LOAN
      AGREEMENT

    


    THIS
      LOAN AGREEMENT (this
      “Agreement”)
      is
      made and entered into as of October 30th
      2008, by
      and among, the undersigned,

    


    ALGATEC
      SOLAR AG,
      a
      German stock corporation (Aktiengesellschaft)
      organized under the laws of Germany, registered with the commercial register
      (Handelsregister)
      of the
      local court (Amtsgericht)
      of
      Cottbus under registration number HRB 8146 CB and having its registered office
      in Röderland, Germany (herein called the “Company”);
      and

    


    ALGATEC
      EQUITY PARTNERS, L.P.,
      a
      limited partnership organized under the laws of the State of Delaware, U.S.A.,
      having principal place of business at 25, Highland Boulevard, Dix Hill, New
      York, 11746, USA (the “Partnership”)
      (the
      Company and the Partnership herein collectively referred to as the “Parties”
and
      each as a “Party”)

    


    Recitals

    


    WHEREAS,
      this
      Agreement is entered into in connection with a Share Purchase Agreement dated
      as
      of the date hereof by and among the Company, Roland Richter, Esq.,( as trustee
      for Mr. Rainer Ruschke), Mr. Ullrich Janks, Dr. Stefan Malik, Mr. Andre Freud
      and the Partnership (as from time to time amended, the “Share
      Purchase Agreement”).
      All
      capitalized terms not separately defined in this Agreement, shall have the
      same
      meanings as defined in the Share Purchase Agreement.

    


    WHEREAS,
      under
      the Share Purchase Agreement, and subject to the terms and conditions set forth
      herein and therein, the Partnership has undertaken to grant the Company a loan
      (the “Loan”)
      in the
      principal amount of Two Million Euros (€2,000,000).

    


    NOW,
      THEREFORE,
      the
      Parties hereto agree as follows:

    


    1. The
      Loan.
      

    


    (a) The
      Partnership agrees to lend to the Company and the Company agrees to borrow
      from
      the Partnership the principal amount of Two Million Euros (€2,000,000) (the
“Principal
      Amount”)
      and
      the Company, in each case subject to the condition precedent (aufschiebende
      Bedingung)
      that
      the First Closing (as defined under the Share Purchase Agreement) has
      occurred.

    


    (b) The
      Principal Amount shall be paid out in Euros to the Company by wire transfer
      of
      immediately available funds free of bank and other charges, to be received
      (Wertstellung) at
      the
      latest on November 30, 2008, to the following bank account: [Note
      L&W to Algatec: Please provide account details.]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    2. Interest. Interest
      shall accrue on the outstanding balance of the Loan at the rate of six percent
      (6%) per annum (computed on the basis on the basis of the actual number of
      days
      elapsed of a 360-day year) from and including the date of receipt of the
      Principal Amount by the Company until (and excluding) the date of repayment
      of
      the Loan. Such interest shall be due and payable in full on the Maturity
      Date.

    


    3. Maturity
      Date.
      

    


    (a) The
      Company shall (subject to the substitution right set forth in Section [ ] below)
      repay the outstanding amount of the Loan (i.e.,
      any
      outstanding portion of the Principal Amount together with any accrued interest)
      on a date (the “Maturity
      Date”)
      which
      shall be the earlier
      to occur
      of (a) December 31, 2011, or (b) the consummation of the “Algatec Financing” as
      hereinafter defined. 

    


    (b) Repayment
      of the Loan shall be made in Euros by wire transfer of immediately available
      funds, free of bank and other charges, to the attorneys’ client trust escrow
      account of Hodgson Russ LLP, set forth below:

    


    The
      Hodgson Russ LLP wire instructions for its client’s
      trust account.
      Please
      note that for foreign wires the swift code should be used, because it speeds
      up
      the receiving of the foreign wire.

    


    Bank
      -
      Manufacturers and Traders Trust Company

    Buffalo
      New York

    ABA
       #022000046

    Account
      Name- Hodgson Russ LLP

    Client’s
      Trust Account Number #103143

    Foreign
      Wire - M & T Swift Code MANTUS33

    Wire
      Reference - Algatec Equity Partners L.P. (054436.00003)

    Wire
      Contact: Sandy Pulli Ext. (001) 716-848-1378

     

    4. Prepayment.  The
      Company shall have the right, but not the obligation, to prepay all or any
      portion of the, prior to the Maturity Date without premium or
      penalty.

    


    5. Events
      of Default.
      An
“Event
      of Default”
under
      this Agreement shall exist if any of the following conditions or events shall
      occur and be continuing:

    


    a. The
      Company defaults in the payment of the outstanding Principal Amount or any
      interest thereon when the same become due and payable on the Maturity Date
      and
      such default has not been cured within twenty (20) Business Days;
      or

    


    b. The
      Management Stockholders are in breach or violation in any material respect
      any
      of their covenants and agreements contained in the Share Purchase Agreement
      and
      such default has not been cured for twenty (20) Business Days after written
      notice of default is given to the Company; or



    
      
        
        

      

      
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    c. any
      representation or warranty made by the Management Stockholders in the Share
      Purchase Agreement have been false or incorrect in any material respect on
      the
      date as of which made, and such condition, if capable of being cured, has not
      been cured for twenty (20) Business Days after written notice of default is
      given to the Company; or

    


    d. the
      Company (i) is generally not paying, or admits in writing its inability to
      pay,
      its debts as they become due, (ii) files, or consents by answer or otherwise
      to
      the filing against it of, a petition for relief or reorganization or arrangement
      or any other petition in bankruptcy, for liquidation or to take advantage of
      any
      bankruptcy, insolvency, reorganization, moratorium or other similar law of
      any
      jurisdiction, (iii) is adjudicated as insolvent or to be liquidated, or (iv)
      takes corporate action for the purpose of any of the foregoing; or

    


    e. a
      court
      or governmental authority of competent jurisdiction enters an order appointing,
      without consent of the Company, a custodian, receiver, trustee or other officer
      with similar powers with respect to it or with respect to any substantial part
      of its property, or constituting an order for relief or approving a petition
      for
      relief or reorganization or any other petition in bankruptcy or for liquidation
      or to take advantage of any bankruptcy or insolvency law of any jurisdiction,
      or
      ordering the dissolution, winding-up or liquidation of any of the Corporations,
      or any such petition shall be filed against the Company and such petition shall
      not be dismissed within sixty (60) days.

    


    6. Remedies
      on Default

    


    a. Acceleration.

    


    (i) If
      an
      Event of Default described in paragraph (e) or (f) of Section 5 (other than
      an
      Event of Default described in clause (i) of paragraph (e) or described in clause
      (iv) of paragraph (e) by virtue of the fact that such clause encompasses clause
      (i) of paragraph (e)) has occurred, the outstanding amount of the Loan
      (i.e.,
      any
      outstanding portion of the Principal Amount together with any unpaid accrued
      interest) shall automatically become immediately due and payable.

    


    (ii) If
      any
      other Event of Default has occurred and is continuing, the Partnership may
      at
      any time at its option, by notice to the Company, declare the Loan (i.e.,
      any
      outstanding portion of the Principal Amount together with any unpaid accrued
      interest) to be immediately due and payable.

    


    (iii) Upon
      the
      Loan (i.e.,
      any
      outstanding portion of the Principal Amount together with any accrued interest)
      becoming due and payable under this Section 6(a), whether automatically or
      by
      declaration (a “Default”),
      it
      will forthwith mature and the entire unpaid amount of the Loan (i.e.,
      any
      outstanding portion of the Principal Amount together with any unpaid accrued
      interest) shall all be immediately due and payable, in each and every case
      without presentment, demand, protest or further notice, all of which are hereby
      waived.



    
      
        
        

      

      
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    d. No
      Waivers or Election of Remedies, Expenses, Etc.
      No
      course of dealing and no delay on the part of the Partnership in exercising
      any
      right, power or remedy shall operate as a waiver thereof or otherwise prejudice
      the Partnership's rights, powers or remedies, unless the contrary is
      specifically stated. No right, power or remedy conferred by this Agreement
      shall
      be exclusive of any other right, power or remedy referred to herein or therein
      or now or hereafter available at law, in equity, by statute or otherwise.


    


    7. Substitution
      Right.

    


    a. In
      the
      event (and only in the event) that the Algatec Financing shall not be
      consummated prior to December 31, 2011, the Company shall have the right, but
      not the obligation, to request, by giving written notice (the “Substitution
      Request”)
      to the
      Partnership within thirty (30) Business Days prior to December 31, 2011, to
      request that the Partnership (at the Company’s election) either waives the Loan
      or contributes (einlegen)
      the
      Loan (i.e.,
      any
      outstanding portion of the Principal Amount together with any unpaid accrued
      interest) into the Company, in exchange for either the issuance by the Company
      or the sale and assignment by the shareholders of the Company (other than the
      Partnership) to the Partnership, in each case, for that number of the ordinary
      shares in the Company (the “Substitute
      Shares”)
      that,
      when taken together with and added to the number of shares issued to the
      Partnership under the Share Purchase Agreement, shall represent a total of
      75%
      of the registered capital in the Company at the time of the issuance of the
      Substitute Shares, subject to reduction of such percentage in the event of
      a
      prior share capital increase in the Company approved by the Management
      Stockholders and the Partnership and in which the Partnership shall not
      participate. 

    


    b. The
      Substitution Request shall be accompanied by a binding written offer of those
      shareholders of the Company which are offering to sell the Substitute Shares
      to
      the Partnership. Such offer shall provide for (i) the number of Substitute
      Shares being offered to be sold by the respective shareholder, (ii) the purchase
      price for the Substitute Shares (which shall be equal to their nominal amount
      (€.01 per share), and (iii) for no representations and warranties by such
      shareholder other than representations and warranties to the effect that (x)
      such shareholder is the sole legal and beneficial owner of the Substitute Shares
      offered to be sold by him, (y) that such shares are fully paid-up and validly
      issued and (z) are free and clear of any third party rights.

    


    c. Following
      receipt of a Substitution Request which is accompanied by such binding written
      offer, the Partnership, shall accept the offer to acquire the Substitute Shares,
      shall no longer be entitled to request repayment of the Loan (i.e.,
      any
      outstanding portion of the Principal Amount and any unpaid accrued interest)
      and
      shall enter into such agreements with the Company as may be required to (at
      the
      Company’s election) waive repayment of the Loan or contribute it to the Company
      (provided that if the Partnership refuses to enter into such agreements it
      shall
      be deemed, for all purposes, to have waived repayment of the Loan upon delivery
      to the Partnership of the Substitute Shares).



    
      
        
        

      

      
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    8. Assignments.
      Neither
      Party may not assign, delegate or otherwise transfer any right, claim or
      obligation it may have under this Agreement without the other Party’s written
      consent. 

    


    9. Applicable
      Law. This
      Agreement shall be construed and enforced in accordance with, and the rights
      of
      the Parties shall be governed by, the laws of the Germany excluding
      choice-of-law that would require the application of the laws of a different
      jurisdiction other than such State. 

    


    10. Jurisdiction.
      For
      any
      dispute, controversy or claim arising from or in connection with this Agreement
      or its the competent courts in Frankfurt am Main shall have exclusive
      jurisdiction. The Partnership hereby consents to the personal jurisdiction
      of
      such courts and shall subject itself to such personal jurisdiction. Any action,
      suit or proceeding relating to such matters shall be commenced, pursued,
      defended and resolved only in such courts and any appropriate appellate court
      having jurisdiction to hear an appeal from any judgment entered in such courts.
      The Partnership irrevocably waives the defense of an inconvenient forum to
      the
      maintenance of such suit or proceeding.

    


    11. Facsimile
      Signatures. This
      Note
      may be executed by facsimile signature which shall, for all purposes be deemed
      to be as legally valid and binding upon the Company as a ribbon original
      signature.

    


    12. Severability.
      Should
      any provision of this Agreement be or become, or be deemed to be or become,
      invalid or unenforceable as a whole or in part, the validity and enforceability
      of the remaining provisions shall not be affected thereby. Any such invalid
      or
      unenforceable provision shall, to the extent permitted by law, be deemed
      replaced by such valid and enforceable provision as comes closest to the
      economic intent and purpose of such invalid or unenforceable provision. The
      same
      shall apply in the event that this Agreement contains any gaps (Vertragslücken).
      


    


    the
      balance of this instrument is intentionally left blank - signature page
      follows


    
      
        
        

      

      
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    IN
      WITNESS WHEREOF, the Company has executed and delivered this Loan Agreement
      as
      of the date and year first above written.

    


    ALGATEC
      SOLAR AG

    


    
      	
              By:
                

            	
              /s/
                Rainer Ruschke

            	 
	
              Name:
                

            	
              Rainer
                Ruschke,

            	 
	
              Title:
                

            	
              President
                and Chief Executive Officer

            	 


    

    


    
      	
              ALGATEC
                EQUITY PARTNERS, L.P.

            
	 	
              By:

            	
              Algatec
                Management LLC

            
	 	 	
              (General
                Partner)

            
	 	 	 
	 	 	
              By:


            	
              /s/
                Robert M. Rubin

            	 
	 	 	
              Name: 

            	
              Robert
                M. Rubin,

            	 
	 	 	
              Title:

            	
              Managing
                Member

            	 


    

     

    
      
        
        

      

      
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