Document:

exv10w30

Exhibit 10.30

CHANGE IN CONTROL AGREEMENT

     This Change in Control Agreement is entered into as of July 15, 2008, between Methode
Electronics, Inc., a Delaware corporation (the “Company”), and Ronald L. G. Tsoumas (the
“Executive”).

WITNESSETH:

     WHEREAS, Executive is employed by the Company or one of its wholly-owned subsidiaries
(referred to collectively as the “Company”) and the Company desires to provide certain security to
Executive in connection with any potential change in control of the Company; and

     NOW, THEREFORE, it is hereby agreed by and between the parties, for good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, as follows:

     1. Payments and Benefits Upon a Change in Control. If within twenty-four (24) months
after a Change in Control (as defined below) or during the Period Pending a Change in Control (as
defined below): (i) the Company shall terminate Executive’s employment with the Company without
Good Cause (as defined below), or (ii) Executive shall voluntarily terminate such employment with
Good Reason (as defined below), the Company shall, within 30 days of Executive’s Employment
Termination (as defined below), make the payments and provide the benefits described below.

          (a) Salary Payment. The Company shall make a lump sum cash payment to
Executive equal to two times the Executive’s Annual Salary (as defined below).

          (b) Bonuses. The Company shall make a lump sum cash payment to Executive equal
to the sum of the following amounts: (i) a bonus equal to two times the lesser of: (a) the
Executive’s target bonus amount for the fiscal year in which Executive’s Employment
Termination occurs, or (b) the bonus the Executive earned in the prior fiscal year (however,
if the Executive’s Employment Termination takes place in the 2007 fiscal year, this amount
shall be the Executive’s target bonus amount for 2007); provided, however, that if the
target bonus amount for the fiscal year has not yet been determined as of the date of the
Executive’s Employment Termination, then the bonus amount payable hereunder shall be
calculated based on the Executive’s target bonus amount for the previous fiscal year,
regardless of whether such bonus was actually earned; plus (ii) all of Executive’s unpaid,
but accrued matching bonus pursuant to the Longevity Contingent Bonus Plan. Payments made
pursuant to subsection (i) above shall not be subject to matching pursuant to the Longevity
Contingent Bonus Plan.

 

 

          (c) Welfare Benefit Plans. With respect to each Welfare Benefit Plan (as
defined below), for the period beginning on Executive’s Employment Termination and ending on
the earlier of: (i) twenty-four (24) months following Executive’s Employment Termination,
or (ii) the date Executive becomes covered by a welfare benefit plan or program maintained
by an entity other than the Company which provides coverage or benefits substantially
equivalent to such Welfare Benefit Plan, Executive shall continue to participate in such
Welfare Benefit Plan on the same basis and at the same cost to Executive as was the case
immediately prior to the Change in Control (or, if more favorable to Executive, as was the
case at any time hereafter), or, if any benefit or coverage cannot be provided under a
Welfare Benefit Plan because of applicable law or contractual provisions, Executive shall be
provided with substantially similar benefits and coverage for such period. Immediately
following the expiration of the continuation period required by the preceding sentence,
Executive shall be entitled to continued group health benefit plan coverage (so-called
“COBRA coverage”) in accordance with Section 498OB of the Internal Revenue Code of 1986, as
amended (the “Code”), it being intended that COBRA coverage shall be consecutive to the
benefit and coverage provided for in the preceding sentence.

          (d) Employment. This Agreement shall not be construed as creating an express
or implied contract of employment and, except as otherwise agreed in writing between the
Executive and the Company, the Executive shall not have any right to be retained in the
employ of the Company.

     2. Definitions. For purposes of this Agreement:

          (a) “Annual Salary” shall mean Executive’s salary at the greater of (i) Executive’s
annualized base salary (including Executive’s monthly car allowance) in effect on the date
of the Change in Control, or (ii) Executive’s annualized base salary in effect on
Executive’s Employment Termination.

          (b) “Change in Control” shall be deemed to have occurred if:

	 	(i)	 	any “person” (as such term is used in Section
13(d) and 14(d)(2) of the Exchange Act, other than any Subsidiary, any
employee benefit plan of the Company or a Subsidiary is or becomes a
beneficial owner, directly or indirectly, of stock of the Company
representing 25% or more of the total voting power of the Company’s
then outstanding stock;

	 	(ii)	 	a tender offer (for which a filing has been
made with the SEC which purports to comply with the requirements of
Section 14(d) of the Exchange Act and the corresponding SEC rules) is
made for the stock of the Company. In case of a tender offer described
in this paragraph (ii), the “Change of Control” will be deemed to have
occurred upon the first to occur of: (A) any time during the offer
when the person (using the definition in (i) above) making the offer
owns or has accepted for payment stock of the Company with

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	 	 	 	25% or more of the total voting power of the Company’s outstanding
stock, or (B) three business days before the offer is to terminate
unless the offer is withdrawn first, if the person making the offer
could own, by the terms of the offer plus any shares owned by this
person, stock with 50% or more of the total voting power of the
Company’s outstanding stock when the offer terminates; or
	 
	 	(iii)	 	individuals who were the Board’s nominees for
election as directors of the Company immediately prior to a meeting of
the shareholders of the Company involving a contest for the election of
directors shall not constitute a majority of the Board following the
election.

          (c) “Employment Termination” shall mean the effective date of: (i) Executive’s
voluntary termination of employment with the Company with Good Reason, or (ii) the
termination of Executive’s employment by the Company without Good Cause.

          (d) “Good Cause” shall mean: (i) Executive’s conviction of a felony; (ii) Executive’s
commission of any act or acts of personal dishonesty intended to result in substantial
personal enrichment to Executive to the detriment of the Company; or (iii) repeated
violations of Executive’s responsibilities which are demonstrably willful and deliberate,
provided that such violations have continued more than ten days after the Board of Directors
of the Company has given written notice of such violations and of its intention to terminate
Executive’s employment because of such violations.

          (e) “Good Reason” shall exist if, without Executive’s express written consent:

	 	(i)	 	The Company shall materially reduce the nature,
scope or level of Executive’s responsibilities from the nature, scope
or level of such responsibilities prior to the Change in Control (or
prior to the Period Pending a Change in Control), or shall fail to
provide Executive with adequate office facilities and support services
to perform such responsibilities.
	 
	 	(ii)	 	The Company shall require Executive to move
Executive’s principal business office more than 25 miles from
Executive’s principal business office at the time of this Agreement, or
assign to Executive duties that would reasonably require such move;
provided, however, that if Executive’s principal business office is not
located at the Company’s then current corporate headquarters, and the
Company requires Executive to move Executive’s principal business
office to such corporate headquarters, or assigns to Executive duties
that would reasonably require such move, such actions shall not
constitute “Good Reason” under this subsection (ii).

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	 	(iii)	 	The Company shall require Executive, or assign
duties to Executive which would reasonably require Executive, to
increase, by more than twenty-four, the number of normal working days
(determined at the time of this Agreement) that Executive spends away
from Executive’s principal business office during any consecutive
twelve-month period.
	 
	 	(iv)	 	The Company shall reduce Executive’s Annual
Salary below that in effect as of the date of this Agreement (or as of
the Change in Control, if greater).
	 
	 	(v)	 	The Company shall materially reduce or fail to
continue in effect any cash or stock-based incentive or bonus plan,
retirement plan, welfare benefit plan, or other benefit plan, program
or arrangement, unless the aggregate value (as computed by an
independent employee benefits consultant selected by the Company) of
all such incentive, bonus, retirement and benefit plans, programs and
arrangements provided to Executive is not materially less than their
aggregate value as of the date of this Agreement (or as of the Change
in Control, if greater).
	 
	 	(vi)	 	If the Board of Directors fails to act in good
faith with respect to the Company’s obligations hereunder, or the
Company breaches its obligations hereunder.

          (f) “Period Pending a Change in Control” shall mean the period between the time an
agreement is entered into by the Company with respect to a merger or other business
combination of the Company, which would constitute a Change in Control, and the effective
time of such merger or other business combination of the Company.

          (g) “Welfare Benefit Plan” shall mean each welfare benefit plan maintained or
contributed to by the Company, including, but not limited to a plan that provides health
(including medical and dental), life, accident or disability benefits or insurance, or
similar coverage, in which Executive was participating at the time of the Change in Control.

     3. Salary to Date of Employment Termination. The Company shall pay to Executive any
unpaid salary or other compensation of any kind earned with respect to any period prior to
Executive’s Employment Termination, including, but not limited to a lump sum cash payment for
accumulated but unused vacation earned through such Employment Termination.

     4. Other Incentive Plans. Except as otherwise provided herein, nothing in this
Agreement shall impair or impact the vesting of any restricted stock, stock options, cash
incentives or other form of compensation or benefits provided under any other plan, program or
arrangement.

     5. Certain Additional Payments by the Company.

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          (a) In the event it shall be determined that as a result, directly or indirectly, of
any payment or distribution by the Company to or for the benefit of the Executive, whether
paid or payable or distributed or distributable pursuant to the terms of this Agreement or
otherwise (a “Payment”), the Executive would be subject to the excise tax imposed by Section
4999 of the Code or any interest or penalties are incurred by the Executive with respect to
such excise tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the “Excise Tax), then the Executive shall be
entitled to promptly receive an additional payment (a “Gross-Up Payment”) in an amount such
that after payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any income taxes (and
any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, but excluding any income taxes on the Payment, the Executive is in the
same after-tax position as if no Excise Tax had been imposed upon the Executive; provided,
however, that the Gross-Up Payment shall be made only to the extent that the total value of
any payments or benefits received by the Executive under this Agreement or any other plan or
agreement with the Company (“Benefits”) exceeds by 10 percent or more the dollar amount that
is three times the Executive’s “base amount” (as defined in Section 280G of the Code). If
the total value of Benefits exceeds by less than 10 percent the dollar amount that is three
times the Executive’s “base amount,” then no Gross-Up Payment shall be made and Benefits
shall be capped at the amount that is $1 less than three times the Executive’s “base
amount.”

          (b) Subject to the provisions of Section 5(c), all determinations required to be made
under this Section 5, including whether or when a Gross-Up Payment is required and the
amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such
determinations, shall be made by the Company’s Independent Public Accounting Firm (the
“Accounting Firm”) which shall provide detailed supporting calculations both to the Company
and the Executive within 15 business days of receipt of notice from the Executive that there
has been a Payment or such earlier time as is requested by the Company. In the event that
the Accounting Firm is serving as accountant or auditor for the individual, entity or group
effecting the Change of Control, the Executive shall appoint another nationally recognized
accounting firm to make the determinations required hereunder (which accounting firm shall
then be referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined
pursuant to this Section 5, shall be paid to the Executive within five business days of the
receipt of the Accounting Firm’s determination. If the Accounting Firm determines that no
Excise Tax is payable by the Executive, it shall furnish the Executive with a written
opinion that failure to report the Excise Tax on the Executive’s applicable federal income
tax return would not result in the imposition of a negligence or similar penalty. Any
determination by the Accounting Firm shall be binding upon the Company and the Executive.
As a result of the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made
(“Underpayment”), consistent with the calculations required to be made hereunder. In the
event that the Company exhausts its remedies pursuant to Section 5(c) and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting

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Firm shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the Executive.

          (c) The Executive shall notify the Company in writing of any claim by the Internal
Revenue Service that, if successful, would require the payment by the Company of the
Gross-Up Payment. Such notification shall be given as soon as practicable but no later than
ten business days after the Executive knows of such claim and shall apprise the Company of
the nature of such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period following
the date on which it gives such notice to the Company (or such shorter period ending on the
date that any payment of taxes with respect to such claim is due). If the Company notifies
the Executive in writing prior to the expiration of such period that it desires to contest
such claim, the Executive shall:

	 	(i)	 	give the Company any information reasonably
requested by the Company relating to such claim,
	 
	 	(ii)	 	take such action in connection with contesting
such claim as the Company shall reasonably request in writing from time
to time, including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by the
Company,
	 
	 	(iii)	 	cooperate with the Company in good faith in
order to effectively contest such claim, and,
	 
	 	(iv)	 	permit the Company to participate in any
proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such contest and
shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax
or income tax (including interest and penalties with respect thereto) imposed as a result of
such representation and payment of costs and expenses. Without limitation on the foregoing
provisions of this Section 5(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct the Executive to pay the
tax claimed and sue for a refund or contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such payment to the
Executive, on an interest-free basis and shall indemnify and hold the Executive harmless, on
an after-tax basis, from any Excise Tax or income

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tax (including interest or penalties with respect thereto) imposed with respect to such
advance or with respect to any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating to payment of taxes for
the taxable year of the Executive with respect to which such contested amount is claimed to
be due is limited solely to such contested amount. Furthermore, the Company’s control of
the contest shall be limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive shall be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue Service or any other taxing authority.

          (d) If, after the receipt by the Executive of an amount advanced by the Company
pursuant to Section 5(c), the Executive becomes entitled to receive any refund with respect
to such claim, the Executive shall (subject to the Company’s complying with the requirements
of Section 5(c)) promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after the receipt by
the Executive of an amount advanced by the Company pursuant to Section 5(c), a determination
is made that the Executive shall not be entitled to any refund with respect to such claim
and the Company does not notify the Executive in writing of its intent to contest such
denial of refund prior to the expiration of 30 days after such determination, then such
advance shall be forgiven and shall not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be
paid.

     6. Mitigation and Set-Off. Executive shall not be required to mitigate Executive’s
damages by seeking other employment or otherwise. The Company’s obligations under this Agreement
shall not be reduced in any way by reason of any compensation or benefits received (or foregone) by
Executive from sources other than the Company after Executive’s Employment Termination, or any
amounts that might have been received by Executive in other employment had Executive sought other
employment, except for the termination of benefits under a Welfare Benefit Plan pursuant to Section
1(c)(ii) hereof. Except as expressly provided in section 1(c) of this Agreement, Executive’s
entitlement to benefits and coverage under this Agreement shall continue after, and shall not be
affected by, Executive’s obtaining other employment after his Employment Termination, provided that
any such benefit or coverage shall not be furnished if Executive expressly waives the specific
benefit or coverage by giving written notice of waiver to the Company.

     7. Litigation Expenses. The Company shall pay to Executive all out-of-pocket
expenses, including attorneys’ fees, incurred by Executive in the event Executive successfully
enforces any provision of this Agreement in any action, arbitration or lawsuit.

     8. Assignment, Successors. This Agreement may not be assigned by the Company without
the written consent of Executive but the obligations of the Company under this Agreement shall be
the binding legal obligations of any successor to the Company by merger or other business
combination, and in the event of any business combination or transaction that results in the
transfer of substantially all of the assets or business of the Company, the Company will cause the
transferee to assume the obligations of the Company under this Agreement. This Agreement may

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not be assigned by Executive during Executive’s life, and upon Executive’s death will inure to
the benefit of Executive’s heirs, legatees and legal representatives of Executive’s estate.

     9. Interpretation. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Illinois, without regard to the conflict of
law principles thereof. The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this Agreement.

     10. Withholding. The Company may withhold from any payment that it is required to
make under this Agreement amounts sufficient to satisfy applicable withholding requirements under
any federal, state or local law.

     11. Amendment or Termination. This Agreement may be amended at any time by written
agreement between the Company and Executive. The Company may terminate this Agreement by written
notice given to Executive at least [two years] prior to the effective date of such termination,
provided that, if a Change in Control occurs prior to the effective date of such termination, the
termination of this Agreement shall not be effective and Executive shall be entitled to the full
benefits of this Agreement. Any such amendment or termination shall be made pursuant to a
resolution of the Company’s Board of Directors.

     12. Financing. Cash and benefit payments under this Agreement shall constitute
general obligations of the Company. Executive shall have only an unsecured right to payment
thereof out of the general assets of the Company. Notwithstanding the foregoing, the Company may,
by agreement with one or more trustees to be selected by the Company, create a trust on such terms,
as the Company shall determine, to make payments to Executive in accordance with the terms of this
Agreement.

     13. Severability. In the event that any provision or portion of this Agreement shall
be determined to be invalid or unenforceable for any reason, the remaining provisions of this
Agreement shall be unaffected thereby and shall remain in full force and effect.

     14. Arbitration. The parties initially shall attempt to resolve by direct negotiation
any dispute, controversy or claim arising out of or relating to this Agreement or its breach or
interpretation (each, a “Dispute”). For purposes of this negotiation, the Company shall be
represented by one or more of its directors appointed by the Board of Directors. If the parties
are unable to resolve the Dispute by direct negotiation within 30 days after written notice by one
party to the other of the Dispute, either party may initiate a confidential, binding arbitration to
resolve the Dispute. All such Disputes shall be arbitrated in Chicago, Illinois pursuant to the
arbitration rules of J.A.M.S. Endispute before a single arbitrator. (If, at the time of any
Dispute, J.A.M.S. Endispute has ceased to exist, all such Disputes shall be arbitrated in Chicago,
Illinois pursuant to the arbitration rules of the American Arbitration Association before a single
arbitrator.) Judgment upon any award rendered by the arbitrator may be entered in any court having
jurisdiction, and both parties consent and submit to the jurisdiction of such court for purposes of
such action. Nothing in this Agreement shall preclude either party from seeking equitable relief
from a court of competent jurisdiction. The statute of limitations, estoppel, waiver, laches and
similar doctrines, which would otherwise be applicable in any action brought by a party shall be
applicable in any arbitration proceeding, and the commencement of an arbitration proceeding shall
be deemed the

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commencement of an action for those purposes. The Federal Arbitration Act shall apply to the
construction, interpretation and enforcement of this arbitration provision.

     15. Other Agreements. This Agreement supersedes and cancels all prior written or oral
agreements and understandings relating to the terms of this Agreement.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first
written above.

	 	 	 	 	 
	 	METHODE ELECTRONICS, INC.

 	 
	 	By:  	
 	 
	 	 	Its: and Chief Executive Officer 	 
	 	 	 	 
	 
	 	EMPLOYEE:

 	 
	 	
 	 
	 	Name: Ronald L.G. Tsoumas  	 
	 	 	 
	 

9exv10w39

Exhibit 10.39

			
	 	 	 
	No. 2	 	 
	 	 	 
	US $100,000.00 
	 	July 10, 2008

PROMISSORY NOTE

     FOR VALUE RECEIVED, the undersigned, Ecology Coatings, Inc., a Nevada corporation (the “The
Maker”), promises to pay to the order of Mitch Shaheen (the “Holder”), the principal amount of One
Hundred Thousand and 00/100 dollars ($100,000.00), together with interest thereon as provided
below.

ARTICLE I

TERMS OF REPAYMENT

     1. Interest. The Note shall bear interest (“Interest”) equal to twenty-five (25%) percent per
annum on the unpaid principal balance, computed on a three hundred and sixty-five (365) day year,
during the term of the Note. The Maker shall pay all Interest on or before the Maturity Date. In no
event shall the rate of Interest payable on this Note exceed the maximum rate of interest permitted
to be charged under applicable law.

     2. Payments. All payments by the Maker under this Note shall first be credited against costs
and expenses provided for hereunder, second to the payment of any penalties, third to the payment
of accrued and unpaid interest, if any, and the remainder shall be credited against principal. All
payments due hereunder shall be payable in legal tender of the United States of America, and in
same day funds delivered to the Holder by cashier’s check, certified check, or any other means of
guaranteed funds to the mailing address provided below, or at such other place as the Holder or any
holder hereof shall designate in writing for such purpose from time to time. If a payment hereunder
otherwise would become due and payable on a Saturday, Sunday or legal holiday, the due date thereof
shall be extended to the next succeeding business day, and Interest, if any, shall be payable
thereon during such extension.

     3. Maturity Date. All outstanding principal and interest shall be payable on August 10, 2008
(the “Maturity Date”).

     Pre-Payment Demand. If at any time before the Maturity Date the Maker completes an
underwritten public offering of its common stock or other form of security convertible into common
stock pursuant to an effective registration statement under the Securities Act of 1933 (the “Act”),
as amended, or a managed private offering exempt from registration under Section 4(2) of the Act
and Regulation D promulgated thereunder (collectively, a “New Offering”) which results in proceeds
received by the Maker net of underwriting discounts and commissions, of at least One Million and
00/100 dollars ($1,000,000.00) (a “Pre-Payment Event”), then at the sole and absolute discretion of
the Holder, and upon written demand to the Maker (the “Pre-Payment Notice”), all amounts owed under
this

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Note shall become due and payable within fifteen (15) days following Maker’s receipt of the
Pre-Payment Notice.

     5. Exemption from Restrictions. It is the intent of the Maker and the Holder in the execution
of this Note that the indebtedness hereunder be exempt from the restrictions of the usury laws of
any applicable jurisdiction. The Maker and the Holder agree that none of the terms and provisions
contained herein shall be construed to create a contract for the use, forbearance or detention of
money requiring payment of interest at a rate in excess of the maximum interest rate permitted to
be charged by the laws of any applicable jurisdiction. In such event, if any holder of this Note
shall collect monies which are deemed to constitute interest which would otherwise increase the
effective interest rate on this Note to a rate in excess of the maximum rate permitted to be
charged by the laws of any applicable jurisdiction, all such sums deemed to constitute interest in
excess of such maximum rate shall, at the option of such holder, be credited to the payment of this
principal amount due hereunder or returned to the Maker.

     6. The indebtedness evidenced by this Note is hereby expressly subordinated, to the extent and
in the manner hereinafter set forth, in right of payment to the prior payment in full of all the
Maker’s Senior Indebtedness, as hereinafter defined.

	 	a.	 	As used in this Note, the term “Senior Indebtedness” shall mean
the principal of an unpaid accrued interest on: (i) indebtedness of the Maker
or with respect to which the Maker is a guarantor, in excess of Fifty Thousand
and 00/100 dollars ($50,000.00), to banks, insurance companies, or other
financial institutions regularly engaged in the business of lending money,
which is for money borrowed by the Maker in the ordinary course of business;
(ii) any of the three (3) promissory notes made by the Maker in favor of Hayden
Capital USA, LLC, a Delaware limited liability company, on February 4, 2008 and
May 20, 2008, (the “Senior Notes”); (iii) any of the two (2) promissory notes
made by the Maker dated March 1, 2008, or (iv) any such indebtedness or any
debentures, notes or other evidence of indebtedness issued in exchange for such
Senior Indebtedness, or any indebtedness arising from the satisfaction of such
Senior Indebtedness by a guarantor.
	 
	 	b.	 	If there should occur any receivership, insolvency, assignment
for the benefit of creditors, bankruptcy, reorganization or arrangements with
creditors (whether or not pursuant to bankruptcy or other insolvency laws) sale
of all or substantially all of the assets, dissolution, liquidation or nay
other marshaling of the assets and liabilities of the Maker, or if this Note
shall be declared due and payable upon the occurrence of any Event of Default
with respect to any Senior Indebtedness, then: (i) no amount shall be paid by
the Maker in respect to the principal of and interest on this Note at the time
outstanding, unless and until the principal of an interest on the Senior
Indebtedness then outstanding shall be paid in full; (ii) no claim or proof of
claim shall be filed with the Maker by or on behalf of the Holder that shall
assert any right to receive payments in respect of the principal of and
interest on this Note, except

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	 	 	 	subject to the payment in full of the principal of and interest on all of the
Senior Indebtedness then outstanding. If there occurs an Event of Default that
has been declared in writing with respect to any Senior Indebtedness, or in the
instrument under which any Senior Indebtedness is outstanding, permitting the
holder of such Senior Indebtedness to accelerate the maturity thereof, then,
unless and until such Event of Default shall have been cured or waived or shall
have ceased to exist, or all Senior Indebtedness shall have been paid in full,
no payment shall be made in respect of the principal of or interest on this
Note, unless within thirty (30) days after the happening of such event of
default, the maturity of such Senior Indebtedness shall not have been
accelerated.
	 
	 	c.	 	Subject to the rights, if any, of the holders of Senior
Indebtedness under this Section 6 to receive cash, securities or other
properties otherwise payable or deliverable to the Holder of this Note, nothing
contained in this Section 6 shall impair, as between the Company and the
Holder, the obligation of the Company, subject to the terms and conditions
hereof, to pay to the Holder the principal hereof and interest hereon as and
when the same become due and payable, or shall prevent the Holder of this Note,
upon default hereunder, from exercising all rights, powers and remedies
otherwise provided herein or by applicable law.
	 
	 	d.	 	Subject to the payment in full of all Senior Indebtedness and
until this Note shall be paid in full, the Holder shall be subrogated to the
rights of the holders of Senior Indebtedness (to the extent of payments or
distributions previously made to such holders of Senior Indebtedness pursuant
to the provisions of Section 6 above) to receive payments or distributions of
assets of the Maker applicable to the Senior Indebtedness. No such payments or
distributions applicable to the Senior Indebtedness shall, as between the
Company and its creditors, other than the holders of Senior Indebtedness and
the Holder, be deemed to be a payment by the Company to or on account of this
Note; and for the purposes of such subrogation, no payments or distributions to
the holders of Senior Indebtedness to which the Holder would be entitled except
for the provisions of this Section 6 shall, as between the company and its
creditors, other than the holders of Senior Indebtedness and the Holder, be
deemed to be a payment by the Company to or on account of the Senior
Indebtedness.

ARTICLE II

COVENANTS

     7. Conversion. If at any time before the Maturity Date, the Maker completes a New Offering,
the Maker shall give the Holder the option to convert this Note, in whole or in part, into a number
of the same type of Maker’s securities issued in the New Offering (the “Issued Securities”). The
number of Issued Securities issued upon conversion of this Note shall be

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determined by dividing the principal amount of the Note by the price per share at which the
Issued Securities were sold in the New Offering (the “Conversion Price”), rounding any fractional
result down to the near whole share. No fractional shares shall be issued upon conversation of this
Note. In lieu of fractional shares, the Holder shall pay cash (based on the Conversion Price) equal
to any fraction of a share remaining (the “Cash Payment”). Notwithstanding the foregoing, should
the Company fail to complete a New Offering, the Holder may elect to convert this Note, in whole or
part, into shares of the Maker’s Common Stock at a price of zero and 50/100 dollars ($.50) per
share.

     8. Options. In partial consideration of this Note, the Maker shall issue to Holder a option to
purchase One Hundred Thousand (100,000) shares of the Maker’s Common Stock (the “Consideration
Option”). The Consideration Option will be immediately exercisable, in whole or part, into the
“Underlying Shares.” The Options will have an exercise price equal to Zero and 50/100 dollars
($.50). The Options will be delivered in a form acceptable to Holder.

     9. Piggyback Registration. If the Conversion Shares and the Underlying Shares (collectively,
the “Shares”) have not been otherwise registered and at any time the Maker proposes to file a
registration statement, whether or not for sale for the Maker’s own account, on a form and in a
manner that would also permit registration of shares (other than in connection with a registration
statement on Forms S-4 or S-8 or any similar or successor form) the Maker shall give to Holder,
written notice of such proposed filing promptly, but in any case at least twenty (20) days before
the anticipated filing. The notice referred to in the preceding sentence shall offer the holder(s)
holding the Shares the opportunity to register such amount of the Shares as he may request (a
“Piggyback Registration”). Subject to this Section, the Maker will include in each such Piggyback
Registration (and any related qualification under state blue sky laws and other compliance filings,
and in any underwriting involved therein) that portion of the Shares with respect to which the
Maker has received written requests for inclusion therein within twenty (20) days after the written
notice from the Maker is given. The holders holding any portion of the Shares will be permitted to
withdraw all or part of the Shares from a Piggyback Registration at any time prior to the effective
date of such Piggyback Registration. Notwithstanding the foregoing, the Maker will not be obligated
to effect any registration of shares under this Paragraph 7 as a result of the registration of any
of its securities solely in connection with mergers effected pursuant to a Form S-4 Filing.

     10. Covenants Regarding Registration

	 	a.	 	The Maker shall use its best efforts to have any registration
statement declared effective at the earliest possible time, and shall furnish
such number of prospectuses as shall be reasonably required.
	 
	 	b.	 	The Maker shall bear all costs, fees and expenses in connection
with a Piggyback Registration,
	 
	 	c.	 	The Maker will take all necessary action which may be required
in qualifying qualifying or registering the Shares included in any Piggyback
Registration for offering and sale under the securities or blue sky laws of
such states as are

4

 

	 	 	 	requested by the holders of such Shares, provided that the Maker shall not be
obligated to execute or file any general consent to service or process or to
qualify as a foreign corporation to do business under the laws of any such
jurisdiction.

     11. Indemnification. The Maker shall, at The Maker’s expense, protect, defend, indemnify, save
and hold Holder harmless against any and all claims, demands, losses, expenses, damages, causes of
action (whether legal or equitable in nature) asserted by any person or entity arising out of,
caused by or relating to the Note, including without limitation the construction of the Note and
the use or application of the proceeds of the Note, and The Maker shall pay Holder upon demand all
claims, judgments, damages, losses and expenses (including court costs and reasonable attorneys’
fees and expenses) incurred by Holder as a result of any legal or other action arising out of the
Note as aforesaid.

     12. Attorneys Fees. The Maker shall reimburse Holder for all reasonable costs, attorney’s
fees, and all other expenses in connection with this Note.

     13. Notice of Default. So long as any amount under this Note shall remain unpaid, the Holder
will, unless the Maker otherwise consents in writing, promptly give written notice to the Maker in
reasonable detail of the occurrence of any Event of Default, or any condition, event or act which
with the giving of notice or the passage of time or both would constitute an Event of Default.

ARTICLE III

DEFAULT

     14. Events of Default. Any of the following events shall constitute an “Event of Default”
hereunder:

	 	a.	 	Failure by the Maker to pay the principal or Interest, if any,
of this Note when due and payable on the Maturity Date.
	 
	 	b.	 	The entry of an order for relief under Federal Bankruptcy Code
as to the Maker or approving a petition in reorganization or other similar
relief under bankruptcy or similar laws in the United States of America or any
other competent jurisdiction, and if such order, if involuntary, is not
satisfied or withdrawn within sixty (60) days after entry thereof; or the
filing of a petition by the Maker seeking any of the foregoing, or consenting
thereto; or the filing of a petition to take advantage of any debtor’s act; or
making a general assignment for the benefit of creditors; or admitting in
writing inability to pay debts as they mature; or
	 
	 	c.	 	Failure by the Maker to pay the principal and Interest, if any,
of this Note concurrent with a Pre-Payment Event; or

5

 

	 	d.	 	The breach of any covenant made by the Maker in this Note.

     15. Acceleration. Upon any Event of Default (in addition to any other rights or remedies
provided for under this Note), at the option of the Holder or any holder hereof, all sums evidenced
hereby, including all principal, accrued but unpaid Interest, fees and all other amounts due
hereunder, shall become immediately due and payable. If an Event of Default relating to certain
events of bankruptcy or insolvency of the Maker occurs and is continuing, the principal of and
interest, if any, on this Note will become and be immediately due and payable without any
declaration or other act on the part of the Holder or any holder hereof. This Note shall bear
interest at the rate of twenty-five (25%) percent per annum upon the occurrence of an Event of
Default (“Default Interest”). Payments of the Default Interest shall be due every thirty (30) days
following the occurrence Event of Default.

     16. No Waiver. Failure of the Holder or any holder hereof to exercise any option hereunder
shall not constitute a waiver of the right to exercise the same in the event of any subsequent
Event of Default, or in the event of continuance of any existing Event of Default after demand or
performance thereof.

     17. Pursuit of any Remedy. The Holder or holder hereof may pursue any remedy under this Note
without notice or presentment. The Holder or any holder hereof has the right to direct the time,
method and place of conducting any proceeding for exercising any remedy available to the Holder or
any such holder hereof under this Note.

ARTICLE IV

MISCELLANEOUS

     18. Amendments. No amendment or waiver of any provision of this Note, nor consent to any
departure by the Maker herefrom, shall in any event be effective unless the same shall be in
writing and signed by the Holder, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.

     19. Notices. All notices and other communications provided for hereunder shall be in writing
(including telecopier communication) and mailed, telecopied, or delivered, to the Maker or the
Holder, as applicable, at their respective addresses specified on the signature pages hereof, or,
as to each party, at such other address as shall be designated by such party in a written notice to
the other party. All such notices and communications shall, when mailed or telecopied, be effective
when deposited in the mails or telecopied with receipt confirmed, respectively.

     20. No Waiver; Remedies. No failure on the part of the Holder to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof or the exercise of
any other right. All rights, powers and remedies of the Holder in connection with this Note are
cumulative and not exclusive, and shall be in addition to any other rights, powers or remedies
provided by law or equity.

6

 

     21. Severability; Headings. If any one or more provisions of this Note shall be held to be
illegal, invalid or otherwise unenforceable, the same shall not affect any other provisions of this
Note and the remaining provisions of this Note shall remain in full force and effect. Article and
paragraph headings in this Note are included herein for convenience of reference only and shall not
constitute a part of this Note for any other purpose or be given any substantive effect.

     22. Binding Effect; Transfer. This Note shall be binding upon and inure to the benefit of the
Maker and the Holder and their respective successors and assigns. The Holder may not assign or
otherwise transfer, or grant participations in, this Note or all or any portion of its rights
hereunder or its interest herein to any person or entity, without the prior written consent of the
Maker which consent shall not be unreasonably withheld. The Maker may not assign or otherwise
transfer its rights or obligations hereunder or any interest herein without the prior written
consent of the Holder. Any attempted assignment by the Maker or the Holder in contravention of this
paragraph shall be null and void and of no force or effect.

     23. Enforcement. It is agreed that time is of the essence of this Note and in the event of
default of the terms of this Note, the Maker agrees to pay all costs of collection or enforcement,
including reasonable attorneys’ fees and if there is a default in payment of any sum due hereunder.

     24. Governing Law. This Note shall be governed by, and shall be construed and enforced in
accordance with, the internal laws of the State of New York without regard to conflicts of laws
principles. The venue of any legal proceeding taken in connection with this Note will be Detroit,
Michigan.

     25. Independence of Covenants. All covenants hereunder shall be given independent effect so
that if a particular action or condition is not permitted by any of such covenants, the fact that
it would be permitted by an exception to, or be otherwise within the limitations of, another
covenant shall not avoid the occurrence of an Event of Default or event which with notice or lapse
of time or both would become an Event of Default if such action is taken or condition exists.

     26. Interpretation. The Holder and the Maker hereby waive the benefit of any statute or rule
of law or judicial decision which would otherwise require that the provisions of this Note be
construed or interpreted more strongly against the party responsible for the drafting thereof.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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     IN WITNESS WHEREOF, this Note has been issued as of date first written above.

	 	 	 	 	 
	 	MAKER:

Ecology Coatings, Inc.

 	 
	 	/s/ Adam S. Tracy, Esq.
 	 
	 	Adam S. Tracy, Esq. 	 
	 	Vice President, General Counsel & Secretary 	 
	 

	 	 	 
	Mailing Address of Holder:
	 	 
	 
	 	 
	Mitch Shaheen
	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 

Mailing Address of Maker:

Ecology Coatings, Inc.

c/o Adam S. Tracy, General Counsel

35980 Woodward Avenue, Suite 200

Bloomfield Hills, Michigan 48304

8

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