**ENERGY CONVERSION DEVICES, INC.**

**Form of Restricted Stock Unit Award Agreement  under the Energy Conversion Devices, Inc.2006 Stock Incentive Plan**

 

| **Participant:**                                 |   |
|--------------------------------------------------|--------|
| **Grant Date:**                                  |   | , 2008 |
| **Number of            Restricted Stock Units:** |   |   |
|                                             |

|  |
|--|

This Restricted Stock Unit Award Agreement (“Agreement”), dated as of the Grant Date, is entered into by and between Energy Conversion Devices, Inc., a Delaware corporation (the “Company”), and the Participant under the Company’s 2006 Stock Incentive Plan (the “Plan”). Certain variable terms are set forth in Exhibit A, which is part of this  Agreement. The words “you,” “your,” and similar terms refer to the Participant to whom this Award is granted.

1.         Definitions and the Plan.   All capitalized terms that are not otherwise defined in this Agreement have the meanings set forth in the Plan, the text of which is incorporated into this Agreement by reference. In case of any conflict between this Agreement and the  Plan, the terms of the Plan shall control.

2.         Number of Shares. 

(a)    This Agreement entitles you to the number of Restricted Stock Units set forth above. Each Restricted Stock Unit will have a nominal value equal to the Fair Market Value of one Share.

(b)    The number of Restricted Stock Units shall be adjusted to reflect certain events affecting the Company’s capitalization in accordance with Section 5.7 of the Plan.

3.         Vesting and Lapse of the Restriction Period.  

(a)    The Restricted Stock Units (*i.e.*, your rights to receive Shares or cash) in this Award are subject to forfeiture until they vest. Exhibit A indicates whether the Restricted Stock Units vest (i) in accordance with the Vesting Schedule set forth in Exhibit A and/or (ii) upon achievement of the Performance  Measure(s) set forth in Exhibit A. Exhibit A also indicates whether any Restricted Stock Units will vest upon a Change of Control prior to your termination of employment.

 

 

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4.         Payment. When any Restricted Stock Units vest, the Shares or cash represented by the vested Restricted Stock Units shall be delivered to you as soon as practicable after the applicable vesting criteria are satisfied (as certified by the Committee in writing, with respect to  Performance Measures). Subject to the Restrictions on Delivery and Resale set forth below, unless you have elected to defer payment pursuant to Exhibit B of this Agreement, Shares or cash shall be delivered no later than March 15th of the 1st calendar year after which the Restriction Period ends.

5.         Rights of the Participant as Shareholder.   

(a)    This Agreement does not give you any rights of a stockholder. However, if these Restricted Stock Units are settled in Shares, you will gain stockholder rights when Shares are transferred to you.

(b)    You are eligible to receive payments equivalent to dividends or other distributions with respect to Restricted Stock Units underlying Shares only if so indicated in Exhibit A of this Agreement. As indicated in Exhibit A, any such payments shall be either (i) subject to forfeiture until the applicable Restricted Stock Units vest, or (ii) distributed  as soon as practicable after the dividend or distribution date. All payments of dividends, payment equivalent to dividends, and other distributions shall be made no later than March 15th of the 1st calendar year after which the payments cease to be subject to a substantial risk of forfeiture.

6.         Forfeiture Upon Termination of Employment. Except for a Qualifying Termination under the terms of the Company’s Executive Severance Plan in which case vesting will be accelerated, if you cease to be an employee before some or all of your Restricted Stock Units vest, the  unvested Restricted Stock Units shall be forfeited and your rights with respect to the unvested Restricted Stock Units shall immediately terminate without any payment to you.

7.         Withholding.   

(a)    The Company may be required to withhold income and employment taxes when it pays cash or delivers Shares following a Restriction Period. To the extent that the Restricted Stock Units are settled in Shares, the Company may not issue Shares until it determines that such withholding obligation has been satisfied. In the discretion of the Committee or its  designee, the Company may:

|   | **•** | Take deductions from amounts paid to you in cash (whether under the Plan or otherwise); |
|--------|------------|-----------------------------------------------------------------------------------------|

|   | **•** | Retain Shares otherwise to be issued to you (whether under this Award or otherwise), or |
|--------|------------|-----------------------------------------------------------------------------------------|

|   | **•** | Permit you to tender Shares. |
|--------|------------|------------------------------|

Alternatively, you may be required to pay the Company an amount sufficient to satisfy the withholding obligation.

 

 

Energy Conversion Devices, Inc.

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(b)    You remain responsible at all times for paying any federal, state, and local income and employment taxes with respect to this Award. The Company is not responsible for any liability or penalty relating to taxes (including excise taxes) on compensation (including imputed compensation) or other income attributed to you (or your Beneficiary) pursuant to this  Agreement, whether as a result of failing to make timely payments of tax or otherwise.

8.         Nontransferability.   

(a)    Unless the Committee or its designee determines otherwise, you may not transfer the Restricted Stock Units awarded under this Agreement.

(b)    Unless otherwise required by law, your rights and interests under this Award may not be subject to lien, obligation, or liability.

9.        Additional Restrictions on Delivery and Resale.   

(a)    Following lapse of a Restriction Period, Shares shall not be delivered (if this Award is to be settled in Shares) and you may not sell any Shares awarded under this Agreement at a time when lifting the restrictions or sale of the Shares would be prohibited under any applicable federal, state, local, or exchange laws, rules, or regulations (“Applicable  Law”).

(b)    Payment shall not be made until (i) all conditions of this Award have been met to the satisfaction of the Committee, (ii) all other legal matters in connection with lifting the restrictions and/or delivery of the Shares have been satisfied, and (iii) you have executed and delivered all representations and agreements as are necessary and  appropriate to satisfy the requirements of any Applicable Law.

(c)     Unless you have elected to defer payment pursuant to Exhibit B of this Agreement, no payment shall be made later than the last day on which payment must be paid in order for the payment to constitute a “short-term deferral” under section 409A of the Internal Revenue Code and the regulations thereunder.

10.       Recoupment. The Company will, to the extent permitted by governing law, in all appropriate cases as determined by the Board, require, and the Participant shall pay, reimbursement to the Company of the gain realized on the Award where all of the following factors, as determined by the Board  (and whose determination shall be conclusive), are present: (a) the gain realized on the Award was attributable, at least in part, to the achievement of certain financial results that were subsequently the subject of a restatement, (b) the Participant engaged in fraud or intentional misconduct that was a substantial contributing cause to the need for the restatement, and (c) the Participant would have received less or no gain with respect to the Award based upon the restated  financial results. In each such instance, the Participant shall pay to the Company the entire gain realized by the Participant on the Award, plus a reasonable rate of interest. For purposes of this Section, a Participant’s gain realized on the Award is (x) if settled in

 

 

Energy Conversion Devices, Inc.

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cash, the amount of cash received by or due to the Participant, and (y) if settled in Shares, the Fair Market Value (determined without regard to the restatement) of the Shares on the Vesting Date.

11.         Notices.   

(a)    Any notice from you to the Company must be in writing and shall be deemed effective when it is received by the Company at the Company’s principal office.

(b)    Any notice from the Company to you must be in writing and shall be deemed effective when it is personally delivered to you or whenit is deposited in the U.S. Mail, with postage and fees prepaid.

12.       Not an Employment Contract. This Agreement is not an employment agreement and does not give you any right to continued employment (or other service relationship) with the Company or any Affiliate. Unless provided otherwise in a written agreement between you and the Company or an Affiliate,  your employment (or other service relationship) is “at will” and may be terminated at any time and for any reason.

13.       Governing Law. This Agreement shall be governed by and interpreted in accordance with Delaware law, without regard to any principles of Delaware law that might direct resolution to the laws of a different jurisdiction.

14.       Severability. If any provision in this Agreement is determined to be unenforceable or invalid, such invalidity or unenforceability shall not affect any other provision hereof, and the Plan shall be construed and enforced as if such provision had not been included.

15.       Waiver. The waiver by you or the Company or an Affiliate of any provision of this Agreement at any time or for any purpose shall not operate as or be construed to be a waiver of the same or any other provision of this Agreement at any subsequent time or for any other purpose.

16.       Interpretation and Construction. This Agreement shall be construed and interpreted by the Committee, in its sole discretion. Any interpretation or other determination by the Committee (including, but not limited to, correction of any defect or omission and reconciliation of any  inconsistency in the Agreement or the Plan) shall be binding and conclusive.

17.       Headings. The headings in this Agreement are provided solely as a convenience to facilitate reference. The headings shall not be relevant for purposes of construing or interpreting any part of this Agreement.

 

 

Energy Conversion Devices, Inc.

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18.       Entire Understanding. This Agreement and the Plan constitute the entire understanding between you and the Company and its Affiliates regarding this Award. Any prior agreements, commitments, or negotiations concerning this Award are superseded.

|   | ENERGY CONVERSION DEVICES, INC. |
|--------|---------------------------------|
|   | By:                             |   |
|   | Title:                          |   |

 

I have read this Agreement and the Plan, and I understand and agree to their terms and conditions.         

 

|   | Participant’s Signature           |
|--------|-----------------------------------------|
|   | Participant’s Name (please print) |

 

 

Energy Conversion Devices, Inc.

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|---------------------------------------|-------------|

 

 

**EXHIBIT A**

**TERMS AND CONDITIONS**

**Restricted Stock Unit Award Agreement**

**under the Energy Conversion Devices, Inc.**

**2006 Stock Incentive Plan**

Pursuant to the Agreement above, Energy Conversion Devices, Inc., a Delaware corporation (the “Company”), grants to you Restricted Stock Units with respect to shares of its common stock (the “Shares”). The terms and conditions of the Award are set forth in this Exhibit A, and in the Energy Conversion Devices, Inc. 2006 Stock Incentive Plan, as amended from  time to time (the “Plan”).