Document:

exv10w1

 

Exhibit 10.1

EMPLOYMENT AGREEMENT

DATED AS OF JUNE 6, 2006

BETWEEN BERNARD CAMMARATA AND THE TJX COMPANIES, INC.

 

 

	 	 	 	 	 	 	 
	 	 	INDEX	 	PAGE	 
	1.
	 	EFFECTIVE DATE; TERM OF AGREEMENT	 	 	1	 
	2.
	 	SCOPE OF EMPLOYMENT	 	 	1	 
	3.
	 	COMPENSATION AND BENEFITS	 	 	2	 
	4.
	 	TERMINATION OF EMPLOYMENT; IN GENERAL	 	 	3	 
	5.
	 	BENEFITS UPON NON-VOLUNTARY TERMINATION OF EMPLOYMENT OR	 	 	4	 
	 
	 	UPON EXPIRATION OF THE AGREEMENT	 	 	 	 
	6.
	 	OTHER TERMINATION; VIOLATION OF CERTAIN AGREEMENTS	 	 	6	 
	7.
	 	BENEFITS UPON CHANGE IN CONTROL	 	 	6	 
	8.
	 	AGREEMENT NOT TO SOLICIT OR COMPETE	 	 	6	 
	9.
	 	ASSIGNMENT	 	 	8	 
	10.
	 	NOTICES	 	 	8	 
	11.
	 	WITHHOLDING	 	 	8	 
	12.
	 	GOVERNING LAW	 	 	8	 
	13.
	 	ARBITRATION	 	 	8	 
	14.
	 	ENTIRE AGREEMENT	 	 	9	 

	 	 	 	 	 
	EXHIBIT A	 	 
	 

	 	CERTAIN DEFINITIONS
	 	A-1
	 
	 	 	 	 
	EXHIBIT B	 	 
	 

	 	DEFINITION OF CHANGE IN CONTROL
	 	B-1
	 
	 	 	 	 
	EXHIBIT C	 	 
	 

	 	CHANGE IN CONTROL BENEFITS
	 	C-1

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BERNARD CAMMARATA

EMPLOYMENT AGREEMENT

     AGREEMENT dated as of June 6, 2006 between BERNARD CAMMARATA (“Executive”) and The TJX
Companies, Inc., a Delaware corporation whose principal office is in Framingham, Massachusetts
01701 (the “Company”).

RECITALS

     Executive has been employed by the Company as Chairman of the Board and in other executive
capacities, most recently pursuant to an employment agreement dated as of June 3, 2003, as amended.
The Company and Executive intend that Executive shall continue to serve the Company as Chairman of
the Board and in other capacities on the terms set forth below and, to that end, deem it desirable
and appropriate to enter into this Agreement.

AGREEMENT

     The parties hereto, in consideration of the mutual agreements hereinafter contained, agree as
follows:

1. EFFECTIVE DATE; TERM OF AGREEMENT. This Agreement shall become effective as of June 6,
2006 (the “Effective Date”) and, as of that date, shall supersede the employment agreement dated as
of June 3, 2003, as amended by letter agreement dated November 14, 2005. Executive’s employment as
Chairman of the Board shall continue on the terms provided herein until the date of the annual
meeting of stockholders of the Company occurring in 2009 (the “2009 meeting date”), subject to
earlier termination as provided herein (such period of employment hereinafter called the
“Employment Period”).

2. SCOPE OF EMPLOYMENT.

     (a) Nature of Services. During the term hereof, Executive shall diligently perform
the duties and assume the responsibilities of Chairman of the Board and such additional executive
duties and responsibilities as shall from time to time be assigned to him by the Board. Without
limiting the generality of the foregoing, the parties hereto acknowledge and agree that Executive
(i) as of the Effective Date is also serving as Acting Chief Executive Officer of the Company, and
(ii) will continue to serve as Acting Chief Executive Officer during such period (the “Acting CEO
Period”) from and after the Effective Date as may be mutually acceptable to the Board and
Executive, subject to the following provisions of this Agreement. The Acting CEO Period shall
terminate when Executive is no longer serving as Acting Chief Executive Officer of the Company.
The Board may at any time remove Executive from the position of Acting Chief Executive Officer of
the Company, and Executive upon not less than ninety (90) days’ advance written notice to the Board
may at any time resign from such position. The

 

 

Board’s removal of Executive from the position of Acting Chief Executive Officer of the
Company, or Executive’s resignation from such position, shall not, without more, constitute a
termination of the Employment Period. In any matter in which the Board or Committee deliberates
or takes action with respect to this Agreement, Executive, if then a member of the body so
deliberating or taking action, shall recuse himself.

     (b) Extent of Services. Executive shall devote such time and efforts as are
reasonably necessary to the proper performance of his duties hereunder, it being understood that
except during the Acting CEO Period such duties are not expected to require Executive’s full-time
attention and that Executive may, during the Employment Period, participate in other activities
(including, without limitation, charitable or community activities, activities in trade or
professional organizations, service on other boards or similar bodies, and investments in other
enterprises), provided that such other activities (i) would be permitted under Section 8 if engaged
in by Executive during the two-year period following a voluntary termination of employment (during
the Employment Period) other than for Valid Reason, and (ii) are not otherwise inconsistent with
Executive’s position, duties and responsibilities hereunder; and further provided, that with
respect to the Acting CEO Period the Board shall have the right to limit Executive’s participation
in other activities described or referred to in this Section 3(b) whenever it shall believe that
the time spent on such participation or activities infringes in any material respect upon the time
required for the performance of Executive’s duties during the Acting CEO Period or is otherwise
incompatible with those duties.

3. COMPENSATION AND BENEFITS.

     (a) Base Salary. Executive shall be paid a Base Salary at the rate of $400,000 per
year or such higher amount as the Committee may determine (the rate described in this sentence as
in effect at any relevant time being herein referred to as the “Chairman Rate”). Notwithstanding
the foregoing, for any portion of the Employment Period that is also within the Acting CEO Period,
Executive shall be paid a Base Salary at the rate of $900,000 per year or such higher amount as the
Committee may determine (the rate described in this sentence as in effect at any relevant time
being herein referred to as the “Acting CEO Rate”). Executive’s Base Salary shall be paid in the
same manner and at the same times as the Company shall pay base salary to other executive
employees.

     (b) Existing Awards Under Stock Incentive Plan. Reference is made to the following
stock-based awards previously made to Executive under the Company’s Stock Incentive Plan (including
any successor, the “Stock Incentive Plan”) which were outstanding as of the Effective Date: (i)
stock option Grant Nos. 86-51, 86-55 and 86-56; (ii) Executive’s November 2005 performance-based
deferred stock award; and (iii) Executive’s November 2005 performance-based restricted stock award.
Each of the stock-based awards referenced in the preceding sentence shall continue for such period
or periods and in accordance with such terms as are set out in the grant and other governing
documents relating to such awards (including for this purpose any prior employment agreement in
effect between Executive and the Company insofar as it relates by its express terms to any such
awards), and shall not be affected by the terms of this Agreement except as otherwise expressly
provided herein. For the avoidance of doubt, in the case of the awards referenced under clause
(ii) and (iii) above, references in the award documentation to terms described in Executive’s
“Employment Agreement” shall be deemed to

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refer both to this Agreement and to Executive’s agreement with the Company dated as of June 3,
2003.

     (c) Continued Participation in Certain Benefits. During the Employment Period,
Executive shall continue to be eligible to participate in the employee benefit and fringe benefit
plans and programs in effect on the date hereof and made available to executives of the Company
generally (including, without limitation, GDCP and ESP (subject to clause (iii) below)), in each
case in accordance with the terms of such plans or programs as in effect from time to time, subject
to the following:

     (i) Executive shall not be entitled to participate in any awards under the Company’s
Long Range Performance Incentive Plan or under the Company’s Management Incentive Plan.

     (ii) Except as provided at Section 3(b) above, Executive shall not be entitled to
participate in any awards under the Stock Incentive Plan.

     (iii) Executive shall not be entitled to any employer credits under ESP.

     (iv) Executive shall have no rights to benefits under the Company’s Supplemental
Executive Retirement Plan (“SERP”).

Except as provided in Section 3(c)(iii) above, Executive’s entitlement to benefits, if any, under
those Company employee and fringe benefit plans and programs in which he participates will be
determined in accordance with the terms of the applicable plan or program.

4. TERMINATION OF EMPLOYMENT; IN GENERAL.

     (a) The Company shall have the right to end Executive’s employment at any time and for any
reason, with or without Cause. A termination by the Company of Executive’s services as Acting
Chief Executive Officer shall not be deemed to result in a termination of Executive’s employment
under this Agreement generally, and therefore shall not be deemed to result in a termination of the
Employment Period, unless the Company in connection therewith terminates Executive’s employment
under this Agreement generally.

     (b) The Employment Period shall terminate when Executive becomes Disabled. In addition, if by
reason of Incapacity Executive is unable to perform his duties for at least six continuous months,
upon written notice by the Company to Executive the Employment Period will be terminated for
Incapacity.

     (c) The Employment Period shall terminate if Executive shall fail to be nominated to serve, or
shall fail to be elected to serve, as a member of the Board.

     (d) Whenever the Employment Period shall terminate, Executive shall resign all offices or
other positions he shall hold with the Company and any affiliated corporations, including all
positions on the Board.

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5. BENEFITS UPON NON-VOLUNTARY TERMINATION OF EMPLOYMENT OR UPON EXPIRATION OF THE
AGREEMENT.

     (a) Certain Terminations Prior to the 2009 meeting date. If the Employment Period
shall have terminated prior to the 2009 meeting date by reason of (i) death, Disability or
Incapacity of Executive, (ii) termination by the Company for any reason other than Cause or (iii)
termination by Executive in the event that either (A) Executive shall be removed from or fail to be
reelected as a Director or as Chairman, or (B) Executive is relocated more than forty (40) miles
from the current corporate headquarters of the Company, in either case without his prior written
consent, then all compensation and benefits for Executive shall be as follows:

     (i) For the longer of twelve (12) months after such termination or until the 2009
meeting date (the “termination period”), the Company will pay to Executive or his legal
representative continued Base Salary at the Chairman Rate (provided, that if immediately
prior to such termination Executive was being paid Base Salary at the Acting CEO Rate,
payment shall be made for the first six (6) months at the Acting CEO Rate and thereafter
until the end of the termination period at the Chairman Rate), subject to the following:

     (A) If Executive is eligible for long-term disability compensation benefits
under the Company’s long-term disability plan, the amount payable under this clause
shall be paid at a rate equal to the excess of (I) the applicable rate of Base
Salary payable under the first sentence of this clause (a)(i) (that is, the Chairman
Rate or the Acting CEO Rate, as the case may be), over (II) the long-term disability
compensation benefits for which Executive is eligible under such plan.

     (B) Payments pursuant to this clause (a)(i) shall be paid for the first twelve
(12) months of the termination period without reduction for compensation earned from
other employment or self-employment, and shall thereafter be reduced by such
compensation received by Executive from other employment or self-employment.

     (ii) Until the expiration of the termination period as defined at (a)(i) above and
subject to such minimum coverage-continuation requirements as may be required by law, the
Company will provide (except to the extent that Executive shall obtain no less favorable
coverage from another employer or from self-employment) such medical and hospital insurance
and term life insurance for Executive and his family, comparable to the insurance provided
for executives generally, as the Company shall determine, and upon the same terms and
conditions as the same shall be provided for other Company executives generally; provided,
however, that in no event shall such benefits or the terms and conditions thereof be less
favorable to Executive than those afforded to him as of the Date of Termination; and further
provided, that to the extent it is impossible or impracticable to provide any such coverage
to Executive under the Company’s then existing employee benefit plans or arrangements, the
Company shall arrange alternative comparable coverage or, if such alternative coverage is
not available, shall pay to Executive the cost of such coverage, all as reasonably
determined by the Committee.

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     (iii) In addition, the Company will pay to Executive or his legal representative such
vested amounts as shall have been deferred for Executive’s account (but not received) under
GDCP in accordance with its terms plus such amounts, if any, as shall then remain credited
to Executive’s account under ESP.

     (iv) Executive or his legal representative shall be entitled to the benefits described
in Sections 3(b) (Existing Awards Under Stock Incentive Plan) and to his benefits under the
Company’s tax qualified Retirement Plan and Savings/Profit-Sharing Plan (such qualified-plan
benefits being hereinafter referred to as Executive’s “Qualified-Plan Benefits”).

     (v) If termination occurs by reason of Incapacity or Disability, Executive shall be
entitled to such compensation, if any, as is payable pursuant to the Company’s long-term
disability plan or any successor Company disability plan. If for any period Executive
receives long-term disability compensation payments under a long-term disability plan of the
Company as well as payments under (a)(i) above, and if the sum of such payments (the
“combined salary/disability benefit”) exceeds the payment for such period to which Executive
is entitled under (a)(i) above (determined without regard to paragraph (A) thereof), he
shall promptly pay such excess in reimbursement to the Company; provided, that in no event
shall application of this sentence result in reduction of Executive’s combined
salary/disability benefit below the level of long-term disability compensation payments to
which Executive is entitled under the long-term disability plan or plans of the Company.

     (vi) Except as expressly set forth above or as required by law, Executive shall not be
entitled to continue participation during the termination period in any employee benefit or
fringe benefit plans, other than a Company-provided automobile allowance.

     (b) Terminations on or after the 2009 meeting date. Unless earlier terminated or
except as otherwise mutually agreed by Executive and the Company, Executive’s employment with the
Company shall terminate on the 2009 meeting date. Unless the Company in connection with such
termination shall offer to Executive continued service in a position acceptable to Executive and
upon mutually and reasonably agreeable terms, Executive shall be entitled upon such termination to
receive, for the period beginning on such termination and ending on the date of the annual meeting
of stockholders occurring in 2010, continuation of Base Salary at the Chairman Rate (provided,
that if immediately prior to such termination Executive was being paid Base Salary at the Acting
CEO Rate, payment shall be made for the first six (6) months at the Acting CEO Rate and thereafter
until the annual meeting of stockholders occurring in 2010 at the Chairman Rate) plus medical,
dental and life-insurance coverage (but not including continued participation in the Company’s
retirement or 401(k) plan(s) or continued participation in any other employee or fringe benefit
plan or program, other than a Company-provided automobile allowance) comparable to the benefits of
such type to which he was entitled at time of termination; provided, that to the extent it is
impossible or impracticable to provide any such benefits to Executive under the Company’s then
existing employee benefit plans or arrangements, the Company shall arrange for alternative
comparable coverage or, if such alternative coverage is not available, shall pay to Executive the
cost of such coverage, all as reasonably determined by the Committee. If the Company in connection
with such termination

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offers to Executive continued service in a position acceptable to Executive and upon mutually
and reasonably agreeable terms, and Executive declines such service, he shall be treated for all
purposes of this Agreement as having terminated his employment voluntarily on the 2009 meeting date
and he shall be entitled only to those benefits to which he would be entitled under Section 6(a)
(“Voluntary termination of employment”). For purposes of the two preceding sentences, “service in
a position acceptable to Executive” shall mean service as Chairman or service in such other
position, if any, as may be acceptable to Executive.

6. OTHER TERMINATION; VIOLATION OF CERTAIN AGREEMENTS.

     (a) Voluntary termination of employment. If Executive terminates his employment
voluntarily, Executive or his legal representative shall be entitled (in each case in accordance
with and subject to the terms of the applicable arrangement) to the following: (i) such vested
amounts, if any, as are credited to Executive’s account (but not received) under GDCP and ESP; (ii)
any benefits described at Sections 3(b) (Existing Awards Under Stock Incentive Plan), and (iii)
Executive’s Qualified-Plan Benefits. No other benefits shall be paid under this Agreement upon a
voluntary termination of employment.

     (b) Termination for Cause; violation of certain agreements. If the Company should end
Executive’s employment for Cause, or, notwithstanding Section 5 and Section 6(a) above, if
Executive should violate the protected persons or noncompetition provisions of Section 8, all
compensation and benefits otherwise payable pursuant to this Agreement shall cease, other than the
benefits described at (a) above. The Company does not waive any rights it may have for damages or
for injunctive relief.

7. BENEFITS UPON CHANGE IN CONTROL. Notwithstanding any other provision of this Agreement,
in the event of a Change of Control, the determination and payment of any benefits payable
thereafter with respect to Executive shall be governed exclusively by the provisions of Exhibit C.

8. AGREEMENT NOT TO SOLICIT OR COMPETE.

     (a) Upon the termination of employment at any time, then for a period of two years after the
termination of the Employment Period, Executive shall not under any circumstances employ, solicit
the employment of, or accept unsolicited the services of, any “protected person” or recommend the
employment of any “protected person” to any other business organization. A “protected person”
shall be a person known by Executive to be employed by the Company or its Subsidiaries or to have
been employed by Company or its Subsidiaries within six months prior to the commencement of
conversations with such person with respect to employment.

     As to (i) each “protected person” to whom the foregoing applies, (ii) each subcategory of
“protected person” as defined above, (iii) each limitation on (A) employment, (B) solicitation and
(C) unsolicited acceptance of services, of each “protected person” and (iv) each month of the
period during which the provisions of this subsection (a) apply to each of the foregoing, the
provisions set forth in this subsection (a) are deemed to be separate and independent agreements
and in the event of unenforceability of any such agreement, such unenforceable agreement shall

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be deemed automatically deleted from the provisions hereof and such deletion shall not affect
the enforceability of any other provision of this subsection (a) or any other term of this
Agreement.

     (b) During the course of his employment, Executive will have learned many trade secrets of the
Company and will have access to confidential information and business plans for the Company.
Therefore, upon termination of the Employment Period on the 2009 meeting date or if Executive
should earlier end his employment voluntarily at any time, including by reason of retirement or
Disability but not including a voluntary termination for Valid Reason, or if the Company should end
Executive’s employment at any time for Cause, then for a period of two (2) years thereafter,
Executive will not, directly or indirectly (including, without limitation, indirectly through any
entity or its subsidiaries or affiliates), be a partner or investor in, or be engaged in any
employment, consulting, or fees-for-services arrangement with, any business which is a competitor
of the Company and its Subsidiaries, nor shall Executive undertake any planning to engage in any
such business. A business shall be deemed a competitor of the Company and its Subsidiaries if (i)
it shall then be so regarded by retailers generally, or (ii) it shall operate an off-price apparel,
off-price footwear, off-price jewelry, off-price accessories, off-price giftware, off-price toys
and games, off-price home furnishings and/or off-price home fashions business, including any such
business that is store-based, catalogue-based, media-based or an on-line, “e-commerce” or other
off-price internet-based business. Executive agrees that if, at any time, pursuant to action of
any court, administrative or governmental body or other arbitral tribunal, the operation of any
part of this paragraph shall be determined to be unlawful or otherwise unenforceable, then the
coverage of this paragraph shall be deemed to be restricted as to duration, geographical scope or
otherwise, as the case may be, to the extent, and only to the extent, necessary to make this
paragraph lawful and enforceable in the particular jurisdiction in which such determination is
made.

     (c) If, during the two-year period following termination of the Employment Period at any time
or for any reason and while he is still entitled to benefits under Section 5 of this Agreement,
Executive engages in any activity that would be prohibited under Section 8(b) above following a
voluntary termination (other than a voluntary termination for Valid Reason) of employment, the
Company’s obligation to pay benefits under Section 5 shall forthwith cease and Executive shall be
entitled only to (x) payment of such vested amounts, if any, as are credited to Executive’s account
(but not received) under GDCP and ESP in accordance with the terms of those programs; (y) payment
of any vested benefits to which Executive is entitled under the Company’s tax-qualified plans; and
(z) such rights, if any, under any stock options or other stock-based awards that were granted
under the Stock Incentive Plan and that are held by Executive on the Date of Termination as are
provided under the terms of those awards.

     (d) If the Employment Period terminates, Executive agrees (i) to notify the Company
immediately upon his securing employment or becoming self-employed during any period when
Executive’s compensation from the Company shall be subject to reduction or his benefits provided by
the Company shall be subject to termination as provided in Section 6 and (ii) to furnish to the
Company written evidence of his compensation earned from any such employment or self-employment as
the Company shall from time to time request. In addition, upon termination of the Employment
Period for any reason other than the death of Executive, Executive shall immediately return all
written trade secrets, confidential information and

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business plans of the Company and shall execute a certificate certifying that he has returned
all such items in his possession or under his control.

9. ASSIGNMENT. The rights and obligations of the Company shall enure to the benefit of and
shall be binding upon the successors and assigns of the Company. The rights and obligations of
Executive are not assignable except only that payments payable to him after his death shall be made
by devise or descent.

10. NOTICES. All notices and other communications required hereunder shall be in writing
and shall be given by mailing the same by certified or registered mail, return receipt requested,
postage prepaid. If sent to the Company the same shall be mailed to the Company at 770 Cochituate
Road, Framingham, Massachusetts 01701, Attention: Chairman of the Executive Compensation
Committee, or other such address as the Company may hereafter designate by notice to Executive; and
if sent to Executive, the same shall be mailed to Executive at his address as set forth in the
records of the Company or at such other address as Executive may hereafter designate by notice to
the Company.

11. WITHHOLDING; CERTAIN TAX MATTERS. Anything to the contrary notwithstanding, (a) all
payments required to be made by the Company hereunder to Executive shall be subject to the
withholding of such amounts, if any, relating to tax and other payroll deductions as the Company
may reasonably determine it should withhold pursuant to any applicable law or regulation, and (b)
to the extent any payment hereunder shall be required to be delayed until six months following
separation from service to comply with the “specified employee” rules of Section 409A of the Code
it shall be so delayed (but not more than is required to comply with such rules). The
parties hereto acknowledge that in addition to any delay required under 11(b), it may be desirable,
in view of regulations or other guidance issued by the IRS under Section 409A of the Code, to amend
provisions of the Agreement to avoid the acceleration of tax or the imposition of additional tax
under Section 409A of the Code and that the Company will not unreasonably withhold its consent to
any such amendments which in its determination are (i) feasible and necessary to avoid adverse tax
consequences under Section 409A of the Code for Executive, and (ii) not adverse to the interests of
the Company.

12. GOVERNING LAW. This Agreement and the rights and obligations of the parties hereunder
shall be governed by the laws of the Commonwealth of Massachusetts.

13. ARBITRATION. In the event that there is any claim or dispute arising out of or
relating to this Agreement, or an alleged breach thereof, and the parties hereto shall not have
resolved such claim or dispute within sixty (60) days after written notice from one party to the
other setting forth the nature of such claim or dispute, then such claim or dispute shall be
settled exclusively by binding arbitration in Boston, Massachusetts in accordance with the Rules
Governing Resolutions of Employment Disputes of the American Arbitration Association by an
arbitrator mutually agreed upon by the parties hereto or, in the absence of such agreement, by an
arbitrator selected according to such Rules. Notwithstanding the foregoing, if either the Company
or Executive shall request, such arbitration shall be conducted by a panel of three arbitrators,
one selected by the Company, one selected by Executive and the third selected by agreement of the
first two, or, in the absence of such agreement, in accordance with such Rules.

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Judgment upon the award rendered by such arbitrator(s) shall be entered in any Court having
jurisdiction thereof upon the application of either party.

14. ENTIRE AGREEMENT. This Agreement, including Exhibits, represents the entire agreement
between the parties relating to the terms of Executive’s employment by the Company and supersedes
all prior written or oral agreements between them”; provided, that this Agreement shall not be
construed as superseding or modifying the Restoration Agreement dated December 31, 2002 between the
Company and Executive and the letter agreement dated December 31, 2002 relating to certain tax
matters.

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	     /s/ Bernard Cammarata	 	 
	 	 	 	 	 
	 	 	Executive	 	 
	 
	 	 	 	 	 	 
	 	 	THE TJX COMPANIES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Jeffrey G. Naylor	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	      Senior Executive Vice President and	 	 
	 

	 	 	 	     Chief Financial Officer	 	 

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EXHIBIT A

Certain Definitions

     In this Agreement, the following terms shall have the following meanings:

     (a) “Base Salary” means, for any period, the amount described in Section 3(a). The terms
“Chairman Rate” and “Acting CEO Rate” shall have the meanings assigned to them in Section 3(a).

     (b) “Board” means the Board of Directors of the Company.

     (c) “Committee” means the Executive Compensation Committee of the Board.

     (d) “Cause” means dishonesty by Executive in the performance of his duties, conviction of a
felony (other than a conviction arising solely under a statutory provision imposing criminal
liability upon Executive on a per se basis due to the Company offices held by Executive, so long as
any act or omission of Executive with respect to such matter was not taken or omitted in
contravention of any applicable policy or directive of the Board), gross neglect of duties (other
than as a result of Disability or death), or conflict of interest which conflict shall continue for
thirty (30) days after the Company gives written notice to Executive requesting the cessation of
such conflict.

     In respect of any termination during a Standstill Period, Executive shall not be deemed to
have been terminated for Cause until the later to occur of (i) the 30th day after notice of
termination is given and (ii) the delivery to Executive of a copy of a resolution duly adopted by
the affirmative vote of not less than a majority of the Company’s directors at a meeting called and
held for that purpose (after reasonable notice to Executive), and at which Executive together with
his counsel was given an opportunity to be heard, finding that Executive was guilty of conduct
described in the definition of “Cause” above, and specifying the particulars thereof in detail;
provided, however, that the Company may suspend Executive and withhold payment of his Base Salary
from the date that notice of termination is given until the earliest to occur of (A) termination of
Executive for Cause effected in accordance with the foregoing procedures (in which case Executive
shall not be entitled to his Base Salary for such period), (B) a determination by a majority of the
Company’s directors that Executive was not guilty of the conduct described in the definition of
“Cause” effected in accordance with the foregoing procedures (in which case Executive shall be
reinstated and paid any of his previously unpaid Base Salary for such period), or (C) ninety (90)
days after notice of termination is given (in which case Executive shall then be reinstated and
paid any of his previously unpaid Base Salary for such period). If Base Salary is withheld and
then paid pursuant to clauses (B) and (C) of the preceding sentence, the amount thereof shall be
accompanied by simple interest, calculated on a daily basis, at a rate per annum equal to the prime
or base lending rate, as in effect at the time, of the Company’s principal commercial bank.

     (e) “Change of Control” has the meaning given it in Exhibit B.

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     (f) “Change of Control Termination” means the termination of Executive’s employment during a
Standstill Period (1) by the Company other than for Cause, or (2) by Executive for good reason, or
(3) by reason of death, Incapacity or Disability.

     For purposes of this definition, termination for “good reason” shall mean the voluntary
termination by Executive of his employment (A) within one hundred and twenty (120) days after the
occurrence without Executive’s express written consent of any one of the events described in
clauses (I), (II), (III), (IV), (V) or (VI) below, provided, that Executive gives notice to the
Company at least thirty (30) days in advance requesting that the pertinent situation described
therein be remedied, and the situation remains unremedied upon expiration of such 30-day period;
(B) within one hundred and twenty (120) days after the occurrence without Executive’s express
written consent of the event described in clause (VII), provided, that Executive gives notice to
the Company at least thirty (30) days in advance of his intent to terminate his employment in
respect of such event; or (C) under the circumstances described in clause (VIII) below, provided
that Executive gives notice to the Company at least thirty (30) days in advance:

	 	(I)	 	the assignment to him of any duties inconsistent with his positions, duties,
responsibilities, reporting requirements, and status with the Company immediately prior
to the Change of Control, or any removal of Executive from or any failure to reelect
him to such positions, except in connection with the termination of Executive’s
employment by the Company for Cause or by Executive other than for good reason, or any
other action by the Company which results in a diminishment in such position,
authority, duties or responsibilities, other than an insubstantial and inadvertent
action which is remedied by the Company promptly after receipt of notice thereof given
by Executive; or
	 
	 	(II)	 	if Executive’s rate of Base Salary for any fiscal year is less than 100% of the
rate of Base Salary paid to Executive in the completed fiscal year immediately
preceding the Change of Control or if Executive’s total cash compensation
opportunities, including salary and incentives, for any fiscal year are less than 100%
of the total cash compensation opportunities made available to Executive in the
completed fiscal year immediately preceding the Change of Control; or
	 
	 	(III)	 	the failure of the Company to continue in effect any benefits or perquisites,
or any pension, life insurance, medical insurance or disability plan in which Executive
was participating immediately prior to the Change of Control unless the Company
provides Executive with a plan or plans that provide substantially similar benefits, or
the taking of any action by the Company that would adversely affect Executive’s
participation in or materially reduce Executive’s benefits under any of such plans or
deprive Executive of any material fringe benefit enjoyed by Executive immediately prior
to the Change of Control; or
	 
	 	(IV)	 	any purported termination of Executive’s employment by the Company for Cause
during a Standstill Period which is not effected in compliance with paragraph (d)
above; or

 

 

A-2

	 	(V)	 	any relocation of Executive of more than forty (40) miles from the place where
Executive was located at the time of the Change of Control; or
	 
	 	(VI)	 	any other breach by the Company of any provision of this Agreement; or
	 
	 	(VII)	 	the Company sells or otherwise disposes of, in one transaction or a series of
related transactions, assets or earning power aggregating more than 30% of the assets
(taken at asset value as stated on the books of the Company determined in accordance
with generally accepted accounting principles consistently applied) or earning power of
the Company (on an individual basis) or the Company and its Subsidiaries (on a
consolidated basis) to any other Person or Persons (as those terms are defined in
Exhibit B); or
	 
	 	(VIII)	 	The voluntary termination by Executive of his employment at any time within one year
after the Change of Control. Notwithstanding the foregoing, the Board may expressly
waive the application of this clause (VIII) if it waives the applicability of
substantially similar provisions with respect to all persons with whom the Company has
a written severance agreement (or may condition its application on any additional
requirements or employee agreements which the Board shall in its discretion deem
appropriate in the circumstances). The determination of whether to waive or impose
conditions on the application of this clause (VIII) shall be within the complete
discretion of the Board but shall be made prior to the Change of Control.

     (g) “Code” means the Internal Revenue Code of 1986, as amended from time to time.

     (h) “Date of Termination” means the date on which Executive’s employment terminates.

     (i) “Disability” has the meaning given it in the Company’s long-term disability plan.
Executive’s employment shall be deemed to be terminated for Disability on the date on which
Executive is entitled to receive long-term disability compensation pursuant to such long-term
disability plan.

     (j) “Effective Date” has the meaning set forth in Section 1.

     (k) “Employment Period” has the meaning set forth in Section 1.

     (l) “ESP” means the Company’s Executive Savings Plan.

     (m) “GDCP” means the Company’s General Deferred Compensation Plan, or, if the General Deferred
Compensation Plan is no longer maintained by the Company, a nonqualified deferred compensation plan
(other than the ESP) or arrangement the terms of which are not less favorable to Executive than the
terms of the General Deferred Compensation Plan as in effect on the Effective Date.

     (n) “Qualified-Plan Benefits” has the meaning set forth in Section 5(a)(iv).

A-3

 

 

     (o) “SERP” has the meaning set forth in Section 3(c)(iv).

     (p) “Incapacity” means a disability (other than Disability within the meaning of (h) above) or
other impairment of health that renders Executive unable to perform his duties to the reasonable
satisfaction of the Committee.

     (q) “Standstill Period” means the period commencing on the date of a Change of Control and
continuing until the close of business on the earlier of the 2009 meeting date or the last business
day of the 24th calendar month following such Change of Control.

     (r) “Stock” means the common stock, $1.00 par value, of the Company.

     (s) “Stock Incentive Plan” has the meaning set forth in Section 3(b).

     (t) “Subsidiary” means any corporation in which the Company owns, directly or indirectly, 50%
or more of the total combined voting power of all classes of stock.

     (u) “2009 meeting date” has the meaning set forth in Section 1.

     (v) “Valid Reason” means the voluntary termination by Executive of his employment (A) within
one hundred and twenty (120) days after the occurrence without Executive’s express written consent
of any one of the events described in clauses (I), (II), (III), (IV), or (V) below, provided that
Executive gives notice to the Company at least thirty (30) days in advance requesting that the
pertinent situation described therein be remedied, and the situation remains unremedied upon
expiration of such 30-day period; or (B) within one hundred and twenty (120) days after the
occurrence without Executive’s express written consent of the event described in clause (VI) below:

	 	(I)	 	the assignment to him of any duties inconsistent with his positions, duties,
responsibilities, reporting requirements, and status with the Company immediately prior
to such assignment, or a substantive change in Executive’s titles or offices as in
effect immediately prior to such assignment, or any removal of Executive from or any
failure to reelect him to such positions, except in connection with the termination of
Executive’s employment by the Company for Cause or by Executive other than for Valid
Reason, or any other action by the Company which results in a diminishment in such
position, authority, duties or responsibilities, other than an insubstantial and
inadvertent action which is remedied by the Company promptly after receipt of notice
thereof given by Executive; provided, that termination by the Company of Executive’s
services as Acting Chief Executive Officer shall not, in and of itself and without
more, be deemed to constitute an assignment, change, removal, failure or other action
described in this clause (I); or
	 
	 	(II)	 	the failure of the Company to continue in effect any benefits or perquisites,
or any pension, life insurance, medical insurance or disability plan in which Executive
was participating immediately prior to such failure unless the Company provides
Executive with a plan or plans that provide substantially similar benefits, or the
taking of any action by the Company that would adversely affect Executive’s

A-4

 

 

	 	 	 	benefits under any of such plans or deprive Executive of any material fringe benefit
enjoyed by Executive immediately prior to such action, unless the elimination or
reduction of any such benefit, perquisite or plan affects all other executives in
the same organizational level (it being the Company’s burden to establish this
fact); or
	 
	 	(III)	 	any purported termination of Executive’s employment by the Company for Cause
which is not effected in compliance with paragraph (d) above; or
	 
	 	(IV)	 	any relocation of Executive of more than forty (40) miles from the place where
Executive was located at the time of such relocation; or
	 
	 	(V)	 	any other breach by the Company of any provision of this Agreement; or
	 
	 	(VI)	 	the Company sells or otherwise disposes of, in one transaction or a series of
related transactions, assets or earning power aggregating more than 30% of the assets
(taken at asset value as stated on the books of the Company determined in accordance
with generally accepted accounting principles consistently applied) or earning power of
the Company (on an individual basis) or the Company and its Subsidiaries (on a
consolidated basis) to any other Person or Persons (as those terms are defined in
Exhibit B).

A-5

 

 

EXHIBIT B

Definition of “Change of Control”

     “Change of Control” shall mean the occurrence of any one of the following events:

     (a) there occurs a change of control of the Company of a nature that would be required to be
reported in response to Item 1(a) of the Current Report on Form 8-K pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 (the “Exchange Act”) or in any other filing under the
Exchange Act; provided, however, that no transaction shall be deemed to be a Change of Control (i)
if the person or each member of a group of persons acquiring control is excluded from the
definition of the term “Person” hereunder or (ii) unless the Committee shall otherwise determine
prior to such occurrence, if Executive or an Executive Related Party is the Person or a member of a
group constituting the Person acquiring control; or

     (b) any Person other than the Company, any wholly-owned subsidiary of the Company, or any
employee benefit plan of the Company or such a subsidiary becomes the owner of 20% or more of the
Company’s Common Stock and thereafter individuals who were not directors of the Company prior to
the date such Person became a 20% owner are elected as directors pursuant to an arrangement or
understanding with, or upon the request of or nomination by, such Person and constitute at least
1/4 of the Company’s Board of Directors; provided, however, that unless the Committee shall
otherwise determine prior to the acquisition of such 20% ownership, such acquisition of ownership
shall not constitute a Change of Control if Executive or an Executive Related Party is the Person
or a member of a group constituting the Person acquiring such ownership; or

     (c) there occurs any solicitation or series of solicitations of proxies by or on behalf of any
Person other than the Company’s Board of Directors and thereafter individuals who were not
directors of the Company prior to the commencement of such solicitation or series of solicitations
are elected as directors pursuant to an arrangement or understanding with, or upon the request of
or nomination by, such Person and constitute at least 1/4 of the Company’s Board of Directors; or

     (d) the Company executes an agreement of acquisition, merger or consolidation which
contemplates that (i) after the effective date provided for in the agreement, all or substantially
all of the business and/or assets of the Company shall be owned, leased or otherwise controlled by
another Person and (ii) individuals who are directors of the Company when such agreement is
executed shall not constitute a majority of the board of directors of the survivor or successor
entity immediately after the effective date provided for in such agreement; provided, however, that
unless otherwise determined by the Committee, no transaction shall constitute a Change of Control
if, immediately after such transaction, Executive or any Executive Related Party shall own equity
securities of any surviving corporation (“Surviving Entity”) having a fair value as a percentage of
the fair value of the equity securities of such Surviving Entity greater than 125% of the fair
value of the equity securities of the Company owned by Executive and any Executive Related Party
immediately prior to such transaction, expressed as a percentage of the fair value of all equity
securities of the Company immediately prior to such transaction (for purposes of this paragraph
ownership of equity securities shall be determined in

B-1

 

 

the same manner as ownership of Common Stock); and provided further, that, for purposes of
this paragraph (d), if such agreement requires as a condition precedent approval by the Company’s
shareholders of the agreement or transaction, a Change of Control shall not be deemed to have taken
place unless and until such approval is secured (but upon any such approval, a Change of Control
shall be deemed to have occurred on the date of execution of such agreement).

In addition, for purposes of this Exhibit B the following terms have the meanings set forth below:

     “Common Stock” shall mean the then outstanding Common Stock of the Company plus, for purposes
of determining the stock ownership of any Person, the number of unissued shares of Common Stock
which such Person has the right to acquire (whether such right is exercisable immediately or only
after the passage of time) upon the exercise of conversion rights, exchange rights, warrants or
options or otherwise. Notwithstanding the foregoing, the term Common Stock shall not include
shares of Preferred Stock or convertible debt or options or warrants to acquire shares of Common
Stock (including any shares of Common Stock issued or issuable upon the conversion or exercise
thereof) to the extent that the Board of Directors of the Company shall expressly so determine in
any future transaction or transactions.

     A Person shall be deemed to be the “owner” of any Common Stock:

     (i) of which such Person would be the “beneficial owner,” as such term is defined in
Rule 13d-3 promulgated by the Securities and Exchange Commission (the “Commission”) under
the Exchange Act, as in effect on March 1, 1989; or

     (ii) of which such Person would be the “beneficial owner” for purposes of Section 16 of
the Exchange Act and the rules of the Commission promulgated thereunder, as in effect on
March 1, 1989; or

     (iii) which such Person or any of its affiliates or associates (as such terms are
defined in Rule 12b-2 promulgated by the Commission under the Exchange Act, as in effect on
March 1, 1989), has the right to acquire (whether such right is exercisable immediately or
only after the passage of time) pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights, warrants or options or otherwise.

     “Person” shall have the meaning used in Section 13(d) of the Exchange Act, as in effect on
March 1, 1989.

     An “Executive Related Party” shall mean any affiliate or associate of Executive other than the
Company or a majority-owned subsidiary of the Company. The terms “affiliate” and “associate” shall
have the meanings ascribed thereto in Rule 12b-2 under the Exchange Act (the term “registrant” in
the definition of “associate” meaning, in this case, the Company).

B-2

 

 

EXHIBIT C

Change Of Control Benefits

     C.1. Benefits Upon a Change of Control Termination.

     (a) The Company shall pay to Executive, in a lump sum within thirty (30) days following a
Change of Control Termination, an amount equal to (A) two times his Base Salary for one year at the
Chairman Rate in effect immediately prior to the Date of Termination or the Change of Control,
whichever is higher (provided, that if immediately prior to the Change of Control Executive was
being paid Base Salary at the Acting CEO Rate, the lump-sum amount payable under this clause (A)
shall equal six (6) months’ worth of Base Salary at such Acting CEO Rate plus eighteen months’
worth of Base Salary at the Chairman Rate) plus (B) the accrued and unpaid portion of his Base
Salary through the Date of Termination, subject to the following. If Executive is eligible for
long-term disability compensation benefits under the Company’s long-term disability plan, the
amount payable under (A) shall be reduced by the annual long-term disability compensation benefit
for which Executive is eligible under such plan for the two-year period over which the amount
payable under (A) is measured. If for any period Executive receives long-term disability
compensation payments under a long-term disability plan of the Company as well as payments under
the first sentence of this paragraph (a), and if the sum of such payments (the “combined Change of
Control/disability benefit”) exceeds the payment for such period to which Executive is entitled
under the first sentence of this paragraph (a) (determined without regard to the second sentence of
this paragraph (a)), he shall promptly pay such excess in reimbursement to the Company; provided,
that in no event shall application of this sentence result in reduction of Executive’s combined
Change of Control/disability benefit below the level of long-term disability compensation payments
to which Executive is entitled under the long-term disability plan or plans of the Company.

     (b) Until the second anniversary of the Date of Termination, the Company shall maintain in
full force and effect for the continued benefit of Executive and his family all life insurance and
medical insurance plans and programs in which Executive was entitled to participate immediately
prior to the Change of Control provided that Executive’s continued participation is possible under
the general terms and provisions of such plans and programs. In the event that Executive is
ineligible to participate in such plans or programs, the Company shall arrange upon comparable
terms to provide Executive with benefits substantially similar to those which he is entitled to
receive under such plans and programs. Notwithstanding the foregoing, the Company’s obligations
hereunder with respect to life or medical coverage or benefits shall be deemed satisfied to the
extent (but only to the extent) of any such coverage or benefits provided by another employer.

     (c) For a period of two years after the Date of Termination, the Company shall continue to
provide to Executive the automobile allowance that it was providing to him prior to the Change of
Control.

     C.2. Gross-Up Payment. Payments under Section C.1. of this Exhibit shall be made
without regard to whether the deductibility of such payments (or any other payments or benefits to
or for the benefit of Executive) would be limited or precluded by Section 280G of the Code

C-1

 

 

(“Section 280G”) and without regard to whether such payments (or any other payments or
benefits) would subject Executive to the federal excise tax levied on certain “excess parachute
payments” under Section 4999 of the Code (the “Excise Tax”). If any portion of the payments or
benefits to or for the benefit of Executive (including, but not limited to, payments and benefits
under this Agreement but determined without regard to this paragraph) constitutes an “excess
parachute payment” within the meaning of Section 280G (the aggregate of such payments being
hereinafter referred to as the “Excess Parachute Payments”), the Company shall promptly pay to
Executive an additional amount (the “gross-up payment”) that after reduction for all taxes
(including but not limited to the Excise Tax) with respect to such gross-up payment equals the
Excise Tax with respect to the Excess Parachute Payments; provided, that to the extent any gross-up
payment would be considered “deferred compensation” for purposes of Section 409A of the Code, the
manner and time of payment, and the provisions of this Section C.2, shall be adjusted to the extent
necessary (but only to the extent necessary) to comply with the requirements of Section 409A with
respect to such payment so that the payment does not give rise to the interest or additional tax
amounts described at Section 409A(a)(1)(B) or Section 409A(b)(4) of the Code (the “Section 409A
penalties”); and further provided, that if, notwithstanding the immediately preceding proviso, the
gross-up payment cannot be made to conform to the requirements of Section 409A of the Code, the
amount of the gross-up payment shall be determined without regard to any gross-up for the Section
409A penalties. The determination as to whether Executive’s payments and benefits include Excess
Parachute Payments and, if so, the amount of such payments, the amount of any Excise Tax owed with
respect thereto, and the amount of any gross-up payment shall be made at the Company’s expense by
PricewaterhouseCoopers LLP or by such other certified public accounting firm as the Committee may
designate prior to a Change of Control (the “accounting firm”). Notwithstanding the foregoing, if
the Internal Revenue Service shall assert an Excise Tax liability that is higher than the Excise
Tax (if any) determined by the accounting firm, the Company shall promptly augment the gross-up
payment to address such higher Excise Tax liability.

     C.3. Other Benefits. In addition to the amounts described in Section C.1., Executive
shall be entitled to the benefits, if any, described at Sections 3(b) (Existing Awards Under Stock
Incentive Plan), and to payment of his Qualified-Plan Benefits.

     C.4. Noncompetition; No Mitigation of Damages; etc.

     (a) Noncompetition. Upon a Change of Control, any agreement by Executive not to
engage in competition with the Company subsequent to the termination of his employment, whether
contained in an employment contract or other agreement, shall no longer be effective.

     (b) No Duty to Mitigate Damages. Executive’s benefits under this Exhibit C shall be
considered severance pay in consideration of his past service and his continued service from the
date of this Agreement, and his entitlement thereto shall neither be governed by any duty to
mitigate his damages by seeking further employment nor offset by any compensation which he may
receive from future employment.

     (c) Legal Fees and Expenses. The Company shall pay all legal fees and expenses,
including but not limited to counsel fees, stenographer fees, printing costs, etc. reasonably

C-2

 

 

incurred by Executive in contesting or disputing that the termination of his employment during
a Standstill Period is for Cause or other than for good reason (as defined in the definition of
Change of Control Termination) or obtaining any right or benefit to which Executive is entitled
under this Agreement following a Change of Control. Any amount payable under this Agreement that
is not paid when due shall accrue interest at the prime rate as from time to time in effect at Bank
of America, or its successor, until paid in full.

     (d) Notice of Termination. During a Standstill Period, Executive’s employment may be
terminated by the Company only upon thirty (30) days’ written notice to Executive.

C-3exv10w1

 

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.

 

 

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

	 
	 

2

 

	 	 	 	 	 	 	 	 	 
	 	 

	 	 	 	 	 	                    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	 
	 

3

 

	 	 	 	 	 	 	 	 	 
	 	 

	 	 	 
	 	 	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	 
	 

4

 

	 	 	 	 	 	 	 	 	 
	 	 

	 	 	 	 	 	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	 
	 

5

 

	 	 	 	 	 	 	 	 	 
	 	 

	 	 	 	 	 	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)

	 
	 

6

 

	 	 	 	 	 	 	 	 	 
	 	 

	 	 	 	 	 	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

7

 

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

     [*****]

8

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