DISTRIBUTION AND MARKETING AGREEMENT

                                     BETWEEN

                              EVERGREEN SOLAR, INC.

                                       AND

                         KAWASAKI HEAVY INDUSTRIES, LTD

                                DECEMBER 24, 1999


<PAGE>   2
                                      -i-


                                TABLE OF CONTENTS



                                                                                                              
1.    RIGHTS OF DISTRIBUTOR; EXCLUSIVITY..........................................................................1
   1.1   Appointment..............................................................................................1
   1.2   Rights of Distributor....................................................................................2
   1.3   Custom Products..........................................................................................2
   1.4   Exclusivity; Noncompetition..............................................................................3
2.    INTELLECTUAL PROPERTY.......................................................................................4
   2.1   Improvements.............................................................................................4
   2.2   Retained Rights..........................................................................................5
   2.3   Trademarks...............................................................................................6
3.    PRICING; PURCHASE ORDERS....................................................................................7
   3.1   Pricing..................................................................................................7
   3.2   Purchase Orders..........................................................................................8
   3.3   Modification of Delivery Date............................................................................8
   3.4   Cancellation of Order....................................................................................9
4.    INVOICE AND RELATED COMMERCIAL TERMS........................................................................9
   4.1   Payment Terms............................................................................................9
   4.2   Past Due Payments........................................................................................9
   4.3   Cancellation By Seller..................................................................................10
   4.4   Payment on Delayed Shipments............................................................................10
   4.5   Shipments...............................................................................................10
   4.6   Security Interest.......................................................................................10
5.    SALES AND MARKETING ACTIVITIES.............................................................................10
   5.1   Sales and Marketing Support and Technical Assistance....................................................10
   5.2   Promotional Material....................................................................................11
   5.3   Prohibited Marketing Practices..........................................................................12
   5.4   Trade Shows.............................................................................................12
   5.5   Product Recall..........................................................................................12
6.    LIMITED WARRANTY...........................................................................................13
7.    LIMITATION OF LIABILITY....................................................................................13
8.    TERM; TERMINATION..........................................................................................13
   8.1   Term....................................................................................................13
   8.2   Termination by Distributor..............................................................................14
   8.3   Termination by Seller...................................................................................14
   8.4   Continuing Obligations..................................................................................14
   8.5   Purchase of Inventory...................................................................................15
   8.6   Survival of Provisions..................................................................................15
9.    INDEMNIFICATION............................................................................................15
   9.1   Indemnification by Seller...............................................................................15
   9.2   Indemnification By Distributor..........................................................................16
   9.3   Notice of Indemnification...............................................................................16
   9.4   Assumption of Defense...................................................................................16
   9.5   Failure to Defend.......................................................................................16
   9.6   Conflicts of Interest...................................................................................16

<PAGE>   3
                                      -ii-




                                                                                                             
   9.7   Settlement..............................................................................................17
   9.8   Participation...........................................................................................17
   9.9   Sole Obligations........................................................................................17
   9.10     Liability Insurance..................................................................................17
10.   CONFIDENTIAL INFORMATION...................................................................................17
   10.1     Confidential Treatment of Information................................................................17
   10.2     Disclosure of Terms of Agreement.....................................................................18
   10.3     Survival of Confidentiality Obligations..............................................................19
11.   RECORDS; REPORTS...........................................................................................19
12.   COLLABORATION..............................................................................................19
13.   GENERAL....................................................................................................19
   13.1     Compliance with Laws.................................................................................19
   13.2     Severability.........................................................................................19
   13.3     Assignment...........................................................................................20
   13.4     Governing Law........................................................................................20
   13.5     UN Convention on Contracts for the International Sale of Goods.......................................20
   13.6     Complete Agreement; Amendment........................................................................20
   13.7     Waiver...............................................................................................20
   13.8     Relationship of the Parties..........................................................................21
   13.9     Force Majeure........................................................................................21
   13.10    Notices..............................................................................................21
   13.11    Headers..............................................................................................22
   13.12    Counterparts.........................................................................................22




<PAGE>   4


                      DISTRIBUTION AND MARKETING AGREEMENT

     This DISTRIBUTION AND MARKETING AGREEMENT (the "Agreement") is made as of
this 24th day of December, 1999 (the "Effective Date"), by and between Evergreen
Solar, Inc., a corporation organized and existing under the laws of the State of
Delaware having its principal office at 211 Second Avenue, Waltham,
Massachusetts 02451 USA ("Seller"), and Kawasaki Heavy Industries, Ltd., a
corporation organized and existing under the laws of Japan having its principal
office at 4-1 Hamamatsucho-2-chome, Minato-ku, Tokyo 105 Japan ("Distributor").

     1.   RIGHTS OF DISTRIBUTOR; EXCLUSIVITY
          ----------------------------------

          1.1  APPOINTMENT.

          (a)  Subject to all of the terms and conditions set forth herein,
Seller hereby appoints Distributor as (i) a non-exclusive distributor of PV
Modules (as defined below) and Systems (as defined below) designed, developed,
manufactured and sold by Seller during the Term (as defined below) of the type
described on EXHIBIT A hereto, including any updates, modifications and new
models designed, developed, manufactured and sold by Seller during the Term (the
"Products") on a nonexclusive, worldwide basis other than in Japan (the
"Nonexclusive Territory"), and (ii) subject to and in accordance with the terms
and conditions of Section 1.4, an exclusive distributor of the Products in
Japan, and Distributor hereby accepts such appointment. For the purposes of this
Agreement, "PV Modules" shall mean a product that cannot be disconnected from
the solar cell, including the frame, electrical box and/or electrical
termination if integrally connected to the product, without impairing its
performance. For the purposes of this Agreement, a "System" is a photovoltaic
system, other than a PV Module, that can be separately installed with or
assembled with a PV Module at the point of use. Without the prior written
approval of the Seller, Distributor shall not otherwise provide or make
available the Products or any part or copies thereof to any person or entity.
Seller may, in its sole discretion, at any time and from time to time during the
Term, upon thirty (30) days written notice to Distributor, update and/or modify
EXHIBIT A to reflect changes in the types of Products to be made available
hereunder.

          (b)  Seller shall have the right to enter into agreements with third
parties for the exclusive distribution of the Products in any country in the
world other than Japan (each, an "Exclusivity Agreement"); provided, that Seller
notifies Distributor of any such proposed agreement at least thirty (30) days
prior to entering into such agreement. In the event Seller enters into an
Exclusivity Agreement, Distributor agrees that upon notification of such
Exclusivity Agreement, Distributor shall cease selling, marketing, distributing
or otherwise providing Products in the territory covered by such Exclusivity
Agreement (the "Covered Territory"); provided, however, that Distributor may
conclude any open transactions, including quoted projects, which were in process
prior to such notification by Seller. Notwithstanding the foregoing, Seller
agrees to use reasonable commercial efforts to provide in such Exclusivity
Agreements that Distributor shall be entitled to sell Products in the Covered
Territory if


<PAGE>   5
                                      -2-


Distributor's sale of such Products is supported economically by the Japanese
overseas aid agencies.

          1.2  RIGHTS OF DISTRIBUTOR. Distributor shall have the non-exclusive
right to market, distribute and sell the Products to end-users and resellers in
the Nonexclusive Territory and, subject to and in accordance with the terms and
conditions of Section 1.4, the exclusive right to market, distribute and sell
the Products to end-users and resellers in Japan, (a) on a stand-alone basis and
(b) in combination with (i) products, components, systems or services which are
suitable to be combined and/or used with the Products as part of a complete
System (each, a "KHI PV System") and for which Distributor has developed or
obtained the right to use and distribute from third parties, and/or (ii) any
other product, component, system or service mutually agreed upon by the parties
to this Agreement (the products, components, systems and services described in
subsections (i) and (ii) are collectively defined herein as the "Components").
Distributor shall be responsible for fabricating and/or procuring all
Components, including, without limitation, structures, wiring, inverters,
batteries and other electrical interface equipment, necessary to assemble,
install, service, sell and/or maintain KHI PV Systems. At least quarterly,
Distributor shall provide Seller with a list of KHI PV Systems offered for sale
or in the process of development during such quarter.

          1.3  CUSTOM PRODUCTS.

               1.3.1 The parties agree that the Products to be offered for sale
to Distributor hereunder are intended to be the photovoltaic modules (and, to
the extent applicable, Systems) of Seller which are made generally commercially
available by Seller from time to time during the Term. Seller shall, upon the
reasonable request of Distributor, use reasonable commercial efforts to
customize the Products (the "Custom Products") to meet the specifications of any
materially strategically important end-user of Distributor, provided that Seller
receives satisfactory assurances from Distributor that the volume of sales to
such end-user will justify Seller's development costs for such Custom Products.
Notwithstanding the foregoing, Seller also shall use reasonable commercial
efforts to adapt existing Products for sale in Japan, provided that such
adaptation is reasonably required in order to effect the sale of the Products in
Japan in order to comply with Japanese regulations or other requirements. Such
adapted Products will be deemed Custom Products for all purposes herein. To the
extent the parties agree to include any such Custom Products for sale hereunder,
the parties will cause EXHIBIT A to be amended to include such Custom Products
as Products for sale hereunder. The terms and conditions of any such sales of
Custom Products shall be as set forth herein with respect to Products unless
otherwise agreed to by Seller and Distributor.

               1.3.2 No later than March 31, 2000, the parties agree to discuss,
with the intent to reach agreement on, reasonable terms and conditions relating
to the development of a roofing tile product for the Japanese market, including,
but not limited to project scope and details, the roles of the parties and
applicable funding obligations. Any such developed roofing tile products will be
deemed Custom Products for all purposes herein.
<PAGE>   6
                                      -3-


          1.4  EXCLUSIVITY; NONCOMPETITION.

               1.4.1 EXCLUSIVITY TERM AND OBLIGATIONS. For a period commencing
on the date of this Agreement and ending on December 31, 2001 (subject to
extension as provided for below) (the "Exclusivity Term"), Distributor shall be
Seller's exclusive distributor of Products in Japan (the "Exclusivity"). During
the Exclusivity Term, the parties agree that (i) Seller will not knowingly
supply Japanese purchasers with Products or Systems other than through sales to
Distributor pursuant to the terms of this Agreement and shall not enter into
joint marketing, distribution or similar agreements with Japanese distributors
other than Distributor; and (ii) Seller will be Distributor's only supplier for
the Japanese market of Products or any other photovoltaic modules, provided,
however, that if any Product offered for sale to Distributor by Seller hereunder
does not substantially meet the technical needs of Distributor's end-users after
giving effect to any reasonable customization, adaptation or certification of
the Products required of Distributor for sale in Japan then, Distributor may, at
its option, terminate the Exclusivity with respect to such Product such that
Distributor shall be entitled to obtain such Product from sources other than
Seller and Seller shall be entitled to supply Japanese purchasers with such
Product other than through sales to Distributor, except that Seller shall, at
its sole discretion, have up to one (1) year to perform any customization,
adaptation or certification of such Product necessary to cause such Product to
substantially meet the technical needs of Distributor's end-users (the "Product
Adaptation"), during which one-year period the Exclusivity with respect to such
Product shall not terminate. In the event such Product Adaptation is successful,
the Exclusivity with respect to such product shall not terminate. Except to the
extent otherwise provided in Section 1.4.4, Seller agrees to notify its
distributors and resellers not to sell Products in Japan during the Exclusivity
Term.

               1.4.2 NONCOMPETITION.

     In addition to any other restrictions contained in this Agreement,
Distributor hereby agrees as follows:

          (a)  Unless otherwise agreed by the parties, during the Exclusivity
Term and for a period of one year thereafter, Distributor shall not develop or
manufacture any photovoltaic wafers, cells or PV Modules.

          (b)  During the Exclusivity Term, Distributor shall not sell in Japan
any photovoltaic wafers, cells or PV Modules that are competitive with the
Products.

               1.4.3 MINIMUM SALES TARGETS. Distributor agrees to meet certain
minimum sales targets during the Exclusivity Term (each a "Minimum Sales
Target") as follows:

          (a)  During the period from January 1, 2000 through December 31, 2001,
Distributor agrees to a Minimum Sales Target of [CONFIDENTIAL TREATMENT
REQUESTED]/*/ (the "Two Year Minimum Target"). In the event Distributor meets
the Two Year Minimum Target, this Section 1.4, and the Exclusivity Term, shall,
subject to subparagraph (b) of this Section 1.4.3, and the last sentence of this
paragraph (a), continue in full force and effect for 2002 and each successive
year of the Term


/*/[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED
AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED
MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
<PAGE>   7
                                      -4-


thereafter. The parties shall in good faith negotiate with respect to the
establishment of a Minimum Sales Target for each such successive calendar year
during the Term, provided, however, that any such Minimum Sales Targets shall be
subject to the mutual agreement of the parties. Notwithstanding any of the
foregoing, neither this Section 1.4 nor the Exclusivity provided for hereunder
shall continue for any year of the Term if the parties fail to agree on a
Minimum Sales Target for such year.

          (b)  In the event the Distributor fails to meet the Two Year Minimum
Target or fails to meet the Minimum Sales Target in any successive calendar year
of the Term, Seller may, in its sole discretion, terminate in its entirety this
Section 1.4, and the Exclusivity provided for hereunder. In such event, the
parties agree to negotiate in good faith new terms, if any, to govern a new
exclusivity arrangement between the parties, provided, however, that any such
exclusivity arrangement shall be subject to the mutual agreement of the parties.

               1.4.4 In the event that any distributor of Systems (each, a
"System Supplier"), whose principal business office is located outside of Japan,
incorporates photovoltaic products purchased from Seller into a System that has
a value separate and distinct from that of the products incorporated therein
(the "OEM Products"), then, notwithstanding any provisions in this Agreement to
the contrary, Seller has no obligation to prevent such System Supplier from
selling such OEM Products in Japan; provided, however, that Seller will use
reasonable commercial efforts to introduce such System Supplier to Distributor
so that Distributor may negotiate with the System Supplier with respect to
Distributor's distribution of such OEM Products in Japan.

     2.   INTELLECTUAL PROPERTY
          ---------------------

          2.1  IMPROVEMENTS.

               2.1.1 OWNED BY SELLER. Any improvements of, additions to or
inventions, know-how, trade secrets or technical information relating directly
or indirectly to (i) [CONFIDENTIAL TREATMENT REQUESTED]/*/  and (ii)
[CONFIDENTIAL TREATMENT REQUESTED]/*/ shall belong to, and shall be and become
the sole and absolute property of, Seller. Distributor hereby (i) assigns to
Seller all right, title and interest in and to the [CONFIDENTIAL TREATMENT
REQUESTED]/*/ Improvements and [CONFIDENTIAL TREATMENT REQUESTED]/*/
Improvements, including but not limited to all portions and work in process
related thereto and all copyrights, patent rights, trade secret rights and all
other intellectual property rights and goodwill in or incorporated in or related
to any of the foregoing and (ii) agrees to execute, and require its employees to
execute, any additional documents necessary for Seller to obtain such right,
title and interest. Seller shall make the right to use and distribute the
[CONFIDENTIAL TREATMENT REQUESTED]/*/ Improvements available to Distributor
pursuant to and in accordance with the terms and conditions of this Agreement as
if such [CONFIDENTIAL TREATMENT REQUESTED]/*/ Improvements were Products
hereunder. Seller hereby grants Distributor the perpetual, non-exclusive,
worldwide, transferable right and license, in all fields of use, to use,
distribute, resell, create derivative works of, license and sublicense the
[CONFIDENTIAL TREATMENT REQUESTED]/*/ Improvements for a reasonable royalty (or
similar) payment to be negotiated

/*/[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED
AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED
MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
<PAGE>   8
                                      -5-


and mutually agreed upon by the parties in good faith.

               2.1.2 OWNED BY DISTRIBUTOR. Any improvements of, additions to or
inventions, know-how, trade secrets or technical information relating directly
or indirectly to [CONFIDENTIAL TREATMENT REQUESTED]/*/ shall belong to, and
shall be and become the sole and absolute property of, Distributor, subject to
Seller's ownership of the Products and the [CONFIDENTIAL TREATMENT REQUESTED]/*/
Improvements. Subject to the license granted to Seller herein, Seller hereby (i)
assigns to Distributor all right, title and interest in and to the [CONFIDENTIAL
TREATMENT REQUESTED]/*/ Improvements, and [CONFIDENTIAL TREATMENT REQUESTED]/*/
Improvements, including but not limited to all portions and work in process
related thereto and all copyrights, patent rights, trade secret rights and all
other intellectual property rights and goodwill in or incorporated in or related
to any of the foregoing and (ii) agrees to execute, and require its employees to
execute, any additional documents necessary for Distributor to obtain such
right, title and interest. Distributor hereby grants Seller (i) the perpetual,
non-exclusive, royalty-free, fully paid-up, worldwide, transferable right and
license, in all fields of use, to use, distribute, resell, create derivative
works of, license and sub-license any of the [CONFIDENTIAL TREATMENT
REQUESTED]/*/ Improvements and (ii) the perpetual, non-exclusive, fully paid-up,
worldwide, transferable right and license, in all fields of use, to use,
distribute, resell, create derivative works of, license and sublicense any of
the [CONFIDENTIAL TREATMENT REQUESTED]/*/ Improvements for a reasonable royalty
(or similar) payment to be negotiated and mutually agreed upon by the parties in
good faith, provided, however, that such license shall be royalty-free if Seller
or distributors or end-users of Seller's products are substantially prevented
from developing, manufacturing, selling, distributing or using Products (or
similar photovoltaic products) in Japan or elsewhere as a result of
Distributor's ownership of [CONFIDENTIAL TREATMENT REQUESTED]/*/ Improvements
and related intellectual property rights.

          2.2  RETAINED RIGHTS.

               2.2.1 Except for the rights expressly granted to Distributor by
Seller pursuant to this Agreement, Seller does not grant Distributor, and Seller
and its Licensors hereby expressly retain, all right title and interest in and
to the Products, the [CONFIDENTIAL TREATMENT REQUESTED]/*/ Improvements, the
Seller Marks (as defined below) and any and all technology, patent or
intellectual property rights underlying the Products and [CONFIDENTIAL TREATMENT
REQUESTED]/*/ Improvements. Nothing contained in this Agreement shall be
construed to confer upon Distributor by implication, estoppel or otherwise as to
any Products and/or [CONFIDENTIAL TREATMENT REQUESTED]/*/ Improvements,
technology or patent or other intellectual property rights of Seller, its
Licensors or any other entity, any license or other rights not expressly granted
to Distributor under this Agreement.

               2.2.2 Unless otherwise agreed to by the parties, Distributor
shall not modify, reverse engineer, disassemble, or create derivative works, or
apply for any patents or other rights, based on or derived from the Products
and/or [CONFIDENTIAL TREATMENT REQUESTED]/*/ Improvements.

/*/[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED
AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED
MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
<PAGE>   9
                                      -6-


          2.3  TRADEMARKS.

               2.3.1 Unless otherwise agreed by the parties, Distributor shall
promote, market, distribute and sell the Products solely under Seller's
trademarks and trade names set forth on EXHIBIT B (the "Seller Marks") without
the addition of any other name or identifying mark.

               2.3.2 Seller hereby grants Distributor the non-exclusive,
non-transferable right to use the Seller Marks in its advertising and
promotional material; provided, however, that (i) the use of the Seller Marks in
each such instance has been approved, in advance and in writing, by Seller in
its sole discretion, and (ii) Distributor conspicuously indicates in each such
medium that the Seller Marks are trademarks of Seller and follows Seller's
trademark usage guidelines ("Trademark Guidelines") to be provided by Seller and
updated by Seller from time to time. Seller shall have the right to revise the
Trademark Guidelines from time to time upon thirty (30) days written notice to
Distributor.

               2.3.3 The Seller Marks and the goodwill associated therewith are
the exclusive property of Seller and nothing in this Agreement grants
Distributor or any other person any right, title or interest therein, except for
the rights expressly granted to use the Seller Marks for the period and on the
terms and conditions set forth herein. All uses of the Seller Marks shall inure
solely to the benefit of Seller, and Distributor shall not contest the validity
of any of the Seller Marks or their associated goodwill.

               2.3.4 Distributor acknowledges and agrees that to assist Seller
in maintaining the validity of the Seller Marks, it will be necessary for
Distributor to maintain records of its use of Seller Marks. Accordingly, during
the term of this Agreement and for a period of six (6) months following any
expiration or termination of this Agreement, Distributor shall maintain records
of its use of the Seller Marks. Such records shall include samples of all uses
of the Seller Marks for each model of the Products in each country, as well as
information regarding the first use of each of the Seller Marks in each country.

               2.3.5 Upon Seller's reasonable request, Distributor shall deliver
to Seller, free of cost, samples of use of the Seller Marks for trademark
registration purposes in compliance with applicable laws; provided, that Seller
shall be under no obligation to obtain any such registration. Distributor shall
assist Seller in the procurement and maintenance of protection, including
trademark registration in Seller's name, of the Seller Marks. Upon request,
Distributor shall execute registered user agreements for the Seller Marks, and
shall execute any documents that may be necessary to terminate Distributor's
status as a registered user of any of the Seller Marks. Any and all such
trademark registrations for the Seller Marks shall be procured by and for the
benefit of Seller and at Seller's expense.

               2.3.6 During the term of this Agreement, Distributor shall not
adopt, use, or register, whether as a corporate name, trademark, service mark or
other indicia of origin, any of the Seller Marks, or any word or mark
confusingly similar to the Seller Marks, in any jurisdiction.


<PAGE>   10
                                      -7-


               2.3.7 If Distributor becomes aware that any third party is or may
be infringing any of the Seller Marks, Distributor shall promptly provide
written notice thereof and evidence of the infringement to Seller. Distributor
shall not take any further action regarding the possible infringement of any of
the Seller Marks without Distributor's prior written approval.

               2.3.8 Distributor shall promptly inform Seller of any actual or
threatened litigation (a "Claim") by or against Distributor which arises out of
the use of the Seller Marks. In the event of a Claim, Seller shall either (i)
select an alternative non-infringing mark which is as similar as possible to the
unavailable Seller Marks, and that new mark shall then be governed by the terms
of this Agreement, or (ii) assume the defense of the Claim. In no event shall
Seller have any liability to Distributor or any third party for any use of the
Seller Marks prior to the date of the Claim.

               2.3.9 Upon termination of this Agreement for any reason,
Distributor will immediately cease all use of the Seller Marks and, at Seller's
election, destroy or deliver to Seller all materials in Distributor's control or
possession which bear the Seller Marks.

     3.   PRICING; PURCHASE ORDERS.

          3.1  PRICING.

               3.1.1 Routine purchases made by Distributor by Order from time to
time on an as needed basis (the "Standard Purchases") shall be sold by Seller to
Distributor at [CONFIDENTIAL TREATMENT REQUESTED]/*/. Purchases by Distributor
which are confirmed, committed and scheduled more than [CONFIDENTIAL TREATMENT
REQUESTED]/*/ ahead of delivery schedule (the "Contract Purchases") shall be
sold by Seller to Distributor at [CONFIDENTIAL TREATMENT REQUESTED]/*/. The
parties agree to discuss special pricing, on a case-by-case basis, for
introductory Products and strategic end-users or projects. Subject to compliance
with the foregoing, Distributor agrees and acknowledges that Seller may in its
sole discretion change the prices it charges to its customers, including the
Distributor, at any time and from time to time, upon thirty (30) days prior
notice to Distributor.

               3.1.2 All prices are F.O.B. the Seller's factory. Distributor
shall be responsible for obtaining insurance in transit coverage and any charges
associated therewith.

               3.1.3 In addition to the prices stated herein, the Distributor
shall be responsible for and shall bear the cost of all freight charges, export
duties, import duties, licenses, fees and taxes.

               3.1.4 Prices for all Products are exclusive of all federal, state
and local excise, sales, use and similar taxes. Consequently, in addition to the
price specified, the amount of any present or future excise, sales, use,
personal property or other similar taxes applicable to


/*/ [CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED
AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED
MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.



<PAGE>   11
                                      -8-


the sale or use of any Product sold hereunder shall be paid by the Distributor
and shall be additional items on any applicable invoice.

               3.1.5 Distributor shall set the price at which the Products are
resold by Distributor to the Distributor's end-users and resellers.

          3.2  PURCHASE ORDERS.

               3.2.1 Shipment of Products from Seller to Distributor shall be
made only against written orders issued by the Distributor ("Orders").

               3.2.2 Any Order, unless otherwise negotiated and confirmed in
writing by the Distributor and the Seller, shall be considered an Order under
this Agreement and not as a separate agreement or separate purchase order. In
the event of any conflict between the terms of an Order and this Agreement, this
Agreement shall take precedence, unless otherwise expressly agreed by the
parties in writing.

               3.2.3 Unless Distributor identifies a firm delivery date in the
Order, Seller shall schedule the delivery date on a "first-in-first-out" basis
based on the date and time the Order is received. Each Order shall specify the
exact number of units to be delivered.

               3.2.4 Products shall be shipped using Seller's standard packaging
methods, materials and shipment services. Notwithstanding the foregoing, Seller
will use commercially reasonable efforts to offer Distributor such reasonable
packaging methods, materials and shipment services as Distributor reasonably
requests. Distributor will assist Seller in developing bulk packaging and
shipping methods, and with repackaging as needed in Japan, in order to reduce
packaging costs by minimizing packaging material and waste.

          3.3  MODIFICATION OF DELIVERY DATE.

               3.3.1 The Distributor shall have the right upon prior written
notice to the Seller to reschedule a delivery date specified in any Order
issued, but such rescheduling shall be permitted only in accordance with the
following schedule:



       Amount of Notice                  Permitted Rescheduling
       ----------------                  ----------------------

                                      
       Less than 45 days                 no rescheduling shall be permitted.

        45 to 90 days                    up to one-half of the units specified in such Order
                                         may be rescheduled for delivery at a date not more
                                         than sixty (60) days after the originally scheduled
                                         delivery date.

      More than 90 days                  up to 100% of the units specified in such Order may
                                         be rescheduled for delivery at any time.



<PAGE>   12
                                      -9-


               3.3.2 Anything else in this Section 3.3 to the contrary
notwithstanding, the Distributor shall not have the right to schedule or
reschedule delivery to a date beyond the termination date of this Agreement
specified in Section 8 of this Agreement.

          3.4  CANCELLATION OF ORDER.

               3.4.1 Prior to shipment, except for Orders for Custom Products,
the Distributor shall have the right to cancel an Order upon written notice to
the Seller accompanied by the payment to the Seller of a cancellation charge
calculated as follows (subject to Section 3.4.3 with respect to Orders for
Custom Products):



   AMOUNT OF NOTICE          CANCELLATION CHARGE

                          
   More than 90 days         none

     61 to 90 days           10% of the purchase price of each cancelled unit.

     31 to 60 days           20% of the purchase price of each cancelled unit.

     15 to 30 days           50% of the purchase price of each cancelled unit.

   Less than 15 days         100% of the purchase price of each cancelled unit.


               3.4.2 In the event the Distributor cancels an Order which was
previously rescheduled in accordance with Section 3.3 of this Agreement, the
original delivery date will apply for purposes of calculating the cancellation
charges under this Section 3.4.

               3.4.3 Prior to shipment, the Distributor shall have the right to
cancel an Order for Custom Products upon written notice to Seller accompanied by
payment for the portion of the Order manufactured and in the process of
manufacture plus payment in accordance with the schedule set forth in Section
3.4.1 for all remaining units not yet manufactured.

     4.   INVOICE AND RELATED COMMERCIAL TERMS.

          4.1  PAYMENT TERMS. Payment to the Seller shall be made [CONFIDENTIAL
TREATMENT REQUESTED]/*/. The Distributor shall be entitled to a [CONFIDENTIAL
TREATMENT REQUESTED]/*/ discount from the invoice price of the Products if
payment in full is made within [CONFIDENTIAL TREATMENT REQUESTED]/*/ days after
date of invoice.

          4.2  PAST DUE PAYMENTS. All payments are to be made in full, on the
due date, in United States currency to the Seller at its address as shown on the
first page of this Agreement and with interest at the rate of [CONFIDENTIAL
TREATMENT REQUESTED]/*/ on any overdue payments. In case any payment shall not
be paid when due, all sums owing under this Agreement or any other agreements or
dealings between the Distributor and the Seller shall, at

/*/ [CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED
AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED
MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
<PAGE>   13
                                      -10-


the option of the Seller, at once become due irrespective of the terms of sale,
and the Seller may defer shipment under this Agreement and any other agreements
between the Distributor and the Seller until such sums shall have been paid.

          4.3  CANCELLATION BY SELLER. If, in the sole judgment of the Seller,
the financial condition of the Distributor at any time does not justify
continuation of production or delivery on the terms of payment specified herein,
the Seller may require full or partial payment in advance, and, in addition, in
the event any proceeding is brought by or against the Distributor under any
bankruptcy or insolvency laws, the Seller shall be entitled to cancel any Orders
then outstanding.

          4.4  PAYMENT ON DELAYED SHIPMENTS. If the Distributor is prevented by
government regulations from transferring funds to the United States, the Seller
shall have the right (in addition, without limitation, to its right to terminate
this Agreement for the failure to receive payment as required herein) to require
the Distributor to deposit the blocked funds due the Seller in any bank
designated by the Seller to which such blocked funds may be legally paid and for
the account of the Seller. The Distributor shall, at Distributor's sole cost and
expense, institute and complete whatever proceedings may be necessary in order
to obtain approval of the payment of such purchase price in United States
currency from all government authorities blocking such payment.

          4.5  SHIPMENTS. Each shipment shall be considered a separate and
independent transaction, and payment therefor shall be made accordingly. If
shipments are delayed by the Distributor, the date of payment shall be
calculated from the date upon which the Seller was prepared to make shipment.
Products held for the Distributor shall be at the risk and expense of the
Distributor.

          4.6  SECURITY INTEREST. Seller retains a security interest in each
Product shipped pending receipt of full payment therefor.

     5.   SALES AND MARKETING ACTIVITIES.

          5.1  SALES AND MARKETING SUPPORT AND TECHNICAL ASSISTANCE.

               5.1.1 It is the parties' intention to collaborate on sales and
technical training and, in connection with this collaboration, the parties
currently intend the following:

          (a)  Seller shall furnish to Distributor reasonable sales and
marketing support and technical assistance with respect to the use and
installation of the Products, including the operation, maintenance and service
thereof and "work-around" solutions to customer problems;

          (b)  Distributor shall send a reasonable number of Distributor's
employees to the Seller's facilities, at reasonable times and upon reasonable
notice to Seller, to collaborate on technical and sales training; and


<PAGE>   14
                                      -11-


          (c)  Seller shall send a reasonable number of Seller's sales and
engineering employees to Distributor's facilities in Japan, at reasonable times
and upon reasonable notice to Distributor, to collaborate on technical and sales
training.

               5.1.2 During the Exclusivity Term, Distributor shall spend a
minimum of [CONFIDENTIAL TREATMENT REQUESTED]/*/ related to the KHI PV
Systems and Products.

               5.1.3 During the Exclusivity Term, Distributor shall assign a
minimum of [CONFIDENTIAL TREATMENT REQUESTED]/*/ to promote, sell and support
the Products and KHI PV Systems including at least [CONFIDENTIAL TREATMENT
REQUESTED]/*/ to collaborate on technical development.

               5.1.4 The parties agree that (i) Distributor will provide Seller
reasonable access, without charge, to data, drawings and analyses relating to
the performance of the KHI PV Systems, (ii) Seller will provide Distributor with
reasonable access, without charge, to data, drawings and analyses relating to
the performance of the Products and (iii) the parties will provide each other
reasonable access, without charge, to the results of commercially available
market research studies relating to photovoltaic markets, products and
competition, subject to restrictions on such studies imposed by the providers of
such studies. The parties agree to facilitate reasonable visits and tours and
consultations with each other's personnel from time to time, at mutually
convenient and reasonable times, to facilitate the sharing of information
regarding photovoltaic markets, customer needs and industry trends and for the
purpose of acquiring information necessary for the marketing of the Products. To
the extent practicable, Distributor agrees to provide Seller, upon Seller's
reasonable request from time to time, with evaluations and analyses of the
performance of products competitive with the Products and KHI PV Systems.

               5.1.5 The parties shall keep each other informed regarding
conditions in the Nonexclusive Territory and in Japan relevant to the sale of
the Products and the KHI PV Systems, including pricing plans, market trends,
competing products, rules and regulations affecting sale or use of the Products
and the KHI PV Systems, certification and quality standards and all
extraordinary events relating to the Products and the KHI PV Systems. The
parties agree to meet twice a year to discuss their respective businesses and
the photovoltaics market.

               5.1.6 Distributor shall provide Seller with Distributor's
quarterly sales plans which shall include Distributor's good faith estimates of
its product sales volume and mix projections for each such quarter and monthly
updates which address Distributor's progress in achieving said plans.

               5.1.7 Each party shall be responsible for its own travel,
lodging, and related expenses incurred pursuant to this Section 5.1.

          5.2  PROMOTIONAL MATERIAL. Each party shall be entitled to use and
distribute marketing materials, including any marketing literature, designs, raw
materials, photos and

/*/ [CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED
AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED
MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

<PAGE>   15
                                      -12-


drawings, developed by the other without usage fees (the "Marketing Materials")
and shall make available to the other party reasonable quantities of its
Marketing Materials for use in the promotion and sale of the Products and KHI PV
Systems. Each party shall be responsible for and shall pay for its own design,
production costs, professional fees and placement fees for its own marketing
literature, advertising and all printed and other promotional materials and
efforts. Except as otherwise specifically permitted herein, neither party shall
use the other party's name or trademarks, or publish any information relating to
such other party in its literature, advertising or other promotions, or in any
other market communications, including public relations materials, joint press
releases and announcements, without the prior written consent of such other
party.

          5.3  PROHIBITED MARKETING PRACTICES.

               5.3.1 Each party agrees that it shall not engage in deceptive,
misleading or unethical trade practices that are or might be detrimental to the
other party.

               5.3.2 Each party agrees that it shall not make any false or
misleading representations with regard to the other Party or its products.

               5.3.3 Each party agrees that it shall not publish or utilize or
cooperate in the publication or utilization of any misleading or deceptive
advertising or marketing material that relates in any way to the other party or
its products.

               5.3.4 Distributor agrees that it shall not make any warranty or
representation to anyone that would give the recipient thereof any claim or
right of action against Seller or that is inconsistent with Seller's warranties
hereunder.

               5.3.5 Distributor agrees that it shall not represent to any third
party that the Products are different from any products marketed directly by
Seller or by Seller's other distributors, or that Distributor is the sole
distributor of the Products (except to the extent consistent with Section 1.4).

               5.4 TRADE SHOWS . Without limiting the generality of any other
provision of this Agreement, Distributor shall pay for the design of trade shows
in Japan. Seller shall make available to Distributor booth designs (but not
physical materials) for use at such trade shows and shall make available certain
of Seller's staff equivalent to a maximum of ten man-days per year for
supporting Japanese trade shows.

               5.5 PRODUCT RECALL. Distributor agrees to keep (and make
reasonably available for Seller's use and copying) for five years after
termination of this Agreement (or longer if required by applicable law) records
of all sales of Products and KHI PV Systems and identifying information
regarding end-users and resellers sufficient to adequately administer a recall
of any Product and to cooperate fully in any decision by Seller to recall,
retrieve and/or replace any Product.


<PAGE>   16
                                      -13-


     6.   LIMITED WARRANTY.

Seller's standard limited warranty, a copy of which is attached hereto as
EXHIBIT C (the "Limited Warranty") shall apply to all sales of Products under
this Agreement. This limited warranty may be modified from time to time in
Seller's sole and absolute discretion. Seller will use reasonable commercial
efforts to review the Limited Warranty to determine whether it is necessary to
modify the Limited Warranty to maintain reasonable competitiveness and in the
Japanese market.

THE FOREGOING LIMITED WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTIES OR CONDITION OF
NONINFRINGEMENT, TITLE, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR
ARISING BY STATUTE OR OTHERWISE IN LAW OR FROM A COURSE OF DEALING OR USAGE OF
TRADE. EXCEPT AS SET FORTH IN EXHIBIT D, THE PRODUCTS ARE BEING SOLD "AS IS".

     7.   LIMITATION OF LIABILITY.

EXCEPT FOR LIABILITY UNDER SECTION 9, IN NO CASE SHALL SELLER BE LIABLE TO
DISTRIBUTOR OR ANY OF DISTRIBUTOR'S END USERS OR RESELLERS FOR ANY SPECIAL,
INDIRECT, PUNITIVE, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING LOST
PROFITS), HOWEVER CAUSED, WHETHER OR NOT FORESEEABLE AND WHETHER BASED ON
CONTRACT OR TORT, INCLUDING, WITHOUT LIMITATION, NEGLIGENCE, EVEN IF SELLER OR
ITS REPRESENTATIVES HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. IN NO
EVENT WILL THE AGGREGATE LIABILITY WHICH SELLER MAY INCUR IN ANY ACTION OR
PROCEEDING EXCEED THE TOTAL AMOUNT ACTUALLY PAID TO SELLER BY DISTRIBUTOR FOR
THE SPECIFIC PRODUCT THAT DIRECTLY CAUSED THE DAMAGE.

     8.   TERM; TERMINATION.

          8.1  TERM. This Agreement shall be effective on the Effective Date and
shall continue in effect for five years from the Effective Date unless earlier
terminated in accordance with the provisions of this Section (the "Term"). The
Term shall renew, unless earlier terminated pursuant to this Section 8, for
successive one year periods, subject to termination in any year (i) pursuant to
this Section 8 or (ii) if either party no later than thirty (30) days prior to
the expiration of the Term notifies the other of its intent not to renew the
Agreement. The terms and conditions of this Agreement shall continue to apply to
any Order until final delivery is made even if such delivery is made after this
Agreement terminates or expires.


<PAGE>   17
                                      -14-


          8.2  TERMINATION BY DISTRIBUTOR. Distributor may terminate this
Agreement immediately, if:

               (a)  Seller fails to perform or comply with any provision of this
Agreement for thirty (30) days after written notice of such failure has been
provided by Distributor to Seller; or

               (b)  Any receiver of any property of Seller shall have been
appointed; Seller shall have made an assignment for the benefit of creditors;
Seller shall have made any assignment or have had an involuntary order made
against it under the Bankruptcy Reform Act of 1978, as amended from time to
time; Seller shall have become bankrupt or insolvent and distributor shall have
made application for relief under the provisions of any statute now or hereafter
in force concerning bankrupt or insolvent debtors; or any action whatever,
legislative or otherwise, shall have been taken with a view to the winding-up,
dissolution or liquidation of Seller.

          8.3  TERMINATION BY SELLER. Seller may terminate this Agreement
immediately if:

               (a)  Distributor fails to:

                    (i)  pay invoices submitted by Seller within the time
               specified herein for thirty (30) days after written notice of
               such failure has been provided by Seller to Distributor, or

                    (ii) perform or comply with any provision of this Agreement
               for thirty (30) days after written notice of such failure has
               been provided by Seller to Distributor;

               or

               (b)  Any receiver of any property of Distributor shall have been
appointed; Distributor shall have made an assignment for the benefit of
creditors; Distributor shall have made any assignment or have had an involuntary
order made against it under the (U.S.) Bankruptcy Reform Act of 1978, as amended
from time to time; Distributor shall have become bankrupt or insolvent and
distributor shall have made application for relief under the provisions of any
statute now or hereafter in force concerning bankrupt or insolvent debtors; or
any action whatever, legislative or otherwise, shall have been taken with a view
to the winding-up, dissolution or liquidation of Distributor.

          8.4  CONTINUING OBLIGATIONS.

               8.4.1 In the event of termination of this Agreement, Seller shall
perform in accordance with their terms and the terms of this Agreement, any open
Orders for Products to the extent such Orders have not been terminated and
Distributor shall make payment for such


<PAGE>   18
                                      -15-


Products in accordance with Section 4; provided, however, that in the event
Seller terminates this Agreement in accordance with Section 8.3(b), Seller shall
be excused from performing any or all open Orders in its sole discretion.

               8.4.2 In the event of the termination of this Agreement for any
reason, all rights and interests granted to Distributor by Seller under the
terms of this Agreement shall immediately revert to Seller and each party shall,
within thirty (30) days after said termination, return to the other party, at
the other party's expense, all written documents of the other party of whatever
kind, including, without limitation, drawings, performance analyses, data,
designs and copies of any kind made thereof by anybody, relating to the Products
or the sale, distribution, combination or installation thereof. Each party
agrees that, in the event of such termination, it will immediately discontinue
and no longer use in any manner whatsoever any of the other party's documents or
Proprietary Information (as hereinafter defined) received hereunder relating to
the Products and that it will immediately discontinue the use and sale of the
Products.

          8.5  PURCHASE OF INVENTORY. Upon the expiration or termination of this
Agreement, Seller shall have the right to repurchase any Products in the
possession of Distributor at the Seller's sales price for such Products in
effect on the date of repurchase.

          8.6  SURVIVAL OF PROVISIONS. The following provisions shall survive
the termination of this Agreement for whatever reason: Sections 2.1, 2.2, 2.3.4,
2.3.9, 5.3, 5.5, 6, 7, 8, 9, 10, 11 and 13. To the extent that Seller, after the
termination or expiration of this Agreement, fills open Orders placed prior to
the termination or expiration of this Agreement, Sections 3 and 4 shall survive
until such Orders have been shipped and Seller has received payment therefor.

     9.   INDEMNIFICATION.

          9.1  INDEMNIFICATION BY SELLER. Seller shall at all times during the
term of this Agreement and thereafter, defend, indemnify and hold harmless
Distributor and its directors, officers, employees and affiliates, from and
against all losses, liability and expenses (including, without limitation,
reasonable attorneys' fees) from (i) products liabilities claims by third
parties arising out of the use of the Products by such third parties and (ii)
any claim that the exercise of any of the rights granted in this Agreement
infringes any third-party Japanese patent or Japanese trademark under the laws
of Japan. The foregoing obligation of the Seller does not apply, and Seller
shall have no liability to Distributor under this Section, for any claim arising
out of (a) the modification of a Product or Products by anyone other than Seller
or a party acting with express authority on Seller's behalf, to the extent that
the claim would have been avoided absent such modification, (b) the combination
of a Product or Products with other products, components, systems or parts to
the extent that the claim would have been avoided absent such combination, or
(c) the sale or use of a Product or Products in a manner not contemplated by
this Agreement. In the event any Product becomes, or in Seller's reasonable
opinion is likely to become, the subject of a claim of infringement of any
patent, trade secret, or other proprietary right of any third party, Seller may
in its sole discretion and at its option, in addition to any other remedies
available to Seller hereunder, (i) if Distributor does not or is not entitled to
seek indemnification

<PAGE>   19
                                      -16-


pursuant to this Section, by written notice to Distributor, assume control of
the defense and/or settlement of such claim using counsel of its choice at
Seller's expense, and/or (ii) either secure for Distributor the right to
continue using the Product, replace or modify the Product or to make it
non-infringing without impairment of function, or, if neither of the foregoing
alternatives is reasonably available to Seller, terminate Distributor's rights
under this Agreement immediately upon written notice, but only to the extent
necessary to avoid the infringement. In no event shall anything in this Section
9 limit Seller's ability to join in a lawsuit, action or other claim that
directly or indirectly involves Seller's Products.

          9.2  INDEMNIFICATION BY DISTRIBUTOR. Distributor shall at all times
during the term of this Agreement and thereafter, defend, indemnify and hold
harmless Seller and its directors, officers, employees and affiliates, from and
against all losses, liabilities and expenses of any kind whatsoever (including,
without limitation, reasonable attorneys' fees) arising out of (i) the
manufacture, installation, marketing, distribution, use, sale and/or maintenance
of the KHI PV Systems, (ii) the alleged breach of any obligations of Distributor
hereunder and (iii) any claim due to actions or omissions by the Distributor.

          9.3  NOTICE OF INDEMNIFICATION. A party seeking indemnification
pursuant to this Section 9 (an "Indemnified Party") from or against the
assertion of any claim by a third person (a "Third Person Assertion") shall give
prompt notice to the party from whom indemnification is sought (the
`Indemnifying Party"); provided, however, that failure to give prompt notice
shall not relieve the Indemnifying Party of any liability hereunder (except to
the extent the Indemnifying Party has suffered actual material prejudice by such
failure).

          9.4  ASSUMPTION OF DEFENSE. Within ten (10) business days of receipt
of notice from the Indemnified Party pursuant to Section 9.3 hereof, the
Indemnifying Party shall have the right exercisable by written notice to the
Indemnified Party, to assume the defense of a Third Person Assertion. If the
Indemnifying Party assumes such defense, the Indemnifying Party may select
counsel of its choice.

          9.5  FAILURE TO DEFEND. If the Indemnifying Party (a) does not assume
the defense of any Third Person Assertion in accordance with Section 9.4 hereof;
or (b) having so assumed such defense, unreasonably fails to defend against such
Third Person Assertion, then, upon ten (10) days' written notice to the
Indemnifying Party, the Indemnified Party may assume the defense of such Third
Party Assertion. In such event, the Indemnified Party shall be entitled under
this Section 9 as part of its damages to indemnification for the costs of such
defense.

          9.6  CONFLICTS OF INTEREST. If the Indemnifying Party has been advised
by the written opinion of counsel to the Indemnified Party that the use of the
same counsel to represent both the Indemnified Party and the Indemnifying Party
would present a conflict of interest, then the Indemnified Party may select its
own counsel to represent the Indemnified Party in the defense of the matter and
the costs of such defense shall be borne by the Indemnifying Party. The
Indemnifying Party shall be entitled to continue to handle its own
representation in such matter through its own counsel.

<PAGE>   20
                                      -17-


          9.7  SETTLEMENT. The party controlling the defense of a Third Person
Assertion shall have the right to consent to the entry of judgment with respect
to, or otherwise settle, such Third Person Assertion with the prior written
consent of the other party.

          9.8  PARTICIPATION. The Indemnifying Party and the Indemnified Party
shall cooperate, in the defense or prosecution of any Third Person Assertion.
The Indemnified Party shall have the right to participate, at its own expense,
in the defense or settlement of any Third Person Assertion.

          9.9  SOLE OBLIGATIONS. The sole and exclusive obligations of the
Indemnifying Party to the Indemnified Party for claims of intellectual property
infringement addressed by this Section 9 shall be limited to the obligations set
forth in this Section 9 and the Indemnified Party shall not be entitled to any
other forms of compensation.

          9.10 LIABILITY INSURANCE. Each party shall obtain and carry in full
force and effect commercial, general liability insurance, including product
liability insurance and errors and omissions insurance, which shall be adequate
to protect itself and the other party with respect to events covered by Sections
9.1 and 9.2 above. Such insurance shall be written by a reputable insurance
company, shall list such other party as an additional named insured thereunder,
shall be endorsed to include product liability coverage and shall require thirty
(30) days written notice to be given to such other party prior to any
cancellation or material change thereof. Without limiting the first sentence of
this Section, the limits of such insurance shall not be less than: One Million
Dollars ($1,000,00) per occurrence with an aggregate of Three Million Dollars
($3,000,000) for personal injury including death; One Million Dollars
($1,000,000) per occurrence with an aggregate of Three Million Dollars
($3,000,000) for property damage; and One Million Dollars ($1,000,000) per
occurrence with an aggregate of Three Million Dollars ($3,000,000) for errors
and omissions. Each party shall provide the other party with certificates of
insurance evidencing the same.

     10.  CONFIDENTIAL INFORMATION.

          10.1 CONFIDENTIAL TREATMENT OF INFORMATION. Except as otherwise
specifically authorized by this Section 10 or elsewhere in this Agreement, each
of Seller and Distributor (including their affiliates) agrees (i) to retain in
strict confidence any proprietary and/or confidential information, which may
relate to the products, technology, trade secrets, know-how, and other valuable
business or technical information (the "Proprietary Information") of the other
party, whether disclosed prior to or after the date hereof, (ii) to use such
Proprietary Information solely in furtherance of its rights and obligations
under this Agreement, (iii) not to disclose such Proprietary Information to any
third persons, other than those of its affiliates, employees, agents or
consultants with a bona fide need to know; provided, that, (A) it imposes all of
its respective obligations under this Agreement on such affiliates, employees,
agents and consultants and (B) with respect to affiliates, agent and
consultants, provides notice to the other party that includes a description of
the Proprietary Information being disclosed and to whom it is being disclosed
(iv) to use its best efforts to cause such affiliates, employees, agents or
consultants not to disclose to any third persons such Proprietary Information
without the prior

<PAGE>   21
                                      -18-


written approval in writing of a duly authorized officer of the other party, and
(v) to use its best efforts to cause its affiliates, employees, agents or
consultants to retain such Proprietary Information in strict confidence, unless
in any such case one or more of the following conditions exist:

          (a)  Such Proprietary Information has been previously published and is
a matter of public record or otherwise in (or becomes available in) the public
domain through no fault of the party receiving such Proprietary Information;

          (b)  Such Proprietary Information has been previously known to the
party receiving such Proprietary Information and such recipient can prove this
fact by documents dated prior to the date of disclosure of such Proprietary
Information to the recipient by the other party hereunder;

          (c)  Such Proprietary Information shall hereafter become known to the
recipient by its own independent development or from a source other than the
other party (through no violation of any confidentiality agreement or obligation
between such other party and any other person); or

          (d)  Such Proprietary Information is required by law to be disclosed,
whether pursuant to the statutes, rules and regulations of the United States
Securities and Exchange Commission (the "SEC") or any other foreign, federal or
state governmental agency or administrative body (provided, however, that the
party receiving such Proprietary Information shall use its best efforts to
obtain confidential treatment of such Proprietary Information by the SEC or
other relevant authority in connection with such disclosure).

          Without limiting any of the foregoing, the parties agree that (i) all
Proprietary Information divulged by a party shall remain the property of the
divulging property, (ii) neither party will use any Proprietary Information of
the other party for purposes of developing competitive strategies or otherwise
competing with the other party, (iii) each party shall guard the Proprietary
Information against disclosure to others with at least the same degree of care
with which such party guards its own proprietary information, but in no event
with less than reasonable care. Upon written request, and at the divulging
party's option, all Proprietary Information, and any copies thereof, shall be
destroyed or promptly returned to the divulging party.

          10.2 DISCLOSURE OF TERMS OF AGREEMENT. Except as may be required by
law or regulation, or in response to a valid subpoena, or as required to be
disclosed by Seller or Distributor in connection with its filings with any
governmental authorities, including, without limitation, the SEC or any similar
governmental body of any foreign jurisdiction (provided, however, that the party
shall use its best efforts to obtain confidential treatment of such Proprietary
Information by the SEC or other relevant authority in connection with such
disclosure), neither party hereto shall disclose the terms of this Agreement
without the prior written consent of the other party hereto.

<PAGE>   22
                                      -19-


          10.3 SURVIVAL OF CONFIDENTIALITY OBLIGATIONS. The confidentiality
obligations of the parties pursuant to this Section 10 shall remain binding on
both parties during the term of this Agreement and for a period of five (5)
years after the termination or expiration of this Agreement, regardless of the
cause of such termination. The parties acknowledge that any breach of this
Section 10 will constitute irreparable harm, and that the non-breaching party
shall be entitled to specific performance or injunctive relief to enforce this
Section 10 in addition to whatever remedies such party may otherwise be entitled
to at law or in equity.

     11.  RECORDS; REPORTS. Distributor agrees to maintain adequate records
relating to all transactions involving the Products and KHI PV Systems during
the term of this Agreement and for a period of five (5) years after its
termination or expiration. Seller shall be entitled from time to time to audit
and examine the records maintained by Distributor in connection with the
transactions contemplated by this Agreement and to determine compliance with the
terms and conditions herein at Distributor's principal executive offices, during
customary business hours and upon reasonable notice. Prior to such audit, the
auditor shall execute a confidentiality agreement acceptable to Distributor that
protects the proprietary and confidential information of Distributor. The cost
of any such audit shall be borne by Seller.

     12.  COLLABORATION. The parties agree to discuss, no later than the third
year of the Term, the possibility of collaborating on manufacturing operations,
subject to sole discretion of both parties in all respects.

     13.  GENERAL.

          13.1 COMPLIANCE WITH LAWS. Each party hereto shall comply with all
applicable laws, regulations, orders, decrees, rulings and judgments, including
foreign and/or local export laws and regulations. Distributor understands and
acknowledges that Seller is subject to regulation by agencies of the U.S.
government, including the U.S. Department of Commerce, which prohibit export or
diversion of certain products and technology to certain countries. Any and all
obligations of Seller to provide the Products or documentation or any media in
which any Product is contained, as well as any training or technical assistance
in connection therewith, shall be subject in all respects to such United States
laws and regulations as shall from time to time govern the license and delivery
of technology and products abroad by persons subject to the jurisdiction of the
United States, including the (U.S.) Export Administration Act of 1979, as
amended, any successor legislation, and the Export Administration Regulations
issued by the Department of Commerce, International Trade Administration, Bureau
of Export Administration.

          13.2 SEVERABILITY. If any provision herein shall be held to be invalid
or unenforceable for any reason, such provision shall, to the extent of such
invalidity or unenforceability, be severed, but without in any way affecting the
remainder of such provision or any other provision contained herein, all of
which shall continue in full force and effect; provided, that the ability of
neither party to obtain substantially the bargained-for performance of the other
shall have been thereby impaired. In such event, the parties shall use their
best efforts to replace such provision with a provision which, to the extent
permitted by applicable law,


<PAGE>   23
                                      -20-


achieves the purposes intended by the invalid or unenforceable provision. Any
deviation by either party from the terms of the provisions of this Agreement
required to comply with applicable laws, rules or regulations shall not be
considered a breach of this Agreement.

          13.3 ASSIGNMENT. This Agreement and any duties, obligations or rights
hereunder shall be binding upon and shall inure to the benefit of successors and
permitted assigns of the parties hereto. Neither party may assign or transfer
this Agreement, or any rights, duties or obligations hereunder, without the
prior written consent of the other party.

                  13.4 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts,
without giving effect to the principles of conflicts of laws thereof. Each party
irrevocably submits to the jurisdiction of any state or federal trial court of
competent subject matter jurisdiction in the Commonwealth of Massachusetts for
the purposes of any suit, action or other proceeding arising out of this
Agreement or any transaction contemplated by this Agreement (and agrees not to
commence any action, suit or proceeding relating to this Agreement or any such
transaction, except in those courts). Each party further agrees that service of
any process, summons, notice or document in accordance with Section 13.10 shall
be effective service of process for any action, suit or proceeding with respect
to any matters to which it has submitted to jurisdiction as set forth in the
immediately preceding sentence. Each party irrevocably and unconditionally
waives any objection to the laying of venue of any action, suit or proceeding
arising out of this Agreement or the transactions contemplated by this Agreement
in any state or federal trial court of competent jurisdiction in the
Commonwealth of Massachusetts, and further irrevocably and unconditionally
waives and agrees not to plead or claim in any such action, suit or proceeding
brought in any such court that such action, suit or proceeding has been brought
in an inconvenient forum.

          13.5 UN CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS.
The United Nations Convention on Contracts for the International Sale of Goods,
shall not apply to this Agreement or any action, suit or proceeding arising out
of this Agreement or the transactions contemplated by this Agreement.

          13.6 COMPLETE AGREEMENT; AMENDMENT. This Agreement, as implemented by
the Orders, is intended to be the sole and complete statement of the obligations
of the parties hereto and supersedes all prior oral and written and all
contemporaneous oral understandings, negotiations, commitments and proposals of
the parties. Any amendments hereto must be made in writing and signed by both
parties. Without limiting the foregoing, Section 10 hereof supersedes the
Confidentiality Agreement executed on February 4, 1998 between the parties
hereto.

          13.7 WAIVER. No delay or failure by either party to exercise or
enforce at any time any right or provision of this Agreement shall be considered
a waiver thereof or of such party's right thereafter to exercise or enforce each
and every right and provision of this Agreement. A waiver to be valid shall be
in writing, but need not be supported by consideration. A valid waiver of any
provision of this Agreement with respect to a particular situation or event
shall not constitute a waiver of such provision with respect to other situations
or events.


<PAGE>   24
                                      -21-


          13.8 RELATIONSHIP OF THE PARTIES. The relationship between Seller and
Distributor shall be that of vendor and purchaser; neither party hereto, its
agents and employees, shall under no circumstances be deemed agents or
representatives of the other party hereto and neither party hereto shall have
any right to enter into any contracts or commitments in the name or on behalf of
the other party hereto or to bind the other party hereto in any respect
whatsoever.

          13.9 FORCE MAJEURE. Neither party shall be held responsible for any
delay or failure in performance hereunder caused in whole or in part by fires,
strikes, floods, embargoes, labor disputes, delays or failures of
subcontractors, acts of sabotage, riots, accidents, delays of carriers or
suppliers, voluntary or mandatory compliance with any governmental act,
regulation or request, acts of God or by public enemy, acts or omissions of
other causes beyond such party's control or without the fault or negligence of
such party; provided, however, that the non-performing party uses reasonable
efforts to avoid or remove such causes of nonperformance and continues
performance hereunder with reasonable dispatch when such causes are removed. In
the event of a force majeure situation, Seller may allocate its available
Products among its distributors and customers in the manner it, in its sole
discretion, deems appropriate

          13.10 NOTICES. All notices, consents and other communications between
the parties shall be in writing and shall be sent to the following addresses (or
to such other address as may be provided to the other party in accordance with
this section) by (a) first class mail, certified or registered, return receipt
requested, postage prepaid, (b) electronic facsimile transmission or electronic
mail transmission, (c) overnight courier service or (d) messenger, and shall be
deemed given on the third business day following transmission by mail or the
first business day following delivery by messenger, via overnight courier
service, via electronic facsimile transmission or via electronic mail
transmission.

          If to Seller:

               Evergreen Solar, Inc.
               211 Second Avenue
               Waltham, Massachusetts  02451
               Attn: President
               Tel: +1 (781) 890-7117
               Fax: +1 (781) 890-7141

          If to Distributor:

               Kawasaki Heavy Industries, Ltd.
               4-1 Hamamatsucho 2-chome
               Minato-ku, Tokyo 105, Japan


<PAGE>   25
                                      -22-


               Attn: Takeshi Suzaki, Senior Manager, Project Unit
                     Steel Structure & Industrial Equipment Division
               Tel: +81 3 3435 2923
               Fax: +81 3 3578 1573

          13.11 HEADERS. Headers used in this Agreement are included for
reference only and shall have no effect upon the construction or interpretation
of any provision hereof.

          13.12 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

                   [REMAINDER OF PAGE INTENTIALLY LEFT BLANK]


<PAGE>   26
                                      -23-


     IN WITNESS WHEREOF, the parties hereto have caused this Distribution and
Marketing Agreement to be executed by their duly authorized representatives as
of the date first above written.


EVERGREEN SOLAR, INC.                       KAWASAKI HEAVY INDUSTRIES, LTD.


By:         Evergreen Solar, Inc.           By: Kawasaki Heavy Industries, Ltd.
    --------------------------------            --------------------------------

Name: /s/ Mark A. Farber                    Name: /s/ Kazuo Mizuno
      ------------------------------              ------------------------------

Title:    President                         Title: Director and General Manager,
       -----------------------------               -----------------------------
                                            Steel Structure & Industrial
                                            ------------------------------------
                                            Equipment Division
                                            ------------------------------------




<PAGE>   27



                                    EXHIBIT A

                                    PRODUCTS

1.   36-cell aluminum-framed modules, as well as frameless versions: E-25, E-28,
     E-30, E-32, E-34, E-36

2.   72-cell aluminum-framed modules, as well as frameless versions: E-50, E-56,
     E-60, E-64, E-68, E-72

3.   AC Modules: Eversun ES-112, ES-240



<PAGE>   28
                                    EXHIBIT B

                                  Seller Marks


               [Graphical Depiction of Evergreen Solar Trademarks]


                              Trademark Guidelines

         C.1 The Evergreen Solar Trademarks identified above are valuable
property of Evergreen Solar and are appropriate tools to enable customers to
identify genuine products licensed by Evergreen Solar. Consistent use of the
Evergreen Solar Trademarks is essential to protect customers and Evergreen
Solar.

         C.2 Distributor must leave trademark notices intact on Products
purchased from and in accompanying documentation and on each piece of
advertising or promotional materials received from Evergreen Solar. In addition,
Distributor must include trademark notices in its own documentation,
advertising, and promotional materials for Evergreen Solar Products or for
Distributor systems that incorporate such Products.

         C.3 Unregistered Evergreen Solar Trademarks should be followed by the
"TM" symbol on at least one prominent appearance of the mark on packaging.
Alternative, the following notice should appear on packaging: [Identify marks]
are trademarks of Evergreen Solar.

         C.4 Registered Evergreen Solar Trademarks must appear with the circled
"R" ("(R)") symbol at the upper right corner of the trademark.

         C.5 Except as otherwise provided in this Agreement, the Evergreen Solar
Trademarks licensed hereunder may not be used on a product or in connection with
a service, or in a business name, of another company unless prior written
permission has been granted by Evergreen Solar. No variations, compounds, or
imitations of the Evergreen Solar Trademarks may be used in company or product
or service names.

         C.6 Evergreen Solar Trademarks that are in the form of a word must
always be used either as a symbol standing alone or as an adjective describing a
noun, with the noun being the generic name of the Licensed Product to which the
trademark is applied.

         C.7 The Evergreen Solar Trademarks must not be altered or modified in
any way. The Evergreen Solar Trademarks may be used in black and white, the
exact color scheme
<PAGE>   29
specified by Evergreen Solar, or in a variety of color treatments as
approved in writing by Evergreen Solar.

         C.8 In addition to these Guidelines, Evergreen Solar will provide to
Distributor from time to time as permitted by the terms of this Agreement
additional instructions which Distributor must follow in its use of the
Evergreen Solar Trademarks licensed pursuant to the terms of this Agreement.

         C.9 When it is inappropriate to use the full company name ("Evergreen
Solar, Inc."), the company can be referred to as "Evergreen Solar", or, when
multiple uses in one document suggest a further shortening, "Evergreen", but
other company name abbreviations should not be used.

<PAGE>   30
                                    EXHIBIT C

                                Limited Warranty

Evergreen Solar warrants E-series photovoltaic modules to be free from defects
in materials and workmanship under normal installation, application, and use for
one (1) year from the date of sale to the original consumer purchaser. Evergreen
Solar will, at its option, repair or replace the product, or refund the purchase
price, if the product becomes inoperable due to a defect in material or
workmanship during the warranty period. Evergreen Solar further warrants for a
period of ten (10) years from the date of sale to the original consumer
purchaser that the power rating at Standard Test Conditions will remain at 90%
or greater of Evergreen Solar's power rating specified on the label. Evergreen
Solar will, at its option, repair or replace the product, refund the purchase
price, or provide the purchaser with additional modules to make up lost power,
provided that such degradation is determined to be due to defects in materials
and workmanship under normal installation, application, and use.

Evergreen Solar is not responsible for any incidental or consequential damages
arising from the use or loss of use of the product. Evergreen Solar's maximum
liability under any warranty is limited to the purchase price of the product.

For a warranty claim, contact your Evergreen Solar dealer or Evergreen Solar
directly about appropriate procedures. This warranty does not cover
transportation costs associated with the return of product or costs of
installation, removal, or reinstallation.


Source: OneCLE Business Contracts.