**Exhibit (10)**

 

**OWENS CORNING**

**KEY EMPLOYEE RETENTION INCENTIVE PLAN**

 

1. Purpose. ThisOwens 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 throughthe date of the Company’s emergence from Chapter 11 bankruptcy. 

 

2.Definitions. For purposes of this Plan: 

 

a.“Board” shall mean the Board of Directors of Owens Corning. 

 

b. “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 understate or federal law. 

 

c. “Committee” shall mean theCompensation Committee of the Board. 

 

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

 

e. “Disability” shall mean the Participant’s entitlement to benefits under any long term disability plan or program of the Company.

 

f. “Effective Date” means January 1, 2004.

 

g. “Emergence” shall mean the effective date of aPlan of Reorganization confirmed in the Chapter 11 proceedings. 

 

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

 

i. “Emergence Date” shall mean the date of Emergence, as defined. 

 

j. “Nonqualifying Severance” shall mean any termination of aParticipant’s employment with the Company after the Effective Date and before the earlier of the Emergence Date or December 31, 2004, in other than a Qualifying Severance. 

 

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

 

l. “Plan” shall mean this Owens Corning KeyEmployee Retention Incentive Plan, as amended from time to time. 

 

m. “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, 2004: (i) by the Company other than forCause, or (ii) by reason of death or Disability. 

3. Administration. 

 

a. The Plan shall be administered by the Committee, which shall have complete authority to determine who shall participate herein and the Retention Amountapplicable 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. 

 

b. The Committee is authorized, on behalf of the Plan, to engageaccountants, 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. 

 

c. All decisions made by the Committee pursuant to the provisions of thePlan 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 bepersonally 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. 

 

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

 

4. Participation. The Committee shall, in its sole discretion, select the employees ofthe 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 herintent to remain employed by the Company through the Emergence Date. 

 

5.Payments. 

 

a. In General. Each Participant whoremains employed by the Company through December 31, 2004 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 orher participation in the Key Employee Retention Incentive Plan. There shall be no requirement of uniformity of Retention Amount among Participants. 

 

b. Qualifying Severance. Each Participant who terminates employment with the Company under a Qualifying Severance shall receive a cash payment fromthe 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 denominatorof which is 12. 

 

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

d. Payment Upon Emergence. If the Company Emerges prior to December 31, 2004, each participantshall 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. 

 

e. Form and Timing ofPayment. 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, 2004, and in the case of a payment pursuant tosubsection (b) above, such payment shall be made as soon as practicable following the date of the Qualifying Severance. Retention amounts are expressed in US dollars, and any payments under this Plan in other currency will be based on the exchangerate in effect at the time of payout. 

 

6. General Provisions.

 

a. Compliance with Legal Requirements. The Plan, thepayment 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 berequired. 

 

b. Nontransferability. No Participant shallhave 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. 

 

c. No Right To Continued Employment. Nothing in the Plan shall conferupon 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 suchParticipant’s employment, which remains “at will.” 

 

d. 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 maintainedby the Company. 

 

e. Severability. If any provision ofthis 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. 

 

f. 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. 

 

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

 

h.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. 

i. Amendment, Termination and Duration of the Plan. The Committee may at any time and from time totime 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, 2004, provided that all amounts not yet paid on the Emergence Date shall be paid thereafter inaccordance with the terms hereof. 

 

j. 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 assetsof the Company that are greater than those of a general creditor of the Company. 

 

k. 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. 

 

l. Governing Law. The Plan and all determinations made and actions taken pursuant hereto shall be governed by thelaws of the State of Delaware without giving effect to the conflict of laws principles thereof.