Nonstatutory Option Agreement



 Exhibit 10.1 
 Distributed Energy Systems Corp. 
 Nonstatutory Stock Option Agreement  
 Granted Under 2003 Stock Incentive Plan 
  

	1.	Grant of Option. 

 This agreement evidences the
grant by Distributed Energy Systems Corp., a Delaware corporation (the “Company”), on December 7, 2007 (the “Grant Date”) to Bernard H. Cherry, an officer and director of the Company (the “Participant”), of an
option to purchase, in whole or in part, on the terms provided herein and in the Company’s 2003 Stock Incentive Plan (the “Plan”), a total of 418,818 shares (the “Shares”) of common stock, $0.01 par value per share, of the
Company (“Common Stock”), at a price of $0.50 per share. Unless earlier terminated, this option shall expire at 5:00 p.m., Eastern time, on October 31, 2012 (the “Final Exercise Date”). 
 It is intended that the option evidenced by this agreement shall not be an incentive stock option as defined in Section 422 of the Internal Revenue
Code of 1986, as amended, and any regulations promulgated thereunder (the “Code”). Except as otherwise indicated by the context, the term “Participant”, as used in this option, shall be deemed to include any person who acquires
the right to exercise this option validly under its terms. 
  

	2.	Vesting; Exercise of Option. 

 (a) Vesting.
This option will become exercisable (“vest”) in twelve equal monthly installments on the last day of each calendar month, beginning with November 2007, provided that the Participant has continued to serve as the interim or permanent chief
executive officer or the chairman of the board of directors of the Company through such day. The right of exercise shall be cumulative so that to the extent the option is not exercised in any period to the maximum extent permissible it shall
continue to be exercisable, in whole or in part, with respect to all Shares for which it is vested until the earlier of the Final Exercise Date or the termination of this option hereunder or under the Plan. 
 (b) Form of Exercise. Each election to exercise this option shall be in writing, signed by the Participant, and received by the Company at its
principal office, accompanied by this agreement, and payment in full in the manner provided in the Plan. The Participant may purchase less than the number of shares covered hereby, provided that no partial exercise of this option may be for any
fractional share. 
 (c) Continuous Relationship with the Company Required. Except as otherwise provided in this Section 2, this
option may not be exercised unless the Participant, at the time he or she exercises this option, is, and has been at all times since the Grant Date, a consultant, advisor, employee or director of the Company or any other entity the employees,
advisors, directors or consultants of which are eligible to receive option grants under the Plan (an “Eligible Participant”). 
 (d) Termination of Relationship with the Company. If the Participant ceases to be an Eligible Participant for any reason, then, except as provided in paragraphs (e) and (f) below, the 








 
right to exercise this option shall terminate three months after such cessation (but in no event after the Final Exercise Date), provided that
this option shall be exercisable only to the extent that the Participant was entitled to exercise this option on the date of such cessation. Notwithstanding the foregoing, if the Participant, prior to the Final Exercise Date, violates the
non-competition or confidentiality provisions of any employment contract, confidentiality and nondisclosure agreement or other agreement between the Participant and the Company, the right to exercise this option shall terminate immediately upon
written notice to the Participant from the Company describing such violation. 
 (e) Exercise Period Upon Death or Disability. If the
Participant dies or becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior to the Final Exercise Date while he or she is an Eligible Participant and the Company has not terminated such relationship for “cause” as
specified in paragraph (e) below, this option shall be exercisable, within the period of one year following the date of death or disability of the Participant, by the Participant (or in the case of death by an authorized transferee),
provided that this option shall be exercisable only to the extent that this option was exercisable by the Participant on the date of his or her death or disability, and further provided that this option shall not be exercisable after
the Final Exercise Date. 
 (f) Termination for Cause. If, prior to the Final Exercise Date, the Participant’s employment or
other relationship with the Company is terminated by the Company for Cause (as defined below), the right to exercise this option shall terminate immediately upon the effective date of such termination of employment or other relationship. If, prior
to the Final Exercise Date, the Participant is given notice by the Company of the termination of his or her employment or other relationship by the Company for Cause, and the effective date of such employment or other termination is subsequent to
the date of the delivery of such notice, the right to exercise this option shall be suspended from the time of the delivery of such notice until the earlier of (i) such time as it is determined or otherwise agreed that the Participant’s
employment or other relationship shall not be terminated for Cause as provided in such notice or (ii) the effective date of such termination of employment or other relationship (in which case the right to exercise this option shall, pursuant to
the preceding sentence, terminate immediately upon the effective date of such termination of employment or other relationship). If the Participant is party to an employment, consulting or severance agreement with the Company that contains a
definition of “cause” for termination of employment or other relationship, “Cause” shall have the meaning ascribed to such term in such agreement. Otherwise, “Cause” shall mean willful misconduct by the Participant or
willful failure by the Participant to perform his or her responsibilities to the Company (including, without limitation, breach by the Participant of any provision of any employment, consulting, advisory, nondisclosure, non-competition or other
similar agreement between the Participant and the Company), as determined by the Company. The Participant shall be considered to have been discharged for “Cause” if the Company determines, within 30 days after the Participant’s
resignation, that discharge for Cause was warranted. 
  

	3.	Withholding. 

 No Shares will be issued pursuant to
the exercise of this option unless and until the Participant pays to the Company, or makes provision satisfactory to the Company for payment of, any federal, state or local withholding taxes required by law to be withheld in respect of this option.

  

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	4.	Nontransferability of Option. 

 This option may not
be sold, assigned, transferred, pledged or otherwise encumbered by the Participant, either voluntarily or by operation of law, except by will or the laws of descent and distribution, and, during the lifetime of the Participant, this option shall be
exercisable only by the Participant. 
  

	5.	Provisions of the Plan. 

 This option is subject to
the provisions of the Plan (including the provisions relating to amendments to the Plan), a copy of which is furnished to the Participant with this option. 
 IN WITNESS WHEREOF, the Company has caused this option to be executed under its corporate seal by its duly authorized officer. This option shall take effect as a sealed instrument. 
  

			
	 DISTRIBUTED ENERGY SYSTEMS CORP.

		
	 By:
	 	 /s/ Paul Koeppe

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



  

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 PARTICIPANT’S ACCEPTANCE 
 The undersigned hereby accepts the foregoing option and agrees to the terms and conditions thereof. The undersigned hereby acknowledges receipt of a copy
of the Company’s 2003 Stock Incentive Plan. 
  

			
	 PARTICIPANT: Bernard H. Cherry

	
	 /s/ Bernard H. Cherry

		
	 Address:
	  	 1 North Breakers Row

		  	 Palm Beach, FL 33480



  

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