OWENS CORNING

KEY EMPLOYEE RETENTION INCENTIVE PLAN

 

Purpose

. This Owens Corning Key Employee Retention Incentive Plan has been established
by Owens Corning for designated key employees of the Company. The purpose of the
Plan is to provide an incentive to Participants to remain in the employ of the
Company through the date of the Company's emergence from Chapter 11 bankruptcy.

Definitions

. For purposes of this Plan:

"Board" shall mean the Board of Directors of Owens Corning.

"Cause" shall mean acts of gross misconduct, gross insubordination,
embezzlement, fraud, misappropriation of funds, property or trade secrets (in
each case as determined by the Committee), or the commission of any felony under
state or federal law.

"Committee" shall mean the Compensation Committee of the Board.

"Company" shall mean Owens Corning, a Delaware Corporation, and each of its
subsidiaries and affiliates.

"Disability" shall mean the Participant's entitlement to benefits under any long
term disability plan or program of the Company.

"Effective Date" means January 1, 2005.

"Emergence" shall mean the effective date of a Plan of Reorganization confirmed
in the Chapter 11 proceedings.

"Retention Amount" shall mean, with respect to each Participant, the amount
payable under the Plan in accordance with Section 5(a) hereof.

"Emergence Date" shall mean the date of Emergence, as defined.

"Nonqualifying Severance" shall mean any termination of a Participant's
employment with the Company after the Effective Date and before the earlier of
the Emergence Date or December 31, 2005, in other than a Qualifying Severance.

"Participant" shall mean an employee of the Company who participates in the Plan
in accordance with Section 4 hereof.

"Plan" shall mean this Owens Corning Key Employee Retention Incentive Plan, as
amended from time to time.

 

"Qualifying Severance" shall mean the termination of a Participant's employment
with the Company after the Effective Date and before the earlier of the
Emergence Date or December 31, 2005: (i) by the Company other than for Cause, or
(ii) by reason of death or Disability.

Administration

.

The Plan shall be administered by the Committee, which shall have complete
authority to determine who shall participate herein and the Retention Amount
applicable to each Participant, to interpret the Plan, to prescribe, amend and
rescind rules and regulations relating to it, and to make all other
determinations necessary or advisable for the administration of the Plan.

The Committee is authorized, on behalf of the Plan, to engage accountants, legal
counsel and such other personnel as it deems necessary or advisable to assist it
in the performance of its duties under the Plan. All reasonable expenses thereof
shall be borne by the Company.

All decisions made by the Committee pursuant to the provisions of the Plan shall
be final, conclusive and binding on all persons, including the Company and the
Participants. No member of the Board or the Committee, nor any officer or
employee of the Company acting on behalf of the Board or the Committee, shall be
personally liable for any action, determination, or interpretation taken or made
in good faith with respect to the Plan, and all members of the Board or the
Committee and each and any officer or employee of the Company acting on their
behalf shall, to the extent permitted by law, be fully indemnified and protected
in respect of any such action, determination or interpretation.

The Committee may delegate any of its duties hereunder to such person or persons
as it may designate from time to time.

Participation

. The Committee shall, in its sole discretion, select the employees of the
Company who shall participate in the Plan. As a condition to participation in
the Plan, each such employee shall execute a document, in such form as the
Committee may require, acknowledging his or her participation in the Plan and
his or her intent to remain employed by the Company through the Emergence Date.

Payments

.

In General

. Each Participant who remains employed by the Company through December 31, 2005
shall receive a cash payment from the Company equal to the Retention Amount
established by the Committee for the Participant, as set forth in the letter
informing the Participant of his or her participation in the Key Employee
Retention Incentive Plan. There shall be no requirement of uniformity of
Retention Amount among Participants.

 

Qualifying Severance

. Each Participant who terminates employment with the Company under a Qualifying
Severance shall receive a cash payment from the Company equal to his or her
Retention Amount multiplied by a fraction, the numerator of which is the number
of calendar months (including fractional months) from the Effective Date until
the date of the Qualifying Severance, and the denominator of which is 12.

Nonqualifying Severance

. No payment shall be made under the Plan in respect of a Participant who incurs
a Nonqualifying Severance.

Payment Upon Emergence

. If the Company Emerges prior to December 31, 2005, each participant shall
receive a cash payment from the Company equal to his or her Retention Amount
multiplied by a fraction, the numerator of which is the number of calendar
months (including fractional months) from the Effective Date until the date of
Emergence, and the denominator of which is 12.

Form and Timing of Payment

. In general, payments under this Section 5 shall be made in a lump sum. Such
payment shall be made as soon as practicable following the earlier of the
Emergence Date or December 31, 2005, but in no case later than March 15, 2006
and in the case of a payment pursuant to subsection (b) above, such payment
shall be made as soon as practicable following the date of the Qualifying
Severance but in no case later than 2.5 months thereafter. Retention amounts are
expressed in US dollars, and any payments under this Plan in other currency will
be based on the exchange rate in effect at the time of payout.

General Provisions

.

Compliance with Legal Requirements

. The Plan, the payment of amounts hereunder, and the other obligations of the
Company under the Plan shall be subject to all applicable federal and state
laws, rules and regulations, and to such approvals by any regulatory or
governmental agency as may be required.

Nontransferability

. No Participant shall have the right to alienate, anticipate, commute, pledge,
encumber or assign any of the benefits or payments which he or she may expect to
receive, contingently or otherwise, under this Plan.

No Right To Continued Employment

. Nothing in the Plan shall confer upon any Participant the right to continue in
the employ of the Company or to be entitled to any remuneration or benefits not
set forth in the Plan or to interfere with or limit in any way the right of the
Company to terminate such Participant's employment, which remains "at will."

Effect on Other Benefits

. Amounts paid or payable hereunder shall not be treated as compensation for
purposes of determining benefit amounts or accruals under any employee pension
or benefit plan, program or arrangement maintained by the Company.

Severability

. If any provision of this Plan shall be held invalid or unenforceable, such
invalidity or unenforceability shall not affect any other provisions hereof, and
this Plan shall be construed and enforced as if such provisions had not been
included.

Successors

. This Plan shall be binding upon the heirs, executors, administrators,
successors and assigns of the parties, including each Participant and any
successor to the Company.

Construction

. The headings and captions herein are provided for reference and convenience
only, shall not be considered part of the Plan, and shall not be used in the
construction of the Plan.

Withholding Taxes

. All amounts to be paid hereunder to Participants shall be paid net of any
taxes that the Company may be required to withhold therefrom in respect of any
federal, state, local or other taxes.

Amendment, Termination and Duration of the Plan

. The Committee may at any time and from time to time alter, amend, suspend, or
terminate the Plan in whole or in part. The Plan shall terminate on the earlier
of the Emergence Date or December 31, 2005, provided that all amounts not yet
paid on the Emergence Date shall be paid thereafter in accordance with the terms
hereof.

Unfunded Plan

. The Plan is intended to constitute an "unfunded" plan for incentive
compensation. With respect to any payments not yet made to a Participant
hereunder, nothing contained in the Plan shall give any such Participant any
rights in any assets of the Company that are greater than those of a general
creditor of the Company.

Beneficiary

. A Participant may file with the Committee a written designation of a
beneficiary on such form as may be prescribed by the Committee and may, from
time to time, amend or revoke such designation. If no designated beneficiary
survives the Participant, the executor or administrator of the Participant's
estate shall be deemed to be the Participant's beneficiary.

Governing Law

. The Plan and all determinations made and actions taken pursuant hereto shall
be governed by the laws of the State of Delaware

without giving effect to the conflict of laws principles thereof.