Exhibit 10.1
LOAN AND SECURITY AGREEMENT
          THIS LOAN AND SECURITY AGREEMENT (this “Agreement”) dated as of the
Effective Date between SILICON VALLEY BANK, a California corporation with its
principal place of business at 3003 Tasman Drive, Santa Clara, California 95054
and with a loan production office located at One Newton Executive Park,
Suite 200, 2221 Washington Street, Newton, Massachusetts 02462 (“Bank”), and
EVERGREEN SOLAR, INC., a Delaware corporation with offices located at 138
Bartlett Street, Marlborough, Massachusetts 01752 (“Borrower”), provides the
terms on which Bank shall lend to Borrower and Borrower shall repay Bank. The
parties agree as follows:
          1 ACCOUNTING AND OTHER TERMS
          Accounting terms not defined in this Agreement shall be construed
following GAAP. Calculations and determinations must be made following GAAP.
Capitalized terms not otherwise defined in this Agreement shall have the
meanings set forth in Section 13. All other terms contained in this Agreement,
unless otherwise indicated, shall have the meaning provided by the Code to the
extent such terms are defined therein.
          2 LOAN AND TERMS OF PAYMENT
     2.1 Promise to Pay. Borrower hereby unconditionally promises to pay Bank
the outstanding principal amount of all Credit Extensions and accrued and unpaid
interest thereon as and when due in accordance with this Agreement.
          2.1.1 Revolving Advances.
               (a) Availability. Subject to the terms and conditions of this
Agreement and to deduction of Reserves, Bank will make Advances to Borrower up
to the Availability Amount. Amounts borrowed under the Revolving Line may be
repaid, and prior to the Revolving Line Maturity Date, reborrowed, subject to
the applicable terms and conditions precedent herein.
               (b) Termination; Repayment. The Revolving Line terminates on the
Revolving Line Maturity Date, when the principal amount of all Advances, the
unpaid interest thereon, and all other Obligations relating to the Revolving
Line shall be immediately due and payable.
          2.1.2 Letters of Credit Sublimit.
               (a) As part of the Revolving Line and subject to deduction of
Reserves, Bank shall issue or have issued Letters of Credit for Borrower’s
account. The face amount of outstanding Letters of Credit (including drawn but
unreimbursed Letters of Credit (but excluding any amounts drawn and reimbursed)
and any Letter of Credit Reserve) may not exceed Ten Million Dollars
($10,000,000) inclusive of Credit Extensions relating to Sections 2.1.3 and
2.1.4. Such aggregate amounts utilized hereunder shall at all times reduce the
amount otherwise available for Advances under the Revolving Line. If, on the
Revolving Line Maturity Date, there are any outstanding Letters of Credit, then
on such date Borrower shall provide to Bank cash collateral in an amount equal
to 105% of the face amount of all such Letters of Credit plus all interest,
fees, and costs due or to become due in connection therewith (as estimated by
Bank in its reasonable discretion), to secure all of the Obligations relating to
said Letters of Credit. All Letters of Credit shall be in form and substance
acceptable to Bank in its sole discretion and shall be subject to the terms and
conditions of Bank’s standard Application and Letter of Credit Agreement (the
“Letter of Credit Application”). Borrower agrees to execute any further
documentation in connection with the Letters of Credit as Bank may reasonably
request. Borrower further agrees to be bound by the regulations of the issuer of
any Letters of Credit guarantied by Bank and opened for Borrower’s account or by
Bank’s interpretations of any Letter of Credit issued by Bank for Borrower’s
account, and Borrower understands and agrees that Bank shall not be liable for
any error, negligence, or mistake, whether of omission or commission, in
following Borrower’s instructions or those contained in the Letters of Credit or
any modifications, amendments, or supplements thereto.
               (b) The obligation of Borrower to immediately reimburse Bank for
drawings made under Letters of Credit shall be absolute, unconditional, and
irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement, such Letters of Credit, and the Letter of Credit Application.

 

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               (c) Borrower may request that Bank issue a Letter of Credit
payable in a Foreign Currency. If a demand for payment is made under any such
Letter of Credit, Bank shall treat such demand as an Advance to Borrower of the
equivalent of the amount thereof (plus fees and charges in connection therewith
such as wire, cable, SWIFT or similar charges) in Dollars at the then-prevailing
rate of exchange in San Francisco, California, for sales of the Foreign Currency
for transfer to the country issuing such Foreign Currency.
               (d) To guard against fluctuations in currency exchange rates,
upon the issuance of any Letter of Credit payable in a Foreign Currency, Bank
shall create a reserve (the “Letter of Credit Reserve”) under the Revolving Line
in an amount equal to ten percent (10%) of the face amount of such Letter of
Credit. The amount of the Letter of Credit Reserve may be adjusted by Bank from
time to time to account for fluctuations in the exchange rate. The availability
of funds under the Revolving Line shall be reduced by the amount of such Letter
of Credit Reserve for as long as such Letter of Credit remains outstanding.
          2.1.3 Foreign Exchange Sublimit. As part of the Revolving Line,
Borrower may enter into foreign exchange contracts with Bank under which
Borrower commits to purchase from or sell to Bank a specific amount of Foreign
Currency (each, a “FX Forward Contract”) on a specified date (the “Settlement
Date”). FX Forward Contracts shall have a Settlement Date of at least one (1) FX
Business Day after the contract date and shall be subject to a reserve of ten
percent (10%) of each outstanding FX Forward Contract in a maximum aggregate
amount equal to One Million Dollars ($1,000,000) (the “FX Reserve”). The
aggregate amount of FX Forward Contracts at any one time plus Credit Extensions
made pursuant to Sections 2.1.2 and 2.1.4 may not exceed ten (10) times the
amount of the FX Reserve. Any amounts needed to fully reimburse Bank will be
treated as Advances under the Revolving Line and will accrue interest at the
interest rate applicable to Advances.
          2.1.4 Cash Management Services Sublimit. Borrower may use up to Ten
Million Dollars ($10,000,000) inclusive of Credit Extensions relating to
Sections 2.1.2 and 2.1.3 (the “Cash Management Services Sublimit”) of the
Revolving Line for Bank’s cash management services which may include merchant
services, direct deposit of payroll, business credit card, and check cashing
services identified in Bank’s various cash management services agreements
(collectively, the “Cash Management Services”). The dollar amount of any Cash
Management Services provided under this sublimit will reduce the amount
otherwise available under the Revolving Line. Any amounts used or reserved by
Borrower for any Cash Management Services will reduce the amount otherwise
available for Credit Extensions under the Revolving Line. Any amounts Bank pays
on behalf of Borrower for any Cash Management Services will be treated as
Advances under the Revolving Line and will accrue interest at the interest rate
applicable to Advances.
     2.2 Overadvances. If, at any time the sum of (a) the outstanding amount of
any Advances (including any amounts used for Cash Management Services) plus
(b) the face amount of any outstanding Letters of Credit (including drawn but
unreimbursed Letters of Credit and any Letter of Credit Reserve, plus (c) the FX
Reserve exceeds the lesser of either the Revolving Line or the Borrowing Base
(such excess amount being an “Overadvance”), Borrower shall immediately pay to
Bank in cash such Overadvance. Without limiting Borrower’s obligation to repay
Bank any amount of the Overadvance, Borrower agrees to pay Bank interest on the
outstanding amount of any Overadvance, on demand, at the Default Rate.
     2.3 Payment of Interest on the Credit Extensions.
               (a) Advances. Subject to Section 2.3(b), each Advance shall bear
interest on the outstanding principal amount thereof from the date when made,
continued or converted until paid in full at a rate per annum equal to the Prime
Rate plus the applicable Prime Rate Margin (as such term is defined in the LIBOR
Supplement) or the LIBOR Rate plus the applicable LIBOR Rate Margin (as such
term is defined in the LIBOR Supplement), as the case may be. Pursuant to the
terms hereof, interest on each Advance shall be paid in arrears on each Interest
Payment Date. Interest shall also be paid on the date of any prepayment of any
Advance pursuant to the Loan Agreement for the portion of any Advance so prepaid
and upon payment (including prepayment) in full thereof. All accrued but unpaid
interest on the Advances shall be due and payable on the Revolving Line Maturity
Date.
               (b) Default Rate. Immediately upon the occurrence and during the
continuance of an Event of Default, Obligations shall bear interest at a rate
per annum which is four percentage points (4.00%) above the rate effective
immediately before the Event of Default (the “Default Rate”). Payment or
acceptance of the increased interest rate provided in this Section 2.3(b) is not
a permitted alternative to timely payment and shall not constitute a waiver of
any Event of Default or otherwise prejudice or limit any rights or remedies of
Bank.

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               (c) Prime Rate Advances. Each change in the interest rate of the
Prime Rate Advances based on changes in the Prime Rate shall be effective on the
effective date of such change and to the extent of such change. Bank shall use
its best efforts to give Borrower prompt notice of any such change in the Prime
Rate; provided, however, that any failure by Bank to provide Borrower with
notice hereunder shall not affect Bank’s right to make changes in the interest
rate of the Prime Rate Advances based on changes in the Prime Rate.
               (d) LIBOR Advances. The interest rate applicable to each LIBOR
Advance shall be determined in accordance with Section 5(a) of the LIBOR
Supplement. Subject to Sections 5 and 6 of the LIBOR Supplement, such rate shall
apply during the entire Interest Period applicable to such LIBOR Advance, and
interest calculated thereon shall be payable on the Interest Payment Date
applicable to such LIBOR Advance.
               (e) Computation of Interest. Interest on the Credit Extensions
and all fees payable hereunder shall be computed on the basis of a 360-day year
and the actual number of days elapsed in the period during which such interest
accrues. In computing interest on any Credit Extension, the date of the making
of such Credit Extension shall be included and the date of payment shall be
excluded; provided, however, that if any Credit Extension is repaid on the same
day on which it is made, such day shall be included in computing interest on
such Credit Extension.
               (f) Debit of Accounts. Bank may debit any of Borrower’s deposit
accounts, including the Designated Deposit Account, for principal and interest
payments or any other amounts Borrower owes Bank when due. These debits shall
not constitute a set-off.
               (g) Payment; Interest Computation; Float Charge. Interest is
payable monthly on the last calendar day of each month. In computing interest on
the Obligations, all Payments received after 12:00 p.m. Pacific time on any day
shall be deemed received on the next Business Day. In addition, so long as any
principal or interest with respect to Credit Extensions remains outstanding,
Bank shall be entitled to charge Borrower a “float” charge in an amount equal to
two (2) Business Days interest, at the interest rate applicable to the Advances,
on all Payments received by Bank. The float charge for each month shall be
payable on the last day of the month. Bank shall not, however, be required to
credit Borrower’s account for the amount of any item of payment which is
unsatisfactory to Bank in its reasonable discretion, and Bank may charge
Borrower’s Designated Deposit Account for the amount of any item of payment
which is returned to Bank unpaid.
     2.4 Fees. Borrower shall pay to Bank:
               (a) Commitment Fee. A fully earned, non-refundable commitment fee
of Three Hundred Fifty Thousand Dollars ($350,000), payable on the Effective
Date;
               (b) Anniversary Fee. A fully earned, non-refundable anniversary
fee of Two Hundred Thousand Dollars ($200,000), payable on the first anniversary
of the Effective Date;
               (c) Letter of Credit Fee. Bank’s customary fees and expenses for
the issuance or renewal of Letters of Credit, upon the issuance or renewal of
such Letter of Credit by Bank;
               (d) Termination Fee. In accordance with the terms of
Section 12.1, a termination fee;
               (e) Unused Revolving Line Facility Fee. A fee (the “Unused
Revolving Line Facility Fee”), payable monthly, in arrears, on the last day of
each month, in an amount equal to one-half of one percent (0.50%) per annum of
the average unused portion of the Revolving Line in the applicable monthly
period, as determined by Bank. The unused portion of the Revolving Line, for the
purposes of this calculation, shall exclude any amounts reserved under the Cash
Management Services Sublimit for products provided and any amounts reserved
under the Foreign Exchange Sublimit for FX Forward Contracts. Borrower shall not
be entitled to any credit, rebate or repayment of any Unused Revolving Line
Facility Fee previously earned by Bank pursuant to this Section 2.4(e)
notwithstanding any termination of the Agreement or the suspension or
termination of Bank’s obligation to make loans and advances hereunder; and
               (f) Bank Expenses. All Bank Expenses (including documented
reasonable attorneys’ fees and expenses for documentation and negotiation of
this Agreement) incurred through and after the Effective Date, when due.

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          3 CONDITIONS OF LOANS
     3.1 Conditions Precedent to Initial Credit Extension. Bank’s obligation to
make the initial Credit Extension is subject to the condition precedent that
Bank shall have received, in form and substance satisfactory to Bank, such
documents, and completion of such other matters, as Bank may reasonably deem
necessary or appropriate, including, without limitation:
               (a) Borrower shall have delivered duly executed original
signatures to the Loan Documents to which it is a party;
               (b) Borrower shall have delivered duly executed original
signatures to the Control Agreements;
               (c) Borrower shall have delivered its Operating Documents and a
good standing certificate of Borrower certified by the Secretary of State of the
State of Delaware as of a date no earlier than thirty (30) days prior to the
Effective Date;
               (d) Borrower shall have delivered duly executed original
signatures to the completed Borrowing Resolutions for Borrower;
               (e) (Reserved)
               (f) the duly executed original signatures to each Guaranty
Agreement and Guarantor Security Agreement, together with the completed
Borrowing Resolutions for each Guarantor;
               (g) Bank shall have received certified copies, dated as of a
recent date, of financing statement searches, as Bank shall request, accompanied
by written evidence (including any UCC termination statements) that the Liens
indicated in any such financing statements either constitute Permitted Liens or
have been or, in connection with the initial Credit Extension, will be
terminated or released;
               (h) Borrower shall have delivered the Perfection Certificate
executed by Borrower and each Guarantor;
               (i) Borrower shall have delivered a landlord’s consent executed
by each landlord of the Borrower for the locations identified in the Perfection
Certificate, to the extent required by Bank, in favor of Bank;
               (j) Borrower shall have delivered a bailee’s/warehouseman’s
waiver executed by each bailee of Borrower, to the extent required by Bank, in
favor of Bank;
               (k) Borrower shall have delivered a legal opinion of Borrower’s
counsel dated as of the Effective Date together with the duly executed original
signatures thereto;
               (l) Borrower shall have delivered evidence satisfactory to Bank
that the insurance policies required by Section 6.7 hereof are in full force and
effect, together with appropriate evidence showing loss payable and/or
additional insured clauses or endorsements in favor of Bank;
               (m) the completion of the Initial Audit sixty (60) days prior to
the initial Credit Extension, with results satisfactory to Bank in its sole and
absolute discretion; and
               (n) Borrower shall have paid the fees and Bank Expenses then due
as specified in Section 2.4 hereof.
     3.2 Conditions Precedent to all Credit Extensions. Bank’s obligations to
make each Credit Extension, including the initial Credit Extension, is subject
to the following:
               (a) Other than during a Streamline Period, timely receipt of an
executed Transaction Report;
               (b) the representations and warranties in Section 5 shall be true
in all material respects on the date of the Transaction Report and on the
Funding Date of each Credit Extension; provided, however, that such

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materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in
all material respects as of such date, and no Default or Event of Default shall
have occurred and be continuing or result from the Credit Extension. Each Credit
Extension is Borrower’s representation and warranty on that date that the
representations and warranties in Section 5 are true in all material respects as
of such date; provided, however, that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or
modified by materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such date; and
               (c) in Bank’s reasonable discretion, there has not been a
Material Adverse Change.
     3.3 Covenant to Deliver.
          Borrower agrees to deliver to Bank each item required to be delivered
to Bank under this Agreement as a condition to any Credit Extension. Borrower
expressly agrees that the extension of a Credit Extension prior to the receipt
by Bank of any such item shall not constitute a waiver by Bank of Borrower’s
obligation to deliver such item, and any such extension in the absence of a
required item shall be in Bank’s sole discretion.
     3.4 Procedures for Borrowing. In addition to and supplemental of the
requirements set forth in Section 3 the LIBOR Supplement and specifically
incorporated by reference herein, subject to the prior satisfaction of all other
applicable conditions to the making of an Advance set forth in this Agreement,
to obtain an Advance (other than Advances under Sections 2.1.2 or 2.1.4),
Borrower shall notify Bank (which notice shall be irrevocable) by electronic
mail, facsimile, or telephone by 12:00 p.m. Pacific time on the Funding Date of
the Advance. Together with such notification, Borrower must promptly deliver to
Bank by electronic mail or facsimile a completed Transaction Report executed by
a Responsible Officer or his or her designee. Bank shall credit Advances to the
Designated Deposit Account. Bank may make Advances under this Agreement based on
instructions from a Responsible Officer or his or her designee or without
instructions if the Advances are necessary to meet Obligations which have become
due. Bank may rely on any telephone notice given by a person whom Bank
reasonably believes is a Responsible Officer or designee.
          4 CREATION OF SECURITY INTEREST
     4.1 Grant of Security Interest. Borrower hereby grants Bank, to secure the
payment and performance in full of all of the Obligations, a continuing security
interest in, and pledges to Bank, the Collateral, wherever located, whether now
owned or hereafter acquired or arising, and all proceeds and products thereof.
Borrower represents, warrants, and covenants that the security interest granted
herein is and shall at all times continue to be a first priority perfected
security interest in the Collateral (subject only to Permitted Liens that may
have superior priority to Bank’s Lien under this Agreement). If Borrower shall
acquire a commercial tort claim, Borrower shall promptly notify Bank in a
writing signed by Borrower of the general details thereof and grant to Bank in
such writing a security interest therein and in the proceeds thereof, all upon
the terms of this Agreement, with such writing to be in form and substance
reasonably satisfactory to Bank. If this Agreement is terminated, upon payment
in full in cash of the Obligations (other than inchoate indemnity obligations)
and at such time as Bank’s obligation to make Credit Extensions has terminated,
Bank shall, at Borrower’s sole cost and expense, release its Liens in the
Collateral and all rights therein shall revert to Borrower.
     4.2 Authorization to File Financing Statements. Borrower hereby authorizes
Bank to file financing statements, without notice to Borrower, with all
appropriate jurisdictions to perfect or protect Bank’s interest or rights
hereunder, including a notice that any disposition of the Collateral, by either
Borrower or any other Person, shall be deemed to violate the rights of Bank
under the Code. Without limiting the foregoing, Borrower hereby authorizes Bank
to file financing statements which describe the collateral as “all assets”
and/or “all personal property” of Borrower or words of similar import.
          5 REPRESENTATIONS AND WARRANTIES
               Borrower represents and warrants as follows:
     5.1 Due Organization and Authorization. Borrower, each of its Subsidiaries,
if any, and each Guarantor are duly existing and in good standing as Registered
Organizations in their respective jurisdictions of

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formation and are qualified and licensed to do business and are in good standing
in any jurisdiction in which the conduct of their business or their ownership of
property requires that they be qualified except where the failure to do so could
not reasonably be expected to have a material adverse effect on Borrower’s
business. In connection with this Agreement, Borrower and each Guarantor has
delivered to Bank a completed certificate substantially in the form provided by
Bank prior to the effective date, signed by Borrower, each entitled “Perfection
Certificate”. Borrower represents and warrants to Bank that (a) Borrower’s and
each Guarantor’s exact legal name is that indicated on each respective
Perfection Certificate and on the signature page thereof; (b) Borrower and each
Guarantor is an organization of the type and is organized in the jurisdiction
set forth in each respective Perfection Certificate; (c) each Perfection
Certificate accurately sets forth Borrower’s or Guarantors’, as the case may be,
organizational identification number or accurately states that Borrower or such
Guarantor has none; (d) each Perfection Certificate accurately sets forth
Borrower’s and each Guarantor’s respective place of business, or, if more than
one, each chief executive office as well as Borrower’s and Guarantor’s
respective mailing address (if different than its chief executive office);
(e) Borrower and each Guarantor (and each respective predecessor) has not, in
the past five (5) years, changed its jurisdiction of formation, organizational
structure or type, or any organizational number assigned by its jurisdiction;
and (f) all other information set forth on the Perfection Certificate pertaining
to Borrower and each of its Subsidiaries and each Guarantor is accurate and
complete in all material respects. If Borrower or any Guarantor is not now a
Registered Organization but later becomes one, Borrower or such Guarantor shall
promptly notify Bank of such occurrence and provide Bank with Borrower’s or such
Guarantor’s organizational identification number.
          The execution, delivery and performance of the Loan Documents have
been duly authorized, and do not conflict with Borrower’s or any Guarantor’s
organizational documents, nor constitute an event of default under any material
agreement by which Borrower or any Guarantor is bound. Neither Borrower nor any
Guarantor is in default under any agreement to which either is a party or by
which either is bound in which the default could have a material adverse effect
on Borrower’s business.
     5.2 Collateral. Borrower has good title to or has rights in, and the power
to transfer each item of Collateral upon which it purports to grant a Lien
hereunder, free and clear of any and all Liens except Permitted Liens. Borrower
has no deposit accounts other than the deposit accounts with Bank and deposit
accounts described in the Perfection Certificate delivered to Bank in connection
herewith.
          The Collateral is not in the possession of any third party bailee
(such as a warehouse) except as otherwise provided in the Perfection
Certificate. None of the components of the Collateral shall be maintained at
locations other than as provided in the Perfection Certificate. In the event
that Borrower or Guarantor, after the date hereof, intend to store or otherwise
deliver any portion of the Collateral in excess of Two Hundred Fifty Thousand
Dollars ($250,000) per location or in the aggregate to a bailee, then such
Borrower or Guarantor, as applicable, will first receive the written consent of
Bank and such bailee must execute and deliver a bailee agreement in form and
substance satisfactory to Bank in its sole discretion.
          All Inventory is in all material respects of good and marketable
quality, free from material defects.
          Borrower is the sole owner of its intellectual property, except for
non-exclusive licenses granted to its customers in the ordinary course of
business. To the Borrower’s knowledge, each patent is valid and enforceable, no
part of the intellectual property has been judged invalid or unenforceable, in
whole or in part, and no claim has been made that any part of the Intellectual
Property violates the rights of any third party.
          Except for over-the-counter software and as otherwise set forth on
Schedule 1 annexed hereto, Borrower is not a party to, nor is bound by, any
license or other agreement with respect to which Borrower is the licensee that
prohibits or otherwise restricts Borrower from granting a security interest in
Borrower’s interest in such license or agreement or any other property. Borrower
shall provide written notice to Bank within twenty (20) days of entering or
becoming bound by any such license or agreement which is reasonably likely to
have a material impact on Borrower’s business or financial condition (other than
over-the-counter software that is commercially available to the public).
     5.3 Accounts Receivable.
               (a) For each Account with respect to which Advances are
requested, on the date each Advance is requested and made, each such Account is
an Eligible Account or an Eligible Foreign Account.

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               (b) All statements made and all unpaid balances appearing in all
invoices, instruments and other documents evidencing the Accounts are and shall
be true and correct and all such invoices, instruments and other documents, and
all of Borrower’s Books are genuine and in all respects what they purport to be.
All sales and other transactions underlying or giving rise to each Account shall
comply in all material respects with all applicable laws and governmental rules
and regulations. Borrower has no knowledge of any actual or imminent Insolvency
Proceeding of any Account Debtor whose accounts are Eligible Accounts or
Eligible Foreign Accounts in any Borrowing Base Certificate. To the best of
Borrower’s knowledge, all signatures and endorsements on all documents,
instruments, and agreements relating to all Accounts are genuine, and all such
documents, instruments and agreements are legally enforceable in accordance with
their terms, except as enforcement may be limited by equitable principles or by
bankruptcy, insolvency or similar laws relating to creditors’ rights generally.
     5.4 Litigation. Except as disclosed in the Perfection Certificate, there
are no actions or proceedings pending or, to the knowledge of the Responsible
Officers, threatened in writing by or against Borrower or any of its
Subsidiaries involving more than Five Hundred Thousand Dollars ($500,000).
     5.5 No Material Deviation in Financial Statements. All consolidated
financial statements for Borrower and any of its Subsidiaries delivered to Bank
fairly present in all material respects Borrower’s consolidated financial
condition and Borrower’s consolidated results of operations as of the date
hereof. There has not been any material deterioration in Borrower’s consolidated
financial condition since the date of the most recent financial statements
submitted to Bank.
     5.6 Solvency. The fair salable value of Borrower’s assets (including
goodwill minus disposition costs) on a going-concern basis exceeds the fair
value of its liabilities; Borrower is not left with unreasonably small capital
after the transactions in this Agreement; and Borrower is able to pay its debts
(including trade debts) as they mature.
     5.7 Regulatory Compliance. Borrower is not an “investment company” or a
company “controlled” by an “investment company” under the Investment Company Act
of 1940. Borrower is not engaged as one of its important activities in extending
credit for margin stock (under Regulations T and U of the Federal Reserve Board
of Governors). Borrower has complied in all material respects with the Federal
Fair Labor Standards Act. Borrower has not violated any laws, ordinances or
rules, the violation of which could reasonably be expected to have a material
adverse effect on its business. None of Borrower’s or any of its Subsidiaries’
properties or assets has been used by Borrower or any Subsidiary or, to the best
of Borrower’s knowledge, by previous Persons, in disposing, producing, storing,
treating, or transporting any hazardous substance other than legally. Borrower
and each of its Subsidiaries have obtained all consents, approvals and
authorizations of, made all declarations or filings with, and given all notices
to, all government authorities that are necessary to continue its business as
currently conducted.
     5.8 Subsidiaries; Investments. Borrower does not own any stock, partnership
interest or other equity securities except for Permitted Investments.
     5.9 Tax Returns and Payments; Pension Contributions. Borrower has timely
filed all required tax returns and reports, and Borrower and its Subsidiaries,
if any, have timely paid all foreign, federal, state and local taxes,
assessments, deposits and contributions owed by Borrower. Borrower may defer
payment of any contested taxes, provided that Borrower (a) in good faith
contests its obligation to pay the taxes by appropriate proceedings promptly and
diligently instituted and conducted, (b) notifies Bank in writing of the
commencement of, and any material development in, the proceedings, (c) posts
bonds or takes any other steps required to prevent the governmental authority
levying such contested taxes from obtaining a Lien upon any of the Collateral
that is other than a “Permitted Lien”. Borrower is unaware of any claims or
adjustments proposed for any of Borrower’s prior tax years which could result in
additional taxes becoming due and payable by Borrower. Borrower has paid all
amounts necessary to fund all present pension, profit sharing and deferred
compensation plans in accordance with their terms, and Borrower has not
withdrawn from participation in, and has not permitted partial or complete
termination of, or permitted the occurrence of any other event with respect to,
any such plan which could reasonably be expected to result in any liability of
Borrower, including any liability to the Pension Benefit Guaranty Corporation or
its successors or any other governmental agency.
     5.10 Use of Proceeds. Borrower shall use the proceeds of the Credit
Extensions solely as working capital and to fund its general business
requirements and not for personal, family, household or agricultural purposes.

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     5.11 Full Disclosure. No written representation, warranty or other
statement of Borrower or any Guarantor in any certificate or written statement
given to Bank, as of the date such representation, warranty, or other statement
was made, taken together with all such written certificates and written
statements given to Bank, contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements contained in the
certificates or statements not misleading in light of the circumstances in which
they were made (it being recognized by Bank that the projections and forecasts
provided by Borrower in good faith and based upon reasonable assumptions are not
viewed as facts and that actual results during the period or periods covered by
such projections and forecasts may differ from the projected or forecasted
results).
          6 AFFIRMATIVE COVENANTS
          Borrower shall do all of the following:
     6.1 Government Compliance. Maintain its and all its Subsidiaries’ legal
existence and good standing in each respective jurisdiction of formation and
maintain qualification in each jurisdiction in which the failure to so qualify
would reasonably be expected to have a material adverse effect on Borrower’s
business or operations. Borrower shall comply, and have each Subsidiary comply,
with all laws, ordinances and regulations to which it is subject, the
noncompliance with which could have a material adverse effect on Borrower’s
business.
     6.2 Financial Statements, Reports, Certificates.
               (a) Borrower shall provide Bank with the following:
               (i) within thirty (30) days after the end of each month, and upon
each request for an Advance, a Transaction Report (including a Borrowing Base
Certificate and all schedules related thereto);
               (ii) within thirty (30) days after the end of each month,
(A) monthly accounts receivable agings, aged by invoice date, (B) monthly
accounts payable agings, aged by invoice date, and outstanding or held check
registers, if any, (C) monthly reconciliations of accounts receivable agings
(aged by invoice date), transaction reports, deferred revenue report and general
ledger, and (D) monthly detailed backlog and perpetual inventory reports for
Inventory valued on a first-in, first-out basis at the lower of cost or market
(in accordance with GAAP) or such other inventory reports as are requested by
Bank in its reasonable discretion;
               (iii) as soon as available, and in any event within thirty
(30) days after the end of each month, monthly unaudited financial statements;
               (iv) within thirty (30) days after the end of each month a
monthly Compliance Certificate signed by a Responsible Officer, certifying that
as of the end of such month, Borrower was in full compliance with all of the
terms and conditions of this Agreement, and setting forth calculations showing
compliance with the financial covenants set forth in this Agreement and such
other information as Bank shall reasonably request;
               (v) as soon as available, and in any event within sixty (60) days
following the end of Borrower’s fiscal year, (A) annual operating budgets
(including income statements, balance sheets and cash flow statements, by month)
for the upcoming fiscal year of Borrower, and (B) annual financial projections
for the following fiscal year (on a quarterly basis) as approved by Borrower’s
board of directors; and
               (vi) as soon as available, and in any event within one hundred
twenty (120) days following the end of Borrower’s fiscal year, annual financial
statements certified by, and with an unqualified opinion of, independent
certified public accountants reasonably acceptable to Bank.
               Notwithstanding the foregoing, during a Streamline Period,
provided no Event of Default has occurred and is continuing, Borrower shall not
be required to provide Bank the reports and schedules required pursuant to
clause (a)(i) and (ii) above.
               (b) In the event that Borrower is or becomes subject to the
reporting requirements under the Securities Exchange Act of 1934, as amended,
within ten (10) days after filing, all reports on Form 10-K, 10-Q and 8-K filed
with the Securities and Exchange Commission or a link thereto on Borrower’s or
another website on the internet; provided that the reports required to be
delivered pursuant to this Section 6.2(b) shall be deemed to have been delivered
on the date on which Borrower posts such report or provides a link thereto on
Borrower’s or another website on the internet.

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     6.3 Accounts Receivable.
               (a) Schedules and Documents Relating to Accounts. Borrower shall
deliver to Bank transaction reports and schedules of collections, as provided in
Section 6.2, on Bank’s standard forms; provided, however, that Borrower’s
failure to execute and deliver the same shall not affect or limit Bank’s Lien
and other rights in all of Borrower’s Accounts, nor shall Bank’s failure to
advance or lend against a specific Account affect or limit Bank’s Lien and other
rights therein. If requested by Bank, Borrower shall furnish Bank with copies
(or, at Bank’s request, originals) of all contracts, orders, invoices, and other
similar documents, and all shipping instructions, delivery receipts, bills of
lading, and other evidence of delivery, for any goods the sale or disposition of
which gave rise to such Accounts. In addition, Borrower shall deliver to Bank,
on its request, the originals of all instruments, chattel paper, security
agreements, guarantees and other documents and property evidencing or securing
any Accounts, in the same form as received, with all necessary endorsements, and
copies of all credit memos.
               (b) Disputes. Borrower shall promptly notify Bank of all disputes
or claims relating to Accounts involving more than One Hundred Thousand Dollars
($100,000). Borrower may forgive (completely or partially), compromise, or
settle any Account for less than payment in full, or agree to do any of the
foregoing so long as (i) Borrower does so in good faith, in a commercially
reasonable manner, in the ordinary course of business, in arm’s-length
transactions, and reports the same to Bank in the regular reports provided to
Bank; (ii) no Event of Default has occurred and is continuing; and (iii) after
taking into account all such discounts, settlements and forgiveness, the total
outstanding Advances will not exceed the Availability Amount.
               (c) Collection of Accounts. Borrower shall have the right to
collect all Accounts, unless and until an Event of Default has occurred and is
continuing. All payments on, and proceeds of, Accounts shall be deposited
directly by the applicable Account Debtor into a lockbox account, or such other
“blocked account” as Bank may specify, pursuant to a blocked account agreement
in form and substance satisfactory to Bank in its sole discretion. Whether or
not an Event of Default has occurred and is continuing, Borrower shall hold all
payments on, and proceeds of, Accounts in trust for Bank, and Borrower shall
promptly deliver all such payments and proceeds to Bank in their original form,
duly endorsed, to be applied to the Obligations pursuant to the terms of
Section 9.4 hereof; provided, however, that during a Streamline Period, such
payments and proceeds shall be deposited into Borrower’s Designated Deposit
Account.
               (d) Returns. Provided no Event of Default has occurred and is
continuing, if any Account Debtor returns any Inventory to Borrower, Borrower
shall promptly (i) determine the reason for such return, (ii) issue a credit
memorandum to the Account Debtor in the appropriate amount, and (iii) provide a
copy of such credit memorandum to Bank, upon request from Bank. In the event any
attempted return occurs after the occurrence and during the continuance of any
Event of Default, Borrower shall hold the returned Inventory in trust for Bank,
and immediately notify Bank of the return of the Inventory.
               (e) Verification. Bank may, from time to time, verify directly
with the respective Account Debtors the validity, amount and other matters
relating to the Accounts, either in the name of Borrower or Bank or such other
name as Bank may choose.
               (f) No Liability. Bank shall not be responsible or liable for any
shortage or discrepancy in, damage to, or loss or destruction of, any goods, the
sale or other disposition of which gives rise to an Account, or for any error,
act, omission, or delay of any kind occurring in the settlement, failure to
settle, collection or failure to collect any Account, or for settling any
Account in good faith for less than the full amount thereof, nor shall Bank be
deemed to be responsible for any of Borrower’s obligations under any contract or
agreement giving rise to an Account. Nothing herein shall, however, relieve Bank
from liability for its own gross negligence or willful misconduct.
     6.4 Remittance of Proceeds. Except as otherwise provided in Section 6.3(c),
deliver, in kind, all proceeds received by Borrower arising from the disposition
of any Collateral to Bank in the original form in which received by Borrower not
later than the following Business Day after receipt by Borrower, to be applied
to the Revolving Line pursuant to the terms of Section 9.4 hereof; provided
that, if no Default or Event of Default has occurred and is continuing, Borrower
shall not be obligated to remit to Bank the proceeds of the sale of worn out,
surplus or obsolete Equipment disposed of by Borrower in good faith in an arm’s
length transaction for an aggregate purchase price of Five Hundred Thousand
Dollars ($500,000) or less (for all such transactions in any fiscal year).
Borrower agrees that it will not commingle proceeds of Collateral with any of
Borrower’s other funds or property,

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but will hold such proceeds separate and apart from such other funds and
property and in an express trust for Bank to the extent such proceeds are
required to be delivered to Bank pursuant to the foregoing sentence. Nothing in
this Section 6.4 limits the restrictions on disposition of Collateral set forth
elsewhere in this Agreement.
     6.5 Taxes; Pensions. Make, and cause each of its Subsidiaries, if any, to
make, timely payment of all foreign, federal, state and local taxes or
assessments (other than taxes and assessments which Borrower is contesting
pursuant to the terms of Section 5.9 hereof), and shall deliver to Bank, on
demand, appropriate certificates attesting to such payments, and pay all amounts
necessary to fund all present pension, profit sharing and deferred compensation
plans in accordance with their terms.
     6.6 Access to Collateral; Books and Records. At reasonable times (but not
more than two (2) times per year prior to the occurrence of an Event of
Default), on one (1) Business Day’s notice (provided no notice is required if an
Event of Default has occurred and is continuing), Bank, or its agents, shall
have the right to inspect the Collateral and the right to audit and copy
Borrower’s Books. The foregoing inspections and audits, including, without
limitation, the Initial Audit, shall be at Borrower’s expense, and the charge
therefor shall be $750 per person per day (or such higher amount as shall
represent Bank’s then-current standard charge for the same), plus reasonable
out-of-pocket expenses provided that so long as no Event of Default shall have
occurred (or if an Event of Default shall have occurred, such Event of Default
shall have been waived by Bank in accordance with the terms hereof), Borrower
shall only be liable for the expenses of two (2) audits per fiscal year. In the
event Borrower and Bank schedule an audit more than ten (10) days in advance,
and Borrower cancels or seeks to reschedules the audit with less than ten (10)
days written notice to Bank, then (without limiting any of Bank’s rights or
remedies), Borrower shall reimburse Bank for any out-of-pocket expenses incurred
by Bank as a result of the cancellation or rescheduling.
     6.7 Insurance. Keep its business and the Collateral insured for risks and
in amounts standard for companies in Borrower’s industry and location and as
Bank may reasonably request. Insurance policies shall be in a form, with
companies, and in amounts that are reasonably satisfactory to Bank. All property
policies shall have a lender’s loss payable endorsement showing Bank as the sole
lender loss payee and waive subrogation against Bank, and all liability policies
shall show, or have endorsements showing, Bank as an additional insured. All
policies (or the loss payable and additional insured endorsements) shall provide
that the insurer must give Bank at least thirty (30) days notice before
canceling, amending, or declining to renew its policy. At Bank’s request,
Borrower shall deliver certified copies of policies and evidence of all premium
payments. Proceeds payable under any policy shall, at Bank’s option, be payable
to Bank on account of the Revolving Line. Notwithstanding the foregoing, (a) so
long as no Event of Default has occurred and is continuing, Borrower shall have
the option, within ninety (90) days of the receipt by Borrower of such proceeds,
of (i) remitting such proceeds to Bank on account of the Obligations or (ii)
applying such proceeds of any casualty policy toward the replacement or repair
of destroyed or damaged property; provided that any such replaced or repaired
property (X) shall be of equal or like value as the replaced or repaired
Collateral and (Y) shall be deemed Collateral in which Bank has been granted a
first priority security interest, and (b) after the occurrence and during the
continuance of an Event of Default, all proceeds payable under such casualty
policy shall, at the option of Bank, be payable to Bank on account of the
Obligations. If Borrower fails to obtain insurance as required under this
Section 6.7 or to pay any amount or furnish any required proof of payment to
third persons and Bank, Bank may make all or part of such payment or obtain such
insurance policies required in this Section 6.7, and take any action under the
policies Bank deems prudent.
     6.8 Operating Accounts.
               (a) Maintain its and its Subsidiaries’ depository, operating
accounts and securities accounts with Bank and Bank’s affiliates with all excess
funds maintained at or invested through Bank or an affiliate of Bank which
accounts shall represent (i) at least fifty-one percent (51%) of the dollar
value of Borrower’s and such Subsidiaries’ accounts at all financial
institutions and (ii) at least sixty-seven percent (67%) of its and its
Subsidiaries’ cash located in the United States.
               (b) Provide Bank five (5) days prior-written notice before
establishing any Collateral Account at or with any bank or financial institution
in the United States other than Bank or its Affiliates. In addition, for each
Collateral Account that Borrower at any time maintains in the United States,
Borrower shall cause the applicable bank or financial institution (other than
Bank) at or with which any Collateral Account is maintained to execute and
deliver a Control Agreement or other appropriate instrument with respect to such
Collateral Account to perfect Bank’s Lien in such Collateral Account in
accordance with the terms hereunder. The provisions of the previous sentence
shall not apply to (i) deposit accounts exclusively used for payroll, payroll
taxes and other

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employee wage and benefit payments to or for the benefit of Borrower’s employees
and identified to Bank by Borrower as such, (ii) the Deutsche Account, (iii) the
Anglo Account and (iv) deposit accounts used solely for petty cash.
     6.9 Financial Covenant.
               Borrower shall maintain at all times, to be tested by Bank at any
time in its sole discretion and to be certified by Borrower as of the last day
of each month:
               (a) Liquidity. Borrower’s unrestricted cash at Bank and
unrestricted Cash Equivalents at Bank plus the lesser of (a) (i) the Revolving
Line or (ii) the Borrowing Base minus (b) the amount of all outstanding Letters
of Credit (including drawn but unreimbursed Letters of Credit plus an amount
equal to the Letter of Credit Reserves), minus (c) the FX Reserve, and minus
(d) the outstanding principal balance of any Advances (including any amounts
used for Cash Management Services) of at least Eighty Million Dollars
($80,000,000).
     6.10 Protection of Intellectual Property Rights. Borrower shall: (a) use
reasonable efforts to protect, defend and maintain the validity and
enforceability of its intellectual property; (b) promptly advise Bank in writing
when Borrower becomes aware of material infringements of its intellectual
property; and (c) not allow any intellectual property material to Borrower’s
business to be abandoned, forfeited or dedicated to the public without Bank’s
written consent, unless Borrower determines that reasonable business practices
suggest that abandonment, forfeiture or dedication is appropriate.
     6.11 Litigation Cooperation. From the date hereof and continuing through
the termination of this Agreement, make available to Bank, without expense to
Bank, Borrower and its officers, employees and agents and Borrower’s Books, to
the extent that Bank may deem them reasonably necessary to prosecute or defend
any third-party suit or proceeding instituted by or against Bank with respect to
any Collateral or relating to Borrower.
     6.12 Designated Senior Debt. Borrower acknowledges that, other than as
described herein and except for Permitted Indebtedness that is subject to
Permitted Liens, the Obligations are senior in all respects to all other
Indebtedness of the Borrower. Borrower shall designate all principal of,
interest (including all interest accruing after the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowable as a claim in any such proceeding), and all fees, costs,
expenses and other amounts accrued or due under this Agreement as “Designated
Senior Debt”, or such similar term, in any future Subordinated Debt incurred by
Borrower after the date hereof, if such Subordinated Debt contains such term or
similar term and if the effect of such designation is to grant Bank the same or
similar rights as granted to Bank as a holder of “Designated Senior
Indebtedness” or such other term or similar term under the Indenture.
     6.13 Further Assurances. Borrower shall execute any further instruments and
take further action as Bank reasonably requests to perfect or continue Bank’s
Lien in the Collateral or to effect the purposes of this Agreement.
          7 NEGATIVE COVENANTS
          Borrower shall not do any of the following without Bank’s prior
written consent, which consent shall not be unreasonably withheld or delayed:
          7.1 Dispositions. Convey, sell, lease, transfer or otherwise dispose
of (collectively, “Transfer”), or permit any of its Subsidiaries to Transfer,
all or any part of its business or property, except for (a) Transfers of
Inventory in the ordinary course of business; (b) Transfers of worn-out, surplus
or obsolete Equipment; (c) Transfers in connection with Permitted Liens and
Permitted Investments; (d) Transfers of property in connection with
sale-leaseback transactions; (e) Transfers of property to the extent such
property is exchanged for credit against, or proceeds are promptly applied to,
the purchase price of other property used or useful in the business of Borrower
or its Subsidiaries; (f) Transfers of non-exclusive licenses or user agreements
for the use of the property of Borrower or its Subsidiaries in the ordinary
course of business and licenses that could not result in a legal transfer of
title of the licensed property but that may be exclusive in respects other than
territory and that may be exclusive as to territory only as to discreet
geographical areas outside of the United States; (g) sales or discounting of
delinquent accounts in the ordinary course of business; (h) Transfers associated
with the making or disposition of a Permitted Investment; (i) Transfers in
connection with a permitted acquisition of a portion of the assets or rights
acquired; (j) Transfers of intellectual property rights jointly developed by
Borrower and a third party in connection with a joint development

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agreement in which Borrower obtains certain intellectual property rights and the
applicable third party obtains certain intellectual property rights; and
(k) Transfers not otherwise permitted in this Section 7.1, provided, that the
aggregate book value of all such Transfers by Borrower and its Subsidiaries,
together, shall not exceed in any fiscal year, five percent (5.0%) of Borrower’s
consolidated total assets as of the last day of the fiscal year immediately
preceding the date of determination. Borrower shall not enter into an agreement
with any Person other than Bank which restricts the subsequent granting of a
security interest in Borrower’s intellectual property.
     7.2 Changes in Business, Management, Control or Business Locations.
(a) Engage in or permit any of its Subsidiaries, if any, to engage in any
business other than the businesses currently engaged in by Borrower and such
Subsidiary, as applicable, or reasonably related thereto or (b) liquidate or
dissolve. Borrower shall not, without at least thirty (30) days prior written
notice to Bank: (1) add any new offices or business locations, including
warehouses (unless such new offices or business locations contain less than Two
Hundred Fifty Thousand Dollars ($250,000) in Borrower’s assets or property),
(2) change its jurisdiction of organization, (3) change its organizational
structure or type, (4) change its legal name, or (5) change any organizational
number (if any) assigned by its jurisdiction of organization.
     7.3 Mergers or Acquisitions. Merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with any other Person other than with
Borrower, or acquire, or permit any of its Subsidiaries to acquire, all or
substantially all of the capital stock or property of another Person, except
where no Event of Default has occurred and is continuing or would result from
such action, and Borrower is the surviving entity.
     7.4 Indebtedness. Create, incur, assume, or be liable for any Indebtedness,
or permit any Subsidiary to do so, other than Permitted Indebtedness.
     7.5 Encumbrance. Create, incur, or allow any Lien on any of its property,
or assign or convey any right to receive income, including the sale of any
Accounts, or permit any of its Subsidiaries to do so, except for Permitted
Liens, permit any Collateral not to be subject to the first priority security
interest granted herein (subject only to Permitted Liens that may have superior
priority to Bank’s Lien under this Agreement), or enter into any agreement,
document, instrument or other arrangement (except with or in favor of Bank) with
any Person which directly or indirectly prohibits or has the effect of
prohibiting Borrower or any Subsidiary from assigning, mortgaging, pledging,
granting a security interest in or upon, or encumbering any of Borrower’s or any
Subsidiary’s intellectual property, except for over-the-counter software and as
is otherwise permitted in Section 7.1 hereof and the definition of “Permitted
Lien” herein.
     7.6 Maintenance of Collateral Accounts. Maintain any Collateral Account
except pursuant to the terms of Section 6.8(b) hereof.
     7.7 Investments; Distributions. (a) Directly or indirectly make any
Investment other than Permitted Investments, or permit any of its Subsidiaries
to do so; or (b) pay any dividends or make any distribution or payment or
redeem, retire or purchase any capital stock other than Permitted Distributions.
     7.8 Transactions with Affiliates. Directly or indirectly enter into or
permit to exist any material transaction with any Affiliate of Borrower, except
for (a) transactions that are in the ordinary course of Borrower’s business,
upon fair and reasonable terms (when viewed in the context of any series of
transactions of which it may be a part, if applicable) or (b) transactions among
Borrower and its Subsidiaries, if any and among Borrower’s Subsidiaries so long
as no Event of Default exists or could result therefrom.
     7.9 Subordinated Debt. (a) Make or permit any payment on any Subordinated
Debt, except under the terms of the subordination, intercreditor or similar
agreement in form and substance acceptable to Bank to which such Subordinated
Debt is subject (a “Subordination Agreement”), or (b) amend any provision in any
document relating to the Subordinated Debt which would increase the amount
thereof or adversely affect the subordination thereof to Obligations owed to
Bank.
     7.10 Compliance. Become an “investment company” or a company controlled by
an “investment company”, under the Investment Company Act of 1940 or undertake
as one of its important activities extending credit to purchase or carry margin
stock (as defined in Regulation U of the Board of Governors of the Federal
Reserve System), or use the proceeds of any Credit Extension for that purpose;
fail to meet the minimum funding requirements of ERISA, permit a Reportable
Event or non-exempt Prohibited Transaction, as defined in ERISA, to occur; fail
to comply with the Federal Fair Labor Standards Act or violate any other law or
regulation, if the

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violation could reasonably be expected to have a material adverse effect on
Borrower’s business, or permit any of its Subsidiaries to do so; withdraw or
permit any Subsidiary to withdraw from participation in, permit partial or
complete termination of, or permit the occurrence of any other event with
respect to, any present pension, profit sharing and deferred compensation plan
which could reasonably be expected to result in any liability of Borrower,
including any liability to the Pension Benefit Guaranty Corporation or its
successors or any other governmental agency.
          8 EVENTS OF DEFAULT
          Any one of the following shall constitute an event of default (an
“Event of Default”) under this Agreement:
     8.1 Payment Default. Borrower fails to (a) make any payment of principal or
interest on any Credit Extension on its due date, or (b) pay any other
Obligations within three (3) Business Days after such Obligations are due and
payable. During the cure period, the failure to cure the payment default is not
an Event of Default (but no Credit Extension will be made during the cure
period);
     8.2 Covenant Default.
               (a) Borrower fails or neglects to perform any obligation in
Sections 6.2, 6.5, 6.8, or 6.9 or violates any covenant in Section 7; or
               (b) Borrower fails or neglects to perform, keep, or observe any
other term, provision, condition, covenant or agreement contained in this
Agreement, any Loan Documents, and as to any default (other than those specified
in this Section 8) under such other term, provision, condition, covenant or
agreement that can be cured, has failed to cure the default within ten (10) days
after the occurrence thereof; provided, however, that if the default cannot by
its nature be cured within the ten (10) day period or cannot after diligent
attempts by Borrower be cured within such ten (10) day period, and such default
is likely to be cured within a reasonable time, then Borrower shall have an
additional period (which shall not in any case exceed thirty (30) days) to
attempt to cure such default, and within such reasonable time period the failure
to cure the default shall not be deemed an Event of Default (but no Credit
Extensions shall be made during such cure period). Grace periods provided under
this section shall not apply, among other things, to financial covenants or any
other covenants set forth in subsection (a) above;
     8.3 Material Adverse Change. A Material Adverse Change occurs;
     8.4 Change of Control. A Change of Control occurs;
     8.5 Attachment. (a) Any material portion of Borrower’s assets is attached,
seized, levied on, or comes into possession of a trustee or receiver and the
attachment, seizure or levy is not removed in ten (10) days; (b) the service of
process upon Bank (or Bank’s Affiliate) seeking to attach, by trustee or similar
process, any funds of Borrower, or of any entity under control of Borrower
(including a Subsidiary) on deposit with Bank; (c) Borrower is enjoined,
restrained, or prevented by court order from conducting a material part of its
business; (d) a judgment or other claim in excess of Five Hundred Thousand
Dollars ($500,000) becomes a Lien on any of Borrower’s assets; or (e) a notice
of lien, levy, or assessment is filed against any of Borrower’s assets by any
government agency and not paid within ten (10) days after Borrower receives
notice. These are not Events of Default if stayed or if a bond is posted pending
contest by Borrower (but no Credit Extensions shall be made during the cure
period);
     8.6 Insolvency. Borrower is unable to pay its debts (including trade debts)
as they become due or otherwise becomes insolvent; (b) Borrower begins an
Insolvency Proceeding; or (c) an Insolvency Proceeding is begun against Borrower
and not dismissed or stayed within thirty (30) days (but no Credit Extensions
shall be made while of any of the conditions described in clause (a) exist
and/or until any Insolvency Proceeding is dismissed);
     8.7 Other Agreements. If Borrower fails to (a) make any payment that is due
and payable with respect to any Material Indebtedness and such failure continues
after the applicable grace or notice period, if any, specified in the agreement
or instrument relating thereto, or (b) perform or observe any other condition or
covenant, or any other event shall occur or condition shall exist under any
agreement or instrument relating to Material Indebtedness, and such failure
continues after the applicable grace or notice period, if any, specified in the
agreement or instrument relating thereto and the effect of such failure, event
or condition is to cause the holder or

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holders of such Material Indebtedness to accelerate the maturity of indebtedness
in excess of One Million Dollars ($1,000,000) or cause the mandatory repurchase
of any indebtedness in excess of One Million Dollars ($1,000,000);
     8.8 Judgments. A judgment or judgments for the payment of money in an
amount, individually or in the aggregate, of at least Five Hundred Thousand
Dollars ($500,000) (not covered by independent third-party insurance) shall be
rendered against Borrower and shall remain unsatisfied and unstayed for a period
of ten (10) days after the entry thereof (provided that no Credit Extensions
will be made prior to the satisfaction or stay of such judgment);
     8.9 Misrepresentations. Borrower or any Person acting for Borrower makes
any representation, warranty, or other statement now or later in this Agreement,
any Loan Document or in any writing delivered to Bank or to induce Bank to enter
this Agreement or any Loan Document, and such representation, warranty, or other
statement is incorrect in any material respect when made; or
     8.10 Guaranty. (a) Any guaranty of any Obligations terminates or ceases for
any reason to be in full force and effect; (b) any Guarantor does not perform
any obligation or covenant under any guaranty of the Obligations; (c) any
circumstance described in Sections 8.3, 8.4, 8.5, 8.7, or 8.8. occurs with
respect to any Guarantor, (d) the liquidation, winding up, or termination of
existence of any Guarantor; or (e) (i) a material impairment in the perfection
or priority of Bank’s Lien in the collateral provided by Guarantor or in the
value of such collateral or (ii) a material adverse change in the general
affairs, management, results of operation, condition (financial or otherwise) or
the prospect of repayment of the Obligations occurs with respect to any
Guarantor.
     8.11 Subordinated Debt. A default or breach by Borrower occurs under any
agreement between Borrower and any creditor of Borrower which gives such
creditor the right to accelerate the Subordinated Debt (whether or not such
right is exercised by such creditor) owed by Borrower to such creditor that
(i) signed a Subordination Agreement or (ii) is otherwise subject to an
agreement pursuant to which its obligations are subordinated to the Obligations
to Bank, or any creditor that is subject to such an agreement breaches any terms
of such agreement.
          9 BANK’S RIGHTS AND REMEDIES
     9.1 Rights and Remedies. While an Event of Default occurs and continues
Bank may, without notice or demand, do any or all of the following to the extent
permitted by law:
               (a) declare all Obligations immediately due and payable (but if
an Event of Default described in Section 8.5 occurs all Obligations are
immediately due and payable without any action by Bank);
               (b) stop advancing money or extending credit for Borrower’s
benefit under this Agreement or under any other agreement between Borrower and
Bank;
               (c) demand that Borrower (i) deposits cash with Bank in an amount
equal to the aggregate amount of any Letters of Credit remaining undrawn, as
collateral security for the repayment of any future drawings under such Letters
of Credit, and Borrower shall forthwith deposit and pay such amounts, and
(ii) pay in advance all Letter of Credit fees scheduled to be paid or payable
over the remaining term of any Letters of Credit;
               (d) terminate any FX Contracts;
               (e) settle or adjust disputes and claims directly with Account
Debtors for amounts on terms and in any order that Bank considers advisable,
notify any Person owing Borrower money of Bank’s security interest in such
funds, and verify the amount of such account;
               (f) make any payments and do any acts it considers necessary or
reasonable to protect the Collateral and/or its security interest in the
Collateral. Borrower shall assemble the Collateral if Bank requests and make it
available as Bank designates. Bank may enter premises where the Collateral is
located, take and maintain possession of any part of the Collateral, and pay,
purchase, contest, or compromise any Lien which appears to be prior or superior
to its security interest and pay all expenses incurred. Borrower grants Bank a
license to enter and occupy any of its premises, without charge by Borrower, to
exercise any of Bank’s rights or remedies;

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               (g) apply to the Obligations any (i) balances and deposits of
Borrower it holds, or (ii) any amount held by Bank owing to or for the credit or
the account of Borrower;
               (h) in Bank’s reasonable discretion, ship, reclaim, recover,
store, finish, maintain, repair, prepare for sale, advertise for sale, and sell
the Collateral. Bank is hereby granted a non-exclusive, royalty-free license or
other right to use, without charge, Borrower’s labels, patents, copyrights, mask
works, rights of use of any name, trade secrets, trade names, trademarks,
service marks, and advertising matter, or any similar property as it pertains to
the Collateral, in completing production of, advertising for sale, and selling
any Collateral and, in connection with Bank’s reasonable exercise of its rights
under this Section, Borrower’s rights under all licenses and all franchise
agreements inure to Bank’s benefit;
               (i) place a “hold” on any account maintained with Bank and/or
deliver a notice of exclusive control, any entitlement order, or other
directions or instructions pursuant to any Control Agreement or similar
agreements providing control of any Collateral;
               (j) demand and receive possession of Borrower’s Books; and
               (k) in Bank’s reasonable discretion, exercise all rights and
remedies available to Bank under the Loan Documents or at law or equity,
including all remedies provided under the Code (including disposal of the
Collateral pursuant to the terms thereof, in Bank’s reasonable discretion).
     9.2 Power of Attorney. Borrower hereby irrevocably appoints Bank as its
lawful attorney-in-fact, exercisable upon the occurrence and during the
continuance of an Event of Default, to: (a) endorse Borrower’s name on any
checks or other forms of payment or security; (b) sign Borrower’s name on any
invoice or bill of lading for any Account or drafts against Account Debtors;
(c) settle and adjust disputes and claims about the Accounts directly with
Account Debtors, for amounts and on terms Bank determines reasonable; (d) make,
settle, and adjust all claims under Borrower’s insurance policies; (e) pay,
contest or settle any Lien, charge, encumbrance, security interest, and adverse
claim in or to the Collateral, or any judgment based thereon, or otherwise take
any action to terminate or discharge the same; and (f) transfer the Collateral
into the name of Bank or a third party as the Code permits. Borrower hereby
appoints Bank as its lawful attorney-in-fact to sign Borrower’s name on any
documents necessary to perfect or continue the perfection of Bank’s security
interest in the Collateral regardless of whether an Event of Default has
occurred until all Obligations have been satisfied in full and Bank is under no
further obligation to make Credit Extensions hereunder. Bank’s foregoing
appointment as Borrower’s attorney in fact, and all of Bank’s rights and powers,
coupled with an interest, are irrevocable until all Obligations have been fully
repaid and performed and Bank’s obligation to provide Credit Extensions
hereunder terminates and shall thereupon terminate.
     9.3 Protective Payments. If Borrower fails to obtain the insurance called
for by Section 6.7 or fails to pay any premium thereon or fails to pay any other
amount which Borrower is obligated to pay under this Agreement or any other Loan
Document, Bank may obtain such insurance or make such payment, and all amounts
so paid by Bank are Bank Expenses and immediately due and payable, bearing
interest at the then highest applicable rate, and secured by the Collateral.
Bank will make reasonable efforts to provide Borrower with notice of Bank
obtaining such insurance at the time it is obtained or within a reasonable time
thereafter. No payments by Bank are deemed an agreement to make similar payments
in the future or Bank’s waiver of any Event of Default.
     9.4 Application of Payments and Proceeds. If no Event of Default has
occurred and is continuing and except for debits made by Bank pursuant to the
terms of Section 2.3(f) hereof which shall be applied to the payment of
principal, interest or such other amounts for which such debit shall have been
made in accordance with the terms thereof, and subject to Section 12.1 hereof,
Bank may apply any funds in its possession, whether from Borrower account
balances, payments, or proceeds realized as the result of any collection of
Accounts or other disposition of the Collateral in accordance with the terms
hereof, first, to Bank Expenses, including without limitation, the documented
reasonable costs, expenses, liabilities, obligations and attorneys’ fees
incurred by Bank in the exercise of its rights under this Agreement; second, to
the interest due on the Revolving Line; and third, to the principal of the
Obligations and any applicable fees and other charges, in such order as Bank
shall determine in its reasonable discretion. Any surplus shall be paid to
Borrower or other Persons legally entitled thereto; Borrower shall remain liable
to Bank for any deficiency. If an Event of Default has occurred and is
continuing, Bank may apply any funds in its possession, whether from Borrower
account balances, payments, proceeds realized as the result of any collection of
Accounts or other disposition of the Collateral, or otherwise, to the
Obligations in such order as Bank shall determine in its sole discretion. Any
surplus shall be paid to Borrower or to other Persons legally entitled thereto;
Borrower shall remain liable to Bank for any deficiency. If Bank, in its
reasonable

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judgment, directly or indirectly enters into a deferred payment or other credit
transaction with any purchaser at any sale of Collateral, Bank shall have the
option, exercisable at any time, of either reducing the Obligations by the
principal amount of the purchase price or deferring the reduction of the
Obligations until the actual receipt by Bank of cash therefor.
     9.5 Bank’s Liability for Collateral. So long as Bank complies with
reasonable banking practices and is not in violation of any applicable law
regarding the safekeeping of the Collateral in the possession or under the
control of Bank, Bank shall not be liable or responsible for: (a) the
safekeeping of the Collateral; (b) any loss or damage to the Collateral; (c) any
diminution in the value of the Collateral; or (d) any act or default of any
carrier, warehouseman, bailee, or other Person. Borrower bears all risk of loss,
damage or destruction of the Collateral.
     9.6 No Waiver; Remedies Cumulative. Bank’s failure, at any time or times,
to require strict performance by Borrower of any provision of this Agreement or
any other Loan Document shall not waive, affect, or diminish any right of Bank
thereafter to demand strict performance and compliance herewith or therewith. No
waiver hereunder shall be effective unless signed by Bank and then is only
effective for the specific instance and purpose for which it is given. Bank’s
rights and remedies under this Agreement and the other Loan Documents are
cumulative. Bank has all rights and remedies provided under the Code, by law, or
in equity. Bank’s exercise of one right or remedy is not an election, and Bank’s
waiver of any Event of Default is not a continuing waiver. Bank’s delay in
exercising any remedy is not a waiver, election, or acquiescence.
     9.7 Demand Waiver. Borrower waives demand, notice of default or dishonor,
notice of payment and nonpayment, notice of any default, nonpayment at maturity,
release, compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees held by Bank on which Borrower is
liable.
          10 NOTICES
          All notices, consents, requests, approvals, demands, or other
communication (collectively, “Communication”), other than Advance requests made
pursuant to Section 3.4, by any party to this Agreement or any other Loan
Document must be in writing and be delivered by one of the methods set forth in
paragraphs (a) – (d) or sent by facsimile at the addresses or facsimile numbers
listed below. Bank or Borrower may change its notice address by giving the other
party written notice thereof. Each such Communication shall be deemed to have
been validly served, given, or delivered: (a) upon the earlier of actual receipt
and three (3) Business Days after deposit in the U.S. mail, registered or
certified mail, return receipt requested, with proper postage prepaid; (b) upon
transmission, when sent by facsimile transmission (with such facsimile promptly
confirmed by delivery of a copy by personal delivery or United States mail as
otherwise provided in this Section 10); (c) one (1) Business Day after deposit
with a reputable overnight courier with all charges prepaid; or (d) when
delivered, if hand-delivered by messenger, all of which shall be addressed to
the party to be notified and sent to the address or facsimile number indicated
below. Advance requests made pursuant to Section 3.4 must be in writing and may
be in the form of electronic mail, delivered to Bank by Borrower at the e-mail
address of Bank provided below and shall be deemed to have been validly served,
given, or delivered when sent (with such electronic mail promptly confirmed by
delivery of a copy by personal delivery or United States mail as otherwise
provided in this Section 10). Bank or Borrower may change its address, facsimile
number, or electronic mail address by giving the other party written notice
thereof in accordance with the terms of this Section 10.

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  If to Borrower:   Evergreen Solar, Inc.
 
      138 Bartlett St.
 
      Marlborough, MA 01752
 
      Attn: Messrs. Michael El-Hillow and Mark Fidler
 
      Fax: 508-229-7722
 
      Email:  melhillow@evergreensolar.com and
mfidler@evergreensolar.com
 
       
 
  with a copy to:   Evergreen Solar, Inc.
 
      138 Bartlett St.
 
      Marlborough, Massachusetts 01752
 
      Attn: Christian M. Ehrbar, Esquire
 
      Fax: 508-229-7722
 
      Email: cehrbar@evergreensolar.com
 
       
 
  If to Bank:   Silicon Valley Bank
 
      One Newton Executive Park, Suite 200
 
      2221 Washington Street, Newton, MA 02462
 
      Attn: Ms. Irina Case
 
      Fax: 617-969-5973
 
      Email:  icase@svb.com
 
       
 
  with a copy to:   Riemer & Braunstein LLP
 
      Three Center Plaza
 
      Boston, Massachusetts 02108
 
      Attn: Charles W. Stavros, Esquire
 
      Fax: 617- 880-3456
 
      Email: cstavros@riemerlaw.com

          11 CHOICE OF LAW, VENUE, JURY TRIAL WAIVER AND JUDICIAL REFERENCE
          Massachusetts law governs the Loan Documents without regard to
principles of conflicts of law. Borrower and Bank each submit to the exclusive
jurisdiction of the State and Federal courts in Massachusetts; provided,
however, that nothing in this Agreement shall be deemed to operate to preclude
Bank from bringing suit or taking other legal action in any other jurisdiction
to realize on the Collateral or any other security for the Obligations, or to
enforce a judgment or other court order in favor of Bank. Borrower expressly
submits and consents in advance to such jurisdiction in any action or suit
commenced in any such court, and Borrower hereby waives any objection that it
may have based upon lack of personal jurisdiction, improper venue, or forum non
conveniens and hereby consents to the granting of such legal or equitable relief
as is deemed appropriate by such court. Borrower hereby waives personal service
of the summons, complaints, and other process issued in such action or suit and
agrees that service of such summons, complaints, and other process may be made
by registered or certified mail addressed to Borrower at the address set forth
in Section 10 of this Agreement and that service so made shall be deemed
completed upon the earlier to occur of Borrower’s actual receipt thereof or
three (3) days after deposit in the U.S. mails, proper postage prepaid.
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH HEREINABOVE, BANK SHALL
SPECIFICALLY HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST BORROWER
OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION WHICH BANK DEEMS
NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR TO OTHERWISE
ENFORCE BANK’S RIGHTS AGAINST BORROWER OR ITS PROPERTY.
TO THE EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND BANK EACH WAIVE THEIR
RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED
UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION,
INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A
MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY
HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
     12 GENERAL PROVISIONS

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     12.1 Termination Prior to Maturity Date. This Agreement may be terminated
prior to the Revolving Line Maturity Date by Borrower, effective three
(3) Business Days after written notice of termination is given to Bank or if
Bank’s obligation to fund Credit Extensions terminates pursuant to the terms of
Section 2.1.1(b). Notwithstanding any such termination, Bank’s lien and security
interest in the Collateral shall continue until Borrower fully satisfies its
Obligations. If such termination is at Borrower’s election (regardless of the
existence of any Event of Default), or at Bank’s election due to the occurrence
and continuance of an Event of Default, Borrower shall pay to Bank, in addition
to the payment of any other expenses or fees then-owing, a termination fee in an
amount equal to either (i) if terminated at any time prior to the first
anniversary of the Effective Date, an amount equal to one and one-half of one
percent (1.50%) of the Revolving Line (i.e. Six Hundred Thousand Dollars
($600,000)) or (ii) if terminated at any time after the first anniversary of the
Effective Date but prior to the Revolving Line Maturity Date, an amount equal to
one percent (1.00%) of the Revolving Line (i.e. Four Hundred Thousand Dollars
($400,000)); provided that in no event will the fees in both of the immediately
preceding clauses (i) and (ii) be required to be paid and no termination fee
shall be charged if the credit facility hereunder is replaced with a new
facility from another division of Silicon Valley Bank. Upon payment in full of
the Obligations and at such time as Bank’s obligation to make Credit Extensions
has terminated, Bank shall release its liens and security interests in the
Collateral and all rights therein shall revert to Borrower.
     12.2 Successors and Assigns. This Agreement binds and is for the benefit of
the successors and permitted assigns of each party. Borrower may not assign this
Agreement or any rights or obligations under it without Bank’s prior written
consent (which may be granted or withheld in Bank’s discretion). Bank has the
right, without the consent of or notice to Borrower, to sell, transfer,
negotiate, or grant participation in all or any part of, or any interest in,
Bank’s obligations, rights, and benefits under this Agreement and the other Loan
Documents.
     12.3 Indemnification. Borrower agrees to indemnify, defend and hold Bank
and its directors, officers, employees, agents, attorneys, or any other Person
affiliated with or representing Bank harmless against: (a) all obligations,
demands, claims, and liabilities (collectively, “Claims”) asserted by any other
party (other than Borrower) in connection with the transactions contemplated by
the Loan Documents; and (b) all losses or Bank Expenses incurred, or paid by
Bank from, following, or arising from transactions between Bank and Borrower
(including documented reasonable attorneys’ fees and expenses), except for
Claims and/or losses directly caused by Bank’s gross negligence or willful
misconduct.
     12.4 Time of Essence. Time is of the essence for the performance of all
Obligations in this Agreement.
     12.5 Severability of Provisions. Each provision of this Agreement is
severable from every other provision in determining the enforceability of any
provision.
     12.6 Amendments in Writing; Integration. All amendments to this Agreement
must be in writing signed by both Bank and Borrower. This Agreement and the Loan
Documents represent the entire agreement about this subject matter and supersede
prior negotiations or agreements. All prior agreements, understandings,
representations, warranties, and negotiations between the parties about the
subject matter of this Agreement and the Loan Documents merge into this
Agreement and the Loan Documents.
     12.7 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, are an original, and all taken together, constitute
one Agreement.
     12.8 Survival. All covenants, representations and warranties made in this
Agreement continue in full force until this Agreement has terminated pursuant to
its terms and all Obligations (other than inchoate indemnity obligations and any
other obligations which, by their terms, are to survive the termination of this
Agreement) have been satisfied. The obligation of Borrower in Section 12.3 to
indemnify Bank shall survive until the statute of limitations with respect to
such claim or cause of action shall have run.
     12.9 Confidentiality. In handling any Borrower financial information or
other Borrower confidential information, Bank shall exercise the same degree of
care that it exercises for its own proprietary information, but disclosure of
information may be made: (a) to Bank’s Subsidiaries or Affiliates; (b) to
prospective transferees or purchasers of any interest in the Credit Extensions
(provided, however, Bank shall use commercially reasonable efforts to obtain
such prospective transferee’s or purchaser’s agreement to the terms of this
provision); (c) as required by law, regulation, subpoena, or other order; (d) to
Bank’s regulators or as otherwise required in connection

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with Bank’s examination or audit; and (e) as Bank considers appropriate in
exercising remedies under this Agreement. Confidential information does not
include information that either: (i) is in the public domain or in Bank’s
possession when disclosed to Bank, or becomes part of the public domain after
disclosure to Bank; or (ii) is disclosed to Bank by a third party, if Bank does
not know that the third party is prohibited from disclosing the information.
     12.10 Attorneys’ Fees, Costs and Expenses. In any action or proceeding
between Borrower and Bank arising out of or relating to the Loan Documents,
provided that Bank is the prevailing party, Bank shall be entitled to recover
its reasonable attorneys’ fees and other costs and expenses incurred, in
addition to any other relief to which it may be entitled.
     12.11 Right of Set Off. Borrower hereby grants to Bank, a lien, security
interest and right of set off as security for all Obligations to Bank, whether
now existing or hereafter arising upon and against all deposits, credits,
collateral and property, now or hereafter in the possession, custody,
safekeeping or control of Bank or any entity under the control of Bank
(including a Bank subsidiary) or in transit to any of them. At any time after
the occurrence and during the continuance of an Event of Default, without demand
or notice, Bank may set off the same or any part thereof and apply the same to
any liability or obligation of Borrower even though unmatured and regardless of
the adequacy of any other collateral securing the Obligations. ANY AND ALL
RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY
OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF
SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER ARE
HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
          13 DEFINITIONS
     13.1 Definitions. As used in this Agreement, the following terms have the
following meanings or the meanings set forth in the LIBOR Supplement:
          “Account” is any “account” as defined in the Code with such additions
to such term as may hereafter be made, and includes, without limitation, all
accounts receivable and other sums owing to Borrower.
          “Account Debtor” is any “account debtor” as defined in the Code with
such additions to such term as may hereafter be made.
          “Advance” or “Advances” means an advance (or advances) under the
Revolving Line.
          “Affiliate” of any Person is a Person that owns or controls directly
or indirectly the Person, any Person that controls or is controlled by or is
under common control with the Person, and each of that Person’s senior executive
officers, directors, partners and, for any Person that is a limited liability
company, that Person’s managers and members.
          “Agreement” is defined in the preamble hereof.
          “Availability Amount” is (I) during a Streamline Period, the Committed
Availability; or (II) at all other times, (a) the lesser of (i) the Revolving
Line or (ii) the Borrowing Base minus (b) the amount of all outstanding Letters
of Credit (including drawn but unreimbursed Letters of Credit but excluding any
amounts drawn and reimbursed) plus an amount equal to the Letter of Credit
Reserves, minus (c) the FX Reserve, and minus (d) the outstanding principal
balance of any Advances (including any amounts used for Cash Management
Services).
          “Bank” is defined in the preamble hereof.
          “Bank Expenses” are all documented audit fees and expenses, costs, and
expenses (including documented reasonable attorneys’ fees and expenses) for
preparing, negotiating, administering, defending and enforcing the Loan
Documents (including, without limitation, those incurred in connection with
appeals or Insolvency Proceedings) or otherwise incurred by Bank with respect to
Borrower.
          “Borrower” is defined in the preamble hereof.

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          “Borrower’s Books” are all Borrower’s books and records including
ledgers, federal and state tax returns, records regarding Borrower’s assets or
liabilities, the Collateral, business operations or financial condition, and all
computer programs or storage or any equipment containing such information.
          “Borrowing Base” is (a) eighty percent (80%) of Eligible Accounts plus
(b) sixty-five percent (65%) of Eligible Foreign Accounts plus (c) forty percent
(40%) of the value of Borrower’s Eligible Inventory (valued at the lower of cost
or wholesale fair market value) (provided, however, such amount in clause
(c) shall not exceed the lesser of (i) Seven Million Five Hundred Thousand
Dollars ($7,500,000) or (ii) forty percent (40%) of the sum of clause (a) plus
clause (b) plus clause (c)), plus, at any time prior to October 1, 2008, Ten
Million Dollars ($10,000,000), in the case of each of clauses (a), (b) and (c),
as reasonably determined by Bank from Borrower’s most recent Borrowing Base
Certificate; provided, however, that Bank may, after consultation with the
Borrower, increase or decrease the foregoing amounts and/or percentages in its
reasonable discretion based on events, conditions, contingencies, or risks
which, as determined by Bank, may adversely affect Collateral.
          “Borrowing Base Certificate” is that certain certificate included
within each Transaction Report.
          “Borrowing Resolutions” are, with respect to any Person, those
resolutions adopted by such Person’s Board of Directors or other appropriate
body and delivered by such Person to Bank approving the transactions
contemplated by the Loan Documents to which such Person is a party, together
with a certificate executed by its secretary on behalf of such Person certifying
that (a) such Person has the authority to execute, deliver, and perform its
obligations under each of the Loan Documents to which it is a party, (b) that
attached to such certificate is a true, correct, and complete copy of the
resolutions then in full force and effect authorizing and ratifying the
execution, delivery, and performance by such Person of the Loan Documents to
which it is a party, (c) the name(s) and titles(s) of the Person(s) authorized
to execute the Loan Documents on behalf of such Person, together with a sample
of the true signature(s) of such Person(s), and (d) that Bank may conclusively
rely on such certificate unless and until such Person shall have delivered to
Bank a further certificate canceling or amending such prior certificate.
          “Business Day” is any day other than a Saturday, Sunday or other day
on which Bank is closed, except that if any determination of a “Business Day”
shall relate to a LIBOR Advance, the term “Business Day” shall also mean a day
on which dealings are carried on in the London interbank market, and if any
determination of a “Business Day” shall relate to an FX Forward Contract, the
term “Business Day” shall mean a day on which dealings are carried on in the
country of settlement of the foreign (i.e., non-Dollar) currency.
          “Cash Equivalents” means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or any agency or any State
thereof having maturities of not more than one (1) year from the date of
acquisition; (b) commercial paper maturing no more than one (1) year after its
creation and having the highest rating from either Standard & Poor’s Ratings
Group or Moody’s Investors Service, Inc., (c) Bank’s certificates of deposit
issued maturing no more than one (1) year after issue; (d) money market funds at
least ninety-five percent (95%) of the assets of which constitute Cash
Equivalents of the kinds described in clauses (a) through (c) of this
definition; and (e) any other short-term investments, as defined by U.S.GAAP or
designated as such by Bank, permitted under Borrower’s investment policy as in
effect on the Effective Date.
          “Cash Management Services” is defined in Section 2.1.4.
          “Cash Management Services Sublimit” is defined in Section 2.1.4.
          “Change of Control” is a transaction in which any “person” (within the
meaning of Section 13(d)(3) and 14(d)(2) of the Securities Exchange Act, as
amended) becomes the “beneficial owner” (as defined in Rule 13-d-3 promulgated
pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended),
directly or indirectly, of greater than forty percent (40%) of the shares of all
classes of stock then outstanding of Borrower ordinarily entitled to vote in the
election of directors.
          “Code” is the Uniform Commercial Code, as the same may, from time to
time, be enacted and in effect in the Commonwealth of Massachusetts; provided,
that, to the extent that the Code is used to define any term herein or in any
Loan Document and such term is defined differently in different Articles or
Divisions of the Code, the definition of such term contained in Article or
Division 9 shall govern; provided further, that in the event that, by reason of
mandatory provisions of law, any or all of the attachment, perfection, or
priority of, or remedies with respect to, Bank’s Lien on any Collateral is
governed by the Uniform Commercial Code in effect in a jurisdiction other than
the Commonwealth of Massachusetts, the term “Code” shall mean the Uniform
Commercial Code as

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enacted and in effect in such other jurisdiction solely for purposes on the
provisions thereof relating to such attachment, perfection, priority, or
remedies and for purposes of definitions relating to such provisions.
          “Collateral” is any and all properties, rights and assets of Borrower
described on Exhibit A.
          “Collateral Account” is any Deposit Account, Securities Account, or
Commodity Account.
          “Committed Availability” means, as the date of determination, an
amount equal to the sum of (a) the Revolving Line minus (b) the amount of all
outstanding Letters of Credit (including drawn but unreimbursed Letters of
Credit plus an amount equal to the Letter of Credit Reserves), minus (c) the FX
Reserve, and minus (d) the outstanding principal balance of any Advances
(including any amounts used for Cash Management Services).
          “Commodity Account” is any “commodity account” as defined in the Code
with such additions to such term as may hereafter be made.
          “Communication” is defined in Section 10.
          “Compliance Certificate” is that certain certificate in the form
attached hereto as Exhibit B.
          “Contingent Obligation” is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (a) any indebtedness, lease,
dividend, letter of credit or other obligation of another such as an obligation
directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly
liable; (b) any obligations for undrawn letters of credit for the account of
that Person; and (c) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; but “Contingent
Obligation” does not include endorsements in the ordinary course of business.
The amount of a Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or, if not
determinable, the maximum reasonably anticipated liability for it determined by
the Person in good faith; but the amount may not exceed the maximum of the
obligations under any guarantee or other support arrangement.
          “Control Agreement” is any control agreement entered into among the
depository institution at which Borrower maintains a Deposit Account or the
securities intermediary or commodity intermediary at which Borrower maintains a
Securities Account or a Commodity Account, Borrower, and Bank pursuant to which
Bank obtains control (within the meaning of the Code) over such Deposit Account,
Securities Account, or Commodity Account.
          “Credit Extension” is any Advance, Letter of Credit, FX Forward
Contract, amount utilized for Cash Management Services, or any other extension
of credit by Bank for Borrower’s benefit.
          “Default” means any event which with notice or passage of time or
both, would constitute an Event of Default.
          “Default Rate” is defined in Section 2.3(b).
          “Deferred Revenue” is all amounts received or invoiced in advance of
performance under contracts and not yet recognized as revenue.
          “Deposit Account” is any “deposit account” as defined in the Code with
such additions to such term as may hereafter be made.
          “Designated Deposit Account” is Borrower’s deposit account, account
number ___, maintained with Bank.
          “Dollars,” “dollars” and “$” each mean lawful money of the United
States.
          “Effective Date” is the date Bank executes this Agreement and as
indicated on the signature page hereof.
          “Eligible Accounts” are Accounts which arise in the ordinary course of
Borrower’s business that meet all Borrower’s representations and warranties in
Section 5.3. Bank reserves the right at any time and from time to time

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after the Effective Date after consultation with Borrower, to adjust any of the
criteria set forth below and to establish new criteria in its reasonable
discretion. Unless Bank agrees otherwise in writing, Eligible Accounts shall not
include:
          (a) Accounts for which the Account Debtor has not been invoiced;
          (b) Accounts that the Account Debtor has not paid within ninety
(90) days of invoice date;
          (c) Accounts owing from an Account Debtor, fifty percent (50%) or more
of whose Accounts have not been paid within ninety (90) days of invoice date;
          (d) Credit balances over ninety (90) days from invoice date;
          (e) Accounts owing from an Account Debtor, including Affiliates, whose
total obligations to Borrower exceed twenty-five (25%) of all Accounts, for the
amounts that exceed that percentage, unless Bank approves in writing;
          (f) Represent progress billings, or be due under a fulfillment or
requirements contract;
          (g) Accounts owing from an Account Debtor which does not have its
principal place of business in the United States or Canada, except for Eligible
L/C Foreign Accounts;
          (h) Accounts owing from the United States or any department, agency,
or instrumentality thereof except for Accounts of the United States if Borrower
has assigned its payment rights to Bank and the assignment has been acknowledged
under the Federal Assignment of Claims Act of 1940, as amended;
          (i) Accounts owing from an Account Debtor to the extent that Borrower
is indebted or obligated in any manner to the Account Debtor (as creditor,
lessor, supplier or otherwise — sometimes called “contra” accounts, accounts
payable, customer deposits or credit accounts), with the exception of customary
credits, adjustments and/or discounts given to an Account Debtor by Borrower in
the ordinary course of its business;
          (j) Accounts for demonstration or promotional equipment, or in which
goods are consigned, or sold on a “sale guaranteed”, “sale or return”, “sale on
approval”, “bill and hold”, or other terms if Account Debtor’s payment may be
conditional;
          (k) Accounts for which the Account Debtor is Borrower’s Affiliate,
officer, employee, or agent;
          (l) Accounts in which the Account Debtor disputes liability or makes
any claim (but only up to the disputed or claimed amount), or if the Account
Debtor is subject to an Insolvency Proceeding, or becomes insolvent, or goes out
of business;
          (m) Accounts owing from an Account Debtor with respect to which
Borrower has received Deferred Revenue (but only to the extent of such Deferred
Revenue);
          (n) Accounts for which Bank, after consultation with Borrower, has
determined in its reasonable discretion collection to be doubtful; and
          (o) other Accounts, after consultation with Borrower, Bank deems
ineligible in the exercise of its reasonable discretion.
          “Eligible Foreign Accounts” are Accounts for which the Account Debtor
does not have its principal place of business in the United States but that are
otherwise Eligible Accounts that are (a) covered by credit insurance
satisfactory to Bank, less any deductible or (b) approved by Bank in writing.
          “Eligible L/C Foreign Accounts” are accounts for which the Account
Debtor does not have its principal place of business in the United States but
that are otherwise Eligible Accounts that are supported by letter(s) of credit
acceptable to Bank.

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          “Eligible Inventory” means, at any time, the aggregate of Borrower’s
Inventory that (a) consists of raw materials and finished goods located in the
United States, in each case that is in good, new, and salable condition, which
is not perishable, consigned, obsolete, not sellable, damaged, or defective, and
is not comprised of demonstrative or custom inventory, works in progress,
packaging or shipping materials, or supplies; (b) meets all applicable
governmental standards; (c) has been manufactured in compliance with the Fair
Labor Standards Act; (d) is subject only to the first priority Liens granted or
in favor of Bank under this Agreement or any of the other Loan Documents; (e) is
located at Borrower’s principal place of business (or any location that is
subject to a landlord consent or bailee waiver in favor of Bank); and (f) is
otherwise acceptable to Bank in its reasonable discretion.
          “Equipment” is all “equipment” as defined in the Code with such
additions to such term as may hereafter be made, and includes without limitation
all machinery, fixtures, goods, vehicles (including motor vehicles and
trailers), and any interest in any of the foregoing.
          “ERISA” is the Employment Retirement Income Security Act of 1974, and
its regulations.
          “Event of Default” is defined in Section 8.
          “EverQ GmbH Joint Venture” means Borrower’s joint venture located in
Thalheim, Germany, established for the purposes of manufacturing solar panels
using Borrower’s string ribbon technology.
          “Foreign Currency” means lawful money of a country other than the
United States.
          “Funding Date” is any date on which a Credit Extension is made to or
on account of Borrower which shall be a Business Day.
          “FX Business Day” is any day when (a) Bank’s Foreign Exchange
Department is conducting its normal business and (b) the Foreign Currency being
purchased or sold by Borrower is available to Bank from the entity from which
Bank shall buy or sell such Foreign Currency.
          “FX Forward Contract” is defined in Section 2.1.3.
          “FX Reserve” is defined in Section 2.1.3.
          “GAAP” is generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other Person as may be approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
          “General Intangibles” is all “general intangibles” as defined in the
Code in effect on the date hereof with such additions to such term as may
hereafter be made, and includes without limitation, all copyright rights,
copyright applications, copyright registrations and like protections in each
work of authorship and derivative work, whether published or unpublished, any
patents, trademarks, service marks and, to the extent permitted under applicable
law, any applications therefor, whether registered or not, any trade secret
rights, including any rights to unpatented inventions, payment intangibles,
royalties, contract rights, goodwill, franchise agreements, purchase orders,
customer lists, route lists, telephone numbers, domain names, claims, income and
other tax refunds, security and other deposits, options to purchase or sell real
or personal property, rights in all litigation presently or hereafter pending
(whether in contract, tort or otherwise), insurance policies (including without
limitation key man, property damage, and business interruption insurance),
payments of insurance and rights to payment of any kind.
          “Guarantor” is any present or future guarantor of the Obligations,
including, without limitation, Evergreen Solar Securities Corporation, a
Massachusetts corporation and ESLR1, LLC, a Delaware limited liability company.
          “Guarantor Security Agreement” is that certain Guarantor Security
Agreement, dated as of the Effective Date, executed by each Guarantor in favor
of Bank with respect to the Obligations of Borrower, and any other security
agreement executed by any other guarantor at any time after the Effective Date
in favor of Bank with respect to the Obligations of Borrower.

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          “Guaranty Agreement” is that certain Unconditional Guaranty Agreement,
dated as of the Effective Date, executed by each Guarantor in favor of Bank with
respect to the Obligations of Borrower, and any other guaranty agreement
executed at any time after the Effective Date in favor of Bank with respect to
the Obligations of Borrower.
          “Indebtedness” is (a) indebtedness for borrowed money or the deferred
price of property or services, such as reimbursement and other obligations for
surety bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations, and
(d) Contingent Obligations.
          “Indenture” is that certain First Supplemental Indenture dated as of
July 2, 2008, executed by and between Borrower, as issuer, and U.S. Bank
National Association, as trustee, relating to 4% Senior Convertible Notes due
2013, as supplemented from time to time.
          “Initial Audit” is Bank’s initial inspection of Borrower’s Accounts,
the Collateral, and Borrower’s Books, to occur no later than December 31, 2008.
          “Insolvency Proceeding” is any proceeding by or against any Person
under the United States Bankruptcy Code, or any other bankruptcy or insolvency
law, including assignments for the benefit of creditors, compositions,
extensions generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.
          “Interest Expense” means for any fiscal period, interest expense
(whether cash or non-cash) determined in accordance with GAAP for the relevant
period ending on such date, including, in any event, interest expense with
respect to any Credit Extension and other Indebtedness of Borrower and its
Subsidiaries, if any, including, without limitation or duplication, all
commissions, discounts, or related amortization and other fees and charges with
respect to letters of credit and bankers’ acceptance financing and the net costs
associated with interest rate swap, cap, and similar arrangements, and the
interest portion of any deferred payment obligation (including leases of all
types).
          “Inventory” is all “inventory” as defined in the Code in effect on the
date hereof with such additions to such term as may hereafter be made, and
includes without limitation all merchandise, raw materials, parts, supplies,
packing and shipping materials, work in process and finished products, including
without limitation such inventory as is temporarily out of Borrower’s custody or
possession or in transit and including any returned goods and any documents of
title representing any of the above.
          “Investment” is any beneficial ownership interest in any Person
(including stock, partnership interest or other securities), and any loan,
advance or capital contribution to any Person.
          “Joint Ventures” means EverQ GmbH Joint Venture and any joint ventures
of Borrower entered into after the date hereof.
          “Letter of Credit” means a standby letter of credit issued by Bank or
another institution based upon an application, guarantee, indemnity or similar
agreement on the part of Bank as set forth in Section 2.1.2.
          “Letter of Credit Application” is defined in Section 2.1.2(a).
          “Letter of Credit Reserve” has the meaning set forth in
Section 2.1.2(d).
          “LIBOR Supplement” is attached as Exhibit C hereto.
          “Lien” is a mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.
          “Loan Documents” are, collectively, this Agreement, the Perfection
Certificate, each Guaranty Agreement, each Guarantor Security Agreement, the
Pledge Agreement, any note, or notes or guaranties executed by Borrower or any
Guarantor, and any other present or future agreement between Borrower any
Guarantor and/or for the benefit of Bank in connection with this Agreement, all
as amended, restated, or otherwise modified.
          “Material Adverse Change” is (a) a material impairment in the
perfection or priority of Bank’s Lien in the Collateral or in the value of such
Collateral; (b) a material adverse change in the business, results of
operations, or financial condition of Borrower; (c) a material impairment of the
prospect of repayment of any portion of the Obligations or (d) Bank determines,
based upon information available to it and in its reasonable judgment, that
there

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is a reasonable likelihood that Borrower shall fail to comply with one or more
of the financial covenants in Section 6 during the next succeeding financial
reporting period.
          “Material Indebtedness” is any Indebtedness (excluding trade payables
or other accrued expenses incurred in the ordinary course of business), the
principal amount of which is equal to or greater than One Million Dollars
($1,000,000.00), and in any event, includes the Indebtedness evidenced by the
Indenture.
          “Obligations” are Borrower’s obligation to pay when due any debts,
principal, interest, Bank Expenses and other amounts Borrower owes Bank now or
later, whether under this Agreement, the Loan Documents, or otherwise,
including, without limitation, all obligations relating to letters of credit,
cash management services, and foreign exchange contracts, if any, and including
interest accruing after Insolvency Proceedings begin and debts, liabilities, or
obligations of Borrower assigned to Bank, and the performance of Borrower’s
duties under the Loan Documents.
          “Operating Documents” are, for any Person, such Person’s formation
documents, as certified with the Secretary of State of such Person’s state of
formation on a date that is no earlier than 30 days prior to the Effective Date,
and, (a) if such Person is a corporation, its bylaws in current form, (b) if
such Person is a limited liability company, its limited liability company
agreement (or similar agreement), and (c) if such Person is a partnership, its
partnership agreement (or similar agreement), each of the foregoing with all
current amendments or modifications thereto.
          “Payment” means all checks, wire transfers and other items of payment
received by Bank (including proceeds of Accounts and payment of all the
Obligations in full) for credit to Borrower’s outstanding Credit Extensions or,
if the balance of the Credit Extensions has been reduced to zero, for credit to
its Deposit Accounts.
          “Perfection Certificate” is defined in Section 5.1.
          “Permitted Distributions” is:
          (a) purchases of capital stock from former employees, consultants and
directors pursuant to repurchase agreements or other similar agreements in an
aggregate amount not to exceed Two Hundred Fifty Thousand Dollars ($250,000.00)
in any fiscal year provided that at the time of such purchase no Default or
Event of Default has occurred and is continuing;
          (b) distributions or dividends consisting solely of Borrower’s capital
stock;
          (c) purchases for value of any rights distributed in connection with
any stockholder rights plan;
          (d) purchases of capital stock or options to acquire such capital
stock with the proceeds received from a substantially concurrent issuance of
capital stock or convertible securities;
          (e) purchases of capital stock pledged as collateral for loans to
employees;
          (f) purchases of capital stock in connection with the exercise of
stock options or stock appreciation rights by way of cashless exercise or in
connection with the satisfaction of withholding tax obligations;
          (g) purchases of fractional shares of capital stock arising out of
stock dividends, splits or combinations or business combinations;
          (h) dividends or distributions from Subsidiary to Borrower or another
Subsidiary; and
          (i) the settlement or performance of such Person’s obligations under
any equity derivative transaction, warrant agreement, option contract or similar
transaction or combination of transactions.
          “Permitted Indebtedness” is:
          (a) Borrower’s Indebtedness to Bank under this Agreement and the other
Loan Documents;
          (b) Indebtedness existing on the Effective Date and shown on the
Schedule;

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          (c) Subordinated Debt;
          (d) unsecured Indebtedness to trade creditors incurred in the ordinary
course of business; and
          (e) (1) Indebtedness of Borrower to any Subsidiary and Contingent
Obligations of any Subsidiary with respect to obligations of Borrower (provided
that the primary obligations are not prohibited hereby), and (2) Indebtedness of
any Subsidiary to any other Subsidiary and Contingent Obligations of any
Subsidiary with respect to the obligations of any other Subsidiary (provided
that the primary obligations are not prohibited hereby; and (3) Indebtedness of
any Subsidiary to Borrower that are permitted under clause (d) of the definition
of Permitted Investments, in the aggregate (inclusive of amounts under clause
(d) of Permitted Investments) not to exceed Five Million Dollars ($5,000,000.00)
in any fiscal year;
          (f) Indebtedness incurred as a result of endorsing negotiable
instruments received in the ordinary course of business;
          (g) Indebtedness consisting of reimbursement obligations under letters
of credit issued for the benefit of any landlord or other Person or guarantees
required to secure rental payments on any real estate lease;
          (h) Indebtedness consisting of interest rate, currency, or commodity
swap agreements, interest rate cap or collar agreements or arrangements
designated to protect a Person against fluctuations in interest rates, currency
exchange rates, or commodity prices;
          (i) Indebtedness with respect to documentary letters of credit;
          (j) capitalized leases and purchase money Indebtedness secured by
Permitted Liens;
          (k) Indebtedness consisting of a guaranty of Indebtedness incurred by
the EverQ GmbH Joint Venture, up to a maximum aggregate amount of 15,000,000
EUR;
          (l) Indebtedness of entities acquired in any permitted merger or
acquisition transaction;
          (m) Indebtedness evidenced by the Indenture and the convertible notes
issued thereunder;
          (n) extensions, refinancings, modifications, amendments and
restatements of any items of Permitted Indebtedness (a) through (m) above,
provided that the principal amount thereof is not increased or the terms thereof
are not modified to impose more burdensome terms upon Borrower or its
Subsidiary, as the case may be; and
          (o) the State-Sponsored Loans.
          “Permitted Investments” are:
          (a) Investments on the Effective Date;
          (b) Cash Equivalents;
          (c) (i) marketable direct obligations issued or unconditionally
guaranteed by the United States or its agencies or any State maturing within
1 year from its acquisition, (ii) commercial paper maturing no more than 2 years
after its creation and having the highest rating from either Standard & Poor’s
Corporation or Moody’s Investors Service, Inc., and (iii) Bank’s certificates of
deposit maturing no more than 2 years after issue;
          (d) Investments in, or equity contributions or asset transfers to
Borrower’s Subsidiaries, or the establishment of such Subsidiaries, or
Investments in, or equity contributions or asset transfers in connection with
the Joint Ventures, provided, however, that such investments may not be made
without the prior written consent of Bank unless Borrower’s unrestricted cash at
Bank and Cash Equivalents at Bank minus any outstanding Credit Extensions is,
and will continue to be immediately after any such Investment, at least two and
one-half (2.5) times the maximum amount of the Revolving Line;

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          (e) Investments consisting of Collateral Accounts in the name of
Borrower or any Subsidiary, provided that any such Collateral Accounts are
permitted by this Agreement;
          (f) Investments consisting of extensions of credit to Borrower’s or
its Subsidiaries’ customers in the nature of accounts receivable, prepaid
royalties or notes receivable arising from the sale or lease of goods, provision
of services or licensing activities of Borrower;
          (g) Investments received in satisfaction or partial satisfaction of
obligations owed by financially troubled obligors;
          (h) Investments acquired in exchange for any other Investments in
connection with or as a result of a bankruptcy, workout, reorganization or
recapitalization;
          (i) Investments acquired as a result of a foreclosure with respect to
any secured Investment;
          (j) Investments consisting of interest rate, currency, or commodity
swap agreements, interest rate cap or collar agreements or arrangements
designated to protect a Person against fluctuations in interest rates, currency
exchange rates, or commodity prices;
          (k) Investments consisting of (i) travel advances and employee
relocation loans and other employee loans and advances in the ordinary course of
business and (ii) loans to employees relating to the purchase of equity
securities of Borrower or its Subsidiaries pursuant to employee stock purchase
plan agreements approved by Borrower’s Board of Directors as long as no cash
proceeds are distributed in connection therewith;
          (l) deposits, repayments and other credits to suppliers who are not
Affiliates made in the ordinary course of business;
          (m) Investments received in a transaction permitted under Section 7.3;
          (n) Investments in an aggregate amount of up to Two Million Dollars
($2,000,000) after the Effective Datein the EverQ GmbH Joint Venture;
          (o) Investments in the EverQ GmbH Joint Venture in excess of the
amounts permitted pursuant to clause (d) and (n) hereof (an “Additional
Investment”); provided, however, that prior to making any such Additional
Investment, (I) no Event of Default shall have occurred and be continuing; and
(II) Borrower shall provide Bank (X) ten (10) Business Days advance notice of
Borrower’s intent to make such Additional Investment, and (Y) evidence
satisfactory to Bank, in its reasonable discretion, that immediately prior to
and after giving effect to such Additional Investment, Borrower will be in
compliance with the Liquidity covenant contained in Section 6.9(a) hereof; and
          (p) other Investments in an amount not to exceed One Million Dollars
($1,000,000) in any fiscal year.
          “Permitted Liens” are:
          (a) (i) Liens existing on the Effective Date and shown on the
Perfection Certificate or (ii) Liens arising under this Agreement and the other
Loan Documents;
          (b) Liens for taxes, fees, assessments or other government charges or
levies, either not delinquent or being contested in good faith and for which
Borrower maintains adequate reserves on Borrower’s Books, if they have no
priority over any of Bank’s Liens;
          (c) purchase money Liens or leases (i) on Equipment (including
accessions, additions, parts, replacements, fixtures, improvements and
attachments thereto, and the proceeds thereof) acquired or held by Borrower or
its Subsidiaries incurred for financing such Equipment (including accessions,
additions, parts, replacements, fixtures, improvements and attachments thereto,
and the proceeds thereof) securing no more than Two Million Dollars ($2,000,000)
on the aggregate amount outstanding, or (ii) existing on Equipment (and
accessions, additions, parts, replacements, fixtures, improvements and
attachments thereto, and the proceeds thereof) when

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acquired, if the Lien is confined to such Equipment (including accessions,
additions, parts, replacements, fixtures, improvements and attachments thereto,
and the proceeds thereto);
          (d) Liens in favor of carriers, warehouseman, mechanics, materialmen,
repairmen or other like Liens arising in the ordinary course of business which
are not overdue for a period of more than 30 days or which are being contested
in good faith and by appropriate proceeding if adequate reserves with respect
thereto are maintained on the books of the applicable Person;
          (e) Liens to secure pledges or deposits in the ordinary course of
business in connection with workers’ compensation, unemployment insurance and
compliance with other social security requirements applicable to Borrower;
          (f) Liens in the nature of easements, rights-of-way, restrictions and
other similar encumbrances affecting real property which do not in any case
materially detract from the value of the property subject thereto or materially
interfere with the ordinary conduct of the business of the applicable Person and
which do not represent or secure an obligation for borrowed money;
          (g) Liens arising under lease or rental agreements to secure
landlords, lessors or renters and confined to the premises or property rented so
long as such Liens have been subordinated to Bank’s lien pursuant to an
agreement or agreements in form and substance satisfactory to Bank;
          (h) Liens incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described in (a) through (g), but any extension,
renewal or replacement Lien must be limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness it secures may not
increase;
          (i) leases or subleases of real property granted in the ordinary
course of business, and leases, subleases, non-exclusive licenses or sublicenses
of property (other than real property or intellectual property) granted in the
ordinary course of Borrower’s business, if the leases, subleases, licenses and
sublicenses do not prohibit granting Bank a security interest;
          (j) non-exclusive licenses of intellectual property granted to third
parties in the ordinary course of business, and licenses of intellectual
property that could not result in a legal transfer of title of the licensed
property that may be exclusive in respects other than territory and that may be
exclusive as to territory only as to discreet geographical areas outside of the
United States;
          (k) Liens on assets acquired in mergers and acquisitions not
prohibited by Section 7 of this Agreement;
          (l) Liens consisting of pledges of cash, cash equivalents or
government securities to secure swap or foreign exchange contracts or letters of
credit;
          (m) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under Sections 8.4 or 8.7;
          (n) Liens in favor of other financial institutions arising in
connection with Borrower’s deposit or securities accounts held at such
institutions, to the extent such Liens secure amounts due as a result of
administrative or maintenance of such deposit or securities accounts;
          (o) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), contracts for the purchase of property, leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature, in each case, incurred in the ordinary course of
business and not representing an obligation for borrowed money;
          (p) Liens in favor of customs or revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;

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          (q) Liens on insurance proceeds in favor of insurance companies
granted solely to secure financed insurance premiums; and
          (r) Liens on equipment with a purchase price of up to Twenty-Five
Million Dollars ($25,000,000) to be specified by Borrower to secure amounts
borrowed pursuant to the State–Sponsored Loans.
          “Person” is any individual, sole proprietorship, partnership, limited
liability company, joint venture, company, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or government agency.
          “Pledge Agreement” means the Stock Pledge Agreements, dated as of the
Effective Date, executed by Borrower in favor of Bank with respect to the
Obligations of Borrower, and any other pledge agreement executed at any time
after the Effective Date in favor of Bank with respect to the Obligations of
Borrower.
          “Prime Rate” is the greater of (i) five percent (5.00%) and
(ii) Bank’s most recently announced “prime rate,” even if it is not Bank’s
lowest rate.
          “Registered Organization” is any “registered organization” as defined
in the Code with such additions to such term as may hereafter be made.
          “Reserves” means, as of any date of determination, such amounts as
Bank may from time to time establish and revise in its reasonable discretion
after consultation with Borrower, reducing the amount of Advances and other
financial accommodations which would otherwise be available to Borrower (a) to
reflect adverse events or conditions not contemplated by Borrower’s most recent
business plan presented to and accepted by Bank which, as determined by Bank in
its reasonable discretion after consultation with Borrower, do or may adversely
affect (i) the Collateral or any other property which is security for the
Obligations or its value (including without limitation any material increase in
delinquencies of Accounts), (ii) the assets or business of Borrower or any
Guarantor, or (iii) the security interests and other rights of Bank in the
Collateral (including the enforceability, perfection and priority thereof); or
(b) to reflect Bank’s determination made in its reasonable discretion after
consultation with Borrower that any collateral report or financial information
furnished by or on behalf of Borrower or any Guarantor to Bank is or may have
been incomplete, inaccurate or misleading in any material respect; or (c) in
respect of any state of facts which Bank determines in its reasonable discretion
after consultation with Borrower constitutes an Event of Default or may, with
notice or passage of time or both, constitute an Event of Default. Consultation
with Borrower by the Bank shall consist of at least five (5) business days
written notice by email or otherwise in accordance with Article 10 of the
Agreement and a good faith effort on the part of Bank and Borrower to review
together and discuss the basis for Reserves or an increase in the Reserves. From
time-to-time following the establishment of Reserves, upon the request of
Borrower, Bank shall in good faith consider and consult with Borrower regarding
a reduction in the Reserves in light of any change in, or elimination of, the
events or conditions that gave rise to the Reserves.
          “Responsible Officer” is any of the Chief Executive Officer,
President, Chief Financial Officer and Controller of Borrower.
          “Revolving Line” is an Advance or Advances in an aggregate amount of
up to Forty Million Dollars ($40,000,000) outstanding at any time.
          “Revolving Line Maturity Date” is October       , 2010.
          “Securities Account” is any “securities account” as defined in the
Code with such additions to such term as may hereafter be made.
          “Settlement Date” is defined in Section 2.1.3.
          “State-Sponsored Loans” means loans in the aggregate amount of up to
Twenty Million Dollars ($20,000,000) to be made to Borrower by the Commonwealth
of Massachusetts or agencies thereof or by private banking institutions in
connection with loans made by the Commonwealth of Massachusetts or agencies
thereof.
          “Streamline Period” is, (X) solely for purposes of determining the
LIBOR Rate Margin and the Prime Rate Margin (as each term is defined in the
LIBOR Supplement), each fiscal quarter for which Borrower has maintained, for
the immediately preceding fiscal quarter of Borrower, an average daily balance
of unrestricted cash

- 29 -

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at Bank and Cash Equivalents at Bank minus the average daily balance of
outstanding Credit Extensions for such fiscal quarter in an amount greater than
or equal to One Hundred Million Dollars ($100,000,000); and (Y) for all other
purposes, any date on which Borrower has unrestricted cash at Bank and Cash
Equivalents at Bank minus any outstanding Credit Extensions in an amount greater
than or equal to One Hundred Million Dollars ($100,000,000), as determined by
Bank at any time in its sole discretion.
          “Subordinated Debt” is indebtedness incurred by Borrower subordinated
to all of Borrower’s now or hereafter indebtedness to Bank (either by its terms
or pursuant to a Subordination Agreement or other similar agreement in form and
substance satisfactory to Bank, entered into between Bank and the other
creditor), on terms acceptable to Bank.
          “Subordination Agreement” is defined in Section 7.9.
          “Subsidiary” means, with respect to any Person, any Person of which
more than 50% of the voting stock or other equity interests is owned or
controlled, directly or indirectly, by such Person or one or more Affiliates of
such Person.
          “Transaction Report” is the Bank’s standard reporting package provided
by Bank directly to Borrower.
          “Transfer” is defined in Section 7.1.
          “Unused Revolving Line Facility Fee” is defined in Section 2.4(e).
[Signature page follows.]

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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as a sealed instrument under the laws of the Commonwealth of
Massachusetts as of the Effective Date.
BORROWER:
EVERGREEN SOLAR, INC.

         
By
  /s/ Michael El-Hillow

 
   
Name:
  Michael El-Hillow

 
   
Title:
  Chief Financial Officer

 
   
 
 
 
   

BANK:
SILICON VALLEY BANK

         
By
  /s/ Michael J. Tramack

 
   
Name:
  Michael J. Tramack

 
   
Title:
  Senior Vice President

 
   
 
 
 
   

Effective Date: October 16, 2008
[Signature page to Loan and Security Agreement]

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EXHIBIT A
The Collateral consists of all of Borrower’s right, title and interest in and to
the following personal property:
          (i) all goods, Accounts (including health-care receivables),
Equipment, Inventory, contract rights or rights to payment of money, leases,
license agreements, franchise agreements, General Intangibles (except as
provided below), commercial tort claims, documents, instruments (including any
promissory notes), chattel paper (whether tangible or electronic), cash, deposit
accounts, fixtures, letters of credit rights (whether or not the letter of
credit is evidenced by a writing), securities, and all other investment
property, supporting obligations, and financial assets, whether now owned or
hereafter acquired, wherever located;
          (ii) all Borrower’s Books relating to the foregoing, and any and all
claims, rights and interests in any of the above and all substitutions for,
additions, attachments, accessories, accessions and improvements to and
replacements, products, proceeds and insurance proceeds of any or all of the
foregoing.
          Notwithstanding the foregoing, the Collateral does not include any of
the following, whether now owned or hereafter acquired: (a) more than 65% of the
presently existing and hereafter arising issued and outstanding shares of
capital stock owned by Borrower of any controlled foreign corporation (as
defined in the Internal Revenue Code of 1986, as amended), which shares entitle
the holder thereof to vote for directors or any other matter; or (b) any
copyright rights, copyright applications, copyright registrations and like
protections in each work of authorship and derivative work, whether published or
unpublished, any patents, patent applications and like protections, including
improvements, divisions, continuations, renewals, reissues, extensions, and
continuations-in-part of the same, trademarks, service marks and, to the extent
permitted under applicable law, any applications therefor, whether registered or
not, and the goodwill of the business of Borrower connected with and symbolized
thereby, know-how, operating manuals, trade secret rights, rights to unpatented
inventions, and any claims for damage by way of any past, present, or future
infringement of any of the foregoing; provided, however, the Collateral shall
include all Accounts, license and royalty fees and other revenues, proceeds, or
income arising out of or relating to any of the foregoing.
          Pursuant to the terms of a certain negative pledge arrangement with
Bank, Borrower has agreed not to encumber any of its copyright rights, copyright
applications, copyright registrations and like protections in each work of
authorship and derivative work, whether published or unpublished, any patents,
patent applications and like protections, including improvements, divisions,
continuations, renewals, reissues, extensions, and continuations-in-part of the
same, trademarks, service marks and, to the extent permitted under applicable
law, any applications therefor, whether registered or not, and the goodwill of
the business of Borrower connected with and symbolized thereby, know-how,
operating manuals, trade secret rights, rights to unpatented inventions, and any
claims for damage by way of any past, present, or future infringement of any of
the foregoing, without Bank’s prior written consent.

1

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EXHIBIT B
COMPLIANCE CERTIFICATE

             
TO:
  SILICON VALLEY BANK   Date:    
 
           
FROM:
  EVERGREEN SOLAR, INC.        

          The undersigned authorized officer of EVERGREEN SOLAR, INC.
(“Borrower”) certifies that under the terms and conditions of the Loan and
Security Agreement between Borrower and Bank (the “Agreement”), (1) Borrower is
in complete compliance for the period ending                      with all
required covenants except as noted below, (2) there are no Events of Default,
(3) all representations and warranties in the Agreement are true and correct in
all material respects on this date except as noted below; provided, however,
that such materiality qualifier shall not be applicable to any representations
and warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in
all material respects as of such date, (4) Borrower, and each of its
Subsidiaries, has timely filed all required tax returns and reports, and
Borrower has timely paid all foreign, federal, state and local taxes,
assessments, deposits and contributions owed by Borrower except as otherwise
permitted pursuant to the terms of Section 5.9 of the Agreement, and (5) no
Liens have been levied or claims made against Borrower or any of its
Subsidiaries, if any, relating to unpaid employee payroll or benefits of which
Borrower has not previously provided written notification to Bank. Attached are
the required documents supporting the certification. The undersigned certifies
that these are prepared in accordance with generally GAAP consistently applied
from one period to the next except as explained in an accompanying letter or
footnotes. The undersigned acknowledges that no borrowings may be requested at
any time or date of determination that Borrower is not in compliance with any of
the terms of the Agreement, and that compliance is determined not just at the
date this certificate is delivered. Capitalized terms used but not otherwise
defined herein shall have the meanings given them in the Agreement.
Please indicate compliance status by circling Yes/No under “Complies” column.

          Reporting Covenant   Required   Complies
 
       
Monthly financial statements with Compliance Certificate
  Monthly within 30 days   Yes No
 
       
Annual financial statement (CPA Audited) + CC
  FYE within 120 days   Yes No
 
       
10-Q, 10-K and 8-K
  Within 10 days after filing with SEC   Yes No
 
       
A/R & A/P Agings
  Monthly within 30 days (not required during a Streamline Period)   Yes No
 
       
Projections
  FYE within 60 days   Yes No
 
       
Transaction Reports
  Monthly within 30 days and with each Request for an Advance (not required
during a Streamline Period)   Yes No

The following Intellectual Property was registered after the Effective Date (if
no registrations, state “None”)

                          Financial Covenant   Required     Actual     Complies
 
 
                       
Maintain at all times:
                       
Liquidity
  $                          $                          Yes No

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          The following financial covenant analyses and information set forth in
Schedule 1 attached hereto are true and accurate as of the date of this
Certificate.
          The following are the exceptions with respect to the certification
above: (If no exceptions exist, state “No exceptions to note.”)
     
 
     
 
     
 

          EVERGREEN SOLAR, INC.    
 
       
By:
       
 
       
Name:
       
Title:
       

          BANK USE ONLY    
 
       
Received by:
       
 
       
 
  authorized signer    
Date:
       
 
       
Verified:
       
 
       
 
  authorized signer    
Date:
       
 
       
 
        Compliance Status:      Yes þ No o    

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Schedule 1 to Compliance Certificate
Financial Covenants of Borrower
Dated:                     
I. Liquidity (Section 6.9(a))
Required: Maintain unrestricted cash at Bank and Cash Equivalents at Bank plus
the lesser of (a)(i) the Revolving Line or (ii) the Borrowing Base minus (b) the
amount of all outstanding Letters of Credit (including drawn but unreimbursed
Letters of Credit plus an amount equal to the Letter of Credit Reserves), minus
(c) the FX Reserve, and minus (d) the outstanding principal balance of any
Advances (including any amounts used for Cash Management Services) of at least
Eighty Million Dollars ($80,000,000)
Actual:

         
A. Unrestricted Cash at Bank and Cash Equivalents at Bank
  $                       
 
       
B. Lesser of Revolving Line/Borrowing Base
  $                       
 
       
C. Outstanding Credit Extensions (including Advances, FX Reserves, drawn but
unreimbursed Letters of Credit, Letter of Credit Reserves, amounts used for Cash
Management Services and any other Reserves)
  $                       
 
       
D. LIQUIDITY (line A plus line B minus line C)
  $                       

Is line D equal to or greater than $80,000,000?
                      No, not in compliance           
                      Yes, in compliance

3

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EXHIBIT C
LIBOR SUPPLEMENT TO AGREEMENT
          This LIBOR Supplement to Agreement (the “LIBOR Supplement”) is a
supplement to the Loan and Security Agreement (the “Loan Agreement”) dated as of
October            , 2008 between Silicon Valley Bank (“Bank”) and Evergreen
Solar, Inc. (the “Borrower”), and forms a part of and is incorporated into the
Loan Agreement. Notwithstanding any other provision of the Loan Agreement to the
contrary, the following provisions shall govern with respect to LIBOR Advances
as to the matters covered:
          1 DEFINITIONS.
          “Additional Costs” is defined in Section 6(b) of this LIBOR
Supplement.
          “Continuation Date” means any date on which Borrower elects to
continue a LIBOR Advance into another Interest Period.
          “Conversion Date” means any date on which Borrower elects to convert a
Prime Rate Advance to a LIBOR Advance or a LIBOR Advance to a Prime Rate
Advance.
          “Effective Amount” means with respect to any Advances on any date, the
aggregate outstanding principal amount thereof after giving effect to any
borrowing and prepayments or repayments thereof occurring on such date.
          “Interest Payment Date” means (a) with respect to any LIBOR Advance,
the last day of each Interest Period applicable to such LIBOR Advance and the
last day of each month, and (b) with respect to Prime Rate Advances, the first
(1st ) day of each month (or, if the first day of the month does not fall on a
Business Day, then on the first Business Day following such date), and each date
a Prime Rate Advance is converted into a LIBOR Advance to the extent of the
amount converted to a LIBOR Advance.
          “Interest Period” means, as to any LIBOR Advance, the period
commencing on the date of such LIBOR Advance, or on the conversion/continuation
date on which the LIBOR Advance is converted into or continued as a LIBOR
Advance, and ending on the date that is one (1), two (2), or three (3) months
thereafter, in each case as Borrower may elect in the applicable Notice of
Borrowing or Notice of Conversion/Continuation; provided, however, that (a) no
Interest Period with respect to any LIBOR Advance shall end later than the
Revolving Line Maturity Date, (b) the last day of an Interest Period shall be
determined in accordance with the practices of the LIBOR interbank market as
from time to time in effect, (c) if any Interest Period would otherwise end on a
day that is not a Business Day, that Interest Period shall be extended to the
following Business Day unless, in the case of a LIBOR Advance, the result of
such extension would be to carry such Interest Period into another calendar
month, in which event such Interest Period shall end on the preceding Business
Day, (d) any Interest Period pertaining to a LIBOR Advance that begins on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at the end of
such Interest Period, and (e) interest shall accrue from and include the first
Business Day of an Interest Period but exclude the last Business Day of such
Interest Period.
          “Interest Rate Determination Date” means each date for calculating the
LIBOR for purposes of determining the interest rate in respect of an Interest
Period. The Interest Rate Determination Date shall be the second Business Day
prior to the first day of the related Interest Period for a LIBOR Advance.
          “LIBOR” means, for any Interest Rate Determination Date with respect
to an Interest Period for any Advance to be made, continued as or converted into
a LIBOR Advance, the rate of interest per annum determined by Bank to be the per
annum rate of interest at which deposits in United States Dollars are offered to
Bank in the London interbank market (rounded upward, if necessary, to the
nearest 1/10,000th of one percent (0.0001%)) in which Bank customarily
participates at 11:00 a.m. (local time in such interbank market) two
(2) Business Days prior to the first day of such Interest Period for a period
approximately equal to such Interest Period and in an amount approximately equal
to the amount of such Advance.
          “LIBOR Advance” means an Advance that bears interest based at the
LIBOR Rate.

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          “LIBOR Rate” means, for each Interest Period in respect of LIBOR
Advances comprising part of the same Advances, an interest rate per annum
(rounded upward, if necessary, to the nearest 1/10,000th of one percent
(0.0001%)) equal to the greater of (i) LIBOR for such Interest Period divided by
one (1) minus the Reserve Requirement for such Interest Period or (ii) two and
one-quarter of one percent (2.25%).
          “LIBOR Rate Margin” is three and three quarters of one percent
(3.75%); provided, however, during a Streamline Period, the LIBOR Rate Margin
shall be three percent (3.00%).
          “Notice of Borrowing” means a notice given by Borrower to Bank in
accordance with Section 3(a) of this LIBOR Supplement, substantially in the form
of Schedule I, with appropriate insertions.
          “Notice of Conversion/Continuation” means a notice given by Borrower
to Bank in accordance with Section 4(b) of this LIBOR Supplement, substantially
in the form of Schedule II, with appropriate insertions.
          “Parent” is defined in Section 6(c) of this LIBOR Supplement.
          “Prime Rate Advance” means an Advance that bears interest based at the
Prime Rate.
          “Prime Rate Margin” is one percent (1.00%); provided, however, during
a Streamline Period, the Prime Rate Margin shall be zero percent (0.00%).
          “Regulatory Change” means, with respect to Bank, any change on or
after the Effective Date of the Loan Agreement in United States federal, state,
or foreign laws or regulations, including Regulation D, or the adoption or
making on or after such date of any interpretations, directives, or requests
applying to a class of lenders including Bank, of or under any United States
federal or state, or any foreign laws or regulations (whether or not having the
force of law) by any court or governmental or monetary authority charged with
the interpretation or administration thereof.
          “Reserve Requirement” means, for any Interest Period, the average
maximum rate at which reserves (including any marginal, supplemental, or
emergency reserves) are required to be maintained during such Interest Period
under Regulation D against “Eurocurrency liabilities” (as such term is used in
Regulation D) by member banks of the Federal Reserve System. Without limiting
the effect of the foregoing, the Reserve Requirement shall reflect any other
reserves required to be maintained by Bank by reason of any Regulatory Change
against (a) any category of liabilities which includes deposits by reference to
which the LIBOR Rate is to be determined as provided in the definition of LIBOR
or (b) any category of extensions of credit or other assets which include
Advances.
          2 GENERAL PROVISIONS RELATING TO THE ADVANCES.
          Each Advance shall, at Borrower’s option in accordance with the terms
of the Loan Agreement, be either in the form of a Prime Rate Advance or a LIBOR
Advance; provided that in no event shall Borrower maintain at any time LIBOR
Advances having more than three (3) different Interest Periods. Borrower shall
pay interest accrued on the Advances at the rates and in the manner set forth in
Section 2.3(a) of the Loan Agreement.
          3 PROCEDURES FOR BORROWING.
               (a) Subject to the prior satisfaction of all other applicable
conditions to the making of an Advance set forth in the Loan Agreement, each
Advance shall be made upon Borrower’s irrevocable written notice delivered to
Bank in the form of a Notice of Borrowing, each executed by a Responsible
Officer of Borrower or his or her designee or without instructions if the
Advances are necessary to meet Obligations which have become due. Bank may rely
on any telephone notice given by a person whom Bank believes is a Responsible
Officer or designee. Borrower will indemnify Bank for any loss Bank suffers due
to such reliance. Such Notice of Borrowing must be received by Bank prior to
12:00 p.m. Pacific time, (i) at least three (3) Business Days prior to the
requested Funding Date, in the case of LIBOR Advances, and (ii) on the requested
Funding Date, in the case of Prime Rate Advances, specifying:
               (1) the amount of the Advance;
               (2) the requested Funding Date;

2

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               (3) whether the Advance is to be comprised of LIBOR Advances or
Prime Rate Advances; and
                         (4) the duration of the Interest Period applicable to
any such LIBOR Advances included in such notice; provided that if the Notice of
Borrowing shall fail to specify the duration of the Interest Period for any
Advance comprised of LIBOR Advances, such Interest Period shall be one
(1) month.
               (b) The proceeds of all such Advances will then be made available
to Borrower on the Funding Date by Bank by transfer to the Designated Deposit
Account and, subsequently, by wire transfer to such other account as Borrower
may instruct in the Notice of Borrowing. No Advances shall be deemed made to
Borrower, and no interest shall accrue on any such Advance, until the related
funds have been deposited in the Designated Deposit Account.
          4 CONVERSION AND CONTINUATION ELECTIONS.
               (a) So long as (i) no Event of Default or Default exists;
(ii) Borrower shall not have sent any notice of termination of the Loan
Agreement; and (iii) Borrower shall have complied with such customary and
reasonable procedures as Bank has established from time to time for Borrower’s
requests for LIBOR Advances, Borrower may, upon irrevocable written notice to
Bank:
                         (1) elect to convert on any Business Day, Prime Rate
Advances into LIBOR Advances;
                         (2) elect to continue on any Interest Payment Date any
LIBOR Advances maturing on such Interest Payment Date; or
                         (3) elect to convert on any Interest Payment Date any
LIBOR Advances maturing on such Interest Payment Date into Prime Rate Advances.
               (b) Borrower shall deliver a Notice of Conversion/Continuation to
be received by Bank prior to 12:00 p.m. Pacific time (i) at least three
(3) Business Days in advance of the Conversion Date or Continuation Date, if any
Advances are to be converted into or continued as LIBOR Advances; and (ii) on
the Conversion Date, if any Advances are to be converted into Prime Rate
Advances, in each case specifying the:
               (1) proposed Conversion Date or Continuation Date;
               (2) aggregate amount of the Advances to be converted or
continued;
               (3) nature of the proposed conversion or continuation; and
               (4) duration of the requested Interest Period.
               (c) If upon the expiration of any Interest Period applicable to
any LIBOR Advances, Borrower shall have failed to timely select a new Interest
Period to be applicable to such LIBOR Advances, Borrower shall be deemed to have
elected to convert such LIBOR Advances into Prime Rate Advances.
               (d) Any LIBOR Advances shall, at Bank’s option, convert into
Prime Rate Advances in the event that (i) an Event of Default or Default shall
exist, or (ii) the aggregate principal amount of the Prime Rate Advances which
have been previously converted to LIBOR Advances, or the aggregate principal
amount of existing LIBOR Advances continued, as the case may be, at the
beginning of an Interest Period shall at any time during such Interest Period
exceed the Revolving Line. Borrower agrees to pay Bank, upon demand by Bank (or
Bank may, at its option, charge the Designated Deposit Account or any other
account Borrower maintains with Bank) any amounts required to compensate Bank
for any loss (including loss of anticipated profits), cost, or expense incurred
by Bank, as a result of the conversion of LIBOR Advances to Prime Rate Advances
pursuant to any of the foregoing.

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               (e) Notwithstanding anything to the contrary contained herein,
Bank shall not be required to purchase United States Dollar deposits in the
London interbank market or other applicable LIBOR market to fund any LIBOR
Advances, but the provisions hereof shall be deemed to apply as if Bank had
purchased such deposits to fund the LIBOR Advances.
          5 SPECIAL PROVISIONS GOVERNING LIBOR ADVANCES.
               (a) Determination of Applicable Interest Rate. As soon as
practicable on each Interest Rate Determination Date, Bank shall determine
(which determination shall, absent manifest error in calculation, be final,
conclusive and binding upon all parties) the interest rate that shall apply to
the LIBOR Advances for which an interest rate is then being determined for the
applicable Interest Period and shall promptly give notice thereof (in writing or
by telephone confirmed in writing) to Borrower.
               (b) Inability to Determine Applicable Interest Rate. In the event
that Bank shall have reasonably determined (which determination shall be final
and conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date with respect to any LIBOR Advance, that by reason of
circumstances affecting the London interbank market adequate and fair means do
not exist for ascertaining the interest rate applicable to such Advance on the
basis provided for in the definition of LIBOR, Bank shall on such date give
notice (by facsimile or by telephone confirmed in writing) to Borrower of such
determination, whereupon (i) no Advances may be made as, or converted to, LIBOR
Advances until such time as Bank notifies Borrower that the circumstances giving
rise to such notice no longer exist, and (ii) any Notice of Borrowing or Notice
of Conversion/Continuation given by Borrower with respect to Advances in respect
of which such determination was made shall be deemed to be rescinded by
Borrower.
               (c) Compensation for Breakage or Non-Commencement of Interest
Periods. Borrower shall compensate Bank, upon written request by Bank (which
request shall set forth the manner and method of computing such compensation),
for all reasonable losses, expenses and liabilities, if any (including any
interest paid by Bank to lenders of funds borrowed by it to make or carry its
LIBOR Advances and any loss, expense or liability incurred by Bank in connection
with the liquidation or re-employment of such funds) such that Bank may incur:
(i) if for any reason (other than a default by Bank or due to any failure of
Bank to fund LIBOR Advances due to impracticability or illegality under
Sections 6(d) and 6(e) of this LIBOR Supplement) a borrowing or a conversion to
or continuation of any LIBOR Advance does not occur on a date specified in a
Notice of Borrowing or a Notice of Conversion/Continuation, as the case may be,
or (ii) if any principal payment or any conversion of any of its LIBOR Advances
occurs on a date prior to the last day of an Interest Period applicable to that
Advance.
               (d) Assumptions Concerning Funding of LIBOR Advances. Calculation
of all amounts payable to Bank under this Section 5 and under Section 3 of this
LIBOR Supplement shall be made as though Bank had actually funded each of its
relevant LIBOR Advances through the purchase of a Eurodollar deposit bearing
interest at the rate obtained pursuant to the definition of LIBOR Rate in an
amount equal to the amount of such LIBOR Advance and having a maturity
comparable to the relevant Interest Period; provided, however, that Bank may
fund each of its LIBOR Advances in any manner it sees fit and the foregoing
assumptions shall be utilized only for the purposes of calculating amounts
payable under this Section 5 and under Section 3 of this LIBOR Supplement.
               (e) LIBOR Advances After and Event of Default. After the
occurrence and during the continuance of an Event of Default, (i) Borrower may
not elect to have an Advance be made or continued as, or converted to, a LIBOR
Advance after the expiration of any Interest Period then in effect for such
Advance and (ii) subject to the provisions of Section 5(c) of this LIBOR
Supplement, any Notice of Conversion/Continuation given by Borrower with respect
to a requested conversion/continuation that has not yet occurred shall be deemed
to be rescinded by Borrower and be deemed a request to convert or continue
Advances referred to therein as Prime Rate Advances.
          6 ADDITIONAL REQUIREMENTS/PROVISIONS REGARDING LIBOR ADVANCES.
               (a) If for any reason (including voluntary or mandatory
prepayment or acceleration), Bank receives all or part of the principal amount
of a LIBOR Advance prior to the last day of the Interest Period for such
Advance, Borrower shall immediately notify Borrower’s account officer at Bank
and, on demand by Bank, pay Bank the amount (if any) by which (i) the additional
interest which would have been payable on the amount so received had it not been
received until the last day of such Interest Period exceeds (ii) the interest
which would have

4

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been recoverable by Bank by placing the amount so received on deposit in the
certificate of deposit markets, the offshore currency markets, or United States
Treasury investment products, as the case may be, for a period starting on the
date on which it was so received and ending on the last day of such Interest
Period at the interest rate determined by Bank in its reasonable discretion.
Bank’s determination as to such amount shall be conclusive absent manifest
error.
               (b) Borrower shall pay Bank, upon demand by Bank, from time to
time such amounts as Bank may determine to be necessary to compensate it for any
reasonable costs incurred by Bank that Bank determines are attributable to its
making or maintaining of any amount receivable by Bank hereunder in respect of
any Advances relating thereto (such increases in costs and reductions in amounts
receivable being herein called “Additional Costs”), in each case resulting from
any Regulatory Change which:
               (1) changes the basis of taxation of any amounts payable to Bank
under the Loan Agreement in respect of any Advances (other than changes which
affect taxes measured by or imposed on the overall net income of Bank by the
jurisdiction in which Bank has its principal office);
               (2) imposes or modifies any reserve, special deposit or similar
requirements relating to any extensions of credit or other assets of, or any
deposits with, or other liabilities of Bank (including any Advances or any
deposits referred to in the definition of LIBOR); or
               (3) imposes any other condition affecting the Loan Agreement (or
any of such extensions of credit or liabilities).
          Bank will notify Borrower of any event occurring after the Effective
Date which will entitle Bank to compensation pursuant to this Section 6 as
promptly as practicable after it obtains knowledge thereof and determines to
request such compensation. Bank will furnish Borrower with a statement setting
forth the basis and amount of each request by Bank for compensation under this
Section 6. Determinations and allocations by Bank for purposes of this Section 6
of the effect of any Regulatory Change on its costs of maintaining its
obligations to make Advances, of making or maintaining Advances, or on amounts
receivable by it in respect of Advances, and of the additional amounts required
to compensate Bank in respect of any Additional Costs, shall be made in good
faith and be conclusive absent manifest error.
               (c) If Bank shall reasonably determine that the adoption or
implementation after the Effective Date of any applicable law, rule, regulation,
or treaty regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any governmental authority,
central bank, or comparable agency charged with the interpretation or
administration thereof, or compliance by Bank (or its applicable lending office)
with any respect or directive adopted regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank, or comparable
agency, has or would have the effect of reducing the rate of return on capital
of Bank or any person or entity controlling Bank (a “Parent”) as a consequence
of its obligations hereunder to a level below that which Bank (or its Parent)
could have achieved but for such adoption, change, or compliance (taking into
consideration policies with respect to capital adequacy) by an amount reasonably
deemed by Bank to be material, then from time to time, within fifteen (15) days
after demand by Bank, Borrower shall pay to Bank such additional amount or
amounts as will compensate Bank for such reduction. A statement of Bank claiming
compensation under this Section 6(c) and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive absent manifest error.
               (d) If, at any time, Bank, in its reasoanable discretion,
determines that (i) the amount of LIBOR Advances for periods equal to the
corresponding Interest Periods are not available to Bank in the offshore
currency interbank markets, or (ii) LIBOR does not accurately reflect the cost
to Bank of lending the LIBOR Advances, then Bank shall promptly give notice
thereof to Borrower. Upon the giving of such notice, Bank’s obligation to make
the LIBOR Advances shall terminate; provided, however, Advances shall not
terminate if Bank and Borrower agree in writing to a different interest rate
applicable to LIBOR Advances.
               (e) If it shall become unlawful for Bank to continue to fund or
maintain any LIBOR Advances, or to perform its obligations hereunder, upon
demand by Bank, Borrower shall prepay the Advances in full with accrued interest
thereon and all other amounts payable by Borrower hereunder (including, without
limitation, any amount payable in connection with such prepayment pursuant to
Section 6(a) of this LIBOR Supplement). Notwithstanding the foregoing, to the
extent a determination by Bank as described above relates to a LIBOR Advance
then being requested by Borrower pursuant to a Notice of Borrowing or a Notice
of

5

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Conversion/Continuation, Borrower shall have the option, subject to the
provisions of Section 5(c) of this LIBOR Supplement, to (i) rescind such Notice
of Borrowing or Notice of Conversion/Continuation by giving notice (by facsimile
or by telephone confirmed in writing) to Bank of such rescission on the date on
which Bank gives notice of its determination as described above, or (ii) modify
such Notice of Borrowing or Notice of Conversion/Continuation to obtain a Prime
Rate Advance or to have outstanding Advances converted into or continued as
Prime Rate Advances by giving notice (by facsimile or by telephone confirmed in
writing) to Bank of such modification on the date on which Bank gives notice of
its determination as described above.

6

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SCHEDULE I
FORM OF NOTICE OF BORROWING
EVERGREEN SOLAR, INC.
Date:                               

To:   Silicon Valley Bank
3003 Tasman Drive
Santa Clara, CA 95054
Attention: Corporate Services Department

Re:   Loan and Security Agreement dated as of October           , 2008 (as
amended, modified, supplemented or restated from time to time, the “Loan
Agreement”), by and between Evergreen Solar, Inc. (“Borrower”), and Silicon
Valley Bank (“Bank”)

Ladies and Gentlemen:
          The undersigned refers to the Loan Agreement, the terms defined
therein and used herein as so defined, and hereby gives you notice irrevocably,
pursuant to Section 3 of the LIBOR Supplement to the Loan Agreement, of the
borrowing of an Advance.
          1. The Funding Date, which shall be a Business Day, of the requested
borrowing is                                         .
          2. The aggregate amount of the requested borrowing is
$                                        .
          3. The requested Advance shall consist of
$                                         of Prime Rate Advances and
$                                           of LIBOR Advances.
          4. The duration of the Interest Period for the LIBOR Advances included
in the requested Advance shall be                                         
month(s).
          The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the proposed Advance
before and after giving effect thereto, and to the application of the proceeds
therefrom, as applicable:
          (a) all representations and warranties of Borrower contained in the
Loan Agreement are true, accurate and complete in all material respects as of
the date hereof;
          (b) no Default or Event of Default has occurred and is continuing, or
would result from such proposed Advance; and
          (c) the requested Advance (i) if during a Streamline Period, will not
exceed, as of the Funding Date, the Committed Availability, and (ii) at all
other times will not cause the aggregate principal amount of the outstanding
Advances to exceed, as of the designated Funding Date, (a) the Revolving Line,
minus (b) the amount of all outstanding Letters of Credit (including drawn but
unreimbursed Letters of Credit plus an amount equal to the Letter of Credit
Reserves), minus (c) the FX Reserve, and minus (d) the outstanding principal
balance of any Advances (including any amounts used for Cash Management
Services).
[Signature page follows.]

7

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                  Borrower:           EVERGREEN SOLAR, INC.    
 
           
 
  By:          
 
  Name:    
 
   
 
  Title:    
 
   
 
     
 
   

     For internal Bank use only

              LIBOR Pricing Date   LIBOR   LIBOR Variance   Maturity Date      
                                    %    

8

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SCHEDULE II
FORM OF NOTICE OF CONVERSION/CONTINUATION
EVERGREEN SOLAR, INC.
Date:                                                                 

To:   Silicon Valley Bank
3003 Tasman Drive
Santa Clara, CA 95054
Attention:

Re:   Loan and Security Agreement dated as of October ___, 2008 (as amended,
modified, supplemented or restated from time to time, the “Loan Agreement”), by
and between Evergreen Solar, Inc. (“Borrower”), and Silicon Valley Bank (“Bank”)

Ladies and Gentlemen:
          The undersigned refers to the Loan Agreement, the terms defined
therein being used herein as therein defined, and hereby gives you notice
irrevocably, pursuant to Section 4 of the LIBOR Supplement to the Loan
Agreement, of the [conversion] [continuation] of the Advances specified herein,
that:
          1. The date of the [conversion] [continuation] is
                    , 20                    .
          2. The aggregate amount of the proposed Advances to be [converted] is
$                                           or [continued] is
$                                         .
          3. The Advances are to be [converted into] [continued as] [LIBOR]
[Prime Rate] Advances.
          4. The duration of the Interest Period for the LIBOR Advances included
in the [conversion] [continuation] shall be             month(s).
          The undersigned, on behalf of Borrower, hereby certifies that the
following statements are true on the date hereof, and will be true on the date
of the proposed [conversion] [continuation], before and after giving effect
thereto and to the application of the proceeds therefrom:
          (a) all representations and warranties of Borrower stated in the Loan
Agreement are true, accurate and complete in all material respects as of the
date hereof; and
          (b) no Default or Event of Default has occurred and is continuing, or
would result from such proposed [conversion] [continuation].
[Signature page follows.]

1

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                  Borrower:    
 
                EVERGREEN SOLAR, INC.    
 
           
 
  By:          
 
  Name:    
 
   
 
  Title:    
 
   
 
     
 
   

     For internal Bank use only

              LIBOR Pricing Date   LIBOR   LIBOR Variance   Maturity Date      
                                    %    

2