Exhibit 10.10
 
EMPLOYMENT AGREEMENT
 
This EMPLOYMENT AGREEMENT (this “Agreement”), entered into this 24 day of
February, 2008, by and between Cyalume Technologies, Inc., a Delaware
corporation (the “Company”), and Derek Dunaway (the “Executive”).
 
WHEREAS, the Company desires to secure the services of the Executive, the
Executive desires to commence employment with the Company, and each desires to
enter into an agreement to provide for the terms of such employment as set forth
herein.
 
NOW, THEREFORE, the parties hereto agree as follows:
 
1.             Definitions.  As used herein, the following terms shall have the
following meanings:
 
“Affiliate” means, as to any Person, any other Person which directly or
indirectly controls, or is under common control with, or is controlled by, such
Person.  As used in this definition, “control” (including, with its correlative
meanings, “controlled by” and “under common control with”) shall mean
possession, directly or indirectly, of the power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise).
 
“Board” means the board of directors of the Company.
 
“Employment Period” means the period beginning on the date of this Agreement and
ending on the date on which the Executive is no longer employed by the Company.
 
“Person” means an individual, a partnership, a corporation, an association, a
limited liability company, a joint stock company, a trust, a joint venture, an
unincorporated organization or a governmental entity or any department, agency
or political subdivision thereof.
 
”Subsidiary” means any corporation, partnership, association or other business
entity of which (i) if a corporation, a majority of the total voting power of
units entitled to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by the
Company or (ii) if a partnership, association or other business entity, a
majority of the partnership or other similar ownership interests thereof is at
the time owned or controlled, directly or indirectly, by the Company.
 
2.             Employment.
 
 (a)           Employment.  The Company agrees to employ the Executive, and the
Executive hereby accepts employment with the Company, upon the terms and
conditions set forth in this Agreement during the Employment Period.
 
 (b)           Position and Duties.
 
 (i)           Position.  During the Employment Period the Executive shall serve
as the President and Chief Executive Officer of the Company under the
supervision and direction and reporting directly to the Cyalume Board.

 
 

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 (ii)           Responsibilities.  In the Executive’s capacity as the President
of the Company, the Executive shall perform such duties as are customarily
performed by a President of a non-public company of comparable size and shall
have such power and authority as shall reasonably be required to enable him to
perform such duties hereunder.  The Executive shall attend Board meetings as
requested by the Board.  The Executive will have such other duties and
responsibilities as the Board may reasonably determine from time to time, and
the Executive will faithfully perform such duties to the best of his ability.
 
 (iii)         Time to be Devoted to Employment.  Except for vacation, absences
due to temporary illness and absences resulting from a disability, the Executive
shall (A) devote substantially all of his business time, attention, energy and
skills to the business of the Company, (B) use his best efforts to promote the
success of the Company’s businesses, and (C) cooperate fully with the Board in
the advancement of the best interests of the Company.
 
 (iv)         Policies.  The Executive will be subject to, and will comply with,
the policies, standards and procedures generally applicable to senior management
employees of the Company from time to time.
 
 (c)           Base Salary and Benefits.
 
 (i)           Base Salary.  During the Employment Period, the Company will pay
to the Executive a base salary (the “Base Salary”) at the annual rate of
$250,000.  The Base Salary shall be paid by the Company in regular installments
in accordance with the Company’s general payroll practices and shall be subject
to customary withholding, payroll and other taxes.
 
 (ii)          Vacation.  During the Employment Period, the Executive shall be
entitled to three (3) weeks paid vacation during each 12-month period
worked.  If the Executive is employed hereunder during a calendar year for less
than all of that year, he shall be entitled in that year to a number of such
vacation days, pro rated based on the number of days worked during such year.
Unused vacation days shall not accumulate or roll over between calendar years.
 
 (iii)         Benefits.  In addition to the Base Salary, the Executive shall be
entitled, during the Employment Period, to participate in such employee benefit
plans generally made available to senior management employees of the Company,
subject to the terms and conditions thereof and subject to change from time to
time (the “Benefit Plans” and the benefits offered under the Benefit Plans being
herein referred to as the “Benefits”).
 
 (iv)         Business Expenses.  The Company shall reimburse the Executive for
all reasonable out-of-pocket expenses incurred by him in the course of
performing his duties under this Agreement, in each case which are consistent
with the Company’s policies in effect from time to time with respect to travel,
entertainment and other business expenses. The Executive must furnish the
Company with evidence relating to such expenses as the Company requires to
substantiate such expenses for tax and accounting purposes. During the
Employment Period, the Executive shall be entitled to a  monthly car allowance
in the amount of $1,000, which allowance shall be paid in regular installments
in accordance with the Company’s general payroll practices and shall be subject
to customary tax withholding.

 
 

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 (d)           Termination.
 
 (i)           The Employment Period shall terminate (x) upon the Executive’s
death or disability, (y) upon the Executive’s voluntary resignation of his
employment with the Company, or (z) by the Company for any reason.  The
effective date of the termination of the Employment Period pursuant to this
Section 2(d) is hereinafter referred to as the “Termination Date.”  Except as
otherwise provided herein, the Termination Date with respect to termination of
the Employment Period by the Company shall be the date specified by the Company
in a written notice to the Executive.  Upon the termination of the Employment
Period, the Executive shall be entitled to (1) all previously earned and accrued
but unpaid Base Salary up to the Termination Date, (2) all unpaid vacation and
reimbursable expenses which have accrued up to the Termination Date and (3) any
other amounts the payment of which is required by applicable law, but shall not
be entitled to any further Base Salary or Benefits for the remainder of that
year or any future year, or to any severance compensation of any kind, nature or
amount.
 
 (ii)          Any payments pursuant to this Section 2(d) shall be made in
regular payroll payment installments in accordance with the Company’s general
payroll practices and as of the date of the final such payment, the Company
shall have no further obligation to the Executive pursuant to this Section 2(d)
except as provided by applicable law.
 
3.             Confidential Information.  The Executive acknowledges that the
information, observations and data obtained by the Executive while employed by
the Company concerning the business and affairs of the Company and/or any
Affiliated entity (collectively, the “Confidential Information”), are the
property of the Company and/or an Affiliated entity, as applicable.  Therefore,
the Executive agrees that he shall not disclose to any unauthorized Person or
use for his own account any Confidential Information unless such Confidential
Information (i) is generally known to and available for use by the public other
than as a result of the Executive’s acts or omissions to act; (ii) is rightfully
received by the Executive from a party who was not subject to any obligations of
confidentiality; or (iii) the Executive is required by order of a court of
competent jurisdiction (by subpoena or similar process) to disclose or discuss
any Confidential Information, provided, that in such case, the Executive shall
promptly inform the Company of such order, shall cooperate with any effort by
the Company to obtain a protective order or to otherwise restrict such
disclosure, and shall only disclose Confidential Information to the extent
necessary to comply with any such court order.  If in the absence of a
protective order or the receipt of a waiver hereunder, the Executive, on the
written advice of counsel, is compelled to disclose any Confidential Information
to any tribunal or else stand liable for contempt, the Executive shall, at the
reasonable request of the Company, use his best efforts to obtain an order or
other assurance that confidential treatment will be accorded to such portion of
the Confidential Information required to be disclosed as the Company shall
designate. The Executive shall deliver to the Company at the termination of the
Executive’s employment, or at any other time that the Company may request, all
memoranda, notes, plans, records, reports, computer tapes and software and other
documents and data (and all copies thereof) relating to the Confidential
Information or Work Product which he may then possess or have under his control.
 
4.            Inventions, Work Product.  The Executive agrees that all
inventions, innovations, improvements, developments, methods, designs, analyses,
drawings, reports, and all similar or related information and other intellectual
property rights which relate to any member of the  Company’s actual or
anticipated business, research and development or existing or future products or
services and which are conceived, developed or made by the Executive while
employed by the Company (collectively, “Work Product”), belong and are the
property of the Company.  The Executive will promptly disclose such Work Product
to the Board and perform all actions reasonably requested by the Board (whether
during or after the Employment Period) to establish and confirm such ownership
(including, without limitation, assignments, consents, powers of attorney and
other instruments).

 
 

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5.             Noncompetition; Nonsolicitation.
 
 (a)           The Executive acknowledges that in the course of his employment
with the Company and its Subsidiaries he will become familiar, with the
Company’s trade secrets and with other Confidential Information and that his
services have been and will be of special, unique and extraordinary value to the
Company and its Subsidiaries.  Therefore, the Executive agrees that, for the
period of twelve (12) months following the Termination Date (such period, the
“Noncompete Period”), he shall not directly or indirectly own, manage, control,
participate in, consult with, render services for, operate or in any manner
engage (including by himself or in association with any Person) in any business
in North America or France (or any other country in which the Company and its
Subsidiaries operate or could reasonably be anticipated to operate during the
Noncompete Period) that, directly or indirectly has as a business purpose or any
activity which is or may reasonably be construed to be competitive with the
business of the Company and its Subsidiaries as conducted at any time during the
Noncompete Period (including changes or expansions in the businesses or the
products sold or distributed reasonably anticipated during such time period).
 
 (b)           During the Noncompete Period, the Executive shall not directly or
indirectly (whether individually or through another Person):  (i) influence or
attempt to influence any of the customers, suppliers, licensees, licensors,
sponsors or other business relations of any member of the Company to divert
their business or patronage from any member of the Company to any other Person
engaged in a similar business or to decrease or cease doing business with any
member of the Company, or in any way interfere with the relationship between any
customer, supplier, licensee, licensor, sponsor or other business relation and
the Company; (ii) disclose to any Person the names, addresses, or requirements
of, any customers of the Company, the prices charged to such customers or the
practices used in servicing such customers; (iii) make any statement or do any
act intended to cause existing or potential customers of the Company to make use
of the services or purchase the products of any competitive business; (iv) hire
or attempt to hire any (A) active employee of the Company and (B) person who was
an employee of the Company at any time within the twelve (12) month period prior
to being hired by the Executive for any kind of employment; or (v) induce or
attempt to induce any employee of the Company to leave his or her employ or in
any way interfere with the relationship between the Company and any of its
employees.
 
 (c)           The parties hereto acknowledge and agree that the Company will
suffer irreparable harm from a breach by the Executive of any of the covenants
or agreements contained in this Section 5. The Executive further acknowledges
that the restrictive covenants set forth in this Section 5 are of a special,
unique and extraordinary character, the loss of which cannot be adequately
compensated by monetary damages.  The Executive agrees that the periods of
restriction and geographic area of restriction imposed by the provisions of this
Section 5 are fair and reasonable and are reasonably required for the protection
of the Company in whose favor such restrictions operate. The Executive
acknowledges that, but for the Executive’s agreements to be bound by the
restrictive covenants set forth in this Section 5, the Company would not have
entered into this Agreement.  In the event of an alleged or threatened breach by
the Executive of any of the provisions of Sections 3 or 5, the Company or its
successor or assign may, in addition to all other rights and remedies existing
in its or their favor, apply to any court of competent jurisdiction for specific
performance and/or injunctive or other equitable relief (without posting a bond
or other security) in order to enforce or prevent any violations of the
provisions hereof.  In the event of a violation by the Executive of any of the
provisions of this Section 5, the Noncompete Period shall be tolled from the
date of the violation until such violation is resolved.
 
 (d)           If, at the time enforcement is sought of any of the provisions of
this Section 5, a court of competent jurisdiction holds that the restrictions
stated herein are unreasonable under the circumstances then existing, the
parties hereto agree that the maximum period, scope or geographical area
reasonable under such circumstances shall be substituted for the stated period,
scope or area.

 
 

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 (e)           The refusal or failure of the Company to enforce any of the
restrictive covenants set forth in Sections 3 and 5 against the Executive, for
any reason, shall not constitute an act of precedent or a defense to the
enforcement by the Company of the restrictive covenants set forth herein, nor
shall it give rise to any claim or cause of action by the Executive against the
Company.  If any action should have to be brought by the Company against the
Executive to enforce the restrictive covenants set forth in Sections 3 and 5,
the Executive agrees that the Company is entitled to preliminary and permanent
injunctive relief restraining the Executive from violating any of such
restrictive covenants and shall be entitled to seek all other legal and
equitable remedies provided under applicable law.  The Executive expressly
acknowledges that the restrictive covenants set forth in Sections 3 and 5 apply
to any successor or assign of the Company as a direct third-party beneficiary
and that such restrictive covenants are expressly intended for the benefit of
such successor and assign.
 
6.             Notices.  All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement will
be in writing and will be effective if delivered personally, mailed by certified
or registered mail, return receipt requested and postage prepaid, sent via a
nationally recognized overnight courier, or sent via facsimile to the recipient
with telephonic confirmation by the sending party. Such notices, demands and
other communications will be sent to the address indicated below:
 
To the Company:
 
Cyalume Technologies, Inc.c/o Columbus Nova
Citigroup Center
153 East 53rd Street
New York, New York 10022
Attention: Jason Epstein and Steven Flyer
Facsimile No.: (212) 308-6623

With a copy (which shall not constitute a notice to the Company) to:
 
Kirkland & Ellis LLP
Citigroup Center
153 East 53rd Street
New York, NY 10022
Attention: Jai Agrawal
Facsimile No.: (212) 446-6460
 
To the Executive:
 
Derek Dunaway
7111 Woodmont Ave.
Apt 717
Bethesda MD, 20815
Facsimile No.: (413) 788-4817
 
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party.

 
 

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7.             Miscellaneous.
 
 (a)           Severability.  Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction.
 
 (b)           Complete Agreement.  This Agreement embodies the complete
agreement and understanding among the parties and supersedes and preempts any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
 
 (c)           Counterparts; Facsimile and Email Signatures.  This Agreement may
be executed in separate counterparts, each of which is deemed to be an original
and all of which taken together constitute one and the same
agreement.  Facsimile or scanned and emailed counterpart signatures to this
Agreement shall be acceptable and binding on the parties hereto.
 
(d)            Successors and Assigns.  Except as otherwise provided herein,
this Agreement shall bind and inure to the benefit of and be enforceable by the
Executive and the Company, and their respective successors and assigns;
provided, that the services provided by the Executive under this Agreement are
of a personal nature and rights and obligations of the Executive under this
Agreement shall not be assignable.
 
(e)            Governing Law.  All questions concerning the construction,
validity and interpretation of this Agreement and the exhibits hereto will be
governed by and construed in accordance with the domestic laws of the State of
New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of New York.
 
(f)            Waiver of Jury Trial.  AS A SPECIFICALLY BARGAINED FOR INDUCEMENT
FOR EACH OF THE PARTIES HERETO TO ENTER INTO THIS AGREEMENT (AFTER HAVING THE
OPPORTUNITY TO CONSULT WITH COUNSEL), EACH PARTY HERETO EXPRESSLY WAIVES THE
RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO OR ARISING IN
ANY WAY FROM THIS AGREEMENT OR THE MATTERS CONTEMPLATED HEREBY.
 
(g)           Remedies Upon Breach. In addition to, and not in limitation of,
the provisions of Sections 3, 4 and 5 hereof, the Executive agrees that any
breach of this Agreement by him may cause irreparable damage to the Company and
that in the event of such breach the Company shall have, in addition to any and
all remedies of law, the right to an injunction, specific performance or other
equitable relief to prevent the violation of any obligations hereunder, without
the necessity of posting a bond or other security.  With respect to any dispute
between the Company and the Executive as to the interpretation, terms, validity
or enforceability of this Agreement, the losing party in such dispute shall pay
to the prevailing party all of the prevailing party’s costs and expenses,
including reasonable attorneys’ fees in connection with the enforcement of this
Agreement.
 
(h)            Executive’s Cooperation.  During the Employment Period and
thereafter, the Executive shall cooperate with the Company in any internal
investigation or administrative, regulatory or judicial proceeding as reasonably
requested by the Company (including, without limitation, the Executive being
available to the Company upon reasonable notice for interviews and factual
investigations, appearing at the Company’s request to give testimony without
requiring service of a subpoena or other legal process, volunteering to the
Company all pertinent information and turning over to the Company all relevant
documents which are or may come into the Executive’s possession, all at times
and on schedules that are reasonably consistent with the Executive’s other
permitted activities and commitments). Such services will be without additional
compensation if the Executive is then employed by the Company and for reasonable
compensation if the Executive is not then employed by the Company.

 
 

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(i)             Amendment and Waiver.  The provisions of this Agreement may be
amended and waived only with the prior written consent of the Company and the
Executive.
 
(j)             No Strict Construction.  The language used in this Agreement
shall be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction shall be applied against any
party.
 
(k)            No Third Party Beneficiaries.  Nothing in this Agreement, express
or implied, is intended or shall be construed to give any Person other than the
parties to this Agreement and their respective heirs, executors, administrators,
successors or permitted assigns any legal or equitable right, remedy or claim
under or in respect of any agreement or any provision contained herein.
 
(l)             Section 409A.  It is the intention of the parties to this
Agreement that no payment or entitlement pursuant to this Agreement will give
rise to any adverse tax consequences to the Executive under Section 409A of the
Code.  The Agreement shall be interpreted to that end and, consistent with that
objective and notwithstanding any provision herein to the contrary, the Company
and the Executive shall, to the extent necessary to comply with Section 409A of
the Code, agree to act reasonably and in good faith to mutually reform the
provisions of this Agreement to avoid the application of or excise tax under
Section 409A of the Code.  Notwithstanding any other provision herein, to the
extent required by Section 409A of the Code, any payment payable to the
Executive due to his “separation from service” (as defined under Section 409A)
shall be deferred during the six-month period commencing on such separation from
service and paid to the Executive in a lump sum promptly after the expiration of
such six-month period.
 
*   *   *   *   *
 
IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement
as of the date first written above.
 
COMPANY:
 
CYALUME TECHNOLOGIES, INC.

By:         /s/ Jason Epstein
 

 
EXECUTIVE:
 
               /s/ Derek Dunaway
 

 
 
 

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