SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(A) of the
Securities Exchange Act of 1934 (Amendment No. ____)
Filed by the Registrant [X] Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as determined by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

ENERGY CONVERSION DEVICES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date of its
filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:

ECD LOGO

ENERGY CONVERSION DEVICES, INC.

1675 West Maple Road
Troy, Michigan 48084

Dear Stockholder:

The Annual Meeting of the Stockholders of Energy Conversion Devices, Inc.
will be held at 10:00 A.M. (E.S.T.) on February 19, 1998 at Michigan State
University Management Education Center, 811 West Square Lake Road, Troy,
Michigan. If you plan to attend, we would appreciate your calling the Investor
Relations department at 248-280-1900.

Sincerely,

Robert C. Stempel
Chairman of the Board

ENERGY CONVERSION DEVICES, INC.
----------------------

NOTICE OF MEETING OF STOCKHOLDERS
----------------------
Troy, Michigan
January 12, 1998

To the Stockholders of ENERGY CONVERSION DEVICES, INC.:

NOTICE is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of ENERGY CONVERSION DEVICES, INC. (the "Company") will be held at
10:00 a.m. (E.S.T.) on Thursday, February 19, 1998 at Michigan State University
Management Education Center, 811 West Square Lake Road, Troy, Michigan. The
purpose of the Meeting is to:

1. Elect the Board of Directors for the ensuing year and until
their successors shall be duly elected and qualified;

2. Consider and vote upon a proposal to increase the number of
authorized shares by 5,000,000 to make available an adequate number of the
Company's shares to be used for future corporate transactions;

3. Approve the appointment of Deloitte & Touche LLP as independent
accountants for the fiscal year ending June 30, 1998; and

4. Transact such other business as may properly come before the
Meeting.

Stockholders of record at the close of business on December 22, 1997 will
be entitled to vote at the Meeting.

The Company's Annual Report on Form 10-K for its fiscal year ended June
30, 1997 accompanies the enclosed Proxy Statement.

Whether or not you expect to attend the Meeting in person, please sign,
date and return the accompanying Proxy in the enclosed prepaid envelope. If you
attend the Meeting, you may vote in person even though you have already signed
and returned a Proxy.

Cordially,

Robert C. Stempel
Chairman of the Board

PROXY STATEMENT

This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Energy Conversion Devices, Inc. (the
"Company"), a Delaware corporation, to be voted at the Annual Meeting of
Stockholders (the "Meeting") to be held at Michigan State University Management
Education Center, 811 West Square Lake Road, Troy, Michigan on February 19, 1998
at 10:00 a.m. (E.S.T.) for the purposes set forth in the accompanying Notice of
Meeting of Stockholders.

Voting Rights of Stockholders. Holders of record of the Company's Common
Stock at the close of business on December 22, 1997 are entitled to vote at the
Meeting. As of December 22, 1997, there were outstanding 10,604,173 shares of
the Company's Common Stock, $.01 par value ("Common Stock"), and 219,913 shares
of the Company's Class A Common Stock, $.01 par value ("Class A Common Stock").
Each share of Common Stock is entitled to one vote per share and each share of
Class A Common Stock is entitled to 25 votes per share. Both classes vote as one
class on all matters, including the election and removal of directors, except
that with respect to (i) a merger or consolidation of the Company with another
corporation, (ii) the liquidation or dissolution of the Company, (iii) the sale
of all or substantially all of the assets of the Company, (iv) an amendment to
the Company's Certificate of Incorporation for which class voting is required by
Section 242 of the Delaware General Corporation Law, or (v) the authorization of
additional shares of Common Stock or Class A Common Stock, the affirmative vote
of a majority of the outstanding shares of Common Stock and the majority of the
outstanding shares of Class A Common Stock, voting as separate classes, is
required. Stanford R. Ovshinsky and his wife, Dr. Iris M. Ovshinsky, executive
officers, directors and founders of the Company, are record owners of 153,420
and 65,601 shares, respectively (or approximately 69.8 percent and 29.8 percent,
respectively), of the outstanding shares of Class A Common Stock, with the
balance of the outstanding shares (892 shares) owned by members of their family.
Mr. and Dr. Ovshinsky also own of record 9,989 shares of Common Stock. In
addition, as of December 22, 1997, Mr. Ovshinsky had the right to vote 126,500
shares of Common Stock (the "Sanoh Shares") owned by Sanoh Industrial Co., Ltd.
("Sanoh") under the terms of an agreement dated November 3, 1992 between the
Company and Sanoh.

A majority of the outstanding voting power will constitute a quorum at the
meeting. Abstentions are counted for purposes of determining the presence or
absence of a quorum for the transaction of business and counted in tabulations
of the votes cast on proposals presented to stockholders.

Voting of Proxies. All shares which are represented by signed proxies received
at or prior to the Meeting from stockholders of record as of the close of
business on December 22, 1997 will be voted at the Meeting. Unless a stockholder
specifies otherwise, the Proxy will be voted FOR each of the thirteen nominees
for director, and FOR the proposal to authorize additional shares and FOR the
approval of the appointment of Deloitte & Touche LLP as the Company's
independent accountants.

Revocation of Proxies. A stockholder who executes a Proxy may revoke it by
written notice received by the Company at any time before it is voted. Proxies
may also be revoked by any subsequently dated Proxy or by the stockholder
attending the Meeting and voting in person.

Other Information. The Company's executive offices are located at 1675
West Maple Road, Troy, Michigan 48084. This Proxy Statement and the accompanying
Proxy are being sent to the Company's stockholders on or about January 12, 1998.

THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED JUNE 30, 1997,
WHICH ACCOMPANIES THIS PROXY STATEMENT, HAS BEEN FURNISHED TO STOCKHOLDERS FOR
INFORMATIONAL PURPOSES ONLY AND NO PART THEREOF IS INCORPORATED BY REFERENCE IN
THIS PROXY STATEMENT.

THE COMPANY WILL PROVIDE TO ANY STOCKHOLDER THE EXHIBITS TO ITS 1997
ANNUAL REPORT ON FORM 10-K, AT A COPYING CHARGE OF $.25 PER PAGE, UPON WRITTEN
REQUEST TO ENERGY CONVERSION DEVICES, INC., 1675 WEST MAPLE ROAD, TROY, MICHIGAN
48084, ATTENTION: INVESTOR RELATIONS.

-4-

ITEM NO. 1

ELECTION OF DIRECTORS

At the Meeting, the directors are to be elected to serve until the next
annual meeting of stockholders and until their successors are duly elected and
qualified. Mr. Jack T. Conway, a director since 1980, died on January 6, 1998.
Pursuant to the provisions of the Company's by-laws, the Board of Directors has
by resolution set the number of directors comprising the full Board, effective
as of the date of the Meeting, at thirteen. In the unanticipated event that any
nominee for director should become unavailable, it is intended that the Proxies
will be voted for such substitute nominee as may be designated by the Board
of Directors. The affirmative vote of a majority of the votes cast, without
regard to class, will be required to elect the directors.

Information concerning the nominees for election as directors, including
the year each nominee first became a director, is set forth below.

---------------

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR ALL
THIRTEEN NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS.

Director
of the
Company Principal Occupation and
Name Since Office Business Experience
---- ------- ------ ------------------------

Stanford R. Ovshinsky 1960 President, Chief Mr. Ovshinsky, 75, the founder and Chief Executive
Executive Officer Officer and Director of the Company, has been an
and Director an executive officer and Director of the Company
since its inception in 1960. Mr. Ovshinsky is the
primary inventor of the Company's technology. Mr.
Ovshinsky also serves as: the Chief Executive
Officer of Ovonic Battery Company, Inc. ("Ovonic
Battery"); President, Chief Executive Officer and
Director of United Solar Systems Corp. ("United
Solar"); a member of the Board of Managers of GM
Ovonic L.L.C. ("GM Ovonic"); and Co-Chairman of the
Board of Directors of Sovlux Co. Ltd. ("Sovlux").
Mr. Ovshinsky is the husband of Dr. Iris M.
Ovshinsky.

Iris M. Ovshinsky 1960 Vice President Dr. Ovshinsky, 70, co-founder and Vice President of
and Director the Company, has been an executive officer and
Director of the Company since its inception in 1960.
Dr. Ovshinsky also serves as a director of Ovonic
Battery. Dr. Ovshinsky is the wife of Stanford R.
Ovshinsky.

-2-

Robert C. Stempel 1995 Chairman of the Mr. Stempel, 64, is Chairman of the Board and
Board and Executive Executive Director of the Company. Prior to his
Director election as a Director in December 1995, Mr. Stempel
served as senior business and technical advisor to
Mr. Ovshinsky. He is also the Chairman of Ovonic
Battery and serves on the Board of Managers of GM
Ovonic. From 1990 until his retirement in 1992, he
was the Chairman and Chief Executive Officer of
General Motors Corporation. Prior to serving as
Chairman, he had been President since 1987. Mr.
Stempel serves on the Board of Directors of NBD
Bank, N.A. He serves on the Audit Committee of the
Board.

Nancy M. Bacon 1977 Senior Vice Mrs. Bacon, 51, joined the Company in 1976 as its
President and Vice President of Finance and Treasurer. She
Director became the Senior Vice President of the Company
in 1993. Mrs. Bacon also serves on the Boards of
Directors of Sovlux and United Solar.

Umberto Colombo 1995 Director Prof. Colombo, 70, is Chairman of the Scientific
Councils of the ENI Enrico Mattei Foundation and
of the Instituto Per l'Ambiente in Italy. He was
Chairman of the Italian National Agency for New
Technology, Energy and the Environment until
1993 and then served as Minister of Universities
and Scientific and Technological Research in the
Italian Government until 1994. Prof. Colombo is
also active as a consultant in international science
and technology policy institutions related to
economic growth.

Hellmut Fritzsche 1969 Vice President Dr. Fritzsche, 70, was a professor of Physics at the
and Director University of Chicago, from 1957 until his retire-
ment in 1996. He was also Chairman of the Department
of Physics, the University of Chicago, until 1986.
Dr. Fritzsche has been a Vice President of the
Company since 1965, acting on a part-time basis,
chiefly in the Company's research and product
development activities.

Joichi Ito 1995 Director Mr. Ito, 31, is President of Eccosys, Ltd. and
Digital Garage KK as well as President and Represen-
tative Director of PSI Japan KK. He is an expert on
new computer technology and networked information
systems and writes and lectures extensively in the
United States, Japan and Europe. Mr. Ito serves as
a director and consultant to many companies in the
field of information technology.

-3-

Seymour Liebman 1997 Director Mr. Liebman, 48, currently Executive Vice President
and General Counsel at Canon U.S.A., Inc. has held a
variety of positions with Canon since 1974, includ-
ing Senior Vice President and General Counsel from
1992-1996. Mr. Liebman also serves on the Board of
Directors of United Solar. He is a Director of Zygo
Corporation.

Walter J. McCarthy, Jr. 1997 Director Mr. McCarthy, 72, until his retirement in 1990, was
the Chairman and Chief Executive Officer of Detroit
Edison Company. Mr. McCarthy has served as a con-
sultant to the Company since 1990. Until 1995, Mr.
McCarthy also served on the Boards of Comerica Bank,
Detroit Edison Company and Federal-Mogul Corpora-
tion. He is a member of the National Academy of
Engineering. Mr. McCarthy serves on the Audit and
Compensation Committees of the Board.

Florence I. Metz 1995 Director Dr. Metz, 68, until her retirement in 1996, held
various executive positions with Inland Steel
Company: General Manager, New Ventures, Inland Steel
Company (1989-1991); General Manager, New Ventures,
Inland Steel Industries (1991-1992) and Advanced
Graphite Technologies (1992-1993); Program Manager
for Business and Strategic Planning at Inland Steel
(1993-1996). Dr. Metz also serves on the Board of
Directors of Ovonic Battery. She serves on the Com-
pensation Committee of the Board.

Haru Reischauer 1990 Director Mrs. Reischauer, 82, was initially appointed as a
Director to fill the unexpired term of Edwin O.
Reischauer (former U.S. Ambassador to Japan)
after his death in September 1990, and was re-
elected to the Board of Directors in 1992. Mrs.
Reischauer also serves on the Board of Directors
of United Solar. She is an author and lecturer.

Nathan J. Robfogel 1990 Director Mr. Robfogel, 62, was, until his retirement in 1996,
a partner with the law firm of Harter, Secrest &
Emery, which he joined in 1959. He is currently
Vice President for University Relations of the
Rochester Institute of Technology where he has been
a trustee since 1985. From 1989 to 1995, Mr.
Robfogel served as Chairman of the Board of
Directors of the New York State Facilities Develop-
ment Corporation, a public benefit corporation.

-4-

Stanley K. Stynes 1977 Director Dr. Stynes, 65, was Dean of the College of
Engineering at Wayne State University from 1970
to August 1985, and a Professor of Engineering at
Wayne State University from 1985 until his
retirement in 1992. He has been involved in various
administrative, teaching, research and related
activities. Dr. Stynes serves as Chairman of the
Audit Committee of the Board.

MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD

The Audit Committee of the Board of Directors (the "Audit Committee") met
five times during the fiscal year ended June 30, 1997 and was composed of
Stanley K. Stynes (Chairman), Jack T. Conway (until his death on January 6,
1998), Walter J. McCarthy, Jr. and Robert C. Stempel. The principal duties
of the Audit Committee are to (i) recommend selection of the Company's inde-
pendent accountants, (ii) review with the independent accountants the results of
their audits, (iii) review with the independent accountants and management the
Company's financial reporting and operating controls and the scope of audits,
(iv) review all budgets of the Company and its subsidiaries and (v) make recom-
mendations concerning the Company's financial reporting, accounting practices
and policies and financial, accounting and operating controls and safeguards.

The Compensation Committee of the Board of Directors (the "Compensation
Committee") met three times during the fiscal year ended June 30, 1997 and was
chaired by Jack T. Conway (until his death on January 6, 1998), with Walter J.
McCarthy, Jr. and Florence I. Metz as members. The Compensation Committee is
responsible for administering the policies which govern both annual compensation
of executive officers and the Company's stock option plans. The Compensation
Committee meets several times during the year to review recommendations from
management regarding stock options and compensation.

The Company does not have a standing nominating committee.

During the fiscal year ended June 30, 1997, the Board of Directors held six
meetings. All directors attended more than 75 percent of the meetings of the
Board and the committees on which such directors served, except for Mrs.
Reischauer, Prof. Colombo and Mr. Ito.

COMPENSATION OF DIRECTORS

Directors who are neither employees of the Company nor otherwise
compensated by the Company are issued approximately $5,000 per year in the
Company's Common Stock based on the closing price of Common Stock on the first
business day of each year. Directors who are not employees of the Company
receive $500 for each Board meeting attended (in person or via telephone con-
ference call) as well as $500 for committee meetings if not coincident with a
Board meeting. Directors are also reimbursed for all expenses incurred for the
purpose of attending Board of Directors and committee meetings, including air-
fare, mileage, parking, transportation and hotel.

-5-

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During the fiscal year ended June 30, 1997, the Compensation Committee was
composed of Mr. Conway, Mr. McCarthy and Dr. Metz. None of the Compensation
Committee members are or were during the last fiscal year an officer or employee
of the Company or any of its subsidiaries, or had any business relationship with
the Company or any of its subsidiaries.

ITEM NO. 2

PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON
STOCK FROM 15,000,000 TO 20,000,000

At the meeting, the stockholders of the Company will be asked to consider
and act upon a proposal (the "Common Stock Proposal") to amend Article FOURTH of
the Company's Certificate of Incorporation to increase the number of authorized
shares of the Company's Common Stock from 15,000,000 to 20,000,000.

As more fully described below, the purpose of the Common Stock Proposal is to
make available additional shares of Common Stock for issuance in the event the
Company in the future determines to seek additional equity financing, to enter
into strategic joint ventures or collaborative business arrangements or to
establish additional director or employee equity compensation plans or
arrangements. The Company has no present plan to issue any of the additional
shares of Common Stock to be authorized pursuant to the Common Stock Proposal.

As indicated below, the Board of Directors strongly believes that the
Common Stock Proposal is in the best interests of the Company and its stock-
holders. Under Delaware law and the Company's Certificate of Incorporation,
the Common Stock Proposal must be approved by both the Board of Directors and
the holders of a majority of both the Company's Class A Common Stock and
Common Stock, voting as separate classes. The Board of Directors approved
the Common Stock Proposal at a meeting held on December 23, 1997.

If the Common Stock Proposal is adopted by the stockholders, the Company
will file a Certificate of Amendment with the Delaware Secretary of State
amending the Company's Certificate of Incorporation in accordance with the
Common Stock Proposal. The text of Article FOURTH, as it is proposed to be
amended, is set forth in Exhibit A to this Proxy Statement.

Background

Under the Company's Certificate of Incorporation as presently in effect,
the Company has 15,000,000 shares of authorized Common Stock. As of the mailing
date of this Proxy Statement, 10,646,173 shares of the Company's Common Stock
were issued and outstanding and 3,779,733 shares were reserved for issuance upon
the exercise of outstanding stock options, warrants and convertible securities.

Purpose of the Common Stock Proposal

The purpose of the Common Stock Proposal is to make available additional
shares of Common Stock for issuance in the event the Company in the future
determines to seek additional

-6-

equity financing, to enter into strategic joint ventures or collaborative
business arrangements or to establish additional director or employee equity
compensation plans or arrangements.

The Company may in the future determine that it is necessary or desirable
to seek additional equity financing through a public offering or private
placement of Common Stock or other securities, including debt securities,
convertible into or exercisable or exchangeable for shares of Common Stock. The
authorization of additional shares of Common Stock pursuant to the Common Stock
Proposal will permit the Company to seek such additional equity financing when
and if market conditions are advantageous without the delay and uncertainty
inherent in obtaining future stockholder approval for the authorization of
additional shares of Common Stock in order to permit such financing. The Company
may also enter into strategic joint venture or other collaborative business
arrangements with licensees, suppliers, distributors and other parties with whom
the Company does business. Certain such transactions could involve an equity
investment in the Company or the issuance of stock options, warrants or other
securities convertible into or exercisable or exchangeable for shares of Common
Stock.

The Company has no present plan to issue any of the additional
shares of Common Stock to be authorized pursuant to the Common Stock Proposal.

Effect of Change

One of the effects of the Common Stock Proposal, if adopted, however, may
also be to enable the Board of Directors to render it more difficult to, or dis-
courage an attempt to, obtain control of the Company by means of a merger,
tender offer, proxy contest or otherwise, and thereby protect the continuity of
present management. The Board of Directors would, unless prohibited by applic-
able law, have additional shares of Common Stock available to effect transac-
tions (including private placements) in which the number of the Company's out-
standing shares would be increased and would thereby dilute the interest of any
party attempting to gain control of the Company. Such action, however, could
discourage an acquisition of the Company which shareholders might view as
desirable. In addition, since the Company's shareholders have no preemptive
rights to purchase additional shares of Common Stock issued, the issuance of
such shares could dilute the interest of current shareholders of the Company.

---------------

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
COMMON STOCK PROPOSAL.

-7-

ITEM NO. 3

APPROVAL OF THE APPOINTMENT OF INDEPENDENT ACCOUNTANTS

Upon the recommendation of the Audit Committee, the Board of Directors has
appointed Deloitte & Touche LLP ("Deloitte & Touche") as independent accountants
for the Company to audit its consolidated financial statements for the fiscal
year ending June 30, 1998 and to perform audit-related services. Such services
include review of periodic reports and registration statements filed by the
Company with the Securities and Exchange Commission and consultation in
connection with various accounting and financial reporting matters. Deloitte &
Touche also performs certain limited non-audit services for the Company.

The Board of Directors has directed that the appointment of Deloitte &
Touche be submitted to the stockholders for approval. If the stockholders should
not approve such appointment, the Audit Committee and the Board of Directors
would reconsider the appointment.

The Company has been advised by Deloitte & Touche that it expects to have
a representative present at the Meeting and that such representative will be
available to respond to appropriate questions. Such representative will also
have the opportunity to make a statement if he or she desires to do so.

---------------

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR
THE APPROVAL OF THE APPOINTMENT OF DELOITTE & TOUCHE AS INDEPENDENT
ACCOUNTANTS.

-8-

SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

Class A Common Stock

Mr. Stanford R. Ovshinsky and his wife, Dr. Iris M. Ovshinsky (executive
officers, directors and founders of the Company), own of record 153,420 shares
and 65,601 shares, respectively (or approximately 69.8 percent and 29.8 percent,
respectively), of the outstanding shares of Class A Common Stock. Common Stock
is entitled to one vote per share and Class A Common Stock is entitled to 25
votes per share. Class A Common Stock is convertible into Common Stock on a
share-for-share basis at any time and from time to time at the option of the
holders, and will be deemed to be converted into Common Stock on a
share-for-share basis on September 14, 1999. As of December 22, 1997, Mr.
Ovshinsky also had the right to vote the 126,500 Sanoh Shares which, together
with the Class A Common Stock and 9,989 shares of Common Stock Mr. and Dr.
Ovshinsky own, give Mr. and Dr. Ovshinsky voting control over shares
representing approximately 35% of the combined voting power of the Company.

The following table sets forth, as of December 22, 1997 information
concerning the beneficial ownership of Class A Common Stock by each Director and
all executive officers and Directors of the Company as a group. All shares are
owned directly except as otherwise indicated. Under the rules of the Securities
and Exchange Commission, Stanford R. Ovshinsky and Iris M. Ovshinsky may each be
considered to beneficially own the shares held by the other.

Class A
Name of Common Stock Total Number of Shares Percentage
Beneficial Owner Beneficially Owned(1)(2) Beneficially Owned of Class
- ---------------- ------------------------ ---------------------- ----------

Stanford R. Ovshinsky 153,420 153,420 69.8%

Iris M. Ovshinsky 65,601 65,601 29.8%

All other executive
officers and directors
as a group (16 persons) __ __ __

Total 219,021 219,021 99.6%

(1) The balance of the 219,913 shares of Class A Common Stock outstanding, 892
shares, or approximately 0.4%, are owned by other members of Mr. and Dr.
Ovshinsky's family. Neither Mr. nor Dr. Ovshinsky has voting or investment
power with respect to such shares.

(2) On November 10, 1995, the Compensation Committee recommended, and the
Board of Directors approved, an amendment to Mr. and Dr. Ovshinsky's Stock
Option Agreements dated November 18, 1993 (the "Agreements") to permit Mr.
and Dr. Ovshinsky to exercise a portion (126,082 and 84,055 shares,
respectively) of their existing Common Stock option for Class A Common
Stock on the same terms and conditions as provided in the Agreements. The
shares of Class A Common Stock issuable upon exercise of the options under
the Agreements, as amended, are not included in the number of shares
indicated.

-9-

Common Stock

Directors and Executive Officers. The following table sets forth, as of
December 22, 1997, information concerning the beneficial ownership of Common
Stock by each director and executive officer and for all directors and executive
officers of the Company as a group. All shares are owned directly except as
otherwise indicated.

Amount and Nature of
Name of Beneficial Owner Beneficial Ownership(1) % of Class(2)
- ------------------------ ----------------------- -------------

Stanford R. Ovshinsky 798,058(3) 7.1%
Iris M. Ovshinsky 392,823(4) 3.6%
Robert C. Stempel 340,904(5) 3.1%
Nancy M. Bacon 251,215(6) 2.3%
Subhash K. Dhar 50,316(7) *
Haru Reischauer 41,709(8) *
Jack T. Conway 38,027(9) *
Hellmut Fritzsche 31,490(10) *
Joichi Ito 22,534(11) *
Walter J. McCarthy, Jr. 21,660(12) *
Stanley K. Stynes 20,357(13) *
Nathan J. Robfogel 16,590(14) *
Umberto Colombo 11,624(15) *
Florence I. Metz 8,857(16) *
Seymour Liebman 4,000(17) *
Stephan W. Zumsteg 3,200(18) *

All executive officers
and directors as a
group (16 persons) 2,053,364 16.6%

- -------

* Less than 1%.

(1) Under the rules and regulations of the Securities and Exchange Commission,
a person is deemed to be the beneficial owner of a security if that person
has the right to acquire beneficial ownership of such security within 60
days, whether through the exercise of options or warrants or through the
conversion of another security.

(2) Under the rules and regulations of the Securities and Exchange Commission,
shares of Common Stock issuable upon exercise of options and warrants or
upon conversion of securities which are deemed to be beneficially owned by
the holder thereof (see Note (1) above) are deemed to be outstanding for
the purpose of computing the percentage of outstanding securities of the
class owned by such person but are not deemed to be outstanding for the
purpose of computing the percentage of the class owned by any other
person.

(3) Includes 509,323 shares (adjusted as of September 30, 1997) represented by
options exercisable within 60 days, the 126,500 Sanoh Shares over which
Mr. Ovshinsky has voting power, 153,420 shares of Class A Common Stock
which are convertible into Common Stock, and 750 shares represented by
warrants exercisable within 60 days. Under the rules and regulations of
the Securities and Exchange Commission, Mr. Ovshinsky may be deemed a
beneficial owner of the shares of Common Stock and Class A Common Stock
owned by his wife, Iris M. Ovshinsky. Such shares are not reflected in Mr.
Ovshinsky's share ownership in this table.

-10-

(4) Includes 324,548 shares (adjusted as of September 30, 1997) represented by
options exercisable within 60 days, 65,601 shares of Class A Common Stock
which are convertible into Common Stock and 750 shares represented by
warrants exercisable within 60 days. Under the rules and regulations of
the Securities and Exchange Commission, Dr. Ovshinsky may be deemed a
beneficial owner of the shares of Common Stock and Class A Common Stock
owned by her husband, Stanford R. Ovshinsky. Such shares are not reflected
in Dr. Ovshinsky's share ownership in this table.

(5) Includes 297,500 shares represented by options exercisable within 60 days
and 14,000 shares represented by warrants exercisable within 60 days.

(6) Includes 227,700 shares represented by options exercisable within 60 days
and 6,000 shares represented by warrants exercisable within 60 days.

(7) Includes 50,316 shares represented by options exercisable within 60 days.

(8) Includes 20,000 shares represented by options exercisable within 60 days,
and 17,885 shares of Common Stock held in a trust of which Mrs. Reischauer
is trustee.

(9) Includes 27,000 shares represented by options exercisable within 60 days
and 4,000 shares represented by warrants exercisable within 60 days.

(10) Includes 18,980 shares represented by options exercisable within 60 days
and 1,980 shares represented by warrants exercisable within 60 days.

(11) Includes 21,749 shares represented by options exercisable within 60 days.

(12) Includes 10,000 shares represented by options exercisable within 60 days.

(13) Includes 9,000 shares represented by options exercisable within 60 days.

(14) Includes 15,000 shares represented by options exercisable within 60 days.

(15) Includes 10,000 shares represented by options exercisable within 60 days.

(16) Includes 5,000 shares represented by options exercisable within 60 days.

(17) Includes 4,000 shares represented by options exercisable within 60 days.

(18) Includes 3,200 share represented by options exercisable within 60 days.

-11-

Principal Shareholders. The following table sets forth, as of December 22,
1997, to the knowledge of the Company, the beneficial holders of more than 5%
of the Company's Common Stock (see footnotes for calculation used to determine
"percentage of class" category):

Name and Address of Amount and Nature of Percentage of
Beneficial Holder Beneficial Ownership Class(1)
- --------------------- -------------------- -------------

Stanford R. and
Iris M. Ovshinsky 1,190,881(2) 10.2 %
1675 West Maple Road
Troy, Michigan 48084

(1) Under the rules and regulations of the Securities and Exchange Commission,
shares of Common Stock issuable upon exercise of options and warrants or
upon conversion of securities which are deemed to be beneficially owned by
the holder thereof are deemed to be outstanding for the purpose of
computing the percentage of outstanding securities of the class owned by
such person but are not deemed to be outstanding for the purpose of
computing the percentage of the class owned by any other person.

(2) Includes 219,021 shares of Class A Common Stock owned by Mr. and Dr.
Ovshinsky (which shares are convertible at any time into Common Stock and
will be deemed to be converted into Common Stock on September 14, 1999),
9,989 shares of Common Stock owned by Mr. and Dr. Ovshinsky, 126,500
shares of Sanoh Shares over which Mr. Ovshinsky has voting rights, 833,871
shares represented by options exercisable within 60 days and 1,500 shares
represented by warrants exercisable within 60 days held by Mr. and Dr.
Ovshinsky.

-12-

EXECUTIVE OFFICERS

The executive officers of the Company are as follows:

Served As An Executive
Name Age Office Officer or Director Since
---- --- ------ -------------------------

Stanford R. Ovshinsky 75 President, Chief Executive Officer 1960(1)
and Director

Iris M. Ovshinsky 70 Vice President and Director 1960(1)

Robert C. Stempel 64 Executive Director and Chairman 1995
of the Board

Nancy M. Bacon 51 Senior Vice President 1976

Hellmut Fritzsche 70 Vice President and Director 1969

Subhash K. Dhar 46 President and Chief Operating 1986
Officer of Ovonic Battery

Stephan W. Zumsteg 51 Treasurer 1997

- -------

(1) The predecessor of the Company was originally founded in 1960. The present
corporation was incorporated in 1964 and is the successor by merger of the
predecessor corporation.

See "Item No. 1, Election of Directors" for information relating to
Stanford R. Ovshinsky, Iris M. Ovshinsky, Robert C. Stempel, Nancy M. Bacon and
Hellmut Fritzsche.

Subhash K. Dhar joined the Company in 1981 and has held various positions
with Ovonic Battery since its inception in October 1982. Mr. Dhar has served as
Chief Operating Officer of Ovonic Battery since 1986 and President since 1987.

Stephan W. Zumsteg joined the Company in March 1997 and was elected
Treasurer in April 1997. Prior to joining the Company, Mr. Zumsteg was Chief
Financial Officer of the Kirlin Company from July 1996 to February 1997 and
Vice President-Finance & Administration and Chief Financial Officer of Lincoln
Brass Works from July 1991 to June 1996.

-13-

EXECUTIVE COMPENSATION

The following table sets forth the compensation paid by the Company during
its last three fiscal years to its Chief Executive Officer and each of its
other four most highly compensated executive officers for the fiscal year ended
June 30, 1997.

SUMMARY COMPENSATION TABLE

Annual Long Term
Compensation Compensation
------------ ------------
All
Restricted Options Other
Name and Principal Fiscal Stock (Number Compen-
Position Year(1) Salary(2) Bonus Award of Shares) sation(4)
- ------------------- ------- --------- ----- ---------- ---------- ---------

Stanford R. Ovshinsky 1997 $276,016 $37,981(3) -- $10,017
President and Chief 1996 $267,800 $90,741(3) -- $10,017
Executive Officer(5) 1995 $256,567 -- 294,957(6) $ 8,798

Iris M. Ovshinsky, 1997 $250,016 -- $ 8,939
Vice President 1996 $250,004 -- $ 5,726
1995 $153,846 196,888 $ 4,726

Robert C. Stempel, 1997 $270,005 -- 25,000 $ 3,159
Executive Director(7) 1996 $125,008 $50,312 125,000 $ 3,159
1995 -- -- 179,000 --

Nancy M. Bacon, 1997 $235,019 -- $ 5,796
Senior Vice President 1996 $235,472 25,000 $ 5,794
1995 $225,000 160,200 $ 4,879

Subhash K. Dhar, 1997 $200,013 -- -- $ 5,283
President and Chief 1996 $200,503 $15,000 62,040 $ 5,283
Operating Officer of 1995 $165,769 -- 3,980 $ 4,267
Ovonic Battery

- -------

(1) The Company's fiscal year is July 1 to June 30. The Company's 1997 fiscal
year ended June 30, 1997.
(2) Amounts shown include compensation deferred under the Company's 401 (k)
Plan. Does not include taxable income resulting from exercise of stock
options.
(3) Computed based on net income from operations for preceding years as
provided in Mr. Ovshinsky's September 1993 Employment Agreement.

-14-

(4) "All Other Compensation" is comprised of (i) contributions made by the
Company to the accounts of each of the named executive officers under the
Company's 401(k) Plan with respect to each of the fiscal years ended June
30, 1997, 1996 and 1995, respectively, as follows: Dr. Ovshinsky $3,269,
$2,500 and $1,500; Mrs. Bacon $4,500 (for each of 1997 and 1996) and
$4,096 (1995); Mr. Dhar $4,500 (for each of 1997 and 1996) and $3,808
(1995); (ii) the dollar value of any life insurance premiums paid by the
Company in the fiscal years ended June 30, 1997, 1996 and 1995,
respectively, with respect to term-life insurance for the benefit of each
of the named executives as follows: Mr. Ovshinsky $10,017 (for each of
1997 and 1996) and $8,798 (1995); Dr. Ovshinsky $5,670 (1997) and $3,226
(for each of 1996 and 1995); Mr. Stempel $3,159 (for each of 1997 and
1996); Mrs. Bacon $1,296, $1,294, and $783; and Mr. Dhar $783 (for each of
1997 and 1996) and $459 (1995). Under the 401 (k) Plan, which is a
qualified defined-contribution plan, the Company makes matching
contributions periodically on behalf of the participants in the amount of
50% of each such participant's contributions. These matching contributions
are limited to 3% of a participant's salary, up to $150,000 for 1997. The
contributions reported for 1997 are for the calendar year ended December
31, 1996.
(5) In September 1993, Mr. Ovshinsky entered into separate employment
agreements with the Company and Ovonic Battery. See "Employment
Agreements." The amounts indicated include compensation received by Mr.
Ovshinsky pursuant to the Employment Agreements with the Company and
Ovonic Battery.
(6) Does not include option to purchase shares of Ovonic Battery. See
"Employment Agreements."
(7) Mr. Stempel joined the Company in December 1995. The salary reported for
1996 is for the six month period January 1996-June 1996. Options
indicated for 1995 were granted to Mr. Stempel prior to his becoming an
executive officer of the Company.

OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth all options granted to the named executive
officers during the fiscal year ended June 30, 1997.

Potential Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation for
Individual Grants Option Term (1)
------------------------------------------------------------- ------------------------------
% of Total
Options
Options Granted Exercise
Granted to Employees Price Expiration
Name (#) in Fiscal Year ($/Sh) Date 0% 5% 10%
------------------ ------- --------------- -------- ----------- -------------------------------

Robert C. Stempel 25,000 8.59% $15.125 12/18/2006 - $237,801 $602,634

- -------

(1) The potential realizable value amounts shown illustrate the values that
might be realized upon exercise immediately prior to the expiration of
their term using 5% and 10% appreciation rates as required to be used in
this table by the Securities and Exchange Commission, compounded annually,
and are not intended to forecast possible future appreciation, if any, of
the Company's stock price. Additionally, these values do not take into
consideration the provisions of the options providing for
nontransferability or termination of the options following termination of
employment.

-15-

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES

The following table sets forth all stock options exercised by the named
executives during the fiscal year ended June 30, 1997 and the number and value
of unexercised options held by the named executive officers at fiscal year end.

Shares
Acquired Number of Securities Value of Unexercised
on Value Underlying Unexercised in-the-Money Options
Name Exercise Realized Options at Fiscal Year End at Fiscal Year End
(#) ($) Exercisable/Unexercisabe Exercisable/Unexercisable
- ------------------------ -------- -------- -------------------------- -------------------------

Stanford R. Ovshinsky(1) _ _ 450,705/58,487 $1,158,341/$51,176

Iris M. Ovshinsky (2) _ _ 280,395/44,066 $749,485/$38,558

Robert C. Stempel (3) _ _ 236,300/113,700 $234,013/$33,863

Nancy M. Bacon (4) 27,800 $219,300(5) 182,640/52,560 $399,185/$32,865

Subhash K. Dhar (6) _ _ 49,122/19,806 $23,545/$1,045

- -------

(1) Mr. Ovshinsky's exercisable and unexercisable options are exercisable at a
weighted average price of $11.04 per share and $11.875 per share,
respectively.

(2) Dr. Ovshinsky's exercisable and unexercisable options are exercisable at a
weighted average price of $11.00 per share and $11.875 per share,
respectively.

(3) Mr. Stempel's exercisable and unexercisable options are exercisable at a
weighted average price of $13.36 and $16.46 per share, respectively.

(4) Mrs. Bacon's exercisable and unexercisable options are exercisable at a
weighted average price of $11.00 per share and $14.23 per share,
respectively.

(5) Of the approximately $219,300 value realized, approximately $133,330 was
used to cover expenses, i.e., purchase price and withholding taxes
associated with the exercise, and approximately $85,191 was used to
purchase 10,935 shares of the Company's Common Stock.

(6) Mr. Dhar's exercisable and unexercisable options are exercisable at a
weighted average price of $15.81 per share and $16.46 per share,
respectively.

EMPLOYMENT AGREEMENTS

On September 2, 1993, Stanford R. Ovshinsky entered into separate
employment agreements with each of the Company and Ovonic Battery in order to
define clearly his duties and compensation arrangements and to provide to each
company the benefits of his management efforts and future inventions. The
initial term of each employment agreement is six years. Mr. Ovshinsky's
employment agreement with the Company provides for an annual salary of not less
than $100,000,

-16-

while his agreement with Ovonic Battery provides for an annual salary of not
less than $150,000. Both agreements provide for annual increases to reflect
increases in the cost of living, discretionary annual increases as determined
by the Board of Directors of the Company and an annual bonus equal to 1% of the
net income from operations of the Company (excluding Ovonic Battery) or Ovonic
Battery.

Mr. Ovshinsky's employment agreement with Ovonic Battery additionally
provides for a right to vote the shares of Ovonic Battery held by the Company
following a change in control of the Company. For purposes of the agreement,
change in control means (i) any sale, lease, exchange or other transfer of all
or substantially all of the Company's assets; (ii) the approval by the
Company's stockholders of any plan or proposal of liquidation or dissolution of
the Company; (iii) the consummation of any consolidation or merger of the
Company in which the Company is not the surviving or continuing corporation;
(iv) the acquisition by any person of 30 percent or more of the combined voting
power of the then outstanding securities having the right to vote for the
election of directors; (v) changes in the constitution of the majority of the
Board of Directors; (vi) the holders of the Class A Common Stock ceasing to be
entitled to exercise their preferential voting rights other than as provided in
the Company's charter and (vii) bankruptcy. In the event of mental or physical
disability or death of Mr. Ovshinsky, the foregoing power of attorney and proxy
will be exercised by Dr. Iris M. Ovshinsky.

Pursuant to his employment agreement with Ovonic Battery, Mr. Ovshinsky
was granted stock options, exercisable at a price of $16,129 per share to
purchase 186 shares (adjusted from a price of $50,000 per share to purchase 60
shares pursuant to the anti-dilution provisions of the option agreement) of
Ovonic Battery's common stock, representing approximately 6% of Ovonic
Battery's outstanding common stock. The Ovonic Battery stock options vest on a
quarterly basis over six years commencing with the quarter beginning October 1,
1993, subject to Mr. Ovshinsky's continued performance of his obligations to
Ovonic Battery under his employment agreement. Vesting of the stock options
will accelerate in the event of Mr. Ovshinsky's death, mental or physical
disability or termination of employment without cause and in the event of a
change in control of the Company.

COMPENSATION COMMITTEE REPORT

Compensation Committee

The Compensation Committee is responsible for administering the policies
which govern both annual compensation of executive officers and the Company's
stock option plans. The Compensation Committee meets several times during the
year to review recommendations from management regarding stock options and
compensation. Compensation and stock option recommendations are based upon
performance, current compensation, stock option ownership, and years of service
to the Company. The Company does not have a formal bonus program for
executives, although it has awarded bonuses to its executives from time to
time.

-17-

Base Salary

The Compensation Committee considers the Company's financial position and
other factors in determining the compensation of its executive officers. These
factors include remaining competitive within the relevant hiring
market--whether scientific, managerial or otherwise--so as to enable the
Company to attract and retain high quality employees, and, where appropriate,
linking a component of compensation to the performance of the Company's Common
Stock--such as by a granting of stock option or similar equity-based
compensation--to instill ownership thinking and align the employees' and
stockholders' objectives. The Company has been successful at recruiting,
retaining and motivating executives who are highly talented,
performance-focused and entrepreneurial.

Stock Options

Stock option grants to Mr. Stempel were made by the Compensation Committee
in accordance with the Compensation Committee's evaluation of his contributions
to the Company. See "Option Grants in Last Fiscal Year." While Mr. Ovshinsky
and Mr. Stempel participate in formulating the recommendation of management
regarding the grant of stock options, neither one participates in the
deliberations of the Compensation Committee.

Ownership of stock assists in the attraction and retention of qualified
employees and provides them with additional incentives to devote their best
efforts to pursue and attain the achievement of corporate goals.

Chief Executive Officer Compensation

In September 1993, Mr. Ovshinsky entered into separate employment
agreements with each of the Company and Ovonic Battery. The purpose of these
agreements, which provide for the payment to Mr. Ovshinsky of an annual salary
of not less than $100,000 by the Company and not less than $150,000 by Ovonic
Battery, was to define clearly Mr. Ovshinsky's duties and compensation
arrangements and to provide to each company the benefits of his management
efforts and future inventions. See "Employment Agreements." Mr. Ovshinsky's
compensation for fiscal year 1997 was determined in accordance with his
Employment Agreements with the Company and Ovonic Battery.

COMPENSATION COMMITTEE

Jack T. Conway
Walter J. McCarthy, Jr.
Florence I. Metz

-18-

PERFORMANCE GRAPH

The line graph below compares the cumulative total stockholder return on
the Company's Common Stock over a five-year period with the return on the
NASDAQ Stock Market - US Index and the Hambrecht & Quist Technology Index.

Cumulative Total Return
- - - - - - - - - - - - - - - - -
6/92 6/93 6/94 6/95 6/96 6/97

ENERGY CONVERSION DEVICES 100 121 136 181 253 142
NASDAQ STOCK MARKET-US 100 126 127 169 218 265
H & Q TECHNOLOGY 100 136 139 245 287 374

The total return with respect to NASDAQ Stock Market - US Index and the
Hambrecht & Quist Technology Index assumes that $100 was invested on June 30,
1992, including reinvestment of dividends.

The Company has paid no cash dividends in the past and no cash dividends
are expected to be paid in the foreseeable future.

The Report of the Compensation Committee on Executive Compensation and the
Performance Graph are not deemed to be filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, or Securities Exchange
Act of 1934, as amended, or incorporated by reference in any documents so
filed.

-19-

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Canon/United Solar. In June, 1990, the Company formed United Solar, a
joint venture with Canon, in which Canon and the Company each own 49.98% of the
outstanding shares, with the balance held by Mrs. Haru Reischauer, a member of
the Company's Board of Directors. Mrs. Reischauer is also a director of United
Solar. In the year ended June 30, 1997, the Company performed various
laboratory, shop, patent and research services for United Solar for which
United Solar was charged approximately $267,000. In the year ended June 30,
1997, United Solar billed the Company for approximately $296,000 for work
performed in accordance with the DOE PV Bonus contract.

GM Ovonic. During the year ended June 30, 1997, the Company had revenues
of $7,776,000 for sales of battery packs, electrodes, machine building and
other services performed for GM Ovonic.

Miscellaneous. Herbert Ovshinsky, Stanford R. Ovshinsky's brother, is
employed by the Company as Director of the Production Technology and Machine
Building Division working principally in the design of manufacturing equipment.
He received $118,245 in salary during the year ended June 30, 1997.

Compliance with Section 16(a) of the Securities Exchange Act of 1934.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and officers to file reports of ownership and changes in ownership
with respect to the securities of the Company and its affiliates with the
Securities and Exchange Commission and to furnish copies of these reports to
the Company. Based on a review of these reports and written representations
from the Company's directors and officers regarding the necessity of filing a
report, the Company believes that during fiscal year ended June 30, 1997, all
filing requirements were met on a timely basis.

ADDITIONAL INFORMATION

Cost of Solicitation. The cost of solicitation will be borne by the
Company. In addition to solicitation by mail, directors, officers and other
employees of the Company may solicit proxies personally or by telephone or
other means of communication. Arrangements may be made with brokerage houses
and other custodians, nominees and fiduciaries to forward, at the expense of
the Company, copies of the proxy materials to the beneficial owners of shares
held of record by such persons. The Company also intends to hire Morrow & Co.,
at an anticipated cost of approximately $5,500 plus out-of-pocket expenses, to
assist it in the solicitation of proxies personally, by telephone, or by other
means.

Other Action at the Meeting. The Company's management, at the time hereof,
does not know of any other matter to be presented which is a proper subject for
action by the stockholders at the Meeting. If any other matters shall properly
come before the Meeting, the shares represented by a properly executed proxy
will be voted in accordance with the judgment of the persons named on the
proxy.

-20-

Stockholder Proposals for 1998 Annual Meeting. Proposals of stockholders
intended to be presented at the Company's next annual meeting of stockholders,
presently expected to be held during January 1999 must be received by the
Company no later than September 4, 1998 in order for those proposals to be
included in the proxy materials for the meeting.

---------------

Stockholders are urged to send in their proxies without delay.

By Order of the Board of Directors

Robert C. Stempel
Chairman of the Board

January 12, 1998

-21-

EXHIBIT A

PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON
STOCK FROM 15,000,000 TO 20,000,000

The first sentence of Article FOURTH is to be modified to read as follows:

"FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 20,500,000 shares, of
which 500,000 shares shall be Class A Common Stock of a par value of
one cent ($.01) per share and 20,000,000 shares shall be Common Stock
of a par value of one cent ($.01) per share."

-22-

ENERGY CONVERSION DEVICES, INC.

PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints ROGER JOHN LESINSKI and GHAZALEH KOEFOD and
each of them, with power of substitution, and in place of each, in case of
substitution, his or her substitute, the attorneys and proxies for and on behalf
of the undersigned to attend the Annual Meeting of Stockholders (the "Meeting")
of ENERGY CONVERSION DEVICES, INC. (the "Company") to be held at Michigan State
University Management Education Center, 811 West Square Lake Road, Troy,
Michigan, on February 19, 1998 at 10:00 a.m. (E.S.T.) and any and all
adjournments thereof, and to cast the number of votes the undersigned would be
entitled to vote if then personally present. The undersigned instructs such
proxies to vote as specified on this card.

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR ALL NOMINEES FOR DIRECTORS AND FOR PROPOSALS 2 AND 3 AS DESCRIBED IN THE
ACCOMPANYING PROXY STATEMENT.

The Board of Directors of the Company recommends a vote FOR Proposals 1, 2
and 3.

1.Election of Directors: Stanford R. Ovshinsky, Iris M. Ovshinsky, Robert C.
Stempel, Nancy M. Bacon, Umberto Colombo, Hellmut Fritzsche, Joichi Ito,
Seymour Liebman, Walter J. McCarthy, Jr., Florence I. Metz, Haru Reischauer,
Nathan J. Robfogel and Stanley K. Stynes.

VOTE FOR ALL THIRTEEN NOMINEES LISTED ABOVE VOTE WITHHELD FOR ALL NOMINEES
(except as directed to the contrary below):

INSTRUCTION: To withhold authority to vote for any nominee, write that
nominee's name in the space provided below:

- -------------------------------------------------------------------------------

2.Proposal to consider and vote upon an increase in the number of authorized
shares by 5,000,000 to make available an adequate number of the Company's
shares to be used for future corporate transactions.

FOR AGAINST ABSTAIN

3.Proposal to approve the appointment of Deloitte & Touche LLP as independent
accountants for the fiscal year ending June 30, 1998.

FOR AGAINST ABSTAIN

-23-

4.In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Meeting.

___________________________________ Dated: ____________________,
Signature:

Please sign exactly as your name appears above. If shares are registered in
the names of two or more persons, each should sign. Executors, administra-
tors, trustees, guardians, attorneys and corporate officers should show their
full titles.

PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENVELOPE
PROVIDED. If you have changed your address, please PRINT your new address
above.

-24-