10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2005
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from           to          .

Commission file number 000-31687

EVERGREEN SOLAR, INC.

(Exact name of registrant as specified in its charter)

Delaware	04-3242254
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
138 Bartlett Street Marlboro, Massachusetts	01752
(Address of principal executive offices)	(Zip Code)

(508) 357-2221

(Registrant’s Telephone Number, Including Area Code)

(Former Name, Former Address And Former Fiscal Year, If Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, Par Value $.01 Per Share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes þ     No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.  Yes o     No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:  Yes þ     No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer (as defined in Exchange Act , or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-(2) of the Exchange Act. (Check one).

Large accelerated filer o     Accelerated filer þ     Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes o     No þ

The aggregate market value of the registrant’s voting and non-voting common equity held by non-affiliates as of July 2, 2005 was approximately $325 million.

As of March 7, 2006, there were 65,017,036, shares of the registrant’s Common Stock, $.01 par value per share, outstanding.

TABLE OF CONTENTS

DOCUMENTS INCORPORATED BY REFERENCE
	ITEM 1. BUSINESS.
	ITEM 1A. RISK FACTORS.
	ITEM 1B. UNRESOLVED STAFF COMMENTS.
	ITEM 2. PROPERTIES.
	ITEM 3. LEGAL PROCEEDINGS.
	ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
PART II
	ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
	ITEM 6. SELECTED FINANCIAL DATA:
	ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
	ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
	ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
	ITEM 9A. CONTROLS AND PROCEDURES.
	ITEM 9B. OTHER INFORMATION.
PART III
	ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
	ITEM 11. EXECUTIVE COMPENSATION.
	ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
	ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
	ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
PART IV
	ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2004 AND 2005
CONSOLIDATED STATEMENTS OF OPERATIONS
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIGNATURES
EX-10.17 MASTER JOINT VENTURE AGREEMENT
EX-10.18 LICENSE AND TECHNOLOGY TRANSFER AGREEMENT
EX-10.19 TECHNOLOGY CO-OPERATION AGREEMENT
EX-10.20 SUPPLY AGREEMENT, DATED NOVEMBER 24, 2005
EX-10.21 SUPPLY AGREEMENT, DATED NOVEMBER 24, 2005
EX-12.1 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
EX-23.1 CONSENT OF PRICEWATERHOUSECOOPERS LLP
EX-31.1 SECTION 302 CERTIFICATION OF THE C.E.O.
EX-31.2 SECTION 302 CERTIFICATION OF THE C.F.O.
EX-32.1 SECTION 906 CERTIFICATION OF THE C.E.O.
EX-32.2 SECTION 906 CERTIFICATION OF THE C.F.O.

DOCUMENTS INCORPORATED BY REFERENCE

The registrant intends to file a definitive proxy statement pursuant to Regulation 14A within 120 days of the end of the fiscal year ended December 31, 2005. Portions of such proxy statement are incorporated by reference into Part III of this Annual Report on Form 10-K.

Forward-Looking Statements

This Annual Report on Form 10-K, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7, contains forward-looking statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results of the Company may differ materially from those expressed or implied by such forward-looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including but not limited to statements regarding the Company’s future growth, revenue, earnings and gross margins improvement; future warranty expenses; benefits and expenses resulting from EverQ; contributions by our strategic partners Q-Cells AG and Renewable Energy Corporation to EverQ and the successful integration of our proprietary technologies; our future equity ownership position in EverQ; receipt of public grant awards; capital requirements to respond to competitive pressures and acquire complementary businesses and necessary technologies; pursuit of future research contracts that are not part of our current ongoing research activities; costs associated with research and development, building or improving manufacturing facilities, general and administrative expenses, business growth and our status as a public company; shifts in our geographic product revenue mix; international expansion of strategic partnerships, manufacturing operations and distribution networks; operating efficiency of manufacturing facilities including increases in manufacturing scale and technological improvements; the occurrence of and the use of proceeds from sales of our securities; the sufficiency of our cash, cash equivalents, marketable securities and borrowings available under our revolving credit facility to satisfy our anticipated cash requirements; sufficiency of our insurance levels for product liability claims; payment of cash dividends; use of derivative financial instruments to manage foreign currency exchange risks; the potential impact of our critical accounting policies and changes in financial accounting standards or practices; the Company’s plans for the EverQ facility; the Company’s goal of transitioning to thin wafer production and the expected timing and results of such transition; the expected timing of the EverQ facility becoming fully operational; the expected demand for solar energy; expectations regarding product performance and cost and technological competitiveness; expectations regarding future silicon supply from Renewable Energy Corporation and the Company’s ability to enter into additional contracts to secure its silicon supply; the anticipated benefits of the Company’s String Ribbon technology; the making of strategic investments and the expectation of future benefit from them; the development of the quad technology platform and its potential effects on crystal growth; the Company’s position in the solar power market; and the Company’s ability to reduce the costs of producing solar products and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements may be identified with such words as “we expect”, “we believe”, “we anticipate” or similar indications of future expectations. These statements are neither promises nor guarantees and involve risks and uncertainties, which could cause our actual results to differ materially from such forward-looking statements. Such risks and uncertainties may include, among other things, macroeconomic and geopolitical trends and events, the execution and performance of contracts by customers, suppliers and partners, and other risks and uncertainties described herein, including but not limited to the items discussed in “Risk Factors” in Item 1A of this report and that are otherwise described from time to time in our filings with the Securities and Exchange Commission (“SEC”), copies of which may be accessed through the SEC’s Web Site at http://www.sec.gov. We caution readers not to place undue reliance on any forward-looking statements contained in this Annual Report, which speak only as of the date of this Annual Report. We disclaim any obligation to publicly update or revise any such statements to reflect any change in our expectations, or events, conditions, or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in such forward-looking statements.

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ITEM 1.   BUSINESS.

OVERVIEW

We develop, manufacture and market solar power products enabled by our proprietary String Ribbon^tm technology that provide reliable and environmentally clean electric power throughout the world. String Ribbon technology is an efficient process for manufacturing crystalline silicon wafers, which are the primary components of photovoltaic cells. Photovoltaic cells generate direct current electricity when exposed to sunlight. We believe that our proprietary and patented technologies offer significant design, cost and manufacturing advantages over competing solar power technologies.

Our revenues today are primarily derived from the sale of solar modules, which are assemblies of photovoltaic cells that have been electrically interconnected and laminated in a physically durable and weather-tight package. We sell our products using distributors, systems integrators and other value-added resellers, who often add value through system design by incorporating our modules associated with electronics, structures and wiring systems. Applications for our products include on-grid generation, in which supplemental electricity is provided to an electric utility grid, and off-grid generation for markets where access to conventional electric power is not economical or physically feasible. Our products are currently sold primarily in Germany and the United States.

In January 2005, we entered into a strategic partnership agreement with Q-Cells AG, or Q-Cells. Q-Cells is the world’s largest independent manufacturer of solar cells, whose crystalline silicon solar cells are among the highest efficiency polycrystalline solar cells commercially available. The agreement provided for the organization and capitalization of EverQ GmbH, or EverQ, which is a limited liability company incorporated under the laws of Germany and our consolidated subsidiary. In November 2005, Renewable Energy Corporation ASA, or REC, based in Hovik, Norway and one of the world’s largest manufacturer of solar-grade silicon and multicrystalline wafers, joined the EverQ partnership. The purpose of EverQ is to develop and operate a facility in Germany to manufacture, market and sell solar products based on our proprietary String Ribbon technology using fabrication processes that combine our, Q-Cells’ and REC’s manufacturing technologies. We believe that EverQ will accelerate the availability of wafer, cell and module manufacturing capacity based on String Ribbon technology and provide greater access to the European solar market.

The EverQ manufacturing facility is located in Thalheim, Germany and is expected to have an initial capacity of 30 megawatts (“MW”) per year. Dependent upon the success of the initial operations of this facility the partners intend over the long-term, if economically viable, to expand the capacity of this facility up to approximately 120 MW. The table below summarizes the funding sources of EverQ (USD at December 31, 2005 exchange rates):

					Evergreen’s
(In millions)	Total		USD		Contribution		USD
Public grants expected to be received	€	28.0	$	33.1	€	—	$	—
Equity		30.0		35.5		22.5		26.6
Shareholder loan		8.0		9.5		8.0		9.5
Bank loan		8.0		9.5		—		—
Total	€	74.0	$	87.6	€	30.5	$	36.1

Our portion of the equity financing noted in the table above was the amount paid prior to REC joining EverQ. Although EverQ has not received any grants to date, on April 25, 2005, EverQ received notification that, subject to certain conditions, including receipt of European Union approval for a portion of the total grants, it will receive German government grants which, together with tax incentives expected to be received from German government authorities, would amount to approximately 28 million Euro. As of December 31, 2005, approximately 14 million Euro had been accrued and billed by EverQ in relation to these grants not relating to the portion subject to EU approval. Through October 2005, Q-Cells and we have each made our required equity contributions which totaled 30 million Euro. In late 2005, we entered into a shareholder loan agreement with EverQ pursuant to which we agreed to loan up to EverQ 8 million Euro, of which

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approximately 4 million Euro was outstanding as of December 31, 2005 and the remainder was drawn during January 2006. During November 2005, EverQ entered into a credit agreement with Deutsche Bank which included a loan of 8 million Euro to provide for interim financing, of which approximately 4 million Euro was outstanding as of December 31, 2005.

REC acquired a 15% ownership position in EverQ from us and Q-Cells for cash of 4.7 million Euro determined on a cost-of-capital basis. Following REC’s initial investment, we owned 64% of EverQ, Q-Cells 21% and REC 15%. Additionally, REC has agreed to the long-term supply of solar-grade silicon to EverQ at market based pricing. Separately, REC agreed to also supply us with a long-term supply of solar-grade silicon at market-based pricing. Under the seven-year term of the agreements, REC has agreed to supply us with 60 metric tons and EverQ with 190 metric tons of solar-grade silicon annually. Additionally, REC has agreed to license to EverQ and us certain of its proprietary manufacturing technology. The agreements contemplate that when REC establishes planned additional facilities for the production of silicon, it will offer to EverQ a second long-term supply agreement that would substantially increase REC’s supply of silicon to EverQ. Should REC offer this second supply agreement, REC will be entitled to increase its ownership stake in EverQ to as much as one-third. The amended master agreement also contemplates that Q-Cells will also be able to increase its ownership stake to one-third of EverQ, or a larger amount should REC decide not to increase their interest in EverQ to one-third.

FINANCING TRANSACTIONS

In February 2005, we completed a common stock offering with gross proceeds of $66.7 million. We received proceeds of $62.3 million, net of offering costs of approximately $4.4 million, which are available to fund the continuing development of our Marlboro, Massachusetts manufacturing facility and a portion of the remaining expenditures necessary for the initial build-out and initial operation of EverQ. A portion of the proceeds from the financing will also be used to increase research and development spending on promising next generation technologies and to explore further expansion opportunities. In this common stock offering, we issued 13,346,000 shares of our common stock. The shares of common stock were sold at a per share price of $5.00 (before deducting underwriting discounts), which represented a 6% discount to the $5.30 closing price of shares of our common stock as reported on the Nasdaq National Market as of the close of business on February 3, 2005.

On June 29, 2005, we issued Convertible Subordinated Notes (“Notes”) in the aggregate principal amount of $90.0 million, and we received proceeds of $86.9 million, net of offering costs. Interest on the Notes is payable semiannually at the annual rate of 4.375%. The Notes do not have required principal payments prior to maturity on July 1, 2012. However, the Notes are convertible at any time prior to maturity, redemption or repurchase, into shares of our common at an initial conversion rate of 135.3180 shares of common stock per $1,000 principal amount of Notes (equivalent to a conversion price of approximately $7.39 per share), subject to adjustment. On or after July 1, 2010, we may redeem the Notes for cash at the following prices expressed as a percentage of the principal amount:

Redemption Period	Price (%)
Beginning on July 1, 2010 and ending on June 30, 2011		101.250
Beginning on July 1, 2011 and ending on June 30, 2012		101.625
On July 1, 2012		100.000

We may redeem the Notes on or after July 6, 2008 and prior to July 1, 2010 only if the closing price of our common stock exceeds 130% of the then-current conversion price of the Notes for at least 20 trading days in a period of 30 consecutive trading days ending on the trading day prior to the date on which we provide notice of redemption. We may be required to repurchase the Notes upon a designated event (either a termination of trading or a change in control) at a price (which will be in cash or, in the case of a change in control, cash, shares of our common stock or a combination of both) equal to 100% of the principal amount of the Notes to be repurchased plus accrued interest. Upon a change in control, we may under certain circumstances be required to pay a premium on redemption which will be a number of additional shares of our common stock as determined by our stock price and the effective date of the change in control.

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The Notes are subordinate in right of payment to all of our future senior debt.

We incurred financing costs of approximately $3.1 million which are being amortized ratably over the term of the notes, which is seven years. Through December 31, 2005, we recorded approximately $2.0 million in interest expense associated with the Notes.

We believe that our current cash, cash equivalents and marketable securities will be sufficient to fund our planned capital programs, fund our expected commitments with EverQ for its initial 30 megawatts of capacity and to fund our operating expenditures over the next twelve months. We may be required to raise additional capital to respond to competitive pressures and/or to acquire complementary businesses, secure raw materials or necessary technologies. We do not know whether we will be able to raise additional financing or financing on terms favorable to us. If adequate funds are not available or are not available on acceptable terms, our ability to fund our operations, further develop and expand our manufacturing operations and distribution network, or otherwise respond to competitive pressures would be significantly limited.

RECENT DEVELOPMENTS

On February 13, 2006, the Company announced that Donald M. Muir had been appointed, effective immediately, to the position of Vice President and Chief Financial Officer. Effective with the appointment of Mr. Muir, Richard G. Chleboski, who had been serving as the Company’s Chief Financial Officer, was appointed to the newly created position of Vice President of Worldwide Expansion.

On February 8, 2006, CRT Capital Group exercised its warrant to purchase 2,400,000 shares of the Company’s common stock resulting in proceeds to the Company of $8.1 million.

On February 21, 2006, the Company announced that it has entered into a four-year supply contract with S.A.G. Solarstrom AG (S.A.G.), based in Freiburg, Germany. The agreement calls for us to ship approximately $100 million of photovoltaic modules to S.A.G. over the next four years.

On February 28, 2006, the Company announced that it has entered into a multi-year supply contract with Global Resource Options, Inc. (GRO), a Vermont-based solar power distributor and system integrator. The agreement calls for us to ship approximately $88 million of photovoltaic modules to GRO over the next four years.

On March 15, 2006, the Company announced that it has entered into a multi-year supply contract with Donauer Solartechnik (Donauer), a German-based solar power distributor. The agreement calls for us to ship approximately $125 million of photovoltaic modules to Donauer over the next four years.

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HISTORICAL MILESTONES

We were incorporated in August 1994 and, to date, we have achieved the following milestones along our product development and commercialization schedule:

October	1994	Evergreen Solar founded with four employees in a 2,500 square foot laboratory
October	1995	First String Ribbon wafers produced
April	1997	9,400 square foot pilot manufacturing facility operational
October	1997	First commercial sale of solar panels produced using String Ribbon technology
June	1999	Total sales of solar panels of 2,500 units and 100 kilowatts achieved
March	2000	Leased 56,250 square foot manufacturing and headquarters facility located in Marlboro, Massachusetts
August	2000	Renovation of our Marlboro manufacturing facility and headquarters begun
June	2001	First shipment of solar panels from our new Marlboro manufacturing facility
November	2001	New distribution relationships in the U.S. and Europe
December	2001	Shipment of our 10,000th solar panel
June	2002	Achieved first quarterly $1.0 million in product sales
December	2002	Demonstration of double ribbon growth to boost productivity
December	2002	Solar system installed on White House
December	2003	Richard M. Feldt appointed as new Chief Executive Officer
January	2004	Shipment of our 50,000th solar panel
January	2004	Demonstrated quad-ribbon growth process
June	2004	Close of $18.8 million private equity financing, net of $1.2 million in financing costs
November	2004	Shipment of our 100,000th solar panel
December	2004	Demonstrated 150 micron thick wafer growth capability
December	2004	Achieved positive gross margins for the first time in Company history
January	2005	Formed EverQ, a 30-megawatt solar wafer, cell and module manufacturing plant partnership with Q-Cells AG
February	2005	Completed a $62.3 million common stock public financing
June	2005	Completed a $90.0 million convertible subordinated note financing
September	2005	Shipment of our 200,000th solar panel
November	2005	Signed $70 million sales agreement with PowerLight Corporation
November	2005	Announced addition of REC, a leading silicon supplier, to EverQ
February	2006	Signed $100 million sales agreement with S.A.G. Solarstrom AG
February	2006	Signed $88 million sales agreement with Global Resource Options, Inc.
March	2006	Signed $125 million sales agreement with Donauer Solartechnik

INDUSTRY BACKGROUND

At approximately $1 trillion per year global revenues, the electric power industry is one of the world’s largest industries. Furthermore, electricity accounts for a growing share of overall energy use. We believe that deregulation, economic, environmental and national security pressures, and technological innovations are creating significant opportunities for new entrants and technologies within the electric power industry, just as these changes have created similar opportunities in other regulated industries such as telecommunications, banking and transportation.

Electric power is an increasingly vital component of the global economy, accounting for a greater share of overall energy use as reliance on electricity-dependent technology grows. According to the U.S. Department of Energy’s International Energy Outlook 2005 worldwide demand for electricity is expected to nearly double over the next two decades, from 14.3 trillion kilowatt hours, or kWh, in 2002 to 26.0 trillion kWh in 2025.

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Demand is expected to grow at 4% per year over this time period in the emerging economies, including China, which currently accounts for only one-third of electricity consumption and where reliable electricity is critical to economic growth. Electricity consumption is expected to grow annually at 1.5% to 2.0% in North America, Europe and industrialized Asia.

Sources of fuel for electricity generation include coal, natural gas, oil, nuclear power and renewable sources, such as solar, hydroelectric and wind power. Coal fuels 39% of worldwide electricity generation, natural gas 18%, nuclear 18%, oil 8%, and renewable sources, chiefly hydroelectric, 18% of global electricity generation. Solar and other non-hydroelectric sources account for approximately 2% of global electricity generation. Electric power producers face several challenges in meeting anticipated growth in electricity demand:

•  Environmental regulations.  Environmental regulations addressing global climate change and air quality seek to limit emissions by existing fossil fuel-fired generation plants and new generating facilities. Countries that are parties to international treaties such as the Kyoto Protocol have voluntarily submitted to reducing emissions of greenhouse gases. National and regional air pollution regulations also restrict the release of carbon dioxide and other gases by power generation facilities.

•  Infrastructure reliability.  Investment in electricity transmission and distribution infrastructure has not kept pace with increased demand, resulting in major service disruptions in the United States, such as the Northeast blackout in August 2003. Increasing the aging infrastructure to meet capacity constraints will be capital intensive, time consuming and may be restricted by environmental concerns.

•  Fossil fuel supply constraints and cost pressures.  The supply of fossil fuels is finite. While an adequate supply of coal, natural gas and oil exists for the foreseeable future, depletion of the fossil fuels over this century may impact prices and infrastructure requirements. For example, the U.S. domestic supply of liquefied natural gas, or LNG, is not expected to meet consumption requirements by 2025, requiring significant investment in LNG shipping terminal infrastructure to support imported fuel. Political instability, labor unrest, war and the threat of terrorism in oil producing regions has disrupted oil production, increased the volatility of fuel prices and raised concerns over foreign dependency in consumer nations.

As a result of these and other challenges, we believe that future demand for electricity will not be met through traditional fossil fuel-based generation technologies alone.

Distributed Generation and Renewable Energy

We believe that distributed generation and renewable energy are two of the most promising areas for growth in the global electric power industry, and solar power is both distributed and renewable. Distributed generation is defined as point-of-use electricity generation that either supplements or bypasses the electric utility grid and employs technologies such as solar power, microturbines and fuel cells. We believe capacity constraints, increased demand for power reliability and quality and the challenges of building new centralized generation and transmission facilities will drive the demand for distributed generation. Renewable energy is defined as energy supplies that derive from nondepleting sources such as solar, wind and certain types of biomass. We believe that economic and security pressures to reduce dependence on imported and increasingly expensive oil and natural gas and growing environmental pressures will drive demand for renewable energy. Renewable energy, including solar and wind power, is the fastest growing segment of the energy industry worldwide.

We further believe that environmentally benign, locally sourced renewable energy will become increasingly more important for economic development, environmental policy and national security. Increasing attention to global warming, global energy policy and regional stability and development will support the deployment of distributed generation, particularly renewable energy.

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Solar Power

Solar power generation uses interconnected photovoltaic cells to generate electricity from sunlight. Most photovoltaic cells are constructed using specially processed silicon, which, when exposed to sunlight, results in the generation of direct current. Many interconnected cells are packaged into solar modules, which protect the cells and collect the electricity generated. Solar power systems are comprised of multiple solar modules along with related power electronics. Solar power technology, first used in the space program in the late 1950s, has experienced growing worldwide commercial use for over 25 years in both on-grid and off-grid applications.

•  On-grid.  On-grid applications provide supplemental electricity to customers that are served by an electric utility grid, but choose to generate a portion of their electricity needs on-site. On-grid applications have been the fastest growing part of the solar power market. This growth is primarily driven by the worldwide trend toward deregulation and privatization of the electric power industry, as well as by government initiatives, including incentive programs to subsidize and promote solar power systems in several countries, including Japan, Germany and the United States. On-grid applications include residential and commercial rooftops, as well as ground-mounted mini-power plants.

•  Off-grid.  Off-grid applications serve markets where access to conventional electric power is not economical or physically feasible. Solar power products can provide a cost-competitive, reliable alternative for such power applications as highway call boxes, microwave stations, portable highway road signs, remote street or billboard lights, vacation homes, rural homes in developed and developing countries, water pumps and battery chargers for recreational vehicles and other consumer applications.

Solar power has emerged as one of the primary distributed generation technologies seeking to capitalize on the opportunities resulting from trends affecting the electric power industry. Relative to other distributed generation technologies, solar power benefits include:

•  Modularity and scalability.  From tiny solar cells powering a hand-held calculator to an array of roof modules powering an entire home to acres of modules on a commercial building roof or field, solar power products can be deployed in many sizes and configurations and can be installed almost anywhere in the world. Solar is among the best technologies for power generation in urban areas, environmentally sensitive areas and geographically remote areas in both developing and developed countries.

•  Reliability.  With no moving parts and no fuel supply required, solar power systems reliably power some of the world’s most demanding applications, from space satellites to maritime applications to remote microwave stations. Solar modules typically carry warranties as long as 25 years.

•  Dual use.  Solar modules are expected to increasingly serve as both a power generator and the skin of the building. Like architectural glass, solar modules can be installed on the roofs or facades of residential and commercial buildings.

•  Environmentally cleaner.  Solar power systems consume no fuel and produce no air, water or noise emissions.

Germany, Japan and the United States presently comprise the majority of world market sales for solar power systems. Government policies in these countries, in the form of both regulation and incentives, have accelerated the adoption of solar technologies by businesses and consumers. Internationally, Spain, Portugal and Italy have recently developed new solar support programs. In the United States, the 2005 energy bill enacted a 30% investment tax credit for solar, and in January 2006 California approved the largest solar program in the country’s history, the $3 billion, 11-year California Solar Initiative.

As a result of solar power’s benefits and government support, the solar power market has seen sustained and rapid growth. Unit shipments have increased over 20% per year on average for the past 20 years, with never a negative growth year, and over 40% for the past five years.

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Solar Power Challenges

Although solar power can provide a cost-effective alternative for off-grid applications, we believe the principal challenge to widespread adoption of solar power for on-grid applications is reducing manufacturing costs without impairing product reliability. We believe the following advancements in solar power technology are necessary to meet this challenge:

•  Efficient material use.  Reduce raw materials waste, particularly the waste associated with sawing silicon by conventional crystalline silicon technology. Efficient use of silicon is imperative for the growth of the industry due to the limited supply and increasing cost of silicon raw material expected for the near future.

•  Simplified and continuous processing.  Reduce reliance on expensive, multi-step manufacturing processes.

•  Reduced manufacturing capital costs.  Decrease the costs and risks associated with new plant investments as a result of lower capital costs per unit of production.

•  Improved product design and performance.  Increase product conversion efficiency, longevity and ease of use. Conversion efficiency refers to the fraction of the sun’s energy converted to electricity.

We further believe the two principal solar power technologies, crystalline silicon and thin films, have not adequately addressed this challenge:

•  Crystalline Silicon.  Crystalline silicon technology was the earliest practiced solar wafer fabrication technology and continues to be the dominant technology for the market, accounting for approximately 94% of solar market sales in 2004, according to Solarbuzz a leading solar industry trade journal. Conventional crystalline silicon technology involves sawing thin wafers from solid crystalline silicon blocks. Crystalline silicon products are known for their reliability, performance and longevity. However, factors such as high materials waste from sawing, numerous processing procedures and high capital costs have limited the speed at which conventional crystalline silicon manufacturers can reduce manufacturing costs.

•  Thin Films.  While most major solar power manufacturers currently rely on crystalline silicon technology for their solar cell production, they, and other new entrants, are also developing alternative thin film technologies to achieve lower manufacturing costs. Thin film technology involves depositing several thin layers of silicon or more complex materials on a substrate to make a solar cell. Although thin film techniques generally use material more efficiently than conventional crystalline silicon, we believe higher capital costs, lower manufacturing yields, lower conversion efficiency and reduced product performance and reliability have resulted in and will continue to result in limited commercial acceptance. According to Solarbuzz, the market share of thin films has declined from 12% in 1999 to approximately 6% in 2004. There will continue to be significant efforts to develop alternate solar technologies, such as amorphous silicon, CIS (copper indium diselenide), CIGS (copper indium gallium diselenide), CdTe (cadmium telluride), CSG (crystalline silicon on glass) and polymer and nano technologies. While these technologies have generally been slow to come to market, all of these efforts are important to broadening the base of products for solar to fit a greater number of market needs and niches.

OUR TECHNOLOGY SOLUTION

We believe our technologies and processes are unique among our competitors. Our technologies and processes have been designed to reduce manufacturing costs while improving product design. We are developing technology at the wafer, cell and module stages of manufacturing, and we hold patents and other intellectual property in all three areas. We believe our String Ribbon wafer manufacturing technology is our core technology and offers a substantial opportunity to reduce cost and otherwise advance our business through reduced materials cost, simpler processing and lower required economies of scale.

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String Ribbon’s key advantage is forming a silicon wafer directly to the needed thickness, rather than slicing wafers from a solid block, thus reducing material use and processing steps. In the String Ribbon technique, strings are pulled vertically through a shallow pool of molten silicon, and the silicon solidifies between the strings to form a continuous ribbon of crystalline silicon. The ribbon is then cut and prepared for cell fabrication. The use of strings to aid in the simplified growth of a silicon ribbon is what distinguishes our proprietary String Ribbon technology from other advanced crystalline silicon wafer technologies that do not involve sawing.

We believe our String Ribbon technology for the growth of solar wafers has the following significant advantages:

•  Efficient materials use.  Unlike conventional bulk crystalline silicon wafer technology, in which solid blocks of silicon are sawed into thin wafers at significant expense and silicon waste, our technology grows a continuous, flat ribbon to the desired thickness. Since our technology does not involve sawing solid blocks, for comparable thickness wafers we currently use approximately two-thirds as much silicon as conventional crystalline silicon techniques and we believe we can further reduce this amount to approximately one-third in the future through production of thinner wafers. It is worth noting that even if standard wafering techniques are improved to allow for sawing thinner wafers, the sawing losses become proportionately larger as a percentage, limiting the ability of these methods from approaching the silicon usage efficiency of the String Ribbon technology. Not only is this an advantage in material costs, it allows us to produce more power from the same amount of silicon feedstock than other manufacturers using crystalline silicon. As long as the supply of silicon remains limited and expensive, higher yield from raw silicon is critical to the growth of the industry.

•  Continuous processing.  Our technology permits the continuous growth of crystalline silicon ribbon, which can lead to high automation, efficient equipment use and improved productivity.

•  Energy and environmental benefits.  String Ribbon uses less energy and substantially reduces the use of hazardous materials, particularly acids and cutting oils, relative to bulk crystalline technology.

Our Business Strategy

Our business strategy is to develop, manufacture and market solar power products that use our technologies in commercial applications around the world. We presently are focused on the following steps to implement our business strategy:

•  Maintain our technology leadership through continuous innovation.  We believe that our String Ribbon technology provides critical competitive advantages. While our license to the underlying patents directed to the String Ribbon technology has expired, we own other patents directed to various aspects of the String Ribbon technology as well as significant trade secrets, and we will continue to invest in research and development to extend our technology leadership while vigorously protecting our intellectual property. Our Marlboro, Massachusetts facility has approximately 6,000 square feet dedicated to research and development and contains equipment to support the development, fabrication and evaluation of new solar power products and technologies. We have demonstrated our ability to produce 150-200 micron ribbons, which consume one-third to one-half less silicon than our current thickness ribbons of approximately 300 microns and which began to enter commercial production in early 2006. We are developing a fourth generation technology termed quad ribbon, which allows us to grow four silicon ribbons simultaneously from a single furnace and may potentially double the output of each furnace. We have also made recent advances and expect to continue to improve the conversion efficiency of our solar cells. Together these developments could dramatically reduce product and capital costs and increase efficiency of raw material usage. We intend to continually invest in improving our proprietary technologies and their commercial applications with the goal of reducing manufacturing costs without impairing product performance or reliability.

•  Lower our manufacturing costs and increase our capacity.  We have focused on manufacturing process improvements to increase output capacity and lower cost. In 2004, we transitioned all single ribbon

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furnaces to double ribbon technology. In 2006, we intend to introduce thin ribbon to commercial production and advance the development of quad ribbon furnaces and higher conversion efficiency. We believe that these capabilities when integrated into the full production line will further lower manufacturing costs and enable the String Ribbon technology to have among the most efficient silicon utilization rates for production of crystalline photovoltaic products. Having validated the cost and product performance of our technology, we are rapidly scaling String Ribbon technology through a manufacturing expansion in Germany that will approximately triple String Ribbon capacity in 2006.

•  Accelerate our cost reduction and capacity expansion through strategic partnerships.  We intend to quicken the expansion pace, secure critical supply chain and leverage our technology and manufacturing capabilities through strategic partnerships with other participants in the solar power industry. Beyond the core String Ribbon technology, we have generated significant experience and know-how in the handling of thin and fragile wafers and cells. This expertise is important in solar manufacturing and is therefore potentially attractive to strategic partners as other manufacturers attempt to move to thinner wafers. On January 14, 2005 we announced the creation of a strategic partnership with Q-Cells of Germany, the world’s largest independent manufacturer of solar cells. This strategic partnership, called EverQ, is currently building a 30 megawatt integrated wafer-cell-module manufacturing plant in Germany. On November 28, 2005 we announced the addition of Renewable Energy Corporation (REC) of Norway, one of the world’s largest manufacturer of solar-grade silicon and multicrystalline wafers, to EverQ. Q-Cells and REC add size, operations expertise, local European presence, secure silicon supply, global market reach and financial depth to the String Ribbon expansion.

•  Expand our market reach through strategic partnerships.  We intend to increase our addressable markets, boost sales and solidify our brand through strategic partnerships with best practice distribution partners worldwide. Like most manufacturers in the solar power business, we sell our modules through distributors and system integrators, which integrate our modules with other structural and electrical components and sell complete systems to end-users. To date, we have worked with a small number of these value-added resellers on a year-by-year purchase order basis. On November 4, 2005, we announced a four-year, $70 million sales agreement with PowerLight Corporation, a leader in developing innovative solar electric technologies and large-scale, grid-connected projects for customers worldwide. On February 21, 2006, the Company announced that it has had entered into a four-year supply contract with S.A.G. Solarstrom AG (S.A.G.), based in Freiburg, Germany to ship approximately $100 million of photovoltaic modules to S.A.G. over the next four years. On February 21, 2006, the we announced that we had entered into a multi-year supply contract with Global Resource Options, Inc. (GRO), a Vermont-based solar power distributor and system integrator to ship approximately $88 million of photovoltaic modules to GRO over the next four years. On March 15, 2006, the Company announced that it has entered into a multi-year supply contract with Donauer Solartechnik (Donauer), a German-based solar power distributor. The agreement calls for us to ship approximately $125 million of photovoltaic modules to Donauer over the next four years. We expect to develop additional market partnerships to support aggressive sales growth.

•  Diversify and differentiate our product lines.  In addition to core wafer and cell technology, our technology related to module manufacturing processes and components allows us to differentiate future products to meet market demands. We have patented methods for producing modules which do not require aluminum frames as is common practice. Such modules would be thinner and lighter than current standard module designs, thereby lending themselves to uses in ways not common today.

OUR PRODUCTS

Solar power products in general are built-up through four stages of production:

•  Wafers.  A crystalline silicon wafer is a flat piece of crystalline silicon that can be processed into a solar cell. Our rectangular wafers currently measure 80 millimeters by 150 millimeters and are approximately 300 microns thick, with 150-200 micron thick wafers expected to be introduced in 2006.

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•  Cells.  A solar cell is a device made from a wafer that converts sunlight into electricity by means of a process known as the photovoltaic effect. Our solar cells produce approximately 1.5 watts of power each.

•  Modules.  A solar module is an assembly of solar cells that have been electrically interconnected and laminated in a physically durable and weather-tight package. A typical solar module can produce from 20 to 300 watts of power and range in size from 2 to 25 square feet. A single 100-watt solar module can power a standard 100-watt light bulb, or approximately 3% of the power requirements of a typical home in the United States. Our current solar modules range up to 120 watts in power, and a 180 watt module is scheduled for 2006 release.

•  Systems.  A solar system is an assembly of one or more solar modules that have been physically mounted and electrically interconnected, often with batteries or power electronics, to produce electricity. Typical residential on-grid systems produce 2,000 to 6,000 watts of power.

Solar modules are our primary product, although we may in the future also sell wafers, cells, or systems. We believe our modules are competitive with other products in the marketplace and are certified to international standards of safety, reliability and quality. If our development programs are successful, we expect to continue to increase the conversion efficiency and power of our solar modules as we expand our manufacturing capacity.

Sales, Marketing and Distribution

We bring our solar power products to market using distributors, system integrators and other value-added resellers. Our distributors often add value through system design by incorporating our modules, associated with electronics, structures and wiring systems. Most of our resellers have a geographic or applications focus. Our channel partners include companies that are exclusively solar resellers as well as others for whom solar power is an extension of their core business, such as engineering design firms or other energy product marketers.

We expect to collaborate closely with a relatively small number of resellers throughout the world. We currently have approximately 35 resellers worldwide and are actively working to refine our distribution partners by very careful addition of a few new accounts and channel partners. We intend to selectively pursue additional strategic relationships with other companies worldwide for the joint marketing, distribution and manufacturing of our products. These resellers are expected to range from large, multinational corporations to small, development-stage companies, each chosen for their particular expertise. We believe that these relationships will enable us to leverage the marketing, manufacturing and distribution capabilities of other companies, explore opportunities for additional product development and more easily and cost-effectively enter new geographic markets, attract new customers and develop advanced solar power applications.

We currently work with a relatively small number of resellers who have particular expertise in a selected geographic or applications market segment. Sales to our 10 largest customers have accounted for approximately 76% of our total product revenues since inception. No single customer has accounted for more than 32% of product revenues since inception. As we continue to expand manufacturing capacity and sales volumes, we anticipate developing relationships with additional customers and decreasing our dependence on any single customer. During fiscal year 2005 approximately 29% of our product sales were made to customers in the United States, and all of our research revenue was generated within the United States. Product revenue from our largest distributor, in Germany, Krannich Solartechnik, accounted for approximately 46% and 21% for the years ended December 31, 2004 and 2005, respectively, and another German distributor, Donauer Solartechnik, accounted for approximately 19% of product revenue for the years ended December 31, 2004 and 2005. Additional information regarding the geographic distribution of our sources of revenue and our long-lived assets may be found in the footnotes to the Financial Statements included with this Annual Report on Form 10-K. Additional information regarding risks attendant to our foreign operations can be found under heading “Certain Factors Which May Affect Future Results” included in Part I, Item 7 of this Annual Report on Form 10-K.

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In addition, we market our products through trade shows, on-going customer communications, promotional material, our web site, direct mail and advertising. Our staff provides customer service and applications engineering support to our distribution partners while also gathering information on current product performance and future product requirements.

Information regarding our government contracts can be found under the heading “RESEARCH AND DEVELOPMENT” below.

MANUFACTURING

Our principal manufacturing objective is to provide for large-scale manufacturing of our solar power products at low costs that will enable us to penetrate price-sensitive solar power markets. Our 76,000 square foot facility, at two adjacent sites in Marlboro, Massachusetts, includes approximately 35,000 square feet of manufacturing space. In addition to the existing 76,000 square feet, an additional 40,000 square feet of adjacent space in a third building will be occupied in early 2006 for research and development and engineering development. The Marlboro facilities include a complete line of equipment to manufacture String Ribbon wafers, fabricate and test solar cells, and laminate and test modules with a total capacity of approximately 15 megawatts per year if operated at full capacity. Going forward, however, we expect to continue to manufacture and to test, pilot, validate and benchmark new manufacturing and product platforms at our Marlboro facilities therefore, we expect actual production from Marlboro in the range of 12-14 megawatts.

In addition to our current investment in our Marlboro, Massachusetts facility, we are currently completing a greenfield factory with capacity of 30 megawatts in Thalheim, Germany as part of EverQ. This factory is expected to begin production in the first half of 2006 and be at full capacity by the end of 2006. As with the Marlboro facility, the Thalheim facility will be an integrated wafer, cell and module factory.

Because the market opportunity for solar power encompasses numerous applications in both developed and developing nations worldwide, we expect a significant portion of our future sales will be made outside the United States. Over 71% of our sales since inception have been outside of the United States. Over time, we expect that our manufacturing will become increasingly global, as well. We believe there are several advantages to manufacturing close to local markets, including reduced shipping costs, reduced currency exposure, enhanced brand recognition, avoidance of import tariffs and access to local private or public sector financing. By the end of 2006, we anticipate that approximately two-thirds of our manufacturing capacity will be in Europe and one-third in the United States, roughly in proportion to our sales mix.

RESEARCH AND DEVELOPMENT

We believe that continuously improving our technology is an important part of our overall strategy. Therefore we have maintained and intend to maintain a strong research and development effort. To this end, our Marlboro, Massachusetts facility currently has approximately 6,000 square feet dedicated to research and development and contains equipment to support the development, fabrication and evaluation of new solar power products and technologies. Additionally, 40,000 square feet of adjacent space in a third building will be occupied in early 2006 dedicated for research and development.

We intend to continue our policy of selectively pursuing contract research, product development and market development programs funded by various agencies of the United States, state and international governments to complement and enhance our own resources. The percentage of our total revenues derived from government-related contracts was approximately 6% and 1% for the years ended December 31, 2004 and 2005, respectively. During 2004, we had one multi-year research contract with the National Renewable Energy Laboratory which expired on March 31, 2005. We have been awarded another multi-year research contract with the National Renewable Energy Laboratory which commenced in July 2005.

This and other research contracts we have obtained generally provide for development of advanced materials and methods for wafer, cell and module manufacturing, product development and market development. To date, we retain most rights to any intellectual property and technological developments resulting from the government funding, with the exception of government “march-in” rights to practice the technology

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on its own behalf and certain rights universities retain for work they perform under subcontract to us. These contracts usually require the submission by us of technical progress reports, most of which may become publicly available. These contracts are generally cost-shared between the funding agency and us with our share of the total contract cost historically ranging from approximately 30% to 70%. The contracts normally expire between six months and three years from their initiation. We recognized research revenues of $1.6 million in 2003, $1.3 million in 2004 and $0.4 million in 2005 from government-sponsored research contracts. We recorded research and development expenditures, including the cost of research revenue of $3.8 million in 2003, $4.9 million in 2004 and $11.5 million in 2005.

Intellectual Property

Patents

We believe that our commercial success will significantly depend on our ability to protect our intellectual property rights underlying our proprietary technologies. We seek United States and international patent protection for major components of our technology platform, including our crystalline silicon wafers, solar cells and solar modules. We own 18 United States patents, four Indian patents, and four granted European patent applications that have each been validated with enforceable rights in ten foreign jurisdictions in the solar power field. These patents begin to expire in 2016 and will all be expired by 2022. In addition, we have nine United States patent applications pending and 34 foreign patent applications pending. We devote substantial resources to building a strong patent position and we intend to continue to file additional United States and foreign patent applications to seek protection for technology we deem important to our commercial success. Our patents cover the following areas:

•  Crystalline Silicon Wafers.  Dr. Emanuel Sachs, a tenured Professor of Mechanical Engineering at the Massachusetts Institute of Technology, developed our core String Ribbon technology. Dr. Sachs has been awarded three United States patents for the String Ribbon technology. An additional patent for a related technology, invented by two employees of the United States National Renewable Energy Laboratory, formerly the Solar Energy Research Institute, was assigned to Dr. Sachs in 1984. In September 1994, Dr. Sachs granted us an irrevocable, worldwide, royalty-bearing license to practice the String Ribbon technology and related patents under a license and consulting agreement. The patents underlying this agreement expired during 2003 and 2004 and the agreement is now terminated. Dr. Sachs currently consults with Evergreen Solar on new technological developments and expected to continue through early Spring 2006. We have been awarded five United States patents and have eight United States patent applications pending as well as two granted European patent applications that have each been validated with enforceable rights in ten foreign jurisdictions and 19 foreign patent applications pending on our own, internally developed inventions related to String Ribbon and wafer fabrication, including methods for automated, high-yield production techniques.

•  Solar Cell Fabrication.  We have been awarded five United States patents, one Indian patent and one granted European patent application that has been validated with enforceable rights in ten foreign jurisdictions relating to our solar cell processing technology as well as two foreign patent applications pending. The United States patents relate to methods for forming wrap-around contacts on solar cells and methods for processing solar cells.

•  Solar Modules.  We have been awarded eight United States patents, three Indian patents, and one granted European patent application that has been validated with enforceable rights in ten foreign jurisdictions, and we have one United States patent application and 13 foreign patent applications pending relating to advanced solar module designs. The United States patents relate to solar cell modules with an improved backskin, solar cell modules with an interface mounting system, an encapsulant material for solar cell modules, and a solar cell roof tile system.

Trademarks and Copyrights

We have three United States trademark registrations and eight foreign trademark registrations associated with our business, including registrations for the trademarks Evergreen Solar, the Evergreen Solar logo and

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Cedar Line. Furthermore, we have a number of common law trademarks and service marks, including the trademark String Ribbon. We are working to increase, maintain and enforce our rights in our trademark portfolio, the protection of which is important to our reputation and branding. We also own copyrights relating to our products, services and business, including copyrights in the software we have developed, in our marketing materials and in our product manuals.

Trade Secrets and Other Confidential Information

With respect to, among other things, proprietary know-how that is not patentable and processes for which patents are difficult to enforce, we rely on trade secret protection and confidentiality agreements to protect our interests. We believe that several elements of our solar power products and manufacturing processes involve proprietary know-how, technology or data, which are not covered by patents or patent applications, including selected materials, technical processes, equipment designs, algorithms and procedures. We have taken security measures to protect our proprietary know-how, technologies and confidential data, and we continue to explore additional methods of protection. While we require all employees, key consultants and other third parties to enter into confidentiality agreements with us, we cannot be assured that proprietary information will not be disclosed inappropriately, that others will not independently develop substantially equivalent proprietary information and techniques or otherwise gain access to our trade secrets, or that we can meaningfully protect our trade secrets. Any material leak of confidential or proprietary information into the public domain or to third parties could result in the loss of a competitive advantage in the solar power market.

COMPETITION

The solar power market is intensely competitive and rapidly evolving. Our competitors have established a market position more prominent than ours, and if we fail to secure our supply chain, attract and retain customers and establish a successful distribution network for our solar power products, we may be unable to increase our sales and market share. There are over 20 companies in the world that produce solar power products, including BP Solar, Kyocera Corporation, Mitsubishi, Solar World AG, Sharp Corporation, and Sanyo Corporation. We also expect that future competition will include new entrants to the solar power market offering new technological solutions. Further, many of our competitors are developing and are currently producing products based on new solar power technologies, including other crystalline silicon ribbon and sheet technologies, that they believe will ultimately have costs similar to, or lower than, our projected costs.

We believe that the cost and performance of our technology will have advantages compared to competitive technologies. Our products offer the reliability, efficiency and market acceptance of other crystalline silicon products. We believe our technology provides lower manufacturing costs resulting from significantly more efficient material usage and fewer processing steps, particularly in wafer fabrication. Compared to thin film products, our products offer generally higher performance and greater market acceptance. Some thin film technologies, such as cadmium telluride, use toxic materials that inhibit their market acceptance, where others, such as copper indium diselenide, rely on raw materials in short supply, such as indium. Other technologies, including all of the polymer and nanomaterial technologies, are still very developmental and have not yet reached the commercialization stage.

The entire solar industry also faces competition from other power generation sources, both conventional sources as well as other emerging technologies. Solar power has certain advantages and disadvantages when compared to other power generating technologies. The advantages include the ability to deploy products in many sizes and configurations, to install products almost anywhere in the world, to provide reliable power for many applications, to serve as both a power generator and the skin of a building and to eliminate air, water and noise emissions. Whereas solar generally is cost effective for off-grid applications, the high up-front cost of solar relative to most other solutions is the primary market barrier for on-grid applications. Furthermore, unlike most conventional power generators, which can produce power on demand, solar power cannot generate power where sunlight is not available, although it is often matched with battery storage to provide highly reliable power solutions.

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ENVIRONMENTAL REGULATIONS

We use, generate and discharge toxic, volatile or otherwise hazardous chemicals and wastes in our research and development and manufacturing activities. We are subject to a variety of foreign, federal, state and local governmental regulations related to the storage, use and disposal of hazardous materials.

We believe that we have all environmental permits necessary to conduct our business. We believe that we have properly handled our hazardous materials and wastes and have not contributed to any contamination at any of our past or current premises. We are not aware of any environmental investigation, proceeding or action by foreign, federal or state agencies involving our past or current facilities. If we fail to comply with present or future environmental regulations, we could be subject to fines, suspension of production or a cessation of operations. Any failure by us to control the use of or to restrict adequately the discharge of hazardous substances could subject us to substantial financial liabilities, operational interruptions and adverse publicity, any of which could materially and adversely affect our business, results of operations and financial condition. In addition, under some foreign, federal and state statutes and regulations, a governmental agency may seek recovery and response costs from operators of property where releases of hazardous substances have occurred or are ongoing, even if the operator was not responsible for the release or otherwise was not at fault.

DIRECTORS AND EXECUTIVE OFFICERS

Directors

Michael El-Hillow (53) has served as the Chairman of our Board of Directors since September 2005 and has served as a director since August of 2004. Mr. El-Hillow currently serves as Senior Vice President and Chief Financial Officer of MTM Technologies, a leading provider of sophisticated information technology solutions and services. Mr. El-Hillow served as Executive Vice President and Chief Financial Officer of Advanced Energy from November 2001 to December 2005. Prior to joining Advanced Energy, he was Senior Vice President and Chief Financial Officer at Helix Technology Corporation, a major supplier of high-vacuum products principally to the semiconductor capital equipment industry, from 1997 until 2001. Prior to Helix, he was Vice President, Finance, Treasurer and Chief Financial Officer at A.T. Cross Company and an audit partner at Ernst & Young. Mr. El-Hillow received an M.B.A. from Babson College in Babson Park, Massachusetts, received a B.S. in Accounting from the University of Massachusetts and he is a certified public accountant.

Allan H. Cohen (55) has served as a director since September 2005. Mr. Cohen has been a senior member of Arthur Andersen LLP’s (“Andersen”) restructuring team since May 2002 and is one of a small number of individuals responsible for the winding down of Andersen’s professional services activities. Mr. Cohen was a partner with Andersen from 1984 through August 2002, serving in a variety of management roles. From 1996 to 2002, he served as the Tax Practice Director for Andersen’s northeast region (consisting of New York, New Jersey and New England) practice. From 1997 to 2002, Mr. Cohen served on both U.S. and global leadership teams with additional responsibility for knowledge and technology needs for Andersen Worldwide’s tax and legal practices. Since July 2005, Mr. Cohen has served on the board of directors of Plexus Financial Technologies, LLP, an early stage financial services software company. He also serves on the board of trustees of the Rachel Molly Markoff Foundation, which funds research and provides support services related to childhood cancer and brain tumors, and is the President of Temple Shalom of Newton, an 850 member Reform Jewish Congregation in the suburban Boston area. Mr. Cohen received his MBA from Rutgers Graduate School of Management in 1973 and his BA in Economics, with honors, from Rutgers College in 1972. Mr. Cohen is a Certified Public Accountant.

Philip J. Deutch (41) has served as a director since May 2003. Mr. Deutch is a general partner with NGP Energy Technology Partners, a private equity firm investing in small and mid-sized companies that develop energy technologies and provide technology driven products and services to the energy industry. He was a Managing Director of Perseus, L.L.C., a Washington, D.C. and New York City-based private equity firm and led Perseus’ energy technology investing from 1997 to 2005. Prior to joining Perseus, Mr. Deutch worked at Williams & Connolly and in the Mergers and Acquisitions Department of Morgan Stanley & Co. Mr. Deutch is a member of the Board of Directors of the International Center for Research on Women. Mr. Deutch received a J.D. from Stanford Law School and a B.A. from Amherst College.

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Richard M. Feldt (54) has served as our President and Chief Executive Officer and a director since December 2003. Previously he was employed by Perseid, a developer of optical phased array technology created by Raytheon, where he served as Chief Executive Officer in 2002. Prior to that, from 2000 to 2001, Mr. Feldt served as Chief Operating Officer of SupplierMarket.com, a B2B internet supply chain management company that was sold to Ariba. From 1995 to 2000, Mr. Feldt was Senior Vice President and General Manager of Worldwide Operations at Symbol Technologies, a data transaction systems company. In addition, Mr. Feldt has held senior positions at A.T. Cross Company, Eastman Kodak Company and Spectra-Physics, Inc. He received a B.S. in Industrial Engineering from Northeastern University.

Edward C. Grady (58) has served as a director since September 2005. Mr. Grady has been President and Chief Executive Officer of Brooks Automation, Inc. (“Brooks”) since October 2004 and a director of Brooks since September 2003. From February 2003 until October 2004, Mr. Grady was President and Chief Operating Officer of Brooks. From October 2001 until February 2003, Mr. Grady served as a consultant to Brooks. From September 2000 until January 2003, Mr. Grady was a principal in the firm of Propel Partners LLC, an investment firm headquartered in Palo Alto, California. From December 1994 through February 2003, Mr. Grady served in a variety of positions for KLA-Tencor Corp., including Executive Senior Business Advisor from September 2001 until February 2003, Executive Group Vice President of the Mercury Group from March 2001 until September 2001 and Executive Group Vice President of the Process Module Control Group from July 2000 until March 2001. Mr. Grady also currently serves on the board of directors of New Wave Research, Inc. Mr. Grady received his MBA from the University of Houston in 1980 and a B.S. in Engineering from Southern Illinois University in 1972.

Dr. Gerald L. Wilson (66) has served as a director since July 2005. Dr. Wilson is the Vannevar Bush Professor of Engineering at the Massachusetts Institute of Technology (MIT) and the former Dean of the School of Engineering at MIT. Dr. Wilson has served on MIT’s faculty since 1965 and currently serves as a Professor of Electrical and Mechanical Engineering. Dr. Wilson also served as the Chairman of the Science Advisory Board of General Motors Corporation and as the Chairman of the Science Advisory Board of Pratt and Whitney, a division of United Technologies Corporation. He is a director of NSTAR and Analogic Corporation. Dr. Wilson received his B.S. and M.S. in Electrical Engineering and his Sc.D. in Mechanical Engineering from MIT.

Timothy Woodward (45) has served as a director since May 2003 and was Chairman of our Board of Directors from November 2004 until September 2005. Mr. Woodward is a Managing Director of Nth Power, L.L.C., a venture capital firm dedicated to the global energy sector. Mr. Woodward joined Nth Power in 1998 following eight years of managing venture capital investments at Liberty Environmental Partners, a venture capital firm focused on environmental, industrial and energy technologies. In 1991, Mr. Woodward assisted in the formation of Liberty Environmental Partners, where he co-managed the firm’s venture capital activities. Prior to forming Liberty Environmental Partners, Mr. Woodward was part of the founding senior management team of First Source, a company providing industrial solvent recycling services, and from 1982 to 1987 he worked in international marketing at Claude Laval Corporation, an industrial filtration equipment manufacturer. Mr. Woodward serves on the Board of Directors of AllConnect, Comverge, Wellspring International and H2Gen. Mr. Woodward received an M.B.A. from the University of California, Los Angeles and a B.S. in Resource Economics from the University of California, Berkeley.

Non-Director Executive Officers

Dr. Terry Bailey (51) has served as our Senior Vice President, Marketing and Sales since August 2004. Prior to this position, Dr. Bailey was a consultant for GE Power Systems from April 2004 to August 2004. From February 2003 to April 2004, Dr. Bailey served as Vice President of Marketing and Sales for AstroPower, Inc., a leading solar technology supplier which was acquired by General Electric in August 2004. Prior to that, Dr. Bailey served as the President and Chief Executive Officer of Salus Micro Technologies from February 1999 to November 2002. Dr. Bailey served as Executive Vice President, Chief Operating Officer of NEC Technologies, Inc., a wholly owned subsidiary of NEC. Dr. Bailey earlier served as Senior Vice President,

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Marketing and Sales at NEC Technologies. Prior to NEC, Dr. Bailey was an executive at Apple Computer, where he served in various positions, including Senior Vice President and General Manager for Apple’s Imaging Division. Dr. Bailey received a Ph.D. in Analytical Chemistry from Florida State University, specializing in nuclear magnetic resonance research and computer system graphics integration, and he received a B.S. in Chemistry from the University of Alabama.

Richard G. Chleboski (40) has served as our Vice President of Worldwide Expansion since February 2006, our Treasurer since August 1994 and our Secretary since May 2000. Mr. Chleboski served as Chief Financial Officer from August 1994 until February 2006. From June 1995 until May 2003, Mr. Chleboski served as a director. From July 1987 until February 1994, Mr. Chleboski worked at Mobil Solar Energy Corporation, the solar power subsidiary of Mobil Corporation, where he was the Strategic Planner from March 1991 until February 1994 and a Process Engineer from 1987 until 1991. Mr. Chleboski received an M.B.A. from Boston College and a B.S. in Electrical Engineering from the Massachusetts Institute of Technology.

Donald M. Muir (49) has served as our Chief Financial Officer and Vice President since February 2006. Mr Muir served as Chief Financial Officer of American Power Conversion Corporation (“APCC”), a provider of global, end-to-end solutions for real-time infrastructure, from 1995 to 2005 and as APCC’s Senior Vice President, Finance & Administration from 2001 to 2005. Mr. Muir also served as APCC’s Treasurer from 2001 to February 2004, and as Vice President, Finance and Administration from 1998 to 2001. From 1993 to 1995, Mr. Muir was the Treasurer of Stratus Computer, Inc. where he was responsible for managing investor relations, treasury services, corporate taxation, and risk management. Prior to his appointment as Treasurer at Stratus Computer, Inc., Mr. Muir held the position of Director of Finance and Administration from 1991 to 1993 and Controller, Worldwide Sales and Service from 1988 to 1991. Mr. Muir received his MBA from Boston University and his BBA in Accounting from the University of Massachusetts at Amherst.

Gary T. Pollard (46) has served as our Vice President, Human Resources since June 2004. Prior to joining Evergreen, Mr. Pollard worked as an independent consultant for regional and international companies in high technology, healthcare, pharmaceuticals and food services developing hiring, recruitment and HR programs, and designing benefit plans. From 1996 to 2002, he served as Vice President of Human Resources for The Mentor Network, a Boston-based company with 6,000 employees and 150 locations in 22 states at the time he left the company. He was also Vice President of Human Resources for Advantage Health Corporation of Woburn, Massachusetts, and Director of Human Resources for Critical Care America, based in Westborough, Massachusetts. He has also held positions at Signal Capital Corporation, Martin Marietta Aerospace and General Electric Information Services. Mr. Pollard received a B.A. in Economics from Saint Michael’s College in Vermont. He is a member of the Society of Human Resource Management and the Northeast Human Resources Association.

Dr. Brown F. Williams (65) has served as Vice President, Research and Development since November 2004. Dr. Williams served as a director from 1999 and as Chairman of our Board of Directors from January 2004 until resigning from our Board of Directors in November 2004. From 1990 to 2003, Mr. Williams served as Chief Executive Officer and Chairman of the Board of Directors of Princeton Video Image, Inc., a company he founded in 1990. From 1988 to 1990, Mr. Williams was an independent consultant to venture capital firms. Dr. Williams has also held several research and managerial positions at RCA Laboratories from 1966 to 1998. He received a Ph.D., M.A. and A.B. and degrees in Physics from the University of California Riverside and was both a University of California Regents Fellow and a National Science Foundation Fellow.

EMPLOYEES

As of December 31, 2005, we had approximately 290 full-time employees, including approximately 40 engaged in research and development and approximately 210 engaged in manufacturing. Approximately 30 of our employees have advanced degrees, including eight with Ph.D.s. None of our employees are represented by any labor union nor are they organized under a collective bargaining agreement. We have never experienced a work stoppage and believe that our relations with our employees are good. Additionally as of December 31, 2005, EverQ had approximately 35 employees.

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AVAILABLE INFORMATION

Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports are made available free of charge though our internet website (http://www.evergreensolar.com) as soon as practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission.

ITEM 1A.  RISK FACTORS.

Certain Factors Which May Affect Future Results

Investors should carefully consider the risks described below before deciding whether to invest in our common stock. The risks described below are not the only ones we face. Additional risks not presently known to us or that we currently believe are immaterial may also impair our business operations and financial results. If any of the following risks actually occurs, our business, financial condition or results of operations could be adversely affected. In such case, the trading price of our common stock could decline and you could lose all or part of your investment. Our filings with the Securities and Exchange Commission also contain forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks we face described below.

Risks Relating to Our Industry, Products, Financial Results and Operations

Evaluating our business and future prospects may be difficult due to the rapidly changing market landscape.

There is limited historical information available about our company upon which you can base your evaluation of our business and prospects. Although we were formed in 1994 to research and develop crystalline silicon technology for use in manufacturing solar power products and began shipping product from our pilot manufacturing facility in 1997, we first shipped commercial products from our Marlboro manufacturing facility in September 2001. Relative to the entire solar industry, we have shipped only a limited number of solar power modules and have recognized limited revenues.

The market we are addressing is rapidly evolving and is experiencing technological advances and new market entrants. Our future success will require us to scale our manufacturing capacity significantly beyond the capacity of our Marlboro, Massachusetts manufacturing facility, and our business model and technology are unproven at significant scale. Moreover, EverQ, our strategic partnership with Q-Cells and REC, is only in the early stages of development and we have limited experience upon which to predict whether it will be successful. As a result, you should consider our business and prospects in light of the risks, expenses and challenges that we will face as an early-stage company seeking to develop and manufacture new products in a growing and rapidly evolving market.

We have a history of losses, expect to incur substantial further losses and may not achieve or maintain profitability in the future, which may decrease the market value of our stock.

Since our inception, we have incurred significant net losses, including a net loss of $17.3 million for the year ended December 31, 2005. Principally as a result of ongoing operating losses, we had an accumulated deficit of $93.0 million as of December 31, 2005. We expect to incur substantial losses for the foreseeable future, and we may never become profitable. Even if we do achieve profitability, we may be unable to sustain or increase our profitability in the future, which could materially decrease the market value of our common stock. We expect to continue to make significant capital expenditures and anticipate that our expenses will increase substantially in the foreseeable future as we seek to:

•  expand our manufacturing operations, whether domestically or internationally, including the EverQ manufacturing facility in Germany;

•  develop our distribution network;

•  continue to research and develop our products and manufacturing technologies;

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•  implement internal systems and infrastructure in conjunction with our growth; and

•  hire additional personnel.

We do not know whether our revenues will grow at all or grow rapidly enough to absorb these expenses, and our limited operating history makes it difficult to assess the extent of these expenses or their impact on our operating results.

We may need to raise significant additional capital in order to fund our operations and to continue to grow our business, which subjects us to the risk that we may be unable to maintain or grow our business as planned and that our stockholders may be subject to substantial additional dilution.

In order to satisfy our existing capital requirements and to fund continuing capacity expansion, we raised $62.3 million, net of offering costs of approximately $4.4 million, from the public sale of our common stock in February 2005. Additionally, we issued Convertible Subordinated Debt with a principal amount of $90 million, providing us with approximately $86.9 million net of issuance costs of $3.1 million. We believe that our current cash, cash equivalents and marketable securities, will be sufficient to fund our operating expenditures over the next 12 months. However, we may need to raise significant additional capital in order to expand EverQ’s manufacturing capacity beyond 30MW, to further enhance our operating infrastructure, to secure the supply of raw materials to further increase manufacturing capacity through the build-out of other manufacturing facilities and to advance our research and development programs that are key to refining our products and to lowering our manufacturing costs. We may also require additional capital to respond to competitive pressures and acquire complementary businesses or necessary technologies. We do not know whether or not we will be able to raise additional financing or financing on terms favorable to us. If adequate funds are not available or are not available on acceptable terms, our ability to fund our operations, develop and expand our manufacturing operations and distribution network, maintain our research and development efforts or otherwise respond to competitive pressures would be significantly impaired. In such a case, our stock price would likely be materially and adversely impacted.

In addition, if we raise additional funds through the issuance of equity or convertible or exchangeable securities, the percentage ownership of our existing stockholders will be reduced. These newly issued securities may have rights, preferences and privileges senior to those of existing stockholders.

Our ability to expand our manufacturing capacity and therefore to increase revenue and achieve profitability depends to a large extent upon the success of EverQ. EverQ is subject to numerous risks, many of which are outside of our control, and we cannot assure you that EverQ will achieve its objective or otherwise be successful. If EverQ is not successful, our business would be materially and adversely harmed and our stock price would decline.

In January 2005, we entered into a strategic partnership agreement with Q-Cells AG, or Q-Cells. Q-Cells is the world’s largest independent manufacturer of solar cells, whose crystalline solar cells are among the highest efficiency polycrystalline solar cells commercially available. The agreement provided for the organization and capitalization of EverQ GmbH, or EverQ, which is a limited liability company incorporated under the laws of Germany and our consolidated subsidiary. In November 2005, Renewable Energy Corporation ASA, or REC, based in Hovik, Norway and one of the world’s largest manufacturer of solar-grade silicon and multicrystalline wafers, joined the EverQ partnership. The purpose of EverQ is to develop and operate a facility in Germany to manufacture, market and sell solar products based on our proprietary String Ribbon^tm technology using fabrication processes that combine our, Q-Cells’ and REC’s manufacturing technologies. We believe that EverQ will accelerate the availability of wafer, cell and module manufacturing capacity based on String Ribbon technology and provide greater access to the European solar market.

The EverQ manufacturing facility is located in Thalheim, Germany and is expected to have an initial capacity of 30 megawatts (“MW”). Dependent upon the success of the initial operations of this facility the partners intend over the long term, if economically viable, to expand the capacity of this facility up to

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approximately 120 MW. The table below summarizes the funding sources of EverQ through December 31, 2005 (USD at December 31, 2005 exchange rates):

					Evergreen’s
(In millions)	Total		USD		Contribution		USD
Public grants expected to be received	€	28.0	$	33.1	€	—	$	—
Equity		30.0		35.5		22.5		26.6
Shareholder loan		8.0		9.5		8.0		9.5
Bank loan		8.0		9.5		—		—
Total	€	74.0	$	87.6	€	30.5	$	36.1

Our portion of the equity financing noted in the table above was the amount paid prior to REC joining EverQ. Although EverQ has not received any grants to date, on April 25, 2005, EverQ received notification that, subject to certain conditions, including receipt of European Union approval for a portion of the total grants, it will receive German government grants which, together with tax incentives expected to be received from German government authorities, would amount to approximately 28 million Euro. As of December 31, 2005, approximately 14 million Euro had been accrued and billed by EverQ in relation to these grants not relating to the portion subject to EU approval. Through October 2005, Q-Cells and we have each made our required equity contributions which totaled 30 million Euro. In late 2005, we entered into a shareholder loan agreement with EverQ pursuant to which we agreed to loan EverQ up to 8 million Euro, of which approximately 4 million Euro was outstanding as of December 31, 2005 and the remainder was drawn during January 2006. During November 2005, EverQ entered into a credit agreement with Deutsche Bank which included a loan of 8 million Euro to provide for interim financing, of which approximately 4 million Euro was outstanding as of December 31, 2005.

REC acquired a 15% ownership position in EverQ from us and Q-Cells for cash, for 4.7 million Euros determined on a cost-of-capital basis. Following REC’s initial investment, we owned 64% of EverQ, Q-Cells 21% and REC 15%. Additionally, REC has agreed to the long-term supply of solar-grade silicon to EverQ at market-based pricing. Separately, REC agreed to also supply us with a long-term supply of solar-grade silicon at market-based pricing. Under the seven-year term of the agreements, REC has agreed to supply us with 60 metric tons and EverQ with 190 metric tons of solar-grade silicon annually. Additionally, REC has agreed to license to EverQ and us certain of its proprietary manufacturing technology. The agreements contemplate that when REC establishes planned additional facilities for the production of silicon, it will offer to EverQ a second long-term supply agreement that would substantially increase REC’s supply of silicon to EverQ. Should REC offer this second supply agreement, REC will be entitled to increase its ownership stake in EverQ to as much as one-third. The amended master agreement also contemplates that Q-Cells will also be able to increase its ownership stake to one-third of EverQ or a larger amount should REC decide not to increase their interest in EverQ to one-third.

We have the ability to terminate EverQ if we, Q-Cells or REC are unable to finance EverQ. As a result, EverQ remains subject to the risk that the parties may be unable to finance, both directly and through government or third party sources, the costs of building the facility, which could cause EverQ to be terminated before the facility is built and result in a significant delay in our ability to expand our manufacturing capacity and our ability to significantly grow revenues and achieve profitability. In addition, EverQ subjects us to the risks inherent in complex strategic partnership transactions with third parties located in international markets, including the following:

•  EverQ will be highly dependent on Q-Cells’s expertise in the rapid development of solar product manufacturing facilities in Germany; therefore, if for any reason, Q-Cells does not devote the personnel necessary to assist us in the development of our facility, EverQ may experience delays and cost-overruns or may be unsuccessful in the establishment of the operation;

•  EverQ contemplates that each of the Company, Q-Cells and REC will contribute certain technologies to EverQ in order to establish novel manufacturing processes based on a combination of our respective technologies; as such, the success of EverQ depends on our ability to integrate our respective technologies and manufacturing processes in order to produce competitive solar products in the world

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marketplace; such integration is unproven and if we are unable to integrate our technologies and manufacturing processes, the prospects for EverQ would be limited;

•  government grants that have been approved may be subject to forfeiture or repayment in whole or in part if EverQ fails to continue to meet the conditions for such grants or if such grants for any reason become unavailable from German or European Union sources;

•  the establishment of the facility may result in cost overruns, delays, equipment problems and construction, start-up and other operating difficulties, any of which could adversely affect the ability of EverQ to achieve or grow revenue on the timeframe we expect;

•  although initially minority shareholders in EverQ, Q-Cells and REC will have the ability to influence the strategic direction of EverQ and other material decisions of EverQ; as a result, we may be unable to take certain actions that we believe would be in our best interests, which, given the expected materiality of EverQ to our combined operations, could significantly harm our business; further, we may be liable to third parties for the material decisions and actions of Q-Cells and REC in EverQ, which actions may harm EverQ and our business;

•  the establishment of EverQ will require significant management attention and will place significant strain on our ability to manage effectively both our operations in Marlboro and the operations of EverQ in Germany;

•  EverQ may subject us to multiple, conflicting and changing laws, regulations and tax schemes;

•  EverQ may be unable to obtain, maintain or enforce adequate intellectual property rights and protection due to limited or unfavorable intellectual property protection and may be subject to claims or suits alleging infringement of third party intellectual property rights;

•  under certain circumstances, if we exit EverQ, EverQ will continue to have certain rights to our proprietary technologies that we are licensing to it and thereby compete with us;

•  two years after the termination of the master joint venture agreement, Q-Cells and REC may engage in ribbon technology-related activities in competition with us;

•  limitations on dividends or restrictions against repatriation of earnings may limit our ability to capitalize on earnings from EverQ;

•  the operation of the manufacturing facility may experience seasonal reductions in productivity common in certain foreign countries, such as the summer months in Europe;

•  EverQ may be subject to increases in tariffs, duties, price controls or other restrictions on foreign currencies or trade barriers imposed by foreign countries;

•  EverQ may be unable to successfully hire and retain the additional personnel necessary to operate the facility, which is expected to require approximately 400 employees for the initial capacity expansion;

•  we will be exposed to fluctuations in currency exchange rates; and

•  we may experience difficulties in staffing and managing international operations, including the difficulty in managing a geographically dispersed workforce in compliance with diverse local laws and customs.

As a result, there can be no assurance that EverQ will be successful in establishing the facility or, once established, that EverQ will attain the manufacturing capacity or the financial results that we currently expect.

In addition, our strategic partnership with Q-Cells and REC subjects us to a risk that in the future we may be unable to consolidate EverQ’s financial results into our financial statements. We consolidate the financial statements of EverQ in accordance with the provisions of FASB FIN 46, “Consolidation of Variable Interest Entities, an interpretation of ARB No. 51.” In the event that Q-Cells and REC increase their ownership interest or for any reason our ownership interest in EverQ decreases, we may be unable under generally accepted accounting principles to continue to consolidate. As a result, we are subject to the risk that period-to-period comparisons of our financial statements in the future may be difficult to make.

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Our future success substantially depends on our ability to significantly increase our manufacturing capacity through the development of additional manufacturing facilities. We may be unable to achieve our capacity expansion goals as a result of a number of risks, which would limit our growth potential, impair our operating results and financial condition and cause our stock price to decline.

Our future success depends on our ability to increase our manufacturing capacity through the development of additional manufacturing facilities. If we are unable to do so, we may not be able to achieve the production volumes and per unit costs that will allow us to meet customer demand, maintain our competitive position and achieve profitability. Our ability to develop additional manufacturing facilities is subject to significant risk and uncertainty, including:

•  we may need to continue to raise significant additional capital through the issuance of equity or convertible or debt securities in order to finance the costs of development of any additional facility, which we may be unable to do on reasonable terms or at all, and which could be dilutive to our existing stockholders;

•  the build-out of any additional facility will be subject to the risks inherent in the development of a new manufacturing facility, including risks of delays and cost overruns as a result of a number of factors, many of which may be out of our control, such as delays in government approvals or problems with supplier relationships;

•  our manufacturing processes, particularly those that incorporate improvements to our String Ribbon technology, are unproven at large scale and may prove difficult to implement in any new facility;

•  we may be required to depend on third parties or strategic partnerships that we establish in the development and operation of a facility, which may subject us to risks that such third parties do not fulfill their obligations to us under our arrangements with them;

•  the establishment of any new facility will require significant management attention, and our management team, which has limited experience in the development of such facilities, may be unable to execute the expansion plan effectively; and

•  if a new facility is established internationally, we may encounter legal restrictions and liability, encounter commercial restrictions and incur taxes and other expenses to do so and otherwise be subject to the risks inherent in conducting business in a foreign jurisdiction as described elsewhere in this section.

If we are unable to develop and successfully operate additional manufacturing facilities, or if we encounter any of the risks described above, we may be unable to scale our business to the extent necessary to achieve profitability, which would cause our stock price to decline. Moreover, there can be no assurance that if we do expand our manufacturing capacity that we will be able to generate customer demand for our solar power products at these production levels or that we will increase our revenues or achieve profitability.

Because we depend on single and sole source suppliers for a number of specialized materials, including silicon, necessary to manufacture our solar power products, we are susceptible to supplier and industry-wide supply shortages and price volatility, which could adversely affect our ability to meet existing and future customer demand for our products and cause us to make fewer shipments, generate lower than anticipated revenues and manufacture our products at higher than expected costs.

We have single and sole source suppliers for a number of specialized materials, including silicon and string, necessary to manufacture our solar power products, which makes us susceptible to quality issues, shortages and price changes for these materials. In particular, we currently use a granular form of silicon which has a format that is best suited for our String Ribbon manufacturing process. Currently, only MEMC Electronic Materials, Inc (MEMC) produces granular silicon available on a commercial scale, and we have historically obtained our silicon from this supplier. MEMC is also a supplier of silicon to the semiconductor industry, which has significantly greater buying power and market influence than we have or anyone else has in the solar power industry. Demand for and pricing of silicon has increased significantly over the past

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18 months. Further increases in the demand for silicon may cause us to encounter shortages or delays in obtaining the specialized silicon to be used in the manufacture of our solar power products, which could result in customer dissatisfaction and decreased revenues. Additionally, further increases in the price of available silicon could negatively impact our results of operations in any given period.

In June 2005, we signed two short-term supply contracts with MEMC that we expected would provide our silicon supply through the first quarter of 2006. The first contract was for 10 metric tons (MT) of silicon and the second was for 90 MT of silicon. The contracts required significant upfront payments for initial shipments of silicon and provided for a reduced rate for subsequent silicon shipments. The contracts further provided that if MEMC failed to fulfill its supply obligations, it would be required to reimburse us for the excess payments on the initial supply. MEMC confirmed to us its intentions to fulfill its supply obligations under the contracts by the end of January 2006 in October 2005 and again in December 2005. At December 31, 2005 MEMC had approximately 53 MT of silicon remaining to be shipped on the contracts. However, in early January MEMC advised us that it did not intend to fulfill its supply obligations under the contracts and instead intended to return the excess payments. Despite our best efforts we have been unable to find a resolution to this matter. Since January 1, MEMC has shipped only 1 MT of silicon. In light of MEMC’s refusal to meet its supply obligations under the contracts to date and the current state of our negotiations with MEMC to try and amicably resolve MEMC’s supply obligations, we do not currently expect to obtain the approximately 52 MT remaining on the supply contracts. As a replacement to the expected supply of silicon from MEMC, we are sourcing chunk silicon. In order for us to use this form of silicon, it must be crushed in an additional process. This process increases the complexity and cost of sourcing this silicon, and has the added risk that the resulting material will be of inadequate purity or format to meet our requirements. Reliance on chunk silicon requires us to modify our processes and begin using crushed silicon earlier than we had anticipated. While we have used crushed silicon in pilot scale with acceptable results, we have not fully tested the process at commercial scale. Failure by us to convert chunk silicon into a usable format in a timely manner and on a cost-effective basis could result in delays in the manufacture of our solar power products or could otherwise have an adverse impact on our results of operations.

In November 2005, we entered into a long-term silicon supply agreement with REC. Under the terms of this agreement, REC has committed to supply us with 60 MT of silicon and to supply EverQ with 190 MT of silicon annually. While REC is currently operating a pilot scale operation to produce granular silicon, REC currently only produces commercial quantities of chunk silicon. The termination of silicon shipments from MEMC has accelerated the timetable by which we will become reliant on REC for our silicon supply.

Our dependence on a limited number of third party suppliers for raw materials, key components for our solar power products and custom-built equipment for our operations could prevent us from delivering our products to our customers within required timeframes, which could result in order cancellations and loss of market share.

We manufacture all of our solar power products using materials and components procured from a limited number of third-party suppliers. If we fail to develop or maintain our relationships with these or our other suppliers, we may be unable to manufacture our products or our products may be available only at a higher cost or after a long delay, which could prevent us from delivering our products to our customers within required timeframes and we may experience order cancellation and loss of market share. We currently do not have contracts with many of our suppliers and may not be able to procure sufficient quantities of the materials and components necessary to manufacture our products on acceptable commercial terms or at all. To the extent the processes that our suppliers use to manufacture materials and components are proprietary, we may be unable to obtain comparable materials and components from alternative suppliers. The failure of a supplier to supply materials and components in a timely manner, or to supply materials and components that meet our quality, quantity and cost requirements could impair our ability to manufacture our products or increase their costs, particularly if we are unable to obtain substitute sources of these materials and components on a timely basis or on terms acceptable to us. Certain of the capital equipment used in the manufacture of our solar power products has been developed and made specifically for us, is not readily available from multiple vendors and would be difficult to repair or replace if it were to become damaged or stop working. Consequently, any

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damage to or break down of our manufacturing equipment at a time we are manufacturing commercial quantities of our products may have a material adverse impact on our business. For example, a supplier’s failure to supply this equipment in a timely manner, with adequate quality and on terms acceptable to us, could delay our capacity expansion of our manufacturing facility and otherwise disrupt our production schedule or increase our costs of production.

We may fail to successfully bring to market our new solar power products under development, which may prevent us from achieving increased sales and market share.

Although we have been selling our solar power products since 1997, we expect to derive a substantial portion of our revenues from sales of our new solar power products that are under development and not yet commercially available. If we fail to successfully develop our new solar power products or technologies, we will likely be unable to recover the losses we have incurred to develop these products and technologies and may be unable to increase our sales and market share and to become profitable. Many of our new product and manufacturing technologies are novel and represent a departure from conventional solar power technologies, and it is difficult to predict whether we will be successful in completing their development. Our new manufacturing technologies have been tested only in our pilot manufacturing facility and, in most cases, only limited pre-production prototypes of our new products have been field-tested.

Our solar power products may not gain market acceptance, which would prevent us from achieving increased sales and market share.

The development of a successful market for our solar power products may be adversely affected by a number of factors, many of which are beyond our control, including:

•  our failure to produce solar power products that compete favorably against other solar power products on the basis of cost, quality and performance;

•  our failure to produce solar power products that compete favorably against conventional energy sources and alternative distributed generation technologies, such as wind and biomass, on the basis of cost, quality and performance;

•  whether or not customers will accept our new module designs under development and the techniques we are developing to mount them; and

•  our failure to develop and maintain successful relationships with distributors, systems integrators and other resellers, as well as strategic partners.

If our solar power products fail to gain market acceptance, we would be unable to increase our sales and market share and to achieve and sustain profitability.

Technological changes in the solar power industry could render our solar power products uncompetitive or obsolete, which could reduce our market share and cause our sales to decline.

Our failure to further refine our technology and develop and introduce new solar power products could cause our products to become uncompetitive or obsolete, which could reduce our market share and cause our sales to decline. The solar power industry is rapidly evolving and competitive. We will need to invest significant financial resources in research and development to keep pace with technological advances in the solar power industry and to effectively compete in the future. We believe that a variety of competing solar power technologies are under development by other companies that could result in lower manufacturing costs or higher product performance than those expected for our solar power products. Our development efforts may be rendered obsolete by the technological advances of others and other technologies may prove more advantageous for the commercialization of solar power products.

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Our ability to increase market share and sales depends on our ability to successfully maintain our existing distribution relationships and expand our distribution channels.

We currently sell our solar power products primarily to distributors, system integrators and other value-added resellers within and outside of North America, which typically resell our products to end users on a global basis. During our fiscal year ending December 31, 2005, we sold our solar power products to approximately 35 distributors, system integrators and other value-added resellers. If we are unable to successfully refine our existing distribution relationships and expand our distribution channels, our revenues and future prospects will be materially harmed. As we seek to grow our sales by entering new markets in which we have little experience selling our solar power products, our ability to increase market share and sales will depend substantially on our ability to expand our distribution channels by identifying, developing and maintaining relationships with resellers both within and outside of North America. We may be unable to enter into relationships with resellers in the markets we target or on terms and conditions favorable to us, which could prevent us from entering these markets or entering these markets in accordance with our plans. Our ability to enter into and maintain relationships with resellers will be influenced by the relationships between these resellers and our competitors, market acceptance of our solar power products and our low brand recognition as a new entrant.

We face risks associated with the marketing, distribution and sale of our solar power products internationally, and if we are unable to effectively manage these risks, it could impair our ability to expand our business abroad.

Sales in Germany constituted approximately 65% of our total product sales for the period ended December 31, 2005. We expect that our sales both to resellers and distributors outside of North America and through our resellers and distributors to end users outside of North America, which could increase upon the establishment and operation of EverQ, will continue to be significant. It will require significant management attention and financial resources to successfully develop our international sales channels. In addition, the marketing, distribution and sale of our solar power products internationally expose us to a number of markets with which we have limited experience. If we are unable to effectively manage these risks, it could impair our ability to grow our business abroad. These risks include:

•  difficult and expensive compliance with the commercial and legal requirements of international markets, with which we have only limited experience;

•  inability to obtain, maintain or enforce intellectual property rights;

•  encountering trade barriers such as export requirements, tariffs, taxes and other restrictions and expenses, which could affect the competitive pricing of our solar power products and reduce our market share in some countries;

•  fluctuations in currency exchange rates relative to the United States dollar;

•  difficulty in recruiting and retaining individuals skilled in international business operations;

•  increased costs associated with maintaining international marketing efforts;

•  difficulty of enforcing revenue collection internationally; and

•  inability to develop, manufacture, market and sell our products and services in German and other international markets due to, for example, third-party intellectual property rights.

We expect that a portion of our international sales will be denominated in United States dollars. As a result, increases in the value of the United States dollar relative to foreign currencies would cause our products to become less competitive in international markets and could result in limited, if any, sales and profitability. For the foreseeable future, market conditions will require us to denominate a majority of our sales in local currencies, principally Euro, which will further expose us to foreign exchange gains or losses.

Our strategy includes establishing local manufacturing facilities in international markets, such as the EverQ factory currently under construction in Germany. As we implement our strategy, we may encounter

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legal restrictions and liability, encounter commercial restrictions and incur taxes and other expenses to establish our manufacturing facilities in certain countries. In addition, we may potentially forfeit, voluntarily or involuntarily, foreign assets due to economic or political instability in the countries where our local manufacturing facilities are located.

Our dependence on a small number of resellers may cause significant fluctuations or declines in our product revenues.

Since inception, our three largest resellers accounted for approximately 52% of our product sales and our 10 largest resellers accounted for approximately 76% of our product sales. Historically, all of our sales to these resellers are made through purchase orders without long-term commitments, including under arrangements that may be cancelled without cause on short notice and that generally do not require them to make minimum purchases. Consequently, our resellers are generally permitted to obtain products from other providers of solar power products without further obligation to us. The concentration of our product sales also exposes us to credit risks associated with the financial viability of these resellers. As of December 31, 2005, approximately 23% of our total accounts receivable were outstanding from a large U.S. distributor and approximately 15% was outstanding from a large European distributor. We anticipate that sales of our solar power products to a limited number of key resellers will continue to account for a significant portion of our total product revenues for the foreseeable future. Consequently, any one of the following events may cause material fluctuations or declines in our product revenues and negatively impact our operating results:

•  reduction, delay or cancellation of orders from one or more of our significant resellers;

•  selection by one or more of our significant resellers of products competitive with ours;

•  loss of one or more of our significant resellers and our failure to recruit additional or replacement resellers; and

•  failure of any of our significant resellers to make timely payment of our invoices.

Problems with product quality or product performance may cause us to incur warranty expenses and may damage our market reputation and prevent us from achieving increased sales and market share, particularly as we introduce new technologies such as Thin Ribbon and larger modules.

As is consistent with standard practice in our industry, the duration of our product warranties is lengthy relative to expected product life and has recently been increasing. Our current standard product warranty includes a one-year warranty period for defects in material and workmanship and a 25-year warranty period for declines in power performance. We believe our warranty periods are consistent with industry practice. Due to the long warranty period, we bear the risk of extensive warranty claims long after we have shipped product and recognized revenues. Although we have sold solar modules since 1997, none of these modules has been operating more than seven years, and a majority of them have been operating less than two years. The possibility of future product failures could cause us to incur substantial expense to repair or replace defective products. Furthermore, widespread product failures may damage our market reputation and reduce our market share and cause sales to decline.

Our success in the future may depend on our ability to establish and maintain strategic alliances, and any failure on our part to establish and maintain such relationships would adversely affect our market penetration and revenue growth.

We intend to continue to establish strategic relationships with third parties in the solar power industry, particularly in international markets. Our ability to establish strategic relationships will depend on a number of factors, many of which are outside our control, such as the competitive position of our technology and our products relative to our competitors. We can provide no assurance that we will be able to establish other strategic relationships in the future.

In addition, other strategic alliances that we establish, will subject us to a number of risks, including risks associated with sharing proprietary information, loss of control of operations that are material to our business

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and profit-sharing arrangements. Moreover, strategic alliances may be expensive to implement and subject us to the risk that the third party will not perform its obligations under the relationship, which may subject us to losses over which we have no control or expensive termination arrangements. As a result, even if our strategic alliances with third parties are successful, our business may be adversely affected by a number of factors that are outside of our control, which would in turn cause our stock price to decline.

The success of our business depends on the continuing contributions of our key personnel and our ability to attract and retain new qualified employees in a competitive labor market.

We have attracted a highly skilled management team and specialized workforce, including scientists, engineers, researchers and manufacturing and marketing professionals. If we were to lose the services of Richard M. Feldt, our Chief Executive Officer, President and a Director, or any of our other executive officers and key employees, our business could be materially and adversely impacted. We do not carry key person life insurance on any of our senior management or other key personnel.

We had approximately 290 employees as of December 31, 2005, and we anticipate that we will need to hire a significant number of new highly-skilled technical, manufacturing, sales and marketing and administrative personnel if we are to successfully develop and market our products, develop our distribution network and operate our expanded manufacturing facility as well as the EverQ manufacturing facility under construction in Germany. EverQ had approximately 35 employees as of December 31, 2005. Competition for personnel is intense, and qualified technical personnel are likely to remain a limited resource for the foreseeable future. Locating candidates with the appropriate qualifications, particularly in the desired geographic location, can be costly and difficult. We may not be able to hire the necessary personnel to implement our business strategy, or we may need to provide higher compensation or more training to our personnel than we currently anticipate. Moreover, any officer or employee can terminate his or her relationship with us at any time.

We may be affected by skilled labor shortages and labor disputes.

We require experienced engineers, technicians and machinists to conduct our business. No assurance can be given that the supply of these skilled persons will always be adequate to meet our requirements or that we will be able to attract an adequate number of skilled persons. Labor disputes could also occur at our manufacturing facilities, which may affect our business. While our employees are not currently represented by labor unions or organized under collective bargaining agreements, labor disputes could occur at any of our facilities, including our Marlboro facility as well as the EverQ manufacturing facility under construction in Germany, which could adversely impact our revenues and operations.

Extended business interruption at our manufacturing facilities could result in reduced sales.

We utilize highly flammable materials such as silane and methane in our manufacturing processes. We have significant experience in handling these materials and take precautions to handle and transport them in a safe manner. By utilizing these materials, we are subject to the risk of losses arising from explosions and fires. Our inability to fill customer orders during an extended business interruption could negatively impact existing customer relationships resulting in market share decreases.

Because our business relies upon a variety of computer systems to operate effectively, the failure or disruption of, or latent defects in these systems could have a material adverse effect on our business.

We are a highly automated company whose efficient and effective operation relies on a variety of information systems, including e-mail, enterprise resource planning and manufacturing execution systems. Disruption in the operation of these systems, or difficulties in maintaining or upgrading these systems, could have an adverse effect on our business. Difficulties that we have encountered, or may encounter, in connection with our implementation and use of our computer systems, including human error or our reliance on, or a failure or disruption of, or latent defects in, such systems, could adversely affect our order management and fulfillment, financial reporting and supply chain management processes, and any such difficulties could have a material adverse effect on our business

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If we fail to maintain an effective system of internal controls over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, this could have a material adverse effect on our business.

Effective internal controls over financial controls are necessary for us to provide reliable financial reports and effectively prevent fraud. We have in the past discovered, and may in the future discover, areas of our internal controls over financial reporting that need improvement. During 2005, we had a material error in our interim financial reports for the periods ending April 2, 2005 and July 2, 2005, which required a restatement of our balance sheets and statements of cash flows for those periods. Although we have implemented enhanced internal controls to properly prepare our financial statements, we cannot be certain that these measures will ensure that we will maintain adequate controls over our financial processes and reporting in the future. In addition, Section 404 of the Sarbanes-Oxley Act of 2002 requires us to evaluate and report on our internal controls over financial reporting and have our independent registered public accounting firm annually attest to our evaluation, as well as issue their own opinion on our report on internal control over financial reporting, which was completed for the first time in connection with our Annual Report on Form 10-K for the fiscal year ended December 31, 2004. We prepared for compliance with Section 404 by strengthening, assessing and testing our system of internal controls over financial reporting to provide the basis for our report. The continuous process of strengthening our internal controls and complying with Section 404 is expensive and time consuming, and requires significant management attention. Further, we cannot be certain that these measures will ensure that we will maintain adequate controls over our financial processes and reporting in the future. Additionally, as we rapidly grow our business, including expansion related to EverQ, our internal controls over financial reporting will become more complex and will require significantly more resources to ensure that they remain effective. Failure to design required new or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to meet our reporting obligations. If a material weakness is discovered the disclosure of that fact, even if quickly remediated, could have a material adverse effect on our business. In addition, future non-compliance with Section 404 could subject us to a variety of administrative sanctions, including the suspension or delisting of our common stock from the Nasdaq National Market and the inability of registered broker-dealers to make a market in our common stock.

Our management team may not be able to successfully implement our business strategies.

If our management team is unable to execute on its business strategies, then our product development, the expansion of our manufacturing operations and distribution network and our sales and marketing activities would be materially and adversely affected. In connection with the planned expansion of our manufacturing capacity, including the EverQ manufacturing facility under construction in Germany, we have undergone and anticipate undergoing further rapid growth in the scope of our operations and the number of our employees, which is likely to place a significant strain on our senior management team and other resources. In addition, we may encounter difficulties in effectively managing the budgeting, forecasting and other process control issues presented by this rapid growth. We may seek to augment or replace members of our management team or we may lose key members of our management team, and we may not be able to attract new management talent with sufficient skill and experience.

The reduction or elimination of government subsidies and economic incentives for on-grid applications could cause our revenues to decline.

We believe that the growth of the majority of our target markets, particularly the market for on-grid applications, depends on the availability and size of government subsidies and economic incentives. Accordingly, the reduction or elimination of government subsidies and economic incentives would likely reduce the size of these markets and/or result in increased price competition, which could cause our revenues to decline. Today, the cost of solar power substantially exceeds the cost of power furnished by the electric utility grid. As a result, federal, state and local governmental bodies in many countries, most notably the United States, Japan and Germany, have provided subsidies in the form of cost reductions, tax write-offs and other incentives to end users, distributors, systems integrators and manufacturers of solar power products to

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promote the use of solar energy in on-grid applications and to reduce dependency on other forms of energy. These government subsidies and economic incentives could be reduced or eliminated altogether.

If solar power technology is not suitable for widespread adoption or sufficient demand for solar power products does not develop or takes longer to develop than we anticipate, our sales would not significantly increase and we would be unable to achieve or sustain profitability.

The market for solar power products is emerging and rapidly evolving, and its future success is uncertain. If solar power technology proves unsuitable for widespread commercial deployment or if demand for solar power products fails to develop sufficiently, we would be unable to generate enough revenues to achieve and sustain profitability. In addition, demand for solar power products in the markets and geographic regions we target may not develop or may develop more slowly than we anticipate. Many factors will influence the widespread adoption of solar power technology and demand for solar power products, including:

•  cost-effectiveness of solar power technologies as compared with conventional and non-solar alternative energy technologies;

•  performance and reliability of solar power products as compared with conventional and non-solar alternative energy products;

•  success of alternative distributed generation technologies such as fuel cells, wind power and micro turbines;

•  fluctuations in economic and market conditions that impact the viability of conventional and non-solar alternative energy sources,

•  such as increases or decreases in the prices of oil and other fossil fuels;

•  capital expenditures by customers that tend to decrease when the United States or global economy slows;

•  continued deregulation of the electric power industry and broader energy industry; and

•  availability of government subsidies and incentives.

We face intense competition from other companies producing solar power and other energy generation products. If we fail to compete effectively, we may be unable to increase our market share and sales.

The solar power market is intensely competitive and rapidly evolving. Our competitors have established a market position more prominent than ours, and if we fail to attract and retain customers and establish a successful distribution network for our solar power products, we may be unable to increase our sales and market share. There are a large number of companies in the world that produce solar power products, including BP Solar, Kyocera Corporation, Sharp Corporation, Mitsubishi, Solar World AG and Sanyo Corporation. We also expect that future competition will include new entrants to the solar power market offering new technological solutions. Further, many of our competitors are developing and are currently producing products based on new solar power technologies, including other crystalline silicon ribbon and sheet technologies, that they believe will ultimately have costs similar to, or lower than, our projected costs. Most of our competitors are substantially larger than we are, have longer operating histories and have substantially greater financial, technical, manufacturing and other resources than we do. Our competitors’ greater size in some cases provides them with a competitive advantage with respect to manufacturing costs due to their ability to allocate fixed costs across a greater volume of production and purchase raw materials at lower prices. Many also have greater name recognition, a more established distribution network and a larger installed base of customers. In addition, many of our competitors have well-established relationships with our current and potential resellers and their customers and have extensive knowledge of our target markets. As a result, our competitors may be able to devote greater resources to the research, development, promotion and sale of their products and respond more quickly to evolving industry standards and changing customer requirements than we can.

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If we are unable to protect our intellectual property adequately, we could lose our competitive advantage in the solar power market.

Our ability to compete effectively against competing solar power technologies will depend, in part, on our ability to protect our current and future proprietary technology, product designs and manufacturing processes through a combination of patent, copyright, trademark, trade secret and unfair competition laws. We may not be able to adequately protect our intellectual property and may need to defend our products and services against infringement claims, either of which could result in the loss of our competitive advantage in the solar power market and materially harm our business and profitability. We face the following risks in protecting our intellectual property and in developing, manufacturing, marketing and selling our products and services:

•  we cannot be certain that our pending United States and foreign patent applications will result in issued patents or that the claims allowed are or will be sufficiently broad to protect our technology or processes;

•  given the costs of obtaining patent protection, we may choose not to protect certain innovations that later turn out to be important;

•  our license, but not our right, to practice the String Ribbon technology terminated upon the expiration of the underlying patents, which occurred during 2003 and 2004, and our historical operating experience with String Ribbon technology and our related patented and proprietary manufacturing processes may not adequately protect our competitive advantage;

•  third parties may design around our patented technologies or seek to challenge or invalidate our intellectual property rights and there is no assurance that our intellectual property rights will deter infringement or misappropriation of our intellectual property;

•  we may incur significant costs and diversion of management resources in prosecuting or defending intellectual property infringement suits;

•  we may not be successful in prosecuting or defending intellectual property infringement suits and, as a result, may need to seek to obtain a license of the third party’s intellectual property rights, which may not be available to us, whether on reasonable terms or at all;

•  the contractual provisions we rely on to protect our trade secrets and proprietary information, such as our confidentiality and non-disclosure agreements with our employees, consultants and other third parties, may be breached and our trade secrets and proprietary information may be disclosed to competitors, strategic partners and the public;

While our license to the underlying patents directed to the String Ribbon technology has expired, we own 5 United States patents, 8 pending United States patent applications, 2 granted European patent applications that have enforceable rights in 10 foreign jurisdictions and 19 pending foreign patent applications directed to various aspects of the String Ribbon technology; however, our historical operating experience with String Ribbon technology and our related patented and proprietary manufacturing processes may not adequately protect our competitive advantage now that the licensed patents have expired.

If we are subject to litigation and infringement claims, they could be costly and disrupt our business.

In recent years, there has been significant litigation involving patents and other intellectual property rights in many technology-related industries. There may be patents or patent applications in the United States or other countries that are pertinent to our business of which we are not aware. The technology that we incorporate into and use to develop and manufacture our current and future solar power products may be subject to claims that they infringe the patents or proprietary rights of others. The success of our technology efforts will also depend on our ability to develop new technologies without infringing or misappropriating the proprietary rights of others. We may receive notices from third parties alleging patent, trademark or copyright infringement, claims regarding trade secrets or contract claims. Receipt of these notices could result in significant costs as a result of the diversion of the attention of management from our technology efforts. No third party has a current filed intellectual property lawsuit, arbitration or other proceeding against us. If a

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successful claim were brought against us, we would have to attempt to license the intellectual property right from the claimant or to spend time and money to design around or avoid the intellectual property. Any such license may not be available at reasonable terms, or at all. We may, however, be involved in future lawsuits, arbitrations or other legal proceedings alleging patent infringement or other intellectual property rights violations. In addition, litigation, arbitration or other legal proceedings may be necessary to:

•  assert claims of infringement or misappropriation of or otherwise enforce our intellectual property rights;

•  protect our trade secrets or know-how; or

•  determine the enforceability, scope and validity of our intellectual property rights or those of others.

We may be unsuccessful in defending or pursuing these lawsuits or claims. Regardless of the outcome, litigation can be very costly and can divert management’s efforts. An adverse determination may subject us to significant liabilities or require us to seek licenses to other parties’ intellectual property rights. We may also be restricted or prevented from developing, manufacturing, marketing or selling a solar power product or service that we develop. Further, we may not be able to obtain any necessary licenses on acceptable terms, if at all.

In addition, we may have to participate in proceedings before the United States Patent and Trademark office, or before foreign patent and trademark offices, with respect to our patents, patent applications, trademarks or trademark applications or those of others. These actions may result in substantial costs to us as well as a diversion of management attention. Furthermore, these actions could place our patents, trademarks and other intellectual property rights at risk and could result in the loss of patent, trademark or other intellectual property rights protection for the products and services on which our business strategy depends.

We may be unable to adequately protect or enforce our proprietary information, which may result in its unauthorized use or reduced sales or otherwise reduce our ability to compete.

Our business and competitive position depend upon our ability to protect our proprietary technology, including any solar power products that we develop. Despite our efforts to protect this information, unauthorized parties may attempt to obtain and use information that we regard as proprietary. Any patents issued in connection with our efforts to develop new technology for solar power products may not be broad enough to protect all of the potential uses of the technology.

In addition, when we do not control the prosecution, maintenance and enforcement of certain important intellectual property, such as a technology in-licensed to us, the protection of the intellectual property rights may not be in our hands. If the entity that controls the intellectual property rights does not adequately protect those rights, our rights may be impaired, which may impact our ability to develop, market and commercialize the related solar power products.

Our means of protecting our proprietary rights may not be adequate, and our competitors may:

•  independently develop substantially equivalent proprietary information, products and techniques;

•  otherwise gain access to our proprietary information; or

•  design around our patents or other intellectual property.

We pursue a policy of having our employees, consultants and advisors execute proprietary information and invention agreements when they begin working for us. However, these agreements may not provide meaningful protection for our trade secrets or other proprietary information in the event of unauthorized use or disclosure. If we fail to maintain trade secret and patent protection, our potential, future revenues may be decreased.

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If the effective term of our patents is decreased due to changes in patent laws or if we need to refile some of our patent applications, the value of our patent portfolio and the revenues we derive from it may be decreased.

The value of our patents depends in part on their duration. A shorter period of patent protection could lessen the value of our rights under any patents that we obtain and may decrease the revenues we derive from our patents. For example, the United States patent laws were amended in 1995 to change the term of patent protection from 17 years after the date of a patent’s issuance to 20 years after the earliest effective filing date of the application for a patent, unless the application was pending on June 8, 1995, in which case the term of a patent’s protection expires either 17 years after its issuance or 20 years after its filing, whichever is later. Because the average time from filing of patent application to issuance of a patent there from is usually at least one year and, depending on the subject matter, may be more than three years, a 20-year patent term from the filing date may result in substantially shorter patent protection. Also, we may need to re-file some of our patent applications to disclose additional subject matter and, in these situations, the patent term will be measured from the date of the earliest priority application to which benefit is claimed in such a patent application. This would shorten our period of patent exclusivity and may decrease the revenues that we might obtain from the patents.

International intellectual property protection is particularly uncertain and costly, and we have not obtained or sought patent or trademark protection in many foreign countries where our solar power products and services may be developed, manufactured, marketed or sold.

Intellectual property law outside the United States is even more uncertain and costly than in the United States and is currently undergoing review and revision in many countries. Further, the laws of some foreign countries may not protect our intellectual property rights to the same extent as United States laws. Moreover, we have not sought, obtained or maintained patent and trademark protection in many foreign countries in which our solar power products and services may be developed, manufactured, marketed or sold by us or by others.

Existing regulations and changes to such regulations may present technical, regulatory and economic barriers to the purchase and use of solar power products, which may significantly reduce demand for our products.

The market for electricity generation products is heavily influenced by foreign, federal, state and local government regulations and policies concerning the electric utility industry, as well as internal policies and regulations promulgated by electric utilities. These regulations and policies often relate to electricity pricing and technical interconnection of customer-owned electricity generation. In the United States and in a number of other countries, these regulations and policies are being modified and may continue to be modified. Customer purchases of, or further investment in the research and development of, alternative energy sources, including solar power technology, could be deterred by these regulations and policies, which could result in a significant reduction in the potential demand for our solar power products. For example, utility companies commonly charge fees to larger, industrial customers for disconnecting from the electric grid or for having the capacity to use power from the electric grid for back-up purposes. These fees could increase the cost to our customers of using our solar power products and make them less desirable, thereby harming our business, prospects, results of operations and financial condition. We anticipate that our solar power products and their installation will be subject to oversight and regulation in accordance with national and local ordinances relating to building codes, safety, environmental protection, utility interconnection and metering and related matters. There is also a burden in having to track the requirements of individual states and design equipment to comply with the varying standards. Any new government regulations or utility policies pertaining to our solar power products may result in significant additional expenses to us and our resellers and their customers and, as a result, could cause a significant reduction in demand for our solar power products.

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Our reliance on government contracts to partially fund our research and development programs could slow our ability to commercialize our solar power technologies and would increase our research and development expenses.

We intend to continue our policy of selectively pursuing contract research, product development and market development programs funded by various agencies of the United States, state and international governments to complement and enhance our own resources.

These government agencies may not continue their commitment to programs to which our development projects are applicable. Moreover, we may not be able to compete successfully to obtain funding through these or other programs. A reduction or discontinuance of these programs or of our participation in these programs would increase our research and development expenses, which could slow our ability to develop our solar power technologies. In addition, contracts involving government agencies may be terminated or modified at the convenience of the agency. Other risks include potential disclosure of our confidential information to third parties and the exercise of “march-in” rights by the government. Our government-sponsored research contracts are subject to audit and require that we provide regular written technical updates on a monthly, quarterly or annual basis, and, at the conclusion of the research contract, a final report on the results of our technical research. Because these reports are generally available to the public, third parties may obtain some aspects of our sensitive confidential information. Moreover, the failure to provide these reports or to provide inaccurate or incomplete reports may provide the government with rights to any intellectual property arising from the related research. “March-in” rights refer to the right of the United States government or government agency to require us to grant a license to the technology to a responsible applicant or, if we refuse, the United States government or government agency may grant the license itself. The United States government or government agency can exercise its march-in rights if it determines that action is necessary because we fail to achieve practical application of the technology or because action is necessary to alleviate health or safety needs, to meet requirements of federal regulations or to give the United States industry preference. Funding from government contracts also may limit when and how we can deploy our technology developed under those contracts.

Compliance with environmental regulations can be expensive, and noncompliance with these regulations may result in adverse publicity and potentially significant monetary damages and fines.

We are required to comply with all foreign, federal, state and local regulations regarding protection of the environment. If more stringent regulations are adopted in the future, the costs of compliance with these new regulations could be substantial. We believe that we have all necessary permits to conduct our business as it is presently conducted. If we fail to comply with present or future environmental regulations, however, we may be required to pay substantial fines, suspend production or cease operations. We use, generate and discharge toxic, volatile and otherwise hazardous chemicals and wastes in our research and development and manufacturing activities. Any failure by us to control the use of, or to restrict adequately the discharge of, hazardous substances could subject us to potentially significant monetary damages and fines or suspensions in our business operations. In addition, under some foreign, federal and state statutes and regulations, a governmental agency may seek recovery and response costs from operators of property where releases of hazardous substances have occurred or are ongoing, even if the operator was not responsible for such release or otherwise at fault.

Product liability claims against us could result in adverse publicity and potentially significant monetary damages.

Like other retailers, distributors and manufacturers of products that are used by consumers, we face an inherent risk of exposure to product liability claims in the event that the use of the solar power products we sell results in injury. Since our products are electricity producing devices, it is possible that consumers could be injured or killed by our products, whether by product malfunctions, defects, improper installation or other causes. In addition, since sales of our existing products have been modest and the products we are developing incorporate new technologies and use new installation methods, we cannot predict whether product liability claims will be brought against us in the future or the effect of any resulting adverse publicity on our business. Moreover, we may not have adequate resources in the event of a successful claim against us. We have

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evaluated the potential risks we face and believe that we have appropriate levels of insurance for product liability claims. We rely on our general liability insurance to cover product liability claims and have not obtained separate product liability insurance. The successful assertion of product liability claims against us could result in potentially significant monetary damages and if our insurance protection is inadequate to cover these claims, they could require us to make significant payments.

Risks Related to Our Common Stock

Substantial leverage and debt service obligations may adversely affect our cash flows.

In connection with our sale of the convertible subordinated notes in June 2005, we incurred new indebtedness of $90 million. As a result of this indebtedness, our principal and interest payment obligations increased substantially. The degree to which we are leveraged could, among other things:

•  make it difficult for us to make payments on the notes;

•  make it difficult for us to obtain financing for working capital, acquisitions or other purposes on favorable terms, if at all, including financing to fund the development or expansion of EverQ’s manufacturing operations;

•  make us more vulnerable to industry downturns and competitive pressures; and

•  limit our flexibility in planning for, or reacting to changes in, our business.

Our ability to meet our debt service obligations will depend upon our future performance, which will be subject to financial, business and other factors affecting our operations, many of which are beyond our control.

The price of our common stock has been volatile.

Our common stock is quoted on the Nasdaq National Market. The trading price of our common stock has been and may continue to be volatile. The closing sale prices of our common stock, as reported by the Nasdaq National Market, have ranged from $4.89 to $16.01 for the 52-week period ended March 3, 2006. Our operating performance will significantly affect the market price of our common stock. To the extent we are unable to compete effectively and gain market share or the other factors described in this section affect us, our stock price will likely decline. The market price of our common stock also may be adversely impacted by broad market and industry fluctuations regardless of our operating performance, including general economic and technology trends. The Nasdaq National Market has, from time to time, experienced extreme price and trading volume fluctuations, and the market prices of technology companies such as ours have been extremely volatile. In addition, companies that have experienced volatility in the market price of their stock have been the subject of securities class action litigation. We may be involved in securities class action litigation in the future. This litigation often results in substantial costs and a diversion of management’s attention and resources. Our quarterly revenue and operating results have fluctuated significantly in the past and may fluctuate significantly from quarter to quarter in the future due to a variety of factors, including:

•  the size and timing of customer orders for or shipments of our products;

•  the rate and cost at which we are able to expand our manufacturing capacity to meet product demand, including the rate and cost at which we are able to implement advances in our String-Ribbon technology;

•  our ability to establish and expand key customer and distributor relationships;

•  our ability and the terms upon which we are able to raise capital sufficient to finance the expansion of our manufacturing capacity and our sales and marketing efforts;

•  our ability to establish a manufacturing facility in Germany as contemplated by our joint venture with Q-Cells and REC at the costs and on the time frame that we expect;

•  the extent to which Q-Cells and REC increase their ownership in EverQ in the future and thereby reduces our share of profits and losses of EverQ in future periods;

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•  the extent to which any change in the capital structure of EverQ in the future causes us to be unable to consolidate EverQ’s financial results;

•  our ability to establish strategic relationships with third parties to accelerate our growth plans;

•  the amount and timing of expenses associated with our research and development programs and our ability to develop enhancements to our manufacturing processes and our products;

•  delays associated with the supply of specialized materials necessary for the manufacture of our solar power products;

•  our ability to execute our cost reduction programs;

•  one time charges resulting from replacing existing equipment or technology with new or improved equipment or technology as part of our strategy to expand our manufacturing capacity and to decrease our per unit manufacturing cost;

•  developments in the competitive environment, including the introduction of new products or technological advancements by our competitors; and

•  the timing of adding the personnel necessary to execute our growth plan.

In addition, the stock market in general, and the Nasdaq National Market and the market for solar technology companies and us in particular, have experienced significant price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. These broad market and industry factors may seriously harm the market price of our common stock, regardless of our operating performance. In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted. A securities class action suit against us could result in substantial costs, potential liabilities and the diversion of management’s attention and resources.

We anticipate that our operating expenses will continue to increase significantly. If our product revenues in any quarter do not increase correspondingly, our net losses for that period will increase. Moreover, given that a significant portion of our operating expenses is largely fixed in nature and cannot be quickly reduced, if our product revenues are delayed or below expectations, our operating results are likely to be adversely and disproportionately affected. For these reasons, quarter-to-quarter comparisons of our results of operations are not necessarily meaningful and you should not rely on results of operations in any particular quarter as an indication of future performance. If our quarterly revenue or results of operations fall below the expectations of investors or public market analysts in any quarter, the market value of our common stock would likely decrease, and it could decrease rapidly and substantially.

Because we do not intend to pay dividends, stockholders will benefit from an investment in our common stock only if it appreciates in value.

We have never declared or paid any cash dividends on our common stock. We anticipate that we will retain our earnings to support operations and to finance the growth and development of our business and do not expect to pay cash dividends in the foreseeable future. As a result, the success of an investment in our common stock will depend upon any future appreciation in its value. There is no guarantee that our common stock will appreciate in value or even maintain the price at which stockholders have purchased their shares.

We are subject to anti-takeover provisions in our charter and by-laws and under Delaware law that could delay or prevent an acquisition of our company, even if the acquisition would be beneficial to our stockholders.

Provisions of our certificate of incorporation and by-laws, as well as Delaware law, could make it more difficult and expensive for a third party to pursue a tender offer, change in control transaction or takeover attempt that is opposed by our board of directors. Stockholders who wish to participate in these transactions may not have the opportunity to do so. We also have a staggered board of directors, which makes it difficult for stockholders to change the composition of our board of directors in any one year. If a tender offer, change

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in control transaction, takeover attempt or change in our board of directors is prevented or delayed, the market price of our common stock could decline. Even in the absence of a takeover attempt, the existence of these provisions may adversely affect the prevailing market price of our common stock if they are viewed as discouraging takeover attempts in the future.

We can issue shares of preferred stock that may adversely affect the rights of a stockholder of our common stock.

Our certificate of incorporation authorizes us to issue up to 27,227,668 shares of preferred stock with designations, rights and preferences determined from time-to-time by our board of directors. Accordingly, our board of directors is empowered, without stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting or other rights superior to those of stockholders of our common stock. For example, an issuance of shares of preferred stock could:

•  adversely affect the voting power of the stockholders of our common stock;

•  make it more difficult for a third party to gain control of us;

•  discourage bids for our common stock at a premium;

•  limit or eliminate any payments that the stockholders of our common stock could expect to receive upon our liquidation; or

•  otherwise adversely affect the market price of our common stock.

We have in the past and we may in the future issue additional shares of authorized preferred stock at any time.

ITEM 1B.   UNRESOLVED STAFF COMMENTS.

None.

ITEM 2.   PROPERTIES.

Our headquarters is currently located in a leased space in Marlboro, Massachusetts, where we currently occupy approximately 100,000 square feet of administrative, laboratory and manufacturing space in three buildings. Our leases expire in June 2010, January 2010 and January 2013.

The EverQ manufacturing facility in Thalheim, Germany is approximately 16,000 square meters, which is owned and operated by EverQ.

ITEM 3.   LEGAL PROCEEDINGS.

We are not a party to any material legal proceedings.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

No matters were submitted to a vote of security holders during the quarter ended December 31, 2005.

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PART II

ITEM 5.   MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market for Our Common Stock

Our common stock is traded on the Nasdaq National Market under the symbol “ESLR”. The following table sets forth for the calendar periods indicated, the high and low sales price of our common stock on the Nasdaq National Market.

	High		Low
Year ended December 31, 2004
First Quarter	$	2.80	$	1.65
Second Quarter	$	5.15	$	2.25
Third Quarter	$	3.29	$	1.92
Fourth Quarter	$	4.70	$	2.82
Year ended December 31, 2005
First Quarter	$	8.05	$	4.00
Second Quarter	$	8.23	$	4.68
Third Quarter	$	9.54	$	5.73
Fourth Quarter	$	12.84	$	7.74

On March 7, 2006, the last reported sale price for our common stock on the Nasdaq National Market was $16.01 per share.

Holders

As of March 7, 2006, there were 65,017,036 shares of our common stock outstanding held by approximately 300 holders of record.

Dividends

We have never declared or paid any cash dividends on our common stock. We anticipate that we will retain our earnings to support operations and to finance the growth and development of our business and do not expect to pay cash dividends on our common stock in the foreseeable future.

Information about dividends accrued and paid with respect to our Series A preferred stock can be found under Part II, Item 7 of this Annual Report on Form 10-K under the heading “Results of Operations — Description of Our Revenues, Costs and Expenses,” and under Note 6 to the Financial Statements included with this Annual Report on Form 10-K.

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Securities Authorized for Issuance Under Equity Compensation Plans

The following information is set forth with respect to our equity compensation plans at December 31, 2005.

Equity Compensation Plan Information

					Number of
					Securities
	Number of				Remaining Available
	Securities to be				for Future Issuance
	Issued Upon		Weighted-Average		Under Equity
	Exercise of		Exercise Price of		Compensation Plans
	Outstanding		Outstanding		(Excluding
	Options, Warrants		Options, Warrants		Securities
Plan Category	and Rights		and Rights		Reflected in Column (a))
	(a)		(b)		(c)
Equity compensation plans approved by security holders		11,150,000	$	3.15		5,092,471
Equity compensation plans not approved by security holders		0		0		0

Recent Sales of Unregistered Securities

On June 29, 2005, we issued Convertible Subordinated Notes (“Notes”) in the aggregate principal amount of $90.0 million, and we received proceeds of $86.9 million, net of offering costs. Interest on the Notes is payable semiannually at the annual rate of 4.375%. The Notes do not have required principal payments prior to maturity on July 1, 2012. However, the Notes are convertible at any time prior to maturity, redemption or repurchase, into shares of our common at an initial conversion rate of 135.3180 shares of common stock per $1,000 principal amount of Notes (equivalent to a conversion price of approximately $7.39 per share), subject to adjustment. On or after July 1, 2010, we may redeem the Notes for cash at the following prices expressed as a percentage of the principal amount:

Redemption Period	Price(%)
Beginning on July 1, 2010 and ending on June 30, 2011		101.250
Beginning on July 1, 2011 and ending on June 30, 2012		101.625
On July 1, 2012		100.000

We may redeem the Notes on or after July 6, 2008 and prior to July 1, 2010 only if the closing price of our common stock exceeds 130% of the then-current conversion price of the Notes for at least 20 trading days in a period of 30 consecutive trading days ending on the trading day prior to the date on which we provide notice of redemption. We may be required to repurchase the Notes upon a designated event (either a termination of trading or a change in control) at a price (which will be in cash or, in the case of a change in control, cash, shares of our common stock or a combination of both) equal to 100% of the principal amount of the Notes to be repurchased plus accrued interest. Upon a change in control, we may under certain circumstances be required to pay a premium on redemption which will be a number of additional shares of our common stock as determined by our stock price and the effective date of the change in control.

The Notes are subordinate in right of payment to all of our future senior debt.

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ITEM 6.   SELECTED FINANCIAL DATA:

You should read the data set forth below in conjunction with our financial statements and related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing elsewhere in this Annual Report on Form 10-K. The statement of operations data presented below for the fiscal years ended December 31, 2003, 2004, and 2005 and the balance sheet data at December 31, 2004 and 2005 have been derived from our audited financial statements which appear elsewhere in this filing. The statement of operations data presented below for the years ended December 31, 2001 and 2002, and the balance sheet data at December 31, 2001, 2002 and 2003 have been derived from our audited financial statements, which are not included in this filing.

	Year Ended December 31,
	2001			2002			2003			2004			2005
	(In thousands, except for per share data)
STATEMENT OF OPERATIONS DATA:
Revenues:
Product revenues	$	1,546		$	5,296		$	7,746		$	22,240		$	43,627
Research revenues		932			1,448			1,565			1,296			405
Total revenues		2,478			6,744			9,311			23,536			44,032
Operating Expenses:
Cost of product revenues		9,649			12,405			15,379			29,717			39,954
Research and development expenses, including cost of research revenues		3,063			3,692			3,791			4,931			11,461
Selling, general and administrative expenses		4,088			4,520			5,337			7,797			12,274
Total operating expenses		16,800			20,617			24,507			42,445			63,689
Operating loss		(14,322	)		(13,873	)		(15,196	)		(18,909	)		(19,657	)
Other income (loss), net		1,845			674			222			(454	)		1,146
Loss from operations before minority interest		(12,477	)		(13,199	)		(14,974	)		(19,363	)		(18,511	)
Minority interest in EverQ		—			—			—			—			1,195
Net loss		(12,477	)		(13,199	)		(14,974	)		(19,363	)		(17,316	)
Accretion, dividends and conversion premiums on Series A convertible preferred stock		—			—			(13,498	)		(2,904	)		—
Net loss attributable to common stockholders	$	(12,477	)	$	(13,199	)	$	(28,472	)	$	(22,267	)	$	(17,316	)
Net loss per share attributable to common stockholders (basic and diluted)	$	(1.10	)	$	(1.16	)	$	(2.39	)	$	(0.67	)	$	(0.29	)
Weighted average shares used in computing basic and diluted net loss per share attributable to common stockholders		11,304			11,405			11,899			33,204			59,631

	December 31,
	2001		2002		2003		2004		2005
	(In thousands)
BALANCE SHEET DATA:
Cash, cash equivalents and marketable securities	$	26,263	$	8,483	$	20,340	$	11,942	$	116,207
Working capital		26,591		12,544		22,039		14,281		124,404
Total assets		44,861		31,963		45,976		49,721		228,959
Subordinated convertible notes		—		—		—		—		90,000
Convertible preferred stock		—		—		27,032		—		—
Total stockholder’s equity		43,055		29,913		16,944		41,520		87,450

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ITEM 7.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

EXECUTIVE OVERVIEW

We develop, manufacture and market solar power products enabled by our String Ribbon technology that provide reliable and environmentally clean electric power throughout the world. Solar power products use interconnected photovoltaic cells to generate electricity from sunlight. To date, our product sales have been primarily solar modules, which are used to generate electricity for on-grid and off-grid applications. Off-grid applications serve markets where access to conventional electric power is not economical or physically feasible. Solar power products can provide a cost-competitive, reliable alternative for powering highway call boxes, microwave stations, portable highway road signs, remote street or billboard lights, vacation homes, rural homes in developed and developing countries, water pumps and battery chargers for recreational vehicles and other consumer applications. More recently, the substantial majority of our products have been used by on-grid customers as a clean, renewable source of alternative or supplemental electricity.

We have increased our production capacity in our Marlboro factory to an installed capacity of approximately 15 megawatts (“MW”). We expect to continue capital expenditures to increase the capabilities and improve the operational efficiency of this factory throughout 2006 and beyond. While these expenditures may add incremental capacity, they are primarily intended to demonstrate advanced technologies that improve the efficiency, capabilities and product attributes of our Marlboro manufacturing process.

Our product sales are constrained by our manufacturing capacity. Product gross margins have been improving over the past year due mainly to capacity increases, improvements in the operating performance of our manufacturing line and price increases. Despite having an installed capacity of approximately 15 MW in our Marlboro factory, it is our intention to dedicate a portion of our factory capacity to developing new technologies with the goal of further improvements in operations, and therefore, we do not expect to operate at the full manufacturing capacity at our Marlboro facility. Furthermore, despite expected substantial capital expenditures at our Marlboro facility, we do not expect to significantly expand our manufacturing capacity or improve product gross margins, rather, such expenditures will be used to demonstrate improved technologies on our Marlboro pilot production line. As we continue to refine and improve our manufacturing process, we expect modest margin improvements of our Marlboro operations in the future.

In January 2005, we entered into a strategic partnership agreement with Q-Cells AG, or Q-Cells. Q-Cells is the world’s largest independent manufacturer of solar cells, whose crystalline silicon solar cells are among the highest efficiency polycrystalline solar cells commercially available. The agreement provided for the organization and capitalization of EverQ GmbH, or EverQ, which is a limited liability company incorporated under the laws of Germany and our consolidated subsidiary. In November 2005, Renewable Energy Corporation ASA, or REC, based in Hovik, Norway and one of the world’s largest manufacturer of solar-grade silicon and multicrystalline wafers, joined the EverQ partnership. The purpose of EverQ is to develop and operate a facility in Germany to manufacture, market and sell solar products based on our proprietary String Ribbon TM technology using fabrication processes that combine our, Q-Cells’ and REC’s manufacturing technologies. We believe that EverQ will accelerate the availability of wafer, cell and module manufacturing capacity based on String Ribbon technology and provide greater access to the European solar market.

The EverQ manufacturing facility is located in Thalheim, Germany and is expected to have an initial capacity of 30 MW. Dependent upon the success of the initial operations of this facility the partners intend

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over the long-term, if economically viable, to expand the capacity of this facility up to approximately 120 MW. The table below summarizes the funding sources of EverQ (USD at December 31, 2005 exchange rates):

					Evergreen’s
(In millions)	Total		USD		Contribution		USD
Public grants expected to be received	€	28.0	$	33.1	€	—	$	—
Equity		30.0		35.5		22.5		26.6
Shareholder loan		8.0		9.5		8.0		9.5
Bank loan		8.0		9.5		—		—
Total	€	74.0	$	87.6	€	30.5	$	36.1

Our portion of the equity financing noted in the table above was the amount paid prior to REC joining EverQ. Although EverQ has not received any grants to date, on April 25, 2005, EverQ received notification that, subject to certain conditions, including receipt of European Union approval, it will receive German government grants which, together with tax incentives expected to be received from German government authorities, would amount to approximately 28 million Euro. As of December 31, 2005, approximately 14 million Euro had been accrued and billed by EverQ in relation to these grants. Through October 2005, Q-Cells and we have each made our required equity contributions which totaled 30 million Euro. In late 2005, we entered into a shareholder loan agreement with EverQ pursuant to which we agreed to loan EverQ up to 8 million Euro, of which approximately 4 million Euro was outstanding as of December 31, 2005 and the remainder was drawn during January 2006. During November 2005, EverQ entered into a credit agreement with Deutsche Bank which included a loan of 8 million Euro to provide for interim financing, of which approximately 4 million Euro was outstanding as of December 31, 2005.

REC acquired a 15% ownership position in EverQ from us and Q-Cells, for 4.7 million Euros in cash determined on a cost-of-capital basis. Following REC’s initial investment, we owned 64% of EverQ, Q-Cells 21% and REC 15%. Additionally, REC has agreed to the long-term supply of solar-grade silicon to EverQ at market-based pricing. Separately, REC agreed to also supply us with a long-term supply of solar-grade silicon at market-based pricing. Under the terms of the seven-year agreements, REC has agreed to supply us with 60 metric tons and EverQ with 190 metric tons of solar-grade silicon annually. Additionally, REC has agreed to license to EverQ and us certain of its proprietary manufacturing technology. The agreements contemplate that when REC establishes planned additional facilities for the production of silicon, it will offer to EverQ a second long-term supply agreement that would substantially increase REC’s supply of silicon to EverQ. Should REC offer this second supply agreement, REC will be entitled to increase its ownership stake in EverQ to as much as one-third. The amended master agreement also contemplates that Q-Cells will also be able to increase its ownership stake to one-third of EverQ, or a larger amount should REC decide not to increase their interest in EverQ to one-third.

Financing Transactions

In February 2005, we completed a common stock offering with gross proceeds of $66.7 million. We received proceeds of $62.3 million, net of offering costs of approximately $4.4 million, which are available to fund the continuing development of our Marlboro, Massachusetts manufacturing facility and a portion of the remaining expenditures necessary for the initial build-out and initial operation of EverQ. A portion of the proceeds from the financing will also be used to increase research and development spending on promising next generation technologies and to explore further expansion opportunities. In this common stock offering, we issued 13,346,000 shares of our common stock. The shares of common stock were sold at a per share price of $5.00 (before deducting underwriting discounts), which represented a 6% discount to the $5.30 closing price of shares of our common stock as reported on the Nasdaq National Market as of the close of business on February 3, 2005.

In June 2005, we issued Convertible Subordinated Notes (“Notes”) in the aggregate principal amount of $90.0 million, and we received proceeds of $86.9 million, net of offering costs . Interest on the Notes is payable semiannually at the annual rate of 4.375%. The Notes do not have required principal payments prior

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to maturity on July 1, 2012. However, the Notes are convertible at any time prior to maturity, redemption or repurchase, into shares of our common at an initial conversion rate of 135.3180 shares of common stock per $1,000 principal amount of Notes (equivalent to a conversion price of approximately $7.39 per share), subject to adjustment. On or after July 1, 2010, we may redeem the Notes for cash at the following prices expressed as a percentage of the principal amount:

Redemption Period	Price (%)
Beginning on July 1, 2010 and ending on June 30, 2011		101.250
Beginning on July 1, 2011 and ending on June 30, 2012		101.625
On July 1, 2012		100.000

We may redeem the Notes on or after July 6, 2008 and prior to July 1, 2010 only if the closing price of our common stock exceeds 130% of the then-current conversion price of the Notes for at least 20 trading days in a period of 30 consecutive trading days ending on the trading day prior to the date on which we provide notice of redemption. We may be required to repurchase the Notes upon a designated event (either a termination of trading or a change in control) at a price (which will be in cash or, in the case of a change in control, cash, shares of our common stock or a combination of both) equal to 100% of the principal amount of the Notes to be repurchased plus accrued interest. Upon a change in control, we may under certain circumstances be required to pay a premium on redemption which will be a number of additional shares of our common stock as determined by our stock price and the effective date of the change in control.

The Notes are subordinate in right of payment to all of our existing and future senior debt.

We incurred financing costs of approximately $3.1 million which are being amortized ratably over the term of the Notes, which is seven years. Through December 31, 2005, we recorded $2.0 million in interest expense associated with the Notes.

EverQ Long-term Debt

On December 22, 2005, EverQ received 4.0 million Euro in funding under a Credit Agreement (the “Credit Agreement”) dated November 9, 2005, between EverQ, Q-Cells AG, Evergreen and a syndicate of banks led by Deutsche Bank Aktiengesellschaft and Bayerische Hypo-und Vereinsbank AG. The Credit Agreement provides EverQ with aggregate borrowing availability of up to 22.5 million Euro comprised as follows: (i) a long-term loan facility amounting to 8.0 million Euro, (ii) a short-term loan facility amounting to 12.0 million Euro and (iii) a short-term revolving credit facility amounting to 2.5 million Euro. The long-term loan facility bears an interest rate of the Interbank Offered Rate (“EURIBOR”) plus between 1.75% and 2.75% depending on whether EverQ meets certain financial targets specified in the Credit Agreement. The short-term loan facility bears an interest rate of EURIBOR plus 2.75% and the short-term revolving credit facility bears an interest rate of 7.5%. In the event of a default by EverQ, Evergreen has agreed to relinquish certain rights to certain assets of EverQ which collateralize EverQ’s repayment obligations under the Credit Facility. In addition, pursuant to the Credit Agreement, Evergreen has agreed to guarantee EverQ’s repayment obligations under the Credit Agreement. As of December 31, 2005, the total amount of debt outstanding relating to the Credit Agreement was $7.7 million, of which $4.1 million is classified as current in the Company’s balance sheet (all amounts translated using rates in effect as of December 31, 2005).

We believe that our current cash, cash equivalents and marketable securities will be sufficient to fund our planned capital programs and to fund our operating expenditures over the next twelve months. We may be required to raise additional capital to respond to competitive pressures and/or to acquire complementary businesses or necessary technologies. We do not know whether we will be able to raise additional financing or financing on terms favorable to us. If adequate funds are not available or are not available on acceptable terms, our ability to fund our operations, further develop and expand our manufacturing operations and distribution network, or otherwise respond to competitive pressures would be significantly limited.

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of consolidated financial statements in accordance with generally accepted accounting principals requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities, if applicable. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements:

Revenue Recognition and Allowance for Doubtful Accounts

We recognize product revenue if there is persuasive evidence of an agreement with the customer, shipment has occurred, risk of loss has transferred to the customer, the sales price is fixed or determinable, and collectibility is reasonably assured. The market for solar power products is emerging and rapidly evolving. We currently sell our solar power products primarily to distributors, system integrators and other value-added resellers within and outside of North America, which typically resell our products to end users throughout the world. For new customers requesting credit, we evaluate creditworthiness based on credit applications, feedback from provided references, and credit reports from independent agencies. For existing customers, we evaluate creditworthiness based on payment history and known changes in their financial condition.

We also evaluate the facts and circumstances related to our customers and consider whether risk of loss has not passed to the customer upon shipment. We consider whether our customer is purchasing our product for stock, and whether contractual or implied rights to return the product exist or whether our customer has an end user contractually committed. To date, we have not offered rights to return our products other than for normal warranty conditions.

We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. If the financial condition of our customers were to deteriorate, such that their ability to make payments was impaired, additional allowances could be required.

Revenue from research grants is generally recognized as services are rendered to the extent of allowable costs incurred.

Sales Discount Allowance

During the first quarter of 2005, we began offering certain customers early payment discounts as an incentive aimed at improving our short-term cash flow. We estimate the allowance for sales discounts based on actual and historical payment practices of customers, and record provisions at the time when revenue is recognized. While our methodology takes into account these uncertainties, adjustments in future periods may be required as our customers change their payment practices. For the year ended December 31, 2005, total sales discounts taken were $454,000.

Inventory

Inventory is valued at the lower of cost or market. Certain factors may impact the realizable value of our inventory including, but not limited to, technological changes, market demand, changes in product mix strategy, new product introductions and significant changes to our cost structure. Estimates of reserves are made for obsolescence based on the current product mix on hand and its expected net realizability. If actual market conditions are less favorable or other factors arise that are significantly different than those anticipated by management, additional inventory write-downs or increases in obsolescence reserves may be required. We treat lower of cost or market adjustments and inventory reserves as an adjustment to the cost basis of the underlying inventory. Accordingly, favorable changes in market conditions are not recorded to inventory in subsequent periods.

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Warranty

We provide for the estimated cost of product warranties at the time revenue is recognized. Given our limited operating history, prior to the first quarter of 2005, we used historical industry solar panel failure rates, adjusted for the differences and uncertainties associated with our manufacturing process, as a basis for the accrued warranty costs. However, since we have not incurred any charges to date against our warranty accrual, we chose not to add to our warranty accrual for 2005 as we believe the accrual reflects our best estimate of warranty costs on products sold to date. While we engage in product quality programs and processes, including monitoring and evaluating the quality of our component suppliers, our warranty obligation is affected by product failure rates and material usage and service delivery costs incurred in correcting a product failure. Our current standard product warranty includes a one-year warranty period for defects in material and workmanship and a 25-year warranty period for declines in power performance. We believe our warranty periods are consistent with industry practice. If our actual product failure rates, material usage or service delivery costs differ from our estimates, revisions to the estimated warranty liability would be required. Since we have a limited operating history and our manufacturing process differs from industry standards, our experience may be different from the industry and therefore significant adjustments to our warranty reserve may be required in future periods.

Long-lived Assets

Our policy regarding long-lived assets is to evaluate the recoverability or usefulness of these assets when the facts and circumstances suggest that these assets may be impaired. This analysis relies on a number of factors, including changes in strategic direction, business plans, regulatory developments, economic and budget projections, technological improvements, and operating results. The test of recoverability or usefulness is a comparison of the asset value to the undiscounted cash flow of its expected cumulative net operating cash flow over the asset’s remaining useful life. If such a test indicates that an impairment is required, then the asset is written down to its estimated fair value. Any write-downs would be treated as permanent reductions in the carrying amounts of the assets and an operating loss would be recognized. To date, we have had recurring operating losses and the recoverability of our long-lived assets is contingent upon executing our business plan that includes further reducing our manufacturing costs and significantly increasing sales. If we are unable to execute our business plan, we may be required to write down the value of our long-lived assets in future periods. All of our long-lived assets are located in the United States and Germany.

Income Taxes

We are required to estimate our income taxes in each of the jurisdictions in which we operate as part of our consolidated financial statements. This involves estimating the actual current tax in addition to assessing temporary differences resulting from differing treatments for tax and financial accounting purposes. These differences together with net operating loss carryforwards and tax credits may be recorded as deferred tax assets or liabilities on the balance sheet. A judgment must then be made of the likelihood that any deferred tax assets will be recovered from future taxable income. To the extent that we determine that it is more likely than not that deferred tax assets will not be utilized, a valuation allowance is established. Taxable income in future periods significantly different from that projected may cause adjustments to the valuation allowance that could materially increase or decrease future income tax expense.

Results of Operations

Description of Our Revenues, Costs and Expenses

Product revenues.  Product revenues consist of revenues from the sale of solar panels, solar cells and systems. Product revenues represented 99% of total revenues for the year ended December 31, 2005, 94% of total revenues for the year ended December 31, 2004 and 83% of total revenues for the year ended December 31, 2003. International product sales accounted for approximately 71%, 74% and 72% of total product revenues for the years ended December 31, 2005, 2004 and 2003, respectively. Krannich Solartechnik one of our German distributors, accounted for approximately 20%, 46%, and 47% of total product revenue for

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the years ended December 31, 2005, 2004 and 2003, respectively. Donauer Solartechnik, another German distributor, accounted for approximately 19%, 19% and 10% of total product revenue for the years ended December 31, 2005, 2004 and 2003, respectively. The decrease in customer concentration experienced in 2005 was due to our efforts to expand our customer base worldwide. We anticipate that international sales will continue to account for a significant portion of our product revenues for the foreseeable future. Currently, all European sales are denominated in Euro, which increases our risk of incurring foreign exchange gains or losses. As we expand our manufacturing operations and distribution network internationally, our exposure to fluctuations in currency exchange rates may increase.

The following table summarizes our concentration of total revenue:

% of Total Revenue	2004			2005
By geography:
U.S. distributors		25	%		28	%
U.S. Government (research revenue)		6	%		1	%
Germany		69	%		63	%
All other		—			8	%
		100	%		100	%
By customer:
Krannich Solartechnik		44	%		20	%
Donauer Solartechnik		19	%		19	%
National Renewable Energy Laboratory (research revenue)		5	%		1	%
All other		32	%		60	%
		100	%		100	%

Research revenues.  Research revenues consist of revenues from various state and federal government agencies to fund our ongoing research, development, testing and enhancement of our products and manufacturing technology. We have not in the past, nor is it our intention in the future, to pursue contracts that are not part of our ongoing research activities. We recognize research revenues as services are rendered to the extent of allowable costs incurred. During 2005, we had two active multi-year research contracts with the National Renewable Energy Laboratory, one of which expired in February 2005. As of December 31, 2005, approximately $170,000 in revenue has been recorded on the remaining contract, and we expect the remaining $2.8 million of revenue will be recognized as work is performed over the remaining life of the contract, which expires in July 2008.

Cost of product revenues.  Cost of product revenues consists primarily of salaries and related personnel costs, materials expenses, depreciation expenses, maintenance, rent and other support expenses associated with the manufacture of our solar power products.

Research and development expenses, including cost of research revenues.  Research and development expenses, including cost of research revenues, consist primarily of salaries and related personnel costs, consulting fees and prototype costs related to the design, development, testing and enhancement of our products and manufacturing technology. We expense our research and development costs as incurred. We believe that research and development is critical to our strategic objectives of enhancing our technology, reducing manufacturing costs and meeting the changing requirements of our customers. As a result, we expect that our total research and development expenses will increase in the future.

Selling, general and administrative expenses.  Selling, general and administrative expenses consist primarily of salaries and related personnel costs, professional fees, rent, insurance and other sales expenses. We expect that selling expenses will increase substantially in absolute dollars as we increase our sales efforts, hire additional sales personnel and initiate additional marketing programs. We expect that general and administrative expenses will increase as we add personnel and incur additional costs related to the growth of

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our business, increasing costs associated with being a public company, and added activities associated with EverQ.

Other income (loss).  Other income consists of interest income primarily from interest earned on the holding of short-term, high-quality commercial paper, corporate bonds and United States government-backed securities, bond premium amortization (or discount accretion), interest on outstanding debt, and net foreign exchange gains and losses.

Minority interest.  For the period ended December 31, 2005, EverQ incurred losses from continuing operations of $4.5 million, all of which are consolidated in our financial statements. However, $1.2 million represents the portion of EverQ losses attributable to the Q-Cells and REC minority interest for the period ended December 31, 2005.

Accretion, dividends and conversion premiums on Series A convertible preferred stock.  On May 15, 2003, we issued 26,227,668 shares of Series A convertible preferred stock at a per share purchase price of $1.12 to several purchasers. Outstanding shares of Series A convertible preferred stock paid a compounding dividend of 10% per annum, paid quarterly, in cash, or at our election to be added to the liquidation preference of the series A convertible preferred stock on a quarterly basis, which would result in an increase in the number of shares of common stock issuable upon conversion of the Series A convertible preferred stock. On June 21, 2004, holders of all outstanding shares of Series A convertible preferred stock agreed to convert all of their shares of Series A convertible preferred stock into shares of our common stock in connection with our private placement financing. During the first quarter of 2004, the Series A convertible preferred stock earned a dividend of approximately $0.7 million, which we elected to add to the liquidation preference of the Series A convertible preferred stock. As an inducement to convert their shares into common stock in connection with our June 2004 private placement financing, the remaining Series A preferred stockholders received the dividend earned for the period between April 1, 2004 and June 21, 2004 in cash, which totaled approximately $0.5 million. In addition, the Series A convertible preferred stockholders received a cash conversion premium of 7% of the accreted value as of March 31, 2004, which totaled $1.7 million. Therefore, the total dividend and conversion premium charge we recorded for the period ended December 31, 2004 was approximately $2.9 million.

Net loss attributable to common stockholders.  Net loss attributable to common stockholders consists of net losses and dividends earned by the Series A convertible preferred stockholders.

COMPARISON OF YEARS ENDED DECEMBER 31, 2005 AND 2004

Revenues.  Our product revenues for the year ended December 31, 2005 were $43.6 million, an increase of $21.4 million, or 96%, from $22.2 million for the same period in 2004. The increase in product revenues was due to the increased production capacity of our manufacturing facility in Marlboro, Massachusetts, our increased marketing and sales activities, and higher selling prices. Research revenues for the year ended December 31, 2005 were $0.4 million, a decrease of $0.9 million, or 69%, from $1.3 million for the same period in 2004. Research revenue decreased because our last active research contract with the National Renewable Energy Laboratory expired during the first quarter of 2005, and our current research contract with the National Renewable Energy Laboratory began in July 2005.

Cost of product revenues.  Our cost of product revenues for the year ended December 31, 2005 was $40.0 million, an increase of $10.2 million, or 34%, from $29.7 million for the same period in 2004. Substantially all of the increase was due to the increase in materials and labor costs associated with the increased production of the Marlboro manufacturing facility. Product gross margin for the year ended December 31, 2005 was 8% versus -34% for the same period in 2004. Product gross margin improved due primarily to improvements in yield and efficiency, increased sales volume and higher average selling prices.

Due to the relatively large component of fixed costs, product gross margins are highly dependent on sales volumes and prices. We realize positive gross margins when our Marlboro manufacturing facility operates at near its target capacity of 15 megawatts. However, we expect that significant portions of manufacturing capacity at our Marlboro manufacturing facility will be dedicated to research and development programs for

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purposes of achieving faster commercialization of technology improvements, which will keep gross margins lower than could potentially be realized throughout 2006 for the Marlboro operation and thereafter. Further improvements in gross margin may result from increases in manufacturing scale and technology improvements. For example, during 2005 we demonstrated the capability of our quad-ribbon technology, which grows four wafers out of a single furnace compared to two wafers grown out of our current furnace technology and has the potential to significantly reduce the manufacturing cost of growing silicon wafers. Further capacity expansion beyond 15 megawatts as well as further process and technology improvements will be required to achieve overall profitability. We expect that product gross margins, on a consolidated basis, will improve as the EverQ facility reaches full capacity sometime in the second half of 2006.

Research and development expenses, including cost of research revenues.  Our research and development expenses, including cost of research revenues, for the year ended December 31, 2005 were $11.5 million, an increase of $6.5 million, or 132%, from $4.9 million for the same period in 2004. Approximately 41% of the increase was due to increased labor costs associated with additional personnel, approximately 20% of the increase was due to increases associated with internal initiatives aimed to improve our manufacturing technology (including the thin ribbon and quad furnace technologies) and activities associated with the planning for the next manufacturing capacity expansion, and approximately 26% of the increase was due to engineering costs associated with the development of the manufacturing process of EverQ.

Selling, general and administrative expenses.  Our selling, general and administrative expenses for the year ended December 31, 2005 were $12.3 million, an increase of $4.5 million, or 57%, from $7.8 million in 2004. Approximately 58% of the increase was due to general and administrative costs incurred by EverQ, approximately 7% of the increase was due to increased compensation costs associated with added personnel, and most of the remainder of the increase was due to increased costs associated with the requirement to comply with various aspects of the Sarbanes-Oxley Act, most notably Section 404 regarding reporting on internal controls over financial reporting, and we expect that activities undertaken in response to the Sarbanes-Oxley Act will increase our administrative costs for the foreseeable future.

Other income (loss).  Other income for the period ended December 31, 2005 was comprised of $5,000 in net foreign exchange gains, $527,000 from the gain on the sale of a portion of our initial interest in EverQ to REC, $3.1 million in interest income and $2.5 million in interest expense. Other income (loss) for the period ended December 31, 2004 consisted of $618,000 in foreign exchange losses, $238,000 in interest income and $74,000 in interest expense. The increase in interest income was due to the larger cash, cash equivalents and marketable securities balances due to the 2005 common stock and subordinated convertible debt financings. Interest expense increased due to interest charges associated with the subordinated convertible debt issued in June 2005.

In 2004, we began to manage our foreign exchange risk through the use of derivative financial instruments. These financial instruments serve to protect cash flow against the impact of the translation into U.S. dollars of foreign currency denominated transactions. As of December 31, 2004, the Company had forward currency contracts denominated in Euro totaling 8.5 million Euro. Total unrealized losses for the period ended December 31, 2004 were approximately $683,000. During 2005, we did not enter into any new forward exchange contracts as we had a natural hedge against foreign currency risk due to the foreign currency requirements of our capital commitments for EverQ. However, we expect that we may resume managing our foreign exchange risk through the use of derivative financial instruments during 2006.

Net loss attributable to common stockholders.  Net loss attributable to common stockholders was $17.3 million and $22.3 million for the years ending December 31, 2005 and December 31, 2004, respectively. The decrease in net loss attributable to common stockholders was due to a decrease in the combined accretion and dividend charges associated with the Series A convertible preferred stock financing, partially offset by an overall increase in net operating losses associated with the scale-up of our operations.

COMPARISON OF YEARS ENDED DECEMBER 31, 2004 AND 2003

Revenues.  Our product revenues for the year ended December 31, 2004 were $22.2 million, an increase of $14.5 million, or 187%, from $7.7 million for the same period in 2003. The increase in product revenues

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was due to the increased production capacity of our manufacturing facility in Marlboro, Massachusetts, our increased marketing and sales activities, and favorable foreign exchange rates. Research revenues for the year ended December 31, 2004 were $1.3 million, a decrease of $269,000, or 17%, from $1.6 million for the same period in 2003. Research revenue decreased during 2004 as we had only one multi-year research contract versus two during the same period in 2003.

Cost of product revenues.  Our cost of product revenues for the year ended December 31, 2004 was $29.7 million, an increase of $14.3 million, or 93%, from $15.4 million for the same period in 2003. This increase was associated with increased production at our Marlboro facility. Approximately 46% of the increase was due to increases in materials purchased associated with increased production, approximately 24% was due to increases in personnel costs due to increases in salaries primarily associated with additional personnel, and approximately 19% was due to increases in depreciation associated with added production equipment. Product gross margin for the year ended December 31, 2004 was −34% versus −99% for the same period in 2003. Product gross margin improved due primarily to improvements in yield and efficiency associated with the scale-up of our second manufacturing line, increased sales volume and favorable exchange rates offset by losses realized upon disposal of fixed assets. During the second quarter of 2004 and as a result of our successful closing of the Common Stock Private Placement consummated on June 21, 2004, we disposed of several pieces of manufacturing equipment in order to replace them with more technologically advanced equipment expected to increase total manufacturing capacity in its Marlboro facility to a target level of 15 megawatts. Equipment with a gross value of $3.7 million was disposed of during the second quarter, for no proceeds, and we realized a loss on disposal of $2.0 million. The loss on disposal of fixed assets is included in cost of product revenues. In addition to the equipment disposals, we accelerated the rate of depreciation of some of our other equipment during 2004 that was disposed of, resulting in incremental depreciation expense of approximately $533,000 for period ended December 31, 2004, which is also included in cost of product revenues.

Research and development expenses, including cost of research revenues.  Our research and development expenses, including cost of research revenues, for the year ended December 31, 2004 were $4.9 million, an increase of $1.1 million, or 30%, from $3.8 million for the same period in 2003. The increase was due mainly to increased labor and consulting costs associated with internal initiatives aimed to improve our manufacturing technology and activities associated with the planning for the next manufacturing capacity expansion.

Selling, general and administrative expenses.  Our selling, general and administrative expenses for the year ended December 31, 2004 were $7.8 million, an increase of $2.5 million, or 46%, from $5.3 million in 2003. Approximately 41% of the increase was due to increases in salaries associated with additional personnel, approximately 46% of the increase was due to higher professional service fees associated with our Sarbanes-Oxley Act compliance activities as well as legal fees associated with EverQ, and most of the remainder of the increase was due to increased costs associated with being a public company.

Other income (loss), net.  Other loss, net for the year ended December 31, 2004 was $454,000 versus other income of $222,000 for the same period in 2003. The other loss was due primarily to unrealized losses associated with the mark-to-market adjustments of our forward foreign exchange contracts.

Accretion, dividends and conversion premiums on Series A convertible preferred stock.  On May 15, 2003, we issued 26,227,668 shares of Series A convertible preferred stock at a per share purchase price of $1.12. Additionally, Beacon Power Corporation purchased a warrant to purchase 2,400,000 shares of common stock at an exercise price equal to $3.37 per share for $100,000. This warrant was subsequently transferred to CRT Capital Group L.L.C. A total of $29.5 million was raised as a result of the consummation of the transaction, which was partially offset by financing costs of $849,000. As a result of the preferred stock financing, accretion and dividends of $13.5 million were recorded through December 31, 2003. Approximately $11.7 million of this charge relates to accretion that was recognized immediately (during the second quarter of 2003) because the holders of shares of the Series A convertible preferred stock are entitled to convert their

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shares into common stock at any time. The sources of the discounts on issuance requiring this accretion charge are summarized in the following table:

Beneficial conversion feature	$	10,314,000
Proceeds allocated to the fair value of common stock warrant		525,000
Financing costs		849,000
Total preferred stock accretion and dividends	$	11,688,000

The difference between the issuance price of the Series A convertible preferred stock and the fair value of our common stock on the date of issuance of the Series A convertible preferred stock resulted in a beneficial conversion feature totaling approximately $10.3 million, which was calculated in accordance with EITF 00-27, Application of Issue No. 98-5 to Certain Convertible Instruments

The total proceeds of $1.1 million from Beacon Power Corporation were allocated between the Series A convertible preferred stock (approximately $475,000) and the warrant (approximately $625,000) based on their relative fair values. The value of the warrant was calculated using the Black-Scholes pricing model with the following assumptions: dividend yield of zero percent; expected volatility of 90%; risk free interest rate of approximately 2% and a term of three years. The difference between the proceeds allocated to the relative fair value of the warrant, $625,000, and the amount paid for the warrant, $100,000, or $525,000 contributed to the initial accretion charge of $11.7 million.

Shares of Series A convertible preferred stock paid a compounding dividend of 10% per annum, paid quarterly, in cash, or at our election to be added to the liquidation preference of the Series A convertible preferred stock on a quarterly basis, which resulted in an increase in the number of shares of common stock issued upon conversion of the Series A convertible preferred stock. For the year ended December 31, 2003, $1.8 million in dividends accrued on the outstanding Series A convertible preferred stock, which we elected to add to the liquidation preference of the Series A convertible preferred stock.

On June 21, 2004, holders of all outstanding shares of Series A convertible preferred stock agreed to convert all of their shares of Series A convertible preferred stock into shares of our common stock in connection with the Common Stock Private Placement. During the first quarter of 2004, the Series A preferred stock earned a dividend of approximately $700,000, which the Company elected to add to the liquidation preference of the Series A convertible preferred stock.

As an inducement to convert their shares into common stock in connection with the Common Stock Private Placement consummated on June 21, 2004, the remaining Series A preferred shareholders received the dividend earned for the period between April 1, 2004 and June 21, 2004 in cash, which totaled approximately $500,000. In addition, the Series A preferred shareholders received a cash conversion premium of 7% of the accreted value as of March 31, 2004, which totaled $1.7 million. Therefore, the total dividend and conversion premium charge recorded by the Company for year ended December 31, 2004 was approximately $2.9 million.

Net loss attributable to common stockholders.  Net loss attributable to common stockholders was $22.3 million and $28.5 million for the years ending December 31, 2004 and December 31, 2003, respectively. The decrease in net loss attributable to common stockholders was due a decrease in the combined accretion and dividend charges associated with the Series A convertible preferred stock financing, which was consummated on May 15, 2003, offset by an overall increase in net operating losses associated with the scale-up of our operations.

LIQUIDITY AND CAPITAL RESOURCES

We have historically financed our operations and met our capital expenditure requirements primarily through sales of our capital stock, issuance of debt and, to a lesser extent, product revenues. Research and development expenditures have historically been partially funded by government research contracts. At December 31, 2005, we had working capital of $124.4 million, including cash, cash equivalents and marketable securities of $116.2 million.

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Net cash used in operating activities was $9.4 million, $15.3 million and $7.3 million for the years ended December 31, 2003, 2004 and 2005, respectively. The use of cash for operating activities in the year ended December 31, 2005 was due primarily to losses from operations of $17.3 million, increases in other current assets of $2.7 million and an increase in inventory of $0.7 million, offset by increases in accounts payable of $9.3 and accrued expenses of approximately $0.9 million, a decrease in accounts receivable of $2.1 million and depreciation and losses on fixed asset disposals of $4.2 million. The increases in net loss and accounts payable for the year ended December 31, 2005 are all attributable to the overall growth of the business and associated increases in working capital requirements, particularly for EverQ. The use of cash for operating activities in the year ended December 31, 2004 was due primarily to losses from operations of $19.4 million, increases in inventory of $0.9 million and an increase in accounts receivable of $5.2 million, offset by increases in accounts payable and accrued expenses of approximately $4.3 million and depreciation and losses on fixed asset disposals of $5.5 million. The increases in net loss, accounts receivable and accounts payable for the year ended December 31, 2004 are all attributable to the overall growth of the business and associated increases in working capital requirements. The use of cash for operating activities in the year ended December 31, 2003 was due to losses from operations of $15.0 million partially offset by depreciation expense of $2.0 million, losses on equipment disposals of $513,000, and a decrease in accounts receivable of $1.8 million.

While our accounts receivables grow with our increasing revenue, our DSO’s have been reduced due to certain European customers taking advantage of early payment discounts. However, we expect DSO’s to increase slightly in 2006 since such early payment discounts will no longer be offered to most of our customers. Fluctuations in accounts receivable from period to period relative to changes in revenue are a result of timing of customer invoicing and receipt of payments from customers. Our days sales outstanding were 56 days, 57 days and 32 days for the quarters ended December 31, 2003, 2004 and 2005, respectively.

Net cash used in investing activities was $15.8, $2.1 million and $137.3 million for the years ended December 31, 2003, 2004 and 2005, respectively. Net cash used in investing activities for the years ended December 31, 2003, 2004 and 2005 was due to primarily to purchases of equipment and marketable securities, partially offset by proceeds from the sale and maturity of marketable securities.

Net cash provided by financing activities was $28.6 million, $18.1 million and $171.2 million for the years ended December 31, 2003, 2004 and 2005, respectively. The cash provided by financing activities for the year ended December 31, 2005 primarily represents net proceeds from common stock issued in conjunction with the common stock public offering completed in February 2005 as well as the Convertible Subordinated Debt issuance in June 2005, as well as proceeds from the sale of a portion of our interest in EverQ to REC of $4.1 million and an increase in EverQ debt of approximately $7.7 million. The cash provided by financing activities during the year ended December 31, 2004 represents net proceeds from common stock issued in conjunction with the Common Stock Private Placement, offset by dividends and conversion premiums paid to the Series A convertible preferred shareholders. The cash provided by financing activities during the year ended December 31, 2003 represents net proceeds from the shares of Series A convertible preferred stock and the warrant issued in conjunction with the Series A convertible preferred stock and warrant financing.

Capital expenditures were $7.1 million, $10.9 million and $57.7 million (which includes $8.2 million of deposits for the manufacture of fixed assets) for the years ended December 31, 2003, 2004 and 2005, respectively. Capital expenditures for the years ended December 31, 2003 and 2004 were primarily for equipment needed for our Marlboro manufacturing facility. Capital expenditures for the year ended December 31, 2005 were primarily for equipment needed for our manufacturing facility and equipment for EverQ. As of December 31, 2005, outstanding commitments for capital expenditures for both Evergreen and EverQ were approximately $28.7 million. Nearly all of our commitments for capital expenditures are associated with infrastructure improvements and equipment purchases for our and EverQ’s manufacturing facilities.

In February 2005, we completed a $62.3 million common stock offering, net of offering costs of approximately $4.4 million, to satisfy existing capital requirements and to fund the continuing capacity expansion of our Marlboro, Massachusetts manufacturing facility and the expenditures necessary for the initial build-out and initial operation of EverQ. A portion of the proceeds from the financing will also be used to

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increase research and development spending on promising next generation technologies and to explore further expansion opportunities. For this common stock offering, we issued 13,346,000 shares of our common stock. The shares of common stock were sold at a per share price of $5.00 (before deducting underwriting discounts), which represented a 6% discount to the $5.30 closing price of shares of our common stock as reported on the Nasdaq National Market as of the close of business on February 3, 2005.

In June 2005, we issued Convertible Subordinated Notes (“Notes”) in the aggregate principal amount of $90.0 million, and we received proceeds of $86.9 million, net of offering costs. Interest on the Notes is payable semiannually at the annual rate of 4.375%. The Notes do not have required principal payments prior to maturity on July 1, 2012. However, the Notes are convertible at any time prior to maturity, redemption or repurchase, into shares of our common at an initial conversion rate of 135.3180 shares of common stock per $1,000 principal amount of Notes (equivalent to a conversion price of approximately $7.39 per share), subject to adjustment. On or after July 1, 2010, we may redeem the Notes for cash at the following prices expressed as a percentage of the principal amount:

Redemption Period	Price (%)
Beginning on July 1, 2010 and ending on June 30, 2011		101.250
Beginning on July 1, 2011 and ending on June 30, 2012		101.625
On July 1, 2012		100.000

We may redeem the Notes on or after July 6, 2008 and prior to July 1, 2010 only if the closing price of our common stock exceeds 130% of the then-current conversion price of the Notes for at least 20 trading days in a period of 30 consecutive trading days ending on the trading day prior to the date on which we provide notice of redemption. We may be required to repurchase the Notes upon a designated event (either a termination of trading or a change in control) at a price (which will be in cash or, in the case of a change in control, cash, shares of our common stock or a combination of both) equal to 100% of the principal amount of the Notes to be repurchased plus accrued interest. Upon a change in control, we may under certain circumstances be required to pay a premium on redemption which will be a number of additional shares of our common stock as determined by our stock price and the effective date of the change in control.

The Notes are subordinate in right of payment to all of our existing and future senior debt.

We incurred financing costs of approximately $3.1 million which are being amortized ratably over the term of the Notes, which is seven years. Through December 31, 2005, we recorded $2.0 million in interest expense associated with the Notes.

EverQ Long-term Debt

On December 22, 2005, EverQ received EURO 4.0 million in funding under a Credit Agreement (the “Credit Agreement”) dated November 9, 2005, between EverQ, Q-Cells AG, Evergreen and a syndicate of banks led by Deutsche Bank Aktiengesellschaft and Bayerische Hypo-und Vereinsbank AG. The Credit Agreement provides EverQ with aggregate borrowing availability of up to EURO 22.5 million comprised as follows: (i) a long-term loan facility amounting to up to EURO 8.0 million, (ii) a short-term loan facility amounting to EURO 12.0 million and (iii) a short-term revolving credit facility amounting to EURO 2.5 million. The Facility A interest rate is the EURO Interbank Offered Rate (“EURIBOR”) plus between 1.75% and 2.75% depending on whether EverQ meets certain financial targets specified in the Credit Agreement. The Facility B interest rate is EURIBOR plus 2.75% and the Facility C interest rate is 7.5%. In the event of a default by EverQ, Evergreen has agreed to relinquish certain rights to certain assets of EverQ which collateralize EverQ’s repayment obligations under the Credit Facility. In addition, pursuant to the Credit Agreement, Evergreen has agreed to guarantee EverQ’s repayment obligations under the Credit Agreement. As of December 31, 2005, the total amount of debt outstanding relating to the Credit Agreement was $7.7 million, of which $4.1 million is classified as current in the Company’s balance sheet.

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Evergreen Solar Loan to EverQ

In November 2005, the Company entered into a Shareholder Loan Agreement to provide EverQ with a loan totaling 8.0 million Euro. Under the terms of the Shareholder Loan Agreement, the loan bears a fixed interest rate of 5.4%, has a term of four years and is subordinated to all other outstanding debt of EverQ. The loan must be repaid in full if the Company’s ownership interest in EverQ falls below 50% or if the Master Joint Venture Agreement of EverQ is terminated under certain circumstances. As of December 31, 2005, $4.8 million of the loan was outstanding and is eliminated in the Company’s balance sheet consolidation.

We believe that our current cash, cash equivalents and marketable securities will be sufficient to fund our planned capital programs and to fund our operating expenditures over the next twelve months. We may be required to raise additional capital to respond to competitive pressures to secure raw materials, and/or to acquire complementary businesses or necessary technologies. We do not know whether we will be able to raise additional financing or financing on terms favorable to us. If adequate funds are not available or are not available on acceptable terms, our ability to fund our operations, further develop and expand our manufacturing operations and distribution network, or otherwise respond to competitive pressures would be significantly limited.

Off-Balance Sheet Arrangements

We do not have any special purpose entities or off-balance sheet financing arrangements, other than routine operating leases associated with our Marlboro facilities.

Contractual Obligations

The following table summarizes our contractual obligations as of December 31, 2005 and the effect such obligations are expected to have on our liquidity and cash flow in future periods (in thousands):

	Total		Less Than
	Years		1 Year		1-3 Years		4-5 Years		After 5 Years
Non-cancelable operating lease	$	4,329	$	783	$	2,614	$	761	$	171
Maturity of Convertible Debt		90,000		—		—		—		90,000
EverQ debt obligations		7,684		4,131		3,553		—		—
Capital expenditure obligations		28,700		28,700		—		—		—
Raw materials purchase commitments		75,250		10,750		32,250		21,500		10,750
Total contractual cash obligations	$	205,963		44,364		38,417		22,261		100,921

INCOME TAXES

As of December 31, 2005, we had federal and state net operating loss carryforwards estimated to be approximately $48.6 million and $36.3 million, respectively, potentially available to reduce future taxable income and tax liabilities which begin to expire in 2009 and 2005, respectively. We also had federal and state research and development tax credit carryforwards of approximately $529,000 and $677,000, respectively, which begin to expire in 2010, and state Investment Tax Credit carryforwards of approximately $920,000 which begin to expire in 2006 available to reduce future tax liabilities, if any. Under provisions of the Internal Revenue Code of 1986, as amended (the “Code”), certain changes in the Company’s ownership may result in a limitation on the amount of net operating loss carryforwards and research and development credit carryforwards, which can be used in future years. As a result of our May 2003 Series A convertible preferred stock financing, it is likely that an ownership change occurred within the definition of Section 382 of the Code. We have estimated our annual net operating loss and tax credit limitation to be approximately $800,000. We have reduced our federal net operating loss carryforwards, tax credit carryforward, and related valuation allowances by the estimated amount likely to expire unutilized as a result of such limitation. We have evaluated the positive and negative evidence bearing upon the realizability of our deferred tax assets. We have

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considered our history of losses and, in accordance with the applicable accounting standards, have provided a full valuation allowance against the deferred tax asset.

Changes in federal and state tax legislation enacted during 2004 and 2005 contain numerous amendments and additions to the U.S. corporate income tax rules. While we continue to analyze these new provisions in order to determine their impact to our financial statements, none of these changes, either individually or in the aggregate, is expected to have a significant effect on our future income tax liability.

RECENT ACCOUNTING PRONOUNCEMENTS

On April 14, 2005, the Securities and Exchange Commission (SEC) approved a new rule that, for public companies, delays the effective date of FASB Statement No. 123 (revised 2004). Except for this deferral of the effective date, the guidance in FAS 123(R) is unchanged. Under the SEC’s rule, FAS 123(R) is now effective for public companies for annual, rather than interim, periods that begin after June 15, 2005. On March 29, 2005, the Securities and Exchange Commission (the “SEC”) issued Staff Accounting Bulletin No. 107 to express the SEC staff’s views regarding the interaction between FAS No. 123R and certain SEC rules and regulations and provide the staff’s views regarding the valuation of share-based payment arrangements. SFAS No. 123R will be effective for our first quarter of 2006. We expect that the impact of expensing stock options on our consolidated financial statements will be material, and we have disclosed the pro-forma financial impact on prior periods in Note 2 to our consolidated financial statements.

In March 2005, the FASB issued Interpretation No. 47 (“FIN 47”), “Accounting for Conditional Asset Retirement Obligations,” that requires an entity to recognize a liability for a conditional asset retirement obligation when incurred if the liability can be reasonably estimated. FIN 47 clarifies that the term Conditional Asset Retirement Obligation refers to a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the entity. FIN 47 also clarifies when an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation. FIN 47 is effective no later than the end of fiscal years ending after December 15, 2005. The Company has determined that this standard does not have a material impact on its Consolidated Financial Statements as of and for the year ended December 31, 2005.

In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections, a replacement of Accounting Principles Board Opinion (APB) No. 20, Accounting Changes, and FASB Statement No. 3, Reporting Accounting Changes in Interim Financial Statements.” This Statement requires retrospective application to prior periods’ financial statements of a change in accounting principle. It applies both to voluntary changes and to changes required by an accounting pronouncement if the pronouncement does not include specific transition provisions. APB 20 previously required that most voluntary changes in accounting principles be recognized by recording the cumulative effect of a change in accounting principle. SFAS 154 is effective for fiscal years beginning after December 15, 2005. The Company will determine the impact of this standard on its Consolidated Financial Statements when an accounting change or error correction occurs.

In January of 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments.” SFAS No. 155 amends SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” and SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.” SFAS No. 155 also resolves issues addressed in SFAS No. 133 Implementation Issue No. D1, “Application of Statement 133 to Beneficial Interests in Securitized Financial Assets.” SFAS No. 155 eliminates the exemption from applying SFAS No. 133 to interests in securitized financial assets so that similar instruments are accounted for in the same manner regardless of the form of the instruments. SFAS No. 155 allows a preparer to elect fair value measurement at acquisition, at issuance, or when a previously recognized financial instrument is subject to a remeasurement (new basis) event, on an instrument-by-instrument basis. SFAS No. 155 is effective for all financial instruments acquired or issued after the beginning of an entity’s first fiscal year that begins after September 15, 2006. The fair value election provided for in paragraph 4(c) of SFAS No. 155 may also be applied upon adoption of SFAS No. 155 for hybrid financial instruments that had been bifurcated under paragraph 12 of SFAS No. 133 prior to the adoption of this Statement. Earlier adoption is permitted as of the beginning of an entity’s fiscal year, provided the entity has

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not yet issued financial statements, including financial statements for any interim period for that fiscal year. Provisions of SFAS No. 155 may be applied to instruments that an entity holds at the date of adoption on an instrument-by-instrument basis. Adoption of this standard is not expected to have a material impact on our results of operations and/or equity.

ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATE RISK

We do not use derivative financial instruments to manage interest rate risk. Interest income earned on our cash, cash equivalents and marketable securities is subject to interest rate fluctuations, but we believe that the impact of these fluctuations will not have a material effect on our financial position due to the immediate available liquidity or short-term nature of these financial instruments. For these reasons, a hypothetical 100-basis point adverse change in interest rates would not have a material effect on our consolidated financial position, results of operations or cash flows.

We are exposed to interest rate risk when there are borrowings under EverQ’s Credit Facility. Certain facilities under the Credit Agreement with Deutsche Bank bear interest at variable rates, based upon published indices. At December 31, 2005, EverQ had approximately $7.7 million in outstanding debt that had variable interest rates.

FOREIGN CURRENCY EXCHANGE RATE RISK

For the year ended December 31, 2005, all of our product sales into Europe were denominated in Euro, which exposes us to foreign exchange gains or losses. Product sales into Europe accounted for approximately 65% of product revenues for the year ended December 31, 2005. Since our Euro-denominated sales represent a significant portion of our total revenue, a hypothetical 10 percent adverse change in exchange rate would have had a material effect on our consolidated financial position, reducing revenue and earnings by approximately 6%. As we expand our manufacturing operations and distribution network internationally, our exposure to fluctuations in currency exchange rates may increase. Additionally, from time to time we may purchase equipment and materials internationally, and to the extent that such purchases are billed in foreign currency, we will be exposed to currency gains or losses.

In 2004, we began to manage our foreign exchange risk through the use of derivative financial instruments. These financial instruments serve to protect cash flow against the impact of the translation into U.S. dollars of foreign exchange denominated transactions. As of December 31, 2004, we had forward currency contracts denominated in foreign currencies totaling 8.5 million Euro. At December 31, 2004, the fair market value of outstanding forward exchange contracts was $11.6 million. We recorded unrealized losses of approximately $683,000 for the year ended December 31, 2004, in connection with the marking to market of these forward contracts. All contracts outstanding at December 31, 2004 were settled during the first quarter of 2005 and we had no outstanding forward contracts as of December 31, 2005. During 2005, we did not enter into any new forward exchange contracts as we had a natural hedge against foreign currency risk due to the foreign currency requirements of our capital commitments for EverQ. However, we expect that we may resume managing our foreign exchange risk through the use of derivative financial instruments during 2006.

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The Company’s Financial Statements and related Notes and the Report of the Independent Registered Public Accounting Firm are included beginning on page F-1 of this Annual Report on Form 10-K.

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

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ITEM 9A.   CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

We have carried out an evaluation under the supervision and with the participation of management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of December 31, 2005, the disclosure controls and procedures were effective.

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that:

•  pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

•  provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and

•  provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2005. In making its assessment, management has utilized the criteria set forth in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. Based on this evaluation, our Management concluded that internal control over financial reporting was effective as of December 31, 2005.

Management’s report on internal control over financial reporting as of December 31, 2005 has been audited by PricewaterhouseCoopers LLP, the Company’s independent registered public accounting firm, as stated in their report which appears herein.

Remediation of Previously Disclosed Material Weakness

Our Quarterly Report on Form 10-Q for the periods ended July 2, 2005 and October 1, 2005, described two material weaknesses in our internal control over financial reporting with respect to the preparation, review and presentation and disclosure of the Company’s consolidated financial statements and the review and presentation of restricted cash. During the periods ended July 2, 2005 and October 1, 2005, we implemented enhanced procedures to properly prepare our financial statements and to ensure that information from EverQ is reported in a timely manner. Such procedures include weekly meetings or conference calls with EverQ financial management to review all restrictions on cash and review of a detailed monthly checklist which includes EverQ’s cash restrictions. In addition, during the preceding two quarters, both we and EverQ have hired additional qualified personnel for financial reporting functions. During the quarter ended

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December 31, 2005, management has completed testing and concluded that these material weaknesses have been remediated.

Changes in Internal Controls Over Financial Reporting

Except as described above there were no other changes in the Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of the Securities Exchange Act Rules 13a-15(d) that occurred during the quarter ended December 31, 2005 that affected, or were reasonably likely to affect, the Company’s internal control over financial reporting.

ITEM 9B.   OTHER INFORMATION.

The Company expects to hold its 2006 Annual Meeting of Stockholders on or about June 8, 2006.

PART III

Certain information required by Part III is omitted from this Annual Report on Form 10-K since we intend to file our definitive Proxy Statement for our 2006 Annual Meeting of Stockholders, pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended (the “Proxy Statement”), no later than April 30, 2006, and certain information to be included in the Proxy Statement is incorporated herein by reference.

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

Information regarding the Company’s named executive officers and its directors is set forth under “Compensation and Other Information Concerning Officers and Directors” in our Proxy Statement, which information is incorporated herein by reference.

ITEM 11.   EXECUTIVE COMPENSATION.

Information regarding the Company’s compensation of its named executive officers and its directors is set forth under “Compensation and Other Information Concerning Officers and Directors” in our Proxy Statement, which information is incorporated herein by reference.

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

Information concerning security ownership of certain beneficial owners, directors and executive officers is set forth under “Securities Ownership of Certain Beneficial Owners and Management” in our Proxy Statement, which information is incorporated herein by reference.

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Information regarding certain relationships and related transaction is set forth under “Certain Relationships and Related Transactions” in our Proxy Statement, and is incorporated herein by reference.

ITEM 14.   PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The information required under this item may be found under the caption “Independent Registered Public Accounting Firm” in our Proxy Statement, and is incorporated herein by reference.

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PART IV

ITEM 15.   EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) The following documents are filed as part of this Annual Report on Form 10-K:

1. All Financial Statements. The financial statements included in Item 8 of Part II which appear beginning on page F-1 of this Annual Report on Form 10-K.

2. Financial Statement Schedules

Schedule I — Condensed Financial Information of Registrant

Schedule II — Valuation and Qualifying accounts and Reserves filed as a separate section of this report in the “List of Financial Statements and Financial Statement Schedules”

All other schedules are omitted as the required information is inapplicable or the information is presented in the Consolidated Financial Statements and notes thereto in Item 8 of Part II which appear beginning on page F-1 of this Annual Report on Form 10-K.

3. Exhibits. See Item 15(b).

(b) The following exhibits

Exhibit
Number			Description
	1	.1(1)	Underwriting Agreement dated as of February 3, 2005, by and among the Company, SG Cowen  & Co., LLC and First Albany Capital Inc.
	3	.1(2)	Third Amended and Restated Certificate of Incorporation. (Exhibit 3.2)
	3	.2(2)	Second Amended and Restated By-laws. (Exhibit 3.5)
	3	.3(3)	Certificate of Amendment of Third Amended and Restated Certificate of Incorporation filed with the Secretary of State of the State of Delaware on May 15, 2003. (Exhibit 4.3)
	3	.4(3)	Certificate of the Powers, Designations, Preferences and Rights of the Series A Convertible Preferred Stock of the Company. (Exhibit 4.4)
	3	.5(4)	Certificate of Amendment of Third Amended and Restated Certificate of Incorporation filed with the Secretary of State of the State of Delaware on August 20, 2004. (Exhibit 4.5)
	4	.1(9)	Indenture, dated as of June 29, 2005, between Registrant and U.S. Bank N.A., as Trustee (Exhibit 4.4)
	4	.1(9)	Form of 4.375% Convertible Subordinated Notes due 2012. (Exhibit 4.4)
	10	.1(2)*	1994 Stock Option Plan. (Exhibit 10.1)
	10	.2(2)*	2000 Stock Option and Incentive Plan. (Exhibit 10.2)
	10	.3(10)*	Amended and Restated 2000 Stock Option and Incentive Plan. (Exhibit 99.1)
	10	.4(10)*	Amended and Restated 2000 Employee Stock Purchase Plan. (Exhibit 99.2)
	10	.5(2)	Lease Agreement between Registrant and W9/TIB Real Estate Limited Partnership dated as of January 31, 2000, as amended. (Exhibit 10.5)
	10	.6(2)†	Agreement between Registrant and Emanuel M. Sachs dated as of September 30, 1994, as amended. (Exhibit 10.7)
	10	.7(2)	Series D Preferred Stock Purchase Agreement dated as of December 28, 1999. (Exhibit 10.8)
	10	.8(2)	Form of Indemnification Agreement between Registrant and each of its directors and executive officers. (Exhibit 10.9)
	10	.9(6)	Stock and Warrant Purchase Agreement dated as of March 21, 2003. (Exhibit 10.1)
	10	.10(6)	Form of Registration Rights Agreement. (Exhibit 10.3)
	10	.11(7)	Voting Agreement dated as of March 21, 2003. (Exhibit 10.2)
	10	.12(8)	Stock and Warrant Purchase Agreement dated June 16, 2004. (Exhibit 10.1)
	10	.13(8)	Warrant Agreement dated June 21, 2004. (Exhibit 10.2)
	10	.14(8)	Form of Warrants. (Exhibit 10.3)

58

Exhibit
Number			Description
	10	.15(8)	Registration Rights Agreement dated June 21, 2004. (Exhibit 10.4)
	10	.16(8)	Conversion, Consent, Voting and Lock-Up Agreement dated June 21, 2004. (Exhibit 10.5)
	10	.17††	Master Joint Venture Agreement entered into as of November 4, 2005 by and among Evergreen Solar, Inc., Q-Cells AG, Renewable Energy Corporation and EverQ GmbH.
	10	.18††	License and Technology Transfer Agreement by and between Evergreen Solar, Inc. and EverQ GmbH, dated November 24, 2005.
	10	.19††	Technology Co-Operation Agreement by and between Renewable Energy Corporation and Evergreen Solar, Inc. dated November 24, 2005.
	10	.20††	Supply Agreement, dated November 24, 2005, by and between Solar Grade Silicon LLC and Evergreen Solar, Inc.
	10	.21††	Supply Agreement, dated November 24, 2005, by and between Solar Grade Silicon LLC and EverQ GmbH.
	10	.22(7)*	Evergreen Solar, Inc. Management Incentive Policy. (Exhibit 10.20)
	10	.23(11)	Purchase Agreement, dated June 23, 2005 between the Registrant and SG Cowen & Co., LLC, as representatives of the Initial Purchasers. (Exhibit 10.24)
	10	.24(9)	Registration Rights Agreement, dated June 29, 2005, between the Registrant and SG Cowen  & Co., LLC, as representative of the Initial Purchasers. (Exhibit 10.21)
	12	.1	Computation of Ratio of Earnings to Fixed Charges.
	23	.1	Consent of PricewaterhouseCoopers LLP, an Independent Registered Public Accounting Firm.
	24	.1	Power of Attorney. (See signature page)
	31	.1	CEO Certification pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31	.2	CFO Certification pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32	.1	CEO Certification pursuant to Rule 13a-14(b) and Rule 15d-14(b) of the Securities Exchange Act of 1934, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	32	.2	CFO Certification pursuant to Rule 13a-14(b) and Rule 15d-14(b) of the Securities Exchange Act of 1934, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

†	Confidential treatment granted as to certain portions.
††	Confidential treatment requested as to certain portions.
*	Indicates a management contract or compensatory plan, contract or arrangement.

(1)	Incorporated herein by reference to the exhibits to the Company’s Current Report on Form 8-K dated February 3, 2005 (File No. 000-31687). The number given in parenthesis indicates the corresponding exhibit number in such Form 8-K.
(2)	Incorporated herein by reference to the exhibits to the Company’s Registration Statement on Form S-1, as amended (file No. 333-43140). The number given in parenthesis indicates the corresponding exhibit number in such Form S-1.
(3)	Incorporated herein by reference to the exhibits to the Company’s Registration Statement on Form S-8 dated June 9, 2003, as amended (file No. 333-105963). The number given in parenthesis indicates the corresponding exhibit number in such Form S-8.
(4)	Incorporated herein by reference to the exhibits to the Company’s Registration Statement on Form S-3 filed on October 21, 2004 (file No. 333-119864). The number given in parenthesis indicates the corresponding exhibit number in such Form S-3.
(5)	Incorporated herein by reference to the exhibits to the Company’s Current Report on Form 8-K dated March 24, 2003 (File No. 000-31687). The number given in parenthesis indicates the corresponding exhibit number in such Form 8-K.

59

(6)	Incorporated herein by reference to the exhibits to the Company’s Current Quarterly Report on Form 10-Q for the period ended April 2, 2005 filed on May 2, 2005. The number given in parenthesis indicates the corresponding exhibit number in such Form 10-Q.
(7)	Incorporated herein by reference to the exhibits to the Company’s Current Report on Form 8-K dated June 22, 2004 (File No. 000-31687). The number given in parenthesis indicates the corresponding exhibit number in such Form 8-K.
(8)	Incorporated herein by reference to the exhibits to the Company’s Current Report on Form 8-K dated January 14, 2005 (File No. 000-31687). The number given in parenthesis indicates the corresponding exhibit number in such Form 8-K.
(9)	Incorporated herein by reference to the exhibits to the Company’s Current Report on Form 8-K dated June 29, 2005 (File No. 000-31687). The number given in parenthesis indicates the corresponding exhibit number in such Form 8-K.
(10)	Incorporated herein by reference to the exhibits to the Company’s Current Report on Form 8-K dated July 15, 2005 (File No. 000-31687). The number given in parenthesis indicates the corresponding exhibit number in such Form 8-K.
(11)	Incorporated herein by reference to the exhibits to the Company’s Current Quarterly Report on Form 10-Q for the period ending July 2, 2005 filed on August 11, 2005. The number given in parenthesis indicates the corresponding exhibit number in such Form 10-Q.

The Company hereby files as part of this Annual Report on Form 10-K the exhibits listed in Item 15(b) set forth above. Exhibits which are incorporated herein by reference may be inspected and copied at the public reference facilities maintained by the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549, and at the SEC’s regional offices located at 233 Broadway, New York, New York 10279, and at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60611-2511. Copies of such material may be obtained by mail from the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549, at prescribed rates. The public may obtain information on the operation of the Public Reference Room by calling 1-800-SEC-0330. The SEC also maintains a web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC at the address http://www.sec.gov.

(c) See Item 15(a)(2).

60

LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of December 31, 2004 and 2005	F-4
Consolidated Statements of Operations for the years ended December 31, 2003, 2004 and 2005	F-5
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2003, 2004 and 2005	F-6
Consolidated Statements of Cash Flows for the years ended December 31, 2003, 2004 and 2005	F-7
Notes to Financial Statements	F-8
Schedule I — Condensed Financial Information of the Registrant	F-29

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of

Evergreen Solar, Inc.:

We have completed integrated audits of Evergreen Solar, Inc.’s 2005 and 2004 consolidated financial statements and of its internal control over financial reporting as of December 31, 2005, and on audit of its 2003 consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are presented below.

Consolidated financial statements and financial statement schedule

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Evergreen Solar, Inc. and its subsidiaries at December 31, 2005 and 2004, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2005 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statements schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein under read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

Internal control over financial reporting

Also, in our opinion, management’s assessment, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting appearing under Item 9A, that the Company maintained effective internal control over financial reporting as of December 31, 2005 based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), is fairly stated, in all material respects, based on those criteria. Furthermore, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control — Integrated Framework issued by the COSO. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express opinions on management’s assessment and on the effectiveness of the Company’s internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial

F-2

statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

PricewaterhouseCoopers LLP

Boston, Massachusetts

March 16, 2006

F-3

EVERGREEN SOLAR, INC.

CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2004 AND 2005

	December 31,			December 31,
	2004			2005
	(In thousands, except share data)
ASSETS
Current assets:
Cash and cash equivalents	$	5,379		$	30,742
Marketable securities		6,563			85,465
Accounts receivable, net of allowance for doubtful accounts and sales discounts of $84 and $65 at December 31, 2004 and December 31, 2005, respectively		6,166			4,124
Grants Receivable		—			16,295
Inventory		2,906			3,634
Interest receivable		57			541
Other current assets		1,411			4,052
Total current assets		22,482			144,853
Restricted cash		414			1,582
Deferred financing costs		—			2,877
Deposits on fixed assets		—			8,217
Fixed assets, net		26,825			71,430
Total assets	$	49,721		$	228,959
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	3,074		$	12,210
Short term borrowings		1,500			—
Current portion of long-term debt		—			4,131
Accrued employee compensation		1,187			1,778
Accrued warranty		705			705
Other accrued expenses		1,295			1,625
Deferred revenue		440			—
Total current liabilities		8,201			20,449
Subordinated convertible notes		—			90,000
Deferred grants		—			16,284
Other long-term debt		—			3,553
Total liabilities		8,201			130,286
Convertible preferred stock:
Series A, $0.01 par value, 26,227,668 shares authorized, no shares issued and outstanding at December 31, 2004 and 2005, respectively		—			—
Minority interest in EverQ		—			11,223
Stockholders’ equity:
Common stock, $0.01 par value, 100,000,000 shares authorized, 47,541,823 and 61,965,231 issued and outstanding at December 31, 2004 and December 31, 2005, respectively		475			620
Additional paid-in capital		116,764			182,345
Deferred compensation		—			(1,036	)
Accumulated deficit		(75,693	)		(93,009	)
Accumulated other comprehensive loss		(26	)		(1,470	)
Total stockholders’ equity		41,520			87,450
Total liabilities, convertible preferred stock and stockholders’ equity	$	49,721		$	228,959

The accompanying notes are an integral part of these consolidated financial statements.

F-4

EVERGREEN SOLAR, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

	For the Years Ended December 31,
	2003			2004			2005
	(In thousands, except per share data)
Revenues:
Product revenues	$	7,746		$	22,240		$	43,627
Research revenues		1,565			1,296			405
Total revenues		9,311			23,536			44,032
Operating expenses:
Cost of product revenues		15,379			29,717			39,954
Research and development expenses, including costs of research revenues		3,791			4,931			11,461
Selling, general and administrative expenses		5,337			7,797			12,274
Total operating expenses		24,507			42,445			63,689
Operating loss		(15,196	)		(18,909	)		(19,657	)
Other income (loss), net:
Foreign exchange gains (losses), net		—			(618	)		5
Gain on sale of EverQ interest to REC		—			—			527
Interest income		222			238			3,140
Interest expense		—			(74	)		(2,526	)
Other income (loss), net		222			(454	)		1,146
Loss from operations before minority interest		(14,974	)		(19,363	)		(18,511	)
Minority interest in EverQ		—			—			1,195
Net loss		(14,974	)		(19,363	)		(17,316	)
Accretion, dividends and conversion premiums on Series A convertible preferred stock		(13,498	)		(2,904	)		—
Net loss attributable to common stockholders	$	(28,472	)	$	(22,267	)	$	(17,316	)
Net loss per share attributable to common stockholders (basic and diluted)	$	(2.39	)	$	(0.67	)	$	(0.29	)
Weighted average shares used in computing basic and diluted net loss per share attributable to common stockholders		11,899			33,204			59,631

The accompanying notes are an integral part of these consolidated financial statements.

F-5

EVERGREEN SOLAR, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

														Accumulated
					Additional									Other			Total
	Common Stock				Paid-In			Deferred			Accumulated			Comprehensive			Stockholders’			Comprehensive
	Shares		Amount		Capital			Compensation			Deficit			Income (Loss)			Equity			Loss
	(In thousands)
Balance at January 1, 2003		11,411	$	114	$	71,508		$	(360	)	$	(41,356	)	$	7		$	29,913
Issuance of common stock pursuant to exercise of options		5		—		8												8
Shares of common stock issued under ESPP		3		—		2												2
Conversion of Series A convertible preferred stock to common stock		3,707		37		4,116												4,153
Compensation expense associated with stock options, net						80			271									351
Accretion of Series A convertible preferred stock						(11,688	)											(11,688	)
Beneficial conversion feature of Series A convertible preferred stock						10,314												10,314
Dividend on Series A convertible preferred stock						(1,810	)											(1,810	)
Issuance of warrants in connection with Series A convertible preferred stock						625												625
Reversal of overaccrued IPO financing costs						84												84
Comprehensive loss:
Net loss												(14,974	)					(14,974	)	$	(14,974	)
Unrealized losses on marketable securities															(34	)		(34	)		(34	)
Comprehensive loss																					(15,008	)
Balance at December 31, 2003		15,126	$	151	$	73,239		$	(89	)	$	(56,330	)	$	(27	)	$	16,944
Issuance of common stock pursuant to exercise of options		18		—		22												22
Shares of common stock issued under ESPP		2		—		11												11
Conversion of Series A convertible preferred stock to common stock		24,733		247		27,457												27,704
Compensation expense associated with stock options, net						58			89									147
Issuance of common stock in connection with private equity financing, net of offering costs		7,663		77		18,694												18,771
Dividend on Series A convertible preferred stock						(2,904	)											(2,904	)
Issuance of common stock warrant to Silicon Valley Bank						187												187
Comprehensive loss:
Net loss												(19,363	)					(19,363	)	$	(19,363	)
Unrealized gains on marketable securities															1			1			1
Comprehensive loss																				$	(19,362	)
Balance at December 31, 2004		47,542	$	475	$	116,764		$	—		$	(75,693	)	$	(26	)	$	41,520
Issuance of common stock pursuant to exercise of options		750		8		1,709												1,717
Issuance of common stock pursuant to exercise of warrants		224		2		606												608
Shares of common stock issued under ESPP		3				23												23
Restricted stock grant		100		1		1,042			(1,043	)								—
Compensation expense associated with restricted stock									7									7
Issuance of common stock in connection with private equity financing, net of offering costs		13,346		134		62,201												62,335
Comprehensive loss:																		—
Net loss												(17,316	)					(17,316	)	$	(17,316	)
Unrealized losses on marketable securities															(43	)		(43	)		(43	)
Foreign currency translation adjustment															(1,401	)		(1,401	)		(1,401	)
Comprehensive loss																				$	(18,760	)
Balance at December 31, 2005		61,965	$	620	$	182,345		$	(1,036	)	$	(93,009	)	$	(1,470	)	$	87,450

The accompanying notes are an integral part of these consolidated financial statements.

F-6

EVERGREEN SOLAR, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Years Ended December 31,
	2003			2004			2005
	(In thousands)
Cash flows from operating activities:
Net loss	$	(14,974	)	$	(19,363	)	$	(17,316	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense		2,005			3,455			4,134
Loss on disposal of fixed assets		513			2,093			56
Minority interest		—			—			(1,195	)
Gain on sale of interest in EverQ to REC		—			—			(527	)
Bad debt expense		87			28			(19	)
Amortization of deferred debt financing costs		—			—			224
Amortization (accretion) of bond premiums		381			357			(595	)
Stock option and restricted stock compensation expense		351			147			7
Changes in operating assets and liabilities:
Inventory		175			(887	)		(729	)
Interest receivable		(97	)		97			(484	)
Accounts receivable		1,778			(5,211	)		2,062
Other current assets		469			(681	)		(2,685	)
Accounts payable		44			2,169			9,317
Accrued expenses		(94	)		2,092			927
Deferred revenue		—			440			(440	)
Net cash used in operating activities		(9,362	)		(15,264	)		(7,263	)
Cash flows from investing activities:
Purchases of fixed assets		(7,136	)		(10,851	)		(57,729	)
Restricted cash		50			—			(1,194	)
Purchases of marketable securities		(26,850	)		(2,418	)		(119,300	)
Proceeds from sale and maturity of marketable securities		18,088			11,218			40,950
Net cash used in investing activities		(15,848	)		(2,051	)		(137,273	)
Cash flows from financing activities:
Issuance of Series A convertible preferred stock, net of offering costs		28,526			—			—
Proceeds from convertible debt financing, net of offering costs		—			—			86,899
Increase in EverQ debt		—			—			7,687
Capital contributions to EverQ by minority interest holder		—			—			9,331
Proceeds from issuance of common stock and warrants, net of offering costs		100			18,771			62,335
Proceeds from the sale of EverQ interest to REC		—			—			4,060
Dividend and conversion premium paid on Series A convertible preferred stock		—			(2,230	)		—
Increase (decrease) in short-term borrowings		—			1,500			(1,500	)
Proceeds from exercise of stock options, warrants and shares purchased under Employee Stock Purchase Plan		10			33			2,348
Net cash flow provided by financing activities		28,636			18,074			171,160
Foreign exchange impact on cash		—			—			(1,261	)
Net increase in cash and cash equivalents		3,426			759			25,363
Cash and cash equivalents at beginning of year		1,194			4,620			5,379
Cash and cash equivalents at end of year	$	4,620		$	5,379		$	30,742
Supplemental cash flow information:
Interest paid		—			27			2,526
Non-cash Series A convertible preferred stock dividends earned		1,810			674			—
Non-cash conversion of Series A convertible preferred stock to common stock		4,153			27,704			—
Issuance of common stock warrant to Silicon Valley Bank		—			187			—

The accompanying notes are an integral part of these consolidated financial statements.

F-7

EVERGREEN SOLAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   NATURE OF BUSINESS

Evergreen Solar, Inc. (the “Company”), incorporated in August 1994, develops, manufactures and markets solar power products, including solar cells, panels and systems. In April 1997, the Company commenced product sales. The Company has incurred losses since inception and has an accumulated deficit, which has been funded by issuing debt and equity securities. The Company has historically financed its operations and met its capital expenditure requirements primarily through sales of its capital stock, issuance of debt and, to a lesser extent, product revenues

In January 2005, the Company entered into a strategic partnership agreement with Q-Cells AG (“Q-Cells”). The agreement provided for the organization and capitalization of EverQ GmbH (“EverQ”), which is a limited liability company incorporated under the laws of Germany. In November 2005, Q-Cells and the Company entered into an agreement with Renewable Energy Corporation ASA (“REC”), whereby REC acquired from the Company and Q-Cells for 4.7 million Euro, a 15% ownership position in EverQ. REC obtained 11.1% of the outstanding equity of EverQ directly from the Company and 3.9% of the outstanding equity of EverQ directly from Q-Cells. The Company received $4.1 million from REC which resulted in a gain on the sale of EverQ interest of $527,000. As of December 31, 2005, Evergreen owns 64%, Q-Cells owns 21% and REC owns 15% of the outstanding equity of EverQ. The master partnership agreement contemplates that REC is entitled, upon certain events, to increase its ownership stake in EverQ to one-third. The master partnership agreement also contemplates that Q-Cells will also be able to increase its ownership stake in EverQ to one-third, or a larger amount should REC decide not to increase their interest to one-third. The purpose of EverQ is to develop and operate a facility in Germany to manufacture, market and sell solar products based on its proprietary String Ribbon technology. The Company believes EverQ will accelerate the availability of wafer, cell and module manufacturing capacity based on String Ribbon technology and provide greater access to the European Union solar market.

The Company believes that its current cash, cash equivalents and marketable securities will be sufficient to fund its planned capital programs and to fund its operating expenditures over the next twelve months. The Company may be required to raise additional capital to respond to competitive pressures and/or to acquire complementary businesses or necessary technologies. The Company does not know whether it will be able to raise additional financing or financing on terms favorable to the Company. If adequate funds are not available or are not available on acceptable terms, the Company’s ability to fund its operations, further develop and expand its manufacturing operations and distribution network, or otherwise respond to competitive pressures would be significantly limited.

The Company is subject to risks common to companies in the high technology and energy industries including, but not limited to, development by the Company or its competitors of new technological innovations, dependence on key personnel, dependence on key or sole source suppliers for materials, protection of proprietary technology and compliance with government regulations. Any delay in the Company’s plan to scale up to full capacity may result in increased costs and could impair business operations.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the major accounting policies followed by the Company in the preparation of the accompanying financial statements is set forth below.

BASIS OF PRESENTATION

The consolidated financial statements include the accounts of the Company’s wholly owned subsidiaries, Evergreen Solar Securities, Inc. and Evergreen Solar GmbH. All intercompany accounts and transactions have been eliminated. As of December 31, 2005, the Company owned 64% of EverQ and had two seats on the four member Supervisory Board. The Company consolidates the financial statements of EverQ in accordance with

F-8

EVERGREEN SOLAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

the provisions of Financial Accounting Standards Board (FASB) FIN 46, “Consolidation of Variable Interest Entities, an interpretation of ARB No. 51.” The functional currency for Evergreen Solar GmbH and EverQ is the Euro. Revenues and expenses of Evergreen Solar GmbH and EverQ are translated into U.S. dollars at the average rates of exchange during the period, and assets and liabilities are translated into U.S. dollars at the period-end rate of exchange

CASH AND MARKETABLE SECURITIES

Cash and cash equivalents consist of cash and highly liquid investments with maturities of three months or less from the date of purchase and whose carrying amount approximates fair value.

The Company’s marketable securities are classified as available-for-sale. At December 31, 2004 and 2005, the Company held US government agency bonds, treasury notes, municipal bonds, corporate bonds and commercial paper. The investments mature within one year from the date of purchase and are carried at market value. At December 31, 2004 and 2005, there were unrealized losses of $26,000 and $69,000, respectively, which are reported as part of stockholders’ equity.

The following table summarizes our cash and marketable securities by type as of December 31 (in thousands):

	2004		2005
Money market funds	$	2,275	$	7,540
Certificates of deposits		—		16,235
Commercial paper		—		42,550
Corporate bonds		6,563		22,524
U.S. Agency notes		675		18,757
Total	$	9,513	$	107,606

CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents, foreign exchange contracts, investments and accounts receivable. The Company places its cash and cash equivalents and foreign exchange contracts with high quality financial institutions. With respect to accounts receivable, such receivables are primarily from distributors and integrators in the solar power industry located throughout the world. The Company performs ongoing credit evaluations of its customers’ financial conditions. The Company generally does not require collateral or other security against accounts receivable; however, it maintains reserves for potential credit losses and such losses have historically been within management’s expectations.

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EVERGREEN SOLAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The table below summarizes the Company’s concentration of credit risk for the years ended December 31, 2003, 2004 and 2005:

	2003			2004			2005
% of total revenue
Krannich Solartechnik		47	%		46	%		20	%
Donauer Solartechnik		10	%		20	%		19	%
Top 5 customers		75	%		79	%		58	%
% of accounts receivable
Sun Farms		—			—			23	%
Krannich Solartechnik		—			50	%		8	%
Donauer Solartechnik		11	%		—			15	%
Sun Source Energy		13	%		—			—
National Renewable Energy Laboratory		19	%		—			—
Top 5 customers		60	%		75	%		64	%

INVENTORY

Inventory is valued at standard cost which approximates the lower of cost or market determined on a first-in, first-out basis. Certain factors may impact the realizable value of the Company’s inventory including, but not limited to, technological changes, market demand, changes in product mix strategy, new product introductions and significant changes to its cost structure. Estimates of reserves are made for obsolescence based on the current product mix on hand and its expected net realizability. If actual market conditions are less favorable or other factors arise that are significantly different than those anticipated by management, additional inventory write-downs or increases in obsolescence reserves may be required. The Company treats lower of cost or market adjustments and inventory reserves as an adjustment to the cost basis of the underlying inventory. Accordingly, favorable changes in market conditions are not recorded to inventory in subsequent periods.

GUARANTOR ARRANGEMENTS

The following is a summary of the Company’s agreements that it has determined are within the scope of FIN No. 45 “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, an interpretation of FASB Statements No. 5, 57, and 107 and rescission of FASB Interpretation No. 34.”

Product warranty

The Company provides for the estimated cost of product warranties at the time revenue is recognized. Given the Company’s limited operating history, prior to the first quarter of 2005, the Company used historical industry solar panel failure rates, adjusted for the differences and uncertainties associated with its manufacturing process, as a basis for the accrued warranty costs. However, since the Company has not incurred any charges to date against its warranty accrual, the Company chose not to add to its warranty accrual for 2005 as the Company believes the accrual reflects its best estimate of warranty costs on products sold to date. The Company’s current standard product warranty includes a one-year warranty period for defects in material and workmanship and a 25-year warranty period for declines in power performance. While the Company engages in product quality programs and processes, including monitoring and evaluating the quality of component suppliers, its warranty obligation is affected by product failure rates and material usage and service delivery costs incurred in correcting a product failure. If the Company’s actual product failure rates, material usage or service delivery costs differ from estimates, revisions to the estimated warranty liability would be required.

F-10

EVERGREEN SOLAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Since the Company has a limited operating history and its manufacturing process differs from industry standards, its experience may be different from the industry data used as a basis for its original estimate. While the Company’s methodology takes into account these uncertainties, adjustments in future periods may be required as its products mature.

The following table summarizes the activity regarding the Company’s warranty accrual:

Balance at January 1, 2003	$	326,000
Accruals for warranties issued during the period		100,000
Balance at December 31, 2003		426,000
Accruals for warranties issued during the period		279,000
Balance at December 31, 2004		705,000
Accruals for warranties issued during the period		—
Balance at December 31, 2005	$	705,000

Indemnification agreements

The Company enters into standard indemnification agreements in its ordinary course of business. Pursuant to these agreements, the Company indemnifies, holds harmless, and agrees to reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally our business partners, customers, directors and officers. The term of these indemnification agreements is generally perpetual any time after execution of the agreement. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited. However, the Company has never incurred costs to defend lawsuits or settle claims related to these indemnification agreements. The Company believes the estimated fair value of such agreements is minimal. The Company agreed to indemnify, defend and hold harmless each of the purchasers participating in the Company’s Series A convertible preferred stock financing transaction, their affiliates and their respective officers, directors, agents, employees, subsidiaries, partners, members and controlling persons to the fullest extent permitted by law from and against any and all losses, claims or written threats thereof, damages, expenses (including reasonable fees, disbursements and other charges of counsel) resulting from or arising out of the Company’s breach of any representation or warranty, covenant or agreement in the purchase agreement. The Company believes the estimated fair value of this indemnification agreement is minimal.

EverQ Debt Guarantee

In November, 2005, a Credit Agreement (the “Credit Agreement”) was entered into between EverQ, Q-Cells, Evergreen and a syndicate of banks led by Deutsche Bank Aktiengesellschaft and Bayerische Hypo-und Vereinsbank AG. The Credit Agreement provides EverQ with aggregate borrowing availability of up to 22.5 million Euro comprised as follows: (i) a long-term loan facility amounting to 8.0 million Euro, (ii) a short-term loan facility amounting to 12.0 million Euro and (iii) a short-term revolving credit facility amounting to 2.5 million Euro. Pursuant to the Credit Agreement, the Company has agreed to guarantee EverQ’s repayment obligations under the Credit Agreement. As of December 31, 2005, EverQ had total obligations outstanding under this Credit Agreement of 6.5 million Euro ($7.7 million at December 31, 2005 exchange rates).

FIXED ASSETS

Fixed assets are recorded at cost. Provisions for depreciation are based on their estimated useful lives using the straight-line method over three to seven years for all laboratory and manufacturing equipment, computers, and office equipment. Leasehold improvements are depreciated over the shorter of the remainder

F-11

EVERGREEN SOLAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

of the lease’s term or the life of the improvements. Upon retirement or disposal, the cost of the asset disposed of and the related accumulated depreciation are removed from the accounts and any gain or loss is reflected in income. Expenditures for repairs and maintenance are expensed as incurred.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company’s policy regarding long-lived assets is to evaluate the recoverability or usefulness of these assets when the facts and circumstances suggest that these assets may be impaired. This analysis relies on a number of factors, including changes in strategic direction, business plans, regulatory developments, economic and budget projections, technological improvements, and operating results. The test of recoverability or usefulness is a comparison of the asset value to the undiscounted cash flow of its expected cumulative net operating cash flow over the asset’s remaining useful life. If such a test indicates that impairment is required, then the asset is written down to its estimated fair value. Any write-downs would be treated as permanent reductions in the carrying amounts of the assets and an operating loss would be recognized. To date, the Company has had recurring operating losses and the recoverability of its long-lived assets is contingent upon executing its business plan that includes further reducing its manufacturing costs and significantly increasing sales. If the Company is unable to execute its business plan, the Company may be required to write down the value of its long-lived assets in future periods. No impairments were required to be recognized during the years ended December 31, 2003, 2004 and 2005 for long-lived assets other than fixed assets.

REVENUE RECOGNITION

The Company recognizes revenue if there is persuasive evidence of an agreement with the customer, shipment has occurred, risk of loss has transferred to the customer, sales price is fixed or determinable, and collectibility is reasonably assured. The market for solar power products is emerging and rapidly evolving. The Company currently sells its solar power products primarily to distributors, system integrators and other value-added resellers within and outside of North America, which typically resell its products to end users throughout the world. For new customers requesting credit, the Company evaluates creditworthiness based on credit applications, feedback from provided references, and credit reports from independent agencies. For existing customers, the Company evaluates creditworthiness based on payment history and known changes in their financial condition.

The Company also evaluates the facts and circumstances related to each sales transaction and considers whether risk of loss has passed to the customer upon shipment. The Company considers whether its customer is purchasing its product for stock, and whether contractual or implied rights to return the product exist or whether its customer has an end user contractually committed. The Company does not offer rights to return its product other than for normal warranty conditions and has had no history of product returns.

Revenue from research grants is generally recognized as services are rendered to the extent of allowable costs incurred. These contracts are generally cost-shared between the funding agency and the Company with the Company’s share of the total contract cost historically ranging from approximately 30% to 70%. The contracts normally expire between six months and three years from their initiation. While the Company’s accounting for research contract costs are subject to audit by the sponsoring agency, in the opinion of management, no material adjustments are expected as a result of such audits.

RESEARCH AND DEVELOPMENT

Research and development costs are generally expensed as incurred.

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EVERGREEN SOLAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

INCOME TAXES

The Company accounts for income taxes under the liability method, which requires recognition of deferred tax assets, subject to valuation allowances, and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes. A valuation allowance is established if it is more likely than not that all or a portion of the net deferred tax assets will not be realized.

COMPREHENSIVE INCOME

Accumulated other comprehensive income consists of unrealized gains and losses on available-for-sale securities and cumulative foreign currency translation adjustments. As of December 31, 2004 and 2005, accumulated other comprehensive loss was $26,000 and $1.5 million, respectively. The $1.5 million in accumulated other comprehensive loss for 2005 mainly consists of cumulative foreign currency translation adjustments associated with the Company’s consolidation of EverQ. Comprehensive loss is reflected in the Consolidated Statement of Stockholder’s Equity, and includes other comprehensive losses plus the Company’s net losses.

STOCK-BASED COMPENSATION

The Company applies the accounting provisions of Accounting Principles Board (“APB”) Opinion 25, and related interpretations, as they relate to stock-based compensation and has elected the disclosure-only alternative permitted under Statement of Financial Accounting Standards, (“SFAS”) No. 123, “Accounting for Stock-Based Compensation.” The Company has disclosed herein pro forma net loss using the fair value based method. All stock-based awards to non-employees are accounted for at their fair market value, as calculated using the Black-Scholes model in accordance with SFAS No. 123, as amended by SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure.” Had the Company adopted SFAS 123 in prior periods, the magnitude of the impact of that standard on its results of operations would have approximated the pro forma net loss and pro forma net loss per share in the table below (in thousands, except per share data):

	2003						2004						2005
	Net Loss			Net Loss			Net Loss			Net Loss			Net Loss			Net Loss
	Attributable			per			Attributable			per			Attributable			per
	to Common			Common			to Common			Common			to Common			Common
	Stockholders			Share			Stockholders			Share			Stockholders			Share
Net loss attributable to common stockholders, as reported	$	(28,472	)	$	(2.39	)	$	(22,267	)	$	(0.67	)	$	(17,316	)	$	(0.29	)
Add: Stock-based employee compensation expense included in reported results		271			0.02			89			—			7			—
Deduct: Total stock-based employee compensation expense determined under the fair value-based method for all awards		(1,561	)		(0.13	)		(2,556	)		(0.08	)		(3,625	)		(0.06	)
Pro forma net loss attributable to common stockholders	$	(29,762	)	$	(2.50	)	$	(24,734	)	$	(0.75	)	$	(20,934	)	$	(0.35	)

F-13

EVERGREEN SOLAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The fair value of employee options at the date of grant were estimated using the Black-Scholes option pricing model with the following assumptions for the years ended December 31, 2003, 2004 and 2005:

	2003			2004			2005
Expected options term		7			7			7
Risk-free interest rate		4.0	%		4.0	%		4.0	%
Expected dividend yield		None			None			None
Volatility		90	%		90	%		90	%

NET LOSS PER COMMON SHARE

The Company computes net loss per common share by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding. The calculation of diluted net loss per common share for the years ended December 31, 2003, 2004 and 2005 does not include approximately 27.6 million, 10.7 million and 22.9 million potential shares of common stock equivalents outstanding at December 31, 2003, 2004 and 2005, respectively, as their inclusion would be antidilutive. Common stock equivalents include outstanding common stock options, common stock warrants, Series A convertible preferred stock and Convertible Debt.

SEGMENT REPORTING

The Company currently operates in a single segment: the sale of solar panels that generate electricity. The Company has no organizational structure dictated by product lines, geography or customer type. Major customer and geographic area revenue disclosures are presented in Note 12. However, the Company expects that as EverQ begins production, EverQ may be reported as its own segment in 2006. Note 13 discloses the impact EverQ had on the Company’s 2005 financial statements.

The components of net loss were as follows (in thousands):

	2003			2004			2005
United States	$	(14,974	)	$	(19,363	)	$	(14,053	)
Foreign		—			—			(3,263	)
Net loss	$	(14,974	)	$	(19,363	)	$	(17,316	)

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principals requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The Company bases its estimates on historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Estimates are used when accounting for the collectibility of receivables, realizability of finished goods inventory, estimated warranty costs, and deferred tax assets. Provisions for depreciation are based on their estimated useful lives using the straight-line method over three to seven years for all laboratory and manufacturing equipment, computers, and office equipment. Leasehold improvements are depreciated over the shorter of the remainder of the lease’s term or the life of the improvements. Some of these estimates can be subjective and complex and, consequently, actual results may differ from these estimates under different assumptions or conditions. While for any given estimate or assumption made by the Company’s management there may be other estimates or assumptions that are

F-14

EVERGREEN SOLAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

reasonable, the Company believes that, given the current facts and circumstances, it is unlikely that applying any such other reasonable estimate or assumption would materially impact the financial statements.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments, including cash equivalents, marketable securities, foreign exchange contracts, accounts receivable and accounts payable are carried in the consolidated financial statements at amounts that approximate fair value at December 31, 2004 and 2005. Fair values are based on market prices and assumptions concerning the amount and timing of estimated future cash flows and assumed discount rates, reflecting varying degrees of perceived risk. The fair market value of forward foreign exchange contracts is determined based on the fair value of similar contracts with similar terms and remaining maturities.

RECENT ACCOUNTING PRONOUNCEMENTS

On April 14, 2005, the Securities and Exchange Commission (SEC) approved a new rule that, for public companies, delays the effective date of FASB Statement No. 123 (revised 2004). Except for this deferral of the effective date, the guidance in FAS 123(R) is unchanged. Under the SEC’s rule, FAS 123(R) is now effective for public companies for annual, rather than interim, periods that begin after June 15, 2005. On March 29, 2005, the Securities and Exchange Commission (the “SEC”) issued Staff Accounting Bulletin No. 107 to express the SEC staff’s views regarding the interaction between FAS No. 123R and certain SEC rules and regulations and provide the staff’s views regarding the valuation of share-based payment arrangements. SFAS No. 123R will be effective for the Company for the first quarter of 2006. The Company is in the process of assessing the impact of expensing stock options on its consolidated financial statements, and has disclosed the pro-forma financial impact in Note 1. The adoption of the SFAS 123R fair value method will have a significant adverse impact on the Company’s reported results of operations. The balance of unearned stock-based compensation to be expensed in the period 2006 through 2009 related to share-based awards unvested at December 31, 2005, as previously calculated under the disclosure-only requirements of SFAS 123, is approximately $6.1 million. The Company anticipates it will grant additional employee stock options and restricted stock units during 2006 as part of its normal compensation policies. The fair value of these grants is not included in the amount above, as the impact of these grants cannot be predicted at this time because it will depend on the number of share-based payments granted and the then current fair values.

In March 2005, the FASB issued Interpretation No. 47 (“FIN 47”), “Accounting for Conditional Asset Retirement Obligations,” that requires an entity to recognize a liability for a conditional asset retirement obligation when incurred if the liability can be reasonably estimated. FIN 47 clarifies that the term Conditional Asset Retirement Obligation refers to a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the entity. FIN 47 also clarifies when an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation. FIN 47 is effective no later than the end of fiscal years ending after December 15, 2005. The Company has determined that this standard will not have a material impact on its Consolidated Financial Statements.

In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections, a replacement of Accounting Principles Board Opinion (APB) No. 20, Accounting Changes, and FASB Statement No. 3, Reporting Accounting Changes in Interim Financial Statements.” This Statement requires retrospective application to prior periods’ financial statements of a change in accounting principle. It applies both to voluntary changes and to changes required by an accounting pronouncement if the pronouncement does not include specific transition provisions. APB 20 previously required that most voluntary changes in accounting principles be recognized by recording the cumulative effect of a change in accounting principle. SFAS 154 is effective for fiscal years beginning after December 15, 2005. The Company will determine the impact of this standard on its Consolidated Financial Statements when an accounting change or error correction occurs.

F-15

EVERGREEN SOLAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In January of 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments.” SFAS No. 155 amends SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” and SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.” SFAS No. 155 also resolves issues addressed in SFAS No. 133 Implementation Issue No. D1, “Application of Statement 133 to Beneficial Interests in Securitized Financial Assets.” SFAS No. 155 eliminates the exemption from applying SFAS No. 133 to interests in securitized financial assets so that similar instruments are accounted for in the same manner regardless of the form of the instruments. SFAS No. 155 allows a preparer to elect fair value measurement at acquisition, at issuance, or when a previously recognized financial instrument is subject to a remeasurement (new basis) event, on an instrument-by-instrument basis. SFAS No. 155 is effective for all financial instruments acquired or issued after the beginning of an entity’s first fiscal year that begins after September 15, 2006. The fair value election provided for in paragraph 4(c) of SFAS No. 155 may also be applied upon adoption of SFAS No. 155 for hybrid financial instruments that had been bifurcated under paragraph 12 of SFAS No. 133 prior to the adoption of this Statement. Earlier adoption is permitted as of the beginning of an entity’s fiscal year, provided the entity has not yet issued financial statements, including financial statements for any interim period for that fiscal year. Provisions of SFAS No. 155 may be applied to instruments that an entity holds at the date of adoption on an instrument-by-instrument basis. Adoption of this standard is not expected to have a material impact on our results of operations and/or equity.

3.   INVENTORY

Inventory consisted of the following at December 31, 2004 and 2005 (in thousands):

	2004		2005
Raw materials	$	2,230	$	2,929
Work-in-process		138		519
Finished goods		538		186
	$	2,906	$	3,634

During the quarter ended July 2, 2005, the Company paid $1.5 million to a key raw material supplier to secure a quantity of inventory. The prepayment is included in the Company’s balance sheet in current assets and is amortized to cost of product revenues as material is used. As of December 31, 2005, prepaid inventory was $784,000.

4.   FIXED ASSETS

Fixed assets consisted of the following at December 31, 2004 and 2005 (in thousands):

	Useful	December 31,			December 31,
	Life	2004			2005
Laboratory and manufacturing equipment	3-7 years	$	20,310		$	29,046
Computer and office equipment	3-7 years		457			1,235
Leasehold improvements	Lesser of 15 to 20 years		7,433			8,360
	or lease term
Assets under construction			5,084			43,199
			33,284			81,840
Less: Accumulated depreciation			(6,459	)		(10,410	)
		$	26,825		$	71,430

F-16

EVERGREEN SOLAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Depreciation expense for the years ended December 31, 2003, 2004 and 2005 was $2.0 million, $3.5 million and $4.1 million, respectively. During 2003, the Company disposed of assets that were no longer in service that had a cost of $718,000 and associated accumulated depreciation of $205,000. These assets were associated with the Company’s single ribbon furnace technology, which were retrofitted to accommodate the Company’s double ribbon furnace technology. The asset disposal resulted in a loss of $513,000 to operations and is included in cost of product revenues. During 2004, and as a result of the Company’s successful closing of the Common Stock Private Placement consummated on June 21, 2004, the Company disposed of several pieces of manufacturing equipment in order to replace them with more technologically advanced equipment expected to increase total manufacturing capacity in its Marlboro facility to a target level of 15 megawatts. Equipment with a gross value of $3.7 million was disposed of during 2004, for no proceeds, and the Company realized a loss on disposal of $2.1 million. The loss on disposal of fixed assets is included in cost of product revenues. In addition to the equipment disposals, the Company had accelerated the rate of depreciation of some of its other equipment during 2004 that was disposed of by the end of 2004, resulting in incremental depreciation expense of approximately $533,000 for the year ended December 31, 2004, which is also included in cost of product revenues.

At December 31, 2005, $8.2 million of deposits on fixed assets under construction were on hand consisting primarily of deposits on equipment currently under construction for EverQ.

5.   INCOME TAXES

Income taxes computed using the federal statutory income tax rate differ from the Company’s effective tax rate primarily due to the following for the years ended December 31, 2003, 2004 and 2005:

	2003			2004			2005
Income tax benefit at US federal statutory tax rate	$	(5,091,000	)	$	(6,630,000	)	$	(5,904,000	)
State income taxes, net of federal tax effect		(758,000	)		(1,498,000	)		(1,363,000	)
Permanent items		95,000			39,000			64,000
Other		(3,000	)		(136,000	)		(347,000	)
Change in deferred tax asset valuation allowance		5,757,000			8,225,000			7,550,000
	$	—		$	—		$	—

As of December 31, 2005, the Company had federal and state net operating loss carryforwards estimated to be approximately $48.6 million and $36.3 million, respectively, available to reduce future taxable income and tax liabilities which begin to expire in 2009 and 2005, respectively. The Company also had federal and state research and development tax credit carryforwards of approximately $529,000 and $677,000, respectively, which begin to expire in 2010 and state Investment Tax Credit carryforwards of approximately $920,000 which begin to expire in 2006 available to reduce future tax liabilities.

Under provisions of the Internal Revenue Code of 1986, as amended, certain changes in the Company’s ownership may result in a limitation on the amount of net operating loss carryforwards and research and development credit carryforwards, which can be used in future years. As a result of its May 2003 Series A convertible preferred stock financing, it is likely that an ownership change occurred within the definition of Section 382 of the Code. The Company has estimated its annual net operating loss and tax credit limitation to be approximately $800,000. The Company has reduced both federal and state net operating loss carryforwards, tax credit carryforwards, and related valuation allowances by the estimated amount likely to expire unutilized as a result of such limitation management of the Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets. Management of the Company has considered its history of losses and, in accordance with the applicable accounting standards, have provided a full valuation allowance against the deferred tax asset. Of the Company’s valuation allowance of $28.9 million,

F-17

EVERGREEN SOLAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

approximately $523,000 relates to stock compensation deductions, which will be credited to additional paid in capital when realized.

Deferred tax assets consist of the following at December 31, 2004 and 2005 (in thousands):

	2004			2005
Gross deferred tax assets
Net operating loss carryforwards	$	16,875		$	18,736
Research and development credit carryforwards		505			976
Capitalized R&D expenses		4,493			8,071
Accrued expenses and deferred compensation		1,173			1,146
Other		489			431
Total gross deferred tax assets		23,535			29,360
Less: deferred tax liabilities
Depreciation		(998	)		(414	)
Deferred tax valuation allowance		(22,537	)		(28,946	)
Net deferred tax asset	$	—		$	—

Changes in federal and state tax legislation enacted during 2004 and 2005 contain numerous amendments and additions to the U.S. corporate income tax rules. While the Company continues to analyze these new provisions in order to determine their impact to its financial statements, none of these changes, either individually or in the aggregate, is expected to have a significant effect on its future income tax liability.

6.   CAPITAL STOCK

The Company has two classes of capital stock: common and preferred. At December 31, 2005, 10,650,000 shares of common stock were authorized for issuance under the Company’s Amended and Restated 2000 Stock Option and Incentive Plan and approximately 4.6 million shares were reserved for issuance upon conversion of outstanding warrants issued in the Series A Private Placement and the Common Stock Private Placement.

In February 2005, the Company completed a $62.3 million common stock offering, net of offering costs of approximately $4.4 million, to satisfy existing capital requirements and to fund the continuing capacity expansion of its Marlboro, Massachusetts manufacturing facility and the expenditures necessary for the build-out and initial operation of EverQ. A portion of the proceeds from the financing will also be used to increase research and development spending on promising next generation technologies and to explore further expansion opportunities. The Company issued 13,346,000 shares of its common stock in the offering. The shares of common stock were sold at a per share price of $5.00 (before underwriting discounts), which represented a 6% discount to the $5.30 closing price of shares of its common stock as reported on the Nasdaq National Market as of the close of business on February 3, 2005.

On April 21, 2004, the Company’s Board of Directors approved a resolution increasing the number of authorized shares of common stock from 70,000,000 to 100,000,000 and correspondingly increasing the total number of authorized shares of capital stock from 96,227,668 to 127,227,668. The Company’s shareholder meeting was subsequently held on August 20, 2004. At this meeting, the shareholders approved a resolution increasing the number of authorized shares of common stock from 70,000,000 to 100,000,000 and correspondingly increasing the total number of authorized shares of capital stock from 96,227,668 to 127,227,668.

In June 2004, in order to satisfy the Company’s existing capital requirements and to fund the continuing capacity expansion of its Marlboro, Massachusetts manufacturing facilities, the Company consummated a

F-18

EVERGREEN SOLAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

$18.8 million private placement financing transaction, net of offering costs of approximately $1.2 million, whereby the Company issued 7,662,835 shares of its common stock, and warrants to purchase up to 2,298,851 shares of its common stock, to certain institutional investors pursuant to a stock and warrant purchase agreement dated June 16, 2004, and a warrant agreement dated June 21, 2004 (“Common Stock Private Placement”). The shares of common stock were sold at a per share price of $2.61, which represented a 10% discount to the $2.90 closing price of shares of the Company’s common stock on the Nasdaq National Market as of the close of business on June 15, 2004. The warrants entitle the holders to shares of the Company’s common stock at an exercise price of $3.34. The warrants are exercisable at any time on or after December 22, 2004 and prior to June 22, 2009.

In May 2003, the Company increased the number of authorized shares of preferred stock to 27,227,668, of which 26,227,668 shares were designated Series A convertible preferred stock. On May 15, 2003, the Company consummated a private placement transaction with certain investors to raise $29.5 million through the issuance of 26,227,668 shares of Series A convertible preferred stock and the sale of a warrant to purchase 2,400,000 shares of common stock. The proceeds to the Company, net of offering costs of approximately $849,000, were approximately $28.6 million. The Company classified the Series A convertible preferred stock outside of permanent equity since the holders of the Series A convertible preferred stock could redeem their shares at any time for shares of the Company’s common stock.

As a result of the preferred stock financing, accretion and dividends of $13.5 million were recorded through December 31, 2003. Approximately $11.7 million of this charge relates to accretion that was recognized immediately because the holders of shares of the Series A convertible preferred stock are entitled to convert their shares into common stock at any time. The sources of the discounts on issuance requiring this accretion charge are summarized in the following table:

Beneficial conversion feature	$	10,314,000
Proceeds allocated to the fair value of common stock warrant		525,000
Financing costs		849,000
Total preferred stock accretion and dividends	$	11,688,000

The difference between the issuance price of the Series A convertible preferred stock and the fair value of the Company’s common stock on the date of issuance of the Series A convertible preferred stock resulted in a beneficial conversion feature totaling approximately $10.3 million, which was calculated in accordance with EITF 00-27, Application of Issue No. 98-5 to Certain Convertible Instruments.

Dividend Rights of Series A Convertible Preferred Stock

On June 21, 2004, holders of all outstanding shares of Series A convertible preferred stock agreed to convert all of their shares of Series A convertible preferred stock into shares of our common stock in connection with the Common Stock Private Placement. During the first quarter of 2004, the Series A preferred stock earned a dividend of approximately $700,000, which the Company elected to add to the liquidation preference of the Series A convertible preferred stock.

As an inducement to convert their shares into common stock in connection with the Common Stock Private Placement consummated on June 21, 2004, the remaining Series A preferred shareholders received the dividend earned for the period between April 1, 2004 and June 21, 2004 in cash, which totaled approximately $500,000. In addition, the Series A preferred shareholders received a cash conversion premium of 7% of the accreted value of Series A Preferred Stock as of March 31, 2004, which totaled $1.7 million. Therefore, the total dividend charged recorded by the Company for year ended December 31, 2004 was approximately $2.9 million.

F-19

EVERGREEN SOLAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

7.   STOCK BASED COMPENSATION

On October 24, 1994, the Board of Directors approved the Company’s 1994 Stock Option Plan (the “1994 Plan”), whose purpose is to encourage employees and other individuals who render services to the Company, by providing opportunities to purchase stock in the Company. The 1994 Plan authorizes the issuance of incentive stock options and nonqualified stock options. The 1994 Plan was terminated as to all new issuances of options effective as of the closing of the Company’s initial public offering. All options granted will expire ten years from their date of issuance. Incentive stock options granted generally have a four-year vesting period from their date of issuance and nonqualified options granted vest immediately upon their issuance.

In August 2000, the Board of Directors and stockholders approved the Company’s 2000 Stock Option and Incentive Plan (the “2000 Plan”), which became effective on the closing of the Company’s initial public offering. The purpose is to encourage employees and other individuals who render services to the Company, by providing opportunities to purchase stock in the Company. The 2000 Plan authorizes the issuance of incentive stock options and nonqualified stock options. All options granted will expire ten years from their date of issuance. Incentive stock options granted generally have a four-year vesting period from their date of issuance and nonqualified options granted generally vest immediately upon their issuance.

The Company’s 2005 Annual Meeting of Stockholders was held on July 15, 2005. At this meeting, the stockholders approved a resolution which, among other things, increased the number of authorized shares of common stock under its 2000 Stock Option and Incentive Plan from 7,650,000 to 10,650,000. Separate resolutions were also approved which, among other things, increased the number of shares authorized under the Company’s 2000 Employee Stock Purchase Plan from 120,000 to 500,000. As of December 31, 2005, the Company had approximately 5.1 million shares of common stock remaining available for future issuance under its equity compensation plans.

The following is a summary of stock option activity:

				Weighted-
				Average
	Shares			Exercise Price
Outstanding at January 1, 2003		1,146,378		$	4.84
Granted		4,137,447			1.75
Exercised		(5,500	)		1.21
Terminated		(14,388	)		3.65
Outstanding at December 31, 2003		5,263,937		$	2.42
Granted		823,301			2.83
Exercised		(17,514	)		1.19
Terminated		(319,990	)		3.72
Outstanding at December 31, 2004		5,749,734		$	2.41
Granted		1,312,304			6.16
Exercised		(750,518	)		2.30
Terminated		(261,991	)		4.11
Outstanding at December 31, 2005		6,049,529		$	3.15

F-20

EVERGREEN SOLAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Summarized information about stock options outstanding at December 31, 2005 is as follows:

			Options Outstanding
			Weighted				Options Exercisable
			Average		Weighted				Weighted
			Remaining		Average				Average
	Number		Contractual		Exercise		Number		Exercise
Range of Exercise Prices	Outstanding		Life (Years)		Price		Exercisable		Price
$   — - $ 1.55		614,785		6.53	$	1.06		346,785	$	1.15
1.56 -  1.60		22,000		7.90		1.59		22,000		1.59
1.61 -  1.61		1,838,000		7.94		1.61		838,000		1.61
1.68 -  1.95		40,192		7.77		1.72		40,192		1.72
2.00 -  2.00		1,130,376		7.88		2.00		540,872		2.00
2.08 -  2.69		645,197		7.07		2.44		362,197		2.40
2.71 -  4.70		618,994		8.63		3.87		291,572		3.36
4.77 -  7.30		760,060		8.75		6.58		151,710		6.00
7.45 - 14.00		363,925		7.65		10.47		216,673		11.50
19.00 - 19.00		16,000		4.84		19.00		16,000		19.00
		6,049,529		7.84	$	3.15		2,826,001	$	3.00

At December 31, 2003, 2004 and 2005, options exercisable were 994,748, 2,265,183 and 2,826,001 respectively. Estimated weighted average fair value of options granted in fiscal years 2003, 2004 and 2005 were $1.75, $2.83 and $6.16, respectively, on the date of grant. Estimated weighted average fair value of options outstanding as of December 31, 2003, 2004 and 2005 was $2.42, $2.41 and $3.15, respectively.

On December 23, 2005, the Company granted a restricted stock award of 100,000 shares to Dr. Brown Williams, vice President of Research and Development. The restricted shares vest over a four year period. The Company recorded approximately $1.0 million in deferred compensation in stockholders’ equity in conjunction with the restricted stock grant and will amortize it over the vesting period of the grant.

On February 27, 2006, the Board of Directors of Evergreen Solar, Inc. (the “Company”) authorized the granting of up to an aggregate of 800,000 shares of the Company’s common stock as performance-based restricted share awards (the “Restricted Share Awards”) and options to purchase up to an aggregate of 335,000 shares of the Company’s common stock to Richard Feldt, Dr. Brown Williams, Dr. Terry Bailey, Richard Chleboski, Gary Pollard and Donald Muir. Vesting of the Restricted Share Awards will only occur upon the achievement of $300 million in revenue, such revenue to include 100% of the Company’s revenue and the Company’s pro rata share of any joint venture revenue, and certain gross margin and net income financial objectives. All Restricted Share Awards will expire after five years if they have not vested. All options will vest over a four year period from February 27, 2006 (the “Date of Grant”) at a rate of 25% of the shares subject to the option per year on each of the first four annual anniversaries of the Date of Grant.

8.   EMPLOYEE STOCK PURCHASE PLAN

In September 2000, the Company’s Board of Directors adopted a non-compensatory Employee Stock Purchase Plan (“the ESPP”). Under the ESPP, eligible employees of the Company who elect to participate are granted options to purchase common stock at a 15% discount from the market value of such stock. The Company’s 2005 Annual Meeting of Stockholders was held on July 15, 2005. At this meeting, the stockholders approved a resolution which amended the ESPP to includes the following material changes: (i) an increase to 500,000 in the number of shares of the Company’s common stock that may be issued under the 2000 ESPP, (ii) the elimination of the 25-share purchase limitation for each participant for a Purchase Period and the addition of a provision that instead would allow the Compensation Committee to establish a limit for each

F-21

EVERGREEN SOLAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Purchase Period in its discretion and (iii) addition of a provision to give the Compensation Committee discretion to prospectively increase the purchase price for shares under the 2000 ESPP. As of December 31, 2005, there were approximately 8,000 shares issued under the ESPP.

9.   WARRANTS

In connection with the Series A convertible preferred stock financing transaction consummated in May 2003 (described in 6), Beacon Power Corporation purchased a warrant for $100,000, which was exercisable for 2,400,000 shares of the Company’s common stock at an exercise price of $3.37 per share. Additionally, Beacon Power Corporation purchased 892,857 shares of Series A convertible preferred stock for $1,000,000. The total proceeds of $1.1 million from Beacon Power Corporation were allocated between the Series A convertible preferred stock ($475,000) and the warrant ($625,000) based on their relative fair values. The fair value of the warrant was calculated using the Black-Scholes pricing model with the following assumptions: dividend yield of zero percent; expected volatility of 90%; risk free interest rate of 2% and a term of three years. The difference between the proceeds allocated to the relative fair value of the warrant, $625,000, and the amount paid for the warrant, $100,000, or $525,000 contributed to the accretion charge of $11.7 million for the year ended December 31, 2003.

In connection with the Common Stock Private Placement consummated on June 21, 2004, the Company issued warrants to purchase up to 2,298,851 shares of its common stock to the investors participating in the financing as well as a warrant to purchase 125,000 shares of common stock to CRT Capital Group LLC, as compensation for CRT Capital Group’s services as the placement agent for the Common Stock Private Placement. The terms of the placement agent warrant are identical to the terms of the warrants issued to the investors participating in the Common Stock Private Placement. The warrants entitle the holders to shares of the Company’s common stock at an exercise price of $3.34. The warrants are exercisable at any time on or after December 22, 2004 and prior to June 22, 2009. During 2005, Beacon Power Corporation sold its warrant to purchase 2,400,000 shares of the Company’s stock to CRT Capital Group, and on February 8, 2006, CRT Capital Group exercised the warrant to purchase 2,400,000 shares of the Company’s common stock resulting in proceeds to the Company of $8.1 million. Additionally, approximately 182,414 shares of common stock were issued during 2005 upon the exercise of warrants by several holders, resulting in proceeds to the Company of approximately $608,000.

The Company issued a warrant to purchase 89,955 shares of common stock to Silicon Valley Bank on August 26, 2004, as compensation for establishing the revolving credit facility. The warrant entitles Silicon Valley Bank to shares of the Company’s common stock at an exercise price of $3.34. The warrants are exercisable at any time on or prior to August 25, 2009. The fair value of the warrant ($187,000) has been recorded as a deferred financing charge and will be charged to interest expense ratably over the term of the facility, which is twelve months. On August 15, 2005, Silicon Valley Bank executed in full a cashless exercise of its warrant, resulting in the Company issuing 41,645 shares of its common stock.

10.   EMPLOYEES’ SAVINGS PLAN

The Company established a 401(k) plan in 1996 for eligible employees. Under the provisions of the plan, eligible employees may voluntarily contribute a portion of their compensation up to the statutory limit. The Company’s 401(k) plan provides a matching contribution of 100% of participating employee contributions, up to a maximum of $750 per year. The Company made matching contributions of $93,000, $87,000 and $0 to participating employees during the fiscal years ending December 31, 2005, 2004 and 2003, respectively.

F-22

EVERGREEN SOLAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

11.   COMMITMENTS

LEASES

On March 13, 2000, the Company entered into a ten-year lease commencing July 1, 2000, for office and manufacturing space in Marlboro, Massachusetts. Pursuant to the terms of the lease agreement, the Company will pay annual rent ranging from $464,000 in the first year to $534,000 during the last year of the lease. The Company recognizes rent expense using a straight-line convention. Rent is payable on the first day of each month and is collateralized by a $414,000 standby letter of credit. In connection with this arrangement, the Company invested in a certificate of deposit pledged to a commercial bank. This certificate of deposit was classified as “restricted cash” on the December 31, 2004 and 2005 balance sheet.

On January 24, 2004, the Company entered into a six and one-half year lease for additional office and warehouse space in Marlboro, Massachusetts. Pursuant to the terms of the lease agreement, the Company will pay annual rent of approximately $149,000. The lease was amended in December 2004 to assume more office space beginning in 2005 in consideration for a small increase in office rent.

In January 2006, the Company entered into a seven year lease for additional space dedicated mainly to research and development in Marlboro, Massachusetts. Pursuant to the terms of the lease agreement, the Company will pay annual rent ranging from $94,000 in the first year to $171,000 during the last year of the lease. The Company recognizes rent expense using a straight-line convention.

The following is a schedule, by year, of future minimum rental payments required under all leases that have remaining non-cancelable lease terms in excess of one year as of December 31, 2005 (in thousands):

2006	$	783
2007		844
2008		877
2009		892
2010		595
Thereafter		337
Total	$	4,328

Occupancy expense, which includes rent, property taxes, and other operating expenses associated with both of our Marlboro locations, was $680,000, $874,000 and $969,000 for the years ended December 31, 2003, 2004, and 2005, respectively.

LICENSE AGREEMENT

In September 1994, the Company signed an agreement to license String Ribbon technology from a professor at Massachusetts Institute of Technology. Concurrently, the Company hired the professor as a consultant. This agreement provides the Company, its successors, assigns, and legal representatives an irrevocable, worldwide right and license in and to the technology and licensed patents, including the right to make, have made, use, lease, sub-license, and sell products and to enforce any of the patent rights of the licensed patents. The license is exclusive except for rights to the licensed patents held by the U.S. Department of Energy. In exchange for these rights, the consultant earned royalties on sales of products through the third quarter of 2004. The Company incurred $54,767, $85,308 and $0 in royalty expense for the years ended December 31, 2003, 2004 and 2005, respectively. The license agreement expired in August 2004 at which point the Company no longer had any royalty obligation.

F-23

EVERGREEN SOLAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

12.  SEGMENT INFORMATION

The Company operates as one segment. The following table summarizes the Company’s concentration of total revenue:

	2004			2005
% of total revenue
By geography:
U.S. distributors		25	%		28	%
U.S. Government (research revenue)		6	%		1	%
Germany		69	%		63	%
All other		—			8	%
		100	%		100	%
By customer:
Krannich Solartechnik		44	%		20	%
Donauer Solartechnik		19	%		19	%
National Renewable Energy Laboratory (research revenue)		5	%		1	%
All other		32	%		60	%
		100	%		100	%

13.   EVERQ GMBH

As of December 31, 2005, the following assets, liabilities and net loss relating to EverQ was consolidated in the Company’s financial statements, prior to any eliminating entries associated with the consolidation (in thousands):

Grants receivable	$	16,295
Cash		824
Other current assets		2,550
Restricted cash		1,168
Deposits on fixed assets		7,618
Fixed assets		42,508
Total assets	$	70,963
Accounts payable and accrued expenses		11,054
Current portion of long term debt		5,343
Current liabilities		16,397
Deferred grants		16,284
Long term debt		7,105
Total liabilities		39,786
Shareholders’ equity		31,177
Total liabilities and stockholders’ equity	$	70,963
Net loss	$	(4,458	)

F-24

EVERGREEN SOLAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Although EverQ has not received any grants to date, on April 25, 2005, EverQ received notification that, subject to certain conditions, including receipt of European Union approval for a portion of the total grants, it will receive German government grants which, together with tax incentives expected to be received from German government authorities, would amount to approximately 28 million Euro. The grants will be amortized over the useful lives of the fixed assets for which the grants were used, in part, to acquire. The grants are subject to certain terms including, among other things, a minimum employment requirement of 350 people through December 31, 2007, and a requirement that EverQ remains in Thalheim, Germany through at least December 31, 2012, and are earned during the investment period ending on December 31, 2007.

14.   FOREIGN CURRENCY HEDGING TRANSACTIONS

In 2004, the Company began to manage its foreign exchange risk through the use of derivative financial instruments. These financial instruments serve to protect cash flow against the impact of the translation into U.S. dollars of foreign exchange denominated transactions. As of December 31, 2004, the Company had forward currency contracts denominated in foreign currencies totaling 8.5 million Euro. At December 31, 2004, the fair market value of outstanding forward exchange contracts was $11.6 million. The Company recorded unrealized losses of approximately $683,000 for the year ended December 31, 2004, in connection with the marking to market of its forward contracts. All contracts outstanding at December 31, 2004 were settled during the first quarter of 2005 and the Company had no outstanding forward contracts as of December 31, 2005.

15.   SHORT-TERM BORROWINGS

In August 2004, the Company entered into a one-year revolving credit facility in the amount of $5.0 million with Silicon Valley Bank pursuant to a Loan and Security Agreement dated August 26, 2004 (the “Loan Agreement”), at which time the Company had drawn $1.5 million. The credit facility was collateralized by a first-priority security interest granted to Silicon Valley Bank by the Company in substantially all of the Company’s assets. The Loan Agreement was modified on October 5, 2005 to extend the expiration date of the revolving credit facility to October 31, 2005. The Company repaid the $1.5 million outstanding on the revolving credit facility on October 19, 2005 and elected not to renew the facility.

16.   LONG TERM DEBT

On June 29, 2005, the Company issued Convertible Subordinated Notes (“Notes”) in the aggregate principal amount of $90.0 million, and the Company received proceeds of $86.9 million, net of offering costs which are being amortized over the term of the Notes. Interest on the Notes is payable semiannually at the annual rate of 4.375%. The Notes do not have required principal payments prior to maturity on July 1, 2012. However, the Notes are convertible at any time prior to maturity, redemption or repurchase, into shares of the Company’s common stock at an initial conversion rate of 135.3180 shares of common stock per $1,000 principal amount of Notes (equivalent to a conversion price of approximately $7.39 per share), subject to adjustment (approximately 12.2 million shares of common stock). On or after July 1, 2010, the Company may redeem the Notes for cash at the following prices expressed as a percentage of the principal amount:

Redemption Period	Price (%)
Beginning on July 1, 2010 and ending on June 30, 2011		101.250
Beginning on July 1, 2011 and ending on June 30, 2012		101.625
On July 1, 2012		100.000

The Company may redeem the Notes on or after July 6, 2008 and prior to July 1, 2010 only if the closing price of its common stock exceeds 130% of the then-current conversion price of the Notes for at least 20 trading days in a period of 30 consecutive trading days ending on the trading day prior to the date on which

F-25

EVERGREEN SOLAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

the Company provides notice of redemption. The Company may be required to repurchase the Notes upon a designated event (either a termination of trading or a change in control) at a price (which will be in cash or, in the case of a change in control, cash, shares of its common stock or a combination of both) equal to 100% of the principal amount of the Notes to be repurchased plus accrued interest. Upon a change in control, the Company may under certain circumstances be required to pay a premium on redemption which will be a number of additional shares of its common stock as determined by the Company’s stock price and the effective date of the change in control.

The Notes are subordinate in right of payment to all of the Company’s future senior debt.

EverQ Long-term Debt

On December 22, 2005, EverQ received 4.0 million Euro in funding under a certain Credit Agreement (the “Credit Agreement”) dated November 9, 2005, between EverQ, Q-Cells AG, Evergreen and a syndicate of banks led by Deutsche Bank Aktiengesellschaft and Bayerische Hypo-und Vereinsbank AG. The Credit Agreement provides EverQ with aggregate borrowing availability of up to 22.5 million Euro comprised as follows: (i) a long-term loan facility amounting to 8.0 million Euro, (ii) a short-term loan facility amounting to 12.0 million Euro and (iii) a short-term revolving credit facility amounting to 2.5 million Euro. The long-term loan facility bears an interest rate of the Interbank Offered Rate (“EURIBOR”) plus between 1.75% and 2.75% depending on whether EverQ meets certain financial targets specified in the Credit Agreement (or 4.84% at December 31, 2005). The short-term loan facility bears an interest rate of EURIBOR plus 2.75% (or 5.44% as of December 31, 2005) and the short-term revolving credit facility bears an interest rate of 7.5% (or 8.04% as of December 31, 2005). In the event of a default by EverQ, Evergreen has agreed to relinquish certain rights to certain assets of EverQ which collateralize EverQ’s repayment obligations under the Credit Facility. In addition, pursuant to the Credit Agreement, Evergreen has agreed to guarantee EverQ’s repayment obligations under the Credit Agreement. As of December 31, 2005, the total amount of debt outstanding relating to the Credit Agreement was $7.7 million, of which $4.1 million is classified as current in the Company’s balance sheet (all amounts translated using rates in effect as of December 31, 2005).

17.   SUBSEQUENT EVENTS

On February 21, 2006, the Company announced that it has had entered into a four-year supply contract with S.A.G. Solarstrom AG (S.A.G.), based in Freiburg, Germany. The agreement calls for the Company to ship approximately $100 million of photovoltaic modules to S.A.G. over the next four years.

On February 28, 2006, the Company announced that it has entered into a multi-year supply contract with Global Resource Options, Inc. (GRO), a Vermont-based solar power distributor and system integrator. The agreement calls for the Company to ship approximately $88 million of photovoltaic modules to GRO over the next four years.

On March 15, 2006, the Company announced that it has entered into a multi-year supply contract with Donauer Solartechnik (Donauer), a German-based solar power distributor. The agreement calls for us to ship approximately $125 million of photovoltaic modules to Donauer over the next four years.

As of March 13, 2006, EverQ had drawn an additional 11 million Euro (approximately $13 million at current exchange rates) on its credit facility with Deutsche Bank.

F-26

EVERGREEN SOLAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

18.   UNAUDITED QUARTERLY RESULTS

The following tables set forth unaudited selected financial information for the periods indicated. This information has been derived from unaudited consolidated condensed financial statements, which, in the opinion of management, include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of such information. The Company’s independent auditors have not audited this information. The results of operations for any quarter are not necessarily indicative of the results to be expected for any future period.

QUARTERLY STATEMENT OF OPERATIONS

	Mar 31,			Jun 30,			Sep 30,			Dec 31,			Apr 2,			Jul 2,			Oct 1,			Dec 31,
	2004			2004			2004			2004			2005			2005			2005			2005
	(In thousands, except per share data)
	Unaudited
Revenues:
Product revenues	$	2,830		$	4,541		$	5,604		$	9,265		$	10,287		$	10,679		$	11,092		$	11,569
Research revenues		262			229			369			436			235			—			94			76
Total revenues		3,092			4,770			5,973			9,701			10,522			10,679			11,186			11,645
Operating expenses:
Cost of product revenues		4,553			9,161			7,230			8,773			9,936			10,018			9,934			10,066
Research and development expenses, including costs of research revenues		902			995			1,335			1,699			2,325			2,647			3,065			3,424
Selling, general and administrative expenses		1,673			1,662			2,126			2,336			1,960			2,992			3,115			4,207
Total operating expenses		7,128			11,818			10,691			12,808			14,221			15,657			16,114			17,697
Operating loss		(4,036	)		(7,048	)		(4,718	)		(3,107	)		(3,699	)		(4,978	)		(4,928	)		(6,052	)
Other income (loss), net
Foreign exchange gains (losses), net		8			(1	)		40			(665	)		280			(194	)		48			(129	)
Gain on sale of EverQ interest to REC		—			—			—			—			—			—			—			527
Interest income (expense), net		65			47			71			(19	)		158			397			7			52
Loss from operations before minority interest		(3,963	)		(7,002	)		(4,607	)		(3,791	)		(3,261	)		(4,775	)		(4,873	)		(5,602	)
Minority interest in EverQ		—			—			—			—			41			282			310			562
Net loss		(3,963	)		(7,002	)		(4,607	)		(3,791	)		(3,220	)		(4,493	)		(4,563	)		(5,040	)
Accretion, dividends and conversion premiums on Series A convertible preferred stock		(665	)		(2,239	)		—			—			—			—			—			—
Net loss attributable to common stockholders	$	(4,628	)	$	(9,241	)	$	(4,607	)	$	(3,791	)	$	(3,220	)	$	(4,493	)	$	(4,563	)	$	(5,040	)
Net loss per share attributable to common stockholders (basic and diluted)	$	(0.30	)	$	(0.44	)	$	(0.10	)	$	(0.08	)	$	(0.06	)	$	(0.07	)	$	(0.07	)	$	(0.08	)
Weighted average shares used in computing basic and diluted net loss per share attributable to common stockholders		15,489			20,840			47,523			47,534			54,914			60,973			61,178			61,510

F-27

EVERGREEN SOLAR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

19.   VALUATION AND QUALIFYING ACCOUNTS

The following table sets forth activity in the Company’s valuation and qualifying accounts (in thousands):

	Balance at
	Beginning		Charged to						Balance at
Description	of Period		Operations			Deductions			End of Period
Year ended December 31, 2003
Reserves and allowances:
Valuation allowance for deferred tax assets		17,151		5,757			—			22,908
Allowance for doubtful accounts		140		87			—			227
Year ended December 31, 2004
Reserves and allowances:
Valuation allowance for deferred tax assets		22,908		8,225			(8,596	)		22,537
Allowance for doubtful accounts & sales discounts		227		28			(171	)		84
Year ended December 31, 2005
Reserves and allowances:
Valuation allowance for deferred tax assets		22,537		7,550			(1,141	)		28,946
Allowance for doubtful accounts & sales discounts		84		(19	)		—			65

F-28

Schedule – 1 – Condensed Financial Information of the Registrant
Condensed Balance Sheets

	December 31,			December 31,
	2004			2005
ASSETS
Total current assets	$	22,482		$	126,999
Restricted cash		414			414
Investment in EverQ		—			24,617
Loans to EverQ		—			4,765
Deferred financing costs		—			2,877
Deposits on fixed assets		—			599
Fixed assets, net		26,825			28,923
Total assets	$	49,721		$	189,194
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
Total current liabilities		8,201			7,079
Subordinated convertible notes		—			90,000
Stockholders’ equity:
Common stock, $0.01 par value, 100,000,000 shares authorized, 47,541,823 and 61,965,231 issued and outstanding at December 31, 2004 and December 31, 2005, respectively		475			620
Additional paid-in capital		116,764			182,345
Deferred compensation		—			(1,036	)
Accumulated deficit		(75,693	)		(89,745	)
Accumulated other comprehensive loss		(26	)		(69	)
Total stockholders’ equity		41,520			92,115
Total liabilities, convertible preferred stock and stockholders’ equity	$	49,721		$	189,194

F-29

Schedule – 1 – Condensed Financial Information of the Registrant
Condensed Statements of Operations

	For the Years Ended December 31,
	2003			2004			2005
Revenues:
Product revenues	$	7,746		$	22,240		$	43,627
Research revenues		1,565			1,296			405
Total revenues		9,311			23,536			44,032
Operating expenses:
Cost of product revenues		15,379			29,717			39,954
Research and development expenses, including costs of research revenues		3,791			4,931			9,753
Selling, general and administrative expenses		5,337			7,797			9,678
Total operating expenses		24,507			42,445			59,385
Operating loss		(15,196	)		(18,909	)		(15,353	)
Other income (loss), net		222			(454	)		1,298
Net loss		(14,974	)		(19,363	)		(14,055	)
Accretion, dividends and conversion premiums on Series A convertible preferred stock		(13,498	)		(2,904	)		—
Net loss attributable to common stockholders	$	(28,472	)	$	(22,267	)	$	(14,055	)
Net loss per share attributable to common stockholders (basic and diluted)	$	(2.39	)	$	(0.67	)	$	(0.24	)
Weighted average shares used in computing basic and diluted net loss per share attributable to common stockholders		11,899			33,204			59,631

F-30

Schedule – 1 – Condensed Financial Information of the Registrant
Condensed Statement of Cash Flows

	For the Years Ended December 31,
	2003			2004			2005
Net cash used in operating activities	$	(9,362	)	$	(15,264	)	$	(11,477	)
Net cash used in investing activities		(15,848	)		(2,051	)		(118,126	)
Net cash flow provided by financing activities		28,636			18,074			154,142
Net increase in cash and cash equivalents		3,426			759			24,539
Cash and cash equivalents at beginning of year		1,194			4,620			5,379
Cash and cash equivalents at end of year	$	4,620		$	5,379		$	29,918

F-31

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned on this 16th day of March, 2006, thereunto duly authorized.

EVERGREEN SOLAR, INC.

By:  /s/  Richard M. Feldt

Richard M. Feldt

Chief Executive Officer,

President and Director

POWER OF ATTORNEY

KNOW ALL PERSONS BY THERE PRESENTS, that each person whose signature appears below constitutes and appoints Richard M. Feldt and Donald M. Muir, and each of them his attorneys-in-fact, each with the power of substitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K with all exhibits thereto and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that such attorneys-in-fact and agents or any of them, or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Name	Title	Date
/s/  Richard M. Feldt Richard M. Feldt	Chief Executive Officer, President and Director (Principal Executive Officer)	March 16, 2006
/s/  Donald M. Muir Donald M. Muir	Chief Financial Officer and Vice President (Principal Financial and Accounting Officer)	March 16, 2006
/s/  Michael El-Hillow Michael El-Hillow	Chairman of the Board of Directors	March 16, 2006
/s/  Philip J. Deutch Philip J. Deutch	Director	March 16, 2006
/s/  Allan H. Cohen Allan H. Cohen	Director	March 16, 2006
/s/  Edward C. Grady Edward C. Grady	Director	March 16, 2006

Name	Title	Date
/s/  Dr. Gerald L. Wilson Dr. Gerald L. Wilson	Director	March 16, 2006
/s/  Timothy Woodward Timothy Woodward	Director	March 16, 2006

EX-10.17

                                                                   Exhibit 10.17

CONFIDENTIAL TREATMENT REQUESTED: Certain portions of this document have been
omitted pursuant to a request for confidential treatment and, where applicable,
have been marked with an asterisk ("[****]") to denote where omissions have been
made. The confidential material has been filed separately with the Securities
and Exchange Commission.


                         MASTER JOINT VENTURE AGREEMENT

                                  BY AND AMONG

                              EVERGREEN SOLAR, INC.

                                  Q - CELLS AG

                          RENEWABLE ENERGY CORPORATION

                                       AND

                                   EVERQ GMBH



                                TABLE OF CONTENTS



                                                                            PAGE
                                                                            ----
                                                                         
ARTICLE I.    Relation to Existing Agreements; Interpretation, Relation
              to Articles, Participation of EverQ........................     4
   1.1           Relation to Existing Agreements.........................     4
   1.2           Definitions.............................................     4
   1.3           Headings and Other Interpretation.......................    11
   1.4           Relation to Articles of Association.....................    11
   1.5           German Legal Terms......................................    11
   1.6           Participation of EverQ..................................    11

ARTICLE II.   Purpose of EverQ, Share Sale and Transfer..................    12
   2.1           Purpose of EverQ........................................    12
   2.2           Share Transfer in EverQ.................................    12

ARTICLE III.  Management and Operation of EverQ..........................    13
   3.1           Management and Supervision of EverQ.....................    13
   3.2           Accounting Matters; Basic Financial Inspection Rights...    13
   3.3           Other Financial Matters.................................    14
   3.4           Second REC Supply Agreement and REC Option..............    14
   3.5           Capacity Expansion and Additional Financing.............    15
   3.6           Directors...............................................    19
   3.7           Indemnification.........................................    19

ARTICLE IV.   Restrictions on Transfer; Right of First Refusal for Sale
              of Shares..................................................    20
   4.1           Restrictions on Transfer; Exceptions....................    20
   4.2           Right to Notice.........................................    20
   4.3           Exercise of Right of First Refusal......................    20
   4.4           Right to Sell to Third Party............................    21
   4.5           Reinstatement of Right of First Refusal.................    21
   4.6           Change of Control.......................................    21
   4.7           Co-Selling Rights.......................................    21
   4.8           Adherence by Third Party................................    21
   4.9           Relation to Articles of Association.....................    21

ARTICLE V.    Term and Termination.......................................    22
   5.1           Term....................................................    22
   5.2           Termination by mutual consent...........................    22
   5.3           Expulsion for Breach....................................    22
   5.4           Termination after [****]................................    26
   5.5           Termination in Case of Sale and Transfer................    26
   5.6           Post-Termination Covenants..............................    26



                                      -i-



                                                                         
ARTICLE VI.   Closing Conditions.........................................    27
   6.1           Conditions to Obligations of REC........................    27
   6.2           Conditions to the Obligations of E and Q................    27

ARTICLE VII.  Warranties.................................................    27
   7.1           Warranties of Q.........................................    27
   7.2           Warranties of E.........................................    29
   7.3           Warranties of REC.......................................    31
   7.4           Additional Representations and Warranties by EVERQ......    33
   7.5           Additional Representations and Warranties by E and Q
                 pertaining to EverQ.....................................    35

ARTICLE VIII. Liability and Limitations of Liability.....................    36
   8.1           Liability...............................................    36
   8.2           Definitions.............................................    37
   8.3           Determination of the Amount of Damage...................    37
   8.4           Limitations of Liability for Breach of Warranties.......    37
   8.5           GENERAL LIMITATION OF LIABILITY.........................    38

ARTICLE IX.   Additional Agreements......................................    38
   9.1           Marketing...............................................    38
   9.2           Q Manufacturing Right of First Refusal..................    38
   9.3           REC Manufacturing Right of First Refusal................    39
   9.4           Relation of Sections 9.2 and 9.3........................    40
   9.5           [****]..................................................    41
   9.6           Cooperation to Pursue Tax Efficiencies..................    42
   9.7           Confidentiality.........................................    42
   9.8           Reasonable Efforts......................................    44
   9.9           Standstill..............................................    44
   9.10          Employee Matters........................................    45
   9.11          Covenant Regarding REC Services Agreement...............    45

ARTICLE X.    Miscellaneous..............................................    45
   10.1          Expenses................................................    45
   10.2          Further Assurances......................................    46
   10.3          Notices.................................................    46
   10.4          Governing Law and Dispute Resolution....................    47
   10.5          Binding Effect..........................................    47
   10.6          Assignment..............................................    48
   10.7          No Third Party Beneficiaries............................    48
   10.8          Foreign Corrupt Practices Act...........................    48
   10.9          Sarbanes-Oxley and Nasdaq Covenant......................    48
   10.10         Amendment, Waivers......................................    49
   10.11         Entire Agreement........................................    49
   10.12         No Joint Venture or Partnership.........................    49
   10.13         Language for Joint Venture and this Agreement...........    49




                                      -ii-



                                                                         
   10.14         Voting and other rights.................................    49
   10.15         Severability............................................    50



EXHIBITS

Exhibit A         Articles of Association
Exhibit A-1       German Translation of Articles of Association
Exhibit 7.4 (a)   EverQ Balance sheet as of September 30, 2005
Exhibit 7.4 (e)   List of EverQ personnel and pensions
Exhibit 7.4 (f)   Material Agreements
Exhibit 7.4 (h)   EverQ Insurance

SCHEDULES

Schedule 3.4   Second REC Supply Agreement


                                     -iii-


                         MASTER JOINT VENTURE AGREEMENT

     This Master Joint Venture Agreement (the "AGREEMENT") is made and entered
into as of the 4th day of November, 2005, by and between

     Evergreen Solar, Inc., a Delaware corporation with its principal executive
offices located at 138 Bartlett Street, Marlboro, Massachusetts, USA
("EVERGREEN" or "E"),

     Q-Cells AG, a stock corporation organized under the laws of Germany with
its principal executive offices located at Guardianstr. 16, 06766 Thalheim,
Germany (,,Q-CELLS" or "Q"),

     Renewable Energy Corporation, a stock corporation organized under the laws
of Norway with its principal executive offices located at Veritasveien 14,
N-1323 Hovik, NORWAY ("REC")

     and

     EverQ GmbH, a limited liability company organized under the laws of Germany
with its principal offices located at Guardianstr. 16, 06766 Thalheim, Germany
(,,EVERQ").

     Capitalized terms used herein shall have the meaning ascribed to them in
SECTION 1.2.

                                    RECITALS

     WHEREAS:

     The Parties are each engaged in the manufacture and distribution of solar
products.

A.   Evergreen Solar

     Evergreen has unique and proprietary String Ribbon wafer manufacturing
     technology which, when fully developed, may have a very low cost potential.
     Evergreen has an active research program to continue to develop its
     advanced string ribbon technology and, assuming the successful growth of
     EverQ, intends to channel its main future growth through EverQ.



B.   EverQ

     EverQ is a recently created joint venture between Q-Cells and Evergreen to
     manufacture String Ribbon wafers, photovoltaic cells and modules
     incorporating such wafers based on the combination of their respective
     technologies and expertise. Construction of the first 30 MW factory has
     started in Thalheim, Germany, which is expected to commence production in
     March[****]. Assuming the factory achieves its objectives, Q-Cells and
     Evergreen plan on expanding the EverQ joint venture in Thalheim to 120 MW
     as soon as practicable, and to look to establish factories in other
     locations worldwide.

C.   REC

     REC is, via its subsidiary Solar Grade Silicon Holding, Inc. with
     production at Moses Lake, Washington, USA and Butte, Montana USA ("SGS"),
     the world leader in the production of solar grade silicon. REC is currently
     performing large scale technology tests with the objective of producing
     commercial quantities of the granular form factor of silicon feedstock that
     is needed by Evergreen for its wafer manufacturing process. REC is also the
     world's largest suppliers of high quality silicon wafers for photovoltaic
     applications. At present REC produces silicon wafers through its unique and
     proprietary casting and slicing processes.

D.   Q-Cells

     Q-Cells is the largest independent manufacturer of crystalline silicon
     solar cells in the world. Q-Cells is in the midst of a capacity expansion
     that will provide them with 350 MW of solar cell manufacturing capacity.
     Q-Cells has active programs to increase the efficiency and reduce the cost
     to convert wafers into solar cells.

E.   Benefits to Parties

     The Parties believe that it is in their mutual best interest to have REC
     become a shareholder of EverQ and provide additional support via the REC
     Supply Agreements and the REC License Agreement, as well as establish a
     close collaboration with Evergreen on technology sharing and potentially
     String Ribbon wafer production. The Parties further believe that combining
     their respective technologies and capabilities would have a number of
     benefits including:

     (1)  REC

          (a)  Access to String Ribbon wafer technology through EverQ
               [****]

          (b)  Technology transfer/sharing with Evergreen

          (c)  Equity participation in EverQ


                                      -2-



          (d)  Secure high value customer for scaling of granular silicon

          (e)  [****]

     (2)  Evergreen

          (a)  Technology transfer/sharing with REC

          (b)  Secure silicon supply at attractive market related pricing

          (c)  Accelerated development and proliferation of String Ribbon
               technology

          (d)  Initial substantial majority ownership of EverQ

     (3)  EverQ

          (a)  Secure silicon supply at attractive market related pricing

          (b)  Accelerated String Ribbon technology development (Evergreen
               responsibility)

          (c)  Accelerated technology and manufacturing systems development

     (4)  Q-Cells

          (a)  Improved cost position through EverQ

          (b)  Low-cost supply of String Ribbon wafers

          (c)  Reduced capital commitment

F.   Existing Agreements

     On 14 January 2005, E and Q have entered in to the following agreements
     regarding EverQ:

          (a) Master Joint Venture Agreement (notarial deed nr. 7 / 2005 of the
          Berlin notary public Dr. Rudolf von Hanstein) (the "EXISTING MJVA"),

          (b) E License Agreement (notarial deed nr. 5 / 2005 of the Berlin
          notary public Dr. Rudolf von Hanstein) (the "E LICENSE AGREEMENT"),

          (c) Q License Agreement (notarial deed nr. 6 / 2005 of the Berlin
          notary public Dr. Rudolf von Hanstein) (the "Q LICENSE AGREEMENT")
          (jointly the "EXISTING AGREEMENTS").

     The Existing MJVA will be replaced by this Agreement. Certified Copies of
     the Existing Agreements have been provided to all Parties who waive reading
     and attaching of the Existing Agreements to this Agreement.


                                      -3-



NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations, warranties and indemnities made herein and of the mutual
benefits to be derived herefrom, and for other good and valuable consideration
(the receipt and adequacy of which are hereby acknowledged), the Parties hereto
agree as follows:

                                   ARTICLE I.

     Relation to Existing Agreements; Interpretation, Relation to Articles,
                             Participation of EverQ

     1.1  Relation to Existing Agreements. The Existing MJVA is hereby replaced
by this Agreement as of the Signing Date. The other Existing Agreements have in
the meantime been amended by the Parties; such amended versions shall remain in
full force and effect.

     1.2 Definitions. For the purposes of this Agreement, capitalized terms
used herein shall have the respective meanings assigned thereto in this SECTION
1.2.

          "ACQUISITION PROPOSAL" has the meaning assigned in SECTION 4.2.

          "ACQUISITION PROPOSAL NOTICE" has the meaning assigned in SECTION 4.2.

          "ACT" has the meaning assigned in SECTION 10.8.

          "ACTION" means any claim, action, suit or arbitration, as well as any
inquiry, proceeding or investigation by or before any Governmental Authority.

          "ADDITIONAL CAPITAL CONTRIBUTIONS" has the meaning set forth in
SECTION 2.3.

          "AFFILIATE" means any Person directly or indirectly controlling or
controlled by, or under direct or indirect common control with, a Party at the
relevant time. For the purposes of this definition, "control" means the
beneficial ownership of more than fifty percent (50%) of the voting rights.

          "AGGREGATE EQUITY FUNDING" means [****], as adjusted to reflect
additional capital contributions after the Closing of this Agreement.

          [****]

          "ALTERNATIVE VENTURE" means a [****]


                                      -4-



[****]

          [****]

          "ANNUAL PLAN" shall mean an annual business and operations plan as
determined by the Supervisory Board.

          "ARBITRATOR" has the meaning assigned in SECTION 5.3 (C)(II)(3).

          "ARTICLES OF ASSOCIATION" means the Articles of Association
(Gesellschaftsvertrag) of EverQ set forth as EXHIBIT A attached hereto (a German
translation is attached hereto as EXHIBIT A-1), together with any amendments
thereto approved by the Parties. Should there be a discrepancy between the
German and the English versions of the Articles, the English version shall
prevail and the Parties shall amend the German version of the Articles to
reflect the meaning of the English version.

          "BANKRUPTCY EVENT" means with regard to any Party:

                    a) such Party commencing a voluntary case or other
proceeding, or an involuntary case or other proceeding being commenced against
such Party and remaining undismissed and unstayed for a period of [****], in
either case seeking liquidation, reorganization or other relief with respect to
such Party or its debts under any applicable bankruptcy, reorganization,
composition, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of such Party or any substantial part of its property;

                    b) such Party consenting to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it; or

                    c) such Party admitting in writing its inability to pay its
debts generally as they become due or generally failing to pay such debts as
they become due or becoming subject to disposition of a clearing-house to
suspend transactions.

          "BREACHING PARTY" has the meaning assigned in SECTION 5.3.

          "BUSINESS DAY" means any day on which financial institutions are
generally open and available for business, and which is not otherwise a holiday,
in all of the German state of Saxony-Anhalt, the US state of Massachusetts and
Oslo, Norway.


                                      -5-



          "BUSINESS YEAR" means the period of time which, according to EverQ's
Articles of Association, or relevant legislation, shall be the annual period
used for accounting and public reporting obligations of EverQ.

          "CAPACITY EXPANSION" has the meaning assigned in SECTION 3.5 (A).

          "CELL" means a crystalline silicon material substrate that has been
processed to provide electrical output from incident sunlight.

          "CHANGE OF CONTROL" means with respect to any entity, the acquisition
of such entity by another Person by means of any transaction or series of
related transactions (including, without limitation, any share acquisition, sale
of all or substantially all of the assets, reorganization, merger or
consolidation, but excluding any sale of shares for capital raising purposes)
other than a transaction or series of transactions in which the holders of the
voting securities of such entity outstanding immediately prior to such
transaction continue to retain (either by such voting securities remaining
outstanding or by such voting securities being converted into voting securities
of the surviving entity), as a result of shares in such entity held by such
holders prior to such transaction, more than 50% of the total voting power
represented by the voting securities of such entity or such surviving entity
outstanding immediately after such transaction or series of transactions.

          "CLOSING CONDITIONS" has the meaning assigned in SECTION 6.1 AND 6.2.

          "CLOSING DATE" means the day on which fulfillment or waiver of all
Closing conditions has occurred (and which the Parties agree is the Signing
Date).

          "CONCURRENT AGREEMENTS" means the Services Agreements, the License
Agreements, the REC Supply Agreements and the Evergreen Supply Agreement.

          "CONFIDENTIAL INFORMATION" has the meaning assigned in SECTION 9.7.

          "DIRECTOR" means a member of the Supervisory Board
(Aufsichtsratsmitglied) of EverQ.

          "DISCLOSING PARTY" has the meaning assigned in SECTION 9.7(A).

          "DISTRIBUTION" means the transfer of cash or other property whether by
way of dividend or otherwise to one or more of the Shareholders, or the purchase
or redemption of Shares for cash or other property.

          "EU" means European Union.

          "E FIRST REFUSAL NOTICE" has the meaning assigned in SECTION 9.2(B).

          "ELECTION NOTICE" has the meaning assigned in SECTION 4.3.


                                      -6-



          "E LICENSE AGREEMENT" has the meaning assigned in the RECITALS (F).

          "E SERVICES AGREEMENT" has the meaning assigned in the RECITALS (F).

          "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

          "EXISTING AGREEMENTS" has the Meaning assigned in the RECITALS (F).

          "EXISTING MJVA" has the Meaning assigned in the RECITALS (F).

          "FAIR MARKET PRICE" has the meaning assigned in SECTION 3.5(D).

          "FAIR MARKET VALUE" has the meaning assigned in SECTION 5.3(C).

          "EVERGREEN SUPPLY AGREEMENT" means a supply agreement between SGS and
Evergreen entered into on November 22, 2005

          "FIRST REC SUPPLY AGREEMENT" means the supply agreement between SGS
and EverQ attached hereto as EXHIBIT C.

          "FREE CASH" means, as of any date of determination, the amount of
liquid net assets held in cash and other liquid, short-term investment
instruments in excess of the amount which is sufficient to fund the operations
and investments of EverQ for the following [****] according to EverQ's
then-current budget projections.

          "GOVERNMENT INVESTMENT GRANT" means GA-grants (GA-Mittel; Mittel aus
dem Programm "Gemeinschaftsaufgabe Aufbau Neue Laender")

          "GOVERNMENTAL AUTHORITY" means any US, German or Norwegian, federal,
national, supranational, state, provincial, municipal, local, or similar
government, governmental, regulatory or administrative authority, agency or
commission or any court, tribunal, or judicial or arbitral body.

          "GOVERNMENTAL ORDER" means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Authority.

          "GRANT IMPUNITY NOTICE" has the meaning assigned in SECTION 3.5
(C)(I).

          "IFRS" means International Financial Reporting Standards.

          "INDEMNIFIABLE CLAIMS" has the meaning assigned in SECTION 8.2.

          "INDEMNIFIED PARTY" has the meaning assigned in SECTION 8.2.

          "INDEMNIFYING PARTY" has the meaning assigned in SECTION 8.1.


                                      -7-



          "INITIAL CAPACITY" has the meaning assigned in SECTION 3.5(A).

          "KNOWLEDGE" shall mean, with respect to a Party, the actual knowledge
of its officers and the members of the Board of Directors or Supervisory Board
of such Party, provided that such persons shall have made reasonable inquiry of
those employees and consultants, as the case may be, whom such officers or
members of the Board of Directors or the Supervisory Board reasonably believe
would have actual knowledge of the matters represented.

          "LAW" means any US, German or Norwegian, federal, national,
supranational, state, provincial, municipal, local or similar statute, law,
ordinance, regulation, rule, code, order, requirement or rule of law.

          "LIABILITIES" means any and all indebtedness or other liabilities and
obligations, whether accrued or fixed, absolute or contingent, matured or
unmatured or determined or determinable, including those arising under any Law,
Action, Governmental Order and those arising under any contract, agreement,
arrangement, commitment or undertaking.

          "LICENSE AGREEMENTS" means the E License Agreement, the Q License
Agreement and the REC License Agreement.

          "MANAGEMENT BOARD" shall mean the Management Board of Directors
(Geschaeftsfuerung) of EverQ.

          "MATERIAL AGREEMENT" means agreements entered into by EverQ with an
annual value above Euro 500,000.

          "MATERIAL BREACH" has the meaning assigned in SECTION 5.3.

          "MODULE" means an assembly of multiple, electrically connected Cells.

          "NEGOTIATION PERIOD" has the meaning assigned in SECTION 4.3.

          "NON-SELLING PARTIES" has the meaning assigned in SECTION 4.2.

          "PARTIES" means the parties to this Agreement, from time to time, and
a "PARTY" shall mean either E, Q or REC, as applicable.

          "PERCENTAGE INTERESTS" means the percentage interests of the Parties
in EverQ.

          "PERSON" means any natural person, firm, partnership, association,
corporation, company, trust, business trust, governmental authority or other
entity.

          "Q CONFIRMATION NOTICE" has the meaning assigned in SECTION 9.2(B).


                                      -8-



          "Q LICENSE AGREEMENT" means the License & Technology Transfer
Agreement between Q and EverQ attached hereto as EXHIBIT C.

          "Q PREFERENTIAL OFFER" has the meaning assigned in SECTION 3.5(C).

          [****]

          "Q SERVICES AGREEMENT" has the meaning assigned in the RECITALS(F)..

          "REC LICENSE AGREEMENT" means the License & Technology Transfer
Agreement between REC and EverQ attached hereto as EXHIBIT B.

          "REC OPTION" has the meaning assigned in SECTION 3.4(B).

          "REC OPTION EXERCISE LETTER" has the meaning assigned in SECTION
3.4(B).

          "REC OFFER DATE" has the meaning assigned in SECTION 3.4(C).

          "REC SUPPLY AGREEMENTS" means the First REC Supply Agreement and the
Second REC Supply Agreement.

          "RECAPITALIZATION" means any stock dividend, stock split, combination
of shares, reorganization, recapitalization, reclassification or other similar
event.

          "RECEIVING PARTY" has the meaning assigned in SECTION 9.7(A).

          [****]

          "RIBBON TECHNOLOGY" means a technique in which a thin sheet of
silicon, typically polycrystalline silicon, is grown directly from molten
silicon. The sheet is generally grown in a vertical orientation without the use
of foreign substrate on which the silicon is formed, although some processes
grow the silicon in a horizontal direction and can use a substrate on which the
silicon is formed.

          [****]

          "SALE PERIOD" has the meaning assigned in SECTION 4.4.

          "SECOND REC SUPPLY AGREEMENT" has the meaning assigned in SECTION 3.4
(A).

          "SECURITIES ACT" means the Securities Act of 1934, as amended.

          "SELLING PARTY" has the meaning assigned in SECTION 4.2.


                                      -9-



          "SERVICES AGREEMENTS" means the E Services Agreement, the Q Services
Agreement and the REC Services Agreement.

          "SGS" has the meaning assigned in the recitals.

          "SHAREHOLDER" means each of E, Q and REC and their respective
Affiliates.

          "SHARES" means shares of EverQ equity securities or securities
convertible or exchangeable into EverQ equity securities.

          "SIGNING DATE" means the date hereof.

          "STRING RIBBON TECHNOLOGY" means [****].

          "SUBJECT SHARES" has the meaning assigned in SECTION 4.2.

          "SUPERVISORY BOARD" means the Supervisory Board of Directors
(Aufsichtsrat) of EverQ.

          "TAX" or, collectively, "TAXES" means any and all German, United
States, provincial, state, local and other taxes, assessments and other
governmental charges, duties, impositions and liabilities, including taxes based
upon or measured by gross receipts, income, profits, sales, use and occupation,
and value added, ad valorem, transfer, franchise, withholding, payroll,
recapture, employment, excise and property taxes, together with all interest,
penalties and additions imposed with respect to such amounts, and any
obligations with respect to such amounts arising as a result of being a member
of an affiliated, consolidated, combined or unitary group for any period or
under any agreements or arrangements with any other Person and including any
liability for taxes of a predecessor or transferor entity.

          "TERMINATING PARTY" has the meanings assigned in ARTICLE 5, as
applicable.

          "TERMINATION CALL RIGHT" has the meanings assigned in SECTION 5.3(D)
AND SECTION 5.4 (B), as applicable.

          "TERMINATION SECURITIES" has the meaning assigned in SECTION 5.3(C).

          "THIRD PARTY" means a Person who is neither a Party nor an Affiliate
of a Party.

          "TRANSFER" has the meaning assigned in SECTION 4.1.

          "US GAAP" means the generally accepted accounting principles in the
United States.


                                      -10-



          "EVERQ" has the meaning assigned in the RECITALS.

          "WAFER" means a crystalline silicon material substrate that is
intended to but has not yet been made into a Cell.

     1.3 Headings and Other Interpretation. In this Agreement (a) headings are
for convenience of reference only and shall not affect the interpretation of the
provisions of this Agreement except to the extent that the context otherwise
requires; (b) words importing the singular shall include the plural and vice
versa; (c) words denoting individuals shall include any form of entity and vice
versa; (d) words denoting any gender shall include all genders; (e) where any
act, matter or thing is required by this Agreement to be performed or carried
out on a certain day and that day is not a Business Day then that act, matter or
thing shall be carried out or performed on the next following Business Day; (f)
unless specified otherwise, any reference herein to any Article, Section,
clause, sub-article, sub-clause, Appendix or Exhibit shall be deemed to be a
reference to an Article, Section, clause, sub-article, sub-clause, Appendix or
Exhibit of this Agreement; (g) any reference to any agreement, document or
instrument shall refer to such agreement, document or instrument as amended,
modified, supplemented, or novated; and (h) the words "include," "including" and
the derivations thereof shall not be limiting.

     1.4 Relation to Articles of Association. In the event that this Agreement
and the Articles of Association of EverQ should differ in one or several
aspects, in the internal relation between E, Q and REC this Agreement shall
supersede the Articles of Association as far as this is legally permissible. E,
Q and REC hereby undertake that they shall cooperate with respect to the
adjustment of EverQ's Articles of Association in accordance with this Agreement.
The Parties shall whenever necessary exercise all voting and other rights and
powers available to them to procure the alteration of the Articles of
Association to the extent necessary to permit EverQ and its affairs to be
carried out as provided in this Agreement. For the avoidance of doubt, the
Articles of Association of EverQ do not conflict and are not to be treated as
conflicting with any provision of this Agreement by which the Parties agree to
procure that anything be or be not done. Subject as aforesaid, the Parties
hereby undertake to each other to observe and perform the provisions of the
Articles of Association of the Company.

     1.5 German Legal Terms. In case of doubt of the meaning of German legal
terms, the German words written in brackets and italics shall be definitive.

     1.6 Participation of EverQ. EverQ shall have no rights under this Agreement
and shall not be bound by any obligation hereunder with the exception of the
rights and obligations resulting from the representations and warranties under
ARTICLE VII and ARTICLE VIII.


                                      -11-



                                  ARTICLE II.

                    Purpose of EverQ, Share Sale and Transfer

     2.1 Purpose of EverQ. The purpose of EverQ shall be the manufacturing and
marketing of String Ribbon based photovoltaic products. EverQ shall be a
manufacturing company designed to exploit the combined strengths of E, Q and
REC. The parties intend that EverQ shall:

          (a) manufacture Wafers using E's String Ribbon Technology;

          (b) process such Wafers into Cells using a fabrication process that
combines each Party's Cell manufacturing technologies;

          (c) assemble Cells into Modules;

          (d) conduct specific manufacturing and product technology-oriented
development work required to optimize its activities;

          (e) conduct all other activities necessary to the manufacture, test
and sale of such solar products with an initial focus on the manufacture, sale
and distribution of Modules; and

          (f) in connection with the foregoing activities, subcontract or
outsource to E, Q and/or REC those functions that E, Q and/or REC is able to
perform more efficiently than EverQ.

     2.2 Share Transfer in EverQ. On the Signing Date, E and Q shall immediately
after the signing of this Agreement split and transfer to REC their shares in
EverQ as follows:

          (a) E shall sell and transfer a split share of 11.1% in EverQ to REC,
and

          (b) Q shall sell and transfer a split share of 3.9% in EverQ to REC.

          (c) The purchase price per 1% in EverQ shall be calculated as follows:
1% of the Aggregate Equity Funding, plus [****], i.e., the purchase price per 1%
in EverQ shall be [****] In addition, REC shall compensate E and Q for any
adverse tax consequences directly resulting from such transfer.

          (d) The Parties shall enter into separate notarial deeds effecting
such sales and transfers.


                                      -12-



                                  ARTICLE III.

                        Management and Operation of EverQ

     3.1 Management and Supervision of EverQ . The Parties shall cause EverQ to
be managed and supervised in accordance with the provisions of the Articles of
Association. In particular, unless otherwise specifically agreed to by the
Parties, the Parties shall cause specific duties and powers of the Supervisory
Board to be as set forth in Articles of Association. Subject to Section 1.4, the
Parties shall not take any action in contravention of the Articles of
Association.

     3.2 Accounting Matters; Basic Financial Inspection Rights.

          (a) Basic Accounting Matters. (i) The Parties shall cause EverQ to (i)
establish its annual accounts and report its annual results in accordance with
the applicable corporate laws of the Federal Republic of Germany, aiming at the
optimization of tax benefits of the Shareholders and (ii) make adjustments to
its accounts to reflect its financial position and results of operations in
accordance with U.S. GAAP.

               (ii) The Parties shall cause EverQ to keep books and records
reflecting all its respective transactions, complete and accurate in all
material respects.

               (iii) The Parties shall cause the fiscal year of EverQ to
commence on January 1 and end on December 31.

          (b) Basic Financial Information. The Parties shall cause EverQ to
furnish the following reports to each of E, Q and REC:

               (i) As soon as practicable after the end of each fiscal year of
EverQ, and in any event within forty (40) days after the end of each fiscal year
of EverQ, an audited consolidated balance sheet of EverQ as at the end of such
fiscal year, and consolidated statements of income and cash flows of EverQ for
such year, prepared in accordance with German GAAP (HGB), IFRS and US GAAP
consistently applied.

               (ii) As soon as practicable after the end of the first, second
and third quarterly accounting periods in each fiscal year of EverQ, and in any
event within twenty-five (25) days after the end of the first, second, and third
quarterly accounting periods in each fiscal year of EverQ, an unaudited
consolidated balance sheet of EverQ as of the end of each such quarterly period,
and unaudited consolidated statements of income and cash flows of EverQ for such
period, prepared in accordance with German GAAP (HGB), IFRS and US GAAP
consistently applied, subject to changes resulting from normal year-end audit
adjustments.

               (iii) Monthly profit and loss statements as soon as reasonably
practicable.


                                      -13-



               (iv) Such other information relating to the financial condition,
business, prospects or corporate affairs of EverQ as E, Q or REC may from time
to time reasonably request.

          (c) Basic Financial Inspection Rights. During the regular office hours
of EverQ, and upon twenty-four (24) hours' notice to EverQ, E, Q and REC shall
have (i) full access to all properties, books of account and records of EverQ,
and (ii) the right to make copies from such books and records at their own
expense. Notwithstanding the foregoing, each Party will be entitled to any
inspection rights granted under German law.

     3.3  Other Financial Matters.

          (a) Annual Plan. The Parties shall cause the Management Board of EverQ
to prepare, and the Supervisory Board to consider and approve, an Annual Plan
with respect to each fiscal year of EverQ no later than thirty (30) days prior
to the commencement of each fiscal year.

          (b) Dividend Policy. The shareholders' meeting may declare and pay
Distributions with the approval of a majority of the votes; provided, however,
the Parties shall take all actions necessary to cause EverQ to require unanimous
approval of the shareholders prior to any Distribution (i) declared at any time
that Free Cash does not exist, (ii) if such Distribution shall cause Free Cash
not to exist immediately following such Distribution, or (iii) other than in a
manner proportionate to the respective ownership interests of the equity
securities of EverQ regardless of whether Free Cash exists.

     3.4  Second REC Supply Agreement and REC Option.

          (a) Second REC Supply Agreement. REC shall use its best endeavours to
increase the production facilities of SGS so that SGS is in a position to offer
to EverQ a second silicon feedstock supply agreement prior to [****], containing
the volumes and other principles and terms as laid down in SCHEDULE 3.4 and to
be sold to EverQ at [****] (the "SECOND REC SUPPLY AGREEMENT).

          (b) Subject to the condition precedent that prior to [****] either (i)
SGS and EverQ have signed the Second REC Supply Agreement (and the obligations
thereunder shall be binding in all respects without condition) or (ii) SGS has
offered (which offer remains open and available for [****]) to EverQ to enter
into the Second REC Supply Agreement, REC shall be entitled to increase its
shareholding in EverQ from 15 % to 21 % (the "REC OPTION"). To exercise the REC
Option, REC shall inform both E and Q in writing of its intention (the "REC
OPTION EXERCISE LETTER"). In order to be binding, the REC Option Exercise Letter
must be received by E and Q not later than [****] following the date on which
REC first offers the Second REC Supply Agreement to EverQ. Upon timely receipt
of the REC Option Exercise Letter, E shall sell and transfer one share
representing 6 % of the EverQ share capital to REC by way of notarial deed. To
prepare such


                                      -14-



sale and transfer, E shall split its shares in EverQ correspondingly. The
purchase price of such 6% share shall be the Aggregate Equity Funding times 6%,
[****], calculated from the Signing Date, pro rated on a daily basis for partial
years assuming a 360-day year and 30-day months.

          (c) If SGS has not offered the Second REC Supply Agreement to EverQ by
[****], REC shall still be bound to procure that SGS offers to EverQ the Second
REC Supply Agreement at the earliest date by which the production capacity in
SGS allows such an offers. The date such offer is received by EverQ is the "REC
OFFER DATE". The obligation of REC to make such an offer for the Second REC
Supply Agreement in conjunction with future capacity increases and the REC
Option shall both expire on [****].

               (i) If by the REC Offer Date EverQ has already entered into one
or more alternative supply agreements that are similar in terms of volume and
duration with one or more third parties, the REC Option shall become void. In
addition, REC will be excluded from participating in future capital increases in
EverQ. REC hereby waives its corresponding subscription rights. In such a case,
all future capital increases shall be conducted [****]. The three preceding
sentences shall not apply to the extent the Q Prefential Offer according to
SECTION 3.5(C) is accepted; in such a case, REC shall be offered shares under
SECTION 3.5(C)(VI) to avoid dilution. If by the REC Offer Date EverQ has already
entered into one or more alternate supply agreements that are similar in terms
of volume and duration with one or more third parties, the REC obligation to
offer the Second REC Supply Agreement shall expire.

               (ii) If by the REC Offer Date EverQ has not yet entered into
corresponding supply agreements with a third party, the REC Option shall remain
in place provided, however, that in addition to the purchase price for the 6%
share REC shall pay to EverQ an additional amount of [****] for the [****] of
delay (such amount to be pro rated for any fraction of such month) and [****]
for each [****] (such amount to be pro rated for any fraction of a month),
provided however that total purchase price payable by REC, including any
additional delay amounts, shall in no case be higher then the Fair Market Value
as defined in Article 5.3 (c). The REC subscription rights in future capital
increases shall remain untouched.

     3.5  Capacity Expansion and Additional Financing.

          (a) It is the intent of the Parties that EverQ shall have an initial
capacity to manufacture 30 MW per year (the "INITIAL CAPACITY"). The Parties
shall use reasonable best efforts to cause EverQ to achieve the Initial Capacity
as soon as practicable. It is also the intent of the Parties that EverQ shall in
the short-term, if economically viable, expand its manufacturing capacity to 120
MW (the "CAPACITY EXPANSION"). Without limiting the foregoing, each of the
Parties shall, and shall cause EverQ to, approve the Capacity Expansion, if
economically viable, and commence substantial activities in furtherance of the
Capacity Expansion within [****].


                                      -15-



          (b) A majority of the Supervisory Board which includes at least one
Director designated by each of not less than two of the Parties to this
Agreement shall have the ability to approve a Capacity Expansion following a
determination by such majority of the Supervisory Board that the Capacity
Expansion is in the best interest of EverQ.

          (c) Additional Financing. If, be it in relation to a Capacity
Expansion or otherwise, EverQ requests in writing from E, Q and REC additional
financing in addition to the funding as agreed by this Agreement (an "ADDITIONAL
FINANCING"), and the Shareholders approve the corresponding capital increase in
accordance with the Articles of Association (an "ADDITIONAL FINANCING REQUEST"),
the following shall apply:

               (i) Subject to REC's rights set forth in paragraph (vii) below, Q
shall be offered in writing to provide such amount of an Additional Financing to
enable it to increase its ownership interest in EverQ to a level equal to (but
not in excess of) the percentage then held by E (the "Q PREFERENTIAL OFFER").
Unless otherwise agreed to by the Parties, the price per 1 % of EverQ equity
share (Stammeinlage) purchased by Q in any financing transaction to be completed
in accordance with the terms of this SECTION 3.5(C)(I) shall be [****]

                    (1)  [****]

                    (2)  [****]

               (ii) Within [****] of receipt of the Grant Impunity Notice and
the Q Preferential Offer, Q shall be entitled to accept the Q Preferential Offer
by subscribing, in the form required by German law, to such number of shares in
EverQ [****] as is needed for Q to obtain an ownership interest equal to E in
EverQ. If, within [****] of receipt of the Grant Impunity Notice and the Q
Preferential Offer, Q has not accepted the Q Preferential Offer, then Q's right
to increase its ownership in EverQ to a level equal to the percentage then held
by E and [****] shall terminate.

               (iii) Any capital increase of EverQ [****] shall be offered to
the Parties pro rata to their shareholdings. If one of the Parties does not
exercise the corresponding subscription rights in full within [****] of the date
that such subscription rights were offered to such Party, the remainder of the
subscription rights shall be offered to the other Party. Should the Parties
(together), not fully subscribe to the full amount of the capital increase, the
subscription rights to the remainder of the capital increase shall then be
offered to third party financial investors, but not to competitors of either
Party (in the reasonable good-faith determination by the Parties). The
Percentage Interests shall be appropriately and correspondingly adjusted in


                                      -16-



connection with any subscription by a Party of EverQ equity securities pursuant
to this SECTION 3.5(C)(III).

               (iv) Without limiting the foregoing, if the Additional Financing
is of an amount that is insufficient to enable Q to increase its ownership in
EverQ to a level equal to E, as provided herein, and Q participates in such
Additional Financing to the full extent possible , then in connection with any
subsequent Additional Financing the Parties shall cause Q to be offered, in
writing, to provide such amount of the Additional Financing to enable Q to
increase its ownership in EverQ to a level equal to E (in accordance with the
terms herein) until such time as Q's ownership in EverQ reaches a level equal to
E.

               (v) Except as otherwise specifically set forth in this Agreement,
the nature and material terms of any and all financing activities by EverQ
(including the selection of lenders, if any) shall be determined by the
Supervisory Board and/or pursuant to a resolution adopted at a shareholder
meeting, as applicable under German law.

               (vi) Whenever a Q Preferential Offer is made by issuance of new
shares , REC shall be offered to purchase such number of new shares in EverQ
required in order to maintain its percentage interest in EverQ at that time in
order to avoid dilution of REC. The share price shall be the same as the [****].

          (d) REC increase to (up to) 33.33%. If an Additional Financing takes
place and subject to the condition precedent that either (i) SGS and EverQ have
signed the Second REC Supply Agreement or (ii) SGS has offered (which offer
remains open and available for at least [****]) to EverQ to enter into the
Second REC Supply Agreement, REC shall be entitled to increase its shareholding
in EverQ to up to 33.33 % through one or more transactions. With the exception
of the subscription price, SECTION 3.5 (B) (including SECTION 3.5 (B) (VI) in
favor of Q and on the basis of the [****]) shall apply mutatis mutandis. Unless
otherwise agreed to by the Parties, the price per [****] of EverQ equity share
(Stammeinlage) purchased by REC in any financing transaction to be completed in
accordance with the terms of this SECTION 3.5(B) shall be the higher of:

               (i) [****] of the Aggregate Equity Funding, plus [****] per
annum, calculated from the Closing Date, pro rated on a daily basis for partial
years assuming a 360-day year and 30-day months; and

               (ii) [****]

                    (1)  [****]

                    (2)  [****]


                                      -17-



                    (3)  [****]

          (e) Relation between Sections 3.5(c) and 3.5(d), compensation
clause. To the extent that REC exercises its rights under Section 3.5 (d), Q's
rights under Section 3.5 (c) shall be limited to 50 % of the share capital in
EverQ not subscribed to by REC. If the resulting capital increases result in
other percentage interests of any Party than intended by Sections 3.5 (c)
through 3.5 (e), the Parties shall agree to sell and transfer split shares in
EverQ in amounts required to achieve the desired result. For the avoidance of
doubt, subject to the exercise of each Party's respective rights under Article
IV and Article V, neither Q nor REC shall be entitled to acquire or maintain a
equity position in EverQ that is in excess of the percentage of the outstanding
equity of EverQ held by E without the prior consent of E, and any holdings in
excess of such amount limitation will be subject to repurchase by E pursuant to
the purchase rights set forth in Section 5.3 hereof.

          (f) Compensation for Grant Repayment Obligations. If EverQ is required
to repay part of the Government Investment Grant, the following will occur:

               (i) E, Q and REC will loan EverQ the amount to be repaid and
EverQ will repay the part of the Government Investment Grant to the appropriate
government authorities.

               (ii) The loan will be at [****].

               (iii) The loan will be made in proportion to the cost of capital
ownership of the parents as follows: REC will make a loan in proportion to their
ownership percentage in EverQ and the remainder of the loan will be evenly split
between E and Q.

               (iv) [****]

          (g) EverQ Debt. E and Q have provided or will provide guarantees to
the EverQ banks. REC will be expected to provide corresponding guarantees. If
such guarantees are executed by the respective banks, the Parties shall share
the burden pro rata to their shareholding in EverQ at the time of such
execution.

          (h) No Additional Obligation. No Party shall be required to provide
loan financing, equity contributions or any form of guarantee or credit support
for repayment for any


                                      -18-



funding obtained by EverQ, above their respective Additional Capital
Contribution and the obligations described in SECTION 3.5 (F) AND 3.5 (G). For
the avoidance of doubt, the rules laid down in SECTION 3.5 (C) AND (D) do not
oblige the Parties to provide additional funding to EverQ.

          (i) Special expansion scenario. If there is no Capacity Expansion
[****], Q and REC shall each have the right to require a capital increase
sufficient to individually pass the 30 % shareholding threshold for appointing
two board members according to SECTION 3.6, provided that the necessary
requirements of merger regulations for passing that threshold are observed. The
parties will cooperate to exchange information and if necessary to do the
filings in order to accomplish this right. The share prices for Q and E shall be
as laid down in SECTION 3.5 (C)(I) for Q and SECTIONS 3.5 (C)(VI) and 3.5 (D)
for REC.

     3.6 Directors. The Parties shall take all actions necessary to establish
the initial number of Directors designated to the Supervisory Board of EverQ at
four (4) and cause E to have the right to nominate and appoint two (2) Directors
including the chairman and Q and REC to have the right to each nominate and
appoint one (1) Director, provided, however, that Q and REC each hold not less
than [****] of the shares in EverQ. In cases of a split Supervisory Board, and
in such cases only, the chairman of the Supervisory Board shall have a deciding
vote. Each Party shall cause each Director appointed by it to perform his duties
as a Director fully in compliance with the terms of this Agreement and the
Articles of Association. None of the Parties shall be excused from the
performance of this Agreement on account of the failure to control such Director
nominated and appointed by it.

     In any event of a change of the size or composition of the Supervisory
Board, the Parties shall take all actions necessary, including any amendments of
the Articles of Association, as far as legally admissible, to ensure that E
retains the right to appoint and revoke [****] of the members of the Supervisory
Board including the chairman for as long as E holds more than [****] of the
shares of EverQ.

     Notwithstanding the foregoing, any Party holding an ownership interest of
more than [****] in EverQ shall have the right to appoint two (2) directors. If
this applies to all three Parties, all six Directors shall unanimously agree on
one (1) seventh Director which shall then be elected by all Parties. All Parties
shall take all actions necessary, including an amendment of the Articles of
Association, to establish the number of Directors of EverQ accordingly.

     3.7 Indemnification. To the fullest extent permitted by German law, E, Q
and REC shall cause EverQ to indemnify and hold harmless each Director
designated to the Supervisory Board nominated by E, Q and REC from all losses,
liabilities, costs and expenses arising out of or relating to such Director's
actions in connection with any action taken within their authority and in their
capacity as a Director, except to the extent that


                                      -19-



such losses, liabilities, costs or expenses are caused by such Director's fraud,
bad faith or willful misconduct, and except to the extent that such Director's
actions comprised or caused breach of this Agreement by the Party who appointed
that Director.

                                   ARTICLE IV.

       Restrictions on Transfer; Right of First Refusal for Sale of Shares

     4.1 Restrictions on Transfer; Exceptions. Each of the Parties agrees that
it shall not, either directly or indirectly, sell, transfer or dispose of
("TRANSFER") any Shares during the term of this Agreement, without complying
with the terms of this ARTICLE 4; provided, however, that the foregoing
restrictions shall not apply to Transfers of shares or other equity interests of
EverQ (i) in accordance with SECTIONS 3.4 OR 3.5 or (ii) by any Party to any
Affiliate of such Party or (iii) from any Affiliate of such Party to such Party
or to any Affiliate of such Party, provided always that the transferring Party
remains, and the transferee of such transferred Shares or equity interests
agrees in the appropriate form to be, bound by the terms of this Agreement to
the same extent that the original Parties are bound thereby. For the avoidance
of doubt, a Change of Control in a Party does not trigger the other Party's
right of first refusal under this SECTION 4.1.

     4.2 Right to Notice. Other than those Transfers excepted under SECTION 4.1,
prior to any Party proposing to Transfer any portion of the Shares held by such
Party (the "SUBJECT SHARES") to a Third Party (an "ACQUISITION PROPOSAL"), the
proposed transferring Party (the "SELLING PARTY") shall provide to the other
Parties (the "NON-SELLING PARTIES") written notice of the Acquisition Proposal,
which notice shall include a reasonable description of all material terms and
conditions of or related to the Acquisition Proposal (the "ACQUISITION PROPOSAL
NOTICE").

     4.3 Exercise of Right of First Refusal. Following receipt of the
Acquisition Proposal Notice by the Non-Selling Parties, each of the Non-Selling
Parties shall have [****] to provide written notice to the Selling Party (the
"ELECTION NOTICE") that it intends to elect to exercise its right of first
refusal. After delivery of the Election Notice to the Selling Party, the Parties
agree to negotiate in good faith the terms and conditions under which the
Non-Selling Party or Parties would acquire [****], all (but not less than all)
of the Subject Shares at issue, and the Non-Selling Parties shall have a right
of first refusal to purchase all (but not less than all) of the Subject Shares
on terms that:

               (i) are reasonably equivalent to the terms set forth in the in
the Acquisition Proposal Notice, provided that the Non-Selling Parties shall not
have any obligation to agree to any terms which are unique to such Third Party,
or

               (ii) are reasonably acceptable to the Selling Party.

The Parties agree that such good-faith negotiations will continue until the
earlier of (i) [****] from the date of delivery of the Election Notice or (ii)
such negotiations are


                                      -20-



terminated earlier by agreement between the Parties (the "NEGOTIATION PERIOD"),
during which period appropriate representatives of each Party shall, in good
faith, make themselves available to meet. During the Negotiation Period, the
Non-Selling Parties shall be permitted to conduct appropriate due diligence.
Delivery of the Election Notice shall not obligate the Non-Selling Party to
purchase the Subject Shares, but shall be delivered in good faith. [****]

     4.4 Right to Sell to Third Party. Subject to compliance with the provisions
hereof, including SECTION 4.3 and SECTION 4.5, if (i) all Non-Selling Parties
fail to deliver an Election Notice within the time required, (ii) all
Non-Selling Parties fail to acquire the Subject Shares before the end of the
Negotiation Period and such failure to acquire is not due to the unreasonable
delay of the Selling Party or (iii) such negotiations are terminated earlier by
agreement between or among the Parties (the earlier to occur is referred to
herein as the "LAPSE DATE"), then the Selling Party shall have the right to
enter into a transaction with a Third Party to sell the Subject Shares at a
price and on terms no more favorable than as set forth in the Acquisition
Proposal Notice, provided that such Third Party acquires the Subject Shares
within [****] of the Lapse Date (the "SALE PERIOD"). All Parties shall approve
such transfer in a shareholders' meeting of EverQ.

     4.5 Reinstatement of Right of First Refusal. In the event that the Third
Party fails to acquire the Subject Shares within Sale Period as described in
SECTION 4.4, the Selling Party shall not thereafter Transfer any shares without
first again offering such securities to the Non-Selling Party in the manner
provided in this ARTICLE IV.

     4.6 Change of Control. The Parties agree that the provisions of this
ARTICLE IV shall not apply to, and shall in no way restrict, any Parties' right
or ability to engage in a Change of Control.

     4.7 Co-Selling Rights. In the event that in conjunction with one or a
series of transactions contemplated by this Article IV, [****] or more of the
outstanding equity interest of EverQ are to be transferred to a third party,
such transaction or transactions shall not be completed until such third party
shall offer and, if such offer is accepted, agree to acquire the remaining
outstanding equity interests of EverQ.

     4.8 Adherence by Third Party. No third party shall become a shareholder in
EverQ unless such third party signs a deed of adherence to the rights and
obligations imposed by ARTICLE IV, ARTICLE V, SECTIONS 9.5 THROUGH 9.10 AND
ARTICLE X. Such deed of adherence shall be in the form of a notarial deed and,
in addition, in a form acceptable by the Parties. All Parties hereby grant power
of attorney to the chairman of the supervisory board of EverQ, from time to
time, to accept such deed of adherence

     4.9 Relation to Articles of Association. The procedure laid down in
SECTIONS 4.2 THROUGH 4.5 above also applies to the offer to the minority
shareholders contemplated in Section


                                      -21-



5.4, sentence 2, of the Articles of Association. This ARTICLE IV does not alter
any provision or provisions contained in the Articles of Association restricting
the transfer of shares. However, the Parties shall exercise all voting and other
rights available to them to ensure the implementation of the foregoing
provisions of this ARTICLE IV and any provisions contained in the Articles of
Association restricting transfers of shares are waived or suspended, if
applicable, to allow such sales and purchases to proceed as provided above.

                                   ARTICLE V.

                              Term and Termination

     5.1 Term. The term of this Agreement shall commence on the date hereof and
shall continue and remain in full force and effect, until this Agreement is
terminated in accordance with this ARTICLE 5.

     5.2 Termination by mutual consent.

          (a) This Agreement may be terminated by mutual written consent of all
Parties.

          (b) In the event of termination pursuant to SECTION 5.2(A), the
consequences of Termination shall be agreed among the Parties in writing, unless
the form of a notarial deed is required under German law.

     5.3 Expulsion for Breach

          (a) Any of the Parties to this Agreement who are not in Material
Breach of this Agreement (for purposes of this SECTION 5.3, each a "REMOVING
PARTY" and collectively "REMOVING PARTIES") may trigger, pursuant to the terms
of this SECTION 5.3, the repurchase of all shares of EverQ held by such other
Party (an "EXPULSION", and the securities subject to such repurchase, "EXPULSION
Securities") if the Party subject to Expulsion (the "BREACHING PARTY") commits a
Material Breach of this Agreement or if the Breaching Party becomes subject to a
Bankruptcy Event. For the avoidance of doubt, this is an individual right of
each Removing Party which is not a Breaching Party.

               (i) If the Breaching Party commits a Material Breach of this
Agreement, and if

                    (1) the Material Breach is incurable, the notice of
Expulsion ("EXPULSION NOTICE") must be made in writing [****] after the Removing
Party learns about the Material Breach.

                    (2) the Material Breach is curable, the Removing Party has
to request such cure in writing, [****] after it learns about the Material
Breach, granting the Breaching Party a cure period of another [****]. If the
Removing


                                      -22-



Party fails to cure such Material Breach within the [****], the notice of
Expulsion must be made in writing not later than [****] after the expiry of the
cure period.

                    (3) For the purposes of this SECTION 5.3, "MATERIAL BREACH"
is defined as (A) a material breach of this Agreement or any of the Concurrent
Agreements or the Second REC Supply Agreement that has had, or is reasonable
likely to have, a material adverse effect on the financial performance or
business prospects of EverQ, either in the short-term or the long-term; provided
that (B) a Material Breach shall include without limitation the failure of the
Breaching Party to comply with its obligation to pay all or any portion of its
Equity Commitment or perform its other obligations in accordance with ARTICLE 2.

               (ii) If the Breaching Party becomes subject to a Bankruptcy
Event, the Expulsion Notice must be made in writing [****] after the Removing
Party learns about the Bankruptcy Event.

          (b) Within a period of [****] after it has delivered an Expulsion
Notice, any Removing Party is entitled to start a process to determine the Fair
Market Value of the Expulsion Securities by indicating so to the Breaching Party
in writing (the "VALUATION REQUEST"). The Valuation Request may be combined with
the Expulsion Notice.

          (c) The "FAIR MARKET VALUE" shall be determined based on the fair
market value for [****], without regard to any additional amount for a possible
control premium, and shall be determined as follows:

               (i) If the Expulsion Securities are publicly traded on a national
stock market or exchange, the Fair Market Value shall be deemed [****].

               (ii) If there is no active public market for the Expulsion
Securities, the value shall be the Fair Market Value thereof as determined by
good faith negotiation between the Parties. If such negotiation fails to
determine the Fair Market Value [****] after the date of the Valuation Request,
the Fair Market Value shall be determined as follows:

                    (1) Each Party shall retain at its expense an independent
third party investment bank or M&A advisor with expertise valuing companies such
as EverQ.

                    (2) Subject to execution of customary confidentiality
agreements by the independent third-party firms, EverQ shall provide or be
caused to provide to each firm all material information, including any material
changes in such information,


                                      -23-



reasonably necessary to value EverQ or reasonably requested by the firms. [****]

                    (3) Within [****] after the Valuation Request pursuant to
SECTION 5.3(B) above, each Party shall submit a final valuation proposal,
prepared in writing with a supporting analysis by its retained third-party firm,
to the other Party and the other Party's third party firm and to the
"ARBITRATOR." The "ARBITRATOR" shall be a Person with expertise in valuing
companies in the photovoltaic industry, shall not have a material business
relationship with any Party or EverQ and shall be reasonably acceptable to both
Parties. If the Parties agree upon a single Arbitrator, the decision of such
Arbitrator shall be final and binding on the Parties. If the Parties have not
agreed on a single Arbitrator, the Non-Breaching Party or Parties on the one
hand and the Breaching Party or Parties on the other hand will each select an
Arbitrator satisfying the criteria set forth herein and the selected Arbitrators
will select a third. In that case, the decision of a majority of the Arbitrators
will control and shall be final and binding on both Parties. In either case, the
arbitrator shall submit his decision to the Parties in writing within [****]
after receiving the two final valuation proposals.

                    (4) If one Party does not submit in a timely manner a final
valuation proposal, then the valuation proposal of the other Party shall be used
to establish the Fair Market Value.

          (d) If an Expulsion is initiated pursuant to SECTION 5.3(A), the
Removing Party or Parties, notwithstanding any other remedy that they may have
pursuant to this Agreement or otherwise under German law, may, within a period
of [****] following decision of the Arbitrator pursuant to SECTION
5.3(C)(II)(3), purchase all of the Expulsion Securities legally or beneficially
owned by each of the Breaching Parties for a cash amount equal to [****] of such
Expulsion Securities (the "EXPULSION CALL RIGHT"). The Expulsion Call Right must
be exercised in writing or in the form required under German law (notarial deed
if EverQ still is a Limited Liability Company (GmbH)) and delivered to each of
the Breaching Parties. If there is more than one Removing Party, they are
entitled to the Expulsion Call right pro rata to their shareholdings in EverQ.
If one Removing Party does not exercise this right at all or not in full, the
other Removing Party is entitled to purchase the remaining shares as well.

          (e) The closing of any purchase and sale of Expulsion Securities shall
take place at the office of EverQ within [****] of the exercise of the Expulsion
Call Right. At such closing, the aggregate purchase price for such purchase and
sale shall be paid in cash or other immediately available funds in exchange for
the Expulsion Securities to be sold.

          (f) Promptly upon receiving notice by a Removing Party of its exercise
of its rights pursuant to SECTION 5.3(A), the Breaching Party shall take such
actions, and cause its Affiliates to take such actions, as may be necessary to
enable the Removing Party to consummate its rights.


                                      -24-


          (g) Continuation of Business. Subject to SECTION 5.3 (I), during any
period in which a Party has the right to purchase or is purchasing the
Securities of the other Party pursuant to this SECTION 5.3, EverQ shall continue
its business in the ordinary course. The Parties and EverQ shall use their
reasonable best efforts to maintain and preserve the business of EverQ pending
the consummation of such purchase.

          (h) In each case of Expulsion according to SECTION 5.3 (A), each Party
shall have the right to demand that all Parties hold a Shareholders' meeting of
EverQ without undue delay and vote in favor of the dissolution and winding up of
EverQ in accordance with applicable law and the Articles of Association, if
either (i) all of the Removing Parties waive their rights under SECTION 5.3(D)
in writing or (ii) none of the Removing Parties has exercised such rights within
the three-month period specified in SECTION 5.3(D), unless the Breaching Party
has offered to purchase the Shares of all of the Removing Parties at [****], has
demonstrated to the Removing Parties' satisfaction that it can complete and
provide payment for the shares within [****] of such offer, and the Removing
Parties have elected to sell their Shares to the Breaching Party,.

          (i) If the applicable Expulsion Call Right is exercised, the Parties
shall cause the License Agreements and the REC Supply Agreements to remain in
full force and effect and the Breaching Party's Service Agreement to be
terminated. The Parties shall cause the Concurrent Agreements to be terminated
if the Parties proceed to dissolution of EverQ, as provided in (h) above (on the
effective date of dissolution).

          (j) In the event of any Expulsion pursuant to this SECTION 5.3 and
except as otherwise set forth in this Agreement, this Agreement shall cease to
have further force or effect on the Breaching Party, provided that this event
shall not release any Party from any liability or obligation which has already
accrued as of the effective date of such event, and shall not constitute a
waiver or release of, or otherwise be deemed to prejudice or adversely affect,
any rights, remedies or claims, whether for damages or otherwise, which a Party
may have hereunder, at law, equity or otherwise or which may arise out of or in
connection with such event. This Agreement shall remain in full force and effect
among the Removing Parties.

          (k) Without limiting any other remedies that may be available to any
Removing Party under this Agreement (but, for the avoidance of doubt, not under
SECTION 5.3. (A) THROUGH (J)) or under German law, in the event of a Material
Breach pursuant to SECTION 5.3(A)(I)(3)(B) in lieu of terminating this Agreement
as provided in this SECTION 5.3, the Removing Parties may, after the expiration
of any cure period applicable with respect to such Material Breach, upon written
notice to EverQ and the Breaching Party, cause the Percentage Interest of the
Breaching Party to be reduced to reflect the relative capital contributions of
the Parties actually contributed under SECTION 2.3 THROUGH 2.4, in which case
the Shares held by the Parties shall be correspondingly adjusted to reflect the
Percentage Interests, as adjusted pursuant to this SECTION 5.3(K). The Breaching
Party is obliged, to the extent required to obtain the result contemplated by
this SECTION 5.3(K), to split its share(s) in EverQ and transfer such share(s)
or


                                      -25-



split share(s), by way of a notarial deed, to the Non-Breaching Parties free of
charge and pro rata to their shareholdings in EverQ.

     5.4 Termination after [****].

          (a) Any Party may terminate this Agreement with six months written
notice to the other Parties anytime time following [****].

          (b) If this Agreement is terminated pursuant to SECTION 5.4 (A) by one
Party, the other Parties may purchase, pro rata to their shareholding in EverQ
at the date of termination, the terminating party's Percentage Interest in EverQ
of [****] (the "TERMINATION CALL RIGHT").

          (C) SECTION 5.3 (B) THROUGH (J) shall apply correspondingly, provided,
however, that the period to exercise the Termination Call Right is extended to
[****] following decision of the Arbitrator pursuant to SECTION 5.3. (C) (II)
(3).

     5.5 Termination in Case of Sale and Transfer. If one Party (the
"TRANSFERRING PARTY") transfers all of the Shares beneficially owned by it to
the other Parties, any Concurrent Agreements to which such Transferring Party is
a party shall survive in accordance with their respective terms.

     5.6 Post-Termination Covenants.

          (a) Employee Issues. Each Party shall negotiate in good faith an
agreement providing that employees of the other Party working for EverQ (either
on a part-time or full-time basis) shall be made available full-time to EverQ
for such period as is reasonably required up to three months to effect an
orderly transition following the termination of this Agreement. The Parties
shall use their reasonable best efforts to make all such employees available on
this basis.

          (b) Return of Confidential Information. Upon the termination of this
Agreement, each Party, at its own cost, shall promptly return to the Disclosing
Party any and all documents and materials constituting or containing
Confidential Information of the Disclosing Party which are in its possession or
control, or at its option, shall destroy such documents and materials and
certify such destruction in writing to the Disclosing Party.

          (c) Survival of Rights and Obligations. The rights and obligations of
the Parties under Articles / Sections 3.7, V, VII, VIII, 9.2, 9.3, 9.4, 9.5,
9.6, 9.7 and X shall survive any termination of this Agreement.


                                      -26-



                                   ARTICLE VI.

                               Closing Conditions

     6.1 Conditions to Obligations of REC. The obligation of REC to fulfill its
obligations under this Agreement shall be subject to the satisfaction of each of
the following conditions, any of which may be waived, in writing, exclusively by
REC:

          (a) Articles of Association. E and Q shall have voted to amend the
Articles of Association in accordance with the form set forth in EXHIBIT A-1.

          (b) Supervisory Board Composition. The authorized size of the
Supervisory Board of EverQ shall have been established at four (4) positions and
Erik Sauar shall have been appointed to the Supervisory Board.

     6.2 Conditions to the Obligations of E and Q. The obligation of E and Q to
fulfill their obligations under this Agreement shall be subject to the
satisfaction of each of the following conditions, any of which may be waived, in
writing, exclusively by E and Q:

          (a) Legal Opinion. REC shall have received an opinion addressed to E
andQ, dated 2 November 2005, of REC's external legal adviser, law firm Selmer,
in a form and substance reasonably satisfactory to E and Q.

                                  ARTICLE VII.

                                   Warranties

     7.1 Warranties of Q. Q hereby warrants in the form of an independent no
fault guarantee (rechtlich selbstaendiges verschuldensunabhaengiges
Garantieversprechen) within the meaning of Sec. 311 paragraph (1) German Civil
Code (Buergerliches Gesetzbuch) to REC and E as follows:

          (a) Organization, Authority and Qualification. Q is a corporation or
other organization duly organized, validly existing and in good standing under
the laws of Germany. Q has all necessary power and authority to enter into this
Agreement and the Concurrent Agreements to which it is a party, to carry out its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. Q is duly licensed or qualified to do business
in Germany. The execution and delivery by Q of this Agreement and the Concurrent
Agreements to which it is a party, the performance by Q of its obligations
hereunder and thereunder and the consummation by Q of the transactions
contemplated hereby and thereby have been duly authorized by all requisite
action on the part of Q, and no other corporate proceedings on the part of Q or
any of its Affiliates are required in connection therewith. This Agreement has
been, and upon its execution, each of the other Concurrent Agreements to which Q
is a party, will be, duly executed and validly delivered by Q, and


                                      -27-



(assuming, if applicable, due authorization, execution and delivery by each of
the other Parties hereto and thereto) this Agreement constitutes and, upon its
execution, each of the other Concurrent Agreements to which Q is a party, shall
constitute, a legal, valid and binding obligation of Q, enforceable against Q in
accordance with its terms.

          (b) No Conflict. The execution, delivery and performance by Q of this
Agreement and the Concurrent Agreements to which it is a party do not and will
not (a) violate or conflict with any provision of its Articles of Association,
by-laws or similar organizational documents, or (b) conflict with or violate in
any material respect any German law or Governmental Order applicable to Q or any
of its assets, properties or business.

          (c) Consents and Approvals. The execution, delivery and performance by
Q of this Agreement and the Concurrent Agreements to which it is a party do not
and will not require any consent, approval, authorization or other order of,
action by, filing with or notification to, any Governmental Authority or other
Third Party.

          (d) Absence of Litigation. There is no legal or regulatory action
pending or, to the knowledge of Q, threatened against Q that seeks to restrain
or enjoin or otherwise challenge the legality, validity or enforceability of
this Agreement or the Concurrent Agreements to which Q is a party.

          (e) Compliance with Laws; Permits. To the extent required to execute
and consummate this Agreement and the Concurrent Agreements or except as would
not materially impair Q's ability to perform its obligations hereunder and
thereunder:

               (i) Q is not in conflict in any material respect with, in
material default under, or in material violation of, any Laws or Governmental
Orders applicable to Q's business, or by which Q believes it is reasonably
likely to be bound or affected. There is no material judgment, injunction, order
or decree that is binding upon Q which has, or would reasonably be expected to
have, the effect of prohibiting or materially impairing the conduct of EverQ as
currently contemplated to be conducted following the Closing Date.

               (ii) Q and its Affiliates currently hold all material permits,
licenses, authorizations, certificates, exemptions, registrations and approvals
of Governmental Authorities (collectively, "PERMITS") necessary or proper for
the current operation of its business, such Permits are in full force and
effect, and no suspension, cancellation or non-renewal of any such Permit is
pending or, to the knowledge of the Q Parties, threatened.

          (f) Intellectual Property. To the extent required to execute and
consummate this Agreement and the Concurrent Agreements or except as would not
materially impair Q's ability to perform its obligations hereunder and
thereunder, no contracts, licenses or agreements to which Q is a party
(including, without limitation, this Agreement and the Q License Agreement and
the transactions contemplated herein and therein) or, to the knowledge of Q, by
operation of law, will:


                                      -28-



               (i) Result in EverQ, REC or E being bound by, or subject to, any
non-compete, exclusivity restriction or other restriction on the operation or
scope of its businesses; or

               (ii) Result in EverQ, REC or E being obligated to pay any
royalties or other amounts to any Third Party.

               (iii) Grant to any Third-Party any right to or with respect to
any Intellectual Property owned by, or licensed to, EverQ, REC or E.

          (g) No Undisclosed Liabilities. Q has no Liabilities which,
individually or in the aggregate, could be reasonably expected to impair,
prevent or delay Q from performing any of its obligations under this Agreement.

          (h) During the period beginning on 1 January 2005 and ending on the
Signing Date, Q has not suffered or been affected by any event (or events) that
has had or is reasonably likely to have a material adverse effect on the
financial performance or business prospects of Q, either in the short-term or
the long-term.

     7.2 Warranties of E. E hereby warrants in the form of an independent no
fault guarantee (rechtlich selbstaendiges verschuldensunabhaengiges
Garantieversprechen) within the meaning of Sec. 311 paragraph (1) German Civil
Code (Buergerliches Gesetzbuch) to REC and Q as follows:

          (a) Organization, Authority and Qualification. E is a corporation or
other organization duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation or organization. E has all
necessary power and authority to enter into this Agreement and the Concurrent
Agreements to which it is a party, to carry out its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby.
The execution and delivery by E of this Agreement and the Concurrent Agreements
to which it is a party, the performance by E of its obligations hereunder and
thereunder and the consummation by E of the transactions contemplated hereby and
thereby have been duly authorized by all requisite action on the part of E, and
no other corporate proceedings on the part of E or any of its Affiliates is
required in connection therewith. This Agreement has been, and upon its
execution, each of the other Concurrent Agreements to which E is a party will
be, duly executed and validly delivered by E, and (assuming, if applicable, due
authorization, execution and delivery by each of the other Parties hereto and
thereto) this Agreement constitutes and, upon its execution, each of the other
Concurrent Agreements to which it is a party shall constitute, a legal, valid
and binding obligation of E, enforceable against E in accordance with its terms.

          (b) No Conflict. The execution, delivery and performance by E of this
Agreement and the Concurrent Agreements to which it is a party do not and will
not (a) violate or conflict with any provision of its certificate of
incorporation or by-laws or similar


                                      -29-



organizational documents, or(b) conflict with or violate in any material respect
any Law or Governmental Order applicable to E or any of its assets, properties
or business.

          (c) Consents and Approvals. The execution, delivery and performance by
E of this Agreement and the Concurrent Agreements to which it is a party do not
and will not require any consent, approval, authorization or other order of,
action by, filing with or notification to, any Governmental Authority or other
Third Party, where failure to obtain such consent, approval, authorization,
order or action, or to make such filing or notification, would not, individually
or in the aggregate, reasonably be expected to prevent or materially delay E
from performing any of its material obligations under this Agreement or the
Concurrent Agreements to which it is a party.

          (d) Absence of Litigation. There is no legal or regulatory action
pending or, to the knowledge of E, threatened against E that seeks to restrain
or enjoin or otherwise challenge the legality, validity or enforceability of
this Agreement or the Concurrent Agreements to which it is a party.

          (e) Compliance with Laws; Permits. To the extent required to execute
and consummate this Agreement and the Concurrent Agreements or except as would
not materially impair E's ability to perform its obligation hereunder and
thereunder:

               (i) E is not in conflict in any material respect, in material
default under or in material violation of, any Laws or Governmental Orders
applicable to E's business or by which E believes it is reasonably likely to be
bound or subject. There is no material judgment, injunction, order or decree
that is binding upon E which has, or would reasonably be expected to have, the
effect of prohibiting or materially impairing the conduct of EverQ as currently
contemplated to be conducted following the Closing Date.

               (ii) E and its Affiliates currently hold all material Permits
necessary or proper for the operation of its business as currently conducted,
such Permits are in full force and effect, and no suspension, cancellation or
non-renewal of any such Permit is pending or, to its knowledge, threatened.

          (f) Intellectual Property. To the extent required to execute and
consummate this Agreement and the Concurrent Agreements or except as would not
materially impair E's ability to perform its obligation hereunder and
thereunder, no contracts, licenses or agreements to which E is a party
(including without limitation this Agreement and the E License Agreement and the
transactions contemplated herein or therein) or, to the knowledge of E, by
operation of law, will:

               (i) Result in EverQ, REC or Q being bound by, or subject to, any
non-compete, exclusivity restriction or other restriction on the operation or
scope of its businesses; or


                                      -30-



               (ii) Result in EverQ, REC or Q being obligated to pay any
royalties or other amounts to any Third Party.

               (iii) Grant to any Third-Party any right to or with respect to
any Intellectual Property owned by, or licensed to, EverQ, REC or Q.

          (g) No Undisclosed Liabilities. E has no Liabilities which,
individually or in the aggregate, could be reasonably expected to impair,
prevent or delay E from performing any of its obligations under this Agreement.

          (h) During the period beginning on 1 January 2005 and ending on the
Signing Date, E has not suffered or been affected by any event (or events) that
has had or is reasonably likely to have a material adverse effect on the
financial performance or business prospects of E, either in the short-term or
the long-term.

     7.3 Warranties of REC. REC hereby warrants in the form of an independent no
fault guarantee (rechtlich selbstaendiges verschuldensunabhaengiges
Garantieversprechen) within the meaning of Sec. 311 paragraph (1) German Civil
Code (Buergerliches Gesetzbuch) to E and Q as follows:

          (a) Organization, Authority and Qualification. REC is a corporation or
other organization duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation or organization. REC has all
necessary power and authority to enter into this Agreement and the Concurrent
Agreements to which it is a party, to carry out its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby.
The execution and delivery by REC of this Agreement and the Concurrent
Agreements to which it is a party, the performance by REC of its obligations
hereunder and thereunder and the consummation by REC of the transactions
contemplated hereby and thereby have been duly authorized by all requisite
action on the part of REC, and no other corporate proceedings on the part of REC
or any of its Affiliates is required in connection therewith. This Agreement has
been, and upon its execution, each of the other Concurrent Agreements to which
REC is a party will be, duly executed and validly delivered by REC, and
(assuming, if applicable, due authorization, execution and delivery by each of
the other Parties hereto and thereto) this Agreement constitutes and, upon its
execution, each of the other Concurrent Agreements to which it is a party shall
constitute, a legal, valid and binding obligation of REC, enforceable against
REC in accordance with its terms.

          (b) No Conflict. The execution, delivery and performance by REC of
this Agreement and the Concurrent Agreements to which it is a party do not and
will not (a) violate or conflict with any provision of its certificate of
incorporation or by-laws or similar organizational documents, or(b) conflict
with or violate in any material respect any Law or Governmental Order applicable
to REC or any of its assets, properties or business.


                                      -31-



          (c) Consents and Approvals. The execution, delivery and performance by
REC of this Agreement and the Concurrent Agreements to which it is a party do
not and will not require any consent, approval, authorization or other order of,
action by, filing with or notification to, any Governmental Authority or other
Third Party, where failure to obtain such consent, approval, authorization,
order or action, or to make such filing or notification, would not, individually
or in the aggregate, reasonably be expected to prevent or materially delay REC
from performing any of its material obligations under this Agreement or the
Concurrent Agreements to which it is a party.

          (d) Absence of Litigation. There is no legal or regulatory action
pending or, to the knowledge of REC, threatened against REC that seeks to
restrain or enjoin or otherwise challenge the legality, validity or
enforceability of this Agreement or the Concurrent Agreements to which it is a
party.

          (e) Compliance with Laws; Permits. To the extent required to execute
and consummate this Agreement and the Concurrent Agreements or except as would
not materially impair REC's ability to perform its obligation hereunder and
thereunder:

               (i) REC is not in conflict in any material respect, in material
default under or in material violation of, any Laws or Governmental Orders
applicable to REC's business or by which REC believes it is reasonably likely to
be bound or subject. There is no material judgment, injunction, order or decree
that is binding upon REC which has, or would reasonably be expected to have, the
effect of prohibiting or materially impairing the conduct of EverQ as currently
contemplated to be conducted following the Closing Date.

               (ii) REC and its Affiliates currently hold all material Permits
necessary or proper for the operation of its business as currently conducted,
such Permits are in full force and effect, and no suspension, cancellation or
non-renewal of any such Permit is pending or, to its knowledge, threatened.

          (f) Intellectual Property. To the extent required to execute and
consummate this Agreement and the Concurrent Agreements or except as would not
materially impair REC's ability to perform its obligation hereunder and
thereunder, no contracts, licenses or agreements to which E is a party
(including without limitation this Agreement and the REC License Agreement and
the transactions contemplated herein or therein) or, to the knowledge of REC, by
operation of law, will:

               (i) Result in EverQ, E or Q being bound by, or subject to, any
non-compete, exclusivity restriction or other restriction on the operation or
scope of its businesses; or

               (ii) Result in EverQ, E or Q being obligated to pay any royalties
or other amounts to any Third Party.


                                      -32-



               (iii) Grant to any Third-Party any right to or with respect to
any Intellectual Property owned by, or licensed to, EverQ, E or Q.

          (g) No Undisclosed Liabilities. REC has no Liabilities which,
individually or in the aggregate, could be reasonably expected to impair,
prevent or delay REC from performing any of its obligations under this
Agreement.

     During the period beginning on 1 January 2005 and ending on the Signing
Date, REC has not suffered or been affected by any event (or events) that has
had or is reasonably likely to have a material adverse effect on the financial
performance or business prospects of REC, either in the short-term or the
long-term.

     7.4 Additional Representations and Warranties by EVERQ. EverQ represents
and warrants that, as of the date of this Agreement:

          (a) The Accounts and the Opening Balance Sheet.

               (i) The Preliminary Balance Sheet of EverQ, a copy of which is
attached hereto as EXHIBIT 7.4.(A) (the "EVERQ BALANCE SHEET"), fairly presents
the financial position of EverQ in all material respects as of 30 September 2005
(the "BALANCE SHEET DATE") and the EverQ Balance Sheet has been prepared in
compliance with generally accepted accounting principles;

               (ii) Since the Balance Sheet Date, EverQ has not incurred other
material liabilities other than liabilities which have arisen since the Balance
Sheet Date in the ordinary course of the business of EverQ.

               (iii) As of the Balance Sheet Date EverQ has no material debts,
liabilities or obligations which are not disclosed, reflected or reserved in the
EverQ Balance Sheet.

          (b) The Assets. With the exception of (aa) securities granted by EverQ
to its banks and (bb) customary reservation of title, EverQ has legal title to
all assets included in the EverQ Balance Sheet, and any such assets are free of
any encumbrance which materially reduces its value;

          (c) Real Estate.

               (i) EverQ has legal right, through ownership or rent, to use to
all its real property;

               (ii) The real property of EverQ has no defects which limit its
use for the business activities carried out by EverQ;


                                      -33-



          (d) Intellectual Property Rights.

               (i) All intellectual property rights, technology and know how
used in the conduct of the contemplated operational business of EverQ, including
but not limited to the String Ribbon Technology, have been validly licensed by
EverQ

               (ii) As of the date of this Agreement, no claims for violation of
intellectual property rights of a third party have been asserted in law suit or
otherwise in writing against EverQ, and to the knowledge of EverQ, the
operations of EverQ do not infringe intellectual property rights of third
parties.

          (e) Personnel and Pensions.

               (I) EXHIBIT 7.4 (E) contains a anonymous, but otherwise complete
list and description, status November 1st, 2005 of employees and all salary,
pension and other employment benefits and all other benefit plans for the
employees of EverQ;

               (ii) There are no schemes in operation entered into or issued by
EverQ under which any employee is entitled to a commission, bonus or other
remuneration calculated by reference to all or part of the turnover, profits or
sales of the operations of EverQ, nor are there any share incentive or share
option schemes proposed or in operation in relation to EverQ, nor are there any
agreements under which any present or former employee, director, agent or
representative is entitled to a sum as a result of the transactions contemplated
hereby.

          (f) Agreements and Undertakings.

               (i) EverQ is not bound by any Material Agreement other than the
agreements listed in EXHIBIT 7.4 (F);

               (ii) To the knowledge of EverQ, the agreements listed in EXHIBIT
7.4 (F) are legally binding and in full force and effect;

               (iii) The agreements and undertakings listed in EXHIBIT 7.4 (F)
have been entered into at adequate customary and arms length terms and
conditions and EverQ is not in material breach of its obligations under such
agreements and undertakings;

               (iv) Other than as contemplated by these agreements, EverQ has
not entered into any guarantee or similar agreements ensuring the performance of
the obligations of any third party.

          (g) The Activities of EverQ.

               (i) EverQ's activities have to date been conducted in accordance
with applicable laws, regulations, permits and authorisations;


                                      -34-



               (ii) EverQ has all licenses and consents necessary to own and
operate its assets and to carry on its business as currently conducted and, to
the best knowledge of EverQ, there are no circumstances that may result in
revocation, suspension or modification of any of those licenses or consents or
that might prejudice their renewal;

          (h) Taxes and Charges. As of the Balance Sheet Date, EverQ has no tax
obligations which are not disclosed in the EverQ Balance Sheet.

          (i) Insurance. The insurance coverage purchased by EverQ, status
November 5, 2005 is listed in EXHIBIT 7.4 (H).

          (j) Litigation.

               (i) EverQ is not involved in any litigation, arbitration or any
other dispute, and EverQ is not aware of anything which may give rise to any
such litigation, arbitration or dispute;

               (ii) EverQ is not subject to any investigation, inquiry, or
enforcement proceedings or process by any governmental, administrative of
regulatory bide nor is EverQ aware of anything which may give rise to such
investigation, inquiry, or process.

          (k) Environment. To the best knowledge of EverQ, there are no facts or
circumstances which will give rise to any actual or potential environmental
liability on the part of EverQ. EverQ has not received any notice or intimation
of any complaint or claim from any person in respect of any matter which could
give rise to environmental liability on the part of EverQ.

          (l) Documentation. As of the Closing Date all documentation concerning
EverQ, such as minutes of meetings of the Board of Directors and the
shareholders, contracts, undertakings, Government permits, books and accounts,
etc., will be freely available to REC.

          (m) Suppliers and Customers.

               (i) No supplier to EverQ has ceased/reduced or has informed EverQ
that it will cease/reduce supplying EverQ;

               (ii) No customer of EverQ has terminated or has informed EverQ
that it will terminate any contract with EverQ or withdrawn or materially
reduced its customs with it.

     7.5 Additional Representations and Warranties by E and Q pertaining to
EverQ.


                                      -35-



          (a) E and Q represent and warrant, severally and not jointly, that:

               (i) EverQ is founded and legally established under the laws of
Germany and registered in the commercial register of the local court at Stendal
with the registration no. HRB 4769 and with a registered share capital of [****]
fully paid in;

               (ii) As of Closing Date and subject to registration by the local
court, EverQ will have the articles of association as attached as EXHIBIT A;

               (iii) E and Q have good and marketable title to the shares to be
transferred to REC under this Agreement;

               (iv) Upon consummation of the transfer of shares as contemplated
herein, REC will acquire from E and Q, respectively, good and marketable title
to the shares, free and clear of all liens and other encumbrances, with the
exception of the transfer restrictions as laid down in this Agreement or the
articles of association. No option has been granted to any other person to
acquire such shares, nor are there any pre-emption rights;

               (v) E and Q have the full right, power and authority to transfer,
convey and sell the shares to REC at Closing;

               (vi) As of the date of this Agreement, no resolutions have been
made by any of E and Q regarding issue of (i) new shares diluting REC's
ownership interest or requiring any contribution, (ii) convertible debt
instruments, (iii) debt instruments with a right of option to subscribe to new
shares or (iv) participating debt instruments.

          (b) EverQ's Representations and Warranties E and Q represent and
warrant, severally and not jointly, that, to the best of their respective
knowledge, the representations and warranties given by EverQ in Section 7.4 are
true and not misleading as of the date of this Agreement.

                                  ARTICLE VIII.

                     Liability and Limitations of Liability

     8.1 Liability. In the event of a breach of any of the Warranties given by
any of the Parties (the "INDEMNIFYING PARTY") in Article VII or in that Party's
License Agreement, the other Parties and EverQ, each individually, shall have
the right to request in writing that the Indemnifying Party puts EverQ in the
position that it would have been in, had there been no breach of Warranty. If,
within eight weeks of such a request, the Indemnifying Party has not


                                      -36-



complied with the request, or if such remedy is impossible, the Indemnifying
Party shall indemnify EverQ in cash. If EverQ has become insolvent as a result
of such breach, or in the case and to the extent that the other Parties have
suffered a damage in excess or outside of the loss in value of their respective
holding in EverQ, the other Parties shall have the right to request in writing
that the Indemnifying Party indemnifies the other Parties in cash. For the
avoidance of doubt: The Indemnifying Party will not be obligated to double
compensate the same loss to either of the other Parties and EverQ.

     8.2 Definitions. All of the claims described in SECTION 8.1 above shall be
referred to as the "INDEMNIFIABLE CLAIMS." Any party seeking such
indemnification is hereafter referred to as an "INDEMNIFIED PARTY".

     8.3  Determination of the Amount of Damage.

          (a) For the purpose of this ARTICLE 8, the damage shall consist of the
amount necessary to cure any event or set of facts causing such Warranty to be
breached or the loss in value of EverQ caused by such breach, whichever amount
is higher.

          (b) In case of dispute, the amount of such damage (but for the
avoidance of doubt, not the existence of a breach) shall be determined by an
expert arbitrator ("Schiedsgutachter"). The expert arbitrator shall be a partner
of an internationally recognized accounting firm. If the Parties cannot agree on
the selection of such expert arbitrator within two weeks after receipt of a
request to appoint such arbitrator, the appointment shall be made by the
President of the Chamber of Industry and Commerce of Berlin. The decision of
such arbitrator shall be final and binding on the Parties and EverQ. The costs
of such arbitrator shall be borne by the Indemnifying Party and the Indemnified
Party respectively in proportion to their relative success according to the
determination delivered by the expert arbitrator who shall also determine such
proportion.

     8.4 Limitations of Liability for Breach of Warranties.

          (a) Each Indemnifying Party shall (in all cases) only be liable for
breach of Warranties under Article 7 to an Indemnified Party in respect of a
claim if the aggregate amount of all claims for which the relevant Indemnifying
Party would otherwise be liable under this Agreement to the relevant Indemnified
Party exceeds EUR 100,000.00 (in which case, however, the relevant Indemnified
Party shall be entitled to claim the total amount of such claims and not merely
the excess above said EUR 100,000.00).

          (B) All claims for breach of Warranties are limited in time until
(verjaehren am) December 31, 2007; in the case that a warranty relating to
Intellectual Property is breached, including, without limitation, warranties
under the License Agreements, the period of limitation (Verjaehrungsfrist)
expires one year after the termination of this Agreement.


                                      -37-



     8.5 GENERAL LIMITATION OF LIABILITY. EACH PARTY SHALL (IN ALL CASES) ONLY
BE LIABLE TO THE OTHER PARTIES OR EVERQ TO THE EXTENT THAT THE AGGREGATE AMOUNT
OF ITS LIABILITY FOR ALL CLAIMS OF WHATSOEVER NATURE MADE UNDER THIS AGREEMENT
AND THE LICENSE AGREEMENTS IS LIMITED TO EUR 15 MILLION, PROVIDED, HOWEVER, THAT
THE LIMITATIONS SET FORTH IN THIS SECTION 8.5 SHALL NOT APPLY IN THE CASE OF
FRAUD OR WILLFUL INTENT.

                                   ARTICLE IX.

                              Additional Agreements

     9.1  Marketing.

          (a) EverQ shall always have the right to directly market its output of
Wafers, Cells, and Modules.

          (b) If EverQ determines to market, distribute or sell Cells, Wafers or
Modules, as the case may be, via intermediaries, distribution partners, sales
agents or the like, it shall invite third parties to declare their interest to
participate in such marketing activities. In such a procedure, the Parties shall
be entitled to declare their interest as well. EverQ shall negotiate with all
the interested parties in good faith for not less than [****], and upon mutual
agreement, the negotiation period may be continued as long as necessary or
productive. The final decision shall be subject to approval by the Supervisory
Board.

          (c) If any marketing agreement is entered into with E, Q or REC
(individually, the "RECIPIENT PARTY"), the Parties shall take all actions to
cause the pricing of EverQ's output to be based on an arms-length transfer price
to provide a reasonable margin for both EverQ and the Recipient Party, taking
into account the Recipient Party's anticipated marketing and distribution costs
as well as anticipated market prices.

     9.2 Q Manufacturing Right of First Refusal.

          (a) During the term of this Agreement and only for so long as E
remains a shareholder of EverQ, whenever E or Affiliates (and references to E in
this section 9.2 are deemed to include E Affiliates) wishes to form an
Alternative Venture [****], E will first offer Q a right of first refusal with
respect to participation in such [****] pursuant to the provisions of SECTION
9.2(B) AND (C).

          (b) In the event that E determines to pursue the formation of an
[****], E shall deliver written notice to Q, offering Q the right of first
refusal to participate in any such [****], which notice shall refer to this
section of this Agreement and, subject to Q entering into a confidentiality
agreement reasonably satisfactory to E with


                                      -38-



respect to the existence of the notice and the subject matter thereof, provide a
description of the general framework of the [****], including without limitation
the proposed purpose and business objectives of the [****] and the contributions
proposed to be required of the parties to the [****] (the "E FIRST REFUSAL
NOTICE"). Upon the receipt of E First Refusal Notice, Q shall have [****] to
confirm in writing to E that it wishes to commence negotiations relating thereto
(the "Q CONFIRMATION NOTICE"). Upon E's receipt of the Q Confirmation Notice, E
and Q shall commence negotiations in good faith regarding the terms and
conditions of an agreement concerning the [****]. The parties will negotiate in
good faith for not less than [****], and upon mutual agreement, the negotiation
period may be continued as long as necessary or productive.

          (c) If the parties execute a definitive agreement concerning the
[****], then the parties will be bound by such agreement. If a definitive
agreement is not executed [****] after the initial [****] negotiation period,
then either party, upon written notice to the other, may end negotiations. Upon
the end of negotiations (or, alternatively, if Q did not provide the Q
Confirmation Notice [****] after receipt of the E First Refusal Notice), the
applicable right of first refusal shall have no further effect and, without
limiting the foregoing, E may enter into an [****] with a Third Party within the
parameters of the general framework set forth in the E First Refusal Notice. The
final conditions may not be materially more favorable to the Third Party, taken
as a whole, than the last conditions offered to Q (and if in fact more
favorable, Q may elect to enter into that [****] on those terms in lieu of the
Third Party). Q shall not have any obligation to agree to any terms which are
unique to the third party. The final agreement with the Third Party is to be
submitted promptly to a person nominated by Q bound by a professional duty of
secrecy (Berufsverschwiegenheit).

          (d) For the avoidance of doubt: During the term of this Agreement,
whenever E wishes to form one or more additional [****] after an E First Refusal
Notice has been provided, the procedure pursuant to the provisions of SECTION
9.2(B) THROUGH (C) shall be repeated.

     9.3 REC Manufacturing Right of First Refusal .

          (a) During the term of this Agreement, and only for so long as E shall
remains a shareholder of EverQ, whenever E or Affiliates (and references to E in
this SECTION 9.3 are deemed to include E Affiliates) wishes to form an
Alternative Venture active [****], E will first offer REC a right of first
refusal with respect to participation in such [****] pursuant to the provisions
of SECTION 9.3(B) AND (C).

          (b) In the event that E determines to pursue the formation of an
[****], E shall deliver written notice to REC, offering REC the right of first
refusal to participate in any such [****], which notice shall refer to this
section of


                                      -39-



this Agreement and, subject to REC entering into a confidentiality agreement
reasonably satisfactory to E with respect to the existence of the notice and the
subject matter thereof, provide a description of the general framework of the
[****], including without limitation the proposed purpose and business
objectives of the [****] and the contributions proposed to be required of the
parties to the [****] (the "E FIRST REFUSAL NOTICE"). Upon the receipt of E
First Refusal Notice, REC shall have [****] to confirm in writing to E that it
wishes to commence negotiations relating thereto (the "REC CONFIRMATION
NOTICE"). Upon E's receipt of the REC Confirmation Notice, E and REC shall
commence negotiations in good faith regarding the terms and conditions of an
agreement concerning the [****]. The parties will negotiate in good faith for
not less than [****], and upon mutual agreement, the negotiation period may be
continued as long as necessary or productive.

          (c) If the parties execute a definitive agreement concerning the
[****], then the parties will be bound by such agreement. If a definitive
agreement is not executed [****] after the initial [****] negotiation period,
then either party, upon written notice to the other, may end negotiations. Upon
the end of negotiations (or, alternatively, if REC did not provide the REC
Confirmation Notice within [****] after receipt of the E First Refusal Notice),
the applicable right of first refusal shall have no further effect and, without
limiting the foregoing, E may enter into an [****] with a third party within the
parameters of the general framework set forth in the E First Refusal Notice. The
final conditions may not be materially more favorable to the third party, taken
as a whole, than the last conditions offered to REC (and if in fact more
favorable, REC may elect to enter into that [****] on those terms in lieu of the
third party). REC shall not have any obligation to agree to any terms which are
unique to the third party. The final agreement with the third party is to be
submitted promptly to a person nominated by REC bound by a professional duty of
secrecy (Berufsverschwiegenheit).

          (d) For the avoidance of doubt: During the term of this Agreement,
whenever E wishes to form one or more additional [****] after an E First Refusal
Notice has been provided, the procedure pursuant to the provisions of SECTION
9.3(B) THROUGH (C) shall be repeated.

          (e) REC shall not be entitled to exercise or otherwise avail itself of
the rights set forth in this Section 9.3 if (i) REC or SGS materially breaches
any continuing supply agreement with E or EverQ or (ii) if REC or SGS shall have
failed to offer to EverQ the Second REC Supply Agreement and EverQ shall have
entered into one or more corresponding (in terms of similar duration or volume)
supply agreements with one or more third parties.

     9.4 Relation of Sections 9.2 and 9.3. If an Alternative Venture falls under
both SECTION 9.2 AND SECTION 9.3 and both Q and REC submit their respective
Confirmation Notice, the Parties shall commence three partite


                                      -40-



negotiations. Unless agreed otherwise between Q and REC, such part of the
Alternative Venture that shall not remain with E shall be offered to Q and REC
[****].

     9.5 [****]. During the term of this Agreement, and for a period of [****]
after its expiration or termination, neither Q nor REC shall, directly or
indirectly, engage in a [****]

          (a) Subject to SECTION 9.5(C) below, [****]

          (b) [****]


                                      -41-



          (c) The covenants contained in SECTION 9.5(A) shall be construed as a
series of separate covenants, one for each county, city, state and country of
the geographic scope. Except for geographic coverage, each such separate
covenant shall be deemed identical in terms to the covenant contained in SECTION
9.5(A). If, in any judicial proceeding, a court refuses to enforce any of such
separate covenants (or any part thereof), then such unenforceable covenant (or
such part) shall be eliminated from this Agreement to the extent necessary to
permit the remaining separate covenants (or portions thereof) to be enforced. In
the event that the provisions of this SECTION 9.5 are deemed to exceed the time,
geographic or scope limitations permitted by applicable law, then such
provisions shall be reformed to the maximum time, geographic or scope
limitations, as the case may be, permitted by applicable laws.

          (d) Each Party agrees that if it breaches any provision of this
SECTION 9.5, the other Party shall be entitled to, in addition to any other
right or remedy otherwise available to it, an injunction from a German court
restraining such breach or threatened breach and to seek specific performance of
any such provision of this SECTION 9.5.

          (e) If Q or REC wish to engage in a [****], they will need the prior
written approval of E which approval shall not be unreasonably withheld if the
envisaged [****] employs a technology that is, from a jointly appointed
independent expert's point of view, not closely related to the technology
employed by E.

     9.6 Cooperation to Pursue Tax Efficiencies. For so long as at least two
Parties beneficially own any Shares, such Parties shall and shall cause their
Affiliates to assist each other and EverQ to pursue any and all tax efficiencies
available to:

          (a) EverQ in the operation of its business; and

          (b) the other Parties as shareholders of EverQ; provided that neither
Party shall be required to expend any monies or incur any cost or liability in
connection therewith. Without limiting the foregoing, the Parties acknowledge
that E intends to pursue tax efficiencies with respect to its ownership of and
contributions to EverQ within the six month period following the Closing Date,
and Q and REC agree to cooperate with E in the achievement of those
efficiencies, including by amending this Agreement or any of the Concurrent
Agreements, so long as any action taken with respect to the achievement of E's
tax efficiencies neither alters the fundamental agreements of the Parties or
otherwise adversely affects Q or REC or EverQ. Without limiting the foregoing,
the Parties expressly agree that at the discretion of E, the Parties shall cause
EverQ to make an election under Treas. Reg. Section 1.7701-3(c) to be treated as
a partnership for U.S. federal income tax purposes and no Party shall take any
action inconsistent with such election, so long as such election neither alters
the fundamental agreements of the Parties or otherwise adversely affects Q or
REC or EverQ.

     9.7  Confidentiality.


                                      -42-



          (a) Definition. "CONFIDENTIAL INFORMATION" means any information: (i)
disclosed by one Party (the "DISCLOSING PARTY") to any other Party (the
"RECEIVING PARTY"), which, if in written, graphic, machine-readable or other
tangible form is marked as "CONFIDENTIAL" or "PROPRIETARY", or which, if
disclosed orally or by demonstration, is identified at the time of initial
disclosure as confidential and reduced to writing and marked "CONFIDENTIAL"
within [****] of such disclosure; or (ii) which is otherwise referred to as
Confidential Information under this Agreement or any License Agreement.

          (b) Confidential Information and Exclusions. Notwithstanding SECTION
9.5(A) (Definition) above, Confidential Information shall exclude information
that: (i) was independently developed by the Receiving Party without using any
of the Disclosing Party's Confidential Information; (ii) becomes known to the
Receiving Party, without restriction, from a source other than the Disclosing
Party that had a right to disclose it; (iii) was in the public domain at the
time it was disclosed or becomes in the public domain through no act or omission
of the Receiving Party; or (iv) was rightfully known to the Receiving Party,
without restriction, at the time of disclosure.

          (c) Confidentiality Obligation. The Receiving Party shall treat as
confidential all of the Disclosing Party's Confidential Information and shall
not use such Confidential Information except as expressly permitted under this
Agreement or a License Agreement or in connection with EverQ's activities.
Without limiting the foregoing, the Receiving Party shall use at least the same
degree of care that it uses to prevent the disclosure of its own confidential
information of like importance, but in no event with less than reasonable care,
to prevent the disclosure of the Disclosing Party's Confidential Information,
subject to SECTION 9.5(D) (Legal Disclosure) below.

          (d) Legal Disclosure. Notwithstanding anything herein to the contrary,
a Receiving Party has the right to disclose Confidential Information without the
prior written consent of the Disclosing Party: (i) as required by any court or
other Governmental Authority, or by any stock exchange the shares of any Party
are listed on; (ii) as otherwise required by law, or (iii) as advisable or
required in connection with any government or regulatory filings, including
without limitation, filings with any regulating authorities covering the
relevant financial markets. If a Receiving Party believes that it will be
compelled by a court or other authority to disclose Confidential Information of
the Disclosing Party, it shall give the Disclosing Party prompt written notice
so that the Disclosing Party may take steps to oppose such disclosure.

          (e) Remedies. If a Receiving Party breaches any of its obligations
under this SECTION 9.7, the Disclosing Party shall be entitled to seek equitable
relief to protect its interest therein, including injunctive relief, as well as
money damages.

          (f) General Knowledge. The Receiving Party shall have no obligation to
limit or restrict the assignment of its employees or consultants as a result of
their having had access to the Disclosing Party's Confidential Information. The
restrictions regarding Confidential


                                      -43-



Information shall not be construed to limit any Party's right to independently
develop or acquire products, processes or concepts without use of the Disclosing
Party's Confidential Information, even if similar. Furthermore, notwithstanding
the restrictions regarding Confidential Information, the Receiving Party shall
be free to use for any purpose the general knowledge resulting from access to
work with or exposure to the Disclosing Party's Confidential Information,
provided that the Receiving Party shall maintain the confidentiality of the
Confidential Information as provided herein. The term "GENERAL KNOWLEDGE" means
information in non-tangible form which may be retained by persons who have had
access to Disclosing Party's Confidential Information, including ideas,
concepts, know-how or techniques contained therein.

     9.8 Reasonable Efforts. Subject to the terms and conditions provided in
this Agreement, all Parties shall each use commercially reasonable efforts to
take promptly, or cause to be taken, all actions, and to do promptly, or cause
to be done, all things necessary, proper or advisable under applicable Laws and
regulations to consummate and make effective the transactions contemplated
hereby, to obtain all necessary waivers, consents and approvals and to effect
all necessary registrations and filings and to remove any injunctions or other
impediments or delays, legal or otherwise, in order to consummate and make
effective the transactions contemplated by this Agreement for the purpose of
securing to the other the benefits contemplated by this Agreement.

     9.9  Standstill.

          (a) For a period commencing with the date hereof and [****], neither Q
nor any of its agents shall,, without the prior written consent of E or its
board of directors: acquire, offer to acquire, or agree to acquire, directly or
indirectly, by purchase or otherwise, any voting securities or direct or
indirect rights to acquire any voting securities of E or any subsidiary thereof,
or of any successor to or person in control of E, or any assets of E or any
subsidiary or division thereof or of any such successor or controlling person;
make, or in any way participate, directly or indirectly, in any "solicitation"
of "proxies" to vote (as such terms are used in the rules of the Securities and
Exchange Commission ("SEC")), or seek to advise or influence any person or
entity with respect to the voting of any voting securities of E; make any public
announcement with respect to, or submit a proposal for, or offer of (with or
without conditions) any extraordinary transaction involving E or any of its
securities or assets; form, join or in any way participate in a "group" as
defined in Section 13(d)(3) of the Exchange Act, in connection with any of the
foregoing; otherwise act or seek to control or influence the management, Board
of Directors or policies of E; take any action that could reasonably be expected
to require E to make a public announcement regarding the possibility of any of
the events described in this SECTION 9.9; or request E or any of its agents,
directly or indirectly, to amend or waive any provision of this SECTION 9.9.

          (b) The restrictions in this SECTION 9.9 shall apply, mutatis
mutandis,


                                      -44-


               (i) to E and its agents regarding any transactions in any voting
securities of Q and / or REC, and

               (ii) to Q and its agents regarding any transactions in any voting
securities of REC.

               (iii) to REC and its agents regarding any transactions in any
voting securities of E and / or Q.

     9.10 Employee Matters. Pursuant to the Services Agreements, to be entered
into [****] of the Signing Date, the Parties intend to provide certain
infrastructure, management, operational, technology support, engineering,
development and other services to EverQ. In addition, the Parties intend to use
commercially reasonable efforts to hire and retain employees for EverQ. The
Parties shall cause the employees and agents of EverQ to abide by E's, and,
whenever applicable, Q's and REC's, public company policies, including without
limitation E's, and, whenever applicable, Q's and REC's, insider trading policy
and obtain a written acknowledgement from each such employee and agent
acknowledging that such employee or agent is subject to such policies.

     9.11 Covenant Regarding REC Services Agreement . The Parties shall, and
shall cause EverQ to enter into the REC Services Agreements within [****]
following the Signing Date. The services provided by REC pursuant to the REC
Services Agreements (i) shall be provided by REC to EverQ on a market-rate or
cost-plus basis, and (ii) shall include, but not be limited to the following
services: general advice regarding management issues in connection with the
establishment and expansion of EverQ; assistance with management staff selection
and recruitment process; advice regarding corporate and organizational structure
considerations; advice and support regarding the EverQ financing activities;
advice and assistance in EverQ and administrative matters, making, where
appropriate, the Parties' suppliers available to EverQ and advising EverQ staff
in this respect; advice and support in connection with the transfer of the
Parties' technology to EverQ; technology support; design and engineering
support; and human resources management and recruitment support. The Services
Agreement shall provide that the provision of services by the Parties prior to
the execution and delivery of the Services Agreement shall be deemed to have
been provided on the terms and conditions of the Services Agreement as if the
Services Agreements were entered into on the Closing Date.

                                   ARTICLE X.

                                  Miscellaneous

     10.1 Expenses . Except as specifically provided for in this Agreement, each
of the Parties shall bear its respective expenses, costs and fees (including
attorneys' fees) in connection with the transactions contemplated hereby,
including the preparation, execution and delivery of this Agreement and the
Concurrent Agreements and compliance herewith and therewith, whether


                                      -45-



or not the transactions contemplated hereby or thereby shall be consummated.
However, the costs related to (i) the EverQ representation in the preparation,
execution and delivery of this Agreement and the Concurrent Agreements and
compliance herewith and therewith and (ii) notarization and registration of the
capital increase and amendments of the Articles of Association shall be borne by
EverQ.

     10.2 Further Assurances. If, at any time after the Closing Date, any
further action is necessary or desirable to carry out the purposes of this
Agreement or to vest EverQ with full right, title and possession to all assets,
property, rights, privileges, powers and franchises contemplated by this
Agreement, each Party will and will cause its Affiliates to take all such lawful
and necessary action, so long as such action is consistent with this Agreement.

     10.3 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if (a) delivered
personally, (b) sent by next-day or overnight mail or delivery or (c) sent by
facsimile, as follows:

     As to E, Inc.:  Evergreen Solar, Inc.
                     138 Bartlett Street
                     Marlboro, MA 01752 USA
                     Attention: Richard Feldt
                                Richard Chleboski
                     Phone: +________________
                     Fax: +_________________

     with a copy to: Wilson Sonsini Goodrich & Rosati, Professional Corporation
                     12 East 49th Street
                     New York, NY 10017 USA
                     Attention: Robert Sanchez
                                Robert O'Connor
                     Phone: 1 212 999-5800
                     Fax: 1 650 493-6811

     As to Q AG:     Q-Cells AG
                     Guardianstr. 16
                     D-06766 Thalheim, Germany
                     Attention: Anton Milner
                                Dr. Hartmut Schuening
                     Phone: +49-34 94-66 8-60
                     Fax: +49-34 94-66 8-777


                                      -46-



     with a copy to: VAN AUBEL Rechtsanwaelte
                     Leibnizstr. 49
                     D-10629 Berlin, Germany
                     Attention: Dr. Thomas van Aubel
                     Phone: +49-30-31 51 90 0
                     Fax: +49-30-31 51 90 90

     As to REC:      Renewable Energy Corporation
                     Veritasveien 14,
                     N-1323 Hovik, Norway
                     Attention: ____________
                     Phone: +________________
                     Fax: +_________________

     with a copy to: ________

     or, in each case, at such other address as may be specified in writing to
the other parties hereto.

     All such notices, requests, demands, waivers and other communications shall
be deemed to have been received (w) if by personal delivery on the day
delivered, (x) if by next-day or overnight mail or delivery, on the day
delivered, or (y) if by facsimile, on the day on which such facsimile was sent;
provided that the Party providing notice pursuant to facsimile shall have
received a confirmation of receipt of such facsimile transmission.

     10.4 Governing Law and Dispute Resolution.

          (a) This Agreement shall be construed in accordance with and governed
by the laws of the Federal Republic of Germany.

          (b) The Parties shall try to settle any disputes by way of mediation.

          (c) All disputes arising in connection with this Agreement or its
validity or any agreement provided herein which cannot be resolved by mutual
agreement of the Parties or mediation shall be finally settled in accordance
with the Arbitration Rules of the German Institution of Arbitration e.V. (DIS)
without recourse to the ordinary courts of law (except for challenges to the
validity of shareholder resolutions which shall be submitted to the competent
courts). The place of arbitration is Berlin, Germany. The arbitral tribunal
consists of three arbitrators. The arbitrators must be capable of being
appointed a judge in accordance with the relevant German legal rules. The
substantive law of the Federal Republic of Germany is applicable to the dispute.
The language of the arbitral proceedings is English.

     10.5 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the Parties hereto and their respective heirs, successors and
permitted assigns.


                                      -47-



     10.6 Assignment. Other than as expressly otherwise provided herein, this
Agreement shall not be assignable or otherwise transferable by any Party hereto
without the prior written consent of all the other parties hereto, and any
purported assignment or other transfer without such consent shall be void and
unenforceable; provided, however, that any Party may assign this Agreement:

          (a) to any of its Affiliates so long as it will be made at the same
time as a transfer of its Shares to such Affiliate specifically permitted by
this Agreement;

          (b) in connection with the sale by a Party of all of the Shares
beneficially owned by such Party as specifically provided by this Agreement,
including by way of the Change of Control of such Party.

          (c) For the avoidance of doubt, no Party shall be obligated to obtain
the consent of any other Party (under this Section 10.6) solely by virtue of a
Change of Control of such Party.

     10.7 No Third Party Beneficiaries. Except as specifically provided by this
Agreement, nothing in this Agreement shall confer any rights upon any Third
Party.

     10.8 Foreign Corrupt Practices Act.

          (a) The Parties recognize that the United States Foreign Corrupt
Practices Act of 1977 (the "ACT") shall be applicable to EverQ, its Affiliates
and its designated directors, officers and personnel in EverQ, even if EverQ
does not conduct any business in the United States of America. The Parties
recognize that the Act prohibits the payment or giving of anything of value
either directly or indirectly to a government official for the purpose of
influencing an act or decision in his or her official capacity, or for the
purpose of inducing him or her to use his or her influence with his or her
government to assist a company in obtaining or retaining business for or with,
or directing business to, any Person.

          (b) Each Party shall each use its reasonable best efforts to ensure
that no part of EverQ capital or other funds will be accepted or used by the
Company for any purpose, nor will it take any action, which would constitute a
violation of any law of the various jurisdictions in which it conducts business
or of the Act.

     Should either Party ever receive, directly or indirectly, a request that
any of them believes will or might constitute a violation of the Act, it shall
immediately notify the Supervisory Board of EverQ.

     10.9 Sarbanes-Oxley and Nasdaq Covenant. The Parties shall cause EverQ to
perform such acts as any of the Parties shall request as reasonably necessary to
permit such Party to comply with all Laws and regulations applicable to
companies in general and publicly reporting companies in particular including
but not limited to: (i) the Exchange Act and the Securities Act


                                      -48-



and the rules of the SEC promulgated thereunder; (ii) the Sarbanes-Oxley Act of
2002 and the rules and regulations of the SEC promulgated thereunder; (iii) the
Nasdaq Marketplace Rules; (iv) similar laws, regulations or rules under
European, German or Norwegian law. Without limiting the foregoing, the Parties
shall cause EverQ to establish, maintain, adhere to and enforce a system of
internal accounting controls which are effective in providing assurance
regarding the reliability of financial reporting and the preparation of
financial statements in accordance with US GAAP.

     10.10 Amendment, Waivers. No amendment, modification or discharge of this
Agreement, and no waiver hereunder, shall be valid or binding unless set forth
in writing and duly executed by each of E, Q and REC.

     10.11 Entire Agreement. This Agreement constitutes the entire agreement and
supersedes all prior agreements and understandings both written and oral,
between or among any of the Parties with respect to the subject matter hereof.

     10.12 No Joint Venture or Partnership. Notwithstanding anything contained
in this Agreement or the Concurrent Agreements to the contrary, including the
use of the terms "joint venture", "EverQ" and similar terms, nothing contained
in this Agreement or the Concurrent Agreements is intended to, or shall be
deemed to, create a partnership or joint venture relationship among the Parties
or any of their Affiliates for any purpose, including tax purposes. The Parties
shall hold individual shares in EverQ. There shall be no joint ownership of such
shares. Neither of the Parties nor any of the Affiliates will take a position
contrary to the foregoing.

     10.13 Language for Joint Venture and this Agreement. All agendas, notices,
other documentation relating to (i) EverQ's interaction with the Parties, (ii)
documentation provided to the Parties and (iii) interaction between the
Shareholders, including without limitation this Agreement, meetings of the
Supervisory Board and the Shareholders of EverQ, and EverQ's financial
statements, shall be prepared in and entered into the English language. In the
event of any dispute concerning the construction or meaning of this Agreement,
the text of the Agreement as written in the English language shall prevail over
any translation of this Agreement that may have been or will be made.

     10.14 Voting and other rights. Each of the Parties shall join with the
other Party in exercising all voting rights and other rights and powers of
control as are respectively available to them in relation to EverQ and their
beneficial shareholdings therein under the Articles of Association for the time
being in force and shall each take or refrain from taking all other appropriate
action within their respective powers so as to procure that at all times during
the subsistence of this Agreement all provisions concerning the structure and
organisation of EverQ and the regulation by the Parties of its affairs set out
in this Agreement are duly observed and given full force and effect and all
actions required of the Parties are carried out in a timely manner. Without
prejudice to the generality of the foregoing each Party shall procure that
(subject to their fiduciary duties) each of the directors appointed by the
Parties, as provided


                                      -49-



herein, shall execute and do all acts and things and give and confer all such
powers and authorities as they would have been required to execute, do, give
and/or confer had they been a Party hereto and had consented in the same terms
as the Party which appointed them.

     10.15 Severability. In the event that any term, condition or provision of
this Agreement is held to be or become invalid or be a violation of any
applicable Law, statute or regulation, the same shall be deemed to be deleted
from this Agreement and shall be of no force and effect and the Agreement shall
remain in full force and effect as if such term, condition or provision had not
originally been contained in this Agreement. The validity and enforceability of
the other provisions shall not be affected thereby. In such case or in the event
that this Agreement should have a gap, the Parties hereto shall agree on a valid
and enforceable provision completing this Agreement, coming as close as possible
to the economic intentions of the Parties. In the event of a partial invalidity
(Teilnichtigkeit) the Parties agree that this Agreement shall remain in force
without the invalid part. This shall also apply if parts of this Agreement are
partially invalid (teilnichtig).

               [Remainder of this page intentionally left blank.]


                                      -50-



                                                                    SCHEDULE 3.4

            Criteria / Main Principles of Second REC Supply Agreement

                                     [****]


                                      -51-

EX-10.18

                                                                   Exhibit 10.18

CONFIDENTIAL TREATMENT REQUESTED: Certain portions of this document have been
omitted pursuant to a request for confidential treatment and, where applicable,
have been marked with an asterisk ("[****]") to denote where omissions have been
made. The confidential material has been filed separately with the Securities
and Exchange Commission.


                                    LICENSE &

                               TECHNOLOGY TRANSFER

                                    AGREEMENT

                                 BY AND BETWEEN

                              EVERGREEN SOLAR, INC.

                                       AND

                                   EVERQ GMBH



                                TABLE OF CONTENTS

                                                                           
ARTICLE 1 DEFINITIONS.......................................................   1
   1.1  CONSTRUCTION........................................................   1
   1.2  DEFINITIONS.........................................................   1

ARTICLE 2 RIGHTS AND LICENSES...............................................   5
   2.1  E LICENSE GRANT TO VENTURECO........................................   5
   2.2  VENTURECO LICENSE GRANT TO E........................................   5
   2.3  RESERVATION OF RIGHTS; NO IMPLIED LICENSES..........................   6

ARTICLE 3 TECHNOLOGY TRANSFER...............................................   6
   3.1  QUARTERLY MEETINGS..................................................   6
   3.2  DELIVERY OF TECHNICAL DELIVERABLES..................................   6
   3.3  COPIES..............................................................   7
   3.4  QUAD RIBBON PROCESS DEVELOPMENT.....................................   7

ARTICLE 4 CONSIDERATION AND PAYMENT.........................................   7
   4.1  MATERIAL NEW IP - VENTURECO REQUEST.................................   7
   4.2  VENTURECO REQUEST FOR MNIP..........................................   8
   4.3  EXCLUSION...........................................................   8
   4.4  ROYALTY ON MNIP.....................................................   8
   4.5  ROYALTY EVALUATION BY EXPERTS.......................................  10
   4.6  TAX AUTHORITY CHALLENGES............................................  11
   4.7  ROYALTY CALCULATIONS................................................  11
   4.8  PAYMENT.............................................................  11
   4.9  CURRENCY............................................................  11
   4.10 TAXES...............................................................  11
   4.11 AUDIT...............................................................  11
   4.12 SEPARATE AGREEMENTS.................................................  12
   4.13 PROSPECTIVE BASIS...................................................  12
   4.14 WAIVER..............................................................  12

ARTICLE 5 INTELLECTUAL PROPERTY RIGHTS......................................  12
   5.1  OWNERSHIP...........................................................  12
   5.2  ENFORCEMENT OF JOINTLY OWNED INTELLECTUAL PROPERTY RIGHTS...........  15
   5.3  THIRD PARTY LICENSES................................................  15
   5.4  FURTHER COOPERATION.................................................  15

ARTICLE 6 WARRANTIES........................................................  15
   6.1  REPRESENTATIONS AND WARRANTIES......................................  15
   6.2  REMEDY..............................................................  16




                                      -I-



                                TABLE OF CONTENTS

                                                                          
   6.3  DISCLAIMER..........................................................  16

ARTICLE 7 CONFIDENTIAL INFORMATION..........................................  16
   7.1  CONFIDENTIAL INFORMATION............................................  16

ARTICLE 8 TERM..............................................................  17
   8.1  TERM................................................................  17
   8.2  SPECIAL TERMINATION RIGHT...........................................  17
   8.3  EFFECT OF TERMINATION...............................................  17

ARTICLE 9 GENERAL PROVISIONS................................................  17
   9.1  LIMITATION OF LIABILITY.............................................  17
   9.2  NOTICES.............................................................  18
   9.3  LANGUAGE............................................................  19
   9.4  AMENDMENTS AND WAIVERS..............................................  19
   9.5  ASSIGNMENT..........................................................  19
   9.6  ENTIRE AGREEMENT; SEVERABILITY......................................  20
   9.7  OTHER REMEDIES; SPECIFIC PERFORMANCE................................  20
   9.8  GOVERNING LAW AND DISPUTE RESOLUTION................................  20
   9.9  COMPLIANCE WITH LAWS AND REGULATIONS................................  20
   9.10 EXPORT..............................................................  20
   9.11 FORCE MAJEURE.......................................................  21
   9.12 INDEPENDENT CONTRACTORS.............................................  21
   9.13 THIRD PARTY BENEFICIARIES...........................................  21
   9.14 COUNTERPARTS........................................................  21




                                      -II-



                                    LICENSE &
                               TECHNOLOGY TRANSFER
                                    AGREEMENT

     This License & Technology Transfer Agreement (this "AGREEMENT") is made by
and between Evergreen Solar, Inc., a Delaware corporation ("E"), and EverQ GmbH,
a limited liability company (GmbH), incorporated under the laws of the Federal
Republic of Germany ("VENTURECO"), as of the Effective Date. E and VentureCo are
hereinafter referred to individually by their respective names or as "PARTY" and
collectively as "PARTIES."

                                    RECITALS:

     WHEREAS, E, Q Cells AG ("Q") and Renewable Energy Corporation ("REC") are
entering into that certain Master Joint Venture Agreement (Notarial Deed nr.
_____/2005 of the Berlin notary public __________, the "MASTER AGREEMENT") which
is deemed to be incorporated into this Agreement where this Agreement refers to
the Master Agreement (and remains incorporated notwithstanding termination of
the Master Agreement), pursuant to which, among other things, the Parties have
agreed to enter this Agreement;

     WHEREAS, Q and VentureCo are entering into that certain License and
Technology Transfer Agreement By and Between Q-Cells AG and EverQ GmbH (the "Q
LICENSE AGREEMENT");

     WHEREAS, REC and VentureCo are entering into that certain License and
Technology Transfer Agreement By and Between Renewable Energy Corporation and
EverQ GmbH (the "REC LICENSE AGREEMENT");

     NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements herein contained, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged and accepted, and intending to be legally bound hereby, the
Parties hereto hereby agree as follows:

                                   ARTICLE 1

                                  DEFINITIONS

     1.1 Construction. Capitalized terms not defined herein shall have the
meanings set forth in the Master Agreement. The interpretation of this Agreement
shall be governed by those principles set forth in SECTION 1.2 (Headings and
Other Interpretation) of the Master Agreement.

     1.2 Definitions. As used herein:


                                      -1-



     "ADDED VALUE" means increased value through sale of a Licensed Product
attributable [****] incorporated into or used to manufacture that Licensed
Product, calculated with reference to [****].

     "DIRECT PRODUCTION COSTS" means all [****] required for the production of a
Licensed Product, and [****] associated with manufacturing a Licensed Product
incorporating MNIP.

     "EFFECTIVE DATE" means [****].

     "E IP" means the E Technology and E Intellectual Property Rights.

     "E INTELLECTUAL PROPERTY RIGHTS" means all Intellectual Property Rights
owned or Licensable by E or its Affiliates during the Initial Period and (with
respect to certain MNIP and other Intellectual Property Rights as described in
this Agreement) [****] Post Termination Period, that relate to the manufacture,
production, assembly, use or sale of Licensed Products, or which would, without
the licenses herein, be infringed or violated by the operation of VentureCo's
business or its commercialization of products as contemplated in the Master
Agreement. "E INTELLECTUAL PROPERTY RIGHTS" includes those Intellectual Property
Rights listed in PART 1 OF EXHIBIT A and (once available for commercial use), in
PART 2 OF EXHIBIT A but excludes those Intellectual Property Rights listed in
PART 3 OF EXHIBIT A ("EXCLUDED E INTELLECTUAL PROPERTY RIGHTS"). For the
avoidance of doubt, "E INTELLECTUAL PROPERTY RIGHTS" excludes (i) other MNIP,
but does not exclude MNIP identified and made available to VentureCo subject to
royalty terms stated in ARTICLE 4 (Consideration and Payment), (ii) other
Intellectual Property Rights for improvements or other inventions that are made
after the Initial Period (except to the extent regulated in the context of
support services to VentureCo pursuant to an applicable agreement), and (iii) in
the event of an acquisition of E, Intellectual Property Rights of the acquirer
of E.

     "E PERCENT REDUCTION DATE" means [****]

     "E TECHNICAL DELIVERABLES" means any reasonably available documentation,
records and other tangible items constituting E Technology and E Intellectual
Property Rights, including any such items specified in Part 1 of Exhibit A.

     "E TECHNOLOGY" means all Technology owned or Licensable by E or its
Affiliates during the Initial Period and (with respect to certain MNIP and other
Technology as described in this Agreement) [****] Post Termination Period, that
relates to the manufacture, production, assembly, use or sale of Licensed
Products and the operation of VentureCo's business and commercialization of
products as contemplated in the Master Agreement. "E TECHNOLOGY" includes
Technology relating to items described in PART 1 OF EXHIBIT A ("INCLUDED E
TECHNOLOGY") and (once available for commercial use) relating to MNIP described
in PART 2 OF EXHIBIT A, but excludes Technology


                                      -2-



relating to items described in PART 3 OF EXHIBIT A ("EXCLUDED E TECHNOLOGY").
For the avoidance of doubt, E Technology excludes (i) other MNIP, but does not
exclude Technology identified and made available to VentureCo as MNIP subject to
royalty terms stated in ARTICLE 4 (Consideration and Payment), (ii) other
Technology created after the Initial Period (except to the extent regulated in
the context of support services to VentureCo pursuant to an applicable
agreement), and (iii) in the event of an acquisition of E, Intellectual Property
Rights of the acquirer of E.

     "EXCLUDED E TECHNOLOGY" has the meaning set forth in SECTION 1.2
(Definitions - E Technology).

     "INITIAL PERIOD" means the time period commencing on the License Effective
Date and ending on the Termination Date.

     "INTELLECTUAL PROPERTY RIGHTS" means all rights in, to, or arising out of:
(i) any Patents; (ii) inventions, discoveries (whether patentable or not in any
country), invention disclosures, improvements, trade secrets, proprietary
information, know-how, technology and technical data; (iii) copyrights,
copyright registrations, mask works, mask work registrations, and applications
therefor in the U.S. or any foreign country, and all other rights corresponding
thereto throughout the world; and (iv) any other proprietary rights in or to
Technology anywhere in the world.

     "JOINTLY OWN" has the meaning set forth in SECTION 5.1(A)(I) (Definition).

     "LICENSABLE" means possession of the ability to grant a license or
sublicense of, or within, the scope provided for in this Agreement without
payment of any fee to, or violating the terms of any agreement or other
arrangements with a Third Party and without violating any applicable laws, rules
or regulations.

     "LICENSE EFFECTIVE DATE" means the Effective Date.

     "LICENSED PRODUCTS" means Wafers, Cells, and/or Modules, as the case may
be, in which the Wafers are made using String Ribbon Technology.

     "MARKET RATE" means [****].

     "MATERIAL NEW IP" or "MNIP" means Intellectual Property Rights and
Technology developed or Licensable by E only after the License Effective Date
(and involving certain levels of investment or achievement by E), [****].


                                      -3-



[****] To avoid doubt, MNIP comprises, without limitation, Intellectual Property
Rights and Technology [****]. Notwithstanding anything to the contrary, MNIP
shall not include any Excluded E Intellectual Property Rights or, in the event
of an acquisition of E, Intellectual Property Rights of the acquirer of E.

     "PATENTS" means any U.S., international or foreign patent or any
application therefor and any and all reissues, divisions, continuations,
renewals, extensions and continuations-in-part thereof.

     "PHASE 2 ROYALTY" means (with respect to the use of MNIP) the quantum of
royalty or equivalent fees (called "royalty") payable for the use of MNIP that
is developed and commercially available after the E Percent Reduction Date and
prior to the Termination Date, including rate and formula for calculating actual
royalty payable, based on [****].

     "POST TERMINATION PERIOD" means the time period commencing immediately
after the Termination Date. "[****] POST TERMINATION PERIOD" means the [****]
period commencing immediately after the Termination Date. "[****] POST
TERMINATION PERIOD" means the [****] period commencing immediately after the
Termination Date.

     "REGISTERED E INTELLECTUAL PROPERTY RIGHTS" means all E Intellectual
Property Rights (including Patents) that have been registered, filed, issued or
otherwise perfected or recorded with or by any state, government or other public
or quasi-public legal authority, including any applications for filings for any
such rights.

     "STRING RIBBON" means [****].

     "TECHNOLOGY" means information and technology in tangible and/or intangible
form and materials, embodiments, implementations or improvements of any
technology, including, but not limited to: software, media, data collections,
databases, techniques, methods, processes, formulae, systems, hardware,
equipment, prototypes, proofs of concept, apparatuses, hardware, software,
algorithms, files, routines, documents, designs, drawings, plans, specifications
and the like.

     "TERMINATION DATE" means the earlier of the date on which the Master
Agreement or this Agreement is terminated in accordance with its terms.


                                      -4-



     "VENTURECO INTELLECTUAL PROPERTY RIGHTS" means all Intellectual Property
Rights developed after the Closing Date and owned (solely or jointly) by
VentureCo that relate or which would, without the licenses set forth herein, be
infringed or violated by making, using, selling, importing or otherwise
exploiting Wafers, Cells and Modules.

     "VENTURECO IP" means VentureCo Technology and VentureCo Intellectual
Property Rights.

     "VENTURECO TECHNOLOGY" means all technology developed after the Closing
Date and owned (solely or jointly) by VentureCo that relates to the making,
using, selling, importing or other exploiting Wafers, Cells and Modules.

                                   ARTICLE 2

                               RIGHTS AND LICENSES

     2.1 E License Grant to VentureCo. Subject to the terms and conditions of
this Agreement, E hereby grants and agrees to grant to VentureCo, effective upon
the License Effective Date, a world-wide, non-exclusive, non-transferable,
perpetual, irrevocable, fully paid up and royalty-free (except as provided in
ARTICLE 4 (Consideration and Payment)) license, without the right to sublicense,
under the E Intellectual Property Rights, to make (but not have made), use,
sell, offer for sale, import or otherwise commercialize or exploit Licensed
Products, to use the E Technology in connection with the foregoing, and to
otherwise operate VentureCo and commercialize its products as contemplated in
the Master Agreement. . It is understood that the foregoing license to VentureCo
includes, without limitiation, the right to change and make improvements and
extensions to the E Technology, and to patent such changes and improvements.
Furthermore, it is understood that VentureCo shall have the right to
commercially exploit such changes and improvements in accordance with such
license.

     2.2 VentureCo License Grant to E. VentureCo hereby grants and agrees to
grant to E a world-wide, non-exclusive, non-transferable (except pursuant to
SECTION 9.5 (Assignment)), perpetual, irrevocable, fully paid up, royalty-free,
fully sublicensable, license, under the VentureCo Intellectual Property Rights
developed in the Initial Period and [****] Post Termination Period, to make,
use, sell, offer for sale, import or otherwise commercialize or exploit Wafers,
Cells and Modules. In addition, VentureCo hereby grants and agrees to grant to E
a world-wide, non-exclusive, non-transferable, perpetual, irrevocable, fully
paid up, royalty-free, fully sublicensable, license, under the VentureCo
Intellectual Property Rights, whenever developed, [****] to make, use, sell,
offer for sale, import or otherwise commercialize or exploit Wafers, Cells and
Modules. It is understood that the foregoing license to E includes, without
limitation, the right for E to change and make improvements and extensions to
such Technology licensed from VentureCo, and to patent such changes and
improvements. Furthermore, it is understood that E shall have the right to
commercially exploit said changes and improvements in accordance with such
license.


                                      -5-



     2.3 Reservation of Rights; No Implied Licenses. All rights not granted
herein are reserved. Nothing in this Agreement shall be deemed to constitute the
grant of any license or other right to a Party's Intellectual Property Rights or
Technology except as expressly set forth herein.

                                   ARTICLE 3

                               TECHNOLOGY TRANSFER

     3.1 Quarterly Meetings.

          (a) New Developments. During the Initial Period and [****] Post
Termination Period, the Parties shall meet on a quarterly basis (or as otherwise
agreed upon by the Parties) to discuss (and E shall advise VentureCo of) any
material or other E IP or VentureCo IP that was acquired, developed or became
Licensable since the prior quarterly meeting.

          (b) Defining Material New IP. During the quarterly meetings described
above, the Parties shall also determine whether new Intellectual Property Rights
and Technology of or Licensable by E comprise Material New IP. The Parties
intend that if E develops certain valuable MNIP, it may be appropriate for E to
receive royalty for VentureCo's use thereof in accordance with ARTICLE 4
(Consideration and Payment). The Parties' obligations with respect to MNIP will
be governed by ARTICLE 4 (Consideration and Payment).

     3.2 Delivery of Technical Deliverables. E shall deliver to VentureCo at
least one copy of all E Technical Deliverables, in electronic form when
practicable, within [****] after the License Effective Date or (as applicable),

          (a) in the case of MNIP listed in EXHIBIT A PART 2, promptly upon
commercial availability (subject to applicable royalties),

          (b) in the case of MNIP available in the Initial Period (other than
that in EXHIBIT A PART 2), promptly after VentureCo's election to acquire that
MNIP (subject to applicable royalties), and

          (c) in the case of MNIP available after the E Interest Reduction Date
or Termination Date, promptly after VentureCo's election to acquire that MNIP
and determination of applicable royalties .

     Subject to ARTICLE 4 (Consideration and Payment), during the Initial Period
and the Post Termination Period, E shall periodically and promptly deliver to
VentureCo copies of E Technical Deliverables that have not been previously
delivered, including E Technical Deliverables relating to E IP acquired or
Licensable after the License Effective Date.


                                      -6-



     3.3 Copies. VentureCo may copy, modify and otherwise use the E Technical
Deliverables in accordance with and subject to the restrictions and licenses set
forth herein as necessary to exercise the rights granted hereunder. VentureCo
agrees to maintain a document control system to control copies of such E
Technical Deliverables and otherwise treat such information as E's Confidential
Information subject to the provisions of ARTICLE 7 (Confidential Information).

     3.4 [****]

          (a) [****]

          (b) [****]

          (c) [****]

                                   ARTICLE 4

                            CONSIDERATION AND PAYMENT

     4.1 Material New IP - VentureCo Request. If E has developed Material New IP
in the Initial Period or [****] Post Termination Period, E shall promptly submit
a general, written description of the Material New IP to VentureCo. This does
not apply to Material New IP listed in EXHIBIT A, PART 2 (which is deliverable
pursuant to SECTION 3.2 (Delivery of Technical Deliverables) as set forth
therein).


                                      -7-


     4.2 VentureCo Request for MNIP. Upon and following the submission of
descriptions of MNIP described in SECTION 4.1 (Material New IP - VentureCo
Request), VentureCo shall be entitled to request from E a license under the MNIP
in writing, subject to the terms and conditions of this Agreement, and subject
to payment of royalties specified in SECTION 4.4 (Royalty on MNIP).

     4.3 Exclusion. If VentureCo is not interested in obtaining a license to
Material New IP, then VentureCo shall notify E to that effect within [****] of
receipt of E's description of the relevant MNIP. After receiving such notice, E
may amend EXHIBIT A to this Agreement to add such MNIP to PART 3 of EXHIBIT A
(and it shall thereby be excluded from the scope of the license granted in
SECTION 2.1 (E License Grant to VentureCo)).

     4.4 Royalty on MNIP. Upon and following VentureCo's request to acquire MNIP
(or at other relevant times as stated below), the Parties will promptly
determine or (as applicable) enter into arm's length negotiations in good faith
to determine the royalty applicable to that MNIP, as stated in the following
paragraphs,

     (a) ROYALTY - MNIP DEVELOPED AND AVAILABLE IN INITIAL PERIOD PRIOR TO
[****]

     The royalty and other fees (if any) (collectively "ROYALTY") payable for
     the use of MNIP including that in EXHIBIT A PART 2, that is developed and
     commercially available in the Initial Period prior to the [****], is the
     following:

     [****]

     The royalty will be calculated on a quarterly basis on all Licensed
     Products for which the MNIP was used, that were sold in the relevant
     quarter. MNIP or (as applicable) E IP was "USED FOR" Licensed Products (for
     purposes of SECTION 4.4 (Royalty on MNIP)) if incorporated into or used in
     the manufacture of those Licensed Products.

     [****]

     (b) ROYALTY - MNIP DEVELOPED AND AVAILABLE IN PERIOD AFTER [****]


                                       -8-



     The royalty payable for the use of MNIP that is developed and commercially
     available after the [****] is the Phase 2 Royalty. [****] Either Party may
     initiate valuation/determination of the Phase 2 Royalty by experts subject
     to SECTION 4.5 (Royalty Evaluation by Experts).

     That royalty agreed or determined (as applicable) shall be the Phase 2
     Royalty that applies to MNIP described in this paragraph (b) [****]. The
     royalty will be calculated on a quarterly basis on all Licensed Products
     for which the MNIP was used, that were sold in that quarter, subject to
     SECTION 4.7 (Royalty Calculations).

     (c) ROYALTY - ON MNIP USED PRIOR TO AND AT TERMINATION DATE, IN POST
TERMINATION PERIOD - [****]

     [****]

     (d) ROYALTY - ON E IP AND MNIP USED PRIOR TO AND AT TERMINATION DATE, IN
[****] POST TERMINATION PERIOD - [****]

     VentureCo shall pay E royalty for E IP and MNIP used [****].

     [****] Either Party may initiate determination or valuation of the [****]
     royalty by experts subject to SECTION 4.5 (Royalty Evaluation by Experts).
     The agreed or (as applicable) specified royalty shall be the [****]
     royalty. The royalty will be calculated on a quarterly basis on all
     Licensed Products for which the E IP or MNIP was used, that were sold in
     that quarter, subject to SECTION 4.7 (Royalty Calculations).

     (e) ROYALTY - ON E IP AND MNIP USED PRIOR TO AND AT THE TERMINATION DATE,
AFTER [****] POST TERMINATION PERIOD - [****]

     VentureCo shall pay E royalties for E IP and MNIP (available prior to and
     at the Termination Date) used for Licensed Products sold in volumes [****],
     after the [****] Post Termination Period. [****]


                                      -9-



     [****] Either Party may initiate determination or valuation of [****]
     royalty by experts subject to SECTION 4.5 (Royalty Evaluation by Experts).
     The agreed or (as applicable) specified royalty shall be the [****]
     royalty. The royalty will be calculated on a quarterly basis on all
     Licensed Products for which the E IP or MNIP was used, that were sold in
     that quarter.

     (f) ROYALTY - MNIP DEVELOPED AND AVAILABLE IN THE [****] POST TERMINATION
PERIOD (NOT AVAILABLE IN THE INITIAL PERIOD)

     The royalty payable for the use of MNIP developed and commercially
     available in the [****] Termination Period is [****] royalty. [****] Either
     Party may initiate valuation/determination of [****] royalty by experts
     subject to SECTION 4.5 (Royalty Evaluation by Experts).

     [****] The royalty will be calculated on a quarterly basis on all Licensed
     Products for which the MNIP was used, that were sold in that quarter.

     (e) ROYALTY - ON EXTERNAL IPR OFFERED BY E

     If E offers VentureCo IP or MNIP which carries an external running cost to
     E (e.g. a license fee/royalty to a third party holder of such Intellectual
     Property Rights), then the cost incurred by E in connection with
     sub-licensing to VentureCo shall be borne in its entirety by VentureCo;
     provided that the written agreement between VentureCo and E for the
     licensing of such IP or MNIP expressly includes the amount of such running
     cost. The aforementioned shall not reduce E's rights to royalty under the
     rules above.

     4.5 Royalty Evaluation by Experts. If the Parties cannot agree on the Phase
2 Royalty, [****] royalty, or Added Value for MNIP within [****] after
initiation or commencement of negotiations to determine such royalty or value,
then the following applies: Each Party shall retain at its expense an
independent professional Third Party expert with expertise evaluating licenses
in the photovoltaic industry.

          (a) Subject to execution of customary confidentiality agreements by
the independent experts, VentureCo and E shall provide or cause to be provided
to each expert all material information, including any material changes in such
information, reasonably necessary to make the determination or reasonably
requested by the experts.

          (b) Within [****] after the [****] period referenced above, each Party
shall submit a final proposal for the relevant Phase 2 Royalty, [****] royalty,
or Added Value for MNIP with a supporting analysis prepared in writing by its
retained expert, to the other Party and to


                                      -10-



the "Arbitrator." The Arbitrator shall be a person with expertise in evaluating
licenses in the photovoltaic industry, shall not have a material business
relationship with either Party and shall be reasonably acceptable to both
Parties. If the Parties have not agreed on an Arbitrator, the Parties will each
select an Arbitrator (within the stated [****] period) satisfying the above
criteria and the selected Arbitrators will select a third. In that case, the
decision of a majority of the Arbitrators will control and shall be final and
binding on both Parties.

          (c) If one Party does not submit in a timely manner a final proposal,
then the proposal of the other Party shall be used to establish the relevant
Phase 2 Royalty, [****] royalty, or Added Value for MNIP.

     4.6 Tax Authority Challenges. In the event that the tax authority
successfully challenges the adequacy or amount of the royalty or the applicable
tax provisions change, then the parties will use best reasonable efforts to
renegotiate to establish a royalty rate consistent with the requirements of
applicable law in a manner that does not adversely affect or increase the
financial burden on VentureCo.

     4.7 Royalty Calculations. Royalties shall not be due with respect to
Licensed Products for which all or part of the purchase price has been refunded
[****] of delivery (and such refunded amounts will be deducted from amounts to
which the relevant royalty rate is applied).

     4.8 Payment. To the extent applicable, VentureCo shall, within thirty (30)
days after the end of each calendar quarter during the term of this Agreement,
prepare a report summarizing the royalty payable to E pursuant to ARTICLE 4
(Consideration and Payment) including a description and basis of the calculation
thereof. VentureCo shall provide copies of such report to E, and VentureCo's
payment to E shall accompany such report.

     4.9 Currency. All payments hereunder shall be made in Euros.

     4.10 Taxes. With respect to royalties payable by VentureCo to E under this
Agreement, VentureCo shall promptly notify E of any requirement under applicable
law to deduct or withhold an amount on behalf of E on account of any tax and, if
so required under applicable law, VentureCo shall: (i) pay to the relevant
authorities the full amount required to be deducted or withheld promptly upon
determination by VentureCo that such deduction or withholding is required; and
(ii) promptly forward to E an official receipt (or certified copy), or other
documentation reasonably acceptable to E, evidencing such payment to such
authorities. To the extent that E cannot or will not be able to take a full
credit against its tax liability for the current or prior taxable years for the
full amount of the withholding tax deducted or withheld by VentureCo and is
otherwise unable to reduce or eliminate such withholding tax liability on its
own, then the Parties shall cooperate with each other and use all reasonable
efforts to reduce or eliminate such tax liability in a lawful and appropriate
manner to the extent such does not result in additional liability to VentureCo.

     4.11 Audit. Each Party shall maintain complete and accurate accounting
records, in accordance with sound accounting practices, to support and document
the royalties or payments


                                      -11-



payable in connection with this Agreement. Such records shall be retained for a
period of at least three (3) years after the royalties which relate to such
records have been accrued and paid. Each Party shall, upon written request from
the other, provide access to such records to such Party for the purposes of
audit. If any such audit discloses a shortfall in payment (or an overcharge, as
the case may be) of more than [****] for any quarter, the audited Party agrees
to pay or reimburse the other Party for the expenses of such audit, and the
Parties shall reconcile payments in accordance with the results of the audit.

     4.12 Separate Agreements. MNIP shall be licensed pursuant to a separate
written agreement between the Parties (which incorporates the terms of this
Agreement as supplemented by royalties applicable to the relevant MNIP). No
license to Material New IP is granted under this Agreement; provided, however,
that MNIP listed in EXHIBIT A PART 2 shall be licensed to VentureCo (subject to
applicable royalty) immediately on commercial availability pursuant to this
Agreement.

     4.13 Prospective Basis. Any royalties or payments agreed upon by the
Parties for MNIP shall be owed on a prospective basis, and not for any products
made, used, sold, offered for sale, or imported prior to VentureCo's receipt of
the written description from E referred to in SECTION 4.1 (Material New IP -
VentureCo Request).

     4.14 Waiver. Notwithstanding the foregoing, if E discloses any Material New
IP prior to the Parties' final agreement pursuant to ARTICLE 4 (Consideration
and Payment), and VentureCo has used, incorporated or relied on such Material
New IP in a manner that cannot be readily ceased or undone without additional
cost or adversely affecting its operations, then such Material New IP shall be
deemed to be included within the scope of the license grant hereunder and E
shall waive its rights under SECTION 4.1 (Material New IP - VentureCo Request)
with respect thereto.

                                    ARTICLE 5

                          INTELLECTUAL PROPERTY RIGHTS

     5.1 Ownership.

          (a) Joint Inventions. E and VentureCo shall Jointly Own all right,
title and interest in all Intellectual Property Rights that personnel of E and
VentureCo (including third parties working on each Party's behalf) jointly
create.

               (i) Definition. For purposes of this SECTION 5.1 (Ownership),
"JOINTLY OWN" means that, subject to the terms of the licenses granted and other
provisions of this Agreement, each Party or owner thereof is free to exploit
such rights and, subject to SECTION 5.2 (Enforcement of Jointly Owned
Intellectual Property Rights), authorize others to do so, with no obligation to
account to the other Party or owner, for profits or otherwise, and each Party
hereby waives any right it may have under the laws of any country to require
such consent or accounting. In the event that either or both Parties are
pursuing enforcement pursuant to SECTION 5.2 (Enforcement


                                      -12-



of Jointly Owned Intellectual Property Rights), any licensing of the respective
Jointly Owned Intellectual Property Right to the alleged Third Party infringer
shall be pursued (with the intent that the actual or alleged infringement is
regularized by appropriate license terms) by the Party or Parties pursuing the
action until the conclusion of the respective action.

               (ii) PROSECUTION AND MAINTENANCE BY VENTURECO. SUBJECT TO SECTION
5.1(C) (Expenses and Assistance), VentureCo shall have the initial right, at its
option, to control the filing for, prosecution and maintenance of any
Intellectual Property Rights that claim or disclose inventions that the Parties
Jointly Own pursuant to SECTION 5.1(A) (Joint Inventions), provided that
VentureCo shall consult with and keep E reasonably informed on matters regarding
such filing, prosecution and maintenance. In such case, subject to 5.1(C)
(Expenses and Assistance), E shall reasonably assist VentureCo, as VentureCo
reasonably requests, in VentureCo's efforts to file for, prosecute and/or
maintain the Jointly-Owned Intellectual Property Rights. For purposes of this
SECTION 5.1(A) (Joint Inventions), "PROSECUTION AND MAINTENANCE" of Intellectual
Property Rights shall be deemed to include, without limitation, responding to
office actions, payment of maintenance and annuity fees, and conduct of
interferences or oppositions, and/or requests for re examinations, reissues or
extensions of patent terms.

               (iii) By the Jointly Owning Party. To the extent that VentureCo
elects not to file, prosecute or maintain any Intellectual Property Right
jointly owned by VentureCo and E and not Q, or pay any fee related thereto, E
shall have the right, at its option, to control the filing, prosecution and/or
maintenance of any such Intellectual Property Right, provided that E shall
consult with and keep VentureCo reasonably informed of matters regarding such
filing, prosecution and maintenance. To the extent that VentureCo elects not to
file, prosecute or maintain any Intellectual Property Right Jointly Owned by
VentureCo, E and Q, or pay any fee related thereto, VentureCo shall notify Q and
E, and Q and E shall have the right, at their option, to jointly control the
filing, prosecution and/or maintenance of any such Intellectual Property Right,
provided that Q and E shall consult with and keep VentureCo reasonably informed
of matters regarding such filing, prosecution and maintenance. To the extent
that E or Q elects not to file, prosecute or maintain any such Jointly Owned
Intellectual Property Right, or pay any fee related thereto, it shall inform the
other, and such other Party shall have the right, at its option, to control the
filing, prosecution and/or maintenance of any such Intellectual Property Right,
provided that such Party shall consult with the other Party and VentureCo and
keep such parties reasonably informed of matters regarding such filing,
prosecution and maintenance.

          (b) Sole Inventions. Subject to the foregoing, each Party shall own
all right, title and interest in all Intellectual Property Rights invented or
authored solely by such Party's personnel (including third parties working on
such Party's behalf). For purposes of clarification, E retains ownership of
Intellectual Property Rights developed as of the License Effective Date and
otherwise developed outside of its cooperation with VentureCo, including without
limitation any E Technology and E Intellectual Property Rights relating to
String Ribbon Technology.


                                      -13-



               (i) PROSECUTION AND MAINTENANCE; SOLE INVENTIONS RELATED TO E
TECHNOLOGY. Each Party shall have sole right, at its option, to control the
filing for, prosecution and maintenance of any Intellectual Property Rights that
claim or disclose inventions that the Party solely owns, subject to the
following. To the extent that VentureCo elects not to file, prosecute or
maintain any Intellectual Property Right relating to VentureCo's solely-owned
Intellectual Property Rights relating to the E IP provided under this Agreement,
or pay any fee related thereto, VentureCo shall notify E, and E shall have the
right, at its option, to control the filing, prosecution and/or maintenance of
any such Intellectual Property Right, and VentureCo, at E's written request,
shall transfer and assign all of its right, title and interest to such
Intellectual Property Right to E. In the event of such transfer, VentureCo
retains a world-wide, non-exclusive, non-transferable, perpetual, irrevocable,
royalty-free, sublicensable license of such transferred Intellectual Property
Rights.

               (ii) Other Prosecution and Maintenance. To the extent that
VentureCo elects not to file, prosecute or maintain any Intellectual Property
Right relating solely to VentureCo's solely-owned Intellectual Property Rights
other than Intellectual Property Rights relating to improvements to the E IP
provided under this Agreement or the Q IP provided under the Q License
Agreement, VentureCo shall notify E and Q, and E and Q shall have the right to
jointly control the filing, prosecution and/or maintenance of any such
Intellectual Property Right, and VentureCo, at E and Q's written request, shall
transfer and assign all right to such Intellectual Property Right to the joint
ownership of E and Q. In the event that either E or Q elects not to participate
in the filing, prosecution or maintenance of any Right, the other Party shall
have the right, at its option, to control the filing, prosecution and/or
maintenance of such Intellectual Property Right, and VentureCo shall, at such
Party's request, transfer and assign all of its right, title and interest to
such Party. In the event of such transfer, VentureCo retains a world-wide,
non-exclusive, non-transferable, perpetual, irrevocable, royalty-free,
sublicensable license of such transferred Intellectual Property Rights which
were originally solely owned by VentureCo.

          (c) Expenses and Assistance. To the extent a Party controls the
foregoing filing, prosecution and maintenance activities of any Jointly Owned
Intellectual Property Rights (or, pursuant to SECTION 5.1 (Ownership), another
Party's Intellectual Property Right), such controlling entity shall be
responsible for all costs and expenses incurred in connection therewith. In such
cases, subject to the foregoing, VentureCo shall reasonably assist the Jointly
Inventing Parties, as the Jointly Inventing Parties reasonably request, in
Jointly Inventing Parties' efforts to file for, prosecute and/or maintain the
Jointly Owned Intellectual Property Rights.

          (d) Employee Inventors. VentureCo shall take all necessary measures to
secure all right, title and interest in inventions that are made by its
employees under the regulations of the German Employee Inventor Law
(Arbeitnehmererfindergesetz) to the maximum extent available under applicable
law such that VentureCo may carry out its obligations of this ARTICLE 5
(Intellectual Property Rights) and the Parties may obtain and exercise their
rights to the applicable Intellectual Property Rights to the full extent and
term available under applicable law. In connection therewith, VentureCo will
comply with all applicable laws including without limitation any obligations to
employees under applicable law with respect to employee inventions.


                                      -14-



     5.2 Enforcement of Jointly Owned Intellectual Property Rights. Each Party
shall promptly notify the other Party if it becomes aware of a possible
infringement by a Third Party of any Jointly Owned Intellectual Property Rights.
If either Party desires to take any action against such an infringing or
misappropriating Third Party, such Party shall first notify the other Party
hereto and consult with such notified Party regarding such action. If the
notified Party desires to participate in such action, the Parties shall then
jointly and cooperatively pursue such action, in which event they shall bear all
costs equally and share in any damages, royalties, license fees or other
recoveries equally, provided that either Party may at any time decide not to
participate further in such action, in which case any further costs shall be
borne by and all damages, royalties, license fees and other recoveries shall be
received by the Party which continues to pursue such action. If a Party declines
to participate in such action, the other Party shall then have the right to
pursue such action alone, and shall bear all costs of and receive all damages,
royalties, license fees and other recoveries from such action. Notwithstanding
the foregoing, if a Party declines to participate in such an action or withdraws
from such an action, such Party shall nevertheless, at the request of the other
Party, cooperate with the other Party, at the cost of the other Party and
subject to any reasonable conditions (including indemnification against
counterclaims by the third party), to the extent which may be necessary to
enable the other Party to pursue such action effectively, including without
limitation joining such action as an indispensable party.

     5.3 Third Party Licenses. To the extent that VentureCo may desire or need
rights with respect to any Intellectual Property Rights not licensed hereunder
or covered by the representations or warranties of ARTICLE 6 (Warranties),
VentureCo shall be solely responsible for obtaining such licenses and paying the
associated costs.

     5.4 Further Cooperation. Each of the Parties hereto agrees, upon the
reasonable request of the other Party, to the extent consistent with this
Agreement, to deliver to the other such records, data or other documents
reasonably requested by the other, and to take or cause to be taken all such
other actions as are reasonably necessary or desirable in order to permit the
other to obtain the full benefits of this Agreement (including the execution of
any documents required in connection therewith).

                                   ARTICLE 6

                                   WARRANTIES

     6.1 Representations and Warranties. E hereby represents and warrants to
VentureCo that:

          (a) Registered E Intellectual Property. EXHIBIT B is a complete and
accurate list of all Registered E Intellectual Property Rights. E will
supplement EXHIBIT B bi annually during the Initial Period and (with respect
MNIP used by VentureCo in the Post Termination Period) Post Termination Period,
as additional Registered E Intellectual Property Rights are applied for or
obtained.


                                      -15-



          (b) Completeness. The E IP constitutes all (or a copy of all) of the
Intellectual Property owned or Licensable by E that is related to or reasonably
necessary for the conduct and operations of VentureCo as currently contemplated
to be conducted, including, without limitation, the design, development,
manufacture, use, marketing and sale of Licensed Products.

          (c) Non-Infringement. To the knowledge of E, VentureCo's use of the E
IP pursuant to this Agreement in the operation of VentureCo as it is
contemplated to be conducted following the Closing, including but not limited to
the design, development, manufacture, use, marketing and sale of Licensed
Products does not, and will not, infringe or misappropriate any Intellectual
Property Rights of any Third Party, violate any right of any Third Party
(including any right to privacy or publicity), or constitute unfair competition
or trade practices under the laws of any jurisdiction. Without limiting the
foregoing, E has not received notice from any Person claiming that such
operation or any act, product, Intellectual Property Rights, Technology or
service by E (including products, Intellectual Property Rights, Technology or
services currently under development) infringes or misappropriates any
Intellectual Property rights of any Person, violates any right of any Person or
constitutes unfair competition or trade practices under the laws of any
jurisdiction (nor does E have knowledge of any basis therefor). To the knowledge
of E, no Person is infringing or misappropriating any E IP.

          (d) Contracts. EXHIBIT C lists all contracts, licenses and agreements
under which both (1) E has been granted Intellectual Property Rights or rights
to Technology from Third Parties and (2) such rights are Licensable and
constitute E IP licensed hereunder.

     6.2 Remedy. E's sole obligation and liability for E's breach of the
representations and warranties provided in this ARTICLE 6 (Warranties) shall be
pursuant to ARTICLE 8 (Liability and Limitations of Liability) of the Master
Agreement.

     6.3 Disclaimer. EXCEPT FOR THE WARRANTIES SET FORTH IN THIS ARTICLE 6
(WARRANTIES) OR EXPRESSLY PROVIDED IN THE MASTER AGREEMENT, THE PARTIES MAKE NO
WARRANTIES, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AND SPECIFICALLY DISCLAIM
ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NONINFRINGEMENT AND TITLE. NEITHER PARTY MAKES ANY GUARANTEES TO THE OTHER
CONCERNING THE SUCCESS OR POTENTIAL SUCCESS OR COMMERCIAL VIABILITY OF THE
ACTIVITIES CONTEMPLATED UNDER THIS AGREEMENT.

                                   ARTICLE 7

                            CONFIDENTIAL INFORMATION

     7.1 Confidential Information. Any Confidential Information exchanged
pursuant to this Agreement (and the terms of this Agreement itself) will be
governed by SECTION 9.5 (Confidentiality) of the Master Agreement, with the
Parties hereunder deemed the Disclosing Party


                                      -16-



and/or Receiving Party as applicable, provided that, notwithstanding anything to
the contrary, each Party may use and distribute any such confidential or
proprietary information as reasonably required to exercise its rights under the
licenses granted pursuant to ARTICLE 2 (Rights and Licenses).

                                   ARTICLE 8

                                      TERM

     8.1 Term. This Agreement shall become effective as of the Effective Date.
The license of SECTION 2.1 (E License Grant to VentureCo) becomes effective only
as of the License Effective Date. This Agreement may be terminated only as
follows:

          (a) This Agreement shall terminate automatically and without further
action on the part of E or VentureCo in the event that the Termination Date
occurs prior to the License Effective Date.

          (b) This Agreement may terminate in the event that E and VentureCo
mutually agree in writing to terminate this Agreement (subject to the Master
Agreement).

     8.2 Special Termination Right. [****]


                                      -17-



     8.3 Effect of Termination. Upon any termination or expiration of this
Agreement, any licenses granted to VentureCo hereunder shall terminate. SECTIONS
2.2 (VentureCo License Grant to E), 2.3 (Reservation of Rights), ARTICLE 3
(Technology Transfer), ARTICLE 4 (Consideration and Payment), ARTICLE 7
(Confidential Information), SECTION 8.3 (Effect of Termination) and ARTICLE 9
(General Provisions) shall survive any termination or expiration of this
Agreement. SECTION 5.1 (Ownership) shall survive any termination or expiration
of this Agreement. Notwithstanding anything to the contrary, SECTION 2.1 (E
License Grant to VentureCo) will survive any termination of the Agreement
pursuant to SECTION 8.2 (Special Termination Right).

                                   ARTICLE 9

                               GENERAL PROVISIONS

     9.1 Limitation of Liability.

          (a) IN NO EVENT WILL EITHER PARTY HAVE ANY LIABILITY FOR ANY SPECIAL,
INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING WITHOUT LIMITATION
DAMAGES FOR LOSS OF PROFITS) THAT RELATE IN ANY WAY TO THIS AGREEMENT, HOWEVER
CAUSED ON ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE), AND WHETHER OR NOT
SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF ANY SUCH DAMAGES.

          (b) This SECTION 9.1 (Limitation of Liability) shall not limit the
remedies that may be available to the Parties pursuant to the Master Agreement
or Concurrent Agreements. To the extent required by applicable law, nothing in
this SECTION 9.1 (Limitation of Liability) shall limit the remedies that may be
available to the Parties for fraud, bodily injury or death.

     9.2 Notices. All notices, requests and other communications to any Party
hereunder shall be in writing (including facsimile transmission) and shall be
given as set forth in the Master Agreement as follows:

     As to VentureCo:  As set forth in the Master Agreement.

     As to E, Inc.:

                                  Evergreen Solar, Inc.
                                  138 Bartlett Street
                                  Marlboro, MA 01752
                                  Attention: Richard Feldt
                                             Richard Chleboski


                                      -18-



     with a copy to:
                                  Wilson Sonsini Goodrich & Rosati
                                  12 East 49th Street
                                  New York, NY 10017 USA
                                  Attention: Robert Sanchez
                                             Robert O'Connor
                                  Phone: 1 212 999-5800
                                  Fax: 1 650 493-6811

     With a copy to:              Taylor Wessing
                                  Jagerstrabe 51
                                  D-10117 Berlin, Germany
                                  Attention: Dr. Eberhardt Kuhne
                                             Philipp von Alvensleben
                                  Phone: ++49 30 885636 0
                                  Fax: ++49 30 885636 46

     In both cases with a copy to Q-Cells AG
                                  Guardianstr. 16
                                  D-06766 Thalheim
                                  Attention: Anton Milner
                                             Dr. Hartmut Schuening
                                  Phone: +49-34 94-66 8-60
                                  Fax: +49-34 94-66 8-777

     with a copy to:              VAN AUBEL Rechtsanwaelte
                                  Leibnizstr. 49
                                  D-10629 Berlin, Germany
                                  Attention: Dr. Thomas van Aubel
                                  Phone: +49-30-31 51 90 0
                                  Fax: +49-30-31 51 90 90

     or, in each case, at such other address as may be specified in writing to
the other Parties hereto.

     9.3 Language. All documentation, communication and services in connection
with this Agreement in shall be in English.


                                      -19-



     9.4 Amendments and Waivers.

          (a) Any provision of this Agreement may be amended or waived if, but
only if, such amendment or waiver is in writing and is signed, in the case of an
amendment, by each Party to this Agreement, or in the case of a waiver, by the
Party against whom the waiver is to be effective.

          (b) No failure or delay by any Party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any or other further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.

     9.5 Assignment. Other than as expressly otherwise provided herein, this
Agreement shall not be assignable or otherwise transferable by any Party hereto
without the prior written consent of the other Party hereto and the prior
written consent of Q; provided, however, that neither Party shall be obligated
to obtain the consent of the other Party under this SECTION 9.5 (Assignment)
solely by virtue of a Change of Control of such Party, and such Party shall have
the right to assign this Agreement, in its entirety including all rights and
obligations, to such Party's successor in such Change of Control. Subject to the
foregoing, the provisions of this Agreement shall be binding upon and inure to
the benefit of the Parties hereto and their respective successors and assigns.
Any assignment or transfer (including through a change of control) of this
Agreement in violation of this SECTION 9.5 (Assignment) shall be null and void.

     9.6 Entire Agreement; Severability. This Agreement, together with the
Master Agreement and Concurrent Agreements, constitutes the entire agreement
between the Parties hereto and any of such Parties' respective affiliates with
respect to the subject matter of this Agreement and supersedes all prior
communications, agreements and understandings, both oral and written, with
respect to the subject matter of this Agreement. In the event any provision of
this Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision, and the Parties agree to negotiate, in good
faith, a legal and enforceable substitute provision which most nearly effects
the Parties' intent in entering into this Agreement.

     9.7 Other Remedies; Specific Performance. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a Party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby or
by law or equity upon such Party, and the exercise by a Party of any one remedy
will not preclude the exercise of any other remedy. The Parties hereto agree
that irreparable damage may occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the Parties may be
entitled to seek an injunction to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in a German court, this
being in addition to any other remedy to which they are entitled at law or in
equity.


                                      -20-



     9.8 Governing Law and Dispute Resolution. This Agreement shall be construed
in accordance with and governed by the laws of the Federal Republic of Germany.

     All disputes arising in connection with this Agreement or its validity or
any agreement provided herein which cannot be resolved by mutual agreement of
the Parties shall be finally settled in accordance with the Arbitration Rules of
the German Institution of Arbitration e.V. (DIS) without recourse to the
ordinary courts of law (except for challenges to the validity of shareholder
resolutions which shall be submitted to the competent court in Berlin). The
place of arbitration is Berlin, Germany. The arbitral tribunal consists of three
arbitrators. The arbitrators must be capable of being appointed a judge in
accordance with the relevant German legal rules. The substantive law of the
Federal Republic of Germany is applicable to the dispute. The language of the
arbitral proceedings is English.

     9.9 Compliance with Laws and Regulations. Each Party will comply with all
applicable laws, regulations and ordinances.

     9.10 Export. No Party shall export or re export, directly or indirectly,
any technical information disclosed hereunder or direct product thereof to any
destination prohibited or restricted by the applicable export control
regulations, including the U.S. Export Administration Regulations and
regulations of Germany, without the prior authorization from the appropriate
governmental authorities. Without limiting the foregoing, E shall be responsible
for obtaining government approvals, permits or the like necessary for the export
of its technology from the United States to VentureCo in Germany, and VentureCo
shall be responsible for obtaining all government approvals, permits or the like
required for the import of any technology to VentureCo and into Germany and for
the export of any technology or products by VentureCo from Germany.

     9.11 Force Majeure. No Party shall be liable to another Party for failure
to perform its obligations under this Agreement if such failure is caused by any
event or condition not reasonably within the control and anticipation of the
affected Party, including, without limitation, by fire, flood, typhoon,
earthquake, explosion, strike, labor trouble or other industrial disturbance,
unavoidable accident, war (declared or undeclared), act of terrorism, sabotage,
embargo, riot, or any other cause beyond the control of the Parties, provided
that the affected Party promptly notifies the other Party of the occurrence of
such event or condition and takes reasonable steps necessary to resume
performance of its obligations so interfered with.

     9.12 Independent Contractors. The Parties hereto are independent
contractors. Nothing contained herein or done pursuant to this Agreement shall
constitute either Party the agent of the other Party for any purpose or in any
sense whatsoever, or constitute the Parties as partners or joint venturers.

     9.13 Third Party Beneficiaries. No provision of this Agreement is intended
to confer upon any person or entity other than the Parties hereto (and their
permitted assigns) any rights or remedies hereunder.


                                      -21-



     9.14 Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. This Agreement
shall become effective when each Party hereto shall have received a counterpart
hereof signed by the other Party hereto.

            (The remainder of this page is intentionally left blank.)


                                      -22-



     IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.

                                        EVERGREEN SOLAR, INC.


                                        BY: /s/ Richard G. Chleboski
                                            ------------------------------------
                                        NAME: Richard G. Chleboski
                                              ----------------------------------
                                        TITLE: CFO
                                               ---------------------------------


                                        VENTURECO GMBH


                                        BY: /s/ Meendurt Buurman
                                            ------------------------------------
                                        NAME: Meendurt Buurman
                                              ----------------------------------
                                        TITLE: CFO, EverQ
                                               ---------------------------------


                                      -23-



                                    EXHIBIT A

                  E INTELLECTUAL PROPERTY RIGHTS & E TECHNOLOGY

                             PART 1 -INCLUDED ITEMS

[****]


                                      -1-



[****]


                                      -2-



                             PART 3 -EXCLUDED ITEMS

[****]


                                      -3-



[****]


                                      -4-



[****]


                                      -5-



                                    EXHIBIT C

                      CONTRACTS INCLUDED AS LICENSABLE E IP

[****]


                                      -6-

EX-10.19

                                                                   Exhibit 10.19

CONFIDENTIAL TREATMENT REQUESTED: Certain portions of this document have been
omitted pursuant to a request for confidential treatment and, where applicable,
have been marked with an asterisk ("[****]") to denote where omissions have been
made. The confidential material has been filed separately with the Securities
and Exchange Commission.


                             TECHNOLOGY CO-OPERATION

                                    AGREEMENT

                                 BY AND BETWEEN

                          RENEWABLE ENERGY COOPERATION

                                       AND

                              EVERGREEN SOLAR, INC.


                                TABLE OF CONTENTS



                                                                            PAGE
                                                                            ----
                                                                         
1.   DEFINITIONS.........................................................     1
     1.1   "CAST"........................................................     1
     1.2   "CELL"........................................................     1
     1.3   "DEVELOPED TECHNOLOGY"........................................     2
     1.4   "DEVELOPMENT SERVICES"........................................     2
     1.5   "DIRECT PRODUCTION COSTS".....................................     2
     1.6   "EFFECTIVE DATE"..............................................     2
     1.7   "GOVERNMENTAL AUTHORITY"......................................     2
     1.8   "INITIAL PERIOD"..............................................     2
     1.9   "INTELLECTUAL PROPERTY RIGHTS"................................     2
     1.10  "JOINT INVENTION".............................................     2
     1.11  "LICENSED PRODUCTS"...........................................     2
     1.12  "LICENSABLE"..................................................     2
     1.13  [****]........................................................     2
     1.14  "MATERIAL IP".................................................     2
     1.15  "MODULE"......................................................     3
     1.16  "POST TERMINATION PERIOD".....................................     3
     1.17  "STRING RIBBON"...............................................     3
     1.18  "TECHNOLOGY"..................................................     3
     1.19  "TERMINATION DATE"............................................     3
     1.20  "WAFER".......................................................     3

2.   JOINT DEVELOPMENT...................................................     3
     2.1   IN GENERAL....................................................     3
     2.2   INITIAL ASSISTANCE............................................     3
     2.3   ONGOING TECHNICAL ASSISTANCE AND CONSULTING...................     3
     2.4   ACCESS TO REC RESOURCES.......................................     4
     2.5   ASSIGNMENT OF PERSONNEL.......................................     4
     2.6   COMPLIANCE WITH RULES.........................................     4
     2.7   MATERIAL IP...................................................     4

3.   ACCESS TO EVERGREEN TECHNOLOGY......................................     4

4.   PAYMENTS............................................................     5
     4.1   [****]........................................................     5
     4.2   SCHEDULE OF COSTS.............................................     5
     4.3   ROYALTY ON MATERIAL IP........................................     5
     4.4   ROYALTY EVALUATION BY EXPERTS.................................     7
     4.5   TAX AUTHORITY CHALLENGES......................................     7
     4.6   ROYALTY ON REFUNDS............................................     7
     4.7   ROYALTY PAYMENT...............................................     7
     4.8   CURRENCY......................................................     7
     4.9   AUDIT.........................................................     7
     4.10  PROSPECTIVE BASIS.............................................     8
     4.11  WAIVER........................................................     8



                                      -i-



                                TABLE OF CONTENTS
                                  (CONTINUED)



                                                                            PAGE
                                                                            ----
                                                                         
5.   OWNERSHIP RIGHTS AND LICENSES.......................................     8
     5.1   INTELLECTUAL PROPERTY RIGHTS IN DEVELOPED TECHNOLOGY..........     8
     5.2   EXPLOITATION OF JOINT INVENTIONS..............................     8
     5.3   PATENT PROSECUTION............................................     8
     5.4   ENFORCEMENT OF JOINT INVENTIONS...............................     8
     5.5   FURTHER ASSURANCES............................................     9
     5.6   BACKGROUND LICENSE............................................     9

6.   TERM AND TERMINATION................................................     9
     6.1   TERM..........................................................     9
     6.2   TERMINATION FOR CAUSE.........................................     9
     6.3   SPECIAL TERMINATION RIGHT.....................................     9
     6.4   SURVIVAL......................................................     9

7.   CONFIDENTIALITY.....................................................    10
     7.1   DEFINITION....................................................    10
     7.2   CONFIDENTIAL INFORMATION AND EXCLUSIONS.......................    10
     7.3   CONFIDENTIALITY OBLIGATION....................................    10
     7.4   LEGAL DISCLOSURE..............................................    10
     7.5   REMEDIES......................................................    10

8.   REPRESENTATIONS AND WARRANTIES......................................    10
     8.1   AUTHORITY.....................................................    10
     8.2   STANDARD OF PERFORMANCE.......................................    10
     8.3   NON-INFRINGEMENT..............................................    11
     8.4   DISCLAIMER....................................................    11

9.   INDEMNIFICATION.....................................................    11
     9.1   INDEMNITY.....................................................    11

10.  LIMITATION OF LIABILITY.............................................    11

11.  GENERAL PROVISIONS..................................................    11
     11.1  NOTICES.......................................................    11
     11.2  LANGUAGE......................................................    12
     11.3  AMENDMENTS AND WAIVERS........................................    12
     11.4  ASSIGNMENT....................................................    12
     11.5  ENTIRE AGREEMENT; SEVERABILITY................................    12
     11.6  OTHER REMEDIES................................................    12
     11.7  GOVERNING LAW AND DISPUTE RESOLUTION..........................    13
     11.8  COMPLIANCE WITH LAWS AND REGULATIONS..........................    13
     11.9  EXPORT........................................................    13
     11.10 FORCE MAJEURE.................................................    13
     11.11 INDEPENDENT CONTRACTORS.......................................    13
     11.12 THIRD PARTY BENEFICIARIES.....................................    13
     11.13 COUNTERPARTS..................................................    13
     11.14 VALIDITY......................................................    13



                                      -ii-


                        TECHNOLOGY COOPERATION AGREEMENT

     This Technology Cooperation Agreement ("AGREEMENT") is made and entered
into as of the 24th day of November, 2005 ("EFFECTIVE DATE") by and between
Renewable Energy Corporation, a stock corporation organized under the laws of
Norway with its principal executive offices located at Veritasveien 14, N-1323
Hovik, Norway ("REC") and Evergreen Solar, Inc., a Delaware corporation with its
principal executive offices located at 138 Bartlett Street, Marlboro,
Massachusetts, USA, ("EVERGREEN").

     WHEREAS, Evergreen and Q-Cells AG ("Q-CELLS") have previously entered into
a master joint venture agreement (such agreement, including, amendment thereof
"MASTER AGREEMENT") pertaining to the formation of EverQ GmbH ("EVERQ");

     WHEREAS, The purpose of EverQ is to manufacture string ribbon wafers,
photovoltaic cells and modules incorporating such wafers based on a combination
of the parties' respective technologies;

     WHEREAS, REC is one of the world's largest suppliers of high quality solar
silicon and silicon wafers for photovoltaic applications;

     WHEREAS, Evergreen, Q-Cells and REC have determined to amend the Master
Agreement to enable REC to become a shareholder of EverQ;

     WHEREAS, concurrently with the aforementioned amendment to the Master
Agreement, REC and EverQ are entering a License & Technology Transfer Agreement
("REC EVERQ LICENSE");

     WHEREAS, In conjunction with the inclusion of REC in EverQ, the parties
believe it to be in their collective best interest for Evergreen and REC to
collaborate with respect to certain technology sharing, which collaboration
shall be determined based on common agreement among Evergreen and REC; and

     WHEREAS, Evergreen and REC wish to provide for a framework under which they
can mutually determine and establish the desired collaboration;

     NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements herein contained, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged and accepted, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:

     1. DEFINITIONS

          1.1 "CAST" means [****].

          1.2 "CELL" means a crystalline silicon material substrate that has
been processed to provide electrical output from incident sunlight.


                                      -1-



          1.3 "DEVELOPED TECHNOLOGY" means any Technology developed, discovered,
created or invented in connection with or resulting from the performance of the
Development Services.

          1.4 "DEVELOPMENT SERVICES" is defined in Section 2.1.

          1.5 "DIRECT PRODUCTION COSTS" means all direct labor, direct and
consumable materials required for the production of a Licensed Product, and
amortized equipment costs associated with manufacturing a Licensed Product
incorporating Material IP.

          1.6 "EFFECTIVE DATE" means [****]

          1.7 "GOVERNMENTAL AUTHORITY" means any US or Norwegian, federal,
national, supranational, state, provincial, municipal, local, or similar
government, governmental, regulatory or administrative authority, agency or
commission or any court, tribunal, or judicial or arbitral body.

          1.8 "INITIAL PERIOD" means the time period commencing on the Effective
Date and ending on the Termination Date.

          1.9 "INTELLECTUAL PROPERTY RIGHTS" means all rights in, to, or arising
out of: (i) any patent, national or international, or any application therefor
and any and all reissues, divisions, continuations, renewals, extensions and
continuations-in-part thereof; (ii) inventions, discoveries (whether patentable
or not in any country), invention disclosures, improvements, trade secrets,
proprietary information, know-how, technology and technical data; (iii)
copyrights, copyright registrations, mask works, mask work registrations, and
applications therefor in the any country, and all other rights corresponding
thereto throughout the world; and (iv) any other proprietary rights in or to
Technology anywhere in the world.

          1.10 "JOINT INVENTION" is defined in Section 5.1 (Intellectual
Property Rights in Developed Technology).

          1.11 "LICENSED PRODUCTS" means Wafers, Cells, and/or Modules, as the
case may be, in which the Wafers are made using String Ribbon Technology.

          1.12 "LICENSABLE" means possession of the ability to grant a license
or sublicense of, or within, the scope provided for in this Agreement without
payment of any fee to, or violating the terms of any agreement or other
arrangements with a Third Party and without violating any applicable laws, rules
or regulations.

          1.13 [****][****]

          1.14 "MATERIAL IP" means Intellectual Property Rights and Technology
owned by or Licensable by REC [****]. To avoid doubt, Material IP


                                      -2-



comprises, without limitation, Patents on Technology [****]. Notwithstanding
anything to the contrary, Material IP shall not include, in the event of an
acquisition of REC, Intellectual Property Rights of the acquirer of REC.

          1.15 "MODULE" means an assembly of multiple, electrically connected
Cells.

          1.16 "POST TERMINATION PERIOD" means the time period commencing
immediately after the Termination Date. "[****]" means the [****] period
commencing immediately after the Termination Date. [****]" means the [****]
period commencing immediately after the Termination Date.

          1.17 "STRING RIBBON" means [****].

          1.18 "TECHNOLOGY" means information and technology in tangible and/or
intangible form and materials, embodiments, implementations or improvements of
any technology, including, but not limited to: software, media, data
collections, databases, techniques, methods, processes, formulae, systems,
hardware, equipment, prototypes, proofs of concept, apparatuses, hardware,
software, algorithms, files, routines, documents, designs, drawings, plans,
specifications and the like.

          1.19 "TERMINATION DATE" means the date on which the Master Agreement
is terminated in accordance with its terms.

          1.20 "WAFER" means a crystalline silicon material substrate that is
intended to but has not yet been made into a Cell.

     2. JOINT DEVELOPMENT

          2.1 IN GENERAL. On the terms and conditions set forth in this
Agreement, the parties agree to jointly develop improvements to Evergreen's
manufacturing processes. REC agrees to participate in this joint development
through the performance of the services described herein (the "DEVELOPMENT
SERVICES").

          2.2 INITIAL ASSISTANCE. REC will disclose to Evergreen REC's
Technology regarding the items set forth in EXHIBIT A ("INITIAL DELIVERABLES"),
to the extent that the parties jointly determine that such Technology may be
applicable to Evergreen and EverQ's manufacturing of Wafers, Cells, and Modules.
[****]

          2.3 ONGOING TECHNICAL ASSISTANCE AND CONSULTING. In addition to the
Development Services contemplated under Section 2.2 (Initial Assistance), REC
shall provide Evergreen technical assistance and consulting as mutually agreed
by the Parties to assist Evergreen in improving the manufacturing of String
Ribbon Wafers, Cells and Modules. The Parties will meet periodically to review
the progress of the Development


                                      -3-



Services. [****]. In the event that the Parties contemplate modifying or
expanding the scope of the Development Services, the Parties shall mutually
agree upon the specifications, timing and costs of such work. The payment for
any Development Services shall be in accordance with Section 4 (Payments) unless
otherwise agreed by the Parties.

          2.4 ACCESS TO REC RESOURCES. In connection with the Development
Services, REC will provide Evergreen reasonable access to REC personnel,
documents and facilities to facilitate the development of Evergreen's
manufacturing process. REC will use commercially reasonable efforts to assign to
the Development Services employees that have sufficient qualifications and
experience with respect to the subject mater of the Development Services and
make such personnel available to Evergreen.

          2.5 ASSIGNMENT OF PERSONNEL. Unless otherwise expressly agreed,
employees of each party remain employees of their respective employer,
notwithstanding their location in the respective facility of the other party or
their participation in the provision or receipt of the Development Services.

          2.6 COMPLIANCE WITH RULES. While at the facility of any party
("HOSTING PARTY") in connection with this Agreement all employees and agents of
the other party ("VISITING PARTY") shall fully abide by all plant rules and
regulations of the Hosting Party.

          2.7 MATERIAL IP.

               (A) MATERIAL IP - NOTIFICATION. If REC has developed Material IP
in the Initial Period [****], REC shall promptly
submit a general, written description of the Material IP to Evergreen, with
reference to this Section. Upon Evergreen's request, REC will further disclose
to Evergreen and provide Evergreen assistance in implementing the respective
Material IP in accordance with Section 2.3 (Ongoing Technical Assistance and
Consulting).

               (B) LICENSE TO MATERIAL IP. Material IP shall be licensed to
Evergreen under Section 5.6 (Background License) except that the license of
Material IP is royalty-bearing to the extent provided in Section 4.3 (Royalty on
Material IP). Notwithstanding the foregoing, Evergreen shall have the right to
exclude any item of Material IP from this Agreement by providing REC written
notice of such exclusion, and after Evergreen has provided such notice, the
respective Material IP shall be excluded from the scope of the license granted
under this Agreement.

     3. ACCESS TO EVERGREEN TECHNOLOGY

          3.1 Upon REC's request prior to [****], the Parties agree to negotiate
in good faith entering into a non-exclusive, world-wide license agreement under
which REC will have a license to manufacture Wafers using String Ribbon
Technology after [****] subject to mutually agreed terms and conditions. These
terms and conditions will be in line with standard commercial terms [****].


                                      -4-



          3.2 In the event that Evergreen intends to commercialize String Ribbon
Technology through such a license agreement in [****], Evergreen shall notify
REC of its intention and provide REC an opportunity to negotiate such a license
agreement with Evergreen. After [****] of good faith negotiations from
Evergreen's notice, neither REC nor Evergreen shall be obligated to continue to
negotiate such a license, and Evergreen shall be free to negotiate and enter a
license agreement with a third party, subject to the following: Evergreen shall
only have the right to enter such agreement with a third party without notifying
REC provided that the conditions of such license agreement are not materially
more favorable to the third party, taken as a whole, than the last conditions
offered to REC. If the terms to be entered with a third party in [****] are
materially more favorable than the last conditions offered to REC, REC may elect
to enter such a license under such terms. In the event that REC does not agree
to enter a license agreement having such terms within [****] of Evergreen's
notice outlining such terms, Evergreen shall have the right to negotiate and
enter any license agreement with a third party on terms that are materially as
favorable as, or less favorable than, such terms. REC shall not have any
obligation to agree to any terms which are unique to the third party. [****]

     4. PAYMENTS

          4.1 [****]. Evergreen will pay REC for the Development Services on a
[****]. In advance of commencing with any phase of the Development Services, REC
will submit an estimate of costs for such phase to Evergreen. In the event that
REC determines that the [****] will exceed the estimate, REC shall seek
Evergreen's approval prior to incurring such excess fees by written notice
giving a revised estimate.

          4.2 SCHEDULE OF COSTS. Unless otherwise agreed by the Parties, the
[****] shall be in accordance with EXHIBIT B.

          4.3 ROYALTY ON MATERIAL IP. Upon and following REC's notification
regarding the Material IP in accordance with Section 2.8(a) (Material IP -
Notification), the Parties will promptly determine or (as applicable) enter into
arm's length negotiations in good faith to determine the royalty applicable to
that Material IP, as stated in the following paragraphs. Evergreen's obligation
to pay a royalty shall be only for Material IP that Evergreen uses in
Evergreen's own manufacturing, and, without limitation, Evergreen shall have no
obligation to pay a royalty with respect to Licensed Products acquired from
EverQ made using or embodying a respective item of Material IP. The royalty
shall be determined as follows:

     (a) ROYALTY - MATERIAL IP DEVELOPED AND AVAILABLE IN INITIAL PERIOD

     The royalty payable for the use of Material IP that is developed and
     commercially available in the Initial Period is the Phase 1 Royalty. The
     Parties shall promptly enter into arm's length negotiations in good faith
     to determine the Phase 1 Royalty applicable to Material IP (of that
     description) that Evergreen wishes to acquire in that


                                      -5-



     period. Either Party may initiate valuation/determination of the Phase 1
     Royalty by experts subject to SECTION 4.4 (ROYALTY EVALUATION BY EXPERTS).

     That royalty agreed or determined (as applicable) shall be the Phase 1
     Royalty that applies to Material IP described in this paragraph (a) for the
     duration of this Agreement (including the Post Termination Period), subject
     to SECTIONS (C) and (D) below. The royalty will be calculated on a
     quarterly basis on all Licensed Products for which the Material IP was used
     by Evergreen, that were sold in that quarter, subject to SECTION 4.6
     (ROYALTY CALCULATIONS).

     (b) ROYALTY - ON MATERIAL IP USED PRIOR TO AND AT TERMINATION DATE, IN POST
TERMINATION PERIOD - TERMINATION DATE CAPACITY

     The royalty specified or determined in paragraph (a), continues to apply in
     the Post Termination Period to the use of Material IP (to which the royalty
     relates) for Licensed Products sold in volumes within the production
     capacity of Evergreen at the Termination Date ("TERMINATION LEVEL
     CAPACITY").

     (c) ROYALTY - ON REC IP AND MATERIAL IP USED PRIOR TO AND AT TERMINATION
DATE, IN [****] POST TERMINATION PERIOD - POST TERMINATION CAPACITY EXPANSION

     Evergreen shall pay REC royalty for REC IP and Material IP used (prior to
     and at the Termination Date) for Licensed Products sold in volumes in
     excess of the Termination Level Capacity. That royalty shall be [****]
     royalty and shall apply (to that REC IP or Material IP used) in the [****]
     Post Termination Period.

     The Parties shall enter into arm's length negotiations in good faith to
     determine the [****] royalty at commencement of the Post Termination
     Period. Either Party may initiate determination or valuation of the [****]
     royalty by experts subject to SECTION 4.5 (Royalty Evaluation by Experts).
     The agreed or (as applicable) specified royalty shall be the [****]
     royalty. The royalty will be calculated on a quarterly basis on all
     Licensed Products for which the REC IP or Material IP was used by
     Evergreen, that were sold in that quarter, subject to SECTION 4.6 (ROYALTY
     CALCULATIONS).

     (d) ROYALTY - ON REC IP AND MATERIAL IP USED PRIOR TO AND AT THE
TERMINATION DATE, AFTER [****] POST TERMINATION PERIOD - POST TERMINATION PERIOD
CAPACITY EXPANSION

     Evergreen shall pay REC royalties for REC IP and Material IP (available
     prior to and at the Termination Date) used for Licensed Products sold in
     volumes in excess of the Termination Level Capacity, after the [****] Post
     Termination Period. That royalty shall be the [****] royalty.

     The Parties shall enter into arm's length negotiations in good faith to
     determine the [****] royalty on expiry of the [****] Post Termination
     Period. Either Party may initiate determination or valuation of the [****]
     royalty by experts subject to Section 4.5 (Royalty Evaluation by Experts).
     The agreed or (as applicable) specified royalty shall be the [****]
     royalty. The royalty will be calculated on a


                                      -6-



     quarterly basis on all Licensed Products for which the REC IP or Material
     IP was used by Evergreen, that were sold in that quarter.

          4.4 ROYALTY EVALUATION BY EXPERTS. If the Parties cannot agree on the
[****] royalty within [****] after initiation or commencement of negotiations to
determine such rate, then the following applies: Each Party shall retain at its
expense an independent professional third party expert with expertise evaluating
licenses in the photovoltaic industry.

               (a) Subject to execution of customary confidentiality agreements
by the independent experts, Evergreen and REC shall provide or cause to be
provided to each expert all material information, including any material changes
in such information, reasonably necessary to make the determination or
reasonably requested by the experts.

               (b) Within [****] after the [****] period referenced above, each
Party shall submit a final proposal for the relevant rate with a supporting
analysis prepared in writing by its retained expert, to the other Party and to
the "ARBITRATOR." The Arbitrator shall be a person with expertise in evaluating
licenses in the photovoltaic industry, shall not have a material business
relationship with either Party and shall be reasonably acceptable to both
Parties. If the Parties have not agreed on an Arbitrator, the Parties will each
select an Arbitrator (within the stated [****] period) satisfying the above
criteria and the selected Arbitrators will select a third. In that case, the
decision of a majority of the Arbitrators will control and shall be final and
binding on both Parties.

               (c) If one Party does not submit in a timely manner a final
proposal, then the proposal of the other Party shall be used to establish the
relevant rate.

          4.5 TAX AUTHORITY CHALLENGES. In the event that the tax authority
successfully challenges the adequacy or amount of the royalty or the applicable
tax provisions change, then the Parties will use best reasonable efforts to
renegotiate to establish a royalty rate consistent with the requirements of
applicable law in a manner that does not adversely affect or increase the
financial burden on either Party.

          4.6 ROYALTY ON REFUNDS. Royalties shall not be due with respect to
Licensed Products for which all of the purchase price has been refunded within
[****] of delivery (and such refunded amounts will be deducted from amounts to
which the relevant royalty rate is applied) If there has been a partial refund,
the royalty shall be reduced proportionately.

          4.7 ROYALTY PAYMENT. To the extent applicable, Evergreen shall, within
[****] after the end of [****] in which royalties are due hereunder, prepare a
report summarizing the royalty payable to REC pursuant to Article 4 (Payment)
including a description and basis of the calculation thereof. Evergreen shall
provide copies of such report to REC, and Evergreen's payment to REC shall
accompany such report.

          4.8 CURRENCY. All payments hereunder shall be made in US Dollars.

          4.9 AUDIT. Each Party shall maintain complete and accurate accounting
records, in accordance with sound accounting practices, to support and document
the royalties or payments payable in connection with this Agreement. Such
records shall be retained for a period of at least [****] after the royalties
which relate to such


                                      -7-



records have been accrued and paid. Each Party shall, upon written request from
the other, provide access to such records to such Party for the purposes of
audit. If any such audit discloses a shortfall in payment (or an overcharge, as
the case may be) of more than [****], the audited Party agrees to pay or
reimburse the other Party for the expenses of such audit, and the Parties shall
reconcile payments in accordance with the results of the audit.

          4.10 PROSPECTIVE BASIS. Any royalties or payments agreed upon by the
Parties for Material IP shall be owed on a prospective basis, and not for any
products made, used, sold, offered for sale, or imported prior to Evergreen's
receipt of the written description from REC referred to in Section 5.7 (Material
IP).

          4.11 WAIVER. Notwithstanding the foregoing, if REC discloses any
Material IP or Post Termination Improvement to Evergreen prior to the Parties'
final agreement regarding applicable royalties pursuant to Article 4 (Payment),
and Evergreen has used, incorporated or relied on such Material IP or Post
Termination Improvement in good faith in a manner that cannot be readily ceased
or undone without additional cost or adversely affecting its operations, then
such Material IP or Post Termination Improvement shall be subject to royalties
based on the principles of this Agreement and the provisions for
calculating/determining Market Value in accordance with the terms and conditions
of this Agreement fairly applied in view of the difficulty of ceasing or undoing
use of such Material IP.

     5. OWNERSHIP RIGHTS AND LICENSES

          5.1 INTELLECTUAL PROPERTY RIGHTS IN DEVELOPED TECHNOLOGY. Title to all
inventions made solely by REC personnel hereunder shall be owned by REC. Title
to all inventions made solely by Evergreen personnel hereunder shall be owned by
Evergreen. Title to all inventions made jointly by personnel of REC and
Evergreen in connection with this Agreement shall be jointly owned by REC and
Evergreen ("JOINT INVENTIONS"). "INVENTIONS" shall include all Technology and
Intellectual Property Rights.

          5.2 EXPLOITATION OF JOINT INVENTIONS. Neither party shall have any
obligation to account to the other for profits, or to obtain any approval of the
other party to license or exploit a Joint Invention, by reason of joint
ownership of any invention; provided, however, that Evergreen shall have the
exclusive right to exploit the Joint Inventions in the field of String Ribbon
Technology and REC shall have exclusive rights to exploit the Joint Inventions
in the field of CAST Wafer processes. For purposes of this Agreement, an
invention shall be considered "made" by the party whose personnel are inventors
with respect to such invention under the patent laws of the jurisdiction of the
particular patent rights in such invention.

          5.3 PATENT PROSECUTION. The filing for, prosecution and maintenance
of, patent applications and patents disclosing a Joint Invention shall be as
mutually agreed by the parties. If the parties do not agree upon such
prosecution, however, each party shall have any and all rights it would
otherwise have as a joint inventor to pursue the filing for and prosecution of
patent applications and patents disclosing a Joint Invention.

          5.4 ENFORCEMENT OF JOINT INVENTIONS. Should the Parties identify any
infringement of a Joint Invention and decide to take action against such
infringement, the Parties shall jointly and cooperatively pursue such action,
bear all costs equally and share in


                                      -8-



any damages, royalties, license fees or other recoveries equally.
Notwithstanding the foregoing, either party may at any time decide not to
participate further in such action, in which case any further costs shall be
borne by and all damages, royalties, license fees and other recoveries shall be
received by the party which continues to pursue such action. If a party declines
to participate in or withdraws from such an action, such party shall
nevertheless, at the request of the other party, cooperate with the other party,
at the cost of the other party and subject to any reasonable conditions
(including indemnification against counterclaims by the third party), to the
extent which may be necessary to enable the other party to pursue such action
effectively, including without limitation joining such action as an
indispensable party.

          5.5 FURTHER ASSURANCES. Each party shall, and shall cause its
employees and agents to, sign, execute and acknowledge or cause to be signed,
executed and acknowledged any and all documents and perform such acts as may be
necessary, for the purposes of perfecting the ownership rights described in this
Section 5 (Ownership Rights and Licenses) and obtaining, enforcing and defending
the rights performed thereto.

          5.6 BACKGROUND LICENSE. Subject to the terms and conditions of this
Agreement, [****]

     6. TERM AND TERMINATION

          6.1 TERM. The term of this Agreement will commence on the Effective
Date and will continue until the Termination Date, unless earlier terminated
under this Section 6 (Term and Termination).

          6.2 TERMINATION FOR CAUSE. Either party may terminate this Agreement
upon written notice to the other upon any material breach hereof by the other
party, if the breaching party has not cured such breach for a period of [****]
after receipt of written notice from the non-breaching party.

          6.3 SPECIAL TERMINATION RIGHT. REC shall have a special right to
terminate the Agreement if its shareholding under the Master Agreement (Master
Joint Venture Agreement of 24 November 2005) in EverQ falls below [****]. Such
termination shall be effective following a [****] written notice to Evergreen,
and shall not affect the right of Evergreen to continue to use Intellectual
Property Rights licensed from REC, nor Evergreen's obligation to continue to pay
royalty for such Intellectual Property Rights.

          6.4 SURVIVAL. The obligations in the following sections will survive
any expiration or termination of this Agreement: 1 (Definitions), 4.3 - 4.11
(regarding payment; provided that the obligations in such Sections 4.3 - 4.11
shall survive only to the extent that payment is owed for use of the respective
Intellectual Property Rights), 5 (Ownership Rights and Licenses), 7
(Confidentiality), 8 (Representations and Warranties), 9 (Indemnification), 10
(Limitation of Liability) and 11 (General Provisions).


                                      -9-



     7. CONFIDENTIALITY

          7.1 DEFINITION. "CONFIDENTIAL INFORMATION" means any information: (i)
disclosed by one party (the "DISCLOSING PARTY") to any other party (the
"RECEIVING PARTY"), which, if in written, graphic, machine-readable or other
tangible form is marked as "Confidential" or "Proprietary", or which, if
disclosed orally or by demonstration, is identified at the time of initial
disclosure as confidential and reduced to writing and marked "Confidential"
within [****] of such disclosure; or (ii) which is otherwise referred to as
Confidential Information under this Agreement.

          7.2 CONFIDENTIAL INFORMATION AND EXCLUSIONS. Notwithstanding Section
7.1 (Definition) above, Confidential Information shall exclude information that:
(i) was independently developed by the Receiving Party without using any of the
Disclosing Party's Confidential Information; (ii) becomes known to the Receiving
Party, without restriction, from a source other than the Disclosing Party that
had a right to disclose it; (iii) was in the public domain at the time it was
disclosed or becomes in the public domain through no act or omission of the
Receiving Party; or (iv) was rightfully known to the Receiving Party, without
restriction, at the time of disclosure.

          7.3 CONFIDENTIALITY OBLIGATION. The Receiving Party shall treat as
confidential all of the Disclosing Party's Confidential Information and shall
not use such Confidential Information except as expressly permitted under this
Agreement. Without limiting the foregoing, the Receiving Party shall use at
least the same degree of care that it uses to prevent the disclosure of its own
confidential information of like importance, but in no event with less than
reasonable care, to prevent the disclosure of the Disclosing Party's
Confidential Information, subject to Section 7.4 (Legal Disclosure) below.

          7.4 LEGAL DISCLOSURE. Notwithstanding anything herein to the contrary,
a Receiving Party has the right to disclose Confidential Information without the
prior written consent of the Disclosing Party: (i) as required by any court or
other Governmental Authority, or by stock exchange where either party is, or has
applied to be, listed; (ii) as otherwise required by law, or (iii) as advisable
or required in connection with any government or regulatory filings, including
without limitation, filings with the SEC or KT. If a Receiving Party believes
that it will be compelled by a court or other authority to disclose Confidential
Information of the Disclosing Party, it shall give the Disclosing Party prompt
written notice so that the Disclosing Party may take steps to oppose such
disclosure.

          7.5 REMEDIES. If a party breaches any of its obligations under this
Section 7, the other party shall be entitled to seek equitable relief to protect
its interest therein, including injunctive relief, as well as money damages.

     8. REPRESENTATIONS AND WARRANTIES

          8.1 AUTHORITY. Each party hereby represents and warrants to the other
that: (a) such party has the right, power and authority to enter into this
Agreement and to fully perform all of its obligations hereunder; and (b)
entering into this Agreement does not and will not violate any agreement or
obligation existing between such party and any third party.

          8.2 STANDARD OF PERFORMANCE. REC shall perform the Development
Services in a professional and workmanlike manner consistent with applicable
industry standards and in accordance with all applicable laws and regulations.


                                      -10-



          8.3 NON-INFRINGEMENT. REC hereby represents and warrants that (i) to
its knowledge, the Developed Technology and the Technology REC discloses in
connection with the Development Services do not infringe or misappropriate any
Intellectual Property Rights of any third party, and (ii) it has not received
notice of a claim or allegation that the Developed Technology and the Technology
REC discloses in connection with the Development Services infringe or
misappropriate any Intellectual Property Right of any third party.

          8.4 DISCLAIMER. EXCEPT FOR THE WARRANTIES IN THIS SECTION 8
(REPRESENTATIONS AND WARRANTIES), EACH PARTY HEREBY DISCLAIMS ANY AND ALL
WARRANTIES, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, INCLUDING WITHOUT
LIMITATION ANY IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.

     9. INDEMNIFICATION

          9.1 INDEMNITY. REC shall, at its own expense, defend or at its option
settle any claim brought against Evergreen or its employees, directors,
distributors, agents, customers, licensees, successors and assigns, and pay any
associated third-party damages, expenses, or settlements arising out of any
breach of any representation or warranty by it under Section 8.3
(Non-Infringement). In the event of any such claim, Evergreen agrees promptly to
notify REC of the claim and to permit REC, at REC's expense, to participate in
the defense thereof with counsel of REC's choosing, subject to Evergreen's
supervision and control.

     10. LIMITATION OF LIABILITY

          10.1 IN NO EVENT WILL EITHER PARTY HAVE ANY LIABILITY FOR ANY SPECIAL,
INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING WITHOUT LIMITATION
DAMAGES FOR LOSS OF PROFITS) THAT RELATE IN ANY WAY TO THIS AGREEMENT, HOWEVER
CAUSED ON ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE), AND WHETHER OR NOT
SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF ANY SUCH DAMAGES.

          10.2 Section 10 (Limitation of Liability) shall not limit the remedies
that may be available to the parties pursuant to the Master Agreement or
Concurrent Agreements. To the extent required by applicable law, nothing in this
Section 10 (Limitation of Liability) shall limit the remedies that may be
available to the parties for fraud, bodily injury or death.

     11. GENERAL PROVISIONS

          11.1 NOTICES. All notices, requests and other communications to any
party hereunder shall be in writing (including facsimile transmission) and shall
be given as set forth in the Master Agreement as follows:


                                      -11-



As to Evergreen:           As to REC:

Evergreen Solar, Inc.      Renewable Energy Corporation
138 Bartlett Street        Postboks 280
Marlboro, MA 01752         1323 Hovik
United States of America   Norway
Attention:                 Attention: Erik Sauar

or, in each case, at such other address as may be specified in writing to the
other parties hereto.

          11.2 LANGUAGE. All documentation, communication and services in
connection with this Agreement in shall be in English.

          11.3 AMENDMENTS AND WAIVERS.

               (a) Any provision of this Agreement may be amended or waived if,
but only if, such amendment or waiver is in writing and is signed, in the case
of an amendment, by each party to this Agreement, or in the case of a waiver, by
the party against whom the waiver is to be effective.

               (b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any or other further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.

          11.4 ASSIGNMENT. Other than as expressly otherwise provided herein,
this Agreement shall not be assignable or otherwise transferable by any party
without the prior written consent of the other party; provided, however, that
either party may assign this Agreement without the consent of the other party to
an affiliate or to a successor-in-interest in the event of a merger,
reorganization or sale of all or substantially all of the assets or business of
such party. Subject to the foregoing, the provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Any assignment or transfer (including through a change
of control) of this Agreement in violation of this Section 11.4 (Assignment)
shall be null and void.

          11.5 ENTIRE AGREEMENT; SEVERABILITY. This Agreement, together with the
Master Agreement and Concurrent Agreements, constitutes the entire agreement
between the parties hereto and any of such parties' respective affiliates with
respect to the subject matter of this Agreement and supersedes all prior
communications, agreements and understandings, both oral and written, with
respect to the subject matter of this Agreement. In the event any provision of
this Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision, and the parties agree to negotiate, in good
faith, a legal and enforceable substitute provision which most nearly effects
the parties' intent in entering into this Agreement.

          11.6 OTHER REMEDIES. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not


                                      -12-



exclusive of any other remedy conferred hereby or by law or equity upon such
party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy.

          11.7 GOVERNING LAW AND DISPUTE RESOLUTION. All disputes arising in
connection with this Agreement or its validity or any agreement provided herein
which cannot be resolved by mutual agreement of the Parties shall be finally
settled in accordance with the Arbitration Rules of the American Arbitration
Association (AAA) without recourse to the ordinary courts of law. The place of
arbitration is New York, New York. The arbitral tribunal consists of three
arbitrators. The law of the State of New York, New York is applicable to the
dispute. The language of the arbitral proceedings is English.

          11.8 COMPLIANCE WITH LAWS AND REGULATIONS. Each party will comply with
all applicable laws, regulations and ordinances.

          11.9 EXPORT. No party shall export or re-export, directly or
indirectly, any technical information disclosed hereunder or direct product
thereof to any destination prohibited or restricted by the applicable export
control regulations, including the U.S. Export Administration without the prior
authorization from the appropriate governmental authorities.

          11.10 FORCE MAJEURE. No party shall be liable to another party for
failure to perform its obligations under this Agreement if such failure is
caused by any event or condition not reasonably within the control and
anticipation of the affected party, including, without limitation, by fire,
flood, typhoon, earthquake, explosion, strike, labor trouble or other industrial
disturbance, unavoidable accident, war (declared or undeclared), act of
terrorism, sabotage, embargo, riot, or any other cause beyond the control of the
parties, provided that the affected party promptly notifies the other party of
the occurrence of such event or condition and takes reasonable steps necessary
to resume performance of its obligations so interfered with.

          11.11 INDEPENDENT CONTRACTORS. The parties hereto are independent
contractors. Nothing contained herein or done pursuant to this Agreement shall
constitute either party the agent of the other party for any purpose or in any
sense whatsoever, or constitute the parties as partners or joint venturers.

          11.12 THIRD PARTY BENEFICIARIES. No provision of this Agreement is
intended to confer upon any person or entity other than the parties hereto (and
their permitted assigns) any rights or remedies hereunder.

          11.13 COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. This Agreement
shall become effective when each party shall have received a counterpart hereof
signed by the other party.

          11.14 VALIDITY. This Agreement shall be null and void, and neither
party shall have obligations whatsoever hereunder, unless the parties thereto
sign and execute the Master Joint Venture Agreement, on the date indicated, in
such a way as to give it full legal effect under German law, including, but not
limited to, notarising it. Furthermore, no obligations shall be binding for
either patty until such a time as the initial share transfer regulated by the
Master Joint Venture Agreement article 2.2 (a) and (b) have been completed
according to the further regulation of the Master Joint Venture Agreement
article 2.2 (d).


                                      -13-



     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.

                                        RENEWABLE ENERGY CORPORATION


                                        By: /s/ Christopher Groth
                                            ------------------------------------
                                        Name: Christopher Groth
                                              ----------------------------------
                                        Title: General Counsel
                                               ---------------------------------


                                        EVERGREEN SOLAR, INC.


                                        By: /s/ Richard G. Chleboski
                                            ------------------------------------
                                        Name: Richard G. Chleboski
                                              ----------------------------------
                                        Title: CFO
                                               ---------------------------------


                                        RENEWABLE ENERGY CORPORATION ASA


                                      -14-



                        EXHIBIT A -- INITIAL DELIVERABLES

     [****]



                    EXHIBIT B -- STANDARD CHARGES FOR [****]

     [****]

EX-10.20

                                                                   Exhibit 10.20

CONFIDENTIAL TREATMENT REQUESTED: Certain portions of this document have been
omitted pursuant to a request for confidential treatment and, where applicable,
have been marked with an asterisk ("[****]") to denote where omissions have been
made. The confidential material has been filed separately with the Securities
and Exchange Commission.

                                SUPPLY AGREEMENT

This Supply Agreement ("Agreement") is made this 24th day of November, 2005, by
and between:

SOLAR GRADE SILICON LLC, 3322 Road, "N" N.E., Moses Lake, Washington 98837, USA
(hereinafter referred to as "SGSIL") and

EVERGREEN SOLAR, INC., a Delaware corporation with its principal executive
offices located at 138 Bartlett Street, Marlboro, Massachusetts, USA
(hereinafter referred to as "CUSTOMER" ).

SGSIL and Customer are each sometimes referred to here in as a "Party" and are
jointly referred to sometimes as the "Parties."

                                    RECITALS

Customer desires to purchase a supply of polycrystalline solar grade silicon
from SGSIL for its own use in the production of silicon wafers for solar
application, subject to the terms and conditions set forth herein.

SGSIL manufactures and sells solar grade polycrystalline silicon products and is
willing to supply such products to Customer, subject to the terms and conditions
set forth herein.

Now, therefore, in consideration of the foregoing, SGSIL and Customer agree as
follows:

1.   DEFINITIONS

"AFFILIATE" shall have the meaning set forth in the Master Joint Venture
Agreement.

"BLANKET PURCHASE ORDER" shall mean an [****] purchase order of the amount of
Products Customer will order during a [****], setting forth delivery dates and
quantities for such Products.

"CHANGE OF CONTROL" shall have the meaning set forth in the Master Joint Venture
Agreement.

"GOVERNMENTAL AUTHORITY" shall mean any US, or German or Norwegian, federal,
national, supranational, state, provincial, municipal, local, or similar
government, governmental, regulatory or administrative authority, agency or
commission or any court, tribunal, or judicial or arbitral body.

"MASTER JOINT VENTURE AGREEMENT" shall mean that certain Master Joint Venture
Agreement by and between Evergreen Solar, Inc., Q-Cells AG and Renewable Energy
Corporation, dated 24 November 2005.

"PRODUCTS" shall mean the solar grade polycrystalline silicon products to be
sold pursuant to this Agreement as listed in Attachment 1 and described in the
Specifications, as may be modified, from time to time by the Parties in a
written Amendment to this Agreement, signed by both Parties.

"SHARES" shall have the meaning set forth in the Master Joint Venture Agreement.

"SPECIFICATIONS" shall mean the Product technical specifications and the other
Product information listed, described or referred to in Attachment 1.

2.   PURCHASE OF PRODUCT.

2.1  SGSIL shall sell and deliver, and Customer shall purchase, the quantities
     of Products set forth in each Order Confirmation, based on Customer's
     [****] Blanket Purchase Order.



     Customer acknowledges and agrees that if it desires to purchase additional
     Products in excess of its then-current Blanket Purchase Order and, in any
     event, if in excess of the maximum quantities set forth in Section 3, any
     such purchase shall be subject to SGSIL having the relevant free production
     capacity at the time of any such excess order by Customer, and subject to
     the provisions of Section 8, below.

2.2  Notwithstanding the fact that Products may be ordered only pursuant to the
     issuance of an [****] Blanket Purchase Order, for SGSIL's planning and
     forecasting purposes, Customer agrees to deliver in writing to SGSIL its
     forecasted requirements of Products for the periods and at the times as
     follows:

     (i)  The rolling [****] quantity forecast set forth in Attachment 2 shall
          be updated [****] during the Term.

     (ii) The rolling [****] quantity forecast set forth in Attachment 2 shall
          be updated [****] during the Term.

2.3  Contemporaneously with the execution of this Agreement, a Blanket Purchase
     Order for [****] in the form of Attachment 4 shall be deemed issued to
     SGSIL in the [****] quantity amount set forth therein (which amount shall
     be not less than the minimum quantity set forth in Attachment 2), and
     setting forth the [****] delivery dates, commencing in January, 2006, for
     the delivery of the [****] quantity of Products set forth therein in [****]
     quantities. For each subsequent [****] in the Term, Customer shall issue a
     Blanket Purchase Order in similar form, except the [****] quantity stated
     in such Blanket Purchase Order shall be delivered in [****] deliveries on
     the delivery dates set forth therein, by not later than [****] of the
     then-current [****]. In the event such an [****] Blanket Purchase Order is
     not timely issued hereunder for any [****] during the initial [****] Term,
     Customer shall be deemed to have issued a Blanket Purchase Order for the
     corresponding minimum [****] quantity of Products for such year set forth
     in Attachment 2, to be delivered in [****] shipments by SGSIL.

3.   QUANTITIES.

3.1  Subject to the minimum quantity of Products to be purchased by Customer
     during [****] as specified in Attachment 2, and the maximum quantities of
     Products to be purchased by Customer stated therein, the quantity of
     Products purchased by Customer under this Agreement shall be the quantities
     set forth in each [****] Blanket Purchase Order issued in accordance with
     Section 2.3. For subsequent years during the term of this agreement, the
     Parties will agree to a minimum and target amount of product to be
     delivered, but in no case will the minimum and target quantities be less
     than those listed in 2008, unless mutually agreed to by the Parties.

4.   PRODUCT PRICING & PAYMENT TERMS.

4.1  The price of the Products during the term of this Agreement will be the
     lesser of (i) [****] By [****] the Parties mean the [****] All prices set
     forth herein do not include freight, insurance, sales or value added tax,
     customs duties, or like charges which will be billed to Customer if SGSIL
     advances them.


                                       -2-



4.2  In the event the Parties cannot agree on [****] Product pricing by [****]
     of the immediately preceding calendar year, then Parties shall submit the
     issue to binding determination of the applicable price in accordance with
     Section 4.1, and the price determined by the arbitration shall be used for
     the Products for such [****]. The determination shall be done by an expert
     on the solar energy sector, to be appointed [****] and shall follow such
     procedural rules as the Parties agree on with the determinator.

4.3  Customer shall pay SGSIL the full price, in U.S. dollars, of all Products
     purchased under this Agreement by paying SGSIL the balance, without
     deduction, shown on each [****] invoice issued by SGSIL pursuant to Section
     5.7, by wire transfer in readily available U.S. funds, within [****] after
     the date of such invoice. Interest shall accrue on overdue invoices the
     lesser of [****] or at the maximum rate permitted by applicable law. If
     Customer fails to timely pay an invoice, SGSIL may, in its sole and
     absolute discretion, demand the balance owed on such invoice including
     accrued interest, and/or may stop future deliveries of Products to Customer
     until Customer pays such delinquent invoice. In addition, in the event of a
     dispute regarding payment of amounts due hereunder, the losing Party shall
     pay the prevailing Party's reasonable costs and expenses in such collection
     or defense as the case may be, including reasonable attorneys' fees, costs
     of expert witnesses, costs of translators and any other collection cost or
     cost of suit, whether or not an action or proceeding is commenced or
     concluded.

5.   DELIVERY; INVOICING.

5.1  Products will be purchased by Customer through the issuance of [****]
     Blanket Purchase Orders and any additional Products in excess of the
     quantities stated in such Blanket Purchase Orders will be purchased by
     Customer at the then-current pricing in effect at the time of such purchase
     order, through the issuance by Customer of a separate purchase order, which
     additional purchase order shall not be effective until the quantity and
     requested delivery date(s) set forth in such additional purchase order are
     accepted and confirmed in writing by SGSIL.

5.2  All Products to be purchased hereunder, whether pursuant to a Blanket
     Purchase Order or an additional purchase order, shall be delivered FCA from
     SGSIL's Washington Distribution Facility in Kent, Washington, USA, (the
     "Washington Distribution Facility") to Customer's facility at the location
     specified by Customer in writing, together with the correct documentation
     and adequate packing and labeling as set forth in Attachment 1.

5.3  In accordance with Section 2.3, the initial delivery of Products to be
     shipped to Customer pursuant to this Agreement shall be in January, 2006
     Product quantity amount set forth in Customer's [****] Blanket Purchase
     Order.

5.4  The Products shall be deemed delivered by SGSIL to Customer under the
     then-current Blanket Purchase Order when transferred to Customer's chosen
     carrier at SGSIL's Washington Distribution Facility in Kent, Washington, or
     such other shipping point in the United States of America designated in
     writing by SGSIL. Upon any such delivery of Products to Customer, Customer
     shall have purchased that quantity of Products and shall be obligated to
     pay SGSIL for such Products unless rejected as not conforming to the
     Product Specifications and returned by Customer within [****] of Customer's
     receipt of the Products.

5.5  Title and risk of loss to the Products shall pass to Customer when SGSIL
     delivers the Products to Customer at the Washington Distribution Facility
     in accordance with the terms set forth in Section 5.4.


                                       -3-



5.6  Any [****] order of Products pursuant to the then-current Blanket Purchase
     Order or any additional order of Products during a [****] in excess of the
     amounts stated therein may be confirmed or issued by Customer, as the case
     may be, on Customer's usual order acknowledgment form or purchase order;
     provided, however, the provisions of this Agreement shall govern and
     supersede all inconsistent, different, or additional terms, conditions, and
     instructions contained in Customer's order acknowledgment or purchase order
     form or in any other Customer transactional documentation provided by
     Customer to SGSIL after the effective date of this Agreement.

5.7  Upon SGSIL's shipment of any order under this Agreement, whether a [****]
     delivery under a Blanket Purchase Order or an additional delivery pursuant
     to a separate purchase order, SGSIL shall in writing, sent electronically
     or by facsimile transmission, invoice Customer for such order. All invoices
     issued by SGSIL hereunder shall list the date of each shipment, the
     quantity and type of Products shipped to Customer, the unit and extended
     prices of all Products shipped and the total price owed by Customer for
     such shipment. Upon Customer's receipt of SGSIL's invoice, Customer is
     obligated to pay the amount set forth therein in accordance with Section
     4.3.

5.8  SGSIL shall exercise its commercially reasonable efforts to manufacture and
     deliver from SGSIL's Washington Distribution Facility the Products ordered
     by Customer under this Agreement, on or before the delivery date or dates
     set forth in SGSIL's Blanket Purchase Order or additional purchase order
     confirmation. Any such additional purchase order shall be confirmed by
     SGSIL electronically or by facsimile transmission within [****] of SGSIL's
     receipt of any such additional purchase order. However, without prejudice
     to SGSIL's obligation to exercise its [****] efforts to deliver the
     Products to Customer on any date of delivery given by SGSIL to Customer,
     whether pursuant to an [****] Blanket Purchase Order or a separate
     additional purchase order, SGSIL shall immediately inform Customer in
     writing if any delay is foreseen.

6.   WARRANTY AND LIMITATION OF LIABILITY.

6.1  LIMITED WARRANTY. SGSIL warrants that, for [****] from the date of
     delivery, the Products will conform to SGSIL's published product
     description set forth in the Specifications. If Customer timely notifies
     SGSIL in writing of a nonconformity, upon verification of the
     nonconformity, SGSIL, in its sole discretion, shall provide Customer with
     one of the following remedies: (i) replacement of the Products that SGSIL
     verifies do not conform to this warranty; (ii) retreatment of the Products
     to bring them into conformity with this warranty; or (iii) issuance of a
     credit to Customer's account to reflect the decrease in value of the
     Products resulting from the non-conformance with this warranty. The
     election of remedies provided in this section shall be SGSIL's exclusive
     obligation with respect to remedying any warranty claims for Products and
     Customer's sole and exclusive remedy for all claims of defects. If the
     remedy chosen by SGSIL in its sole discretion hereunder is adjudicated to
     be insufficient, including, without limitation, any finding of failure of
     essential purpose, SGSIL shall be entitled to the alternative remedy of
     refunding the price paid by Customer for such defective Products and SGSIL
     shall have no other liability to Customer for breach of this limited
     warranty. No Products furnished by SGSIL shall be covered by this warranty
     if the claimed defect is due to Customer's failure to properly store,
     maintain, or use the Products in accordance with good industry practices or
     specific recommendations or instructions of SGSIL. ALL OTHER WARRANTIES,
     EXPRESS OR IMPLIED, INCLUDING IMPLIED WARRANTIES OF MERCHANTABILITY OR
     FITNESS FOR ANY PARTICULAR PURPOSE, ARE DISCLAIMED.

6.2  The warranties set forth in Section 6.1 do not extend to any Product that:
     (i) has been subjected to misuse, neglect or abuse not caused by SGSIL,
     (ii) has a defect caused by having been modified or altered by a party
     other than SGSIL, (iii) has a defect caused by a combination with another
     product


                                       -4-



     not supplied or specified by SGSIL, or (iv) has been used in violation of
     the Specifications and/or other approved written instructions furnished to
     Customer by SGSIL prior to the delivery of the Product.

6.3  Customer shall ship a claimed defective Product to SGSIL's designated
     repair location FCA, Customer's location, freight collect. Within [****]
     after receipt of a defective Product, SGSIL shall ship the retreated or
     replacement Product, at SGSIL's expense to Customer's designated location
     (freight prepaid, DDU, Customer's destination). If SGSIL determines that
     the Product is not defective and conforms to the Specifications, SGSIL
     shall ship the non-defective Product to Customer at Customer's expense,
     FCA, SGSIL's designated repair location, freight collect, and Customer
     shall refund all freight, shipping, insurance, customs, duties and other
     charges previously paid by SGSIL in connection with Customer's return of
     the Product. Customer shall include the following information with the
     return of the claimed defective Product: (i) Customer's name and complete
     address, (ii) name(s) and telephone number(s) of Customer's designated
     contact if there are questions regarding the claimed defective Product,
     (iii) the "ship-to" address for the retreated or replacement Product, (iv)
     complete list of all claimed defective Product being returned, and (v)
     nature of each Product's claimed defect or failure.

6.4  LIMITATION OF LIABILITY. In no event shall SGSIL's liability for damages in
     relation to any Products sold to Customer pursuant to this Agreement exceed
     the purchase price paid by Customer for the goods directly having caused
     those damages. In no event shall SGSIL be liable for consequential,
     incidental, special, punitive or exemplary damages. Customer acknowledges
     and agrees that these limitations are reasonable and that such limitations
     have been specifically bargained for between the Parties.

7.   CONFIDENTIALITY.

7.1  "Confidential Information" means any information: (i) disclosed by one
     Party (the "Disclosing Party") to any other Party (the "Receiving Party"),
     which, if in written, graphic, machine-readable or other tangible form is
     marked as "Confidential" or "Proprietary", or which, if disclosed orally or
     by demonstration, is identified at the time of initial disclosure as
     confidential and reduced to writing and marked "Confidential" within [****]
     of such disclosure; or (ii) which is otherwise referred to as Confidential
     Information under this Agreement or any License Agreement.

7.2  Notwithstanding Section 7.1 above, Confidential Information shall exclude
     information that: (i) was independently developed by the Receiving Party
     without using any of the Disclosing Party's Confidential Information; (ii)
     becomes known to the Receiving Party, without restriction, from a source
     other than the Disclosing Party that had a right to disclose it; (iii) was
     in the public domain at the time it was disclosed or becomes in the public
     domain through no act or omission of the Receiving Party; or (iv) was
     rightfully known to the Receiving Party, without restriction, at the time
     of disclosure.

7.3  The Receiving Party shall treat as confidential all of the Disclosing
     Party's Confidential Information and shall not use such Confidential
     Information except as expressly permitted under this Agreement. Without
     limiting the foregoing, the Receiving Party shall use at least the same
     degree of care that it uses to prevent the disclosure of its own
     confidential information of like importance, but in no event with less than
     reasonable care, to prevent the disclosure of the Disclosing Party's
     Confidential Information, subject to Section 7.4 below.

7.4  Notwithstanding anything herein to the contrary, a Receiving Party has the
     right to disclose Confidential Information without the prior written
     consent of the Disclosing Party: (i) as required by


                                       -5-



     any court or other Governmental Authority, or any stock exchange where a
     Party's shares are listed; (ii) as otherwise required by law, or (iii) as
     advisable or required in connection with any government or regulatory
     filings. If a Receiving Party believes that it will be compelled by a court
     or other authority to disclose Confidential Information of the Disclosing
     Party, it shall give the Disclosing Party prompt written notice so that the
     Disclosing Party may take steps to oppose such disclosure.

8.   CAPACITY.

     In the event SGSIL from time to time experiences limited delivery capacity
     as a result of Force Majeure (as defined in Section 9) or as a result of
     demand for Products by Customer in excess of the maximum quantity amounts
     set out in Section 3 and Attachment 2 (a "Limited Capacity Period"), SGSIL
     shall use its [****] efforts to allocate delivery of Products to Customer
     and SGSIL's other customers in proportion to Customer's and other
     customers' relative orders for forecasted amounts of Products and their
     orders for Products in excess of forecasted amounts. Notwithstanding
     anything to the contrary in this Agreement, Customer agrees that such
     [****] efforts by SGSIL shall constitute adequate performance of SGSIL's
     obligations under this Agreement during a Limited Capacity Period.

9.   FORCE MAJEURE.

9.1  Neither party shall be considered in default in the performance of its
     obligations hereunder to the extent that the performance of these
     obligations is prevented or delayed by Force Majeure. The term "Force
     Majeure" is hereby defined as the following: acts of God; plant accidents;
     strikes; lockouts or other similar industrial disturbances; acts of public
     enemies; orders or restraints of any kind from any Governmental Authority
     (except when such governmental action results from a Party's failure or
     refusal to comply with any applicable law, rule or regulation); acts of
     terrorism; war, insurrection or riots; earthquakes, fires, storms or other
     natural disasters.

9.2  In case of Force Majeure according to Section 9.1 either party shall
     promptly notify the other party and shall use its [****] efforts to
     minimize the consequences.

9.3  For the duration and to the extent of Force Majeure, the Parties will be
     released from their obligations under this Agreement. The Term shall be
     extended for an amount of time equal to the period during which the Parties
     were released from their obligations under this Agreement.

10.  SUSPENSION OF PERFORMANCE - TERMINATION.

10.1 This Agreement may terminate in the event that the parties mutually agree
     in writing to terminate this Agreement (subject to the Master Joint Venture
     Agreement).

     Either Party may suspend its performance under this Agreement for a
     material breach or default of any of the terms, conditions or covenants of
     this Agreement by the other, provided that such suspension of performance
     may be made only following written notice of such breach with reference to
     this Section 10.1 and the expiration of a [****] period during which period
     the other party has failed to cure such breach after such notice. Such
     suspension of performance shall not affect any delivery under a Blanket
     Purchase Order for a delivery date that is prior to the date of suspension
     of performance or an additional purchase order accepted by SGSIL prior to
     the date of suspension of performance. The suspension of performance shall
     not prejudice the rights or liabilities of the Parties with respect to
     Product sold, or any indebtedness then owing by either party to the other.


                                       -6-



     No single instance of suspension of performance may exceed [****], nor must
     performance be suspended by one Party more than [****] in any [****] period
     under the Agreement. Should an event occur, that might otherwise give a
     Party the right to suspend performance had it not already done so [****] in
     the last [****], the Party may instead elect to terminate the Agreement
     according to the rules of article 10.2 to the extent these are applicable.

10.2 Either Party may terminate this Agreement, effective immediately, without
     liability for said termination, upon written notice to the other Party, if
     any of the following events occur:

     (i)  The other files a voluntary petition in bankruptcy or is adjudged
          bankrupt;

     (ii) A court assumes jurisdiction of the assets of the other under a
          federal reorganization act;

     (iii) A trustee or receiver is appointed by a court for all or a
          substantial portion of the assets of the other;

     (iv) The other becomes insolvent or suspends its business;

     (v)  The other makes an assignment of its assets for the benefit of its
          creditors, except as required in the ordinary course of business; or

     Notwithstanding the generality of the foregoing, the Parties agree that in
     the event of a termination by SGSIL pursuant to this Section 10.2, such
     termination shall also automatically terminate the then-current Blanket
     Purchase Order, and any deliveries thereunder, and any additional purchase
     orders received from Customer, and SGSIL shall have no obligation to
     deliver Products pursuant to any such terminated Blanket Purchase Order or
     additional purchase order.

11.  MISCELLANEOUS.

11.1 Other than as expressly otherwise provided herein, this Agreement shall not
     be assignable or otherwise transferable by any Party hereto without the
     prior written consent of all the other parties hereto, and any purported
     assignment or other transfer without such consent shall be void and
     unenforceable; provided, however, that any Party may assign this Agreement:

     (a)  to any of its Affiliates so long as it will be made at the same time
          as a transfer of its Shares to such Affiliate specifically permitted
          by the Master Joint Venture Agreement;

     (b)  in connection with the sale by a Party of all of the Shares
          beneficially owned by such Party as specifically provided by the
          Master Joint Venture Agreement, including by way of the Change of
          Control of such Party.

     (c)  For the avoidance of doubt, neither Party shall be obligated to obtain
          the consent of the other Party (under this Section 11.1) solely by
          virtue of a Change of Control of such Party.

11.2 In the event any provision of this Agreement shall be declared
     unenforceable or invalid by a legal authority having jurisdiction over the
     Agreement and the Parties, the validity of the remaining provisions shall
     not in any way be affected or impaired thereby. The Parties shall in good
     faith work together toward replacing the ineffective or invalid provisions
     with valid provisions, which fulfill the economic purpose of the
     ineffective or invalid provision.


                                       -7-



11.3 Any amendment, addition, deletion, alteration or change of this Agreement
     shall only be valid if in writing and executed by each of the Parties. The
     following listed documents shall be the only documents attached to this
     Supply Agreement:

     [ ]  Attachment 1 - Specifications

     [ ]  Attachment 2 - Supply Forecasts, Minimum and Maximum [****]
          Quantities, Pricing and Product Mix

     [ ]  Attachment 3 - Addresses and Contact Persons

     [ ]  Attachment 4 - Blanket Purchase Order

11.4 This Agreement shall be null and void, and SGIL shall have no obligations
     whatsoever hereunder, unless the parties thereto sign and execute the
     Master Joint Venture Agreement, on the date indicated, in such a way as to
     give it full legal effect under German law, including, but not limited to,
     notarising it. Furthermore, no obligations shall be binding for SGIL until
     such a time as the initial share transfer regulated by the Master Joint
     Venture Agreement article 2.2 (a) and (b) have been completed according to
     the further regulation of the Master Joint Venture Agreement article 2.2
     (d).

12.  TERM.

     Except as otherwise extended pursuant to a force majeure under Section 9.3,
     or earlier terminated pursuant to Section 4.2 or Section 10, this Agreement
     will be effective on the date executed by both of the Parties and will
     endure for an initial period of seven (7) years and, thereafter, shall be
     automatically extended for consecutive periods of one year, unless either
     Party provides to the other Party written notice of its intent to terminate
     this Agreement as of the next occurring expiration date, which notice shall
     be given not less than [****] prior to such expiration date. The initial
     seven (7) year term of this Agreement, and any extensions thereof pursuant
     to this Section 12 shall be referred to herein as the "Term."

13.  APPLICABLE LAW.

     The law applicable to this Agreement is set forth in Section 16.

14.  NOTICES.

     All notices called for under this Agreement shall be in writing. Notice
     shall be deemed effective if sent registered mail to the address listed in
     Attachment 3 or to such other address as either party may, from time to
     time, by written notice provide to the other Party. Notice shall also be
     effective if actually received by any method that produces a hard copy
     record, including facsimile transmissions and e-mail with confirmation of
     receipt.

15.  GOVERNING LANGUAGE.

     The parties hereby confirm that they have agreed that all written documents
     between them shall be prepared in the English language only and such
     language shall be the governing language.

16.  DISPUTE RESOLUTION.

     All disputes arising in connection with this Agreement or its validity or
     any agreement provided herein which cannot be resolved by mutual agreement
     of the Parties shall be finally settled in accordance with the Arbitration
     Rules of the American Arbitration Association (AAA) without recourse to the
     ordinary courts of law. The place of arbitration is New York, New York. The
     arbitral


                                       -8-



     tribunal consists of three arbitrators. The law of the State of New York is
     applicable to the dispute. The language of the arbitral proceedings is
     English.

17.  PATENT INDEMNITY.

     SGSIL warrants that the sale or use of the Products does not infringe or
     misappropriate any third party's patents, trademarks, trade secrets or
     other proprietary rights (collectively, "PROPRIETARY RIGHTS"). SGSIL will
     hold Customer harmless from all costs, losses, damages and liability which
     may be awarded against Customer on account of the infringement of such
     third party's Proprietary Rights by the Products, provided SGSIL is given
     prompt notice by Customer of any pending or threatened infringement claim
     and is allowed to control the defense and settlement of any such claim.
     SGSIL shall have the right to settle any such infringement claim on the
     terms and conditions it deems advisable. SGSIL shall not be liable for any
     infringement claims or costs or damages incurred as a result of any suit or
     proceeding based upon a claim that: (i) the infringement was caused by a
     combination of the PRODUCT with another product not supplied by SGSIL or
     which other product was specified by Customer and not otherwise provided by
     SGSIL, where the Product otherwise does not infringe or (ii) if the PRODUCT
     was modified after delivery to Customer, where the unmodified Product does
     not infringe.

18.  COMPLIANCE WITH FOREIGN LAWS.

     Customer shall obtain all licenses, permits and approvals required by any
     United States law or regulation with respect to the export of the Products
     to Customer's facility outside the United States under this Agreement.
     Subject to Section 19, Customer agrees that, after the Products arrive at
     Customer's facility, Customer will not re-export the Products except in
     compliance with United States export laws and regulations. Customer shall
     be responsible for formal compliance with those export laws and
     regulations. In addition, Customer expressly assumes responsibility for
     determining the need for and obtaining import licenses, currency exchange
     approvals and any other governmental approvals that may be necessary to
     permit the import of the Products into Germany. Customer is responsible for
     full compliance with all applicable laws or regulations in countries other
     than the United States concerning the export, sales or use of the Customer
     products incorporating the Products sold hereunder. Customer will indemnify
     and hold SGSIL harmless from any costs, liabilities or damages that result
     from any failure by Customer to comply with such laws.

19.  USE OF PRODUCTS.

     Customer agrees that the Products sold and delivered to Customer hereunder
     are to be used solely for use in Customer's own photovoltaic products and
     are not to be resold or used by Customer for any other purpose or in any
     other manner whatsoever.

20.  QUESTIONABLE PAYMENTS.

     Customer shall at all times comply, and shall cause its directors,
     officers, employees and agents to abide by and comply, in all respects,
     with the United States Foreign Corrupt Practices Act (15 U.S.C.
     Sections 78dd-1, 78dd 2, 78dd-3 and 78m, as amended) and all United States
     governmental agency regulations applying or interpreting said Act and, to
     the extent applicable in any non-U.S. jurisdiction, with the Convention on
     Combating Bribery of Foreign Public Officials in International Business
     Transactions (Dec. 18, 1997, 37 I.L.M 1 (1998), and/or the European Union
     Convention on the Fight Against Corruption Involving Officials of the
     European Communities or Officials of the Member States of the European
     Union (O.J. No. C195, 25.06.1997, May 26, 1997), or any similar treaty,
     convention, law or regulation applicable in the jurisdiction in question.


                                       -9-



IN WITNESS WHEREOF, SGSIL and Customer have caused this Agreement to be executed
by their duly authorized officer or representative, as of the date and year set
forth below.

SOLAR GRADE SILICON LLC                 EVERGREEN SOLAR, INC


BY:                                     BY:
    ---------------------------------       ------------------------------------
PRINT NAME:                             PRINT NAME:
            -------------------------               ----------------------------
ITS:                                    ITS:
     --------------------------------        -----------------------------------
DATE:                                   DATE:
      -------------------------------         ----------------------------------


                                      -10-



ATTACHMENT 1 - SPECIFICATIONS

                 TO SUPPLY AGREEMENT BETWEEN SGSIL AND CUSTOMER

See attached Specifications of each Product listed below, as previously sent to
Customer electronically in PDF Format, and as hereafter amended, from time to
time, by mutual agreement of the Parties in accordance with the Agreement:

PRODUCTS:

Either:

     [****]


                                      -11-



           ATTACHMENT 2 - SUPPLY FORECASTS, MINIMUM AND MAXIMUM [****]
                       QUANTITIES, PRICING AND PRODUCT MIX
                 TO SUPPLY AGREEMENT BETWEEN SGSIL AND CUSTOMER

[****]


                                      -12-



                  ATTACHMENT 3 - ADDRESSES AND CONTACT PERSONS
                 TO SUPPLY AGREEMENT BETWEEN SGSIL AND CUSTOMER



              SGSIL                             CUSTOMER
              -----                             --------
                                 
CONTRACT HOLDER:                    CONTRACT HOLDER:
Goran Bye, CEO                      Shall be as provided by Customer
Solar Grade Silicon LLC             in writing.
3322 Road, "N" N.E.,
Moses Lake, Washington 98837, USA

CONTRACT MANAGER:                   CONTRACT MANAGER:
Kurt Levens, Director of Sales &    Leo Oei
Marketing

CONTRACT ADMINISTRATOR:             CONTRACT ADMINISTRATOR:
Ms. Sharon Palmerton                Richard Chleboski



                                      -13-



                      ATTACHMENT 4 - BLANKET PURCHASE ORDER


                                      -14-

EX-10.21

                                                                   Exhibit 10.21

CONFIDENTIAL TREATMENT REQUESTED: Certain portions of this document have been
omitted pursuant to a request for confidential treatment and, where applicable,
have been marked with an asterisk ("[****]") to denote where omissions have been
made. The confidential material has been filed separately with the Securities
and Exchange Commission.

                                SUPPLY AGREEMENT

This Supply Agreement ("Agreement") is made this 24th day of November, 2005, by
and between:

SOLAR GRADE SILICON LLC, 3322 Road, "N" N.E., Moses Lake, Washington 98837, USA
(hereinafter referred to as "SGSIL") and

EVERQ GMBH, a limited liability company (GmbH), incorporated under the laws of
the Federal Republic of Germany (hereinafter referred to as "CUSTOMER" ).

SGSIL and Customer are each sometimes referred to here in as a "Party" and are
jointly referred to sometimes as the "Parties."

                                    RECITALS

Customer desires to purchase a supply of polycrystalline solar grade silicon
from SGSIL for its own use in the production of silicon wafers for solar
application, subject to the terms and conditions set forth herein.

SGSIL manufactures and sells solar grade polycrystalline silicon products and is
willing to supply such products to Customer, subject to the terms and conditions
set forth herein.

Now, therefore, in consideration of the foregoing, SGSIL and Customer agree as
follows:

1.   DEFINITIONS

"AFFILIATE" shall have the meaning set forth in the Master Joint Venture
Agreement.

"BLANKET PURCHASE ORDER" shall mean an [****] purchase order of the amount of
Products Customer will order during a [****], setting forth delivery dates and
quantities for such Products.

"CHANGE OF CONTROL" shall have the meaning set forth in the Master Joint Venture
Agreement.

"GOVERNMENTAL AUTHORITY" shall mean any US, or German or Norwegian, federal,
national, supranational, state, provincial, municipal, local, or similar
government, governmental, regulatory or administrative authority, agency or
commission or any court, tribunal, or judicial or arbitral body.

"MASTER JOINT VENTURE AGREEMENT" shall mean that certain Master Joint Venture
Agreement by and between Evergreen Solar, Inc., Q-Cells AG and Renewable Energy
Corporation, dated 24 November 2005.

"PRODUCTS" shall mean the solar grade polycrystalline silicon products to be
sold pursuant to this Agreement as listed in Attachment 1 and described in the
Specifications, as may be modified, from time to time by the Parties in a
written Amendment to this Agreement, signed by both Parties.

"SHARES" shall have the meaning set forth in the Master Joint Venture Agreement.

"SPECIFICATIONS" shall mean the Product technical specifications and the other
Product information listed, described or referred to in Attachment 1.

2.   PURCHASE OF PRODUCT.

2.1  SGSIL shall sell and deliver, and Customer shall purchase, the quantities
     of Products set forth in each Order Confirmation, based on Customer's
     [****] Blanket Purchase Order.



     Customer acknowledges and agrees that if it desires to purchase additional
     Products in excess of its then-current Blanket Purchase Order and, in any
     event, if in excess of the maximum quantities set forth in Section 3, any
     such purchase shall be subject to SGSIL having the relevant free production
     capacity at the time of any such excess order by Customer, and subject to
     the provisions of Section 8, below.

2.2  Notwithstanding the fact that Products may be ordered only pursuant to the
     issuance of an [****] Blanket Purchase Order, for SGSIL's planning and
     forecasting purposes, Customer agrees to deliver in writing to SGSIL its
     forecasted requirements of Products for the periods and at the times as
     follows:

     (i)  The rolling [****] quantity forecast set forth in Attachment 2 shall
          be updated [****] during the Term.

     (ii) The rolling [****] quantity forecast set forth in Attachment 2 shall
          be updated [****] during the Term.

2.3  Contemporaneously with the execution of this Agreement, a Blanket Purchase
     Order for [****] in the form of Attachment 4 shall be deemed issued to
     SGSIL in the [****] quantity amount set forth therein (which amount shall
     be not less than the minimum quantity set forth in Attachment 2), and
     setting forth the [****] delivery dates, commencing in January, 2006, for
     the delivery of the [****] quantity of Products set forth therein in [****]
     quantities. For each subsequent [****] in the Term, Customer shall issue a
     Blanket Purchase Order in similar form, except the [****] quantity stated
     in such Blanket Purchase Order shall be delivered in [****] deliveries on
     the delivery dates set forth therein, by not later than [****] of the
     then-current [****]. In the event such an [****] Blanket Purchase Order is
     not timely issued hereunder for any [****] during the initial [****] Term,
     Customer shall be deemed to have issued a Blanket Purchase Order for the
     corresponding minimum [****] quantity of Products for such year set forth
     in Attachment 2, to be delivered in [****] shipments by SGSIL.

3.   QUANTITIES.

3.1  Subject to the minimum quantity of Products to be purchased by Customer
     during [****] as specified in Attachment 2, and the maximum quantities of
     Products to be purchased by Customer stated therein, the quantity of
     Products purchased by Customer under this Agreement shall be the quantities
     set forth in each [****] Blanket Purchase Order issued in accordance with
     Section 2.3. For subsequent years during the term of this agreement, the
     Parties will agree to a minimum and target amount of product to be
     delivered, but in no case will the minimum and target quantities be less
     than those listed in 2008, unless mutually agreed to by the Parties.

4.   PRODUCT PRICING & PAYMENT TERMS.

4.1  The price of the Products during the term of this Agreement will be the
     lesser of (i) [****] By [****] the Parties mean the [****] All prices set
     forth herein do not include freight, insurance, sales or value added tax,
     customs duties, or like charges which will be billed to Customer if SGSIL
     advances them.


                                      -2-



4.2  In the event the Parties cannot agree on [****] Product pricing by [****]
     of the immediately preceding calendar year, then Parties shall submit the
     issue to binding determination of the applicable price in accordance with
     Section 4.1, and the price determined by the arbitration shall be used for
     the Products for such [****]. The determination shall be done by an expert
     on the solar energy sector, to be appointed [****] and shall follow such
     procedural rules as the Parties agree on with the determinator.

4.3  Customer shall pay SGSIL the full price, in U.S. dollars, of all Products
     purchased under this Agreement by paying SGSIL the balance, without
     deduction, shown on each [****] invoice issued by SGSIL pursuant to Section
     5.7, by wire transfer in readily available U.S. funds, within [****] after
     the date of such invoice. Interest shall accrue on overdue invoices the
     lesser of [****] or at the maximum rate permitted by applicable law. If
     Customer fails to timely pay an invoice, SGSIL may, in its sole and
     absolute discretion, demand the balance owed on such invoice including
     accrued interest, and/or may stop future deliveries of Products to Customer
     until Customer pays such delinquent invoice. In addition, in the event of a
     dispute regarding payment of amounts due hereunder, the losing Party shall
     pay the prevailing Party's reasonable costs and expenses in such collection
     or defense as the case may be, including reasonable attorneys' fees, costs
     of expert witnesses, costs of translators and any other collection cost or
     cost of suit, whether or not an action or proceeding is commenced or
     concluded.

5.   DELIVERY; INVOICING.

5.1  Products will be purchased by Customer through the issuance of [****]
     Blanket Purchase Orders and any additional Products in excess of the
     quantities stated in such Blanket Purchase Orders will be purchased by
     Customer at the then-current pricing in effect at the time of such purchase
     order, through the issuance by Customer of a separate purchase order, which
     additional purchase order shall not be effective until the quantity and
     requested delivery date(s) set forth in such additional purchase order are
     accepted and confirmed in writing by SGSIL.

5.2  All Products to be purchased hereunder, whether pursuant to a Blanket
     Purchase Order or an additional purchase order, shall be delivered FCA from
     SGSIL's Washington Distribution Facility in Kent, Washington, USA, (the
     "Washington Distribution Facility") to Customer's facility at the location
     specified by Customer in writing, together with the correct documentation
     and adequate packing and labeling as set forth in Attachment 1.

5.3  In accordance with Section 2.3, the initial delivery of Products to be
     shipped to Customer pursuant to this Agreement shall be in January, 2006
     Product quantity amount set forth in Customer's [****] Blanket Purchase
     Order.

5.4  The Products shall be deemed delivered by SGSIL to Customer under the
     then-current Blanket Purchase Order when transferred to Customer's chosen
     carrier at SGSIL's Washington Distribution Facility in Kent, Washington, or
     such other shipping point in the United States of America designated in
     writing by SGSIL. Upon any such delivery of Products to Customer, Customer
     shall have purchased that quantity of Products and shall be obligated to
     pay SGSIL for such Products unless rejected as not conforming to the
     Product Specifications and returned by Customer within [****] of Customer's
     receipt of the Products.

5.5  Title and risk of loss to the Products shall pass to Customer when SGSIL
     delivers the Products to Customer at the Washington Distribution Facility
     in accordance with the terms set forth in Section 5.4.


                                      -3-



5.6  Any [****] order of Products pursuant to the then-current Blanket Purchase
     Order or any additional order of Products during a [****] in excess of the
     amounts stated therein may be confirmed or issued by Customer, as the case
     may be, on Customer's usual order acknowledgment form or purchase order;
     provided, however, the provisions of this Agreement shall govern and
     supersede all inconsistent, different, or additional terms, conditions, and
     instructions contained in Customer's order acknowledgment or purchase order
     form or in any other Customer transactional documentation provided by
     Customer to SGSIL after the effective date of this Agreement.

5.7  Upon SGSIL's shipment of any order under this Agreement, whether a [****]
     delivery under a Blanket Purchase Order or an additional delivery pursuant
     to a separate purchase order, SGSIL shall in writing, sent electronically
     or by facsimile transmission, invoice Customer for such order. All invoices
     issued by SGSIL hereunder shall list the date of each shipment, the
     quantity and type of Products shipped to Customer, the unit and extended
     prices of all Products shipped and the total price owed by Customer for
     such shipment. Upon Customer's receipt of SGSIL's invoice, Customer is
     obligated to pay the amount set forth therein in accordance with Section
     4.3.

5.8  SGSIL shall exercise its commercially reasonable efforts to manufacture and
     deliver from SGSIL's Washington Distribution Facility the Products ordered
     by Customer under this Agreement, on or before the delivery date or dates
     set forth in SGSIL's Blanket Purchase Order or additional purchase order
     confirmation. Any such additional purchase order shall be confirmed by
     SGSIL electronically or by facsimile transmission within [****] of SGSIL's
     receipt of any such additional purchase order. However, without prejudice
     to SGSIL's obligation to exercise its [****] efforts to deliver the
     Products to Customer on any date of delivery given by SGSIL to Customer,
     whether pursuant to an [****] Blanket Purchase Order or a separate
     additional purchase order, SGSIL shall immediately inform Customer in
     writing if any delay is foreseen.

6.   WARRANTY AND LIMITATION OF LIABILITY.

6.1  LIMITED WARRANTY. SGSIL warrants that, for [****] from the date of
     delivery, the Products will conform to SGSIL's published product
     description set forth in the Specifications. If Customer timely notifies
     SGSIL in writing of a nonconformity, upon verification of the
     nonconformity, SGSIL, in its sole discretion, shall provide Customer with
     one of the following remedies: (i) replacement of the Products that SGSIL
     verifies do not conform to this warranty; (ii) retreatment of the Products
     to bring them into conformity with this warranty; or (iii) issuance of a
     credit to Customer's account to reflect the decrease in value of the
     Products resulting from the non-conformance with this warranty. The
     election of remedies provided in this section shall be SGSIL's exclusive
     obligation with respect to remedying any warranty claims for Products and
     Customer's sole and exclusive remedy for all claims of defects. If the
     remedy chosen by SGSIL in its sole discretion hereunder is adjudicated to
     be insufficient, including, without limitation, any finding of failure of
     essential purpose, SGSIL shall be entitled to the alternative remedy of
     refunding the price paid by Customer for such defective Products and SGSIL
     shall have no other liability to Customer for breach of this limited
     warranty. No Products furnished by SGSIL shall be covered by this warranty
     if the claimed defect is due to Customer's failure to properly store,
     maintain, or use the Products in accordance with good industry practices or
     specific recommendations or instructions of SGSIL. ALL OTHER WARRANTIES,
     EXPRESS OR IMPLIED, INCLUDING IMPLIED WARRANTIES OF MERCHANTABILITY OR
     FITNESS FOR ANY PARTICULAR PURPOSE, ARE DISCLAIMED.

6.2  The warranties set forth in Section 6.1 do not extend to any Product that:
     (i) has been subjected to misuse, neglect or abuse not caused by SGSIL,
     (ii) has a defect caused by having been modified or altered by a party
     other than SGSIL, (iii) has a defect caused by a combination with another
     product


                                      -4-



     not supplied or specified by SGSIL, or (iv) has been used in violation of
     the Specifications and/or other approved written instructions furnished to
     Customer by SGSIL prior to the delivery of the Product.

6.3  Customer shall ship a claimed defective Product to SGSIL's designated
     repair location FCA, Customer's location, freight collect. Within [****]
     after receipt of a defective Product, SGSIL shall ship the retreated or
     replacement Product, at SGSIL's expense to Customer's designated location
     (freight prepaid, DDU, Customer's destination). If SGSIL determines that
     the Product is not defective and conforms to the Specifications, SGSIL
     shall ship the non-defective Product to Customer at Customer's expense,
     FCA, SGSIL's designated repair location, freight collect, and Customer
     shall refund all freight, shipping, insurance, customs, duties and other
     charges previously paid by SGSIL in connection with Customer's return of
     the Product. Customer shall include the following information with the
     return of the claimed defective Product: (i) Customer's name and complete
     address, (ii) name(s) and telephone number(s) of Customer's designated
     contact if there are questions regarding the claimed defective Product,
     (iii) the "ship-to" address for the retreated or replacement Product, (iv)
     complete list of all claimed defective Product being returned, and (v)
     nature of each Product's claimed defect or failure.

6.4  LIMITATION OF LIABILITY. In no event shall SGSIL's liability for damages in
     relation to any Products sold to Customer pursuant to this Agreement exceed
     the purchase price paid by Customer for the goods directly having caused
     those damages. In no event shall SGSIL be liable for consequential,
     incidental, special, punitive or exemplary damages. Customer acknowledges
     and agrees that these limitations are reasonable and that such limitations
     have been specifically bargained for between the Parties.

7.   CONFIDENTIALITY.

7.1  "Confidential Information" means any information: (i) disclosed by one
     Party (the "Disclosing Party") to any other Party (the "Receiving Party"),
     which, if in written, graphic, machine-readable or other tangible form is
     marked as "Confidential" or "Proprietary", or which, if disclosed orally or
     by demonstration, is identified at the time of initial disclosure as
     confidential and reduced to writing and marked "Confidential" within [****]
     of such disclosure; or (ii) which is otherwise referred to as Confidential
     Information under this Agreement or any License Agreement.

7.2  Notwithstanding Section 7.1 above, Confidential Information shall exclude
     information that: (i) was independently developed by the Receiving Party
     without using any of the Disclosing Party's Confidential Information; (ii)
     becomes known to the Receiving Party, without restriction, from a source
     other than the Disclosing Party that had a right to disclose it; (iii) was
     in the public domain at the time it was disclosed or becomes in the public
     domain through no act or omission of the Receiving Party; or (iv) was
     rightfully known to the Receiving Party, without restriction, at the time
     of disclosure.

7.3  The Receiving Party shall treat as confidential all of the Disclosing
     Party's Confidential Information and shall not use such Confidential
     Information except as expressly permitted under this Agreement. Without
     limiting the foregoing, the Receiving Party shall use at least the same
     degree of care that it uses to prevent the disclosure of its own
     confidential information of like importance, but in no event with less than
     reasonable care, to prevent the disclosure of the Disclosing Party's
     Confidential Information, subject to Section 7.4 below.

7.4  Notwithstanding anything herein to the contrary, a Receiving Party has the
     right to disclose Confidential Information without the prior written
     consent of the Disclosing Party: (i) as required by


                                      -5-



     any court or other Governmental Authority, or any stock exchange where a
     Party's shares are listed; (ii) as otherwise required by law, or (iii) as
     advisable or required in connection with any government or regulatory
     filings. If a Receiving Party believes that it will be compelled by a court
     or other authority to disclose Confidential Information of the Disclosing
     Party, it shall give the Disclosing Party prompt written notice so that the
     Disclosing Party may take steps to oppose such disclosure.

8.   CAPACITY.

     In the event SGSIL from time to time experiences limited delivery capacity
     as a result of Force Majeure (as defined in Section 9) or as a result of
     demand for Products by Customer in excess of the maximum quantity amounts
     set out in Section 3 and Attachment 2 (a "Limited Capacity Period"), SGSIL
     shall use its [****] efforts to allocate delivery of Products to Customer
     and SGSIL's other customers in proportion to Customer's and other
     customers' relative orders for forecasted amounts of Products and their
     orders for Products in excess of forecasted amounts. Notwithstanding
     anything to the contrary in this Agreement, Customer agrees that such
     [****] efforts by SGSIL shall constitute adequate performance of SGSIL's
     obligations under this Agreement during a Limited Capacity Period.

9.   FORCE MAJEURE.

9.1  Neither party shall be considered in default in the performance of its
     obligations hereunder to the extent that the performance of these
     obligations is prevented or delayed by Force Majeure. The term "Force
     Majeure" is hereby defined as the following: acts of God; plant accidents;
     strikes; lockouts or other similar industrial disturbances; acts of public
     enemies; orders or restraints of any kind from any Governmental Authority
     (except when such governmental action results from a Party's failure or
     refusal to comply with any applicable law, rule or regulation); acts of
     terrorism; war, insurrection or riots; earthquakes, fires, storms or other
     natural disasters.

9.2  In case of Force Majeure according to Section 9.1 either party shall
     promptly notify the other party and shall use its [****] efforts to
     minimize the consequences.

9.3  For the duration and to the extent of Force Majeure, the Parties will be
     released from their obligations under this Agreement. The Term shall be
     extended for an amount of time equal to the period during which the Parties
     were released from their obligations under this Agreement.

10.  SUSPENSION OF PERFORMANCE - TERMINATION.

10.1 This Agreement may terminate in the event that the parties mutually agree
     in writing to terminate this Agreement (subject to the Master Joint Venture
     Agreement).

     Either Party may suspend its performance under this Agreement for a
     material breach or default of any of the terms, conditions or covenants of
     this Agreement by the other, provided that such suspension of performance
     may be made only following written notice of such breach with reference to
     this Section 10.1 and the expiration of a [****] period during which period
     the other party has failed to cure such breach after such notice. Such
     suspension of performance shall not affect any delivery under a Blanket
     Purchase Order for a delivery date that is prior to the date of suspension
     of performance or an additional purchase order accepted by SGSIL prior to
     the date of suspension of performance. The suspension of performance shall
     not prejudice the rights or liabilities of the Parties with respect to
     Product sold, or any indebtedness then owing by either party to the other.


                                      -6-



     No single instance of suspension of performance may exceed [****], nor must
     performance be suspended by one Party more than [****] in any [****] period
     under the Agreement. Should an event occur, that might otherwise give a
     Party the right to suspend performance had it not already done so [****] in
     the last [****], the Party may instead elect to terminate the Agreement
     according to the rules of article 10.2 to the extent these are applicable.

10.2 Either Party may terminate this Agreement, effective immediately, without
     liability for said termination, upon written notice to the other Party, if
     any of the following events occur:

     (i)  The other files a voluntary petition in bankruptcy or is adjudged
          bankrupt;

     (ii) A court assumes jurisdiction of the assets of the other under a
          federal reorganization act;

     (iii) A trustee or receiver is appointed by a court for all or a
          substantial portion of the assets of the other;

     (iv) The other becomes insolvent or suspends its business;

     (v)  The other makes an assignment of its assets for the benefit of its
          creditors, except as required in the ordinary course of business; or

     Notwithstanding the generality of the foregoing, the Parties agree that in
     the event of a termination by SGSIL pursuant to this Section 10.2, such
     termination shall also automatically terminate the then-current Blanket
     Purchase Order, and any deliveries thereunder, and any additional purchase
     orders received from Customer, and SGSIL shall have no obligation to
     deliver Products pursuant to any such terminated Blanket Purchase Order or
     additional purchase order.

11.  MISCELLANEOUS.

11.1 Other than as expressly otherwise provided herein, this Agreement shall not
     be assignable or otherwise transferable by any Party hereto without the
     prior written consent of all the other parties hereto, and any purported
     assignment or other transfer without such consent shall be void and
     unenforceable; provided, however, that any Party may assign this Agreement:

     (a)  to any of its Affiliates so long as it will be made at the same time
          as a transfer of its Shares to such Affiliate specifically permitted
          by the Master Joint Venture Agreement;

     (b)  in connection with the sale by a Party of all of the Shares
          beneficially owned by such Party as specifically provided by the
          Master Joint Venture Agreement, including by way of the Change of
          Control of such Party.

     (c)  For the avoidance of doubt, neither Party shall be obligated to obtain
          the consent of the other Party (under this Section 11.1) solely by
          virtue of a Change of Control of such Party.

11.2 In the event any provision of this Agreement shall be declared
     unenforceable or invalid by a legal authority having jurisdiction over the
     Agreement and the Parties, the validity of the remaining provisions shall
     not in any way be affected or impaired thereby. The Parties shall in good
     faith work together toward replacing the ineffective or invalid provisions
     with valid provisions, which fulfill the economic purpose of the
     ineffective or invalid provision.


                                      -7-



11.3 Any amendment, addition, deletion, alteration or change of this Agreement
     shall only be valid if in writing and executed by each of the Parties. The
     following listed documents shall be the only documents attached to this
     Supply Agreement:

     [ ]  Attachment 1 - Specifications

     [ ]  Attachment 2 - Supply Forecasts, Minimum and Maximum [****]
          Quantities, Pricing and Product Mix

     [ ]  Attachment 3 - Addresses and Contact Persons

     [ ]  Attachment 4 - Blanket Purchase Order

11.4 This Agreement shall be null and void, and SGIL shall have no obligations
     whatsoever hereunder, unless the parties thereto sign and execute the
     Master Joint Venture Agreement, on the date indicated, in such a way as to
     give it full legal effect under German law, including, but not limited to,
     notarising it. Furthermore, no obligations shall be binding for SGIL until
     such a time as the initial share transfer regulated by the Master Joint
     Venture Agreement article 2.2 (a) and (b) have been completed according to
     the further regulation of the Master Joint Venture Agreement article 2.2
     (d).

12.  TERM.

     Except as otherwise extended pursuant to a force majeure under Section 9.3,
     or earlier terminated pursuant to Section 4.2 or Section 10, this Agreement
     will be effective on the date executed by both of the Parties and will
     endure for an initial period of seven (7) years and, thereafter, shall be
     automatically extended for consecutive periods of one year, unless either
     Party provides to the other Party written notice of its intent to terminate
     this Agreement as of the next occurring expiration date, which notice shall
     be given not less than [****] prior to such expiration date. The initial
     seven (7) year term of this Agreement, and any extensions thereof pursuant
     to this Section 12 shall be referred to herein as the "Term."

13.  APPLICABLE LAW.

     The law applicable to this Agreement is set forth in Section 16.

14.  NOTICES.

     All notices called for under this Agreement shall be in writing. Notice
     shall be deemed effective if sent registered mail to the address listed in
     Attachment 3 or to such other address as either party may, from time to
     time, by written notice provide to the other Party. Notice shall also be
     effective if actually received by any method that produces a hard copy
     record, including facsimile transmissions and e-mail with confirmation of
     receipt.

15.  GOVERNING LANGUAGE.

     The parties hereby confirm that they have agreed that all written documents
     between them shall be prepared in the English language only and such
     language shall be the governing language.

16.  DISPUTE RESOLUTION.

     All disputes arising in connection with this Agreement or its validity or
     any agreement provided herein which cannot be resolved by mutual agreement
     of the Parties shall be finally settled in accordance with the Arbitration
     Rules of the German Institution of Arbitration e.V. (DIS) without recourse
     to the ordinary courts of law (except for challenges to the validity of
     shareholder resolutions


                                      -8-



     which shall be submitted to the competent courts). The place of arbitration
     is Berlin, Germany. The arbitral tribunal consists of three arbitrators.
     The arbitrators must be capable of being appointed a judge in accordance
     with the relevant German legal rules. The substantive law of the Federal
     Republic of Germany is applicable to the dispute. The language of the
     arbitral proceedings is English.

17.  PATENT INDEMNITY.

     SGSIL warrants that the sale or use of the Products does not infringe or
     misappropriate any third party's patents, trademarks, trade secrets or
     other proprietary rights (collectively, "PROPRIETARY RIGHTS"). SGSIL will
     hold Customer harmless from all costs, losses, damages and liability which
     may be awarded against Customer on account of the infringement of such
     third party's Proprietary Rights by the Products, provided SGSIL is given
     prompt notice by Customer of any pending or threatened infringement claim
     and is allowed to control the defense and settlement of any such claim.
     SGSIL shall have the right to settle any such infringement claim on the
     terms and conditions it deems advisable. SGSIL shall not be liable for any
     infringement claims or costs or damages incurred as a result of any suit or
     proceeding based upon a claim that: (i) the infringement was caused by a
     combination of the PRODUCT with another product not supplied by SGSIL or
     which other product was specified by Customer and not otherwise provided by
     SGSIL, where the Product otherwise does not infringe or (ii) if the PRODUCT
     was modified after delivery to Customer, where the unmodified Product does
     not infringe.

18.  COMPLIANCE WITH FOREIGN LAWS.

     Customer shall obtain all licenses, permits and approvals required by any
     United States law or regulation with respect to the export of the Products
     to Customer's facility in Germany under this Agreement. Subject to Section
     19, Customer agrees that, after the Products arrive at Customer's facility,
     Customer will not re-export the Products except in compliance with United
     States export laws and regulations. Customer shall be responsible for
     formal compliance with those export laws and regulations. In addition,
     Customer expressly assumes responsibility for determining the need for and
     obtaining import licenses, currency exchange approvals and any other
     governmental approvals that may be necessary to permit the import of the
     Products into Germany. Customer is responsible for full compliance with all
     applicable laws or regulations in countries other than the United States
     concerning the export, sales or use of the Customer products incorporating
     the Products sold hereunder. Customer will indemnify and hold SGSIL
     harmless from any costs, liabilities or damages that result from any
     failure by Customer to comply with such laws.

19.  USE OF PRODUCTS.

     Customer agrees that the Products sold and delivered to Customer hereunder
     are to be used solely for use in Customer's own photovoltaic products and
     are not to be resold or used by Customer for any other purpose or in any
     other manner whatsoever.

20.  QUESTIONABLE PAYMENTS.

     Customer shall at all times comply, and shall cause its directors,
     officers, employees and agents to abide by and comply, in all respects,
     with the United States Foreign Corrupt Practices Act (15 U.S.C. Sections
     78dd-1, 78dd 2, 78dd-3 and 78m, as amended) and all United States
     governmental agency regulations applying or interpreting said Act and, to
     the extent applicable in any non-U.S. jurisdiction, with the Convention on
     Combating Bribery of Foreign Public Officials in International Business
     Transactions (Dec. 18, 1997, 37 I.L.M 1 (1998), and/or the European Union
     Convention on the Fight Against Corruption Involving Officials of the
     European Communities or Officials of the


                                      -9-



     Member States of the European Union (O.J. No. C195, 25.06.1997, May 26,
     1997), or any similar treaty, convention, law or regulation applicable in
     the jurisdiction in question.

IN WITNESS WHEREOF, SGSIL and Customer have caused this Agreement to be executed
by their duly authorized officer or representative, as of the date and year set
forth below.

SOLAR GRADE SILICON LLC                 EVERQ GMBH


BY:                                     BY:
    ---------------------------------       ------------------------------------
PRINT NAME:                             PRINT NAME:
           --------------------------               ----------------------------
ITS:                                    ITS:
     --------------------------------        -----------------------------------
DATE:                                   DATE:
      -------------------------------         ----------------------------------


                                      -10-



ATTACHMENT 1 - SPECIFICATIONS

                 TO SUPPLY AGREEMENT BETWEEN SGSIL AND CUSTOMER

See attached Specifications of each Product listed below, as previously sent to
Customer electronically in PDF Format, and as hereafter amended, from time to
time, by mutual agreement of the Parties in accordance with the Agreement:

PRODUCTS:

Either:

[****]


                                      -11-



           ATTACHMENT 2 - SUPPLY FORECASTS, MINIMUM AND MAXIMUM [****]
                       QUANTITIES, PRICING AND PRODUCT MIX
                 TO SUPPLY AGREEMENT BETWEEN SGSIL AND CUSTOMER

[****]


                                      -12-



                  ATTACHMENT 3 - ADDRESSES AND CONTACT PERSONS
                 TO SUPPLY AGREEMENT BETWEEN SGSIL AND CUSTOMER



                   SGSIL                                      CUSTOMER
- -------------------------------------------   ----------------------------------------
                                           
CONTRACT HOLDER:                              CONTRACT HOLDER:
Goran Bye, CEO                                Shall be provided by Customer in Writing
Solar Grade Silicon LLC
3322 Road, "N" N.E.,
Moses Lake, Washington 98837, USA

CONTRACT MANAGER:                             CONTRACT MANAGER:
Kurt Levens, Director of Sales & Marketing    Shall be provided by Customer in Writing

CONTRACT ADMINISTRATOR:                       CONTRACT ADMINISTRATOR:
Ms. Sharon Palmerton                          Shall be provided by Customer in Writing



                                      -13-



                      ATTACHMENT 4 - BLANKET PURCHASE ORDER


                                      -14-

EX-12.1

                                                                    EXHIBIT 12.1

                              EVERGREEN SOLAR INC.

                COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

                                 (IN THOUSANDS)



                                               ------------------------------------------------------------------
                                                  2001          2002          2003          2004          2005
                                               ----------    ----------    ----------    ----------    ----------
                                                                                        
Net loss                                       $ (12,477)    $ (13,199)    $ (14,974)    $ (19,363)    $ (17,316)

  Fixed charges:
    Interest portion of operating lease (A)          206           159           162           210           223
    Debt interest                                      -             -             -            74         2,526
                                               ---------     ---------     ---------     ---------     ---------
  Total fixed charges                                206           159           162           284         2,749
                                               =========     =========     =========     ==========    =========

Net loss less fixed charges                      (12,271)      (13,040)      (14,812)      (19,079)      (14,567)
                                               =========     =========     =========     =========     =========

Ratio of earnings to fixed charges                      (B)           (B)           (B)           (B)           (B)
                                               =========     =========     =========     =========     =========

Supplemental information:
  Additional earnings required to achieve 1:1
    ratio of earnings to fixed charges         $ (12,477)    $ (13,199)    $ (14,974)    $ (19,363)    $ (17,316)
                                               =========     =========     =========     =========     =========


(A)   Represents an approximate interest factor of 1/3 of operating rentals

(B)   Earnings are inadequate to cover fixed charges; additional earnings
      required presented as supplemental information in the above table

EX-23.1

                                                                    Exhibit 23.1


            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (File Nos. 333-53374, 333-105963 and 333-127025) and Form
S-3 (File Nos. 333-106126, 333-117264, 333-119864 and 333-128074) of Evergreen
Solar, Inc. of our report dated March 16, 2006 relating to the financial
statements, financial statement schedule, management's assessment of the
effectiveness of internal control over financial reporting and the effectiveness
of internal control over financial reporting, which appears in this Form 10-K.


/s/ PricewaterhouseCoopers LLP

Boston, MA
March 16, 2006

EX-31.1

                                                                    EXHIBIT 31.1

                                  CERTIFICATION

I, Richard M. Feldt, certify that:

1.    I have reviewed this Annual Report on Form 10-K of Evergreen Solar, Inc;

2.    Based on my knowledge, this report does not contain any untrue statement
      of a material fact or omit to state a material fact necessary to make the
      statements made, in light of the circumstances under which such statements
      were made, not misleading with respect to the period covered by this
      report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this report, fairly present in all material
      respects the financial condition, results of operations and cash flows of
      the registrant as of, and for, the periods presented in this report;

      4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:

      a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;

      b) designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;

      c) evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and

      d) disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and

      5. The registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):

      a) all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and

      b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.

Date: March 16, 2006                       /s/ Richard M. Feldt
                            ---------------------------------------------------
                                             Richard M. Feldt
                                   Chief Executive Officer and President
                                       (Principal Executive Officer)

EX-31.2

                                                                    EXHIBIT 31.2

                                  CERTIFICATION

I, Donald M. Muir, certify that:

1.    I have reviewed this Annual Report on Form 10-K of Evergreen Solar, Inc;

2.    Based on my knowledge, this report does not contain any untrue statement
      of a material fact or omit to state a material fact necessary to make the
      statements made, in light of the circumstances under which such statements
      were made, not misleading with respect to the period covered by this
      report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this report, fairly present in all material
      respects the financial condition, results of operations and cash flows of
      the registrant as of, and for, the periods presented in this report;

      4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:

      a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;

      b) designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;

      c) evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and

      d) disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and

      5. The registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):

      a) all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and

      b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.

Date: March 16, 2006                        /s/ Donald M. Muir
                            ----------------------------------------------------
                                              Donald M. Muir
                                 Vice President and Chief Financial Officer
                                       (Principal Financial Officer)

EX-32.1

                                                                    EXHIBIT 32.1

                                  CERTIFICATION
                           PURSUANT TO 18 U.S.C. 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

      I, Richard M. Feldt, Chief Executive Officer of Evergreen Solar, Inc.,
certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that the Annual Report on Form 10-K of Evergreen
Solar, Inc. for the fiscal year ended December 31, 2005 fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934
and that information contained in such Annual Report on Form 10-K fairly
presents, in all material respects, the financial condition and results of
operations of Evergreen Solar, Inc.

Date: March 16, 2006                         /s/ Richard M. Feldt
                              --------------------------------------------------
                                               Richard M. Feldt
                                    Chief Executive Officer and President

      A signed original of this written statement required by Section 906 has
been provided to Evergreen Solar, Inc. and will be retained by Evergreen Solar,
Inc. and furnished to the Securities and Exchange Commission or its staff upon
request.

EX-32.2

                                                                    EXHIBIT 32.2

                                  CERTIFICATION
                           PURSUANT TO 18 U.S.C. 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

      I, Donald M. Muir, Chief Financial Officer of Evergreen Solar, Inc.,
certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that the Annual Report on Form 10-K of Evergreen
Solar, Inc. for the fiscal year ended December 31, 2005 fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934
and that information contained in such Annual Report on Form 10-K fairly
presents, in all material respects, the financial condition and results of
operations of Evergreen Solar, Inc.

Date: March 16, 2006                          /s/ Donald M. Muir
                              --------------------------------------------------
                                                Donald M. Muir
                                  Vice President and Chief Financial Officer

      A signed original of this written statement required by Section 906 has
been provided to Evergreen Solar, Inc. and will be retained by Evergreen Solar,
Inc. and furnished to the Securities and Exchange Commission or its staff upon
request.