Document:

Name of Executive:	James R. Kackley
	Position:	President and Chief Operating Officer
	Fiscal Year 2010 Base Salary:	$300,000
	
Effective Date:	July 22, 2009
	Initial Term:	Effective Date through July 31, 2011
	Renewal Periods are:	1 Year
	Post-Change of Control Renewal Period is:	2 Years
	
Severance Multiplier is:	1x
	Post-Change of Control Severance Multiplier is:	2x

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
commence employment with Orion as of the effective date set forth above (the
“Effective Date”) 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 Effective Date and continue until the end of the initial term set forth
                    above. Thereafter, the Agreement shall only renew for successive
renewal periods                     as set forth above if both parties mutually agree to
renew the Agreement.                     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 date on which the Company’s
common                     stock was first sold to the public pursuant to an effective
registration                     statement filed under the Securities Act of 1933, as
amended (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  

2 

	 	        (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  

	 	        (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.  

3 

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  

4 

	 	
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.  

	 	        (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 budget                     over which the Executive retains
authority; (iv) a material change in the                     geographic location at which
the Executive must perform services; or (v) 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.  

5 

	 	        (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.  

	 	        (o)                        “Termination
Date” shall mean the date of the Executive’s
                    termination of employment from the Company, as further described in
Section 4.  

6 

        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. It is mutually                     agreed that the Executive’s current
board positions and other activities                     are hereby approved.  

	 	        (b)    Base
Salary. Orion shall pay Executive a Base Salary at the annual rate
                    set forth above for Fiscal Year 2010, 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.  

7 

	 	        (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.  

	 	        (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.  

9 

	 	        (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.  

        7.    Covenants
by Executive. 

11 

	 	        (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.  

        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.  

14 

        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, together with the                employment
offer letter dated as of the Effective Date and incorporated herein,
               contains the entire agreement of the parties with respect to the subject
matter                of this Agreement except where other agreements are specifically
noted, adopted,                or incorporated by reference. This Agreement otherwise
supersedes any and all                other agreements, either oral or in writing,
between the parties hereto with                respect to the employment of Executive by
Company, and all such agreements shall                be void and of no effect. Each
party to this Agreement acknowledges that no                representations, inducements,
promises, or agreements, oral or otherwise, have                been made by any party,
or anyone acting on behalf of any party, which are not                embodied herein,
and that no other agreement, statement, or promise not                contained in this
Agreement will be valid or binding.  

        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 

        WHEREAS,
this Agreement is effective as of the Effective Date set forth above. 

EXECUTIVE 

/s/ James R. Kackley
James R. Kackley 

ORION ENERGY SYSTEMS,
INC.  

	By:  	/s/
Neal R. Verfuerth       
Neal R. Verfuerth       
Chief Executive Officer

16ORION ENERGY SYSTEMS,
INC.
2004 STOCK AND INCENTIVE AWARDS PLAN 
STOCK OPTION AWARD 

James R. Kackley

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

	Grant Date:  	August
3, 2009

	Type of Option:  	Nonqualified
Stock Option 

	Number of Option Shares:  	Thirty-Five
Thousand (35,000)

	Exercise Price per Share:  	U.S.
$[_.__] [Closing share price on August 3, 2009]

	Vesting:  	Your
 Option will vest and become  exercisable  upon any  termination  of your
                                       employment other than a termination for Cause (as
defined below).

	Termination Date: 	Your
Option expires at, and cannot be exercised after, the close of business at the Company’s
headquarters on the earliest to occur of: 

	 	                                       • 	The
tenth (10th) anniversary of the Grant Date; 

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

	 	• 	One
year after your termination of employment or service for any other reason, provided that
if you die during this one year period, the exercise period will be extended until one
year after the date of your death.  

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

	 	
Notwithstanding
the above, your entire Option is terminated immediately if the Company or an Affiliate
terminates you for Cause, or if your employment or service is otherwise terminated at a
time when you could be terminated for Cause. 

	 	
For
purposes of this Agreement, “Cause” means any of the following: (i) failure to
perform or observe any of the terms or provisions of any written employment agreement
with the Company or an Affiliate, or if no written employment agreement exists, the gross
dereliction of your employment duties; (ii) failure to comply fully with the lawful
directives of the Board of Directors of the Company; (iii) dishonesty; (iv) misconduct;
(v) conviction of a crime involving moral turpitude; (vi) substance abuse; (vii)
misappropriation of funds: (viii) disloyalty or disparagement of the Company, and of its
Affiliates, or any of their management or employees; or (ix) other proper cause
determined in good faith by the Committee. 

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

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

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

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

2 

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

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

3 

	Notice of Sale: 	If
your Option is designated as an incentive stock option, you must promptly report to the
Secretary of the Company any disposition of the Shares acquired under your Option that is
made within two (2) years from the Grant Date or within twelve (12) months from the date
you acquired the Shares (the “Notice Period”). In addition, the Company may, at
any time during the Notice Period, place a legend or legends on any certificate(s) for
the Shares issued under your Option requesting the Company’s transfer agent to
notify the Company of any transfer of the Shares. 

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

	 	• 	As
a condition of the granting of your Option, except as required by law, you agree not to
disclose information regarding the existence, terms, or conditions of this Option to any
person or entity whatsoever, including without limitation any members of the media
(including, but not limited to, print journalists, newspapers, radio, television, cable,
satellite programs, or Internet media) or any Internet web page or “chat room,”or
any other entity or person, with the exception of your spouse, accountant, tax advisor,
and/or attorneys. Any violation of this provision may result in immediate and complete
forfeiture of all rights granted under this Option if so determined by the Committee.  

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

4 

	 	• 	This
Stock Option Award may be executed in counterparts.  

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

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

	/s/ Neal R. Verfuerth	/s/ James R. Kackley
	Neal R. Verfuerth, CEO	James R. Kackley, Optionee

5

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00160-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00160-of-00352.parquet"}]]