Document:

Name of Executive:	John H. Scribante
	Position:	Senior Vice President of Business Development
	Fiscal Year 2008 Base Salary:	$150,000
	Fiscal Year 2009 Base Salary:	$225,000
	
Initial Term:	Effective date through March 31, 2009
	Renewal Periods are:	1 Year
	Post-Change of Control Renewal Period is:	1 Year
	
Severance Multiplier is:	0.5x
	Post-Change of Control Severance Multiplier is:	1x

EXECUTIVE EMPLOYMENT
AND SEVERANCE AGREEMENT 

        This
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,
the Executive is employed by Orion in a key employee capacity and the Executive’s
services are valuable to the conduct of the business of the Company; and 

        WHEREAS,
Orion and Executive desire to specify the terms and conditions on which Executive will
continue employment on and after the date the Company’s common stock is first sold to
the public pursuant to an effective registration statement filed under the Securities Act
of 1933, as amended (the “IPO”), and under which Executive will receive
severance in the event that Executive separates from service with the Company; 

        NOW,
THEREFORE, for good and valuable consideration, the parties agree as follows: 

        1.    Effective
Date; Term. This Agreement shall become effective                     on
the date of the Company’s IPO and continue until the end of the initial
                    term set forth above. Thereafter, the Agreement shall renew
automatically for                     successive renewal periods as set forth above
unless and until either party                     provides written notice to the other
party of the intent not to renew the                     Agreement at least ninety (90)
days prior to the end of any term.                     Notwithstanding the foregoing, if
a Change of Control occurs prior to the end of                     any term, the
Agreement shall be automatically extended for the post- Change of
                    Control renewal period set forth above beginning on the date of the
Change of                     Control. 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:  

	 	        (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 or her 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 an act constituting 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 IPO 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  

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	 	        (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 IPO                     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 IPO 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 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 IPO 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  

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	 	        (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 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  

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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)    “COBRA”shall
mean the provisions of Code Section 4980B.  

	 	        (g)    “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.  

	 	        (h)    “Competitive
Business Activity” shall mean the design and                     manufacture of
lighting systems and controls for industrial, commercial and
                    agricultural facilities.  

	 	        (i)                        “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.  

	 	        (j)    “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 and benefits due                     pursuant to this
Agreement and (ii) any salary, bonus, equity, accrued vacation,
                    expense reimbursement and other ordinary 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.  

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	 	        (k)                        “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 diminution in the                     authority, duties or responsibilities of
Neal Verfuerth; (iv) a material                     diminution in the budget over which
the Executive retains authority; (v) a                     material change in the
geographic location at which the Executive must perform                     services; or
(vi) 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.  

	 	        (l)                        “Separation
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.  

	 	        (m)    “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, with any partial year’s
bonus being annualized with respect to                     such fiscal year) multiplied
by the severance multiplier set forth above; provided thatif
Executive’s Termination Date occurs on                     or following a Change of
Control, the multiplier described above shall be                     increased to the
post-Change of Control severance multiplier set forth above and                     any
reduction in Executive’s Base Salary since the date of the Change of
                    Control shall be ignored.  

	 	        (n)    “Successor” shall
mean the person to which this Agreement is                     assigned upon a Sale of
Business within the meaning of Section 10.  

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	 	        (o)                        “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 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 continue to serve on any board of
                    directors or trustees of any business organization or any charitable
                    organization; further provided in each case, and in the
aggregate, that                     such activities do not conflict or interfere with the
performance of                     Executive’s duties hereunder or conflict with
Section 7.  

	 	        (b)    Base
Salary. Orion shall pay Executive a Base Salary at the respective
                    annual rates set forth above for Fiscal Year 2008 and Fiscal Year
2009, 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.
On and after a Change                     of Control, to assure that Executive will have
an opportunity to earn incentive                     compensation, the Executive shall be
included in a bonus plan of the Employer                     which shall satisfy the
standards described below (such plan, the “Bonus                     Plan”).
Bonuses under the Bonus Plan shall be payable with respect to
                    achieving such financial or other goals reasonably related to the
business of                     the Company as the Company shall establish (the “Goals”),
all of which                     Goals shall be attainable, prior to the end of the
post-Change of Control                     renewal period (as set forth above), with
approximately the same degree of                     probability as the most attainable
goals under the Company’s bonus plan or                     plans as in effect at
any time during the 180-day period immediately prior to                     the Change of
Control (whether one or more, the “Company Bonus Plan”)                     and
in view of the Company’s existing and projected financial and business
                    circumstances applicable at the time. The amount of the bonus (the
“Bonus                     Amount”) that Executive is eligible to earn under
the Bonus Plan shall be                     no less than 100% of the Executive’s
target award provided in such Company                     Bonus Plan (such bonus amount
herein referred to as the “Targeted                     Bonus”), and in the
event the Goals are not achieved such that the entire                     Targeted Bonus
is not payable, the Bonus Plan shall provide for a payment of a                     Bonus
Amount equal to a portion of the Targeted Bonus reasonably related to that
                    portion of the Goals which were achieved. Payment of the Bonus Amount
shall not                     be affected by any circumstance occurring subsequent to the
end of the                     post-Change of Control renewal period, including
termination of Executive’s                     employment.  

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	 	        (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. On
and after a Change of Control, Executive                     shall be included: (i) to
the extent eligible thereunder (which eligibility                     shall not be
conditioned on Executive’s salary grade or on any other
                    requirement which excludes persons of comparable status to the
Executive unless                     such exclusion was in effect for such plan or an
equivalent plan immediately                     prior to the Change in Control of the
Company), in any and all plans providing                     benefits for the Company’s
salaried employees in general (including but not                     limited to group
life insurance, hospitalization, medical, dental, and long-term
                    disability plans) and (ii) in plans provided to executives of the
Company of                     comparable status and position to Executive (including but
not limited to                     deferred compensation, split-dollar life insurance,
supplemental retirement,                     stock option, stock appreciation, stock
bonus, cash bonus and similar or                     comparable plans); provided,
that, in no event shall the aggregate                     level of benefits under
the plans described in clause (i) and the plans                     described in clause
(ii), respectively, in which Executive is included be less                     than the
aggregate level of benefits under plans of the Company of the type
                    referred to in such clause, respectively, in which Executive was
participating                     immediately prior to the Change in Control.  

	 	        (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.  

        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-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 of Cause shall only be
                    made in good faith by the Board, and after a Change of Control, by
the Board of                     Directors of the Successor, which may terminate
Executive for Cause only after                     providing Executive (i) written notice
as set forth above, (ii) the opportunity                     to appear before such 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 or her 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.  

8 

	 	        (d)                        Executive
may terminate his or her 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-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, 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 or her 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 or she lived.  

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	 	        (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
Benefits; Timing and Form of Payment. Subject to the                     limitations
imposed by Section 6, 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 6 is
determined, but in no event may                     be payment be made more than 21⁄2 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; and  

	 	        (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.  

	 	
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 or her 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. The Company’s
obligations under                this Section 5 shall survive the termination of this
Agreement.  

10 

        6.    Limitations
on Severance Payments and Benefits. Notwithstanding                any other
provision of this Agreement, if any portion of the Severance 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 6,                (D) the After-Tax Value of the Total
Payments if the reduction in Total Payments                contemplated under this
Section 6 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 6. As used in this Section 6, 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
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 6,                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 6 shall be of no further force or                effect.  

11 

        7.                   Covenants
by Executive.  

	 	        (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 or she agrees that he or she 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 herself 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 or her 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 or her 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.” 

12 

	 	        (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;  

	 	        (iv)                   Upon
any termination of Executive’s employment, employee 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 7, 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 7, 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 7, 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 7.  

13 

	 	        (e)    Severability
of Provisions. If any restriction, limitation, or provision                of this
Section 7 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 7 is declared invalid
or unenforceable                by a court of competent jurisdiction, such phrase,
clause, or provision shall be                deemed severed from this Section 7, but
will not affect any other provision                of this Section 7, which shall
otherwise remain in full force and effect.                The provisions of this Section 7
are each declared to be separate and                distinct covenants by Executive.  

        8.    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 Chief Executive Officer
of Orion and the                General Counsel of Orion. Either party may change its
address by written notice                in accordance with this paragraph.  

        9.    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.  

        10.    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                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 10 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                or her 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 10, this Agreement
shall not be assignable by Orion.                This Agreement shall not be terminated
by the voluntary or involuntary                dissolution of Orion.  

14 

        11.    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 or                any Severance
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.  

        12.    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.  

        13.    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.  

        14.    Invalid
Provisions. Subject to Section 7(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.  

        15.    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.  

        16.    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
               (including with respect to the definition of Cause and the process for
Cause                termination, any stock option or similar equity award agreements
with the                Company to which Executive may now or hereafter be a party),
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.  

        17.    Modification.
This Agreement may not be modified or amended                by oral agreement, but only
by an agreement in writing signed by Orion and                Executive.  

        18.    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.  

15 

EXECUTIVE 

/s/ John H. Scribante
Signature 

John H. Scribante
Printed Name 

March 18, 2008
Date 

________________________________
Address 

ORION ENERGY SYSTEMS,
INC. 

By:  /s/ Neal R. Verfuerth
Name: Neal R. Verfuerth
Title: President/Chief Executive Officer  

16Exhibit 10.23 to Scanner Technologies Corporation Form 10-KSB for fiscal year ended December 31, 2007

Exhibit 10.23

 

THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER EITHER THE SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE DISTRIBUTED FOR VALUE UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND SUCH LAWS COVERING SUCH SECURITIES, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT, OFFER, PLEDGE OR OTHER DISTRIBUTION FOR VALUE IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND SUCH LAWS.

COMMON STOCK PURCHASE WARRANT

To Purchase 150,000 Shares of Common Stock

of

SCANNER TECHNOLOGIES CORPORATION

THIS CERTIFIES THAT, for good and valuable consideration, Betsy Brenden Radtke, or her registered successors or assigns, is entitled to subscribe for and purchase from Scanner Technologies Corporation, a New Mexico corporation (the “Company”), at any time up to and including January 11, 2018, one hundred fifty thousand (150,000) fully paid and nonassessable shares of Common Stock of the Company at a price of $0.07 per share (the “Warrant Exercise Price”), subject to the antidilution provisions of this Warrant. The shares of Common Stock that may be acquired upon exercise of this Warrant are referred to herein as the “Warrant Shares.”  As used herein, the term “Common Stock” means and includes the Company’s presently authorized common stock, no par value, and shall also include any capital stock of any class of the Company hereafter authorized
which shall not be limited to a fixed sum or percentage in respect of the rights of the holders thereof to participate in dividends or in the distribution of assets upon the voluntary or involuntary liquidation, dissolution, or winding up of the Company.

This Warrant is subject to the following provisions, terms and conditions:

	
             
 	
            1.
 	
            Exercise; Transferability.
 

 

	
             
 	
            (a)
 	
            The rights represented by this Warrant may be exercised by the holder hereof, in whole or in part (but not as to a fractional share of Common Stock), by written notice of exercise (in the form attached hereto) delivered to the Company at the principal office of the Company prior to the expiration of this Warrant and accompanied or preceded by the surrender of this Warrant along with a check in payment of the Warrant Exercise Price for such shares.
 

 

	
             
 	
            (b)
 	
            This Warrant may not be sold, transferred, assigned, hypothecated or divided into two or more Warrants of smaller denominations, nor may any Warrant Shares issued pursuant to exercise of this Warrant be transferred, except as provided in Section 7 hereof.
 

 

 

2.                   Exchange
and Replacement. Subject to Sections l and 7 hereof, this Warrant is exchangeable upon the surrender
hereof by the holder to the Company at its office for new Warrants of like tenor and date representing in the aggregate the right
to purchase the number of Warrant Shares purchasable hereunder, each of such new Warrants to represent the right to purchase such
number of Warrant Shares (not to exceed the aggregate total number purchasable hereunder) as shall be designated by the holder at
the time of such surrender. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction,
or mutilation of this Warrant, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it,
and upon surrender and cancellation of this Warrant, if mutilated, the Company will make and deliver a new Warrant of like tenor,
in lieu of this Warrant. This Warrant shall be promptly canceled by the Company upon the surrender hereof in connection with any
exchange or replacement. The Company shall pay all expenses, taxes (other than stock transfer taxes), and other charges payable in
connection with the preparation, execution, and delivery of Warrants pursuant to this Section 2.

 

	
             
 	
            3.
 	
            Issuance of the Warrant Shares.
 

 

	
             
 	
            (a)
 	
            The Company agrees that the Warrant Shares shall be and are deemed to be issued to the holder as of the close of business on the date on which this Warrant shall have been surrendered and the payment made for such Warrant Shares as aforesaid. Subject to the provisions of the next section, certificates for the Warrant Shares so purchased shall be delivered to the holder within a reasonable time, not exceeding fifteen (15) days after the rights represented by this Warrant shall have been so exercised, and, unless this Warrant has expired, a new Warrant representing the right to purchase the number of Warrant Shares, if any, with respect to which this Warrant shall not then have been exercised shall also be delivered to the holder within such time.
 

 

	
             
 	
            (b)
 	
            Notwithstanding the foregoing, however, the Company shall not be required to deliver any certificate for Warrant Shares upon exercise of this Warrant except in accordance with exemptions from the applicable securities registration requirements or registrations under applicable securities laws. Nothing herein, however, shall obligate the Company to effect registrations under federal or state securities laws. If registrations are not in effect and if exemptions are not available when the holder seeks to exercise the Warrant, the Warrant exercise period will be extended, if need be, to prevent the Warrant from expiring, until such time as either registrations become effective or exemptions are available, and the Warrant shall then remain exercisable for a period of at least 30 calendar days from the date the Company delivers to
the holder written notice of the availability of such registrations or exemptions. The holder agrees to execute such documents and make such representations, warranties, and agreements as may be required solely to comply with the exemptions relied upon by the Company, or the registrations made, for the issuance of the Warrant Shares.
 

 

4.                   Covenants of the Company. The Company covenants and agrees that all Warrant Shares will, upon issuance, be duly authorized and issued, fully paid, nonassessable, and free from all taxes, liens, and charges with respect to the issue thereof. The Company further covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved for the purpose of issue or transfer upon exercise of the subscription rights evidenced by this Warrant a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant.

 

2

	
             
 	
            5.
 	
            Antidilution Adjustments. The provisions of this Warrant are subject to adjustment as provided in this Section 5.
 

 

	
             
 	
            (a)
 	
            The Warrant Exercise Price shall be adjusted from time to time such that in case the Company shall hereafter:
 

 

	
             
 	
            (i)
 	
            pay any dividends on any class of stock of the Company payable in  Common Stock or securities convertible into Common Stock;
 

 

	
             
 	
            (ii)
 	
            subdivide its then outstanding shares of Common Stock into a greater number of shares; or
 

 

	
             
 	
            (iii)
 	
            combine outstanding shares of Common Stock, by reclassification or otherwise;
 

 

then, in any such event, the Warrant Exercise Price in effect immediately prior to such event shall (until adjusted again pursuant hereto) be adjusted immediately after such event to a price (calculated to the nearest full cent) determined by dividing (a) the number of shares of Common Stock outstanding immediately prior to such event, multiplied by the then existing Warrant Exercise Price, by (b) the total number of shares of Common Stock outstanding immediately after such event (including the maximum number of shares of Common Stock issuable in respect of any securities convertible into Common Stock), and the resulting quotient shall be the adjusted Warrant Exercise Price per share. An adjustment made pursuant to this subsection shall become effective immediately after the record date in the case of a dividend or distribution and shall become effective immediately after the effective
date in the case of a subdivision, combination or reclassification. If, as a result of an adjustment made pursuant to this subsection, the holder of any Warrant thereafter surrendered for exercise shall become entitled to receive shares of two or more classes of capital stock or shares of Common Stock and other capital stock of the Company, the Board of Directors (whose determination shall be conclusive) shall determine the allocation of the adjusted Warrant Exercise Price between or among shares of such classes of capital stock or shares of Common Stock and other capital stock. All calculations under this subsection shall be made to the nearest cent or to the nearest 1/100 of a share, as the case may be. In the event that at any time as a result of an adjustment made pursuant to this subsection, the holder of any Warrant thereafter surrendered for exercise shall become entitled to receive any shares of the Company other than shares of Common Stock, thereafter the Warrant Exercise
Price of such other shares so receivable upon exercise of any Warrant shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to Common Stock contained in this subsection.

 

	
             
 	
            (b)
 	
            Upon each adjustment of the Warrant Exercise Price pursuant to subsection 5(a) above, the holder of each Warrant shall thereafter (until another such adjustment) be entitled to purchase at the adjusted Warrant Exercise Price the number of shares, calculated to the nearest full share, obtained by multiplying the number of shares specified in such Warrant (as adjusted as a result of all adjustments in the Warrant Exercise Price in effect prior to such adjustment) by the Warrant Exercise Price in effect prior to such adjustment and dividing the product so obtained by the adjusted Warrant Exercise Price.
 

 

3

	
             
 	
            (c)
 	
            In case of any consolidation or merger to which the Company is a party other than a merger or consolidation in which the Company is the continuing corporation, or in case of any sale or conveyance to another corporation of the Company’s property as an entirety or substantially as an entirety, or in the case of any statutory exchange of securities with another corporation (including any exchange effected in connection with a merger of a third corporation into the Company), there shall be no adjustment under subsection (a) of this Section but the holder of each Warrant then outstanding shall have the right thereafter to convert such Warrant into the kind and amount of shares of stock and other securities and property which the holder would have owned or have been entitled to receive immediately after such consolidation,
merger, statutory exchange, sale, or conveyance had such Warrant been converted immediately prior to the effective date of such consolidation, merger, statutory exchange, sale, or conveyance and in any such case, if necessary, appropriate adjustment shall be made in the application of the provisions set forth in this subsection with respect to the rights and interests thereafter of any holders of the Warrant, to the end that the provisions set forth in this Section shall thereafter correspondingly be made applicable, as nearly as may reasonably be, in relation to any shares of stock and other securities and property thereafter deliverable on the exercise of the Warrant. The provisions of this subsection shall similarly apply to successive consolidations, mergers, statutory exchanges, sales or conveyances.
 

 

	
             
 	
            (d)
 	
            Upon any adjustment of the Warrant Exercise Price, then and in each such case, the Company shall give written notice thereof, by first-class mail, postage prepaid, addressed to the holder as shown on the books of the Company, which notice shall state the Warrant Exercise Price resulting from such adjustment and the increase or decrease, if any, in the number of shares of Common Stock purchasable at such price upon the exercise of this Warrant, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based.
 

 

6.                  No Voting Rights. This Warrant shall not entitle the holder to any voting rights or other rights as a shareholder of the Company.

 

	
             
 	
            7.
 	
            Notice of Transfer of Warrant or Resale of the Warrant Shares.
 

 

	
             
 	
            (a)
 	
            Subject to the sale, assignment, hypothecation, or other transfer restrictions set forth in Section 1 hereof, the holder, by acceptance hereof, agrees to give written notice to the Company before transferring this Warrant or transferring any Warrant Shares of such holder’s intention to do so, describing briefly the manner of any proposed transfer. Promptly upon receiving such written notice, the Company shall present copies thereof to the Company’s counsel and to counsel to the original purchaser of this Warrant. If in the opinion of each such counsel the proposed transfer may be effected without registration or qualification (under any federal or state securities laws), the Company, as promptly as practicable, shall notify the holder of such opinion, whereupon the holder shall be entitled to transfer this Warrant or
to dispose of Warrant Shares received upon the previous exercise of this Warrant, all in accordance with the terms of the notice delivered by the holder to the Company; provided that an appropriate legend may be endorsed on this Warrant or the certificates for such Warrant Shares respecting restrictions upon transfer thereof necessary or advisable in the opinion of counsel and satisfactory to the Company to prevent further transfers which would be in violation of Section 5 of the Securities Act of 1933, as amended (the “Securities Act”) and applicable state securities laws; and provided further that the prospective transferee or purchaser shall execute such documents and make such representations, warranties, and agreements as may be required solely to comply with the exemptions relied upon by the Company for the transfer or disposition of the Warrant or Warrant Shares.
 

 

4

	
             
 	
            (b)
 	
            If in the opinion of either of the counsel referred to in this Section, the proposed transfer or disposition of this Warrant or such Warrant Shares described in the written notice given pursuant to this Section may not be effected without registration or qualification of this Warrant or such Warrant Shares the Company shall promptly give written notice thereof to the holder, and the holder will limit its activities in respect to such as, in the opinion of both such counsel, are permitted by law.
 

 

8.                  Fractional Shares. Fractional shares shall not be issued upon the exercise of this Warrant, but in any case where the holder would, except for the provisions of this Section, be entitled under the terms hereof to receive a fractional share, the Company shall, upon the exercise of this Warrant for the largest number of whole shares then called for, pay a sum in cash equal to the sum of (a) the excess, if any, of the Market Price of such fractional share over the proportional part of the Warrant Exercise Price represented by such fractional share, plus (b) the proportional part of the Warrant Exercise Price represented by such fractional share. For purposes of this Section, the term “Market Price”
with respect to shares of Common Stock of any class or series means the last reported sale price or, if none, the average of the last reported closing bid and asked prices on any national securities exchange or quoted on the Nasdaq Stock Market or other over-the-counter market, or, if not listed on a national securities exchange or quoted on the Nasdaq Stock Market or other over-the-counter market, then the price per share established by the Board of Directors of the Company.

 

IN WITNESS WHEREOF, Scanner Technologies Corporation has caused this Warrant to be signed by its duly authorized officer and this Warrant to be dated January 11, 2008.

 

 

	
             
 	
            SCANNER TECHNOLOGIES CORPORATION
 
	
             
 	
            By: 
 	
            
 /s/ Elwin M. Beaty
 
	
             
 	
             
 	
            Elwin M. Beaty, President, Chief Executive Officer
   and Chief Financial Officer
 

 

 

5

To:    SCANNER TECHNOLOGIES CORPORATION

 

NOTICE OF EXERCISE OF WARRANT -- 
To Be Executed by the Registered Holder in Order to Exercise the Warrant

Subscriber hereby irrevocably elects to exercise the attached Warrant to purchase by surrendering a check,                                       of the shares issuable upon the exercise of such Warrant, and requests that certificates for such shares (together with a new Warrant to purchase the number of shares, if any, with respect to which this Warrant is not exercised) shall be issued in the name of

 

 

	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 
	
             
 	
             
 	
            (Print Name)
 
	
             
 	
             
 	
             
 
	
            Please insert social security or other 

identifying number of registered holder 

of certificate (                                           )
 	
             
 	
            Address:
 
	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 
	
            Dated: __________________________, ______
 	
             
 	
             
 
	
             
 	
             
 	
            (Signature)*
 

 

 

*The signature on the Notice of Exercise of Warrant must correspond to the name as written upon the face of the Warrant in every particular without alteration or enlargement or any change whatsoever. When signing on behalf of a corporation, partnership, trust or other entity, PLEASE indicate your position(s) and title(s) with such entity.

 

 

 

 

ASSIGNMENT FORM

 

To be signed only upon authorized transfer of Warrants.

FOR VALUE RECEIVED, Subscriber hereby sells, assigns, and transfers unto _____________________________ the right to purchase the securities of Scanner Technologies Corporation, to which the within Warrant relates and appoints _____________, attorney, to transfer said right on the books of Scanner Technologies Corporation, with full power of substitution in the premises.

 

	
            Dated:  
 	
             
 	
             
 	
             
 
	
              
 	
             
 	
             
 	
            (Signature)
 
	 
	
             
 	
            Address:

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