| Name of Executive: |
Xxxxx X. Xxxxxxx |
| 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 |
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 Xxxxx in a key employee capacity and the Executive’s
services are valuable to the conduct of the business of the Company; and
WHEREAS,
Xxxxx 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:
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(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.
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(b) “Base
Salary” shall mean the Executive’s annual base salary
with the Company as in effect from time to time.
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(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.
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(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.
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(e) “Change
of Control” shall mean and be limited to any of the
following:
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(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
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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
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(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.
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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):
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(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;
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(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;
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(iii) the
term “Act” means the Securities Exchange Act of 1934, as amended;
and
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(iv) a
Person shall be deemed to be the “Beneficial Owner” of any
securities which:
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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; |
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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. |
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(f) “COBRA”shall
mean the provisions of Code Section 4980B.
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(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.
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(h)
“Competitive Business Activity” shall mean the design and
manufacture of lighting systems and controls for industrial,
commercial and agricultural facilities.
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(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.
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(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 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.
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(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:
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(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.
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(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.
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(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.
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(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.
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(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.
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3. Employment
of Executive
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(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.
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(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.
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(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.
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(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.
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(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.
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(f) Other
Perquisites. Executive shall be entitled to receive the other
benefits and perquisites set forth in Exhibit A.
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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:
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(a) Executive’s
employment will terminate upon Executive’s death.
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(b) If
Executive is Disabled, and if within thirty (30) days after Xxxxx 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, Xxxxx
may terminate the Executive’s employment, effective immediately
following the end of such thirty-day period.
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(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 Xxxxx,
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.
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(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.
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5. Payments
upon Termination.
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(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:
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(i) Executive’s
employment is terminated by Orion without Cause, except in the case
of death or Disability; or
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(ii) Executive
terminates his or her employment with the Company for Good Reason.
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If
Executive dies after receiving a notice by Xxxxx 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.
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(c) Severance
Benefits; Timing and Form of Payment. Subject to the limitations
imposed by Section 6, if Executive is entitled to severance benefits,
then:
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(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 2½ months
after the year in which Executive’s Separation from Service
occurs;
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(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
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(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.
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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. |
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(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.
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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 Xxxxx’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 Xxxxx’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.
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(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.
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(b) Non-Competition/Non-Solicitation.
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(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.
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(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.
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(c) Disclosure
and Assignment to the Company of Inventions and Innovations.
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(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.”
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(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.
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(iii) Executive
agrees to make and maintain for the Company adequate and current written
records of all such Innovations;
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(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.
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(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.
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(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.
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(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.
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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 Xxxxx 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 Xxxxx (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 Xxxxx. 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.
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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 Xxxxx 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.
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WHEREAS,
this Agreement is effective as of the Effective Date set forth above.
EXECUTIVE
/s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
ORION ENERGY SYSTEMS,
INC.
| By: |
/s/
Xxxx X. Xxxxxxxxx
Xxxx X. Xxxxxxxxx
Chief Executive Officer |
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