SEPARATION AGREEMENT
EXHIBIT 10.3
This Separation Agreement (“Agreement”) is between Orion Energy Systems Ltd., a Wisconsin
corporation (“Orion”) and Xxxxx Xxxxxx (“Xxxxxx”).
1. Background. Xxxxxx’x employment with Orion ended, effective February 19, 2007.
Both Xxxxxx and Orion desire an amicable separation and to fully and finally compromise and settle
any differences that may exist between them on the terms set forth in this Agreement. Xxxxxx had an
employment agreement that may provide for the receipt of severance under certain circumstances.
Orion disputes that those circumstances exist, but is willing to provide the severance outlined in
this Agreement in return for Xxxxxx’x execution of this Agreement, it becoming effective (see
paragraph 17), and his continued compliance with each of the covenants in this Agreement, including
those regarding confidentiality, non-competition, and non-solicitation.
2. Severance Pay and Benefits. In return for the execution of this Agreement, it
becoming effective (see paragraph 17), and Xxxxxx honoring all of its terms, Orion will provide or
deliver the following:
x. Xxxxxxxxx Pay. Six (6) months (the period of March 1, 2007 through August
31, 2007) of severance at his regular rate of pay in effect at February 19, 2007, less
withholding and deductions. The severance (a total amount of $87,500.00 for the 6-month
period, less withholding and deductions) shall be paid in one lump sum via wire transfer to
Xxxxxx’x account on the first business day after this Agreement becomes effective (see
paragraph 17) and be allocated for purposes of unemployment compensation benefits to the
week ending February 19, 2007. Orion agrees not to challenge Xxxxxx’x eligibility for
unemployment compensation benefits and further agrees to respond to any inquiry about any
post-employment to Xxxxxx by Orion with an explanation of the above-mentioned allocation.
b. COBRA Coverage. If Xxxxxx or any of his dependents who are qualified
beneficiaries (within the meaning of Code Section 4980B and any regulations thereunder)
elect COBRA continuation coverage under any group health plan maintained by Orion, Orion
will make timely continuation coverage premium payments for six (6) months of COBRA
continuation coverage (starting with the month of June, 2007 and continuing for the
following five (5) successive months) for Xxxxxx and/or his dependents, unless he and his
dependents cease to be eligible for such coverage for any reason or he breaches any of the
covenants contained in this Agreement. Such COBRA subsidies shall be reduced by Orion in
its discretion to the extent any benefits of the same type are received by or made available
to Xxxxxx and/or any of his dependents during such 6-month period. Xxxxxx shall report to
Orion any benefits of the same type received by or made available to him and/or his
dependents during such 6-month period.
c. Stock Options. An amendment to that certain nonstatutory (non-qualified)
Stock Option Agreement between Xxxxxx and Orion dated May 11, 2005, which shall be delivered
to Xxxxxx on the date this Agreement becomes effective. Subject to the terms and conditions
of the Stock Option Agreement, as amended, Xxxxxx shall have the right to exercise and
purchase forty thousand (40,000) shares of Common Stock of Orion at the exercise price of
$2.25 per share, (i) twenty thousand (20,000) options of which shall be exercisable at any
time between the effective date of this Agreement and the expiration of the “Stock Option
Exercise Period” and (ii) twenty thousand (20,000) options of which shall be exercisable
during a nine (9) month period commencing on June 30, 2009 and expiring on March 31, 2010
(the “Stock Option Exercise Period”).
3. Acknowledgement. Xxxxxx understands that the severance and benefits provided in
paragraph 2 will not be paid or provided unless (a) he accepts this Agreement, (b) it becomes
effective (see paragraph 17), and (c) he continues to comply with all of the applicable terms of
this Agreement.
4. Restrictive Covenants.
a. Non-competition. Xxxxxx agrees that, for a period of twenty (20) months
after the effective date of this Agreement, he will not, on his own behalf or for another
person or organization, provide services of the same nature that he provided while employed
by Orion to any competitor of Orion (which means any person or organization that is in the
business of or makes money from designing, developing, or selling products or services
similar to those products and services about which Xxxxxx had confidential information or
with which he worked (for purposes of sales or otherwise) in the last year of his employment
with Orion) in the United States.
b. No Solicitation. Xxxxxx agrees that for a period of twenty (20) months
after the effective date of this Agreement, he will not initiate contact in order to induce,
solicit, or encourage a client or customer of Orion with whom Xxxxxx had direct contact,
during the 12-month period prior to the end of his employment, to purchase services or
products from another similar to those services or products sold to the customer or client
by Orion. Additionally, Xxxxxx agrees that, for a twenty (20) month period after the date
on which his employment ended, he will not initiate contact in order to induce, solicit, or
encourage any person to leave Orion’s employ. Nothing in this paragraph is meant to, nor
does it, prohibit an employee of Orion that is not a party to this Agreement from becoming
employed by another organization or person.
5. Release. Xxxxxx understands and agrees that his acceptance of this Agreement means
that, except as stated in paragraph 8, he is forever waiving and giving up any and all claims he
may have, whether known or unknown, against Orion, its subsidiaries, and related companies, their
employees and agents for any personal monetary relief for himself, benefits or remedies that are
based on any act or failure to act that occurred before he signed this Agreement. He understand
that this release and waiver of claims includes claims relating to his employment and the
termination of his employment; any Orion policy, practice, contract or agreement; any tort or
personal injury; any policies, practices, laws or agreements governing the payment of wages,
commissions or other compensation; any laws governing employment discrimination including, but not
limited to, the Age Discrimination in Employment Act, Title VII of the Civil Rights Act, the
Employee Retirement Income Security Act, the Americans with Disabilities Act, the Wisconsin Fair
Employment Act and/or any state or local laws; any laws governing whistle blowing or retaliation,
including but not limited to, the Xxxxxxxx-Xxxxx Act; any laws or agreements that provide for
punitive, exemplary or statutory damages; and any laws or agreements that provide for payment of
attorney fees, costs or expenses.
6. Intentionally Left Blank
7. No Disparagement. Xxxxxx agrees not to make critical, negative or disparaging
remarks about Orion, its services, its products, its employees, officers, directors, or agents to
others. He also agrees not to disclose personal or private information about Orion or its
employees, officers, directors, agents or clients. Orion similarly agrees not to make any negative
or disparaging remarks about Xxxxxx. Further, Orion agrees to provide in conjunction with and on
Xxxxxx’x behalf, a positive letter of reference in the form attached as Exhibit A on the first
business day after this Agreement becomes effective (see paragraph 17) and positive verbal
references. Notwithstanding the forgoing, nothing in this paragraph 7 shall apply to any
statements made by either party in the context of any lawsuit or in response to any government
inquiry.
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8. Claims Not Waived. Xxxxxx understands that this Agreement does not waive
any claims that he may have: (a) for compensation for illness or injury or medical expenses under
any worker’s compensation statute; (b) for benefits under any plan currently maintained by Orion
that provides for retirement benefits; (c) under any law or any policy or plan currently maintained
by Orion that provides health insurance continuation or conversion rights; or (d) any claim that by
law cannot be released or waived.
9. Government Cooperation. Nothing in this Agreement prohibits Xxxxxx from
cooperating with any government agency.
10. Confidentiality/Non-Disclosure/Trade Secrets. Xxxxxx agrees that Orion is a
private corporation whose stock is not publicly held. Information about its financing (debt and
equity), financial performance, stock valuation, capital structure, revenues, expenses, profits,
ownership, investors, business strategies, financing strategies, sales and marketing strategies,
management salaries and compensation, employees and employee benefits and relations, consultants
and consultant relationships (both current and former), customers and customers relationships (both
current and former), suppliers and supplier relationships (both current and former), products,
services, engineering, research and development, manufacturing, computer systems and information
technology, and other information marked or kept as confidential information is considered private
and confidential by Orion (“Confidential Information”). Xxxxxx further agrees to not use or
disclose any Confidential Information without Orion’s prior written consent. Nothing in this
provision is intended to, nor shall it, restrict Xxxxxx from any employment opportunities or
employment with another. Future employment restrictions are provided in paragraph 4.a. above. In
addition, Xxxxxx agrees that the existence and the terms of this Agreement are not to be disclosed
to anyone other than his attorneys, tax advisors, or immediate family, except as required by law,
and that whenever disclosure is made, Xxxxxx will advise such persons to whom disclosure is
provided that they may not disclose the existence or terms of this Agreement to others except as
required by law. However, Xxxxxx may be required to share the terms of the restrictive covenants
(paragraphs 4.a. and 4.b. only) with a future employer as Orion requests or instructs, and in such
case, such disclosure shall be permitted.
Xxxxxx agrees and understands that this Agreement does not reduce his obligations to comply
with applicable laws relating to trade secrets.
11. Nonadmission. Xxxxxx and Orion both acknowledge and agree that nothing in this
Agreement is meant to suggest that Orion has violated any law or contract or that Xxxxxx has any
claim against Orion.
12. Voluntary Agreement. Xxxxxx acknowledges and states that he has entered into this
Agreement knowingly and voluntarily.
13. Consulting An Attorney. Xxxxxx acknowledges that Orion has told him that he should
consult an attorney of his own choice about this Agreement and every matter that it covers before
signing this Agreement.
14. Obligation to Pay Attorney Fees and Costs. Each party understands and agrees that if
such party (the “defaulting party”) violates the commitments or obligations made in this Agreement,
then the other party (the “non-defaulting party”) may seek to recover any payments and/or benefits
provided in this Agreement and that, except as provided in paragraph 15 with respect to Xxxxxx, the
defaulting party will be responsible for paying the actual attorney fees and costs incurred by the
non-defaulting party in enforcing this Agreement or (in the case of Orion) in defending a claim
released by paragraph 5.
15. Exception to Attorney Fees Obligation. The obligation to pay Orion’s attorney fees and
costs does not apply to an action by Xxxxxx regarding the validity of this Agreement under the
ADEA.
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16. Complete Agreement. Xxxxxx and Orion each understands and agrees that this document
contains the entire agreement between he and Orion relating to his employment and the termination
of his employment, including the separation pay and other consideration set forth herein, as well
as the rights and obligations set forth herein, and that this Agreement supersedes and displaces
any prior agreements and discussions relating to such matters and that they may not rely on any
such prior agreements or discussions.
17. Effective Date and Revocation. This Agreement shall not be effective until seven (7)
days after Xxxxxx signs it and returns it to Orion’s designated representative, Xxxx von Estorff.
During that seven-day period Xxxxxx may revoke his acceptance of this Agreement by delivering to
von Estorff a written statement stating he wishes to revoke this Agreement.
18. Final and Binding Effect. Xxxxxx understands that if this Agreement becomes effective
it will have a final and binding effect and that by signing and not timely revoking this Agreement
he may be giving up legal rights.
19. Return of Property. Xxxxxx acknowledges an obligation and agrees to return all Orion
property if he has not done so already. This includes all files, working papers and notes,
documents, records, including customer and client and potential customer and client business cards
and information, credit cards, keys and key cards, computers, laptops, cellular telephones,
Blackberry devices or similar instruments, and any other property of Orion. In addition, Xxxxxx
agrees to provide any and all access codes or passwords necessary to gain access to any computer,
program or other equipment that belongs to Orion or is maintained by Orion or on Orion property.
Further, he acknowledges an obligation and agrees not to destroy, delete or disable any Orion
property, including items, files and materials on computers and laptops.
20. Future Cooperation. Xxxxxx agrees to cooperate with Orion in the future and to provide
to Orion with answers to questions and truthful information, testimony or affidavits requested in
connection with any matter that arose during his employment. This cooperation may be performed at
reasonable times and places and in a manner as to not interfere with any other employment Xxxxxx
may have at the time of request. Orion agrees to reimburse Xxxxxx for his reasonable expenses
incurred in providing such cooperation.
21. Representations. By signing this Agreement Xxxxxx represents that he has read this
entire document and understands all of its terms.
22. 21-Day Consideration Period. Xxxxxx may consider whether to sign and accept this
Agreement for a period of twenty-one (21) days from the day he received it. If this Agreement is
not signed, dated and returned to Xxxx von Estorff within twenty-two (22) days, the offer of
benefits described in paragraph 2 will no longer be available.
| ACCEPTED: | ACCEPTED: | |||||||
| Orion Energy Systems, Ltd. | ||||||||
| /s/ Xxxxx Xxxxxx | ||||||||
| Xxxxx Xxxxxx | By: | /s/ Xxxx X. Xxxxxxxxx | ||||||
| Dated: | June 28, 2007 | Name: Xxxx X. Xxxxxxxxx | ||||||
| Title: President and CEO | ||||||||
| Dated: June 28, 2006 | ||||||||
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