EVERGREEN SOLAR INC

The condensed consolidated financial statements of Evergreen Solar, Inc. (“Evergreen Solar” or the “Company”) are unaudited and have been prepared on a basis substantially consistent with the Company’s audited financial statements for the year ended December 31, 2010. These condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. Consequently, these statements do not include all disclosures normally required by generally accepted accounting principles for annual financial statements. These condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2010, which are contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010. The unaudited condensed consolidated financial statements, in the opinion of management, reflect all adjustments necessary for a fair statement of the financial position at April 2, 2011, the results of operations for the quarters ended April 3, 2010 and April 2, 2011, and the cash flows for the quarters ended April 3, 2010 and April 2, 2011. The balance sheet at December 31, 2010 was derived from audited financial statements as of that date, but does not include all disclosures required by accounting principles generally accepted in the United States of America. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for any other interim period or for the full fiscal year ending December 31, 2011.

The Company last provided an updated discussion on liquidity risk and management plans in its Annual Report on Form 10-K. At that time, the Company believed that its cash on hand and expected cash to be realized as it converted its Devens accounts receivables and inventory to cash would provide sufficient liquidity to fund its operating needs for the next twelve months. However, since that time, there has been a continued rapid deterioration in the demand for and average selling prices of solar products, driven largely by uncertainties regarding feed-in-tariffs and other subsidy programs combined with the continued worldwide capacity expansion. For the Company, this development, as well as a significant rate of order cancellations, resulted in the Company’s inability to sell a significant portion of its production for the first quarter. While the first quarter has historically been slow for the solar industry, the sluggish demand has unexpectedly continued into the second quarter of 2011. This longer than expected slow down and the anticipation of further declines in average selling prices have combined to increase solar panel inventory throughout the distribution channel and to decrease product revenues.

As a result of the Company’s low year to date sales volume and potentially lower sales for the remainder of this year as the industry balances inventory levels, together with significantly increased pricing pressure, the cash that the Company had previously expected to realize from liquidating working capital at its recently closed Devens facility will be significantly less than expected and will take longer than expected to realize. Further, the rapid decline in selling prices necessitated a valuation adjustment of approximately $17.2 million for the Company’s inventory as of April 2, 2011. As a result of these developments, (i) the Company’s near term liquidity has been negatively impacted, (ii) the Company will be required to secure additional sources of cash sooner than expected, and (iii) there is uncertainty regarding the Company’s ability to maintain liquidity sufficient to operate its business effectively over at least the next twelve months, which raises substantial doubt as to its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The New Subordinated Notes bear interest at the rate of 4% per year, payable semi-annually in arrears on January 15 and July 15 of each year, beginning on July 15, 2011 with an effective interest cost of approximately 49.7%. The New Subordinated Notes will mature on July 15, 2020 unless previously repurchased by the Company or converted in accordance with their terms prior to such date. The New Subordinated Notes are not redeemable at the Company’s option prior to the stated maturity date. If certain fundamental changes occur at any time prior to maturity, holders of the New Subordinated Notes may require the Company to repurchase their New Subordinated Notes in whole or in part for cash equal to 100% of the principal amount of the New Subordinated Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the date of repurchase. The fair value of the New Subordinated Notes is estimated based on quoted market prices which approximated 71.4% of par value as of April 2, 2011, or approximately $9.0 million. The New Subordinated Notes are unsecured subordinated obligations and are contractually subordinated in right of payment to all of the Company’s existing and future senior indebtedness, is subordinated to all of the Company’s existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness, and is structurally subordinated in right of payment to all existing and future indebtedness and other liabilities of the Company’s subsidiaries. The New Subordinated Notes are convertible into shares of the Company’s common stock at an initial conversion rate of 229.8851 shares of common stock per $1,000 principal amount of New Subordinated Notes (which is equivalent to an initial conversion price of approximately $4.35 per share), subject to adjustment upon occurrence of certain events. Upon conversion, the New Subordinated Notes also provide for an additional payment of $300 per $1,000 principal amount in addition to a coupon make whole payment, both of which will be paid in shares of the Company’s common stock.

We last provided an updated discussion on liquidity risk and management plans in our Annual Report on Form 10-K. At that time, we believed that our cash on hand and expected cash to be realized as we converted our Devens accounts receivables and inventory to cash would provide sufficient liquidity to fund our operating needs for the next twelve months. However, since that time, there has been a continued rapid deterioration in the demand for and average selling prices of solar products, driven largely by uncertainties regarding feed-in-tariffs and other subsidy programs combined with the continued worldwide capacity expansion. For Evergreen Solar, this development, as well as a significant rate of order cancellations, resulted in our inability to sell a significant portion of our production for the first quarter. While the first quarter has historically been slow for the solar industry, the sluggish demand has unexpectedly continued into the second quarter of 2011. This longer than expected slow down and the anticipation of further declines in average selling prices have combined to increase solar panel inventory throughout the distribution channel and to decrease product revenues.

As a result of our low year to date sales volume and potentially lower sales for the remainder of this year as the industry balances inventory levels, together with significantly increased pricing pressure, the cash that we had previously expected to realize from liquidating working capital at our recently closed Devens facility will be significantly less than expected and will take longer than expected to realize. Further, the rapid decline in selling prices necessitated a valuation adjustment of approximately $17.2 million for our inventory as of April 2, 2011. As a result of these developments, our near term liquidity has been negatively impacted and will require us to secure additional sources of cash sooner than expected, and there is uncertainty regarding our ability to maintain liquidity sufficient to operate our business effectively over at least the next twelve months which raises substantial doubt as to our ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

These severance agreements provide for continuation of salary and health care benefits if the executive is terminated without cause, with nine months for the CEO and six months for other executive officers. Up to an additional nine months or six months, as applicable, of salary and benefits will be paid to a terminated executive if the executive remains unemployed at the end of the nine or six month initial salary continuation period. The severance agreements also provide for terminated employees to receive a prorated portion of any corporate bonus that is awarded for 2011 or 2012, as applicable, if the executive remains employed on July 1 of the applicable year. In connection with entering into these new severance agreements, executives who had previously entered into change of control based severance agreements have agreed to terminate those earlier agreements. A copy of the form of Severance Agreement is included as an exhibit to this report on Form 10-Q and the foregoing description of these agreements with our executive officers is qualified in its entirety by the terms of the form agreement.