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Sample Business Contracts

1994 Stock Option Plan - Evergreen Solar Inc.

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                              EVERGREEN SOLAR, INC.

                             1994 STOCK OPTION PLAN

     1. PURPOSE. The purpose of this 1994 Stock Option Plan (the "Plan") is to
encourage employees of Evergreen Solar, Inc. (the "Company") and of any present
or future parent or subsidiary of the Company (collectively, "Related
Corporations"), and other individuals who render services to the Company or a
Related Corporation, by providing opportunities to purchase stock in the Company
pursuant to options granted hereunder which qualify as "incentive stock options"
("ISOs") under Section 422(b) of the Internal Revenue Code of 1986, as amended
(the "Code") and options which do not qualify as ISOs ("Non-Qualified Options").
Both ISOs and Non-Qualified Options are referred to hereafter individually as an
"Option" and collectively as "Options." As used herein, the terms "parent" and
"subsidiary" mean "parent corporation" and "subsidiary corporation,"
respectively, as those terms are defined in Section 424 of the Code.

     2. ADMINISTRATION OF THE PLAN.

          A. BOARD OR COMMITTEE ADMINISTRATION. The Plan shall be administered
     by the Board of Directors of the Company (the "Board") or by a committee
     appointed by the Board (the "Committee"); provided that the Plan shall be
     administered to the extent required by Rule 16b-3 promulgated under the
     Securities Exchange Act of 1934 or any successor provision ("Rule 16b-3"),
     with respect to specific grants of Options, by a disinterested
     administrator or administrators within the meaning of Rule 16b-3.
     Hereinafter, all references in this Plan to the "Committee" shall mean the
     Board if no Committee has been appointed. Subject to ratification of the
     grant or authorization of each Option by the Board (if so required by
     applicable state law), and subject to the terms of the Plan, the Committee
     shall have the authority to (i) determine to whom (from among the class of
     employees eligible under paragraph 3 to receive ISOs) ISOs shall be
     granted, and to whom (from among the class of individuals and entities
     eligible under paragraph 3 to receive Non-Qualified Options) Non-Qualified
     Options may be granted; (ii) determine the time or times at which Options
     shall be granted; (iii) determine the exercise price of shares subject to
     each Option, which price shall not be less than the minimum price specified
     in paragraph 6; (iv) determine whether each Option granted shall be an ISO
     or a Non-Qualified Option; (v) determine (subject to paragraph 7) the time
     or times when each Option shall become exercisable and the duration of the
     exercise period; (vi) extend the period during which outstanding Options
     may be exercised; (vii) determine whether restrictions such as repurchase
     options are to be imposed on shares subject to Options and the nature of
     such restrictions, if any; and (viii) interpret the Plan and prescribe and
     rescind rules and regulations relating to it. If the Committee determines
     to issue a Non-Qualified Option, it shall take whatever actions it deems
     necessary, under Section 422 of the Code and the regulations promulgated
     thereunder, to ensure that such Option is not treated as an ISO. The
     interpretation and construction by the Committee of any provisions of the
     Plan or of any Option granted under it shall be final unless otherwise
     determined by the Board. The Committee may from time to time adopt such
     rules and regulations for carrying out the Plan as it may deem advisable.
     No member of the Board or the Committee shall be liable for any action or
     determination made in good faith with respect to the Plan or any Option
     granted

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under it.

          B. COMMITTEE ACTIONS. The Committee may select one of its members as
     its chairman, and shall hold meetings at such time and places as it may
     determine. A majority of the Committee shall constitute a quorum and acts
     by a majority of the members of the Committee at a meeting at which a
     quorum is present, or acts reduced to or approved in writing by a majority
     of the members of the Committee (if consistent with applicable state law),
     shall constitute the valid acts of the Committee. From time to time the
     Board may increase the size of the Committee and appoint additional members
     thereof, remove members (with or without cause) and appoint new members in
     substitution therefor, fill vacancies however caused, or remove all members
     of the Committee and thereafter directly administer the Plan.

          C. GRANT OF OPTIONS TO BOARD MEMBERS. Subject to the provisions of the
     first sentence of paragraph 2(A) above, if applicable, Options may be
     granted to members of the Board. All grants of Options to members of the
     Board shall in all other respects be made in accordance with the provisions
     of this Plan applicable to other eligible persons. Consistent with the
     provisions of the first sentence of paragraph 2(A) above, members of the
     Board who either (i) are eligible to receive grants of Options pursuant to
     the Plan or (ii) have been granted Options may vote on any matters
     affecting the administration of the Plan or the grant of any Options
     pursuant to the Plan, except that no such member shall act upon the
     granting to himself or herself of Options, but any such member may be
     counted in determining the existence of a quorum at any meeting of the
     Board during which action is taken with respect to the granting to such
     member of Options.

     3. ELIGIBLE EMPLOYEES AND OTHERS. ISOs may be granted only to employees of
the Company or any Related Corporation. Non-Qualified Options may be granted to
any employee, officer or director (whether or not also an employee) or
consultant of the Company or any Related Corporation. The Committee may take
into consideration a recipient's individual circumstances in determining whether
to grant an ISO or a Non-Qualified Option. The granting of any Option to any
individual or entity shall neither entitle that individual or entity to, nor
disqualify such individual or entity from, participation in any other grant of
Options.

     4. STOCK. The stock subject to Options shall be authorized but unissued
shares of Common Stock of the Company, par value $.01 per share (the "Common
Stock"), or shares of Common Stock reacquired by the Company in any manner. The
aggregate number of shares which may be issued pursuant to the Plan is 275,000,
subject to adjustment as provided in paragraph 13. If any Option granted under
the Plan shall expire or terminate for any reason without having been exercised
in full or shall cease for any reason to be exercisable in whole or in part or
shall be repurchased by the Company, the shares subject to such Option shall
again be available for grants of Options under the Plan.

     5. GRANTING OF OPTIONS. Options may be granted under the Plan at any time
after October 24, 1994 and prior to October 24, 2004. The date of grant of an
Option under the Plan will be the date specified by the Committee at the time it
grants the Option; provided, however, that such date shall not be prior to the
date on which the Committee acts to approve the grant.


<PAGE>   3

     6. MINIMUM OPTION PRICE; ISO LIMITATIONS.

          A. PRICE FOR NON-QUALIFIED OPTIONS. The exercise price per share
     specified in the agreement relating to each Non-Qualified Option granted
     under the Plan shall in no event be less than the minimum legal
     consideration required therefor under the laws of any jurisdiction in which
     the Company or its successors in interest may be organized.

          B. PRICE FOR ISO. The exercise price per share specified in the
     agreement relating to each ISO granted under the Plan shall not be less
     than the fair market value per share of Common Stock on the date of such
     grant. In the case of an ISO to be granted to an employee owning stock
     possessing more than ten percent (10%) of the total combined voting power
     of all classes of stock of the Company or any Related Corporation, the
     price per share specified in the agreement relating to such ISO shall not
     be less than one hundred ten percent (110%) of the fair market value per
     share of Common Stock on the date of grant. For purposes of determining
     stock ownership under this paragraph, the rules of Section 424(d) of the
     Code shall apply.

          C. $100,000 ANNUAL LIMITATION ON ISO VESTING. Each eligible employee
     may be granted Options treated as ISOs only to the extent that, in the
     aggregate under this Plan and all incentive stock option plans of the
     Company and any Related Corporation, ISOs do not become exercisable for the
     first time by such employee during any calendar year with respect to stock
     having a fair market value (determined at the time the ISOs were granted)
     in excess of $100,000. The Company intends to designate any Options granted
     in excess of such limitation as Non-Qualified Options.

          D. DETERMINATION OF FAIR MARKET VALUE. If, at the time an Option is
     granted under the Plan, the Company's Common Stock is publicly traded,
     "fair market value" shall be determined as of the last business day for
     which the prices or quotes discussed in this sentence are available prior
     to the date such Option is granted and shall mean (i) the average (on that
     date) of the high and low prices of the Common Stock on the principal
     national securities exchange on which the Common Stock is traded, if the
     Common Stock is then traded on a national securities exchange; or (ii) the
     last reported sale price (on that date) of the Common Stock on the Nasdaq
     National Market, if the Common Stock is not then traded on a national
     securities exchange; or (iii) the closing bid price (or average of bid
     prices) last quoted (on that date) by an established quotation service for
     over-the-counter securities, if the Common Stock is not reported on the
     Nasdaq National Market. If the Common Stock is not publicly traded at the
     time an Option is granted under the Plan, "fair market value" shall be
     deemed to be the fair value of the Common Stock as determined by the
     Committee after taking into consideration all factors which it deems
     appropriate, including, without limitation, recent sale and offer prices of
     the Common Stock in private transactions negotiated at arm's length.

     7. OPTION DURATION. Subject to earlier termination as provided in
paragraphs 9 and 10 or in the agreement relating to such Option, each Option
shall expire on the date specified by the Committee, but not more than (i) ten
years from the date of grant in the case of Options generally and (ii) five
years from the date of grant in the case of ISOs granted to an employee owning
stock possessing more than ten percent (10%) of the total combined voting power
of all classes

<PAGE>   4


of stock of the Company or any Related Corporation, as determined under
paragraph 6(B). Subject to earlier termination as provided in paragraphs 9 and
10, the term of each ISO shall be the term set forth in the original instrument
granting such ISO, except with respect to any part of such ISO that is converted
into a Non-Qualified Option pursuant to paragraph 16.

     8. EXERCISE OF OPTION. Subject to the provisions of paragraphs 9 through
12, each Option granted under the Plan shall be exercisable as follows:

          A. VESTING. The Option shall either be fully exercisable on the date
     of grant or shall become exercisable thereafter in such installments as the
     Committee may specify.

          B. FULL VESTING OF INSTALLMENTS. Once an installment becomes
     exercisable it shall remain exercisable until expiration or termination of
     the Option, unless otherwise specified by the Committee.

          C. PARTIAL EXERCISE. Each Option or installment may be exercised at
     any time or from time to time, in whole or in part, for up to the total
     number of shares with respect to which it is then exercisable.

          D. ACCELERATION OF VESTING. The Committee shall have the right to
     accelerate the date on which any installment of any Option becomes
     exercisable; provided that the Committee shall not, without the consent of
     an optionee, accelerate the permitted exercise date of any installment of
     any Option granted to any employee as an ISO (and not previously converted
     into a Non-Qualified Option pursuant to paragraph 16) if such acceleration
     would violate the annual vesting limitation contained in Section 422(d) of
     the Code, as described in paragraph 6(C).

     9. TERMINATION OF EMPLOYMENT. Unless otherwise specified in the agreement
relating to such ISO, if an ISO optionee ceases to be employed by the Company
and all Related Corporations other than by reason of death or disability as
defined in paragraph 10, no further installments of his or her ISOs shall become
exercisable, and his or her ISOs shall terminate after the passage of three
months from the date of termination of his or her employment, but in no event
later than on their specified expiration dates, except to the extent that such
ISOs (or unexercised installments thereof) have been converted into
Non-Qualified Options pursuant to paragraph 16. For purposes of this paragraph
9, employment shall be considered as continuing uninterrupted during any bona
fide leave of absence (such as those attributable to illness, military
obligations or governmental service) provided that the period of such leave does
not exceed 90 days or, if longer, any period during which such optionee's right
to reemployment is guaranteed by statute. A bona fide leave of absence with the
written approval of the Committee shall not be considered an interruption of
employment under this paragraph 9, provided that such written approval
contractually obligates the Company or any Related Corporation to continue the
employment of the optionee after the approved period of absence. ISOs granted
under the Plan shall not be affected by any change of employment within or among
the Company and Related Corporations, so long as the optionee continues to be an
employee of the Company or any Related Corporation. Nothing in the Plan shall be
deemed to give any optionee the right to be



<PAGE>   5

retained in employment or other service by the Company or any Related
Corporation for any period of time.

     10. DEATH; DISABILITY.

          A. DEATH. If an ISO optionee ceases to be employed by the Company and
     all Related Corporations by reason of his or her death, any ISO owned by
     such optionee may be exercised, to the extent permitted under the terms of
     the applicable stock option agreement, by the estate, personal
     representative or beneficiary who has acquired the ISO by will or by the
     laws of descent and distribution.

          B. DISABILITY. If an ISO optionee ceases to be employed by the Company
     and all Related Corporations by reason of his or her disability, such
     optionee shall have the right to exercise any ISO held by him or her on the
     date of termination of employment, to the extent permitted under the terms
     of the applicable stock option agreement. For the purposes of the Plan, the
     term "disability" shall mean "permanent and total disability" as defined in
     Section 22(e)(3) of the Code or any successor statute.

     11. ASSIGNABILITY. No Option shall be assignable or transferable by the
optionee except by will or by the laws of descent and distribution. Except as
set forth in the preceding sentence, during the lifetime of an optionee each
Option shall be exercisable only by such optionee.

     12. TERMS AND CONDITIONS OF OPTIONS. Options shall be evidenced by
instruments (which need not be identical) in such forms as the Committee may
from time to time approve. Such instruments shall conform to the terms and
conditions set forth in paragraphs 6 through 11 hereof and may contain such
other provisions as the Committee deems advisable which are not inconsistent
with the Plan, including restrictions applicable to shares of Common Stock
issuable upon exercise of Options. The Committee may specify that any
Non-Qualified Option shall be subject to the restrictions set forth herein with
respect to ISOs, or to such other termination and cancellation provisions as the
Committee may determine. The Committee may from time to time confer authority
and responsibility on one or more of its own members and/or one or more officers
of the Company to execute and deliver such instruments. The proper officers of
the Company are authorized and directed to take any and all action necessary or
advisable from time to time to carry out the terms of such instruments.

     13. ADJUSTMENTS. Upon the occurrence of any of the following events, an
optionee's rights with respect to Options granted to such optionee hereunder
shall be adjusted as hereinafter provided, unless otherwise specifically
provided in the written agreement between the optionee and the Company relating
to such Option:

          A. STOCK DIVIDENDS AND STOCK SPLITS. If the shares of Common Stock
     shall be subdivided or combined into a greater or smaller number of shares
     or if the Company shall issue any shares of Common Stock as a stock
     dividend on its outstanding Common Stock, the number of shares of Common
     Stock deliverable upon the exercise of Options shall be appropriately
     increased or decreased proportionately, and appropriate adjustments shall
     be made in the purchase price per share to reflect such subdivision,
     combination or stock



<PAGE>   6

dividend.

          B. CONSOLIDATIONS OR MERGERS. If the Company is to be consolidated
     with or acquired by another entity in a merger, sale of all or
     substantially all of the Company's assets or otherwise (an "Acquisition"),
     the Committee or the board of directors of any entity assuming the
     obligations of the Company hereunder (the "Successor Board"), shall, as to
     outstanding Options, either (i) make appropriate provision for the
     continuation of such Options by substituting on an equitable basis for the
     shares then subject to such Options either (a) the consideration payable
     with respect to the outstanding shares of Common Stock in connection with
     the Acquisition, (b) shares of stock of the surviving corporation or (c)
     such other securities as the Successor Board deems appropriate, the fair
     market value of which shall not materially exceed the fair market value of
     the shares of Common Stock subject to such Options immediately prior to the
     Acquisition; or (ii) upon written notice to the optionees, provide that all
     Options must be exercised, to the extent then exercisable, within a
     specified number of days of the date of such notice, at the end of which
     period the Options shall terminate; or (iii) terminate all Options in
     exchange for a cash payment equal to the excess of the fair market value of
     the shares subject to such Options (to the extent then exercisable) over
     the exercise price thereof.

          C. RECAPITALIZATION OR REORGANIZATION. In the event of a
     recapitalization or reorganization of the Company (other than a transaction
     described in subparagraph B above) pursuant to which securities of the
     Company or of another corporation are issued with respect to the
     outstanding shares of Common Stock, an optionee upon exercising an Option
     shall be entitled to receive for the purchase price paid upon such exercise
     the securities he or she would have received if he or she had exercised
     such Option prior to such recapitalization or reorganization.

          D. MODIFICATION OF ISO. Notwithstanding the foregoing, any
     adjustments made pursuant to subparagraphs A, B or C with respect to ISOs
     shall be made only after the Committee, after consulting with counsel for
     the Company, determines whether such adjustments would constitute a
     "modification" of such ISOs (as that term is defined in Section 424 of the
     Code) or would cause any adverse tax consequences for the holders of such
     ISOs. If the Committee determines that such adjustments made with respect
     to ISOs would constitute a modification of such ISOs or would cause adverse
     tax consequences to the holders, it may refrain from making such
     adjustments.

          E. DISSOLUTION OR LIQUIDATION. Subject to subparagraph B above if such
     dissolution or liquidation follows a sale of all or substantially of the
     Company's assets, in the event of the proposed dissolution or liquidation
     of the Company, each Option will terminate immediately prior to the
     consummation of such proposed action or at such other time and subject to
     such other conditions as shall be determined by the Committee.

          F. ISSUANCES OF SECURITIES. Except as expressly provided herein, no
     issuance by the Company of shares of stock of any class, or securities
     convertible into shares of stock of any class, shall affect, and no
     adjustment by reason thereof shall be made with respect to, the number or
     price of shares subject to Options. No adjustments shall be made for




<PAGE>   7

      dividends paid in cash or in property other than securities of the
      Company.

          G. FRACTIONAL SHARES. No fractional shares shall be issued under the
     Plan and the optionee shall receive from the Company cash in lieu of such
     fractional shares.

          H. ADJUSTMENTS. Upon the happening of any of the events described in
     subparagraphs A, B or C above, the class and aggregate number of shares set
     forth in paragraph 4 hereof that are subject to Options which previously
     have been or subsequently may be granted under the Plan shall also be
     appropriately adjusted to reflect the events described in such
     subparagraphs. The Committee or the Successor Board shall determine the
     specific adjustments to be made under this paragraph 13 and, subject to
     paragraph 2, its determination shall be conclusive.

     14. MEANS OF EXERCISING OPTIONS. An Option (or any part or installment
thereof) shall be exercised by giving written notice to the Company at its
principal office address, or to such transfer agent as the Company shall
designate. Such notice shall identify the Option being exercised and specify the
number of shares as to which such Option is being exercised, accompanied by full
payment of the purchase price therefor either (a) in United States dollars in
cash or by check, (b) at the discretion of the Committee, through delivery of
shares of Common Stock having a fair market value equal as of the date of the
exercise to the cash exercise price of the Option, (c) at the discretion of the
Committee, by delivery of the optionee's personal recourse note bearing interest
payable not less than annually at no less than 100% of the lowest applicable
Federal rate, as defined in Section 1274(d) of the Code, (d) at the discretion
of the Committee and consistent with applicable law, through the delivery of an
assignment to the Company of a sufficient amount of the proceeds from the sale
of the Common Stock acquired upon exercise of the Option and an authorization to
the broker or selling agent to pay that amount to the Company, which sale shall
be at the participant's direction at the time of exercise, or (e) at the
discretion of the Committee, by any combination of (a), (b), (c) and (d) above.
If the Committee exercises its discretion to permit payment of the exercise
price of an ISO by means of the methods set forth in clauses (b), (c), (d) or
(e) of the preceding sentence, such discretion shall be exercised in writing at
the time of the grant of the ISO in question. The holder of a Option shall not
have the rights of a shareholder with respect to the shares covered by his
Option until the date of issuance of a stock certificate to such holder for such
shares. Except as expressly provided above in paragraph 13 with respect to
changes in capitalization and stock dividends, no adjustment shall be made for
dividends or similar rights for which the record date is before the date such
stock certificate is issued.

     15. TERM AND AMENDMENT OF PLAN. This Plan was adopted by the Board on
October 24, 1994, subject, with respect to the validation of ISOs granted under
the Plan, to approval of the Plan by the stockholders of the Company at the next
Meeting of Stockholders or, in lieu thereof, by written consent. If the approval
of stockholders is not obtained prior to October 24, 1995, any grants of ISOs
under the Plan made prior to that date will be rescinded. The Plan shall expire
at the end of the day on October 23, 2004 (except as to Options outstanding on
that date). Subject to the provisions of paragraph 5 above, Options may be
granted under the Plan prior to the date of stockholder approval of the Plan.
The Board may terminate or amend the Plan in any respect at any time, except
that, without the approval of the stockholders obtained within 12 months



<PAGE>   8

before or after the Board adopts a resolution authorizing any of the following
actions: (a) the total number of shares that may be issued under the Plan may
not be increased (except by adjustment pursuant to paragraph 13); (b) the
benefits accruing to participants under the Plan may not be materially
increased; (c) the requirements as to eligibility for participation in the Plan
may not be materially modified; (d) the provisions of paragraph 3 regarding
eligibility for grants of ISOs may not be modified; (e) the provisions of
paragraph 6(B) regarding the exercise price at which shares may be offered
pursuant to ISOs may not be modified (except by adjustment pursuant to paragraph
13); (f) the expiration date of the Plan may not be extended; and (g) the Board
may not take any action which would cause the Plan to fail to comply with Rule
16b-3. Except as otherwise provided in this paragraph 15, in no event may action
of the Board or stockholders alter or impair the rights of an optionee, without
such optionee's consent, under any Option previously granted to such optionee.

     16. CONVERSION OF ISO INTO NON-QUALIFIED OPTIONS. The Committee, at the
written request or with the written consent of any optionee, may in its
discretion take such actions as may be necessary to convert such optionee's ISOs
(or any installments or portions of installments thereof) that have not been
exercised on the date of conversion into Non-Qualified Options at any time prior
to the expiration of such ISOs, regardless of whether the optionee is an
employee of the Company or a Related Corporation at the time of such conversion.
Such actions may include, but shall not be limited to, extending the exercise
period or reducing the exercise price of the appropriate installments of such
ISOs. At the time of such conversion, the Committee (with the consent of the
optionee) may impose such conditions on the exercise of the resulting
Non-Qualified Options as the Committee in its discretion may determine, provided
that such conditions shall not be inconsistent with this Plan. Nothing in the
Plan shall be deemed to give any optionee the right to have such optionee's ISOs
converted into Non-Qualified Options, and no such conversion shall occur until
and unless the Committee takes appropriate action.

     17. APPLICATION OF FUNDS. The proceeds received by the Company from the
sale of shares pursuant to Options granted under the Plan shall be used for
general corporate purposes.

     18. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION. By accepting an ISO
granted under the Plan, each optionee agrees to notify the Company in writing
immediately after such optionee makes a Disqualifying Disposition (as described
in Sections 421, 422 and 424 of the Code and regulations thereunder) of any
stock acquired pursuant to the exercise of ISOs granted under the Plan. A
Disqualifying Disposition is generally any disposition occurring on or before
the later of (a) the date two years following the date the ISO was granted or
(b) the date one year following the date the ISO was exercised.

     19. WITHHOLDING OF ADDITIONAL INCOME TAXES. Upon the exercise of a
Non-Qualified Option, the making of a Disqualifying Disposition (as defined in
paragraph 18), the vesting or transfer of restricted stock or securities
acquired on the exercise of a Option hereunder, or the making of a distribution
or other payment with respect to such stock or securities, the Company may
withhold taxes in respect of amounts that constitute compensation includible in
gross income. The Committee in its discretion may condition (i) the exercise of
an Option, or (ii) the vesting or transferability of restricted stock or
securities acquired by exercising an Option, on the optionee's making
satisfactory arrangement for such withholding. Such arrangement may



<PAGE>   9

include payment by the optionee in cash or by check of the amount of the
withholding taxes or, at the discretion of the Committee, by the optionee's
delivery of previously held shares of Common Stock or the withholding from the
shares of Common Stock otherwise deliverable upon exercise of a Option shares
having an aggregate fair market value equal to the amount of such withholding
taxes.

     20. GOVERNMENTAL REGULATION. The Company's obligation to sell and deliver
shares of the Common Stock under this Plan is subject to the approval of any
governmental authority required in connection with the authorization, issuance
or sale of such shares.

     Government regulations may impose reporting or other obligations on the
Company with respect to the Plan. For example, the Company may be required to
send tax information statements to employees and former employees that exercise
ISOs under the Plan, and the Company may be required to file tax information
returns reporting the income received by optionees in connection with the Plan.

     21. GOVERNING LAW. The validity and construction of the Plan and the
instruments evidencing Options shall be governed by the laws of Delaware, or the
laws of any jurisdiction in which the Company or its successors in interest may
be organized.