Exhibit 10.1

Distributed Energy Systems Corp.

10 Technology Drive

Wallingford, CT 06492

November 16, 2007

BH Cherry LLC and

Bernard H. Cherry

1 North Breakers Row

Palm Beach, FL 33480

Gentlemen:

Distributed Energy Systems Corp. (the “Company”) wishes to engage the services
of BH Cherry LLC (the “LLC”) and, through it, the services of Bernard H. Cherry
(“Executive”) as its Interim Chief Executive Officer and the LLC wishes to
provide the services of Executive on a consulting basis. The purpose of this
letter agreement is to set forth the terms of this arrangement.

1. As of October 31, 2007, the LLC has provided, and will continue to provide,
the services of Executive as the Interim Chief Executive Officer of the Company.
Executive will have the responsibilities and authorities customarily inherent in
the position of chief executive officer and as provided in the Company’s by-laws
and will, in his capacity as an officer of the Company, report solely to the
Board of Directors of the Company (the “Board of Directors”). In addition,
Executive will be responsible for other duties as may from time to time be
reasonably agreed among him, the LLC and the Board of Directors, including at
the request of the Board of Directors assisting in the search for a permanent
Chief Executive Officer (together with the services described in the preceding
sentence, the “Services”). The LLC and Executive agree that Executive will
devote his best efforts, skill, knowledge, attention, and energies to performing
the Services and to the advancement of the Company’s business and interests and
to the performance of his duties and responsibilities as Interim Chief Executive
Officer of the Company, and they agree to observe all rules and regulations of
the Company. The parties contemplate that Executive will initially devote
approximately five days per week to the performance of the Services, although
the judgment as to the necessary time commitment shall be in the discretion of
Executive and the time commitment may decline over time. Executive, in his
individual capacity, will continue in his role as a director of the Company and
as Chairman of the Board, subject to the Company’s by-laws and legal
requirements.

2. In rendering the Services to the Company, Executive and the LLC shall act as
an independent contractor and not as an employee, joint venturer or partner of
the Company for any purpose whatsoever. The manner and means by which the
Services are provided shall be under

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the sole and exclusive control and discretion of the LLC and Executive, subject
to the provisions of this letter agreement, the Company’s by-laws and legal
requirements. The LLC is not authorized to transact any business or assume or
create any obligation or responsibility, express or implied, on behalf of, or in
the name of, the Company or to bind the Company in any manner. Executive, in his
individual capacity as a corporate officer, shall be authorized to transact
business and incur obligations on behalf of the Company only to the extent such
authority is inherent in the position of chief executive officer. The LLC
retains the right to contract with other companies or entities for Executive’s
or its own consulting and management services, subject to the requirements of
this letter agreement. Likewise, the Company retains a reciprocal right to
contract with other companies and/or individuals for consulting and management
services without restriction.

3. The Company will pay the LLC for the services of Executive at a rate of
$4,000 per day actually devoted by Executive to performing the Services. The LLC
shall present monthly invoices to the Company reporting in reasonable detail the
work performed by Executive and containing the LLC’s employer identification
number and address, which invoices shall be subject to approval by a member of
the Audit Committee of the Board of Directors, which approval shall not be
unreasonably withheld. Effective on the date of this letter agreement, Executive
shall no longer be eligible for compensation in his role as a director or as
Chairman of the Board of Directors.

4. Executive shall not be eligible to participate in any bonus or benefit
programs or privileges that the Company establishes and makes available to its
employees from time to time, including, without limitation, social security,
unemployment, medical or pension payments, and Executive waives any claim to
entitlement to such participation even if his status is later reclassified
retroactively by a governmental agency.

5. The Company will reimburse the LLC for reasonable business expenses incurred
in connection with the performance of the Service, including but not limited to
air fare at coach rates, lodging and meal expenses in connection with
Executive’s commuting between his residences in Florida and New Jersey and
Company facilities. The LLC shall submit to the Company itemized monthly
statements, in a form satisfactory to the Company, of such expenses incurred in
the previous month, which statements shall be subject to standard Company
expense reimbursement policies in effect from time to time and approval by a
member of the Audit Committee of the Board of Directors.

6. This letter agreement and the consulting arrangement hereunder may be
terminated by the Company or the LLC at any time, for any reason, and with or
without notice. In the event of such termination, the LLC shall be entitled to
payment for services performed and expenses incurred prior to the effective date
of termination, as contemplated by this letter agreement,

7. As a condition to this engagement, the LLC and Executive shall execute and
comply with the terms of an Assignment of Inventions, Non-Disclosure and
Non-Compete Agreement in the form attached hereto as Exhibit A.

 

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8. The LLC and Executive represent that they are not bound by any agreement,
employment or consulting contract, restrictive covenant or other restriction to
refrain from competing, directly or indirectly, with the business of a previous
employer or other party or that would prevent them from entering into this
consulting arrangement with or carrying out their responsibilities for the
Company, or which is in any way inconsistent with the terms of this letter
agreement. The LLC and Executive further represent that their engagement by the
Company does not and will not breach any agreement to keep in confidence
proprietary information, knowledge or data acquired by them in confidence or in
trust prior to their engagement by the Company.

9. The LLC is responsible for the Federal, state and local taxes, including all
employment taxes, withholding, and social security payments, for Executive and
any other employee(s) performing consultant services under this letter
agreement, and for complying with all applicable Federal, state and local laws,
ordinances, and regulations that are now or in the future may become applicable
to this letter agreement and the services provided hereunder, including but not
limited to, complying with all applicable rules and regulations of the state of
Connecticut. The LLC is also responsible for maintaining adequate workers’
compensation insurance coverage for Executive. The LLC agrees to indemnify,
defend and hold harmless the Company, its stockholders, officers, directors,
agents and employees from any claims by any federal, state or local government
agency, whether on account of withholding of employment taxes or any other claim
or cause, arising out of the LLC’s or Executive’s service hereunder.

10. This letter agreement is personal to the LLC and Executive and neither shall
have the right to assign any of its or his rights or delegate any of its or his
duties without the express written consent of the Company.

11. All notices required or permitted under this letter agreement shall be in
writing and shall be deemed effective upon personal delivery or upon deposit in
the United States Post Office, by registered or certified mail, postage prepaid,
addressed to the other party at the address shown above, or at such other
address or addresses as either party shall designate to the other in accordance
with this section.

12. This letter agreement contains the entire understanding between the Company
on the one hand and the LLC and Executive on the other hand and supersedes,
replaces and takes precedence over any prior understanding or oral or written
agreement between them respecting the subject matter of this letter agreement.
There are no representations, agreements, arrangements, nor understandings, oral
or written, between the Company on the one hand and the LLC and Executive on the
other hand relating to the subject matter of this letter agreement that are not
fully expressed herein. This letter agreement may be amended or modified only by
a written instrument executed by the Company, the LLC and Executive.

13. In the event any provision of this letter agreement shall be held invalid,
the same shall not invalidate or otherwise affect in any respect any other term
or terms of this letter agreement, which term or terms shall remain in full
force and effect.

14. No delay or omission by the Company, the LLC, or Executive in exercising any
right under this letter agreement shall operate as a waiver of that or any other
right. A waiver or

 

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consent given by the Company, the LLC, or Executive on any one occasion shall be
effective only in that instance and shall not be construed as a bar or waiver of
any right on any other occasion.

15. This letter agreement shall be governed by and construed in accordance with
the internal laws of the State of Connecticut without giving effect to any
choice or conflict of law provision or rule (whether of the State of Connecticut
or any other jurisdiction) that would cause the application of laws of any
jurisdictions other than those of the State of Connecticut.

Please sign the enclosed duplicate of this letter agreement in the space
provided below to indicate your agreement to these terms.

 

DISTRIBUTED ENERGY SYSTEMS CORP. By:  

/s/ Paul Koeppe

  Paul Koeppe,   Chairman of the Compensation Committee of the Board of
Directors

 

Accepted:   BH CHERRY LLC   By:  

/s/ Bernard H. Cherry

  Date: November 16, 2007   Bernard H. Cherry, Managing Member  

/s/ Bernard H. Cherry

  Date: November 16, 2007 Bernard H. Cherry  

 

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