Exhibit 10.1
CONFIDENTIAL TREATMENT REQUESTED: Certain portions of this document have been
omitted pursuant to a request for confidential treatment and, where applicable,
have been marked with an asterisk (“[*****]”) to denote where omissions have
been made. The confidential material has been filed separately with the
Securities and Exchange Commission.
Memorandum of Understanding
     This Memorandum of Understanding outlines certain principles and
understandings regarding the restructuring of certain rights and obligations
among Evergreen Solar, Inc., (“Evergreen”), Q-Cells AG (“Q-Cells”), EverQ GmbH
(“EverQ”) and Renewable Energy Corporation AS (“REC”). Each of the parties
listed above is referred to herein individually as a “Party” and jointly as the
“Parties”.
     WHEREAS, the Parties previously entered into a Master Joint Venture
Agreement dated as of November 22, 2005 (the “Master Agreement”) which provides
for, among other matters, the establishment and conduct of the business of
EverQ. Capitalized terms not otherwise defined herein shall have the meaning set
forth in the Master Agreement.
     WHEREAS, Evergreen currently owns 64% of the outstanding equity interests
of EverQ, Q-Cells currently owns 21% of the outstanding equity interests of
EverQ and REC currently owns 15% of the outstanding equity interests of EverQ.
     WHEREAS, the Master Agreement provides that based on the fulfillment of
certain obligations and conditions, Q-Cells and REC will be entitled to increase
their ownership interests in EverQ up to one-third of the outstanding equity
interests of EverQ.
     WHEREAS, pursuant to the Master Agreement, REC is obligated to use its best
endeavors to increase its capacity in a manner that will enable it to offer to
EverQ the right to enter into the Second REC Supply Agreement.
     WHEREAS, in order for REC to be able to offer volumes according to the
Second REC Supply Agreement, REC is preparing to start a new silicon plant named
REC Silicon III. REC is 100 % owner of REC Silicon, which is again 100 % owner
of REC Silicon III.
     WHEREAS, in conjunction with the transactions contemplated by the Master
Agreement, Evergreen, Q-Cells and REC have agreed to license to EverQ certain
proprietary intellectual property.
     WHEREAS, the parties intend to amend certain terms of the Master Agreement
and the rights and obligations related thereto in order to expedite the capacity
expansion of EverQ for the benefit of all Parties and their respective
shareholders.

 

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Outline of Primary Terms

                   
1.
    Second REC Supply
Agreement     1.1      As contemplated by Section 3.4 of the Master Agreement,
the Parties intend that REC will increase its silicon production capacity and
that EverQ and REC will enter into the Second REC Supply Agreement. The pricing
will be the [*****]. The pricing for the Second REC Supply Agreement shall be as
outlined in Appendix A with its reference to gross price including prepayment
and residual price remaining after the prepayment.

1.2      Under the terms of the Second REC Supply Agreement, EverQ shall make a
prepayment to REC of approximately $87 million. Approximately $45 million shall
be placed in an escrow account and shall be reduced ratably over the anticipated
delivery of 7,400 MT over the life of the Second REC Supply Agreement (such that
if REC does not deliver the entirety of the supply agreement, a portion of the
prepayment will be refunded) as shown in Appendix A. Approximately $42 million
represents a sign-on fee and shall be available for REC to use for internal
requirements, but will be refunded in entirety if REC fails to establish the
plant and start delivering volumes under the Second REC Supply Agreement. In
case of a force majeure event, REC will be allowed sufficient time to repair the
damage, but will ultimately refund the sign-on fee in its entirety if it fails
to establish the plant within reasonable time taking the force majeure event(s)
into account.

The $87 million prepayment will be made within [*****] after the Second REC
Supply Agreement has become legally binding to all three parties.

1.3      EverQ shall be entitled to 1,200 MT per year from REC Silicon III when
this is running at full planned capacity

          –     The expansion is expected to come online in [*****] and reach
full capacity between [*****] and [*****]

          –     Deliveries to EverQ is expected to have this profile:

                    2008:                     300-500 metric tons

                    2009:                     900-1,100 metric tons

   

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                              2010-2014 (inclusive):                     1,200
metric tons/year

1.4      If REC Silicon III should experience production problems, volumes to
all customers will be reduced pro-rata without penalties.

1.5      EverQ shall have the right to reduce any year’s volume by [*****].

          –     Such reduction implies no reduction in later years’ product
allocation.

          –     Such reduction shall not be redeemable in later years.

          –     Should EverQ fail to take at least [*****] of any year’s volume,
REC Silicon shall be entitled to reduce all remaining annual volumes
correspondingly.

          –     Reduction in volume by EverQ shall not entitle EverQ to any
refund of pre-paid amounts.

1.6      The gross price may be reduced by an amount not to exceed [*****] per
kilogram if the purity of the product is lower than comparable material in the
market. The price reduction shall cover [*****] so that both parties have equal
interest to bridge the quality gap. Practical definition is to be discussed.
[*****]. If REC [*****] for increased purity exceeds [*****], the price may
similarly be adjusted upwards.

1.7      The gross price will be adjusted [*****], and may further be increased
only to reflect extra ordinary [*****].

1.8      If REC consciously decides to close down REC Silicon III (after the
plant had started to deliver according to the second supply agreement) AND stop
delivering silicon to EverQ even though EverQ has purchased or tried to purchase
at least [*****] of the agreed quantities in the Second REC Supply Agreement,
then REC will as a minimum pay a penalty of [*****] of the volumes not delivered
under the Second REC Supply Agreement plus refund the funds remaining on the
escrow account.

   
2.
    Increased REC and
Q-Cells ownership
in EverQ     2.1      REC currently owns 15% of the outstanding equity interests
of EverQ. The Master Agreement describes that in    

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          conjunction with the offering of the Second REC Supply Agreement, REC
shall be entitled to increase its ownership stake in EverQ by purchasing an
additional 6% of EverQ from Evergreen. REC will purchase this additional 6% of
EverQ equity interests in conjunction with the execution of the Second REC
Supply Agreement at the price set forth in the Master Agreement. For this
purpose, the cost of capital price for EverQ will be approximately [*****].

2.2      Additionally, the Parties anticipate that at the time of execution of
the Second REC Supply Agreement, REC will exercise its rights under
Section 3.5(d) of the Master Agreement to increase its equity interest in EverQ
from 21% (after REC has increased its ownership stake from 15% by 6% according
to section 2.1 of this agreement) to a one-third ownership interest. The
purchase price for this additional stake shall be set based on a [*****]. For
purposes of clarification, the aggregate purchase price for the remaining
interest to be purchased by REC for a total 1/3 ownership of EverQ
(approximately 12.3%) will be approximately $47,000,000.

2.3      In conjunction with REC’s increase in ownership, Q-Cells shall increase
its ownership in EverQ by 12.3 % to one-third at cost of capital price for EverQ
([*****]) for approximately [*****] in accordance with the terms of the Master
Agreement.

2.4      [*****].

2.5      Following the transactions described in Section 2.1 to 2.4, Evergreen,
REC and Q-Cells shall each own one-third of the outstanding equity of EverQ. As
part of these adjustments to equity ownership of EverQ, all outstanding debt
obligations of EverQ to the Parties shall be adjusted such that these debt
obligations will reflect the new ownership percentages.

   
3.
    License &
Technology Transfer
Agreements     3.1      In conjunction with the transactions contemplated by the
Master Agreement, Evergreen, REC, Q-Cells (“the Parents”) and EverQ entered into
three License & Technology Transfer Agreements (the “License Agreements”)
pursuant to which the Parents license certain technology to EverQ. The Parties
have agreed that in conjunction with the transactions contemplated by this
Memorandum of Understanding, the definition for a market based royalty will
follow the structure below. It is understood that this is a general structure
and that    

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          individual technologies may require a modification to the structure
below based on the nature of the value such technology holds for EverQ
([*****]). Additionally, if any of the Parties can document that the royalty
scheme outlined below creates an unforeseen and unreasonable situation at a
later point in time, Evergreen, REC and Q-Cells agree to negotiate in good faith
to find a mutually satisfactory solution.

EverQ shall pay to the Parents a royalty (“x”) for a license for technology
which will be [*****] that was not already captured by the [*****] as compared
to an agreed upon baseline (generally in terms of [*****] provided by [*****] or
similar benefits), which will [*****] as follows:

     [*****]

For any individual license, the royalty above will be capped at a maximum of
[*****] of sales [*****] (at the respective level of underlying technology, e.g.
[*****]) based on internal transfer prices in line with market prices at the
respective level.

The royalty (“x”) shall be calculated and paid by EverQ on a quarterly basis
based on actual performance of the licensed technology.

3.2      If it can be demonstrated that the [*****], including royalty, and
[*****] are less attractive than [*****], then the royalty shall immediately be
reduced to where the total of [*****] and resulting royalty are [*****], but in
no case will the royalty be less than zero. The [*****] related to making
[*****] is regarded as [*****] only as long as there is [*****]. However, if a
royalty is originally structured with a meaningful percentage attributed to
[*****] and the Parties later determine that the [*****] has been reduced
substantially or eliminated, they will agree to negotiate in good faith a change
in the [*****] percentage as would have occurred had    

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          the royalty been originally structured around [*****] only.

Each Party is entitled to select an external auditor, mutually agreeable to the
other Parties, to evaluate to what extent the above cap should come into force
or not by comparing the [*****] from wafer to module (for example [*****]) vs.
modules based on ribbon wafers in EverQ.

3.3      If several technologies are added from the same Party that all
individually satisfy the requirements for a royalty, these royalties shall
individually follow the scheme above, but with a total cap of [*****].
Section 3.2 shall apply.

3.4      Special conditions for [*****]. The [*****] royalty will follow the
above structure, with the following exceptions:

(a)      In the start-up year of [*****] the royalty shall not exceed [*****]
wafer revenue (the equivalent revenue had EverQ sold wafers instead of modules).

(b)      Until [*****] the total royalty to Evergreen shall never drop below
[*****] of wafer sales; Section 3.2 shall apply. Until [*****] the maximum
annual cap on royalties to Evergreen shall be [*****].

   
4.
    Interim Silicon     4.1      In order to expedite the capacity expansion of
EverQ prior to commencement of silicon supply under the Second REC Supply
Agreement, the Parties have agreed that each of REC and Q-Cells will enter into
silicon supply agreements with EverQ pursuant to which each would supply EverQ
with the silicon required to execute its capacity expansion plans, up to an
expected maximum of approximately 150 metric tons (each, an “Interim
Agreement”).

The Parties have agreed that the terms of the Interim Agreements shall include:

a.      Price per kilogram of silicon: [*****].

b.      Volume: Each Interim Agreement shall provide for the supply of up to 150
metric tons of silicon.

c.      Delivery schedule (MT)

   

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          Q1-07      [*****]
Q2-07      [*****]
Q3-07      [*****]
Q4-07      [*****]
Q1-08      [*****]
Q2-08      [*****]

It has been agreed that Q-Cells will provide the first [*****] of silicon and
REC will provide the second [*****] of silicon. If this is not sufficient,
Q-cells and REC will each supply [*****] metric tons more.

The quantities from REC will be provided at said price on REC standard agreement
terms. The quantities from Q-Cells will be provided at said price on similar
standard agreement terms.

   
5.
    Subject to Board approval     5.1      This Memorandum of Understanding
shall be binding upon all three Parties as soon as it has been approved by the
Board of Directors (Supervisory Board) of each Party. The Parties will
thereafter immediately start finalizing binding, detailed agreements on
substantially the same terms as contained in this Memorandum of Understanding.

   
6.
    Law     6.1      German Law shall prevail, with jurisdiction at the courts
of Berlin.

   
7.
    Confidentiality     7.1      The existence of this Memorandum of
Understanding, and specific terms therein, shall be kept confidential to the
Parties except as required by law. The Parties shall ensure that their
employees, agents and advisors are bound by this confidentiality.

   

 

      Evergreen Solar, Inc.   Q-Cells AG By: /s/ Richard G. Chleboski
 
Name: Richard G. Chleboski
Title: Vice President
  By: /s/ Anton Milner
 
Name: Anton Milner

Title: C.E.O.
  Ever-Q Joint Venture   REC By: /s/ Bernd Schmidt
 
Name: Bernd Schmidt

Title: Chief Financial Officer
  By: /s/ Erik Thorsen
 
Name: Erik Thorsen

Title: President & CEO

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Appendix A – Second REC Silicon Supply Agreement Volume and Market Pricing
     [*****]

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