Exhibit 10.16
            

Name of Executive:
 
Michael W. Altschaefl
Position:
 
Chief Executive Officer
 
 
 
Fiscal Year 2018 Base Salary (pro-rated):
 
$325,000
 
 
 
Initial Term:
 
Effective Date through June 8, 2019
Renewal Periods are:
 
1 Year
 
 
 
Pre-Change of Control Severance Multiplier is:
 
2.0x
 
 
 

EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT
This Executive Employment and Severance Agreement (“Agreement”) is between the
Executive named above (“Executive”), on the one hand, and Orion Energy Systems,
Inc. (“Orion” and, together with its subsidiaries, the “Company”), on the other.
WHEREAS, Executive is currently serving as Board Chair and was appointed by the
Board on May 25, 2017 as the Company’s new Chief Executive Officer.
WHEREAS, in consideration of Executive’s new role and responsibilities, he was
provided with the following compensation arrangement for fiscal 2018 by the
Compensation Committee of the Board of Directors: (i) an annual base salary of
$325,000 (commencing June 1, 2017); (ii) a fiscal 2018 incentive cash bonus
opportunity equal to 100% of his base salary based on the Company achieving
certain fiscal 2018 financial performance targets and (iii) a restricted stock
grant equal to 80% of his base salary, with the option to elect to receive the
award entirely in shares of restricted stock, or in the form of 60% restricted
stock and 40% restricted cash, in each case, vesting pro rata over a three-year
period.
WHEREAS, pursuant to the Board’s compensation policy and non-employee director
compensation plan, as a result of his new executive role, Executive will no
longer be entitled to receive any compensation as Board Chair or as a member of
the Board while he serves as the Company’s Chief Executive Officer.
WHEREAS, Orion and Executive desire to specify the terms and conditions on which
Executive will be employed as the Company’s new Chief Executive Officer, and
under which Executive will receive severance in the event that Executive
separates from service with the Company under certain conditions or the Company
experiences a Change of Control.
NOW, THEREFORE, for good and valuable consideration, the parties agree as
follows:
1.Effective Date; Term. This Agreement shall become effective on June 8, 2017
(the “Effective Date”) and continue until the end of the initial term set forth
above. The employment status of Executive will be reviewed by Orion and
Executive ninety (90) days prior to the end of the initial term as set forth
above (and the end of any subsequent renewal term thereafter). Upon such review,
this Agreement may be renewed for the renewal period as set forth above only
upon the mutual consent of the Company and Executive prior to the expiration of
the then applicable term. Expiration of this Agreement will not affect the
rights or obligations of the parties hereunder arising out of, or relating to,
circumstances occurring prior to the expiration of this Agreement, which rights
and obligations will survive the expiration of this Agreement.
2.    Definitions. For purposes of this Agreement, the following terms shall
have the meanings ascribed to them:

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(a)    “Accrued Benefits” shall mean the following amounts, payable as described
herein: (i) all base salary for the time period ending with the Termination
Date; (ii) reimbursement for any and all monies advanced in connection with the
Executive’s employment for reasonable and necessary expenses incurred by the
Executive on behalf of the Company for the time period ending with the
Termination Date; (iii) any and all other cash earned through the Termination
Date and deferred at the election of the Executive or pursuant to any deferred
compensation plan then in effect; and (iv) all other payments and benefits to
which the Executive (or in the event of the Executive’s death, the Executive’s
surviving spouse or other beneficiary), including those provided pursuant to
Exhibit A, is entitled on the Termination Date under the terms of any benefit
plan of the Company, excluding severance payments under any Company severance
policy, practice or agreement in effect on the Termination Date. Payment of
Accrued Benefits shall be made promptly in accordance with the Company’s
prevailing practice with respect to clauses (i) and (ii) or, with respect to
clauses (iii) and (iv), pursuant to the terms of the benefit plan or practice
establishing such benefits.
(b)    “Base Salary” shall mean the Executive’s annual base salary with the
Company as in effect from time to time.
(c)    “Board” shall mean the board of directors of Orion or a committee of such
Board authorized to act on its behalf in certain circumstances, including the
Compensation Committee of the Board.
(d)    “Cause” shall mean a good faith finding by the Board that Executive has
(i) failed, neglected, or refused to perform the lawful employment duties
related to his position or as from time to time assigned to him (other than due
to Disability); (ii) committed any willful, intentional, or grossly negligent
act having the effect of materially injuring the interest, business, or
reputation of the Company; (iii) violated or failed to comply in any material
respect with the Company’s published rules, regulations, or policies, as in
effect or amended from time to time; (iv) committed an act constituting a felony
or misdemeanor involving moral turpitude, fraud, theft, or dishonesty; (v)
misappropriated or embezzled any property of the Company (whether or not such
act constitutes a felony or misdemeanor); or (vi) breached any material
provision of this Agreement or any other applicable confidentiality,
non-compete, non-solicit, general release, covenant not-to-sue, or other
agreement with the Company.
(e)    “Change of Control” shall mean and be limited to any of the following:
(i)    any Person (other than (A) the Company or any of its subsidiaries, (B) a
trustee or other fiduciary holding securities under any employee benefit plan of
the Company or any of its subsidiaries, (C) an underwriter temporarily holding
securities pursuant to an offering of such securities or (D) a corporation
owned, directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of stock in the Company
(“Excluded Persons”)) is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired directly from the
Company or its Affiliates after the Effective Date, pursuant to express
authorization by the Board that refers to this exception) representing twenty
percent (20%) or more of either the then outstanding shares of common stock of
the Company or the combined voting power of the Company’s then outstanding
voting securities; or
(ii)    the following individuals cease for any reason to constitute a majority
of the number of directors of the Company then serving: (A) individuals who, on
the Effective Date, constituted the Board and (B) any new director (other than a
director whose initial assumption of office is in connection with an actual or
threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company, as such
terms are used in Rule 14a‑11 of Regulation 14A under the Act) whose appointment
or election by the Board or nomination for election by the Company’s
shareholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors on the Effective Date,
or whose appointment, election or nomination for election was previously so
approved (collectively the “Continuing Directors”); provided, however, that
individuals who are appointed to the Board pursuant to or in accordance with the
terms of an agreement relating to a merger, consolidation, or share exchange
involving the Company (or any direct or indirect subsidiary of the Company)
shall not be Continuing Directors for purposes of this Agreement until after
such individuals are first nominated for election

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by a vote of at least two-thirds (2/3) of the then Continuing Directors and are
thereafter elected as directors by the shareholders of the Company at a meeting
of shareholders held following consummation of such merger, consolidation, or
share exchange; and, provided further, that in the event the failure of any such
persons appointed to the Board to be Continuing Directors results in a Change of
Control, the subsequent qualification of such persons as Continuing Directors
shall not alter the fact that a Change of Control occurred; or
(iii)    the consummation of a merger, consolidation or share exchange of the
Company with any other corporation or the issuance of voting securities of the
Company in connection with a merger, consolidation or share exchange of the
Company (or any direct or indirect subsidiary of the Company), in each case,
which requires approval of the shareholders of the Company, other than (A) a
merger, consolidation or share exchange which would result in the voting
securities of the Company outstanding immediately prior to such merger,
consolidation or share exchange continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving entity
or any parent thereof) at least fifty percent (50%) of the combined voting power
of the voting securities of the Company or such surviving entity or any parent
thereof outstanding immediately after such merger, consolidation or share
exchange, or (B) a merger, consolidation or share exchange effected to implement
a recapitalization of the Company (or similar transaction) in which no Person
(other than an Excluded Person) is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired directly from the
Company or its Affiliates after the Effective Date, pursuant to express
authorization by the Board that refers to this exception) representing twenty
percent (20%) or more of either the then outstanding shares of common stock of
the Company or the combined voting power of the Company’s then outstanding
voting securities; or
(iv)     the consummation of a plan of complete liquidation or dissolution of
the Company or a sale or disposition by the Company of all or substantially all
of the Company’s assets (in one transaction or a series of related transactions
within any period of 24 consecutive months), in each case, which requires
approval of the shareholders of the Company, other than a sale or disposition by
the Company of all or substantially all of the Company’s assets to an entity at
least seventy-five percent (75%) of the combined voting power of the voting
securities of which are owned by Persons in substantially the same proportions
as their ownership of the Company immediately prior to such sale.
Notwithstanding the foregoing, no “Change of Control” shall be deemed to have
occurred if there is consummated any transaction or series of integrated
transactions immediately following which the record holders of the common stock
of the Company immediately prior to such transaction or series of transactions
continue to own, directly or indirectly, in the same proportions as their
ownership in the Company, an entity that owns all or substantially all of the
assets or voting securities of the Company immediately following such
transaction or series of transactions.
For purposes of this Section 2(e):

(i)    the term “Person” shall mean any individual, firm, partnership,
corporation or other entity, including any successor (by merger or otherwise) of
such entity, or a group of any of the foregoing acting in concert;
(ii)    the terms “Affiliate” and “Associate” shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations of the
Act;
(iii)    the term “Act” means the Securities Exchange Act of 1934, as amended;
and
(iv)    a Person shall be deemed to be the “Beneficial Owner” of any securities
which:
a)    such Person or any of such Person’s Affiliates or Associates has the right
to acquire (whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or understanding, or
upon the exercise of conversion rights, exchange rights, rights, warrants or
options, or otherwise; provided, however, that a Person

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shall not be deemed the Beneficial Owner of, or to beneficially own, securities
tendered pursuant to a tender or exchange offer made by or on behalf of such
Person or any of such Person’s Affiliates or Associates until such tendered
securities are accepted for purchase;
b)    such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has the right to vote or dispose of or has “beneficial ownership” of
(as determined pursuant to Rule l3d-3 of the General Rules and Regulations under
the Act), including pursuant to any agreement, arrangement or understanding;
provided, however, that a Person shall not be deemed the Beneficial Owner of, or
to beneficially own, any security under this clause b) as a result of an
agreement, arrangement or understanding to vote such security if the agreement,
arrangement or understanding: (A) arises solely from a revocable proxy or
consent given to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable rules and
regulations under the Act and (B) is not also then reportable on a Schedule l3D
under the Act (or any comparable or successor report); or
c)     are beneficially owned, directly or indirectly, by any other Person with
which such Person or any of such Person’s Affiliates or Associates has any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting (except pursuant to a revocable proxy as described in clause b) above) or
disposing of any voting securities of the Company.
(f)    “Change of Control Payment” shall mean product of (i) Executive’s Base
Salary at the time of such Change of Control plus the average of the annual
bonuses earned by Executive with respect to each of the three completed fiscal
years of Company preceding the year in which the Change of Control occurs (or
such lesser number of fiscal years for which Executive was employed by Company
as its Chief Executive Officer, with any partial years’ bonus being annualized
with respect to such fiscal year), multiplied by (ii) three.
(g)    “COBRA” shall mean the provisions of Code Section 4980B.
(h)    “Code” shall mean the Internal Revenue Code of 1986, as amended, as
interpreted by rules and regulations issued pursuant thereto, all as amended and
in effect from time to time. Any reference to a specific provision of the Code
shall be deemed to include reference to any successor provision thereto.
(i)    “Competitive Business Activity” shall mean the design and manufacture of
lighting, solar and/or energy efficient systems and controls for industrial,
commercial and agricultural facilities.
(j)    “Disability” shall mean, subject to applicable law, a total and permanent
disability consisting of a mental or physical disability which precludes the
disabled Executive from performing the material and substantial duties of his
employment. Payment of benefits for total disability under a disability
insurance policy shall be conclusive as to the existence of total disability,
although such payments are not required in order to establish total disability
for purposes of this Agreement. The Executive has a “total and permanent
disability” if he is precluded by mental or physical disability for 180 days
during any twelve (12) month period. For purposes of this Agreement, an
Executive shall be deemed totally and permanently disabled at the end of such
180th day. In case of a disagreement as to whether an Executive is totally and
permanently disabled and, at the request of any party, the matter shall be
submitted to arbitration as provided for herein, and judgment upon the award may
be entered in any court having jurisdiction thereof. Any costs of such
proceedings (including the reasonable legal fees of the prevailing party) shall
be borne by the non-prevailing party to such arbitration.
(k)    “General Release” shall mean a release of all claims that Executive, and
anyone who may succeed to any claims of Executive, has or may have against
Orion, its board of directors, any of its subsidiaries or affiliates, or any of
their employees, directors, officers, employees, agents, plan sponsors,
administrators, successors (including the Successor), fiduciaries, or attorneys,
including but not limited to claims arising out of Executive’s employment with,
and termination of employment from, the Company, but excluding claims for (i)
Severance Payments, Change of Control Payments, Accrued Benefits and benefits
due pursuant to this Agreement and (ii) any salary, bonus, equity, accrued
vacation, expense reimbursement and other ordinary

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payments or benefits earned or otherwise due with respect to the period prior to
the date of any Separation from Service. The General Release shall be in a form
that is reasonably acceptable to the Company or the Board.
(l)    “Good Reason” shall mean the occurrence of any of the following without
the consent of Executive: (i) a material diminution in the Executive’s Base
Salary; (ii) a material diminution in the Executive’s authority, duties or
responsibilities; (iii) a material change in the geographic location at which
the Executive must perform services; or (iv) a material breach by Orion of any
provisions of this Agreement or any option agreement with the Company to which
the Executive is a party.
(m)    “Separation from Service” or “Separated From Service” shall mean
Executive’s termination of employment from Orion and each entity that is
required to be included in Orion’s controlled group of corporations within the
meaning of Code Section 414(b), or that is under common control with Orion
within the meaning of Code Section 414(c); provided that the phrase “at least 50
percent” shall be used in place of the phrase “ at least 80 percent” each place
it appears therein or in the regulations thereunder (collectively, “409A
affiliates”). Notwithstanding the foregoing:
(i)    If Executive takes a leave of absence for purposes of military leave,
sick leave or other bona fide leave of absence, Executive will not be deemed to
have incurred a Separation from Service for the first six (6) months of the
leave of absence, or if longer, for so long as Executive’s right to reemployment
is provided either by statute or by contract.
(ii)    Subject to paragraph (i), Executive shall incur a Separation from
Service when the level of bona fide services provided by Executive to Orion and
its 409A affiliates permanently decreases to a level of twenty percent (20%) or
less of the level of services rendered by Executive, on average, during the
immediately preceding 12 months of employment.
(iii)    If, following Executive’s termination of employment, Executive
continues to provide services to the Company or a 409A Affiliate in a capacity
other than as an employee, Executive will not be deemed to have Separated from
Service as long as Executive is providing bona fide services at a rate that is
greater than twenty percent (20%) of the level of services rendered by
Executive, on average, during the immediately preceding 12 months of service.
(n)    “Severance Payment” shall mean the Executive’s Base Salary at the time of
the Termination Date plus the average of the annual bonuses earned by the
Executive with respect to each of the three completed fiscal years of the
Company preceding the year in which the Termination Date occurs (or such lesser
number of fiscal years for which the Executive was employed by the Company as
its Chief Executive Officer, with any partial year’s bonus being annualized with
respect to such fiscal year) multiplied by the severance multiplier set forth
above.
(o)    “Successor” shall mean the person to which this Agreement is assigned
upon a Sale of Business within the meaning of Section 11.
(p)    “Termination Date” shall mean the date of the Executive’s termination of
employment from the Company, as further described in Section 4.
3.    Employment of Executive.
(a)    Position.
(i)    Executive shall serve in the position set forth above in a full-time
capacity. In such position, Executive shall have such duties and authority as is
customarily associated with such position and shall have such other titles and
duties, consistent with Executive’s position, as may be assigned from time to
time by the Board.
(ii)    Executive will devote Executive’s full business time and best efforts to
the performance of Executive’s duties hereunder and will not engage in any other
business, profession

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or occupation for compensation or otherwise which would conflict or interfere
with the rendition of such services either directly or indirectly, without the
prior written consent of the Board; provided that nothing herein shall preclude
Executive, subject to the prior approval of the Board, from accepting
appointment to or continuing to serve on any board of directors or trustees of
any business organization or any charitable organization or from continuing to
serve in his current capacities at his current companies and organizations;
further provided in each case, and in the aggregate, that such activities do not
materially conflict or interfere with the performance of Executive’s duties
hereunder or conflict with Section 8.
(b)    Base Salary. Orion shall pay Executive a Base Salary at the annual rate
set forth above, effective as of June 1, 2017, payable in regular installments
in accordance with the Company’s usual payroll practices. Executive shall be
entitled to such increases in Executive’s base salary, if any, as may be
determined from time to time by the Board.
(c)    Bonus Incentives. Executive shall be entitled to participate in such
annual and/or long-term cash and equity incentive plans and programs of Orion as
are generally provided to the senior executives of Orion or as otherwise
provided by the Board or the Compensation Committee thereof.
(d)    Employee Benefits. Executive shall be entitled to participate in the
Company’s employee benefit plans (other than annual and/or long-term incentive
programs, which are addressed in subsection (c)) as in effect from time to time
on the same basis as those benefits are generally made available to other senior
executives of Orion.
(e)    Business Expenses. The reasonable business expenses incurred by Executive
in the performance of Executive’s duties hereunder shall be reimbursed by the
Company in accordance with Company policies.
(f)    Other Perquisites. Executive shall be entitled to receive the other
benefits and perquisites set forth in Exhibit A.
(g)    No Compensation as Director. Executive shall not receive any compensation
(whether cash or equity based) as Board Chair or as a member of the Board while
he serves as the Company’s Chief Executive Officer, provided that Executive
shall be entitled to the continued vesting of all restricted stock awards (and
related restricted cash) that were granted to Executive in his capacity as a
director of the Company prior to Executive serving as the Company’s Chief
Executive Officer.
4.    Termination of Employment. Executive’s employment with the Company will
terminate during the term of the Agreement, and this Agreement will terminate on
the date of such termination, as follows:
(a)    Executive’s employment will terminate upon Executive’s death.
(b)    If Executive is Disabled, and if within thirty (30) days after Orion
notifies the Executive in writing that it intends to terminate the Executive’s
employment, the Executive shall not have returned to the performance of the
Executive’s duties hereunder on a full-time basis, Orion may terminate the
Executive’s employment, effective immediately following the end of such thirty
(30)-day period.
(c)    Orion may terminate Executive’s employment with or without Cause (other
than as a result of Disability which is governed by subsection (b)) by providing
written notice to Executive that indicates in reasonable detail the facts and
circumstances alleged to provide a basis for such termination. If the
termination is without Cause, Executive’s employment will terminate on the date
specified in the written notice of termination. If the termination is for Cause,
the Executive shall have thirty (30) days from the date the written notice is
provided, or such longer period as Orion may determine to be appropriate, to
cure any conduct or act, if curable, alleged to provide grounds for termination
of Executive’s employment for Cause. If the alleged conduct or act constituting
Cause is not curable, Executive’s employment will terminate on the date
specified in the written notice of termination. If the alleged conduct or act
constituting Cause is curable but Executive does not cure such conduct or act
within the specified time period, Executive’s employment will terminate on the
date immediately following the end of the cure period. Notwithstanding the
foregoing, a determination

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of Cause shall only be made in good faith by the Board, which may terminate
Executive for Cause only after providing Executive (i) written notice as set
forth above, (ii) the opportunity to appear before the Board and provide
rebuttal to such proposed termination, and (iii) written notice following such
appearance confirming such termination and certifying that the decision to
terminate Executive for Cause was approved in good faith by at least sixty-six
percent (66%) of the members of such board, excluding Executive. Unless
otherwise directed by Orion, from and after the date of the written notice of
proposed termination, Executive shall be relieved of his duties and
responsibilities and shall be considered to be on a paid leave of absence
pending any final action by the Board or the Board of Directors of the Successor
confirming such proposed termination.
(d)    Executive may terminate his employment for or without Good Reason by
providing written notice of termination to Orion that indicates in reasonable
detail the facts and circumstances alleged to provide a basis for such
termination. If Executive is alleging a termination for Good Reason, Executive
must provide written notice to Orion of the existence of the condition
constituting Good Reason within ninety (90) days of the initial existence of
such condition, and Orion must have a period of at least thirty (30) days
following receipt of such notice to cure such condition. If such condition is
not cured by Orion within such thirty (30)-day period, Executive’s termination
of employment from the Company shall be effective on the date immediately
following the end of such cure period.
5.    Payments upon Termination.
(a)    Entitlement to Severance. Subject to the other terms and conditions of
this Agreement (including, without limitation, Section 6 hereof), Executive
shall be entitled to the Accrued Benefits, and to the severance benefits
described in subsection (c), in either of the following circumstances while this
Agreement is in effect:
(i)    Executive’s employment is terminated by Orion without Cause, except in
the case of death or Disability; or
(ii)    Executive terminates his employment with the Company for Good Reason.
If Executive dies after receiving a notice by Orion that Executive is being
terminated without Cause, or after providing notice of termination for Good
Reason, the Executive’s estate, heirs and beneficiaries shall be entitled to the
Accrued Benefits and the severance benefits described in subsection (c) at the
same time such amounts would have been paid or benefits provided to Executive
had he lived.

(b)    General Release Requirement. As an additional prerequisite for receipt of
the severance benefits described in subsection (c), Executive must execute,
deliver to Orion, and not revoke (to the extent Executive is allowed to do so) a
General Release.
(c)    Severance Payment; Timing and Form of Payment. Subject to Section 5(b)
and the limitations imposed by Section 6 and Section 7, in lieu of any severance
pay under any severance pay plans, programs or policies, if Executive is
entitled to severance benefits, then:
(i)    Company shall pay Executive the Severance Payment in a lump sum within
ten (10) days following the Executive’s Separation from Service, or if later,
the date on which the General Release is no longer revocable, or if later, the
date on which the amount payable under Section 7 is determined, but in no event
may payment be made more than 2½ months after the year in which Executive’s
Separation from Service occurs;
(ii)    At the same time that the Severance Payment is made, Company shall pay
Executive a lump sum amount equal to the Executive’s annual target cash bonus
opportunity (if any) as established by the Board or the Compensation Committee
of the Board for the fiscal year in which the Separation from Service occurs,
multiplied by a fraction, the numerator of which is the number of days that have
elapsed during the annual performance period to the date of the Executive’s
Separation from Service and the denominator of which is 365;

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(iii)    Executive shall be entitled to pay premiums for COBRA continuation
coverage for the length of such coverage at the same rate as is being charged to
active employees for similar coverage; and
(iv)     Executive shall not be entitled to receive, and shall forfeit all right
to receive, the Change of Control Payment, as set forth in Section 6 below.
All payments shall be subject to payroll taxes and other withholdings in
accordance with the Company’s (or the applicable employer of record’s) standard
payroll practices and applicable law.

(d)    Other Termination of Employment. If Executive’s employment terminates for
any reason other than those described in subsection (a), the Executive (or the
Executive’s estate in the event of his death), shall be entitled to receive only
the Accrued Benefits. Executive must be terminated for Cause pursuant to and in
accordance with Section 4(c) of this Agreement in order for the consequences of
such a Cause termination to apply to Executive under any stock option or similar
equity award agreement with the Company to which Executive is then a party.
Subject to the limitations imposed by Section 6, Company’s obligations under
this Section 5 shall survive the termination of this Agreement.
(e)    D&O Tail Policy. If Executive’s employment terminates for any reason, as
promptly as practical following the date on which Executive also ceases to serve
as a member of the Board, the Company shall obtain, at its cost and expense, a
six year tail director and officer insurance policy covering Executive on the
same terms and conditions as the similar tail director and officer insurance
policies previously obtained by Company for its retiring directors.
6.    Payments upon Change of Control.
(a)    Entitlement to Change of Control Payment. Subject to the other terms and
conditions of this Agreement, including but not limited to the limitations
imposed by Section 7, Company shall pay Executive the Change of Control Payment
and the Accrued Benefits:
(i)    Upon the occurrence of a Change of Control (provided, however, that for
all purposes under this Section 6, the definition of Change of Control in
Section 2(e)(i) shall be modified so that the twenty (20) percent Beneficial
Ownership threshold set forth therein shall be fifty (50) percent); or
(ii)    If, prior to a Change of Control but following the Company’s entry into
a legally binding written agreement, arrangement or understanding that would
result in a Change of Control, Executive’s employment is terminated by the
Company without Cause (except in the case of death or Disability) or Executive
terminates his employment with the Company for Good Reason.
(b)    Timing and Form of Payment. If Executive becomes entitled to the Change
of Control Payment pursuant to Section 6(a)(i), the Company shall pay Executive
the Change of Control Payment and Accrued Benefits in a lump sum upon the
occurrence of the Change of Control regardless of whether or not Executive
remains as the Company’s Chief Executive Officer as a result of the Change of
Control. If Executive becomes entitled to the Change of Control Payment pursuant
to Section 6(a)(ii), the Company shall pay Executive the Change of Control
Payment and Accrued Benefits in a lump sum within ten (10) days following the
Executive’s Separation from Service.
(c)    Expiration of Future Payment and Severance. If Executive is entitled to
receive the Change of Control Payment, then Executive shall not be entitled to
receive, and shall forfeit all right to receive, the Severance Payment, as set
forth in Section 5(c)(i) above. Following the payment of the Change of Control
Payment by Company, Company’s obligations under Section 5 and this Section 6
shall expire, with no right or expectation by Executive to receive, and no
obligation or requirement by Company to pay or provide, any additional Severance
Payment or any other similar payment or benefit, provided that Executive will
retain the right (if any) to the continued vesting of previously granted
restricted stock awards (and any related restricted cash) pursuant to the terms
of the applicable restricted stock award agreement and the right to receive the
Accrued Benefits. Notwithstanding such forfeiture and expiration, the other
rights and obligations under this

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Agreement shall survive and continue through the termination of this Agreement
or for such shorter or longer periods of time as set forth herein. Subject to
the foregoing, Company’s obligations under this Section 6 shall survive the
termination of this Agreement.
7.    Limitations on Change of Control Payments and Benefits. Notwithstanding
any other provision of this Agreement, if any portion of the Change of Control
Payment or any other payment under this Agreement, or under any other agreement
with or plan of the Company (in the aggregate “Total Payments”), would
constitute an “excess parachute payment,” then the Total Payments to be made to
Executive shall be reduced such that the value of the aggregate Total Payments
that Executive is entitled to receive shall be One Dollar ($1) less than the
maximum amount which Executive may receive without becoming subject to the tax
imposed by Code Section 4999 or which the Company may pay without loss of
deduction under Code Section 280G(a); provided that the foregoing reduction in
the amount of Total Payments shall not apply if the After-Tax Value to Executive
of the Total Payments prior to reduction in accordance herewith is greater than
the After-Tax Value to Executive if Total Payments are reduced in accordance
herewith. For purposes of this Agreement, the terms “excess parachute payment”
and “parachute payments” shall have the meanings assigned to them in Code
Section 280G, and such “parachute payments” shall be valued as provided therein.
Present value for purposes of this Agreement shall be calculated in accordance
with Code Section 1274(b)(2). Within twenty (20) business days following
delivery of the notice of termination or notice by Orion to Executive of its
belief that there is a payment or benefit due Executive that will result in an
excess parachute payment as defined in Code Section 280G, Executive and Orion,
at Orion’s expense, shall obtain the opinion (which need not be unqualified) of
nationally recognized tax counsel selected by Orion’s independent auditors and
acceptable to Executive in Executive’s sole discretion, which opinion sets
forth: (A) the amount of the Base Period Income, (B) the amount and present
value of Total Payments, (C) the amount and present value of any excess
parachute payments without regard to the limitations of this Section 7, (D) the
After-Tax Value of the Total Payments if the reduction in Total Payments
contemplated under this Section 7 did not apply, and (E) the After-Tax Value of
the Total Payments taking into account the reduction in Total Payments
contemplated under this Section 7. As used in this Section 7, the term “Base
Period Income” means an amount equal to Executive’s “annualized includible
compensation for the base period” as defined in Code Section 280G(d)(1). For
purposes of such opinion, the value of any noncash benefits or any deferred
payment or benefit shall be determined by Orion’s independent auditors in
accordance with the principles of Code Sections 280G(d)(3) and (4), which
determination shall be evidenced in a certificate of such auditors addressed to
Orion and Executive. For purposes of determining the After-Tax Value of Total
Payments, Executive shall be deemed to pay federal income taxes and employment
taxes at the highest marginal rate of federal income and employment taxation in
the calendar year in which the Termination Payment is to be made and state and
local income taxes at the highest marginal rates of taxation in the state and
locality of Executive’s domicile for income tax purposes on the date the
Termination Payment is to be made, net of the maximum reduction in federal
income taxes that may be obtained from deduction of such state and local taxes.
Such opinion shall be dated as of the Termination Date and addressed to Orion
and Executive and shall be binding upon the Company and Executive. If such
opinion determines that there would be an excess parachute payment and that the
After-Tax Value of the Total Payments taking into account the reduction
contemplated under this Section is greater than the After-Tax Value of the Total
Payments if the reduction in Total Payments contemplated under this Section did
not apply, then the Termination Payment hereunder or any other payment
determined by such counsel to be includible in Total Payments shall be reduced
or eliminated as specified by Executive in writing delivered to Orion within
five (5) business days of Executive’s receipt of such opinion or, if Executive
fails to so notify Orion, then as Orion shall reasonably determine, so that
under the bases of calculations set forth in such opinion there will be no
excess parachute payment. If such legal counsel so requests in connection with
the opinion required by this Section, Executive and Orion shall obtain, at
Orion’s expense, and the legal counsel may rely on in providing the opinion, the
advice of a firm of recognized executive compensation consultants as to the
reasonableness of any item of compensation to be received by Executive.
Notwithstanding the foregoing, the provisions of this Section 7, including the
calculations, notices and opinions provided for herein, shall be based upon the
conclusive presumption that the following are reasonable: (1) the compensation
and benefits provided for in Section 3 and (2) any other compensation, including
but not limited to the Accrued Benefits, earned prior to the date of Executive’s
Separation from Service by the Executive pursuant to the Company’s compensation
programs if such payments would have been made in the future in any event, even
though the timing of such payment is triggered by the Change in Control or the
Executive’s Separation from Service. If the provisions of Code Sections 280G and
4999 are repealed without succession, then this Section 7 shall be of no further
force or effect.
8.    Covenants by Executive.

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(a)    Confidentiality and Non-Disclosure. During Executive’s employment with
the Company and for a period of two years following Executive’s Separation from
Service, he agrees that he will not, except in furtherance of the business of
the Company, disclose, furnish, or make available to any person or use for the
benefit of himself or any other person any confidential or proprietary
information or data of the Company including, but not limited to, trade secrets,
customer and supplier lists, pricing policies, operational methods, marketing
plans or strategies, product development techniques or plans, business
acquisition or disposition plans, new personnel employment plans, methods of
manufacture, technical process, and formulae, designs and design projects,
inventions and research projects and financial budgets and forecasts except (i)
information which at the time is available to others in the business or
generally known to the public other than as a result of disclosure by Executive
not permitted hereunder, and (ii) when required to do so by a court of competent
jurisdiction, by any governmental agency or by any administrative, legislative
or regulatory body; provided that in this instance Executive shall make
reasonable efforts to inform the Company of any such request prior to any
disclosure so as to permit the Company a meaningful opportunity to seek a
protective order or similar adjudication. Upon termination of his employment
with the Company, Executive will immediately return to the Company all written
or electronically stored confidential or proprietary information in whatever
format it is contained.
(b)    Non-Competition/Non-Solicitation.
(i)    During Executive’s employment with the Company and for a period of two
years following Executive’s Separation from Service, Executive agrees not to
directly or indirectly engage, or assist any business or entity, in Competitive
Business Activity in any capacity, including without limitation as an employee,
officer, or director of, or consultant or advisor to, any person or entity
engaged directly or indirectly in a business which engages in Competitive
Business Activity, in North America or anywhere that Orion or its Successor does
business at the time of Executive’s termination of employment, without the
written consent of the Board.
(ii)    During Executive’s employment with the Company and for a period of two
years following Executive’s Separation from Service, Executive agrees not to, in
any form or manner, directly or indirectly, on his own behalf or in combination
with others (1) solicit, induce or influence any customer, supplier, lender,
lessor or any other person with a business relationship with the Company to
discontinue or reduce the extent of such business relationship, or (2) recruit,
solicit or otherwise induce or influence any employee of the Company to
discontinue their employment with the Company.
(c)    Disclosure and Assignment to the Company of Inventions and Innovations.
(i)    Executive agrees to disclose and assign to the Company as the Company’s
exclusive property, all inventions and technical or business innovations,
including but not limited to all patentable and copyrightable subject matter
(collectively, the “Innovations”) developed, authored or conceived by Executive
solely or jointly with others during the period of Executive’s employment,
including during Executive’s employment prior to the date of this Agreement, (1)
that are along the lines of the business, work or investigations of the Company
to which Executive’s employment relates or as to which Executive may receive
information due to Executive’s employment with the Company, or (2) that result
from or are suggested by any work which Executive may do for the Company or (3)
that are otherwise made through the use of Company time, facilities or
materials. To the extent any of the Innovations is copyrightable, each such
Innovation shall be considered a “work for hire.”
(ii)    Executive agrees to execute all necessary papers and otherwise provide
proper assistance (at the Company’s expense), during and subsequent to
Executive’s employment, to enable the Company to obtain for itself or its
nominees, all right, title, and interest in and to patents, copyrights,
trademarks or other legal protection for such Innovations in any and all
countries.
(iii)    Executive agrees to make and maintain for the Company adequate and
current written records of all such Innovations;

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(iv)    Upon any termination of Executive’s employment, Executive agrees to
deliver to the Company promptly all items which belong to the Company or which
by their nature are for the use of Company employees only, including, without
limitation, all written and other materials which are of a secret or
confidential nature relating to the business of the Company.
(v)    In the event Company is unable for any reason whatsoever to secure
Executive’s signature to any lawful and necessary documents required, including
those necessary for the assignment of, application for, or prosecution of any
United States or foreign application for letters patent or copyright for any
Innovation, Executive hereby irrevocably designates and appoints Company and its
duly authorized officers and agents as Executive’s agent and attorney-in-fact,
to act for and in Executive’s behalf and stead to execute and file any such
applications and to do all other lawfully permitted acts to further the
assignment, prosecution, and issuance of letters patent or registration of
copyright thereon with the same legal force and effect as if executed by
Executive. Executive hereby waives and quitclaims to Company any and all claims,
of any nature whatsoever, which Executive may now have or may hereafter have for
infringement of any patent or copyright resulting from any such application.
(d)    Remedies Not Exclusive. In the event that Executive breaches any terms of
this Section 8, Executive acknowledges and agrees that said breach may result in
the immediate and irreparable harm to the business and goodwill of the Company
and that damages, if any, and remedies of law for such breach may be inadequate
and indeterminable. The Company, upon Executive’s breach of this Section 8,
shall therefore be entitled (in addition to and without limiting any other
remedies that the Company may seek under this Agreement or otherwise at law or
in equity) to (1) seek from any court of competent jurisdiction equitable relief
by way of temporary or permanent injunction and without being required to post a
bond, to restrain any violation of this Section 8, and for such further relief
as the court may deem just or proper in law or equity, and (2) in the event that
the Company shall prevail, its reasonable attorneys fees and costs and other
expenses in enforcing its rights under this Section 8.
(e)    Severability of Provisions. If any restriction, limitation, or provision
of this Section 8 is deemed to be unreasonable, onerous, or unduly restrictive
by a court of competent jurisdiction, it shall not be stricken in its entirety
and held totally void and unenforceable, but shall remain effective to the
maximum extent possible within the bounds of the law. If any phrase, clause or
provision of this Section 8 is declared invalid or unenforceable by a court of
competent jurisdiction, such phrase, clause, or provision shall be deemed
severed from this Section 8, but will not affect any other provision of this
Section 8, which shall otherwise remain in full force and effect. The provisions
of this Section 8 are each declared to be separate and distinct covenants by
Executive.
9.    Notice. Any notice, request, demand or other communication required or
permitted herein will be deemed to be properly given when personally served in
writing or when deposited in the United States mail, postage prepaid, addressed
to Executive at the address appearing at the end of this Agreement and to the
Company with attention to the Chair of the Board of Directors of Orion (or the
Lead Independent Director if Executive is then serving as the Chair) and the
General Counsel of Orion. Either party may change its address by written notice
in accordance with this paragraph.
10.    Set Off; Mitigation. The Company’s obligation to pay Executive the
amounts and to provide the benefits hereunder shall be subject to set-off,
counterclaim or recoupment of amounts owed by Executive to the Company. However,
Executive shall not be required to mitigate the amount of any payment provided
for pursuant to this Agreement by seeking other employment or otherwise.
11.    Benefit of Agreement. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective executors, administrators,
successors and assigns. If Orion experiences a Change of Control, or otherwise
sells, assigns or transfers all or substantially all of its business and assets
to any person or if Orion merges into or consolidates or otherwise combines
(where Orion does not survive such combination) with any person (any such event,
a “Sale of Business”), then Orion shall assign all of its right, title and
interest in this Agreement as of the date of such event to such person, and
Orion shall cause such person, by written agreement in form and substance
reasonably satisfactory to Executive, to expressly assume and agree to perform
from and after the date of such assignment all of the terms, conditions and
provisions imposed by this Agreement upon the Company. Failure of

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Orion to obtain such agreement prior to the effective date of such Sale of
Business shall be a breach of this Agreement constituting “Good Reason”
hereunder, except that for purposes of implementing the foregoing the date upon
which such Sale of Business becomes effective shall be the Termination Date. In
case of such assignment by Orion and of assumption and agreement by such person,
as used in this Agreement, “Orion” shall thereafter mean the person which
executes and delivers the agreement provided for in this Section 11 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law, and this Agreement shall inure to the benefit of, and be
enforceable by, such person. Executive shall, in his discretion, be entitled to
proceed against any or all of such persons, any person which theretofore was
such a successor to Orion, and Orion (as so defined) in any action to enforce
any rights of Executive hereunder. Except as provided in this Section 11, this
Agreement shall not be assignable by Orion. This Agreement shall not be
terminated by the voluntary or involuntary dissolution of Orion.
12.    Arbitration. Any controversy or claim arising out of or relating to this
Agreement or the breach of this Agreement that cannot be mutually resolved by
the Executive and the Company, including any dispute as to the calculation of
the Executive’s Benefits, Base Salary, Bonus Amount, Severance Payment, or any
Change of Control Payment hereunder, shall be submitted to arbitration in
Milwaukee, Wisconsin, in accordance with the procedures of the American
Arbitration Association. The determination of the arbitrator shall be conclusive
and binding on the Company and the Executive, and judgment may be entered on the
arbitrator’s award in any court having jurisdiction.
13.    Applicable Law and Jurisdiction. This Agreement is to be governed by and
construed under the laws of the United States and of the State of Wisconsin
without resort to Wisconsin’s choice of law rules. Each party hereby agrees that
the forum and venue for any legal or equitable action or proceeding arising out
of, or in connection with, this Agreement will lie in the appropriate federal or
state courts in the State of Wisconsin and specifically waives any and all
objections to such jurisdiction and venue.
14.    Captions and Paragraph Headings. Captions and paragraph headings used
herein are for convenience only and are not a part of this Agreement and will
not be used in construing it.
15.    Invalid Provisions. Subject to Section 8(e), should any provision of this
Agreement for any reason be declared invalid, void, or unenforceable by a court
of competent jurisdiction, the validity and binding effect of any remaining
portion will not be affected, and the remaining portions of this Agreement will
remain in full force and effect as if this Agreement had been executed with said
provision eliminated.
16.    No Waiver. The failure of a party to insist upon strict adherence to any
term of this Agreement on any occasion shall not be considered a waiver of such
party’s rights or deprive such party of the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement.
17.    Entire Agreement. This Agreement contains the entire agreement of the
parties with respect to the subject matter of this Agreement except where other
agreements are specifically noted, adopted, or incorporated by reference. This
Agreement otherwise supersedes any and all other agreements, either oral or in
writing, between the parties hereto with respect to the employment of Executive
by Company, and all such agreements shall be void and of no effect. Each party
to this Agreement acknowledges that no representations, inducements, promises,
or agreements, oral or otherwise, have been made by any party, or anyone acting
on behalf of any party, which are not embodied herein, and that no other
agreement, statement, or promise not contained in this Agreement will be valid
or binding.
18.    Modification. This Agreement may not be modified or amended by oral
agreement, but only by an agreement in writing signed by Orion and Executive.
19.    Counterparts. This Agreement may be signed in counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.

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IN WITNESS WHEREOF, this Agreement is effective as of June 8, 2017.
EXECUTIVE
 
 
 
 
 
/s/ Michael W. Altschaefl
 
 
Michael W. Altschaefl
 
 
 
 
 
                    
 
 
Address
 
 
 
 
 
ORION ENERGY SYSTEMS, INC.
 
 
 
 
 
By:    /s/ Anthony L. Otten        
 
 
 Anthony L. Otten
 
 
Lead Independent Director
 
 

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EXHIBIT A

Executive:        Michael W. Altschaefl

Benefits and Perquisites*

* Note: The listed benefits and perquisites are in addition to those generally
made available to all other senior executives of Orion under the Company’s
employee benefit plans (other than annual and long-term cash and equity
incentive plans, which are addressed in Section 3(c) of the Agreement) as in
effect from time to time. Executive is entitled to participate in such benefit
plans on the same basis as those benefits are generally made available to other
senior executives of Orion. Currently, such company-wide benefits include: (i)
401(k) Plan; (ii) group short term disability insurance; and (iii) group health
and prescription drug insurance.

Benefit
 
 
 
 
 
1.    Life Insurance
 
$1,000,000 (face value)
 
 
 
2. Health/Prescription Drug Reimbursement
 
Reimbursed by Company Per Current Practice
 
 
 
3. Group Long Term Disability Insurance
 
Reimbursed by Company Per Current Practice
 
 
 
4.     Automobile Allowance
 
$1,000 per month
 
 
 
5.     Vacation
 
5 weeks per year

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