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                                                                    EXHIBIT 10.6

                           WESTERN DIGITAL CORPORATION

                              AMENDED AND RESTATED
                        CHANGE OF CONTROL SEVERANCE PLAN

        1. Purpose of Plan. The Executives have made and are expected to make
major contributions to the profitability, growth and financial strength of the
Company and its affiliates. In addition, the Company considers the continued
availability of the Executives' services, managerial skills and business
experience to be in the best interest of the Company and its stockholders and
desires to assure the continued services of the Executives on behalf of the
Company and/or its affiliates without the distraction of the Executives
occasioned by the possibility of an abrupt change in control of the Company.

        2. Definitions. Whenever the following terms are used in this Plan, they
shall have the meaning specified below unless the context clearly indicates to
the contrary:

               2.01 "Board" shall mean the Board of Directors of the Company.

               2.02 "Cause" shall mean the occurrence or existence of any of the
following with respect to the Executive, as determined by a majority of the
disinterested directors of the Board or the Committee:

               (a) the Executives' conviction by, or entry of a plea of guilty
or nolo contendere in, a court of competent and final jurisdiction for any crime
involving moral turpitude or any felony punishable by imprisonment in the
jurisdiction involved;

               (b) whether prior or subsequent to the date hereof, the
Executives' willful engaging in dishonest or fraudulent actions or omissions
which results directly or indirectly in any demonstrable material financial or
economic harm to the Company or any of its subsidiaries or affiliates;

               (c) the Executives' failure or refusal to perform his or her
duties as reasonably required by the Employer, provided that Executive shall
have first received written notice from the Employer stating with specificity
the nature of such failure or refusal and affording the Executive at least five
(5) days to correct the act or omission complained of;

               (d) gross negligence, insubordination, material violation by the
Executive of any duty of loyalty to the Company or any subsidiary or affiliate
of the Company, or any other material misconduct on the part of the Executive,
provided that the Executive shall have first received written notice from the
Company stating with specificity the nature of such action or violation and
affording the Executive at least five (5) days to correct such action or
violation;

               (e) the repeated non-prescription use of any controlled
substance, or the repeated use of alcohol or any other non-controlled substance
which in the Board's reasonable

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determination renders the Executive unfit to serve in his or her capacity as an
officer or employee of the Company or any of its subsidiaries or affiliates;

               (f) sexual harassment by the Executive that has been reasonably
substantiated and investigated;

               (g) involvement in activities representing conflicts of interest
with the Company or any of its subsidiaries or affiliates;

               (h) improper disclosure of confidential information;

               (i) conduct endangering, or likely to endanger, the health or
safety of another employee;

               (j) falsifying or misrepresenting information on the records of
the Company or any of its subsidiaries or affiliates; or

               (k) the Executive's physical destruction or theft of substantial
property or assets of the Company or any of its subsidiaries or affiliates.

               2.03 "Change in Control" shall mean an occurrence of any of the
following events, unless the Board shall provide otherwise:

               (a) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act, a "Person"), alone or together with its affiliates
and associates, including any group of persons which is deemed a "person" under
Section 13(d)(3) of the Exchange Act (other than the Company or any subsidiary
thereof or any employee benefit plan (or related trust) of the Company or any
subsidiary thereof, or any underwriter in connection with a firm commitment
public offering of the Company's capital stock), becomes the "beneficial owner"
(as such term is defined in Rule 13d-3 of the Exchange Act, except that a person
shall also be deemed the beneficial owner of all securities which such person
may have a right to acquire, whether or not such right is presently exercisable,
referred to herein as "Beneficially Own" or "Beneficial Owner" as the context
may require) of thirty-three and one third percent or more of (i) the then
outstanding shares of the Company's common stock ("Outstanding Company Common
Stock") or (ii) securities representing thirty-three and one-third percent or
more of the combined voting power of the Company's then outstanding voting
securities ("Outstanding Company Voting Securities") (in each case, other than
an acquisition in the context of a merger, consolidation, reorganization, asset
sale or other extraordinary transaction covered by, and which does not
constitute a Change in Control under, clause (c) below);

               (b) a change, during any period of two consecutive years, of a
majority of the Board as constituted as of the beginning of such period, unless
the election, or nomination for election by the Company's stockholders, of each
director who was not a director at the beginning of such period was approved by
vote of at least two-thirds of the Incumbent Directors then in office (for
purposes hereof, "Incumbent Directors" shall consist of the directors holding
office as of the Effective Date and any person becoming a director subsequent to
such date whose election, or nomination for election by the Company's
stockholders, is approved by a vote of at least a majority of the Incumbent
Directors then in office);

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               (c) consummation of any merger, consolidation, reorganization or
other extraordinary transaction (or series of related transactions) involving
the Company, a sale or other disposition of all or substantially all of the
assets of the Company, or the acquisition of assets or stock of another entity
by the Company or any of its subsidiaries (each, a "Business Combination"), in
each case unless, following such Business Combination, (1) all or substantially
all of the individuals and entities that were the Beneficial Owners of the
Outstanding Company Common Stock and the Outstanding Company Voting Securities
immediately prior to such Business Combination Beneficially Own, directly or
indirectly, more than 50% of the then-outstanding shares of common stock and the
combined voting power of the then-outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the entity
resulting from such Business Combination (including, without limitation, an
entity that, as a result of such transaction, owns the Company or all or
substantially all of the Company's assets directly or through one or more
subsidiaries (a "Parent")), (2) no Person (excluding any entity resulting from
such Business Combination or a Parent or any employee benefit plan (or related
trust) of the Company or such entity resulting from such Business Combination or
Parent, and excluding any underwriter in connection with a firm commitment
public offering of the Company's capital stock) Beneficially Owns, directly or
indirectly, more than thirty-three and one third percent of, respectively, the
then-outstanding shares of common stock of the entity resulting from such
Business Combination or the combined voting power of the then-outstanding voting
securities of such entity, and (3) at least a majority of the members of the
board of directors or trustees of the entity resulting from such Business
Combination or a Parent were Incumbent Directors at the time of execution of the
initial agreement or of the action of the Board providing for such Business
Combination; or

               (d) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company (other than in the context of a
merger, consolidation, reorganization, asset sale or other extraordinary
transaction covered by, and which does not constitute a Change in Control under,
clause (c) above).

               2.04 "Code" shall mean the Internal Revenue Code of 1986, as
amended.

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

               2.06 "Company" shall mean Western Digital Corporation, a Delaware
corporation, and, as permitted by Section 12.03(b), its successors and assigns.

               2.07 "Date of Termination" following a Change in Control shall
mean the dates, as the case may be, for the following events: (a) if the
Executive's employment is terminated by death, the date of death, (b) if the
Executive's employment is terminated due to a Permanent Disability, thirty (30)
days after the Notice of Termination is given (provided that the Executive shall
not have returned to the performance of his or her duties on a full-time basis
during such period), (c) if the Executive's employment is terminated pursuant to
a termination for Cause, the date specified in the Notice of Termination, and
(d) if the Executive's employment is terminated for any other reason, fifteen
(15) days after delivery of the Notice of Termination unless otherwise agreed by
the Executive and the Company.

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               2.08 "Disability" shall mean that the Executive is unable, by
reason of injury, illness or other physical or mental impairment, to perform
each and every task of the position for which the Executive is employed, which
inability is certified by a licensed physician reasonably selected by the
Employer.

               2.09 "Effective Date" shall mean March 29, 2001.

               2.10 "Employer" shall mean the Company or its subsidiary
employing Executive, provided however, that nothing contained herein shall
prohibit the Company or another of its subsidiaries fulfilling any obligation of
the employing entity to the Executive and for such purposes will be deemed the
act of the Employer.

               2.11 "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.

               2.12 "Executive" shall mean any Tier 1 Executive or Tier 2
Executive.

               2.13 "Good Reason" shall mean any of the following without the
Executive's express written consent:

               (a)     (i) the assignment to the Executive of any duties
materially and adversely inconsistent with the Executive's positions, duties,
responsibilities and status with the Employer immediately prior to a Change in
Control or with significantly less authority than immediately prior to the
Change in Control;

                       (ii) a significant adverse alteration in the nature of
the Executive's reporting responsibilities, titles, or offices with the Employer
from those in effect immediately prior to a Change in Control, or

                       (iii) any removal of the Executive from, or any failure
to reelect the Executive to, any such positions, except in connection with a
termination of the employment of the Executive for Cause, Permanent Disability,
or as a result of the Executive's death or by the Executive other than for Good
Reason;

               (b) a reduction by the Employer in the Executive's base salary in
effect immediately prior to a Change in Control;

               (c) failure by the Employer to continue in effect any
compensation plan, bonus or incentive plan, stock purchase plan, stock option
plan, life insurance plan, health plan, disability plan or other benefit plan or
arrangement in which the Executive is participating at the time of a Change in
Control unless the Employer substitutes a plan or arrangement which, when viewed
in the totality of the benefits provided, does not adversely impact the
Executive in a material respect, or the taking of any action by the Employer
which would adversely affect, in a material respect, Executive's participation
in or materially reduce Executive's benefits under any of such plans;

               (d) any material breach by the Company or the Employer of any
provision of this Plan;

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               (e) following a Change in Control, the Executive is excluded
(without substitution of a substantially equivalent plan) from participation in
any incentive, compensation, stock option, health, dental, insurance, pension or
other benefit plan generally made available to persons at Executive's level of
responsibility in the Company or the Employer;

               (f) the requirement by the Employer that the Executive's
principal place of employment be relocated more than fifty (50) miles from his
or her place of employment prior to a Change in Control, or that the Executive
must travel on the Employer's business to an extent materially greater than the
Executive's customary business travel obligations prior to a Change in Control;
or

               (g) the Company's failure to obtain a satisfactory agreement from
any successor to assume and agree to perform the Company's obligations under
this Plan, as contemplated in Section 12.03(b) hereof.

               2.14 "Notice of Termination" shall mean a written notice which
shall indicate the specific termination provision in this Plan relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated.

               2.15 "Permanent Disability" shall mean if, as a result of the
Executive's Disability, the Executive shall have been absent from his or her
duties with the Employer on a full-time basis for six (6) months of any
consecutive eight (8) month period.

               2.16 "Termination of Employment" shall mean the time when the
employee-employer relationship between the Executive and the Employer is
terminated for any reason, voluntarily or involuntarily, with or without Cause,
including, without limitation, a termination by reason of resignation, discharge
(with or without Cause), Permanent Disability, death or retirement, but
excluding terminations where there is a simultaneous re-employment of the
Executive by the Company or a subsidiary of the Company.

               2.17 "Tier 1 Executive" shall mean an officer of the Company who
is elected or appointed by the Board of Directors and is subject to Section 16
of the Exchange Act.

               2.18 "Tier 2 Executive" shall mean an employee who is appointed
as an officer of the Company by the President of the Company pursuant to the
Company's Bylaws and such other employee of the Company or any of its
subsidiaries who is designated as a Tier 2 Executive by the Board or the
Committee.

        3. Term. This Plan shall be effective until March 29, 2011.

        4. Compensation Upon A Change In Control.

               4.01 Salary. Commencing on the date a Change in Control shall
occur, the Employer shall pay a salary to the Executive at an annual rate at
least equal to the annual salary payable to the Executive immediately prior to
such date. The salary, as it may be changed from time to time by mutual
agreement between the Executive and the Employer, shall be paid in

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equal installments on each regular payroll payment date after the date of this
Plan and shall be subject to regular withholding for federal, state and local
taxes in accordance with law.

               4.02 Other Benefits.

               (a) Commencing on the date a Change in Control shall occur, the
Executive shall be entitled to participate in and to receive benefits under
those employee benefit plans or arrangements (including, without limitation, any
pension or welfare plan, life, health, hospitalization and other forms of
insurance and all other "fringe" benefits or perquisites) made available to
executives of the Company or the Employer, or any successor thereto. The
Executive's level of participation in, or entitlements under, any such employee
benefit plan or arrangement of any successor to the Company shall be calculated
as if the Executive had been an employee of such successor to the Company from
the date of the Executive's employment by the Employer.

               (b) Commencing on the date a Change in Control shall occur, the
Executive shall be entitled to reimbursement, in accordance with the usual
practices of the Employer, for all reasonable travel and other business expenses
incurred by the Executive in the performance of his or her duties on behalf of
the Employer.

        5. Termination of Employment of Executive.

               5.01 Payment of Severance Benefits Upon Change of Control. In the
event of a Change in Control of the Company, Executive shall be entitled to the
severance benefits set forth in Section 6, but only if during the term of this
Plan:

               (a) the Executive's employment by the Employer is terminated by
the Employer without Cause within one (1) year after the date of the Change in
Control;

               (b) the Executive terminates his or her employment with the
Employer for Good Reason within one (1) year after the date of the Change in
Control and complies with the procedures set forth in Section 5.02;

               (c) the Executive's employment by the Employer is terminated by
the Employer prior to the Change in Control and such termination arose in
connection with or in anticipation of the Change in Control (for purposes of
this Plan, meaning that at the time of such termination the Company had entered
into an agreement, the consummation of which would result in a Change in
Control, or any person had publicly announced its intent to take or consider
actions that would constitute a Change in Control, and in each case such Change
in Control is consummated, or the Board adopts a resolution to the effect that a
potential Change in Control for purposes of this Plan has occurred); or

               (d) the Executive terminates his or her employment with the
Employer for Good Reason prior to the Change in Control, the event constituting
Good Reason arose in connection with or in anticipation of the Change in Control
and the Executive complies with the procedures set forth in Section 5.02.

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               5.02 Good Reason.

               (a) Notwithstanding anything contained in any employment
agreement between the Executive and the Employer to the contrary, during the
term of this Plan the Executive may terminate his or her employment with the
Employer for Good Reason as set forth in Section 5.01(b) or (d) and be entitled
to the benefits set forth in Section 6, provided that the Executive gives
written notice to the Company and the Employer of his or her election to
terminate his or her employment for such reason within 180 days after the time
he or she becomes aware of the existence of facts or circumstances constituting
Good Reason or, if later, within ten (10) days of the time the claim is resolved
pursuant to Section 5.02(b).

               (b) If the Executive believes that he or she is entitled to
terminate his or her employment with the Employer for Good Reason, he or she may
apply in writing to the Company for confirmation of such entitlement prior to
the Executive's actual separation from employment, by following the claims
procedure set forth in Section 9. The submission of such a request by the
Executive shall not constitute "Cause" for the Company to terminate the
Executive's employment and the Executive shall continue to receive all
compensation and benefits he or she was receiving at the time of such submission
throughout the resolution of the matter pursuant to the procedures set forth in
Section 9. If the Executive's request for a termination of employment for Good
Reason is denied under both the request and appeal procedures set forth in
Sections 9.02 and 9.03, then the parties shall use their best efforts to resolve
the claim within ninety (90) days after the claim is submitted to binding
arbitration pursuant to Section 9.04.

               5.03 Permanent Disability. In the event of a Permanent Disability
of the Executive, the Executive shall be entitled to no further benefits under
this Plan, provided that the Employer shall have provided the Executive a Notice
of Termination and the Executive shall not have returned to the full-time
performance of the Executive's duties within thirty (30) days of such Notice of
Termination.

               5.04 Cause. The Employer may terminate the employment of the
Executive for Cause. The Executive shall not be deemed to have been terminated
for Cause unless and until there shall have been delivered to the Executive a
Notice of Termination and a certified copy of a resolution of the Board adopted
by the affirmative vote of not less than a majority of the entire membership of
the Board (other than the Executive if he or she is a member of the Board at
such time) at a meeting called and held for that purpose and at which the
Executive was given an opportunity to be heard, finding that the Executive was
guilty of conduct constituting Cause based on reasonable evidence, specifying
the particulars thereof in detail. For purposes of this Section 5.04, no act or
failure to act on the Executive's part shall be considered "willful" unless done
or omitted to be done by him or her not in good faith and without reasonable
belief that his or her action or omission was in the best interest of the
Company and the Employer.

               5.05 Notice of Termination. Any termination of the Executive's
employment by the Employer or by the Executive (other than termination based on
the Executive's death) following a Change in Control shall be communicated by
the terminating party in a Notice of Termination to the other party hereto.

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        6. Compensation and Benefits Upon Termination of Employment.

               6.01 Severance Benefits. If the Executive shall be terminated
from employment with the Employer or shall terminate his or her employment with
the Employer as described in Section 5.01, then the Executive shall be entitled
to receive the following:

               (a) In lieu of any further payments to the Executive except as
expressly contemplated hereunder, the Employer shall pay as severance pay to the
Executive an amount equal to two times (in the case of a Tier 1 Executive) or
one times (in the case of a Tier 2 Executive) the Executive's annual base
compensation plus target bonus as in effect immediately prior to the Change in
Control or as in effect on the date of the Notice of Termination, whichever is
higher. Such cash payment shall be payable in a single sum, within ten (10)
business days following the Executive's Date of Termination.

               (b) Any non-vested stock options granted to the Executive by the
Company shall become 100% vested and may be exercised by the Executive for the
longer of (i) ninety (90) days after the Date of Termination or (ii) the period
specified in the plan or agreement governing such options.

               (c) For a period of twenty-four months (in the case of a Tier 1
Executive) or twelve months (in the case of a Tier 2 Executive) following the
Executive's Date of Termination (the "payment period"), the Executive shall be
entitled to the continuation of the same or equivalent life, health,
hospitalization, dental and disability insurance coverage and other employee
insurance or welfare benefits (including equivalent coverage for his or her
spouse and dependent children) and car allowances as he or she was receiving
immediately prior to the Change in Control. In the event that Executive is
ineligible under the terms of such insurance to continue to be so covered, the
Employer shall provide Executive with a lump sum payment equal to the cost of
obtaining such coverage for the payment period. If the Executive, prior to a
Change in Control, was receiving any cash-in-lieu payments designed to enable
the Executive to obtain insurance coverage of his or her choosing, the Employer
shall, in addition to any other benefits to be provided under this Section
6.01(d), provide Executive with a lump-sum payment equal to the amount of such
in-lieu payments that the Executive would have been entitled to receive over the
payment period. The benefits to be provided under this Section 6.01(d) shall be
reduced to the extent of the receipt of substantially equivalent coverage by the
Executive from any successor employer.

               (d) All awards under the Company's Executive Retention Plan
adopted in July, 1998 or any similar plan shall accelerate and be payable
fifteen (15) days after the Date of Termination.

               (e) If any payments received by a Tier 1 Executive pursuant to
this Plan will be subject to the excise tax imposed by Section 4999 of the Code,
or any successor or similar provision of the Code or any comparable provision of
state law (the "Excise Tax"), the Employer shall pay to the Tier 1 Executive
additional compensation such that the net amount received by the Tier 1
Executive after deduction of any Excise Tax (and taking into account any
federal, state and local income taxes payable by the Tier 1 Executive as a
result of the receipt of such gross-up compensation), shall be equal to the
total payments he or she would have received had no such

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Excise Tax (or any interest or penalties thereon arising primarily from the acts
or omissions of the Employer) been paid or incurred. The Employer shall pay such
additional compensation at the time when the Employer withholds such Excise Tax
from any payments to the Tier 1 Executive. The calculation of the tax gross-up
payment shall be approved by the Company's independent certified public
accounting firm and the Tier 1 Executive's designated financial advisor.

               (f) In the event that the amount of payments or other benefits
payable to a Tier 2 Executive under this Plan, together with any payments or
benefits payable under any other plan, program, arrangement or agreement
maintained by the Employer or one of its affiliates, would constitute an 'excess
parachute payment' (within the meaning of Section 280G of the Code), the
payments under this Plan shall be reduced (by the minimum possible amounts)
until no amount payable to the Tier 2 Executive under this Plan constitutes an
'excess parachute payment' (within the meaning of Section 280G of the Code);
provided, however, that no such reduction shall be made if the net after-tax
payment (after taking into account Federal, state, local or other income and
excise taxes) to which the Tier 2 Executive would otherwise be entitled without
such reduction would be greater than the net after-tax payment (after taking
into account Federal, state, local or other income and excise taxes) to the Tier
2 Executive resulting from the receipt of such payments with such reduction. If,
as a result of subsequent events or conditions (including a subsequent payment
or absence of a subsequent payment under this Plan or other plans, programs,
arrangements or agreements maintained by the Employer or one of its affiliates),
it is determined that payments hereunder have been reduced by more than the
minimum amount required under this Section 6.01(f), then an additional payment
shall be promptly made to the Tier 2 Executive in an amount equal to the excess
reduction. All determinations required to be made under this Section 6.01(f),
including whether a payment would result in an 'excess parachute payment' and
the assumptions to be utilized in arriving at such determination, shall be made
and approved by the Company's independent certified public accounting firm and
the Tier 2 Executive's designated financial advisor.

               6.02 Accrued Benefits. Upon termination of the employment of
Executive for any reason, any accumulated but unused vacation shall be paid
through the Date of Termination. Upon termination of the employment of Executive
as set forth in Section 5.01, any accrued but unpaid bonus shall be paid through
the Date of Termination. Unless otherwise specifically provided in this Plan,
any payments or benefits payable to the Executive hereunder, including without
limitation any bonus, in respect of any calendar year during which the Executive
is employed by the Employer for less than the entire such year shall be prorated
in accordance with the number of days in such calendar year during which he or
she is so employed.

        7. No Mitigation. The Executive shall not be required to mitigate the
amount of any payments provided for by this Plan by seeking employment or
otherwise, nor shall the amount of any cash payments or benefits provided under
this Plan be reduced by any compensation or benefits earned by the Executive
after his or her Date of Termination (except as provided in the last sentence of
Section 6.01(d) above). Notwithstanding the foregoing, if the Executive is
entitled, by operation of any applicable law, to unemployment compensation
benefits or benefits under the Worker Adjustment and Retraining Act of 1988
(known as the "WARN" Act) in connection with the termination of his or her
employment in addition to amounts required to be paid to him or her under this
Plan, then to the extent permitted by applicable statutory law

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governing severance payments or notice of termination of employment, the Company
shall be entitled to offset the amounts payable hereunder by the amounts of any
such statutorily mandated payments.

        8. Limitation on Rights.

               8.01 No Employment Contract. This Plan shall not be deemed to
create a contract of employment between the Employer and the Executive and shall
create no right in the Executive to continue in the Employer's employment for
any specific period of time, or to create any other rights in the Executive or
obligations on the part of the Company or its subsidiaries, except as set forth
herein. Except as set forth herein, this Plan shall not restrict the right of
the Employer to terminate the employment of Executive, or restrict the right of
the Executive to terminate his or her employment.

               8.02 No Other Exclusions. This Plan shall not be construed to
exclude the Executive from participation in any other compensation or benefit
programs in which he or she is specifically eligible to participate either prior
to or following the Effective Date of this Plan, or any such programs that
generally are available to other executive personnel of the Company, nor shall
it affect the kind and amount of other compensation to which the Executive is
entitled.

        9. Administrator and Claims Procedure.

               9.01 Administrator. Except as set forth herein, the administrator
(the "Administrator") for purposes of this Plan shall be the Company. The
Company shall have the right to designate one or more of the Company's or the
Employer's employees as the Administrator at any time. The Company shall give
the Executive written notice of any change in the Administrator, or in the
address or telephone number of the same.

               9.02 Claims Procedure. The Executive, or other person claiming
through the Executive, must file a written claim for benefits with the
Administrator as a prerequisite to the payment of benefits under this Plan. The
Administrator shall make all determinations as to the right of any person to
receive benefits under Sections 9.02 and 9.03. The decision by the Administrator
of a claim for benefits by the Executive, his or her heirs or personal
representative (the "claimant") shall be stated in writing by the Administrator
and delivered or mailed to the claimant within thirty (30) days after receipt of
the claim, unless special circumstances require an extension of time for
processing the claim. If such an extension is required, written notice of the
extension shall be furnished to the claimant prior to the termination of the
initial thirty-day period. In no event shall such extension exceed a period of
thirty (30) days from the end of the initial period. Any notice of denial shall
set forth the specific reasons for the denial, specific reference to pertinent
provisions of this Plan upon which the denial is based, a description of any
additional material or information necessary for the claimant to perfect his or
her claim, with an explanation of why such material or information is necessary,
and a description of claim review procedures, written to the best of the
Administrator's ability in a manner that may be understood without legal or
actuarial counsel.

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               9.03 Appeals. A claimant whose claim for benefits has been wholly
or partially denied by the Administrator may request, within sixty (60) days
following the date of such denial, in a writing addressed to the Administrator,
a review of such denial. The claimant shall be entitled to submit written
comments, documents, records and other information he or she shall consider
relevant to a determination of his or her claim, and he or she may include a
request for a hearing in person before the Administrator. Prior to submitting
his or her request, the claimant shall be entitled to review such documents,
records, and other information as the Administrator shall reasonably agree are
pertinent to his or her claim. The claimant may, at all stages of the review, be
represented by counsel, legal or otherwise, of his or her choice, provided that
the fees and expenses of such counsel shall be borne by the claimant, unless the
claimant is successful, in which case, such costs shall be borne by the Company.
The review of the claim shall take into account all information submitted by
claimant relating to the claim, without regard to whether such information was
submitted in the initial benefit determination. All requests for review shall be
promptly resolved. The Administrator's decision with respect to any such review
shall be set forth in writing and shall be mailed to the claimant not later than
sixty (60) days following receipt by the Administrator of the claimant's request
unless special circumstances, such as the need to hold a hearing, require an
extension of time for processing, in which case the Administrator's decision
shall be so mailed not later than one hundred and twenty (120) days after
receipt of the claimant's request. The time and place of any hearing shall be as
mutually agreed by the parties. If the claimant is dissatisfied with the
Administrator's decision on review, the claimant may then either, at his or her
option, invoke the arbitration procedures described in Section 9.04 or pursue a
remedy in a judicial forum. No legal action may be commenced prior to the
completion of the claims and appeals procedures described in the foregoing
provisions of Section 9.02 and 9.03. Notwithstanding the foregoing, no legal
action may be commenced after ninety (90) days after the date upon which the
Administrator's written decision on appeal was sent to claimant.

               9.04 Arbitration. A claimant who has followed the procedures in
Sections 9.02 and 9.03, but who has not obtained full relief on his or her claim
for benefits, may, within sixty (60) days following his or her receipt of the
Administrator's written decision on review pursuant to Section 9.03, apply in
writing to the Administrator for expedited and binding arbitration of his or her
claim before an arbitrator in Orange County, California in accordance with the
commercial arbitration rules of the American Arbitration Association, as then in
effect, or pursuant to such other form of alternative dispute resolution as the
parties may agree (collectively, the "arbitration"). Subject to Section 10, the
Company or the Employer shall pay filing fees and other costs required to
initiate the arbitration. The arbitrator's sole authority shall be to interpret
and apply the provisions of this Plan; and except as set forth herein he or she
shall not change, add to, or subtract from, any of its provisions. The
arbitrator shall have the power to compel attendance of witnesses at the
hearing. Any court having jurisdiction may enter a judgment based upon such
arbitration. The arbitrator shall be appointed by mutual agreement of the
Company and the claimant; provided that if the Company and the claimant cannot
agree, the arbitrator shall be appointed pursuant to the applicable commercial
arbitration rules. The arbitrator shall be a professional person with a
reputation in the community for expertise in employee benefit matters and who is
unrelated to the claimant, the Company or its subsidiaries or any employees of
the Company or its subsidiaries. All decisions of the arbitrator shall be final
and binding on the claimant and the Company.

                                       11

<PAGE>
        10. Legal Fees and Expenses. If any dispute arises between the parties
with respect to the interpretation or performance of this Plan, the prevailing
party in any arbitration or proceeding shall be entitled to recover from the
other party its attorneys fees, arbitration or court costs and other expenses
incurred in connection with any such proceeding. Amounts, if any, paid to the
Executive under this Section 10 shall be in addition to all other amounts due to
the Executive pursuant to this Plan.

        11. ERISA. This Plan is an unfunded compensation arrangement for a
member of a select group of the Company's management or that of its subsidiaries
and any exemptions under the Employee Retirement Income Security Act of 1974, as
amended, as applicable to such an arrangement shall be applicable to this Plan.

        12. Miscellaneous.

               12.01 Administration. This Plan may be administered by the Board
or the Committee. When this Plan refers to any action by the Board, the
Committee may take such action with the same effect as if it had been taken by
the Board.

               12.02 Amendments. This Plan may be changed, amended or modified
by resolution of the Board or the Committee.

               12.03 Assignment and Binding Effect.

               (a) Neither this Plan nor the rights or obligations hereunder
shall be assignable by the Executive or the Company except that this Plan shall
be assignable to, binding upon and inure to the benefit of any successor of the
Company, and any successor shall be deemed substituted for the Company upon the
terms and subject to the conditions hereof'.

               (b) The Company will require any successor (whether by purchase
of assets, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to expressly assume and agree to
perform all of the obligations of the Company under this Plan (including the
obligation to cause any subsequent successor to also assume the obligations of
this Plan) unless such assumption occurs by operation of law. Nothing in this
Section 12.03 is intended, however, to require that a person or group referred
to in Section 2.03(a) as being the beneficial owner of shares of stock of the
Company must assume the obligations under this Plan as a result of such stock
ownership.

               12.04 No Waiver. No waiver of any term, provision or condition of
this Plan, whether by conduct or otherwise, in any one or more instances shall
be deemed or be construed as a further or continuing waiver of any such term,
provision or condition or as a waiver of any other term, provision or condition
of this Plan.

               12.05 Rules of Construction.

               (a) This Plan has been executed in, and shall be governed by and
construed in accordance with the laws of, the State of California. Captions
contained in this Plan are for convenience of reference only and shall not be
considered or referred to in resolving questions of interpretation with respect
to this Plan.

                                       12

<PAGE>
               (b) If any provision of this Plan is held to be illegal, invalid
or unenforceable under any present or future law, and if the rights or
obligations of any party hereto under this Plan will not be materially and
adversely affected thereby, (i) such provision will be fully severable, (ii)
this Plan will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, (iii) the remaining
provisions of this Plan will remain in full force and effect and will not be
affected by the illegal, invalid or unenforceable provision or by its severance
herefrom and (iv) in lieu of such illegal, invalid or unenforceable provision,
there will be added automatically as a part of this Plan a legal, valid and
enforceable provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible.

               12.06 Notices. Any notice required or permitted by this Plan
shall be in writing, delivered by hand, or sent by registered or certified mail,
return receipt requested, or by recognized courier service (regularly providing
proof of delivery), addressed to the Board and the Company and where applicable,
the Administrator, at the Company's then principal office, or to the Executive
at the address set forth in the records of the Employer, as the case may be, or
to such other address or addresses the Company or the Executive may from time to
time specify in writing. Notices shall be deemed given when received.

               12.07 Section 409A. This Plan shall be construed and interpreted
so as to avoid the imputation of any tax liability (penalty or otherwise)
pursuant to Section 409A of the Code. The Company may suspend the payment of any
benefit pursuant to this Plan to any "specified employee" (within the meaning of
Section 409A of the Code) to a date no earlier than the date that is six months
after the employee's separation of service to the extent, if any, the Committee
determines that such suspension is reasonably necessary to satisfy Code Section
409A(a)(2)(B)(i) (in which case the benefits that would have otherwise been paid
during such six month period shall be paid, without interest, as soon as
practical following the end of such six month period).

                                       ###

Western Digital Corporation Amended and Restated Change of Control Severance
Plan

As amended (Sections 2.03, 3 and 12.07) February 16, 2006

                                       13exv10w1

 

Exhibit 10.1

EMPLOYMENT AGREEMENT

     This Employment Agreement (“Agreement”), dated as of January 23, 2006 (the “Effective
Date”), is made by and among David R. Asplund (“Mr. Asplund”) and Electric City Corp., a
Delaware corporation (the “Company”).

     WHEREAS, the Company desires to assure itself of the services of Asplund, and Asplund desires
to be employed by the Company; and

     WHEREAS, the Company and Asplund desire to clearly define and clarify all material terms and
conditions of this employment relationship through a written agreement;

     NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and Mr. Asplund do hereby agree as follows:

     Section 1. Employment and Duties. On the terms and subject to the conditions set
forth in this Agreement, the Company agrees to employ Mr. Asplund as its Chief Executive Officer to
render such services as would be customary for a chief executive officer and to render such other
services and discharge such other responsibilities as the Board of Directors of the Company may,
from time to time, stipulate and which shall not be inconsistent with the position of Chief
Executive Officer. Mr. Asplund’s employment pursuant to this Agreement shall commence on January
23, 2006 and terminate on January 22, 2009, unless earlier terminated pursuant to the termination
provisions of this Agreement. The period during which Asplund is employed by the Company under
this Agreement is herein called the “Employment Period”. The parties acknowledge and agree
that certain provisions hereof shall continue in effect following the termination of the Employment
Period, as set forth herein.

     Section 2. Performance. (a) Mr. Asplund accepts the employment as set forth in
Section 1 herein and agrees to concentrate all of his professional time and efforts to the
performance of the services described therein, including the performance of such other services and
responsibilities as the Board of Directors of the Company may from time to time stipulate and which
shall not be inconsistent with the position of Chief Executive Officer.

     (b) Without limiting the generality of the foregoing, Mr. Asplund ordinarily shall devote not
less than five (5) days per week (except for vacations and regular business holidays observed by
the Company) on a full-time basis, during normal business hours Monday through Friday. Mr. Asplund
further agrees that when the performance of his duties reasonably requires, he shall be present on
the Company’s premises or engaged in service to or on behalf of the Company at such times except
during vacations, regular business holidays or weekends.

Page 1 of 14

 

     (c) Notwithstanding the foregoing, the Company agrees that Mr. Asplund has the right to
participate in outside activities, including but not limited to serving on boards of directors for
civic, charitable or business organizations, in a paid or unpaid capacity, so long as such
activities are not in direct conflict with Mr. Asplund’s obligations as outlined herein. Further,
Mr. Asplund will have reasonable, limited use of the Company’s resources and reasonable time during
the Company’s business hours to pursue such activities so long as such activities do not
unreasonably interfere with his obligations as Chief Executive Officer. Upon request by the
Company, Mr. Asplund agrees to furnish to the Company a list of organizations in which he is
involved, including a description of his involvement in such organizations and the amount of any
remuneration received or expected to be received from such involvement.

     Section 3. Term/Termination.

     3.1. Term. The term of employment under this Agreement (the “Employment Period”) shall
commence on January 23, 2006 and shall terminate on January 22, 2009 unless earlier terminated
pursuant to the termination provisions set forth herein. Notwithstanding anything to the contrary
herein, the parties acknowledge and agree that Mr. Asplund’s employment may be terminated for “Due
Cause” (as hereinafter defined), and subject to any consent or approval rights of the holders of
the Company’s Series E Convertible Preferred Stock. At the end of the Employment Period, the
continuation of Asplund’s employment with the Company shall be at the will of the Company and Mr.
Asplund on terms and conditions agreed to by the Company and Mr. Asplund and there shall be no
obligation on the part of the Company or Mr. Asplund to continue such employment.

     3.2. Termination for Due Cause. The Employment Period may be terminated for “Due
Cause” (as defined below) by the Company upon the affirmative vote of a majority of the Board of
Directors (a “Termination Vote”), provided that any required consent of the holders
of the Company’s Series E Convertible Preferred Stock to such termination is obtained before such
termination shall become effective. Upon a Termination Vote and obtaining any required consent of
the holders of the Company’s Series E Convertible Preferred Stock, a written notice of such
termination shall be given to Mr. Asplund in the manner required by Section 6 hereof. For purposes
hereof, “Due Cause” shall mean any of the following:

	(i)	 	a material breach by Mr. Asplund of his covenants under this Agreement if such material
breach is not remedied within fifteen (15) calendar days following written notice thereof from
the Company or any Director of the Company;
	 
	(ii)	 	commission by Mr. Asplund of a felony, or of theft or embezzlement of property of the
Company;
	 
	(iii)	 	actions by Mr. Asplund (other than actions taken with the approval of the Board) which
result in a material injury to the businesses, properties or reputation of the Company or any
of its subsidiaries;

Page 2 of 14

 

	(iv)	 	refusal to perform or substantial neglect of the duties assigned to Mr. Asplund pursuant to
Section 1 of this Agreement if such refusal or neglect is not remedied within fifteen (15)
calendar days following written notice thereof from the Company or any Director of the
Company; or
	 
	(v)	 	any material violation of any statutory or common law duty of loyalty to the Company.

All compensation to Mr. Asplund under this Agreement shall immediately terminate upon the effective
date of any termination of the Employment Period for Due Cause hereunder (other than any earned but
unpaid salary, vacation and bonus compensation as set forth in Sections 4.1, 4.2 and 4.7,
respectively, herein for the period ending on the date of termination) and all vested and unvested
“Stock Options” (as defined in Section 4.3) as of such date shall immediately expire, terminate and
be of no further force or effect; provided, however, that if the Employment Period is
terminated for a reason stated in clause (ii) or clause (iii) (or both) and no other reason is
given, and it shall be subsequently determined by a final decision of a court or arbitrator having
jurisdiction that Mr. Asplund did not commit the alleged acts in question, or, in the case of
clause (iii) that the acts did not result in a material injury to the businesses, properties or
reputation of the Company or any of its subsidiaries, then such vested and unvested Stock Options
shall be restored to Mr. Asplund and he shall be treated as having been terminated pursuant to
Section 3.6 for the purposes of his rights with respect to such Stock Options, except that the
termination date shall be the date of such final determination of such court or arbitrator. Any
salary, bonus and accrued vacation shall be payable as follows: salary and accrued vacation shall
be paid at the next regularly scheduled payroll date, and any bonus shall be payable in accordance
with the applicable bonus plan.

     3.3. Termination Due to Death. The Employment Period shall automatically terminate
upon the death of Mr. Asplund and all compensation to Mr. Asplund shall immediately cease, other
than any earned but unpaid salary, vacation and bonus compensation as set forth in Sections 4.1,
4.2 and 4.7, respectively, herein for the period ending on the date of termination. All unvested
Stock Options as of such date of death shall immediately vest. Stock Options which are vested
prior to the date of death or on the date of death pursuant to the preceding sentence may be
exercised by his estate or executor within one (1) year following the date of death. Any Stock
Options which are not exercised within such period of one (1) year thereafter shall thereupon
expire, terminate and be of no further force or effect. Any salary, bonus and accrued vacation
shall be payable as follows: salary and accrued vacation shall be paid at the next regularly
scheduled payroll date, and any bonus shall be payable in accordance with the applicable bonus
plan.

     3.4. Termination Due to Permanent Total Disability. In the event that Mr. Asplund
becomes “Permanently Disabled” (as defined below), the Company, at its option, shall have the right
to terminate the Employment Period by written notice to Mr. Asplund given in the manner required by
Section 6 hereof. For purposes hereof, “Permanently Disabled” shall mean physical or
mental inability of Mr. Asplund to perform substantially all of the services required pursuant to
this Agreement for a

Page 3 of 14

 

continuous period of one-hundred eighty (180) days or for a period aggregating at least
one-hundred eighty (180) days in any consecutive twelve (12) month period. In the event that Mr.
Asplund disputes the Company’s determination that he is Permanently Disabled, the determination
shall be made by a qualified physician selected jointly by the Company and Mr. Asplund. In the
event of termination of the Employment Period pursuant to this Section 3.4, all compensation to Mr.
Asplund shall immediately cease, other than any earned but unpaid salary, vacation and bonus
compensation as set forth in Sections 4.1, 4.2 and 4.7, respectively, herein for the period ending
on the date of termination, and any vested Stock Options as of the date of termination shall be
exercisable for up to 90 days following such termination. Any Stock Options which are vested on
the date of termination may be exercised by Mr. Asplund within one hundred eighty (180) days
following the date of termination. Any Stock Options which are vested on the date of termination
and are not exercised within such period of one hundred eighty (180) and are not exercised by Mr.
Asplund within one hundred eighty (180) days following the termination date shall thereupon expire,
terminate and be of no further force or effect. All unvested Stock Options as of such date of
termination shall immediately terminate. Any salary, bonus and accrued vacation shall be payable
as follows: salary and accrued vacation shall be paid at the next regularly scheduled payroll date,
and any bonus shall be payable in accordance with the applicable bonus plan.

     3.5. Termination by Mr. Asplund. (a) Mr. Asplund may terminate the Employment Period
and his employment hereunder (i) in the event the Company has breached a material term or condition
of this Agreement which is not cured or remedied within fifteen (15) days following Mr. Asplund’s
giving written notice of such breach to the Chairman of the Board of Directors of the Company, or
(ii) at Mr. Asplund’s convenience pursuant to Section 3.5(b), or (iii) as provided in Section
4.3(e). In the event that Mr. Asplund terminates the Employment Period due to an uncured breach by
the Company, such action shall be deemed to be a termination of the Employment Period by the
Company without Due Cause for purposes hereof. Any salary, bonus and accrued vacation payable with
respect to such termination shall be in accordance with Section 3.6 below.

     (b) In the event that the Employment Period is terminated by Mr. Asplund at his convenience,
then Mr. Asplund will be due any earned but unpaid salary, vacation and bonus compensation as set
forth in Sections 4.1, 4.2 and 4.7, respectively, herein, and any vested Stock Options as of the
date of termination shall be exercisable for up to ninety (90) days following such termination.
Any Stock Options which are vested on the date of termination and are not exercised by Mr. Asplund
within ninety (90) days following the termination date shall thereupon expire, terminate and be of
no further force or effect. Except as otherwise set forth in Section 4.3(e), any unvested Stock
Options as of the date of termination shall immediately terminate. Any salary, bonus and accrued
vacation payable under this Section 3.5(b) shall be payable as follows: salary and accrued vacation
shall be paid at the next regularly scheduled payroll date, and any bonus shall be payable in
accordance with the applicable bonus plan.

Page 4 of 14

 

     (e) In the event that the Employment Period is terminated by Mr. Asplund in accordance with
Section 4.3(e), then Mr. Asplund will be due the amounts provided for thereunder.

     3.6. Termination Other Than Due Cause, Death, Disability or Resignation. In the event
that the Employment Period is terminated for reasons other than Due Cause, death, becoming
Permanently Disabled or resignation or pursuant to Section 4.3(e), then all Stock Options then held
by Mr. Asplund and scheduled to vest within one (1) year of the date of such termination shall vest
immediately and be exercisable at any time within one (1) year after the date of such termination.
Any Stock Options which are not exercised within one (1) year following such termination date shall
thereupon expire, terminate and be of no further force or effect. Upon any termination under this
Section 3.6, the Company shall pay as severance compensation to Mr. Asplund (i) six (6) months’
salary compensation at his then annual salary compensation rate, plus (ii) any bonus earned as of
the termination date, and (iii) any accrued vacation. Such severance compensation shall be paid to
Mr. Asplund as follows: (x) the six (6) months’ salary compensation shall be payable in
installments in accordance with the Company’s regular payroll; (y) any bonus shall be payable in
accordance with the applicable terms governing such bonus; and (z) accrued vacation shall be paid
at the next regularly scheduled payroll date. No termination pursuant to Section 4.3(e) shall be
deemed to be a termination under this Section 3.6.

     3.7. Surrender of Properties. Upon any termination of Mr. Asplund’s employment with
the Company, regardless of the cause therefore, Mr. Asplund shall be deemed to have resigned from
the Company’s Board of Directors and as an officer and director of any of the Company’s
subsidiaries, if serving as such at that time, and shall promptly deliver to the Company all
property provided to him by the Company or its subsidiaries for use in relation to his employment
and any and all sales materials, lists of customers and prospective customers, price lists, files,
patent applications, records, models or other materials and information of or pertaining to the
Company or its subsidiaries or their customers or prospective customers or the products, businesses
and operations of the Company or its subsidiaries.

     3.8. Survival of Covenants. The covenants of Mr. Asplund set forth in Sections 3.7, 4
and 5 herein shall survive the termination of the Employment Period or termination of this
Agreement.

     Section 4. Compensation/Expenses.

     4.1 Base Salary. In exchange for the services to be rendered by Mr. Asplund
hereunder, the Company agrees to pay, during the Employment Period, a base annual salary (the
“Base Salary”) of Two Hundred Eighty Five Thousand dollars ($285,000), which shall be
payable in equal installments in accordance with the Company’s regular payroll.

     4.2 Bonuses.

Page 5 of 14

 

     (a) For the period commencing on the Effective Date and ending on December 31, 2006, Mr.
Asplund shall be eligible for a bonus determined based on the Company’s consolidated gross revenue
for the fiscal year ending December 31, 2006 (as reflected in the Company’s reported financial
statements) in accordance with the following table:

	 	 	 
	Consolidated Gross Revenue	 	Bonus Amount
	More than $10,000,000

	 	$15,000
	More than $12,500,000

	 	Additional $15,000
	More than $16,000,000

	 	Additional $15,000
	More than $18,000,000

	 	Additional $20,000

Any such bonus shall be paid promptly (and in any event on the next regular payroll date) following
determination of the Company’s consolidated gross revenue for fiscal year 2006.

     (b) For the period commencing on January 1, 2007 and ending on December 31, 2007, Mr. Asplund
shall be eligible for a bonus, not to exceed $65,000, determined based on the Company’s
consolidated net income for such period on such terms as shall be agreed upon by Mr. Asplund and
the Compensation Committee of the Board of Directors, as approved by the Board of Directors. Any
such bonus shall be paid promptly (and in any event on the next regular payroll date) following
determination of the Company’s consolidated net income for fiscal year 2007.

     (c) For the period commencing on January 1, 2008 and ending on December 31, 2008, Mr. Asplund
shall be eligible for a bonus, not to exceed $65,000, determined based on the Company’s
consolidated net income for such period on such terms as shall be agreed upon by Mr. Asplund and
the Compensation Committee of the Board of Directors, as approved by the Board of Directors. Any
such bonus shall be paid promptly (and in any event on the next regular payroll date) following
determination of the Company’s consolidated net income for fiscal year 2008.

     4.3. Stock Options.

     (a) Subject to obtaining the approval of the Company’s shareholders at the 2006 annual meeting
of shareholders as described below, the Company grants to Mr. Asplund stock options (the “Stock
Options”) to purchase up to Four Million Five Hundred Thousand (4,500,000) shares of the
Company’s common stock at the following prices per share:

     (i) options with respect to One Million Five Hundred Thousand (1,500,000) shares shall
be at a price per share of $0.62 and such options shall become vested and exercisable on
January 22, 2007, so long as Mr. Asplund is employed by the Company as its Chief Executive
Officer on such date;

Page 6 of 14

 

     (ii) options with respect to One Million Five Hundred Thousand (1,500,000) shares
shall be at a price per share equal to the higher of (x) the average closing price of the
Company’s common stock as measured over the thirty (30) trading day period prior to January
22, 2007, or (y) the closing price of the Company’s common stock on January 22, 2007. Such
options shall become vested and exercisable on January 22, 2008, so long as Mr. Asplund is
employed by the Company as its Chief Executive Officer on such date; and

     (iii) options with respect to One Million Five Hundred Thousand (1,500,000) shares
shall be at a price per share equal to the higher of (x) the average closing price of the
Company’s common stock as measured over the thirty (30) trading day period prior to January
22, 2008, or (y) the closing price of the Company’s common stock on January 22, 2008. Such
options shall become vested and exercisable on January 22, 2009, so long as Mr. Asplund is
employed by the Company as its Chief Executive Officer on such date.

     (b) Registration Rights. Mr. Asplund shall have piggy-back registration rights for all
shares of the Company’s common stock obtained through the exercise of any Stock Options granted
pursuant to this Section 4.3 with respect to any registration statement filed by the Company with
the Securities and Exchange Commission covering shares of common stock (other than on Form S-4 or
S-8), except that Mr. Asplund agrees to waive his registration rights for any registration
undertaken at the request of, or registration that includes, the holders of the Company’s Series E
Convertible Preferred Stock and/or the rights of any other holders of the Company’s preferred stock
to the extent that such waiver is requested by such holders. In addition, Mr. Asplund agrees that
his registration rights shall be subject to underwriter cutbacks as may be requested by an
underwriter with respect to a registration of the Company’s common stock. The Company shall bear
the cost of registering the shares pursuant to this Section 4.3.1, other than any underwriters’
discounts or commissions.

     (c) Sale of Assets: Change in Control. For all purposes of this Agreement, a
“Change in Control” shall be deemed to have occurred when (i) the Company is merged or
consolidated with another entity which is not then controlled by the Company and, as a result of
such merger or consolidation, an unrelated entity acquires the ability to elect a majority of the
Company’s Board of Directors, or (ii) substantially all of the Company’s assets are sold or
otherwise transferred to another entity that is not then controlled by or affiliated with the
Company. Upon the occurrence of a Change in Control, the Stock Options granted to Mr. Asplund
pursuant to this Section 4.3 shall be automatically and immediately vested and become exercisable
by Mr. Asplund, subject to the other applicable terms of this Agreement.

     (d) Shareholder Approval; Terms Governing Stock Options. Five Hundred Thousand
(500,000) of the Stock Options granted hereunder, which shall vest on January 22, 2007, shall be
granted immediately and governed in accordance with the provisions of the Company’s 2001 Employee
Stock Incentive Plan. The Company’s grant of the remaining Four Million (4,000,000) Stock Options
hereunder shall not become effective until such time as the grant thereof shall have been approved
by the Company’s

Page 7 of 14

 

shareholders. The Company hereby agrees to submit such grant for shareholder approval at the
2006 annual meeting of shareholders of the Company. Except as otherwise provided herein, all such
Stock Options shall be governed by the terms of the 2001 Employee Stock Incentive Plan.

     (e) Termination if Shareholders Do Not Approve Grant of Options. In the event that
the Company’s shareholders do not approve the grant of such additional Four Million (4,000,000)
Stock Options at the Company’s 2006 annual meeting of shareholders, then (i) such additional Stock
Options shall be null and void and treated as if never granted, and (ii) for a period of thirty
(30) days thereafter, Mr. Asplund, at his sole discretion, may elect to terminate his employment
and the Employment Period hereunder and receive the benefits described in the next sentence.
Provided that Mr. Asplund remains employed as President of the Company on the date of the Company’s
2006 annual meeting, if, within the thirty (30) day period specified, Mr. Asplund elects to
terminate his employment and the Employment Period pursuant to the first sentence of this Section
4(e) because the additional Stock Options are not approved by the stockholders, then (x) the
500,000 Stock Options granted pursuant to the 2001 Employee Stock Incentive Plan shall immediately
vest and be exercisable at any time for a period of ninety (90) days, with any unexercised options
terminating at the end of such ninety (90) day period, and (y) the Company shall pay to Mr.
Asplund, as a lump sum, an amount equal to his base salary from the date of such termination
through January 22, 2007 plus $65,000, plus any accrued unused vacation as of the date of
termination, and such amount shall be paid to Mr. Asplund on the date of the Company’s next regular
payroll.

     4.4. Insurance. During the Employment Period, the Company shall continue to provide,
at its expense and if Mr. Asplund continues to be eligible and qualifies for such benefits, (i)
long-term disability insurance providing for disability benefits equal to 60% of his base salary to
age 65, (ii) term life insurance with death benefits equal to three times his base salary, (iii)
medical and dental insurance for Mr. Asplund and his family substantially equivalent to any such
benefits provided to other senior executives of the Company, (iv) directors’ and officers’
liability insurance, in such amount as may be determined by the board of directors of the Company,
(v) vacation in accordance with Section 4.7 hereof, and (vi) any other benefits offered from
time-to-time to other senior executives of the Company. Mr. Asplund agrees to submit to any
medical or other examination and to execute and deliver any application or other instrument in
writing, reasonably necessary to effectuate such long-term disability and life insurance.

     4.5. Automobile Allowance. Mr. Asplund shall be entitled to an automobile allowance
of $550.00 per month.

     4.6. Business Expenses. Mr. Asplund shall be reimbursed for reasonable
business-related expenses that he incurs pursuant to his employment with the Company, subject to
review and approval by the Audit Committee of the Board of Directors (the “Audit
Committee”). Mr. Asplund shall provide the Company with expense reports detailing
business-related expenses and supporting documentation and other substantiation of such expenses
that conform to the reporting requirements of the Company and requirements of the Internal Revenue
Service. Mr. Asplund may request

Page 8 of 14

 

reimbursement advances equal to the amounts of business-related expenses submitted but such
advances shall be subject to subsequent adjustment following review and approval by the Audit
Committee.

     4.7. Vacation. Mr. Asplund shall be entitled to twenty (20) paid vacation days per
calendar year which will accrue ratably over each twelve (12) month period; provided that
he may take his vacation days for each contract year at any time during such year. Up to five (5)
vacation days may be accumulated and carried over to the next calendar year.

     Section 5. Covenants of Mr. Asplund.

     5.1. Confidentiality. During the Employment Period and following the termination
thereof for any reason, Mr. Asplund shall not disclose or make any use of, for his own benefit or
for the benefit of a business or entity other than the Company or its subsidiaries, any secret or
confidential information, lists of customers and prospective customers or any other information of
or pertaining to the Company or its subsidiaries that is not publicly available.

     5.2. Inventions and Secrecy. Except as otherwise provided in this Section 5.2, Mr.
Asplund (i) shall hold in a fiduciary capacity for the benefit of the Company and its subsidiaries,
all secret and confidential information, knowledge, or data of the Company and its subsidiaries
obtained by Mr. Asplund during his employment by the Company, which is not generally know to the
public or recognized as standard industry practice (whether or not developed by Mr. Asplund) and
shall not, during his employment by the Company and following the termination of such employment
for any reason, communicate or divulge any such information, knowledge or data to any person or
entity other than the Company, its subsidiaries or persons or entities designated by the Company;
(ii) shall promptly disclose to the Company all inventions, ideas, devices and processes made or
conceived by him, alone or jointly with others, from the time of entering the Company’s employ and
until such employment is terminated and for a one (1) year period following such termination, which
pertain, whether directly or indirectly, to the business of the Company or its subsidiaries or
resulting from or suggested by any work which he may have done for or at the request of the Company
or its subsidiaries; (iii) shall at all times during his employment with the Company, assist the
Company and its subsidiaries in every proper way (at the expense of the Company) to obtain and
develop for the benefit of the Company patents on such inventions, ideas, devices and processes;
and (iv) shall doe all such acts and execute, acknowledge and deliver all such instruments as may
be necessary or desirable to vest in the Company the entire interest in such inventions, ideas,
devices and processes referred to in this Section 5.2.

     5.3. Competition Following Termination. Within the two (2) year period following
termination, for any reason, of Mr. Asplund’s employment with the Company, Mr. Asplund shall not,
without the prior written consent of the Company, which consent may be withheld at the sole
discretion of the Company, (i) engage directly or indirectly, whether as an officer, director,
stockholder (of 5% or more of such entity), partner, majority owner, managerial employee, creditor,
or otherwise, in the operation,

Page 9 of 14

 

management or conduct of any business that competes with the businesses of the Company or its
subsidiaries being conducted at the time of such termination; (ii) solicit, contact, interfere
with, or divert any customer served by the Company or its subsidiaries, or any prospective customer
identified by or on behalf of the Company or its subsidiaries as of the date of Mr. Asplund’s
termination to divert business from or compete with the Company; or (iii) solicit any person
employed by the Company or any of its subsidiaries at the time of such termination to leave such
employment. Notwithstanding the foregoing, a response by a Company employee (or an employee of a
subsidiary of the Company) to a non-directed general solicitation shall not be deemed a violation
of clause (iii) preceding.

     5.4. Acknowledgement. Mr. Asplund acknowledges that the restrictions set forth in
this Section 5 are reasonable in scope and essential to the preservation of the businesses and
proprietary properties of the Company and its subsidiaries at the time of such termination and that
the enforcement thereof will not in any manner preclude Mr. Asplund, in the event of termination of
his employment with the Company, from becoming gainfully employed to provide a reasonable standard
of living for himself, the members of his family and those dependent upon him.

     5.5. Severability — Covenants. The covenants of Mr. Asplund contained in this Section
5 shall each be construed as any agreement independent of any other provision in this Agreement and
the existence of any claim or cause of action of Mr. Asplund against the Company or its
subsidiaries, whether predicated on this Agreement or otherwise, shall not constitute a defense to
the enforcement by the Company or its subsidiaries of such covenants. The parties hereto expressly
agree and contract that it is not the intention of any party to violate any public policy,
statutory or common law, and that if any sentence, paragraph, clause or combination of the same of
this Agreement is in violation of the law of any state where applicable, such sentence, paragraph,
clause or combination of the same shall be void in the jurisdictions where it is unlawful and the
remainder of such provision and this Agreement shall remain binding on the parties to make the
covenants of this Agreement binding only to the extent that it may be lawfully done under existing
applicable laws. In the event that any part of any covenant of this Agreement is determined by a
court of law to be overly broad, thereby making the covenant unenforceable, the parties hereto
agree, and it is their desire, that such court shall substitute a judicially enforceable limitation
in lieu of the overly broad covenant, and that as so modified the covenant shall be binding upon
the parties as if originally set forth herein.

     5.6. Remedies for Breach. Mr. Asplund acknowledges that his services pursuant to this
Agreement are unique and extraordinary and that irreparable injury will result to the Company and
its businesses and properties in the event of a material breach of the terms and conditions of this
Section 5 to be performed by him, the Company shall be entitled, if it so elects, to institute and
prosecute proceedings in any court of competent jurisdiction, either at law or in equity, to enjoin
him from performing services for any other person or entity or otherwise acting in violation of any
of the terms of this Section 5, and to obtain damages for any breach of this Section 5.

Page 10 of 14

 

     Section 6. Indemnification. In addition to any rights Mr. Asplund may have under the
Company’s charter or by-laws, the Company agrees to indemnify Mr. Asplund and hold Mr. Asplund
harmless, both during the Term and thereafter, against all costs, expenses (including, without
limitation, attorneys’ and accountants’ fees) and liabilities (other than settlements to which the
Company does not consent, such consent not to be unreasonably withheld) (collectively,
“Losses”) reasonably incurred by Mr. Asplund in connection with any claim, action,
proceeding or investigation brought against or involving Mr. Asplund with respect to, arising out
of or in any way relating to Mr. Asplund’s employment with the Company. Mr. Asplund shall promptly
notify the Company of any claim, action, proceeding or investigation under this paragraph and the
Company shall be entitled to participate in the defense of any such claim, action, proceeding or
investigation and, if it so chooses, to assume the defense with counsel selected by the Company and
approved by Mr. Asplund; provided that Mr. Asplund shall have the right to employ counsel
to represent him (at the Company’s expense) if Company counsel would have a “conflict of interest”
in representing both the Company and Mr. Asplund. The Company shall not settle or compromise any
claim, action, proceeding or investigation without Mr. Asplund’s consent, which consent shall not
be unreasonably withheld or delayed; provided, however, that such consent shall not be
required if the settlement entails only the payment of money and the Company fully indemnifies Mr.
Asplund in connection therewith. To the fullest extent permitted by law and the Company’s
certificate of incorporation and by-laws, the Company further agrees to advance any and all
expenses (including, without limitation, the fees and expenses of counsel) reasonably incurred by
the Mr. Asplund in connection with any such claim, action, proceeding or investigation. The
provisions of this paragraph shall survive the termination of this Agreement for any reason.

     Section 7. Notice. Any notice required or permitted hereunder shall be in writing and
given (i) either by actual delivery of the notice into the hands of the party hereunder entitled,
or (ii) by the mailing of the notice in the United States mail, certified mail, return receipt
requested, all postage prepaid and addressed to the party to whom the notice is to be given at the
party’s respective address set forth below, or such other address as either party may from time to
time designate to the other by written notice as provided herein.

	 	 	 
	If to the Company:

	 	Electric City Corp.
	 

	 	1280 Landmeier Road
	 

	 	Elk Grove Village, IL 60007
	 

	 	Attention: Chairman of the Board of Directors
	 
	 	 
	With a copy to:

	 	Electric City Corp.
	 

	 	1280 Landmeier Road
	 

	 	Elk Grove Village, IL 60007
	 

	 	Attention: Chief Financial Officer
	 
	 	 
	If to Mr. Asplund:

	 	Mr. David Asplund
	 

	 	2829 Iroquois Road
	 

	 	Wilmette, IL 60091

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The notice shall be deemed to be received in case (i) on the date of actual receipt by the party
and in case (ii) three days following the date of the mailing.

     Section 8. Amendment and Waiver. No amendment or modification of this Agreement shall
be valid or binding upon: (i) the Company unless made in writing and signed by an officer of the
Company, duly authorized by the Board of Directors of the Company or; (ii) Mr. Asplund unless made
in writing and signed by him. The waiver by the Company or Mr. Asplund of the breach of any
provision of this Agreement by the other party shall not operate or be construed as a waiver of any
subsequent breach of such party. No other course of dealing between the parties or any delay in
exercising any rights hereunder will operate as a waiver of any rights of either party under this
Agreement.

     Section 9. Governing Law/Arbitration. (a) The validity and effect of this Agreement
and the rights and obligations of the parties hereto shall be governed by, and construed in
accordance with, the laws and decisions of the State of Illinois, without giving effect to the
principles of conflicts of laws thereof.

     (b) The parties hereto agree that in the event of any disagreements or controversies arising
from this Agreement, such disagreements and controversies shall be subject to binding arbitration
as arbitrated in accordance with the then current Commercial Arbitration Rules of the American
Arbitration Association (the “AAA”) in Chicago, Illinois before one neutral arbitrator. Such
arbitrator shall be selected by mutual agreement of the parties within thirty (30) days of written
notice of said disagreement or controversy. If the parties cannot mutually agree to an arbitrator
within thirty (30) days, then the AAA shall designate the arbitrator. Either party may apply to
the arbitrator seeking injunctive relief until the arbitration award is rendered or the controversy
is otherwise resolved. Without waiving any remedy under this Agreement, either party may also seek
from any court having jurisdiction any interim or provisional relief that is necessary to protect
the rights or property of that party, pending the establishment of the arbitral tribunal (or
pending the arbitral tribunal’s determination of the merits of the controversy). In the event of
any such disagreement or controversy, neither party shall directly or indirectly reveal, report,
publish or disclose any information relating to such disagreement or controversy to any person,
firm or corporation not expressly authorized by the other party to receive such information or use
such information or assist any other person in doing so, except to comply with actual legal
obligations of such party or unless such disclosure is directly related to an arbitration
proceeding as provided herein, including, but not limited to, the prosecution or defense of any
claim in such arbitration. The costs and expenses of the arbitration (excluding attorneys’ fees)
shall be paid as determined by the arbitrator. This paragraph shall survive the termination of
this Agreement.

     Section 10. Entire Agreement. This Agreement contains all of the terms agreed upon by
the parties with respect to the subject matter hereof and supersedes all prior agreements,
arrangements and communications between the parties dealing with such subject matter, whether oral
or written.

Page 12 of 14

 

     Section 11. Binding Effect. This Agreement shall be binding upon and shall inure to
the benefit of the transferees, successors and assigns of the Company, including any company or
entity with which the Company may merge or consolidate.

     Section 12. Remedies Cumulative. The remedies provided herein shall be cumulative and
in addition to any and all other remedies which either party may have at law or in equity.

     Section 13. Costs of Enforcement. In the event of any suit or proceeding seeking to
enforce the terms, covenants or conditions of this Agreement, the prevailing party shall, in
addition to all other remedies and relief that may be available pursuant to this Agreement or
applicable law, recover his or its reasonable attorneys’ fees and costs as shall be determined and
awarded by an arbitrator or court, as the case may be.

     Section 14. Headings. Numbers and titles to paragraphs hereof are for information
purposes only and, where inconsistent with the text, are to be disregarded.

     Section 15. Severability — General. If any provision of this Agreement or the
application of any such provision to any person or circumstance shall be held invalid, illegal or
unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision hereof.

     Section 16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed to be an original and
all of which together shall be deemed to be one and the same agreement.

[Balance of page intentionally left blank; signature page follows.]

Page 13 of 14

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the date
first set forth above.

	 	 	 	 	 	 	 	 	 
	ELECTRIC CITY CORP.	 	 	 	DAVID R. ASPLUND	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Richard Kiphart
	 	 	 	/s/ David R. Asplund	 	 
	 

	 	 
	 	 	 	 	 	 
	Printed: Richard Kiphart	 	 	 	 	 	 
	Title: Chairman of the Board	 	 	 	 	 	 

Page 14 of 14

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