Document:

Executive Incentive Plan adopted by the registrant on May 28, 2008.

 EXHIBIT 10.1 
 DISTRIBUTED ENERGY SYSTEMS 
 EXECUTIVE INCENTIVE PLAN 
 Adopted May 28,2008 
 PLAN OBJECTIVE

 The Executive Incentive Plan (the “Plan”) for DESC and certain of its affiliates (collectively, the “Company”) is designed to
maximize assets available for distribution to creditors and shareholders by providing incentives to two key executives of the Company to maximize the net recovery received by the Company upon the consummation of sales of the various businesses of
the Company and/or confirmation of a chapter 11 plan that implements a recapitalization of one or more of the Company’s businesses. 
 ELIGIBLE
EMPLOYEES 
 The Plan covers Bernard Cherry, Chairman and Interim Chief Executive Officer and Peter Tallian, Chief Financial Officer (the “Plan
Participants”). All payments under the Plan (the “Plan Payments”) shall be in lieu of any other severance agreement or policy or performance bonus under any other plan, program, agreement, applicable law or policy otherwise
applicable to the Plan Participants and the Company. 
 PLAN PAYMENTS 
 Upon the successful closing of (i) the sale of the Company’s Proton business and (ii) the sale of the Company’s Northern business and/or confirmation of a chapter 11 plan that provides for the
recapitalization of one or both of the Northern and Proton businesses (collectively, the “Restructuring”), each of the Plan Participants shall have earned and be entitled to a minimum payment of $100,000. 
 To the extent the proceeds from the Restructuring are sufficient to satisfy the allowed secured claims of Perseus Partners VII, L.P. (“Perseus”), the Plan
Participants shall have earned and be entitled to receive additional payments calculated as a percentage of the excess proceeds or value achieved from the Restructuring (the “Excess Proceeds”)1 as follows: 
 Bernard Cherry – 7.5% of the Excess Proceeds 
 Peter Tallian –5.0% of the Excess Proceeds 
 Notwithstanding the
foregoing, the payments to the Plan Participants earned pursuant to the Plan shall not exceed $750,000 for Bernard Cherry and $500,000 for Peter Tallian. 
  

	1	In the event of confirmation and effectiveness of a chapter 11 plan, the Excess Proceeds shall be calculated based on the value available for distribution to unsecured creditors and
interest holders. 

 By way of example, assume that Perseus’s allowed secured claims are $19 million and the proceeds from the
Restructuring are $22 million. The payments under the Plan to the Plan Participants would be as follows: 
 Bernard Cherry: $325,000 ($100,000 + 7.5% of
$3,000,000) 
 Peter Tallian: $250,000 ($100,000 + 5.0% of $3,000,000) 
 CARVEOUT 
 Perseus has agreed to a carve-out from its collateral in the amount of $200,000 to fund the minimum payment under the Plan (the
“Carve-out”) to the extent the proceeds from the Restructuring are insufficient to satisfy Perseus’ debt. 
 COURT APPROVAL 

If the Company files a chapter 11 proceeding to implement the Restructuring, the Company shall promptly file a motion seeking bankruptcy court approval of the Plan
including administrative priority status for any payments thereunder and in connection with approval of Debtor In Possession financing, shall seek approval of the Carve-out. 
 TERMINATION OF EMPLOYMENT 
 Awards under the Plan are offered as discretionary incentive amounts. Plan Payments shall
be made to each entitled Plan Participant in accordance with the terms of the Plan, even if such Plan Participant is not employed by the Company at the time a Plan Payment is to be made, unless the Plan Participant retires, dies, voluntarily
resigns, or is terminated for cause, in which case the Plan Participant shall not be entitled to any Plan Payments after the termination of his employment. 
 For purposes of the Plan, the term “for cause” means, either before or after adoption of the Plan: 
  

	 	•	 	 The arrest or conviction (or plea of guilty or nolo contendere) of Plan Participant of any felony or other crime involving dishonesty or moral turpitude;

  

	 	•	 	 A finding by an legal or administrative court or tribunal that the Plan Participant engaged in willful misconduct, or was grossly negligent, in the performance of
his or her duties; 

  

	 	•	 	 A material and direct conflict of interest, not specifically waived in advance by the Company; 

  

	 	•	 	 Unauthorized use or disclosure of confidential information that belongs to the Company or the Company’s customers or employees; 

 

	 	•	 	 Repeated absences from work that the Company reasonably determine to be materially adverse to the best interests of the Company; 

  

 2 

	 	•	 	 Repeated failure of Plan Participant to perform his or her job duties in a satisfactory manner; provided that such failure continues for more than 21 days after
written notice thereof which specifically identifies the manner in which Plan Participant is believed to have materially failed to perform said duties; 

  

	 	•	 	 Refusal to follow the instructions of a direct supervisor or from a member of the Company’s board of directors; or 

  

	 	•	 	 Other material misconduct including, but not limited to: falsification of the Company’s records, theft, sexual harassment, or possession of firearms,
controlled substances or illegal drugs on the Company’s premises or while performing the Company’s business. 

 FURTHER
ACTIONS 
 As a condition to each Plan Participant’s eligibility to participate in the Plan, such Plan Participant shall agree to take such further
actions as are reasonably requested by the Company, including such actions as the Company may reasonably request subsequent to the termination of such Plan Participant’s employment with the Company, as the case many be, to assist the Company in
the conduct of any bankruptcy cases filed under chapter 11 of the United States Bankruptcy Code. 
 NO PROMISE OF CONTINUED EMPLOYMENT 
 The Plan and any Plan Participant’s selection as a participant in the Plan does not, and is in no manner intended to constitute, a promise of employment for any
period of time or to change a Plan Participant’s status, if applicable, as an at shall employee subject to termination at any time for any reason. 
 TAXES 
 All payments made pursuant to the Plan shall be subject to standard withholding and deductions. Neither the Company nor its officers
or agents make or has made any representation about the tax consequences of any payments or benefits offered by the Company to any Plan Participant. 
 SEVERABILITY 
 If any provision of the Plan is determined to be invalid or unenforceable, in whole or in part, this determination shall not
affect any other provision of the Plan and the provision in question shall be modified as to be rendered enforceable in a manner consistent with the intent of the parties insofar as possible. Any waiver of or breach of any of the terms of the Plan
shall not operate or be construed as a waiver of any other breach of such terms or conditions or of any other terms and conditions, nor shall any failure to enforce any provision hereof operate or be construed as a waiver of such provision or of any
other provision. 
  

 3 

 CHOICE OF LAW AND VENUE 
 The Plan shall be governed by the laws of the State of Delaware, notwithstanding that State’s conflict of law provisions. The Company and each of the Plan Participants shall irrevocably and unconditionally consent to the exclusive
jurisdiction of the United States District Court for the District of Delaware (the “District Court”) or if a chapter 11 proceeding is commenced the United States Bankruptcy Court (the “Bankruptcy Court”). The Company and
each of the Plan Participants shall irrevocably and unconditionally waive any objection to the laying of venue of any action, suit, or proceeding arising out of or related to the Plan in the District Court or Bankruptcy Court, as applicable, and
shall further irrevocably and unconditionally waive and agree not to plead or claim that any such action, suit or proceeding brought in the District Court or Bankruptcy Court, as applicable, has been brought in an inconvenient forum. 
 ENTIRE AGREEMENT AND AMENDMENT 
 This document constitutes the
complete, final and exclusive embodiment of the terms and conditions of the Plan and may only be modified in writing signed by an authorized officer of the Company. Any agreement between any Plan Participant and the Company with regard to the Plan
and its subject matter is superseded in its entirety by this document. 
 NO ASSIGNMENT 
 The rights of a Plan Participant or any other person to any payment or other benefits under the Plan may not be assigned, transferred, pledged, or encumbered except by will or the laws of decent and distribution.

  

 4Fourth Amendment to Additional Investment Senior Secured Convertible Promissory

 Exhibit 10.1 
 EXECUTION COPY 
 FOURTH AMENDMENT TO ADDITIONAL INVESTMENT SENIOR SECURED 
 CONVERTIBLE PROMISSORY NOTES 
 FOURTH AMENDMENT TO ADDITIONAL INVESTMENT SENIOR SECURED CONVERTIBLE PROMISSORY NOTES (this “Fourth Amendment”), dated as of May 30, 2008, by and between Distributed Energy Systems Corp., a Delaware
corporation (the “Company”) and Perseus Partners VII, L.P., a Delaware limited partnership (the “Holder”). Unless otherwise indicated, all capitalized terms used herein and not otherwise defined have the
respective meanings provided such terms in the Purchase Agreement and the Notes referred to below. 
 W I T N E S S E T H:

 WHEREAS, the Company and the Holder are parties to a Securities Purchase Agreement, dated as of May 10, 2007 and amended
on March 13, 2008 (as further amended, modified and/or restated from time to time, the “Purchase Agreement”); 
 WHEREAS, under the terms of the Purchase Agreement, on March 13, 2008 the Company issued to the Holder a senior secured convertible promissory note in the principal amount of $1,500,000.00 (the “Additional Investment
Note”); 
 WHEREAS, on April 1, 2008, the Company issued to the Holder an additional senior secured convertible
promissory note in the principal amount of $9,246.58 as payment for interest due and payable on the Additional Investment Note (the “PIK Note”, and together with the Additional Investment Note, the “Notes”, and each
individually, a “Note”); 
 WHEREAS, the Company and the Holder amended certain provisions of the Notes effective
May 8, 2008 (the “First Amendment”), May 16, 2008 and May 22, 2008; and 
 WHEREAS, the Company has
requested an amendment of certain provisions of the Notes as herein provided; 
 NOW, THEREFORE, it is agreed: 
 1. Amendment of Each Note. The Holder and the Company hereby agree that as of the Fourth Amendment Effective Date (as defined below) and through
6:00 p.m. EDT on June 3, 2008, Section 4(i) of each Note is amended by: 
 (a) setting the Net Working Capital
benchmark at $1,000,000; and 
 (b) setting the unrestricted cash and cash equivalents benchmark at $2,000,000. 
 After 6:00 p.m. EDT on June 3, 2008, each benchmark will revert to the benchmark in place prior to the effective date of the First Amendment. 

 2. Representations and Warranties. The representations and warranties of the Company contained in
the Purchase Agreement or in any other Transaction Document that are qualified as to materiality are true and correct, and all other representations and warranties of the Company contained in the Purchase Agreement or in any other Transaction
Document that are not so qualified are true and correct in all material respects, in each case with the same effect as though made as of the date of this Fourth Amendment, except that the accuracy of representations and warranties that by their
terms speak as of a specified date are determined as of such date and except for matters arising after the Effective Date of the Purchase Agreement that, (A) when viewed in the aggregate, have not had and are not reasonably likely to have a
Material Adverse Effect or (B) have been disclosed in writing or electronically to the Holder or its representatives. 
 3.
GOVERNING LAW. THIS FOURTH AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK. 
 4. Effectiveness. This Fourth Amendment is effective upon execution of this Fourth Amendment by both Parties (the “Fourth Amendment
Effective Date”). 
 5. Waiver and Release. The Company by signing below hereby waives and releases the Holder, its
respective affiliates and its and its affiliates’ respective directors, officers, employees and attorneys from any and all claims, offsets, defenses and counterclaims of the Company arising on or prior to the date hereof in connection with any
action or inaction taken by any such Person pursuant to this Fourth Amendment, such waiver and release being with full knowledge and understanding of the circumstances and effect thereof and after having consulted legal counsel with respect thereto.

 6. Expenses. The Company hereby reconfirms its obligations under Section 8.6(a)(ii) of the Purchase Agreement to pay and
reimburse the Holder for all reasonable out-of-pocket expenses and fees and disbursements, including attorneys’ and accountants’ fees, incurred by the Holder and its representatives in connection with this Fourth Amendment. 
 7. Transaction Documents. From and after the Fourth Amendment Effective Date, all references in the Purchase Agreement and each of the other
Transaction Documents to each Note shall be deemed to be references to such Note as amended, modified and/or restated hereby. 
 8.
Counterparts. Signatures on this Fourth Amendment may be communicated by facsimile or electronic transmission and shall be binding upon the Parties so transmitting their signatures. Counterparts with original signatures shall be provided to
the other Party following the applicable facsimile or electronic transmission, provided that the failure to provide the original counterpart shall have no effect on the validity or the binding nature of this Fourth Amendment. No Party shall raise
facsimile or electronic delivery of a signature or the fact that any signature or agreement or instrument was transmitted or communicated by a facsimile or e-mail as a defense to the formation nor enforceability of a contract and each such Party
forever waives any such defense. 

 IN WITNESS WHEREOF, the Parties hereto have caused their duly authorized officers to execute and
deliver this Fourth Amendment as of the date first above written. 
  

			
	DISTRIBUTED ENERGY SYSTEMS CORP.
		
	By:	 	 /s/ Peter J. Tallian

	Name:	 	Peter J. Tallian
	Title:	 	CFO
	
	PERSEUS PARTNERS VII, L.P.
		
	By:	 	 Perseus Partners VII GP, L.P. 
 its general
partner

		
	By:	 	 Perseus Partners VII GP, L.L.C. 
 its general
partner

		
	By:	 	 /s/ Teresa Y. Bernstein

		 	Teresa Y. Bernstein
		 	Secretary

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