Document:

exv10w1

 

Exhibit 10.1

Employment Agreement

     AGREEMENT
made this
1st day
of October, 2005 by and between Orion Energy Systems, Ltd., a
Wisconsin corporation (Orion”) and Bruce Wadman (“Employee”),

     WHEREAS,
Orion desires to continue to employ Employee and Employee desires to continue that
employment, upon the terms and conditions contained herein:

     NOW,
THEREFORE, in consideration of the mutual covenants and conditions hereinafter set forth,
the parties agree as follows:

     1. Term.
The term shall be for a period of twenty-four (24) months from the date of
this Agreement. The Agreement shall continue on a year to year basis after the 24 month period,
unless one of the parties notifies the other at least 30 days prior to the expiration date.

     2. Employee’s
Duties. The Employee is engaged to act as Vice President, Chief
Operating Officer and CFO for Orion and all of its subsidiaries. Employee shall devote his entire
time, attention and energies to the business of Orion and shall not, during the term of this
Agreement, be engaged in any other non-personal business activity pursued for gain, profit or other
pecuniary advantage. The Employee may invest his assets in such form or manner as will not require
any significant services which conflict with Employee’s duties to Orion, provided that such
investment is with a business, person or entity which is not in competition with Orion,

     3. Compensation.

          A. Base Salary. During the first twelve (12) months of this Agreement, the Employee’s
base salary shall be $14,583.00 per month. A performance review shall be conducted at the end of
the first twelve (12) months and an adjustment in salary may be made in the discretion of Orion.

          B. Bonus. Employee shall be eligible for a bonus equal to 30% of base salary. The
material components of the bonus program will be one that is substantially the same for all senior
executives shall be reviewed prior to the end of Orion’s fiscal year and may be adjusted in the
discretion of Orion. Subject to the agreement of the parties, the bonus program may provide that
such amounts be paid or awarded on a current or deferred basis and may be paid or awarded in the
form of cash or other consideration as mutually agreed upon. Bonus compensation earned shall be
paid or awarded within ninety (90) days of the close of the bonus computation period.

     4. Severance Pay. If the Employee’s employment is involuntarily terminated by Orion
other than for “cause,” the Employee shall be entitled to receive his current monthly salary under
Section 3A and family health benefits both paid in full for a period of one (1) year after such
termination of employment, and a prorated bonus under Section 3B. Employee shall be entitled to a
pro rated bonus, but not to salary continuation, if employment is terminated voluntarily by
Employee or is terminated by Orion for “cause.” For the purposes of this Agreement, “cause” shall
mean fraud, intentional misconduct or the conviction of a felony by the

 

 

Employee that, in the sole determination of the Orion Board of Directors, would have a
material and negative effect Orion.

     5. Employee Benefits. Employee shall be entitled to such fringe benefits as provided
other employees in the same or similar positions. Vacation shall be three weeks per year. Orion
will pay Employee a car allowance of $ 1,000 a month and will provide Employee with a cellular
phone and pager.

     Employee shall be entitled to options to purchase 100,000 shares of Orion stock with 50,000
being granted on employees original date of employment which shall vest over the normal five year
vesting period and the balance will vest at the end of a full five years of employment. These
options are subject to the terms and conditions of Orion stock option plans. The number of option
shares, exercise price, vesting schedule and all other terms and conditions affecting the option
shares shall be set forth in stock option agreements.

     6. Noncompetition.

          A. Employee acknowledges that Orion is engaged in the conduct of a highly specialized and
competitive business and that the restrictive covenants contained herein are necessary to protect
Orion and that these covenants are made in consideration of the compensation and benefits provided
Employee.

          B. For a period of twelve (12) months immediately following the termination of Employee’s
employment with Orion, however caused, Employee shall not, indirectly or directly, own, manage,
operate, control or participate in or be connected with as an officer, director, stockholder,
employee, consultant, partner, proprietor, broker or otherwise, whether in a paid or unpaid
position, engage in a business which is competitive with Employee at the time of termination. The
term “Business” shall include the range of products, product categories and subject matter that
Orion is selling or marketing or is in the process of developing at the time that Employee’s
employment terminates.

          C. During said twelve (12) months, Employee will not, directly or indirectly: (i) use
confidential information to solicit or attempt to solicit business from any of Orion’s customers,
vendors and/or suppliers; or (ii) refer or recommend that any of Orion’s customers, vendors and/or
suppliers, patronize any other business in direct or indirect competition with the Employer.

          D. During said twelve (12) months, Employee will not, directly or indirectly, solicit, raid,
entice or induce any person who is, or at anytime during the term hereof shall be, an employee or
consultant of Employer to become employed, as an employee, consultant or contractor, by any other
person, firm or corporation in any business in competition with Orion.

     7. Confidentiality. During Employee’s employment with Orion, Employee may be exposed
to Orion trade secrets; as such trade secrets are protected by law. Trade secrets are Confidential
Information which derive actual or potential economic value to Employer from not being generally
known, or readily ascertainable, by competitors of Orion, which information gives, or has the
potential of giving, Employer an advantage over its competitors of Employer, which Employer has
taken, and will continue to take, reasonable steps to maintain confidential

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vis-à-vis its competitor for so long as any such trade secret is maintained as a trade secret
by Orion.

     During Employee’s employment at Orion and for a period of five (5) years thereafter, Employee
agrees that all Confidential Information received from Orion and all Notes shall be kept and
maintained in the strictest confidence and shall not be disclosed or made available or used by
Employee or any third party. Employee further agrees to take all measures necessary to safeguard
and protect Orion’s Confidential information and the Notes.

     The restrictions and conditions of this section shall not apply where Employee can demonstrate
that such information is:

     (a) in or comes into the public domain at any time, or is made available to the general public
without restrictions by Orion:

     (b) independently developed by Employee without reference to or use of the disclosed
Confidential Information.

     (c) rightfully received from a third party without restriction and without breach of this
Agreement; or

     (d) required to be disclosed in satisfaction of any Court order, subpoena, regulation, or
legislative enactment.

     8. Intellectual Property Work Product. For purposes of this Agreement, the term
“Intellectual Property Work Product” means all writings, documents, inventions, ideas, drawings,
artwork, research, processes, procedures, techniques, designs, technologies, computer hardware or
software, programming code, templates, forms, formulas, discoveries, products, marketing and
business plans and all improvements, know-how, data, rights and claims related to those items and
all work product of any type, whether or not copyrightable or patentable, which the Employee makes,
conceives, discovers or develops, either solely or jointly with any other person or persons, at any
time during his employment with Orion, whether during working hours or at Orion’s facilities or at
any other location at the request or upon the suggestion of Orion or otherwise which relate to or
are otherwise in any way useful in connection with any business now or hereafter carried on or
contemplated by Orion, including developments or expansions of its present fields of operations.

     Orion’s Intellectual Property Work Product shall be the sole and exclusive property of Orion
and shall, upon its creation be owned by Orion. The Employee acknowledges and agrees that all
Intellectual Property Work Product that is copyrightable shall be considered a work made for hire
under the Copyright Act, 17 U.S.C. Sec. 101 et seq. The Employee agrees to make full disclosure to
Orion of all such Intellectual Property Work Product and agrees to do everything necessary or
desirable to vest absolute title thereto in Orion and to protect Orion’s right in the Intellectual
Property Work Product. The Employee will assist Orion (at Orion’s expense) to obtain and enforce
patents, copyrights or other rights or registrations relating to or arising out of the Intellectual
Property Work Product and this obligation shall continue after the Employee’s termination of his
employment with Orion (regardless of whether the termination is voluntary or involuntary). To the
extent that the Employee may be entitled to claim any ownership in any

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such Intellectual Property Work Product, he hereby irrevocably assigns and transfers to Orion
all rights, title and interest in an to such Intellectual Property Work Product under patent,
copyright, trade secret and trademark law developed during the term of the Agreement.

     9. Injunctive Relief. In addition to any other remedies provided by law, if Employee
breaches any of the provisions of Article 5, 6 or 7, Orion shall be entitled to injunctive relief
against Employee. In the event that either party breaches this Agreement, the non-breaching party
shall be entitled to recover from the breaching party all costs incurred by the non-breaching party
in enforcing his Agreement, including attorney’s fees.

     10. Other Agreements. The covenants and obligations of Employee and Orion under this
Agreement shall not in any way limit, abrogate, of modify the rights and obligations of the parties
under any other agreement to which they are a party.

     11. Modification of Agreement. The terms of this Agreement, including terms
pertaining to base salary and bonuses, may be modified in writing upon the mutual consent of the
parties.

     12. Severability. All agreements and covenants herein are severable, and if any of
them is held invalid by a court of competent jurisdiction, this Agreement shall be interpreted as
if such invalid agreement or covenant was not contained herein. The parties hereby agree to
negotiate any modification or reformation of this Agreement to the extent necessary to render it
valid and enforceable under the law of any interested jurisdiction.

     13. Notification to Subsequent Employers. For the period of twelve (12) months
immediately following the end of Employee’s employment by Orion, Employee will inform each new
employer, prior to accepting employment, of the existence of this Agreement and provide that
employer with a copy of the Agreement. In addition, Employee hereby authorizes Orion to forward a
copy of this Agreement to any actual or prospective new employer. If employee is not terminated
for cause, Employer will provide a positive reference and/or letter of recommendation.

     14. Waiver. No delay or failure by Orion in exercising any right under this Agreement
shall constitute a waiver of that or any other right.

     15. Assignments. This Agreement shall inure to the benefit of and shall be
Enforceable by Orion, its successors and assigns. This Agreement is personal to Employee and
Employee may not delegate any of his obligations hereunder without obtaining prior written consent
of Orion’s Board of Directors.

     16. Applicable Law. This Agreement shall interpreted under the laws of the State of
Wisconsin.

     17. Binding Arbitration.

          A. Except as provided in Section 17, B, the parties agree to binding arbitration of any
dispute concerning this Agreement using the applicable rules of the American

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Arbitration Association; provided, however, any arbitrator chosen shall be a member of the
National Academy of Arbitrators.

          B. Provided, however, Orion may seek injunctive relief under Section 9.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written
above.

	 	 	 	 	 	 	 
	ORION:

	 	By:
	 	           /s/
	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Its:
	 	          Chairman	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	Date:           10/1/05	 	 
	 

	 	 	 	 	 	 
	EMPLOYEE:

	 	 	 	          /s/ Bruce Wadman	 	 
	 

	 	 	 	 	 	 
	 	 	Bruce Wadman	 	 
	 
	 	 	 	 	 	 
	 	 	Date:           10/1/05	 	 
	 

	 	 	 	 	 	 

5exv10w2

 

Exhibit 10.2

EMPLOYMENT AGREEMENT

          AGREEMENT made as of the first day of April 2005 by and between Orion Energy Systems, Ltd., a
Wisconsin corporation (the “Employer”), and Neal R. Verfuerth (the “Employee”).

          WHEREAS, Employee currently serves as President and CEO of the Employer;

          WHEREAS, the Employer desires to continue to employ Employee, and Employee desires to continue
employment, upon the terms and conditions contained herein;

          NOW, THEREFORE, in consideration of the mutual covenants and conditions hereinafter set forth,
the parties agree as follows:

     1. Employment. Employee’s employment with the Employer is hereby continued upon the
terms and conditions hereinafter set forth.

     2. Term. Employer’s employment of the Employee shall be for a period of thirty-six
(36) months from the date of this Agreement with two optional one-year extensions (the “Term).
Such extensions shall be automatic unless either party notifies the other of its or his option to
cancel such extension at least one hundred twenty (120) days in advance. During the term of this
Agreement, Employee’s employment with Employer shall be “at-will,” which means either the Employer
or the Employee may terminate this Agreement for any reason or no reason at all, with or without
notice. However, if termination is for “cause,” then Employee shall not be entitled to certain
benefits as further provided in this Agreement. For purposes of this Agreement, “cause” shall mean
fraud or intentional misconduct by the Employee that, in the determination of the Board of
Directors of the Employer (the “Board”), would have a material and negative effect on Employer.

     3. Employee’s Duties. The Employee is engaged to act as the Employer’s President and
CEO. Employee shall perform such duties as set forth in the Employer’s By-Laws for the office of
President and as determined by the Board. Employee shall devote his entire time, attention, and
energies to the business of Employer and shall not, during the term of this Agreement, be engaged
in any other non-personal business activity pursued for gain, profit or other pecuniary advantage,
except as otherwise may be permitted in this Agreement or by the Board in writing. The Employee
may invest his assets in such form or manner as will not require any significant services which
conflict with Employee’s duties to Employer; provided that such investment is with a business,
person, or entity which is not in competition with Employer.

     4. Compensation.

          A. Base Salary. During the first twelve (12) months of this Agreement, the Employee’s
base annual salary shall be $250,000.00. Each year thereafter, so long as Employee remains employed, Employee’s base salary shall increase by
eight percent (8%) per year.

 

 

          B. Bonus. Based on the following schedule, and contingent on the Employee’s employment during
the fiscal year for which the bonus is awarded, the Employee shall receive a bonus equaling up to
100% of the base salary for that fiscal year:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Fiscal Year	 	 	Fiscal Year	 	 	Fiscal Year	 	 	Fiscal Year	 	 	Fiscal Year	 
	Bonus Schedule	 	06	 	 	07	 	 	08	 	 	09	 	 	10	 
	Gross Revenue

Goal 

	 	$	40	MM	 	$	70	MM	 	$	100	MM	 	$	130	MM	 	$	160	MM
	Importance 

	 	 	40	%	 	 	35	%	 	 	35	%	 	 	35	%	 	 	35	%
	EBITDA

Goal 

	 	$	3.5	MM	 	$	12	MM	 	$	18	MM	 	$	24	MM	 	$	30	MM
	Importance
	 	 	30	%	 	 	35	%	 	 	40	%	 	 	40	%	 	 	40	%
	Equity

Goal

	 	$	10	MM	 	$	20	MM	 	$	25	MM	 	$	30	MM	 	$	35	MM
	Importance
	 	 	15	%	 	 	15	%	 	 	10	%	 	 	10	%	 	 	10	%
	Common Stock

Goal 

	 	$	       6	 	 	$	  10	 	 	$	 14	 	 	$	 18	 	 	$	 22	 	 
	Importance
	 	 	15	%	 	 	15	%	 	 	15	%	 	 	15	%	 	 	15	%

If 75% but not 100% of any of the above goals are met, the Board of Directors in its sole
discretion may award a bonus related to that goal of up to 60% of the amount otherwise due upon
meeting the goal. The bonus may be paid either in cash, equity, or a combination of the two as
determined from year to year by the Board after consultation with Employee.

          C. Debt Forgiveness. As of April 1, 2005, Employee will be indebted to the Employer in
the amount of $110,827.61. Unless otherwise agreed or unless Employee is terminated for cause (as
defined in Section 2), Employer shall forgive one third of this balance and all accrued interest on
April 1st of the next three years beginning in 2006.

          D. Fringe Benefits. Employee shall be entitled to such fringe benefits as other
employees in the same or similar positions are provided. The Employer shall provide additional
fringe benefits to Employee, if necessary, so that the Employee will receive the following benefits
at no cost to the Employee: (1) term life insurance policy with a face amount not less than the
initial base pay under Section 4.A., (ii) family health coverage under an insurance policy, (iii)
ninety (90) days sick pay per year with no carry over; (iv) long term disability policy with the
maximum level of benefit permitted by the underwriting rules of the insurance company from which
the policy is purchased. All benefits to be provided hereunder shall be subject to the Employee’s
insurability under the standard underwriting policies of the insurance company from which the policies are purchased. The Employer shall also pay Employee a car allowance of $1,000 per
month and shall provide the Employee with a cellular phone and pager with the associated expenses
paid for by Employer.

          E. Loan Guarantee. In the event that Employee personally guarantees any debt of the
Employer, the Employee shall receive compensation from the Employer in an amount of cash and/or
equity agreed upon by the parties; but in no event shall such cash

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compensation exceed one percent
(1.0%) of the amount of the guaranty determined on an annual basis, or a percentage equal to that
paid to other shareholders providing similar guarantees. Employer will purchase and maintain a
life insurance policy in an amount at least equal to the amount of such Employee’s guarantees, the
proceeds of which upon Employee’s death will be first applied to any Employer or related entity
debt guaranteed by the Employee.

     5. Severance. In the event that Employee’s employment with the Employer terminates for
any reason other than for “cause” under Section 2, the Employee shall be entitled to receive: (i)
one hundred fifty percent (150%) of his base salary under Section 4.A. at the time of termination
of employment, and (ii) a prorated bonus under Section 4.B. determined with respect to the stub
bonus period ending on his date of termination. Unless otherwise agreed by the parties, severance
pay described in clause (i) of the preceding sentence shall be paid within thirty (30) days of such
termination and the severance pay described in clause (ii) of the preceding sentence shall be paid
within ninety (90) days of the close of the otherwise applicable bonus period. In the event that
Employee’s employment with the Employer terminates for “cause” under Section 2, Employee shall be
entitled to receive (i) any pro rata salary, bonus and other benefits accrued prior to the date of
such termination of employment, and (ii) any other salary, bonus and benefits deemed appropriate by
the Board in its sole discretion considering the prior contributions by Employee as well as the
reasons for such termination.

     6. Confidentiality and Non-competition Agreement.

          A. Acknowledgements. The Employee knows and has been informed that (a) the Employer’s
customer relationships and customer goodwill are valuable assets of the Employer which have been
developed by the Employer’s substantial investment of time, effort and expense and (b) that the
Employer has invested much time, effort and expense in developing the confidential business
information referred to below which is vital to the success of the Employer’s business. The
Employee acknowledges that his employment with the Employer will place him in a personal
relationship with the Employer’s customers and will result in the Employee having access to the
Employer’s confidential business information. The Employee further acknowledges that the Employer
has a legitimate interest in protecting its customer relationships, customer goodwill, and
confidential business information by means of the enforcement of this agreement.

          B. Non-competition. The Employee agrees that he will not during the term of his
employment with the Employer and for a period of two (2) years immediately following the
termination of his employment with the Employer (regardless of whether the termination is voluntary or involuntary), directly or indirectly (through
partners, agents, employers, employees or any other persons acting for, with or on behalf of the
Employee) solicit or in any way contact any customer of the Employer for the purpose of selling to
the customer any goods or services in competition with the Employer or accept any orders or
business from any customer for goods or services, in competition with the Employer, unless
expressly approved by resolution of the Board. For purposes of this subsection, the term
“customer” shall be specifically limited to individuals and entities of any type who received any
goods or services supplied by or on behalf of the Employer at any time within two (2) years
preceding the date of the Employee’s termination of employment. The term “customer” shall be
further limited to those customers of the Employer with whom the Employee transacted business on
behalf of the

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Employer any time during the two (2) years preceding the date of termination and
customers of the Employer with whom another employee of the Employer transacted business on behalf
of the Employer under the Employee’s direct or indirect supervision at any time within (2) years
preceding the date of termination. Payment to Employee of all amounts due under Section 5 are
subject to compliance with the provisions of this section.

          C. Confidentiality. The Employee agrees that he will not, during his employment and
for a period of two (2) years after the termination of his employment with the Employer (regardless
of whether the termination is voluntary or involuntary), directly or indirectly, unless authorized
in writing by the Board, use in competition with the Employer or disclose to any individual or
entity of any type any of the Employer’s bona fide confidential business information including, but
not limited to, customer lists, lists of customer prospects, methods of operation, methods of
pricing, business systems, business plans, marketing and advertising strategies, information
relating to transactions between the Employer and its customers (such as types and quantities of
goods/services purchased by a customer, dates of purchases, pricing strategies, prices paid and
costs of sales), information relating to transactions between the Employer and its vendors (such as
types and quantities of goods/services purchased from a vendor, dates of purchases and prices paid
to a vendor), product data, new product development plans, business development and acquisition
plans, engineering information, formulas, technical data, personnel information, and financial
information. Upon termination of employment (regardless of whether the termination is voluntary or
involuntary), the Employee agrees to promptly deliver to the Employer the originals and all copies
of all documents, records, and property of any nature whatsoever which are the property of the
Employer or which relate to the business activities of the Employer and which are in the Employee’s
possession or control at the time of the termination of employment. This provision is not intended
to prevent Employee from being gainfully employed, but soley to prevent Employee from using the
Employer’s confidential business information for the advantage of someone or some entity that is
not the Employer. Additionally, the prohibition provided by this paragraph is not intended to
limit in any manner, Employee’s obligations to comply with any applicable State’s trade secret
laws.

     7. Intellectual Property Work Product.

          For purposes of this agreement, the term “Intellectual Property Work Product” means all
writings, documents, inventions, ideas, drawings, artwork, research, processes, procedures,
techniques, designs, technologies, computer, hardware or software, programming code, templates,
forms, formulas, discoveries, products, marketing and business plans and all improvements,
know-how, data, rights and claims related to those items and all work product of any type, whether
or not copyrightable or patentable, which the Employee makes, conceives, discovers or develops at
any time during the Term. Employee’s work on such Intellectual Property Work Product shall be
considered permitted personal and not Employer business activity. The Employee’s Intellectual
Property Work Product shall initially be the property of the Employee upon its creation, but
thereafter the Employer shall have the option to acquire and own all such Employee’s Intellectual
Property Work Product pursuant to an Intellectual Property Assignment Agreement. The Employee
agrees to make full disclosure to the Employer of all such Intellectual Property Work Product and
agrees to do everything necessary or desirable to transfer absolute title thereto in the Employer
and to protect the Employer’s rights in the Intellectual Property Work Product should the Employer
exercise its option to acquire any such

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Work Product. The Employee will assist the Employer (at
the Employer’s expense) to obtain and enforce patents, copyrights or other rights or registrations
relating to or arising out of any Intellectual Property Work Product so transferred and this
obligation shall continue after the Employee’s termination of his employment with the Employer
(regardless of whether the termination is voluntary or involuntary). To the extent that the
Employee is transferring such Intellectual Property Work Product, he hereby irrevocably agrees to
assign and transfer to the Employer all rights, title and interest in and to such Intellectual
Property Work Product under patent, copyright, trade secret and trademark law developed during the
term of the Agreement on accordance with the Intellectual Property Assignment Agreement entered
into contemporaneously with this Agreement.

     8. Remedies. In addition to any other remedies provided by law, if a party breaches
this Agreement, the other party shall be entitled to injunctive relief against the breaching party.

     9. Modification of Agreement. The terms of this Agreement, including terms pertaining
to base salary and bonuses, may be modified only in writing upon the mutual consent of the parties
hereto.

     10. Severability. All agreements and covenants herein are severable, and if any of
them is held invalid by a court of competent jurisdiction, this Agreement shall be interpreted as
if such invalid agreement or covenant was not contained herein. The parties hereby agree to
negotiate any modification or reformation of Sections 6, 8, and 17 of this Agreement to the extent
necessary to render it valid and enforceable under the law of any interested jurisdiction.

     11. Notification to Subsequent Employers. For the period of twenty-four (24) months
immediately following the end of the Employee’s employment by Employer, Employee will inform each
new employer, prior to accepting employment, of the existence of non-compete and confidentiality
provisions contained in this Agreement and provide that employer with a copy of those provisions to the new employer. In addition,
Employee hereby authorizes Employer to forward a copy of this Agreement or any portion of this
Agreement to any actual or prospective new employer.

     12. Notices. Any notice required or permitted to be given under this Agreement shall
be sufficient if in writing and hand delivered or sent by registered mail to his residence in the
case of Employee, or to its principal office in the case of the Employer.

     13. Waiver. No delay or failure by the Employer in exercising any right under this
Agreement shall constitute a waiver of that or any other right.

     14. Assignment. This Agreement shall inure to the benefit of and shall be enforceable
by the Employer, its successors and assigns. This Agreement is personal to the Employee and
Employee may not delegate any of his obligations hereunder without first obtaining prior written
consent of the Board.

     15. Applicable Law. This Agreement shall be interpreted under the laws of the State of
Wisconsin.

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     16. Entire Agreement. This Agreement constitutes the entire agreement of the parties.
This Agreement supersedes any and all other prior agreements, both verbal and written, between the
parties hereto with respect to the Employee’s employment including, but not limited to, the
employment agreement dated October 1, 2001.

     17. Binding Arbitration.

          A. Except as provided in Section 17.B., the parties agree to binding arbitration of any
dispute concerning the terms of this Agreement or any instrument entered into in connection with
this Agreement on such terms as the parties agree, and, if no other agreement, then using the
applicable rules of the American Arbitration Association.

          B. Either party may seek injunctive relief against the other party in any court of proper
jurisdiction with respect to any breach of Sections 6 or 7 of this Agreement.

          IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written.

EMPLOYER:

	 	 	 	 	 
	 

	 	By:
	 	Patrick Trotter
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Its:
	 	Chairman
	 

	 	 	 	 

EMPLOYEE:

	 	 	 
	 

	 	/s Neal R. Verfuerth
	 

	 	 
	 

	 	Neal R. Verfuerth

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INTELLECTUAL PROPERTY ASSIGNMENT AGREEMENT

     For good and valuable consideration set forth below, the receipt and sufficiency of which are
hereby acknowledged, Neal Verfuerth, an adult resident of the state of Wisconsin (hereinafter
referred to as “ASSIGNOR”), has agreed pursuant to that certain Employment Agreement dated April 1,
2005 (the “Employment Agreement”) to offer to sell, assign, and transfer unto Orion Energy Systems,
Ltd., a Wisconsin corporation having offices at 1204 Pilgrim Road, Plymouth, Wisconsin 53073, its
successors and assigns (hereinafter collectively referred to as “ASSIGNEE”), the full and exclusive
right, title and interest for the United States, its territories and possessions, and all foreign
countries in and to any part of the Intellectual Property Work Product (as that term is defined in
the Employment Agreement) requested by Assignee, including the right to sue for past infringement,
such right, title, and interest to be held and enjoyed by ASSIGNEE, its successors and assigns,
including the right to sue for damages for infringement of any of the Intellectual Property Work
Product occurring prior to the date of this assignment, to the full end of the term or terms for
the Intellectual Property Work Product as fully and entirely as would have been held and enjoyed by
ASSIGNOR had this Assignment not been made.

     As consideration for such assignment, for each Intellectual Property Work Product developed
after the date hereof for which ASSIGNOR has or intends to have a patent filed, for which ASSIGNOR
submits to ASSIGNEE an Invention Disclosure Form in the form attached hereto as Exhibit 1, and for
which ASSIGNEE elects in writing to exercise its option to purchase, ASSIGNEE shall pay to ASSIGNOR
an amount to be agreed upon in writing by ASSIGNOR and ASSIGNEE (but in no event more than $1,500
per month per Intellectual Property Work Product) from the time of exercise for as long as such
Intellectual Property Work Product is significantly used or relied upon by ASSIGNEE (as determined
by ASSIGNEE, in its sole discretion), but not after abandonment, rejection, determination of
invalidity or expiration of any applicable patent filing therefore; provided, however, that
ASSIGNEE shall not be required to make any such payment in the event of the earlier to occur of (i)
ASSIGNEE electing not to actively pursue the filing of such patent or (ii) ASSIGNEE providing
ASSIGNOR written notice that ASSIGNEE will not be actively relying upon such Intellectual Property
Work Product. For any and all other Intellectual Property Work Product for which ASSIGNOR does not
intend to have a patent filed and that Assignee elects to purchase, the price shall be an
aggregated flat fee of $1,000. To insure payment when due, ASSIGNOR may be granted a security
interest in any such transferred Intellectual Property Work Product if he so requests.

     ASSIGNOR hereby agrees (a) to communicate to ASSIGNEE or its representative or agents, all
facts and information known or available to ASSIGNOR respecting the Intellectual Property Work
Product, improvements, and modifications including evidence for interference, reexamination,
reissue, opposition, revocation, extension, or infringement purposes or other legal, judicial, or
administrative proceedings, whenever requested by ASSIGNEE; (b) to testify in person or by
affidavit as required by ASSIGNEE in any such proceeding in the United States or a country foreign
thereto; (c) to execute and deliver, upon request by ASSIGNEE, all lawful papers including, but not
limited to, original, divisional, continuation, and reissue applications, renewals, assignments,
powers of attorney, oaths, affidavits, and declarations, depositions; and

7

 

(d) to provide all reasonable assistance to ASSIGNEE in obtaining and enforcing proper title
in and protection for the Intellectual Property Work Product, improvements, and modifications under
the intellectual property laws of the United States and countries foreign thereto after any such
Intellectual Property Work Product is acquired by ASSIGNEE.

     ASSIGNOR hereby represents and warrants that ASSIGNOR has the full and unencumbered right to
sell, assign, and transfer any interests to be sold, assigned, and transferred herein, and that
ASSIGNOR has not executed and will not execute any document or instrument in conflict herewith.

     ASSIGNOR hereby grants to the law firm of Foley & Lardner LLP the power and authority to
insert in this Assignment or any future transfer documentation any further identification which may
be necessary or desirable to comply with the rules of the U.S. Patent and Trademark Office for
recordation of this Assignment or the other transfer documents.

     ASSIGNOR understands and agrees that the attorneys and agents of the law firm of Foley &
Lardner LLP do not personally represent ASSIGNOR OR ASSIGNOR’s legal interests in this matter, but
instead represent the interests of ASSIGNEE; since said attorneys and agents cannot provide legal
advice to ASSIGNOR with respect to this Assignment, ASSIGNOR acknowledges its right to seek its own
independent legal counsel.

8

 

     Executed this ___day of ___, 2005.

	 	 	 	 	 
	 	ASSIGNOR

 	 
	 	 	 
	 	Neal Verfuerth 	 
	 

	 	 	 	 	 	 	 
	State of Wisconsin   
	 	 	)	 	 	 

	 	 	 	)	 	 	ss.

	County of                    
	 	 	)	 	 	 

On this ___day of ___, 2005, before me, a notary public in and for said county,
appeared Neal Verfuerth who is personally known to me to be the same person whose name is
subscribed to the foregoing instrument, and he acknowledged that he signed, sealed, and delivered
the said instrument as his free and voluntary act for the uses and purposes therein set forth.

	 	 	 	 	 
	 	 	 
	 	 	 
	 	Notary Public 	 
	 	My Commission Expires:                     	 
	 

(Seal)

9

 

	 	 	 	 	 
	 	ORION ENERGY SYSTEMS, LTD.
(“ASSIGNEE”)

 	 
	 	 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 

	 	 	 	 	 	 	 
	State of Wisconsin
	 	 	)	 	 	 

	 	 	 	)	 	 	ss.

	County of                    
	 	 	)	 	 	 

On this ___day of ___, 2005, before me, a notary public in and for said county,
appeared ___, who is personally known to me to be the same person whose name is
subscribed to the foregoing instrument, and he/she acknowledged that he/she signed, sealed, and
delivered the said instrument as his/her free and voluntary act for the uses and purposes therein
set forth.

	 	 	 	 	 
	 	 	 
	 	 	 
	 	Notary Public 	 
	 	My Commission Expires:                     	 
	 

(Seal)

10

 

Exhibit 1

CONFIDENTIAL and PROPRIETARY

ORION ENERGY SYSTEMS, LTD.

INVENTION DISCLOSURE

	 	 	 
	TITLE OF INVENTION:  
	 	 

	 	 	 

     PRODUCT NAME (IF APPLICABLE):                                          

     MODEL NUMBER (IF APPLICABLE):                                          

     BRIEF DESCRIPTION OF INVENTION                                          

 

 

     The undersigned person prepared this Invention Disclosure. It is believed to be accurate and
complete.

	 	 	 
	Signature:
	 	 

	 	 	 

	Printed Name:
	 	 

	 	 	 

	Date:
	 	 

	 	 	 

11

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