exv10w7






Exhibit 10.7


ORION ENERGY SYSTEMS, INC.

2004 STOCK AND INCENTIVE AWARDS PLAN

ACCELERATED PERFORMANCE VESTING STOCK OPTION AWARD




[Name]

[Address]



You have been granted an accelerated performance vesting option (your “Option”) to purchase shares
of common stock (“Shares”) of Orion Energy Systems, Inc. (the “Company”) under the Orion Energy
Systems, Inc. 2004 Stock and Incentive Awards Plan (the “Plan”) with the following terms and
conditions:




	 	 	 

	Grant Date:

	 	                    
	 
	 	 
	Type of Option:

	 	Nonqualified Stock Option
	 
	 	 
	Number of Option Shares:

	 	                    
	 
	 	 
	Exercise Price per Share:

	 	U.S. $                    
	 
	 	 
	Vesting:

	 	One hundred percent (100%) of your Option will vest and become exercisable if, and
only if, both of the following conditions occur and you remain continuously employed
or in service until the applicable vesting date:
	 
	 	 
	 

	 	(i)    The Company achieves, as determined by the Committee, at least 100% of the
respective target levels for each of the three financial metrics for fiscal 2012 set
forth in Appendix A attached hereto; and

	 
	 	 
	 

	 	(ii)   The closing sale price of the Company’s common stock on the primary national
securities exchange on which such stock is then traded equals or exceeds $5.00 per
share for at least 20 trading days in any 90-day period following the Grant Date.

	 
	 	 
	 

	 	If both of the foregoing conditions are satisfied, one hundred percent (100%) of your
Option will vest and become exercisable upon the later of (A) the Company’s public
release of its fiscal 2012 results (publicly confirming satisfaction of performance
condition (i) above) and (B) the first trading day on which performance condition (ii)
above is satisfied.
	 
	 	 
	 

	 	Notwithstanding the foregoing, if your Option is not vested upon






 









 






	 	 	 

	 

	 	the termination of your employment or service with the Company for any reason, then it will immediately
terminate upon such termination of employment or service.
	 
	 	 
	Termination Date:

	 	Your Option expires at, and cannot be exercised after, the close of business at the
Company’s headquarters on the earliest to occur of:
	 
	 	 
	 
	 	•     The tenth (10th) anniversary of the Grant Date;

	 
	 	 
	 

	 	•     One year after your termination of employment or service as a result of death
or disability (within the meaning of Code Section 22(e)(3)) (if your Option has vested
prior to your termination); or

	 
	 	 
	 

	 	•     90 days after your termination of employment or service for any other reason
(if your Option has vested prior to your termination), provided that (i) if you die
during this 90-day period, the exercise period will be extended until one year after
the date of your death, and (ii) any senior officer of the Company may, in his or her
discretion, extend this 90-day period for up to one year after such termination of
employment if, based on the circumstances of the termination of employment or service,
such officer deems such an extension to be in the best interests of the Company.

	 
	 	 
	 

	 	If the date this Option terminates as specified above falls on a day on which the
primary stock market on which the Company’s common stock is then traded is not open
for trading or on a date that you are prohibited by Company policy (such as an insider
trading policy) from exercising the Option, the termination date shall be
automatically extended to the first available trading day following the original
termination date, but not beyond the tenth (10th) anniversary of the Grant
Date.
	 
	 	 
	 

	 	Notwithstanding the above, your entire Option is terminated immediately if the Company
or an Affiliate terminates you for Cause (as defined below), or if your employment or
service is otherwise terminated at a time when you could be terminated for Cause, or
you voluntarily terminate without the Company’s prior consent.
	 
	 	 
	 

	 	For purposes of this Agreement, “Cause” means any of the following: (i) failure to
perform or observe any of the terms or provisions of any written employment agreement
with the Company or an Affiliate, or if no written employment agreement exists, the
gross dereliction of your employment duties; (ii) failure






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	 	to comply fully with the
lawful directives of the Board of Directors of the Company; (iii) dishonesty; (iv)
misconduct; (v) conviction of a crime involving moral turpitude; (vi) substance abuse;
(vii) misappropriation of funds: (viii) disloyalty or disparagement of the Company,
and of its Affiliates, or any of their management or employees; or (ix) other proper
cause determined in good faith by the Committee.
	 
	 	 
	Manner of Exercise:

	 	You may exercise your Option only to the extent vested and only if it has not
terminated. To exercise your Option, you must complete the “Notice of Stock Option
Exercise” form provided by the Company and return it to the address indicated on the
form or follow such other procedures as the Company may prescribe from time to time.
The form will be effective when it is received by the Company, but exercise will not
be completed until you pay the total exercise price and all applicable withholding
taxes due as a result of the exercise to the Company.
	 
	 	 
	 

	 	If someone else wants to exercise your Option after your death, that person must
contact the Company and prove to the Company’s satisfaction that he or she is entitled
to do so.
	 
	 	 
	 

	 	Your ability to exercise your Option may be restricted by the Company if required by
applicable law.
	 
	 	 
	Restrictions on Resale:

	 	By accepting your Option, you agree not to sell any Shares acquired under your Option
at a time when applicable laws, Company policies or an agreement between the Company
and its underwriters prohibit a sale.
	 
	 	 
	Restrictions on Transfer:

	 	During your lifetime, this Option is only exercisable by you. You may not transfer,
pledge or assign this Option, by operation of law or otherwise, except pursuant to
your will or the laws of descent and distribution. If you attempt to transfer,
assign, pledge, hypothecate or otherwise dispose of this Option, except as provided
above, or in the event this Option is subject to levy or attachment, execution or
similar process, the Company may terminate this Option by providing written notice to
you.
	 
	 	 
	Rescission of Exercise;
Disgorgement of Option
Gains:

	 	If you are terminated for Cause, or if you are not terminated for Cause but the
Committee later determines that you could have been terminated for Cause if all facts
had been known at that time, or if the Committee determines that, after your
termination of employment, you have violated the provisions of any non-competition,
non-solicitation, confidentiality or assignment of inventions agreement then in
effect, then your Option will






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	 	terminate immediately on the date of such termination or
determination, as applicable, and the Committee may, in its sole and absolute
discretion, (i) rescind any notice of exercise submitted by you for which payment or
the issuance of Shares has not been completed, in which event any exercise price you
have tendered will be promptly returned to you or retained by the Company as an offset
as provided below, and/or (ii) notify you in writing within two (2) years after
exercise of all or any portion of the Option that any exercise made within the one (1)
year period prior to your termination or prior to your breach of any non-competition,
non-solicitation, confidentiality or assignment of inventions agreement, is rescinded.
Within ten (10) days after receiving such notice from the Company, you shall pay to
the Company the amount of any cash payment received, or the value of any other gain
realized, as a result of the rescinded exercise. Notwithstanding the foregoing, the
Company shall have the right to retain (as an offset against any amounts due
hereunder), the exercise price and withholding amount tendered by you with respect to
any rescinded exercise, and the Company shall have the right to offset against any
other amounts due from the Company to you the amount owed by you hereunder.
	 
	 	 
	Miscellaneous:

	 	•     As a condition of the granting of your Option, you agree, for yourself
and your legal representatives or guardians, that this Stock Option Award shall be
interpreted by the Committee and that any interpretation by the Committee of the terms
of this Stock Option Award or the Plan and any determination made by the Committee
pursuant to this Stock Option Award or the Plan shall be final, binding and
conclusive. Notwithstanding the foregoing, this Stock Option Award may not be
amended, and the Company may not take any other action the effect of which is, to
reduce the Exercise Price per Share other than (i) pursuant to Section 6.4 of the
Plan, and in accordance with Section 1.409A-1(b)(5)(v)(B) of the Treasury Regulations,
or (ii) in connection with a transaction which is considered the grant of a new option
for purposes of Section 409A of the Code, provided that the new Exercise Price per
Share is not less than Fair Market Value of a Share on the new grant date.

	 
	 	 
	 

	 	•     As a condition of the granting of your Option, except as required by law, you
agree not to disclose information regarding the existence, terms, or conditions of
this Option to any person or entity whatsoever, including without limitation any
members of the media (including, but not limited to, print journalists, newspapers,
radio, television, cable, satellite programs, or Internet media) or any Internet web page or







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	 	“chat room,” or any other entity or person, with the exception of your spouse,
accountant, tax advisor, and/or attorneys. Any violation of this provision may result
in immediate and complete forfeiture of all rights granted under this Option if so
determined by the Committee.

	 
	 	 
	 

	 	•     As a condition of the granting of your Option, you acknowledge and agree that
this Stock Option Award and the Plan constitute the entire agreement of the parties
with respect to the subject matter of this Stock Option Award. This Stock Option
Award and the Plan supersede any and all other agreements or representations, both
verbal and written, between the parties to this Stock Option Award with respect to
your Option. You represent and warrant that you have no other outstanding options to
purchase Common Stock or any other security of the Company other than your Option or
any options previously granted and described in any agreement similar to this Stock
Option Award, and you hereby release the Company from any claims and liabilities
relating thereto.

	 
	 	 
	 

	 	•     This Stock Option Award may be executed in counterparts.






Your Option is granted under and governed by the terms and conditions of the Plan. Additional
provisions regarding your Option and definitions of capitalized terms used and not defined in your
Option can be found in the Plan.




[Signatures on next page]




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BY SIGNING BELOW AND ACCEPTING THIS STOCK OPTION AWARD, YOU AGREE TO ALL OF THE TERMS AND
CONDITIONS DESCRIBED HEREIN AND IN THE PLAN. YOU ALSO ACKNOWLEDGE RECEIPT OF THE PLAN.




	 	 	 	 	 	 	 

	 
	 	 	 	 	 	 
	 

Authorized Officer

	 	 
	 	 

Optionee
	 	 






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