Exhibit 10.1

 

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ENERGY CONVERSION DEVICES, INC.

EXECUTIVE SEVERANCE PLAN

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Effective July 24, 2007

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TABLE OF CONTENTS

 

Section 1.

Introduction

1

 

1.1.

Purpose.

1

 

1.2.

Effective Date.

1

 

Section 2.

Definitions and Construction

2

 

2.1.

Definitions.

2

 

2.2.

Gender and Number.

3

 

2.3.

Section 409A

3

 

Section 3.

Participation by Eligible Executives

4

 

3.1.

Generally.

4

 

3.2.

Participation Agreement Required.

4

 

Section 4.

Severance Benefits

5

 

4.1.

Basic Severance Benefits.

5

 

4.2.

Medical and Dental Benefits.

7

 

4.3.

Equity Awards

7

 

4.4.

Outplacement Services

8

 

4.5.

Gross-Up Payment/Reduction of Benefits

8

 

4.6.

Qualifying Termination.

10

 

Section 5.

Covenants

12

 

5.1.

Generally.

12

 

5.2.

Noncompetition.

12

 

5.3.

Interference with Business Relations.

12

 

5.4.

Proprietary and Confidential Information.

13

 

5.5.

Nondisparagement

13

 

5.6.

Cooperation

13

 

5.7.

Recoupment

14

 

Section 6.

Release

15

 

6.1.

Generally.

15

 

6.2.

Time Limit for Providing Release.

15

 

Section 7.

Nature of Participant’s Interest in the Plan

16

 

7.1.

No Right to Assets.

16

 

7.2.

No Right to Transfer Interest.

16

 

7.3.

No Employment Rights.

16

 

7.4.

Withholding and Tax Liabilities.

16

 

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Executive Severance Plan

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Section 8.

Administration, Interpretation, and Modification of Plan

17

 

8.1.

Plan Administrator.

17

 

8.2.

Powers of the Administrator.

17

 

8.3.

Finality of Committee Determinations.

17

 

8.4.

Incapacity.

17

 

8.5.

Amendment, Suspension, and Termination.

17

 

8.6.

Power to Delegate Authority.

18

 

8.7.

Headings.

18

 

8.8.

Severability.

18

 

8.9.

Governing Law.

18

 

8.10.

Complete Statement of Plan.

18

 

Section 9.

Claims and Appeals

19

 

9.1.

Application of Claims and Appeals Procedures.

19

 

9.2.

Initial Claims.

19

 

9.3.

Appeals.

20

 

9.4.

Other Rules and Rights Regarding Claims and Appeals.

21

 

9.5.

Interpretation.

21

 

 

 

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Executive Severance Plan

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SECTION 1.      INTRODUCTION

 

 

1.1.

Purpose.

The purpose of the Plan is to ensure that the Company will have the continued
dedication of key executives of the Company by providing severance protection to
selected individuals. The Plan is an unfunded welfare plan maintained primarily
for the purpose of providing severance benefits to a select group of management
and key management employees.

 

 

1.2.

Effective Date.

The Plan is effective as of July 24, 2007.

 

 

 

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SECTION 2.      DEFINITIONS AND CONSTRUCTION

 

 

2.1.

Definitions.

When used in capitalized form in the Plan, the following words and phrases have
the following meanings, unless the context clearly indicates that a different
meaning is intended:

 

(a)

“Across the Board Change” means any change affecting more than fifty percent
(50%) of the Company’s employees.

 

(b)

“Administrative Committee” means the Compensation Committee or such other
Committee or person as the Board of Directors designates.

 

(c)

“Board of Directors” means the Board of Directors of the Company.

 

(d)

“Cause” has the meaning provided in Section 4.6(c).

 

(e)

“CEO” means the Chief Executive Officer of the Company.

 

(f)

“Change in Control” means a Change in Control of the Company as defined in the
Energy Conversion Devices, Inc. 2006 Stock Incentive Plan.

 

(g)

“Code” means the Internal Revenue Code of 1986, as amended.

 

(h)

“Company” means Energy Conversion Devices, Inc., and any successor to Energy
Conversion Devices, Inc. Employment with the Company includes employment with
any corporation, partnership, or other organization that would, if applicable,
be aggregated with the Company under sections 414(b) and (c) of the Code.

 

(i)

“Compensation Committee” means the Compensation Committee of the Board of
Directors.

 

(j)

“Effective Date” means July 24, 2007.

 

(k)

“Eligible Executive” means an employee of the Company who is designated by the
Administrative Committee, in its discretion, to be eligible to participate in
the Plan.

 

(l)

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

(m)

“Excise Tax” has the meaning provided in Section 4.5.

 

(n)

“Good Reason” has the meaning provided in Section 4.6(b).

 

(o)

“Gross-Up Payment” has the meaning provided in Section 4.5.

 

 

 

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(p)

“Participant” means an Eligible Executive who is eligible to participate in the
Plan under Section 2.

 

(q)

“Participation Agreement” has the meaning provided in Section 3.2.

 

(r)

“Plan” means the Energy Conversion Devices, Inc. Executive Severance Plan as set
forth in this document.

 

(s)

“Qualifying Termination” has the meaning provided in Section 4.6

 

(t)

“Section” means a section of this Plan and any subsections of that section.

 

(u)

“Section 409A” means section 409A of the Code.

 

(v)

“Severance Benefit” has the meaning provided in Section 4.1.

 

(w)

“Severance Coverage Period” is, with respect to a Participant, the period of
severance specified in the Participant’s Participation Agreement.

 

 

2.2.

Gender and Number.

Words used in the masculine gender in the Plan are intended to include the
feminine and neuter genders, where appropriate. Words used in the singular form
in the Plan are intended to include the plural form, where appropriate, and vice
versa.

 

 

2.3.

Section 409A 

Payments under the Plan are intended to be exempt from, or comply with, Section
409A, and the Plan will be interpreted to achieve this result. However, in no
event is the Company responsible for any tax or penalty owed by a Participant
with respect to the payments under this Plan, except as provided in Section 4.5
(relating to Gross-Up Payments).

 

 

 

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SECTION 3.      PARTICIPATION BY ELIGIBLE EXECUTIVES

 

 

3.1.

Generally.

An employee of the Company becomes eligible to participate in the Plan upon the
later of (a) the date on which the Administrative Committee designates the
employee as an Eligible Executive and (b) the date on which the Company and the
employee execute a Participation Agreement in accordance with Section 3.2.

 

 

3.2.

Participation Agreement Required.

No employee will be eligible to receive a benefit under this Plan unless the
employee and the Company execute a Participation Agreement containing such terms
as shall be determined by the Administrative Committee. The executed
Participation Agreement will constitute an agreement between the Company and the
employee that binds both of them to the terms of the Plan and will bind their
heirs, executors, administrators, successors, and assigns, both present and
future.

 

 

 

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SECTION 4.      SEVERANCE BENEFITS

 

 

4.1.

Basic Severance Benefits.

A Participant who has a Qualifying Termination is entitled to a Severance
Benefit in the amount described in subsection (a), which is paid in the time and
form specified in subsection (b), and is conditioned upon the Participant’s
timely execution of a release as provided in Section 6.

 

(a)

Amount. The Participant’s Severance Benefit will include the Participant’s base
salary and bonus award as follows—

(1)         Base Salary. The Participant’s Severance Benefit includes the
Participant’s base salary (at the rate in effect immediately prior to the
Participant’s Qualifying Termination, or if greater, the rate in effect at any
time within 90 days prior to the Participant’s Qualifying Termination) for the
Participant’s Severance Coverage Period.

(2)         Bonus Award. The Participant’s Severance Benefit includes the
following bonus award—

(A)         a pro-rata portion of the target incentive under the Company’s
annual cash incentive plan for the measurement period during which the
Qualifying Termination occurs, which is equal to the target incentive for the
period multiplied by a fraction, the numerator of which is the number of
complete calendar months that elapsed from the beginning of the incentive
measurement period until the Participant’s Qualifying Termination, and the
denominator of which is the total number of complete calendar months in the
incentive measurement period; and

(B)         an amount equal to the target incentive for the measurement period
in which the Qualifying Termination occurs multiplied by a fraction, the
numerator of which is the number of complete calendar months in the Severance
Coverage Period, and the denominator of which is the total number of complete
calendar months in the incentive measurement period.

 

(b)

Time and Form of Payment. If a Participant is entitled to a Severance Benefit,
the Severance Benefit will be paid as follows—

 

(1)

In General. Except as otherwise provided in paragraph (2) or (3), below, (A) the
base salary portion of a Participant’s Severance Benefit will be paid during the
Severance Coverage Period according to the Company’s usual payroll practices,
except that payments otherwise to be made before 60th day following the
Participant’s Qualifying Termination date will be paid on the 60th day following
the Participant’s Qualifying Termination date, and (B) the bonus award portion
of the

 

 

 

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Participant’s Severance Benefit will be paid in a lump sum in the calendar month
following the last day of the Severance Coverage Period.

 

(2)

Qualifying Termination Following a Change in Control. If the Participant’s
Qualifying Termination occurs in anticipation of, or within one year after, a
Change in Control, and subject to paragraph (3), below, the entire Severance
Benefit will be paid in the form of a lump sum on the 60th day following the
Participant’s Qualifying Termination date.

 

(3)

Time of Payment under Section 409A. To comply with Section 409A—

 

(A)

The portion of the Severance Benefit that is not subject to Section 409A is a
separate payment, for purposes of Section 409A, from the portion of the
Severance Benefit, if any, that is subject to Section 409A. For the avoidance of
doubt, Section 409A does not cover the portion of the Severance Benefit equal to
(i) the first two and one-half months of base salary, plus (ii) if the
Participant’s Severance Benefit is paid solely on account of an “involuntary
separation from service” under Treas. Reg. section 1.409A-1(n), the remaining
portion of the Severance Benefit up to the lesser of two times the Participant’s
annualized compensation (as determined under Section 409A) or two times the Code
section 401(a)(17) limit for the year of the Participant’s separation from
service. The amount in clause (ii) in the previous sentence is limited to
payments that must be paid by December 31 of the second calendar year following
the calendar year of the Participant’s separation from service.

 

(B)

Any payment under the Plan that is subject to Section 409A and that is
contingent on a termination of employment is contingent on a “separation from
service” within the meaning of Section 409A.

 

(C)

If, upon separation from service, the Participant is a “specified employee”
within the meaning of Section 409A, any payment under the Plan that is subject
to Section 409A and would otherwise be paid within six months after the
Participant’s separation from service will instead be paid in the seventh month
following the Participant’s separation from service.

 

 

 

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(D)

If any portion of the Severance Benefit is subject to Section 409A, the time of
payment with respect to that portion of the Severance Benefit will be determined
without regard to paragraph (2) unless the Change in Control constitutes a
“change in control” as defined under Section 409A and the separation from
service occurs no later than two years after the Change in Control.

 

 

4.2.

Medical and Dental Benefits.

If the Participant has a Qualifying Termination and timely executes a release as
provided in Section 6, the Company will provide the Participant with medical and
dental benefits as follows—

 

(a)

Amount. During the Severance Coverage Period (but not for more than 18 months),
the Company will pay a portion of the Participant’s premiums for medical and
dental coverage under COBRA (and, if the Severance Coverage Period extends
beyond the COBRA period, any medical and dental coverage obtained by the
Participant after the COBRA period) equal to the portion of medical and dental
benefit premiums (if any) that the Company would have paid with respect to the
Participant had the Participant continued employment with the Company in the
same position held by the Participant at the time of his or her Qualifying
Termination. Notwithstanding the previous sentence, the Company reserves the
right to modify, amend, or terminate at any time any Company benefit plan to the
extent permitted under the terms of the plan and applicable law.

 

(b)

Time of Payment. Each month’s premium will be paid in the month it is due,
except that payments may be delayed pending the Participant’s execution of a
release in accordance with Section 6. For purposes of Section 409A, payments
under this Section made within the COBRA coverage period are separate from
payments, if any, made later.

 

 

4.3.

Equity Awards

If the Participant has a Qualifying Termination and timely executes a release as
provided in Section 6, the Participant’s awards, if any, under the Energy
Conversion Devices, Inc. 2006 Stock Incentive Plan (or its successor or its
predecessor) will be vested and any stock option or stock appreciation right
will, unless otherwise provided in the applicable award agreement, be
exercisable until the 90th day following the Participant’s Qualifying
Termination (but no later than the earlier of the 10th anniversary of the date
the award was granted or the expiration date of the award as specified in the
award agreement).

 

 

 

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4.4.

Outplacement Services

If the Participant has a Qualifying Termination and timely executes a release as
provided in Section 6, the Company will provide the Participant with reasonable
outplacement services during the Severance Coverage Period, but in no event
later than the end of the 18th complete calendar month after a Qualifying
Termination.

 

 

4.5.

Gross-Up Payment/Reduction of Benefits

Under some circumstances, payments by a company to certain individuals that are
considered to be contingent upon a change in control are subject to a 20% excise
tax under section 4999 of the Code (the “Excise Tax”). The Excise Tax could
apply to payments under this Plan if the payments are considered to be
contingent upon a change in control, and the payments, combined with all other
change in control payments, exceed three times the Participant’s average pay,
all as determined under the Code. If the Excise Tax applies to payments under
this Plan, the Company will pay such Excise Tax as described below.

 

(a)

Eligibility for Gross-Up. If any payment to a Participant made under this Plan
is subject to the Excise Tax, the Participant will be eligible for a Gross-Up
Payment in the amount described in subsection (c), paid at the time specified in
subsection (d), except as provided in subsection (b).

 

(b)

Reduction of Benefits. Notwithstanding subsection (a), a Participant will not be
entitled to receive a Gross-Up Payment under this Section if the aggregate
present value of the Participant’s “parachute payments” is less than or equal to
310% of his or her “base amount” (as determined under section 280G of the Code).
In such an event, the Participant’s benefits under this Plan will be reduced
(first by reducing the bonus portion of the Severance Benefit, then by reducing
the base salary portion, from latest payments to earliest payments, of the
Severance Benefit, and then by reducing other payments under the Plan) by the
smallest amount necessary to ensure that the benefits paid under the Plan are
not subject to the Excise Tax.

 

(c)

Amount. If a Participant is entitled to a Gross-Up Payment, the amount of such
payment will be determined as follows—

 

(1)

Generally. The amount of the Gross-Up Payment will equal an amount such that,
after payment by the Participant of all taxes (including any interest or
penalties imposed with respect to such taxes) with respect to the Gross-Up
Payment, including any Excise Tax imposed upon the Gross-Up Payment, the
Participant retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the payments made under the Plan. The nationally recognized firm of
certified public accountants (the "Accounting Firm") used by the Company prior
to the Change in Control (or, if such Accounting Firm declines to serve, a
nationally recognized firm of certified public accountants selected by the
Company) will determine whether the payments under the Plan will result in an
excess parachute payment that is subject to the Excise Tax.

 

 

 

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If the Accounting Firm determines that no payment under the Plan will be subject
to the Excise Tax, it will, at the same time as it makes such determination,
furnish the Participant with an opinion that he or she has substantial authority
not to report any Excise Tax on his/her federal, state, local income or other
tax return. If it is later determined pursuant to paragraph (4) that the
payments under the Plan are subject to the Excise Tax, the Gross-Up Payment will
include any penalties and interest that are imposed or become due as a result of
the Accounting Firm’s initial determination that the Company’s Payments were not
subject to the Excise Tax.

 

(2)

Tax Rates. For purposes of determining the amount of the Gross-Up Payment, the
Participant will be deemed to pay (A) federal income taxes at the highest
marginal rates of federal income taxation applicable to individuals in the
calendar year in which the Gross-Up Payment is to be made and (B) state and
local income taxes at the highest marginal rates of taxation applicable to
individuals as are in effect in the state and locality of the Participant’s
residence in the calendar year in which the Gross-Up Payment is to be made, net
the maximum reduction in federal income taxes that can be obtained from
deduction of such state and local taxes, taking into account any limitations
applicable to individuals subject to federal income tax at the highest marginal
rates.

 

(3)

Adjustments to Gross-Up Payments. If it is established pursuant to a final
determination of a court or an Internal Revenue Service proceeding or written
opinion of counsel that the Excise Tax is less than the amount previously taken
into account hereunder, the Participant will repay the Company, within 30 days
of his or her receipt of notice of such final determination or opinion, the
portion of the Gross-Up Payment attributable to such reduction (plus the portion
of the Gross-Up Payment attributable to the Excise Tax imposed on the Gross-Up
Payment being repaid by the Participant if such repayment results in a reduction
in Excise Tax) plus any interest received by the Participant on the amount of
such repayment, provided that if any such amount has been paid by the
Participant as an Excise Tax or other tax, he or she will cooperate with the
Company in seeking a refund of any tax overpayments, and he or she will not be
required to make repayments to the Company until the overpaid taxes and interest
thereon are refunded to him or her.

 

(4)

Additional Gross-Up Payment. If it is established pursuant to a final
determination of a court or an Internal Revenue Service proceeding or the
written opinion of counsel that the Excise Tax exceeds the amount taken into
account hereunder (including by reason of any payment the existence or amount of
which cannot be determined at the time of the Gross-Up Payment), the Company
will make an additional Gross-Up Payment in respect of such excess (including
any tax penalties imposed or interest due because of the underpayment) 30 days
after the Company’s receipt of notice of such final determination or opinion;

 

 

 

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provided that the Participant notifies the Company of the potential underpayment
within 30 days of the Participant’s initial receipt from the Internal Revenue
Service of a dispute or inquiry regarding the amount of the Excise Tax.

 

(d)

Time and Form of Payment.

 

(1)

Generally.

 

(A)

Except as provided in paragraph (C), if the Company determines that an Excise
Tax will be imposed upon a Participant, the Gross-Up Payment will be paid in a
lump sum on the fifth day before the due date of the Excise Tax.

 

(B)

Except as provided in paragraph (C), if the Accounting Firm initially determines
that an Excise Tax will not be imposed upon any payment under the Plan and an
Excise Tax is subsequently imposed on a payment under the Plan pursuant to
Section 4.5(c)(4), the Gross-Up Payment will be paid in a lump sum on the 60th
day after the Participant’s initial receipt of notice of such final
determination or opinion; provided that no Gross-Up Payment will be paid under
this paragraph (B) if the Participant does not notify the Company of the
potential underpayment within 30 days of the Participant’s initial receipt from
the Internal Revenue Service of a dispute or inquiry regarding the amount of the
Excise Tax.

 

(C)

Notwithstanding subparagraphs (A) and (B), the Gross-Up Payment will neither be
paid (i) later than the end of the Participant’s taxable year next following the
Participant’s taxable year in which the related taxes are remitted to the taxing
authority, nor (ii) earlier than the date that is six months after the
Participant’s separation from service, if the Participant is a “specified
employee” upon separation from service (as determined under Section 409A).

 

 

4.6.

Qualifying Termination.

 

(a)

A Participant has a Qualifying Termination if his or her employment with the
Company is terminated—

 

(1)

for Good Reason; or

 

(2)

involuntarily by the Company for any reason other than for Cause.

 

 

 

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(b)

Good Reason.

(1)         Definition. “Good Reason” means, without the consent of the
Participant, (A) any material diminution in the Participant’s base pay; (B) any
material diminution in the Participant’s authority, duties or responsibilities;
or (C) a material change in the Participant’s office location (which, for this
purpose, means a change of more than 50 miles). However, “Good Reason” does not
include such material diminution if the material diminution is the result of an
Across the Board Change, unless the Participant’s Qualifying Termination occurs
within one year before, or within one year after, a Change in Control. For the
avoidance of doubt, “Good Reason” does not occur solely because the Company
ceases to be publicly traded.

(2)         Notice and Cure Period. A Participant does not terminate for Good
Reason unless (A) the Participant gives the Administrative Committee written
notice within 90 days of the initial existence of the condition on which Good
Reason is based, (B) the Company does not cure the condition within 30 days of
receiving such notice, and (C) the Participant terminates within one year
following the initial existence of the condition.

 

(c)

Cause. “Cause” means, as determined by the Administrative Committee in its
discretion, fraud, embezzlement, or a conviction of a felony, or a willful and
continual failure after notice to substantially perform his duties (other than
failure resulting from the Participant’s incapacity due to physical or mental
illness), or any other breach of duty by the Participant resulting in material
harm to the Company.

 

 

 

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SECTION 5.      COVENANTS

 

 

5.1.

Generally.

In consideration for the benefits provided under the Plan, each Participant will
agree to the covenants set forth in this Section 5.

 

 

5.2.

Noncompetitiqon.

 

(a)

Prohibited Conduct. During the period of a Participant’s employment with the
Company, and for the Participant’s Severance Coverage Period, the Participant
will not, without the prior written consent of the CEO (or if the Participant is
the CEO, without prior written consent of the Board of Directors)—

 

(1)

personally engage in Competitive Activities (as defined below); or

(2)         work for, own, manage, operate, control, or participate in the
ownership, management, operation, or control of, or provide consulting or
advisory services to, any individual, partnership, firm, corporation, or
institution engaged in Competitive Activities, or any company or person
affiliated with such person or entity engaged in Competitive Activities;
provided that Participant’s mere purchase or holding, for investment purposes,
of securities of a publicly-traded company will not constitute “ownership” or
“participation in ownership” for purposes of this paragraph so long as
Participant’s equity interest in any such company is less than 5% of its
outstanding shares.

 

(b)

Competitive Activities. “Competitive Activities” means business activities, for
employees classified as above E5 anywhere in the world and for employees
classified as E5 and E4 anywhere in North America, which, in whole or in part,
are in competition with the Company and its divisions, subsidiaries, affiliates
and joint ventures as of the date that employment with the Company terminates.
If the scope of the obligations contained in this Section 5.2 is determined to
exceed that which may be enforceable under applicable law, the scope of these
obligations will be reformed to provide for enforcement to the maximum extent
permitted under applicable law. The Participant will bear the burden of proving
the scope of the maximum enforceable obligations under applicable law and that
the activities in which he or she has engaged do not exceed such maximum
enforceable obligations.

 

 

5.3.

Interference with Business Relations.

During the period of the Participant’s employment with the Company, and for the
Participant’s Severance Coverage Period, Participant will not, without the prior
written consent of the CEO (or if the Participant is the CEO, without prior
written consent of the Board of Directors)—

 

(a)

recruit or solicit any employee of the Company for employment or for retention
as a consultant or service provider;

 

 

 

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(b)

hire or participate (with another company or third party) in the process of
hiring (other than for the Company) any person who is then an employee of the
Company, or provide names or other information about Company employees to any
person or business (other than the Company) under circumstances that could lead
to the use of that information for purposes of recruiting or hiring;

 

(c)

interfere with the relationship of the Company with any of its employees,
agents, or representatives;

 

(d)

solicit or induce, or in any manner attempt to solicit or induce, any client,
customer, or prospect of the Company (1) to cease being, or not to become, a
customer of the Company or (2) to divert any business of such customer or
prospect from the Company; or

 

(e)

otherwise interfere with, disrupt, or attempt to interfere with or disrupt, the
relationship, contractual or otherwise, between the Company and any of its
customers, clients, prospects, suppliers, consultants, or employees.

 

 

5.4.

Proprietary and Confidential Information.

The Participant will at all times preserve the confidentiality of all
proprietary information and trade secrets of the Company, except to the extent
that disclosure of such information is legally required. “Proprietary
information” means information that has not been disclosed to the public and
that is treated as confidential within the business of the Company, such as
strategic or tactical business plans; undisclosed financial data; ideas,
processes, methods, techniques, systems, patented or copyrighted information,
models, devices, programs, computer software, or related information; documents
relating to regulatory matters and correspondence with governmental entities;
undisclosed information concerning any past, pending, or threatened legal
dispute; pricing and cost data; reports and analyses of business prospects;
business transactions that are contemplated or planned; research data; personnel
information and data; identities of users and purchasers of the Company’s
products or services; and other confidential matters pertaining to or known by
the Company, including confidential information of a third party that
Participant knows or should know the Company is bound to protect.

 

 

5.5.

Nondisparagement

The Participant will at no time make any derogatory, misleading or otherwise
negative statement about the actions, performance or behavior of the Company or
its officers, directors, employees and agents.

 

 

5.6.

Cooperation

The Participant will cooperate with the Company in order to ensure an orderly
transfer of his or her duties and responsibilities. In addition, the Participant
will at all times, both before and after termination of employment, (a) provide
reasonable cooperation in connection with any action or proceeding (or any
appeal from any action or

 

 

 

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proceeding) that relates to events occurring during the Participant’s employment
hereunder, provided that such cooperation does not materially interfere with the
Executive’s then current employment, and (b) cooperate with the Company in
executing and delivering documents requested by the Company, and taking any
other actions, that are necessary or requested by the Company to assist the
Company in patenting, copyrighting, or registering any programs, ideas,
inventions, discoveries, patented or copyrighted material, or trademarks, and to
vest title thereto in the Company.

 

 

5.7.

Recoupment

If the Participant breaches any of the covenants set forth in this Section 5,
the Company will have no further obligation to pay to the Participant any
benefit under the Plan, and the Participant will be obligated to repay to the
Company all benefits previously paid to, or on behalf of, the Participant under
the Plan.

 

 

 

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SECTION 6.      RELEASE

 

 

6.1.

Generally.

A Participant will not be entitled to any benefits under this Plan unless, at
the time of the Participant’s Qualifying Termination, he or she executes and
does not subsequently revoke a release satisfactory to the Company releasing the
Company, its affiliates, subsidiaries, shareholders, directors, officers,
employees, representatives, and agents and their successors and assigns from any
and all employment-related claims the Participant or his or her successors and
beneficiaries might then have against them (excluding any claims the Participant
might then have under this Plan or any employee benefit plan sponsored by the
Company). The release will be substantially in the form that is attached as
Exhibit A to the Plan.

 

 

6.2.

Time Limit for Providing Release.

A Participant will execute and submit the release to the Company within 30 days
after the date of the Participant’s Qualifying Termination. However, if the
Participant has a Qualifying Termination in connection with an exit incentive or
other employment termination program offered to a group or class of employees,
the Participant will have 50 days after the Participant terminates employment to
execute and submit the release to the Company.

 

 

 

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SECTION 7.      NATURE OF PARTICIPANT'S INTEREST IN THE PLAN

 

 

7.1.

No Right to Assets.

Participation in the Plan does not create, in favor of any Participant, any
right or lien in or against any asset of the Company. Nothing contained in the
Plan, and no action taken under its provisions, will create or be construed to
create a trust of any kind, or a fiduciary relationship, between the Company and
a Participant or any other person. The Company’s promise to pay benefits under
the Plan will at all times remain unfunded as to each Participant, whose rights
under the Plan are limited to those of a general and unsecured creditor of the
Company.

 

 

7.2.

No Right to Transfer Interest.

Rights to benefits payable under the Plan are not subject in any manner to
alienation, sale, transfer, assignment, pledge, or encumbrance. However, the
Administrative Committee may recognize the right of an alternate payee named in
a domestic relations order to receive all or part of a Participant’s benefits
under the Plan, but only if (a) the domestic relations order would be a
“qualified domestic relations order” within the meaning of section 414(p) of the
Code (if section 414 (p) applied to the Plan), (b) the domestic relations order
does not attempt to give the alternate payee any right to any asset of the
Company, (c) the domestic relations order does not attempt to give the alternate
payee any right to receive payments under the Plan at a time or in an amount
that the Participant could not receive under the Plan, and (d) the amount of the
Participant’s benefits under the Plan are reduced to reflect any payments made
or due the alternate payee.

 

 

7.3.

No Employment Rights.

No provisions of the Plan and no action taken by the Company, the Board of
Directors, the Compensation Committee, or the Administrative Committee will give
any person any right to be retained in the employ of the Company, and the
Company specifically reserves the right and power to dismiss or discharge any
Participant for any reason or no reason and at any time.

 

 

7.4.

Withholding and Tax Liabilities.

The amount of any withholdings required to be made by any government or
government agency will be deducted from benefits paid under the Plan to the
extent deemed necessary by the Administrative Committee. In addition, the
Participant will bear the cost of any taxes not withheld on benefits provided
under the Plan, regardless of whether withholding is required, except as
provided in Section 4.5 (relating to Gross-Up Payments).

 

 

 

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SECTION 8.      ADMINISTRATION, INTERPRETATION, AND MODIFICATION OF PLAN

 

 

8.1.

Plan Administrator.

The Administrative Committee will administer the Plan.

 

 

8.2.

Powers of the Administrator.

The Administrative Committee powers include, but are not limited to, the power
to adopt rules consistent with the Plan; the power to decide all questions
relating to the interpretation of the terms and provisions of the Plan; and the
power to resolve all other questions arising under the Plan (including, without
limitation, the power to remedy possible ambiguities, inconsistencies, or
omissions by a general rule or particular decision). The Administrative
Committee has full discretionary authority to exercise each of the foregoing
powers.

 

 

8.3.

Finality of Committee Determinations.

Determinations by the Administrative Committee and any interpretation, rule, or
decision adopted by the Administrative Committee under the Plan or in carrying
out or administering the Plan will be final and binding for all purposes and
upon all interested persons, their heirs, and their personal representatives.

 

 

8.4.

Incapacity.

If the Administrative Committee determines that any Participant entitled to
benefits under the Plan is unable to care for his or her affairs because of
illness or accident, any payment due (unless a duly qualified guardian or other
legal representative has been appointed) may be paid for the benefit of such
Participant to his or her spouse, parent, brother, sister, or other party deemed
by the Administrative Committee to have incurred expenses for such Participant.
If a Participant dies after having a Qualifying Termination, any payment of the
Participant's Severance Benefit remaining due to the Participant will be paid to
the Participant's estate at the time such payment would otherwise be paid to the
Participant but no later than 90 days after the Participant's death.

 

 

8.5.

Amendment, Suspension, and Termination.

The Board of Directors has the right by written resolution to amend, suspend, or
terminate the Plan at any time, except, with respect to a Participant, as
provided under the Participant’s Participation Agreement. However, no amendment,
suspension, or termination that reduces the benefits to which a Participant is
entitled under the Plan will apply to an employee who already is a Participant
in the Plan without his or her express written consent if such amendment,
suspension, or termination occurs less than one year before a Change in Control.
Notwithstanding the foregoing, the Board of Directors may amend the Plan at any
time to comply with Section 409A.

 

 

 

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8.6.

Power to Delegate Authority.

The Board of Directors and the Administrative Committee may, in their sole
discretion, delegate to any person or persons all or part of its authority and
responsibility under the Plan, including, without limitation, the authority to
amend the Plan.

 

 

8.7.

Headings.

The headings used in this document are for convenience of reference only and may
not be given any weight in interpreting any provision of the Plan.

 

 

8.8.

Severability.

If an arbitrator or court of competent jurisdiction determines that any term,
provision, or portion of this Plan is void, illegal, or unenforceable, the other
terms, provisions, and portions of this Plan will remain in full force and
effect, and the terms, provisions, and portions that are determined to be void,
illegal, or unenforceable will either be limited so that they will remain in
effect to the extent permissible by law, or such arbitrator or court will
substitute, to the extent enforceable, provisions similar thereto or other
provisions, so as to provide to the Company, to the fullest extent permitted by
applicable law, the benefits intended by this Plan.

 

 

8.9.

Governing Law.

The Plan will be construed, administered, and regulated in accordance with the
laws of Michigan (excluding any conflicts or choice of law rule or principle),
except to the extent that those laws are preempted by federal law.

 

 

8.10.

Complete Statement of Plan.

This Plan contains a complete statement of its terms. The Plan may be amended,
suspended, or terminated only in writing and then only as provided in Section
8.5 or 8.6. A Participant’s right to any benefit of a type provided under the
Plan will be determined solely in accordance with the terms of the Plan. No
other evidence, whether written or oral, will be taken into account in
interpreting the provisions of the Plan. Notwithstanding the preceding
provisions of this Section 8.10, for purposes of determining benefits with
respect to a Participant, this Plan will be deemed to include (a) the provisions
of any Participation Agreement executed in accordance with Section 3.2, and (b)
the provisions of any other written agreement between the Company and the
Participant to the extent such other agreement explicitly provides for the
incorporation of some or all of its terms into this Plan.

 

 

 

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SECTION 9.      CLAIMS AND APPEALS

 

 

9.1.

Application of Claims and Appeals Procedures.

 

(a)

The provisions of this Section 9 will apply to any claim for a benefit under the
Plan, regardless of the basis asserted for the claim and regardless of when the
act or omission upon which the claim is based occurred.

 

(b)

No claim for non-payment or underpayment of benefits allegedly owed under the
Plan may be filed in court until the claimant has exhausted the claims review
procedures established in accordance with this Section 9.

 

 

9.2.

Initial Claims.

 

(a)

Any claim for benefits will be in writing (which may be electronic if permitted
by the Administrative Committee) and will be delivered to a claims administrator
designated in writing by the Administrative Committee

 

(b)

Each claim for benefits will be decided by the claims administrator or the
Administrative Committee (as determined by the Administrative Committee) within
a reasonable period of time, but not later than 90 days after such claim is
received by the claims administrator (without regard to whether the claim
submission includes sufficient information to make a determination), unless the
claims administrator or the Administrative Committee determines that special
circumstances require an extension of time for processing the claim. If the
claims administrator or the Administrative Committee determines that an
extension of time for processing is required, the claims administrator or the
Administrative Committee will notify the claimant in writing before the end of
the initial 90-day period of the circumstances requiring an extension of time
and the date by which a decision is expected.

 

(c)

If any claim is denied in whole or in part, the claims administrator or the
Administrative Committee will provide to the claimant a written decision, issued
by the end of the period prescribed by subsection (b), above, that includes the
following information:

 

(1)

The specific reason or reasons for denial of the claim;

(2)         References to the specific Plan provisions upon which such denial is
based;

(3)         A description of any additional material or information necessary to
perfect the claim, and an explanation of why such material or information is
necessary;

(4)         An explanation of the appeal procedures Plan’s and the applicable
time limits; and

 

 

 

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(5)         A statement of the claimant’s right to bring a civil action under
section 502(a) of ERISA, if his or her claim is denied upon review.

 

 

9.3.

Appeals.

 

(a)

If a claim for benefits is denied in whole or in part, the claimant may appeal
the denial to the Administrative Committee. Such appeal will be in writing
(which may be electronic, if permitted by the Administrative Committee), may
include any written comments, documents, records, or other information relating
to the claim for benefits, and will be delivered to the Administrative Committee
within 60 days after the claimant receives written notice that his or her claim
has been denied.

 

(b)

The Administrative Committee will decide each appeal within a reasonable period
of time, but not later than 60 days after such claim is received by the
Administrative Committee, unless the Administrative Committee determines that
special circumstances require an extension of time for processing the appeal.

(1)         If the Administrative Committee determines that an extension of time
for processing is required, the Administrative Committee will notify the
claimant in writing before the end of the initial 60-day period of the
circumstances requiring an extension of time and the date by which the claims
administrator expects to render a decision.

(2)         If an extension of time pursuant to paragraph (1), above, is due to
a claimant’s failure to submit information necessary to decide the appeal, the
period for deciding the appeal will be tolled from the date on which the
notification of extension is sent to the claimant until the date on which the
claimant responds to the request for additional information.

 

(c)

In connection with any appeal, a claimant will be provided, upon request and
free of charge, reasonable access to, and copies of, all documents, records, and
other information relevant to his or her claim for benefits. A document, record,
or other information will be considered relevant to a claim for benefits if such
document, record, or other information:

 

(1)

Was relied upon in making the benefit determination;

(2)         Was submitted, considered, or generated in the course of making the
benefit determination, without regard to whether such document, record, or other
information was relied upon in making the benefit determination; or

(3)         Demonstrates compliance with processes and safeguards designed to
ensure and to verify that the benefit determination was made in accordance with
the terms of the Plan and that such terms of the Plan have been applied
consistently with respect to similarly situated claimants.

 

 

 

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(d)

The Administrative Committee review on appeal will take into account all
comments, documents, records and other information submitted by the claimant,
without regard to whether such information was considered in the initial benefit
determination.

 

(e)

If any appeal is denied in whole or in part, the Administrative Committee will
provide to the claimant a written decision, issued by the end of the period
prescribed by subsection (b), above, that includes the following information:

 

(1)

The specific reason or reasons for the decision;

(2)         References to the specific Plan provisions upon which the decision
is based;

(3)         An explanation of the claimant’s right to receive, upon request and
free of charge, reasonable access to, and copies of, all documents, records, and
other information relevant to his or her claim for benefits (as determined
pursuant to subsection (c), above); and

(4)         A statement of the claimant’s right to bring a civil action under
section 502(a) of ERISA.

 

 

9.4.

Other Rules and Rights Regarding Claims and Appeals.

 

(a)

A claimant may authorize a representative to pursue any claim or appeal on his
or her behalf. The Administrative Committee may establish reasonable procedures
for verifying that any representative has in fact been authorized to act on his
or her behalf.

 

(b)

Notwithstanding the deadlines prescribed by this 9.4, the Administrative
Committee and any claimant may agree to a longer period for deciding a claim or
appeal or for filing an appeal, provided that the Administrative Committee will
not extend any deadline for filing an appeal unless imposition of the deadline
prescribed by Section 9.3(a) would be unreasonable under the applicable
circumstances.

 

 

9.5.

Interpretation.

The provisions of this Section 9 are intended to comply with section 503 of
ERISA and will be administered and interpreted in a manner consistent with such
intent.

 

 

 

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EXHIBIT A

 

DRAFT RELEASE

 

In consideration of the benefits I am entitled to receive under the Energy
Conversion Devices, Inc. Executive Severance Plan (the “Plan”), I, [employee
name], on behalf of myself, and on behalf of my heirs, successors and assigns,
hereby agree to release Energy Conversion Devices, Inc. (the “Company”), all of
its past, present and future subsidiaries, affiliates, directors, officers,
employees; and all of its and their respective heirs, successors, and assigns
(the “Released Parties”) from any and all claims, demands, actions, and
liabilities that I might otherwise have asserted arising out of my employment
with the Company, including the termination of that employment.

I also promise not to sue the Company or any of the Released Parties based, in
whole or in part, on any claims relating to my employment with the Company or
the termination of that employment. However, I am not releasing my rights, if
any, under the Plan or any qualified employee retirement plan, nor am I
releasing any rights or claims that may arise after the date on which I sign
this Release. Those rights, and only those rights, survive unaffected by this
Release.

I understand that as a consequence of my signing this Release I am giving up,
with respect to my employment and the termination of that employment, any and
all rights I might otherwise have under (1) the Age Discrimination in Employment
Act of 1967, as amended; (2) and all other federal, state or municipal laws
prohibiting discrimination in employment on the basis of sex, race, national
origin, religion, age, handicap or other invidious factor; and (3) any and all
theories of contract or tort law, whether based on common law or otherwise.

I acknowledge and agree that:

1.

The benefits I am receiving under the Plan constitute consideration over and
above any benefits that I might be entitled to receive without executing this
Release.

2.

The Company advised me in writing to consult with an attorney prior to executing
a copy of the Plan document and the Release.

3.

I was given a period of at least 21 days within which to consider the Plan and
the Release.

4.

The Company has advised me of my statutory right to revoke my acceptance of the
terms of the Plan and this Release at any time within seven (7) days of my
signing of this Release.

5.

I remain subject to and will continue to comply with the restrictive covenants
set forth in Section 5 of the Plan.

 

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6.

I warrant and represent that my decision to accept the Plan (including this
Release) was (a) entirely voluntary on my part; (b) not made in reliance on any
inducement, promise or representation, whether express or implied, other than
the inducements, representations and promises expressly set forth in the Plan or
in the Release; and (c) did not result from any threats or other coercive
activities to induce acceptance of the Plan or Release.

In the event I decide to exercise my right to revoke within seven (7) days of my
acceptance of this Release, I warrant and represent that I will do the
following: (1) notify the Company in writing of my intent to revoke my
agreement, and (2) simultaneously return in full the consideration received from
the Company under the Plan. I acknowledge that, if I revoke this Release during
the revocation period, I will not be entitled to the benefits under the Plan.

I further warrant and represent that I fully understand and appreciate the
consequence of my signing this Release.

IN WITNESS WHEREOF, I hereby acknowledge receipt of consideration and execute
the foregoing agreement at ___, this ____ day of ____________, 20__.

 

 

 

[name of employee]

 

 

Witnessed by _______________ on this _____ day of ____________, 20_.

 

 

 

WITNESS

 

 

 

 

 

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