EMPLOYMENT AGREEMENT

 

This Employment Agreement (the “Agreement”) is made and entered into, effective
April 29, 2013 (the “Effective Date”), by and between Cyalume Technologies,
Inc., a Delaware corporation (the “Company”), and Michael Pellicci (“Employee”).

 

WHEREAS, the Company desires to employ Employee as Chief Financial Officer (CFO)
of the Company, and Employee desires to be employed by the Company upon the
terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto agree as follows:

 

1.TERM. This Agreement shall be for an initial term of three (3) years,
beginning on the Effective Date. The Agreement shall continue for successive
one-year periods thereafter unless and until terminated by either party upon
thirty (30) days’ written notice prior to the Agreement’s anniversary/expiration
date, or until terminated pursuant to Section 8 of this Agreement.

 

2.DUTIES OF EMPLOYEE.

 

(a)Duties. Employee shall be employed as the Chief Financial Officer (“CFO”) of
the Company. Employee’s duties shall be such executive, managerial,
administrative, and professional duties as are commensurate with the position of
CFO, and as shall be assigned by the Chief Executive Officer or the Board of
Directors of the Company, or by their authorized designees. Employee may
delegate duties to other employees of the Company as he reasonably determines is
in the best interest of the Company, consistent with the general authority and
power given to him hereunder. The principal place of employment of Employee
shall be at the Company’s executive offices, which executive offices initially
shall be located in West Springfield, Massachusetts until such time as the
Company’s executive offices are relocated to Fort Lauderdale, Florida.

 

(b)Exclusive Employment. Employee shall devote the whole of his business time,
attention and abilities to carrying out his duties hereunder.

 

(c)Loyal and Conscientious Performance. Employee agrees that to the best of his
ability and experience, and in compliance with all applicable laws and the
Company’s policies, Certificate of Incorporation and Bylaws, as they may be
amended from time to time, he will at all times loyally and conscientiously
perform all the duties and obligations required of him by the terms of this
Agreement. Employee further agrees he shall use his best efforts to promote the
interests and reputation of the Company and its affiliates and not do anything
which is to the detriment of the Company or its affiliates.

 

3.COMPENSATION AND BENEFITS.

 

(a)Salary. For all the services to be rendered by Employee in any capacity
hereunder, the Company shall pay Employee, in equal installments consistent with
the Company’s practices for its employees, salary and compensation as set forth
in Schedule 1 attached to this Agreement and incorporated herein. The Company
shall have the ability to withhold from the compensation otherwise due to
Employee under this Agreement any amounts required to be withheld from
compensation from time to time under applicable law.

 

 

 

 

(b)Severance Benefits.

 

(i)In the event Employee’s employment with the Company is terminated by the
Company (including, for the avoidance of doubt, through the Company’s election
not to renew this Agreement at the end of the initial term or any successive
one-year term pursuant to Section 1) other than as a result of death, disability
(as defined in Section 8(a)(ii)), retirement or for “cause” (as defined in
Section 8(a)(iii)), or if Employee’s employment with the Company is terminated
by Employee for the reason set forth in Section 8(d), and upon execution by
Employee of a separation agreement prepared by the Company within thirty (30)
days of the date of termination of Employee’s employment, the Company will pay
Employee, at normal payroll intervals for twelve (12) months, a sum equal to
Employee’s annual Base Salary in effect at the time of termination hereunder,
less applicable deductions and withholdings.

 

(ii)In the event that Employee elects to terminate this Agreement (including,
for the avoidance of doubt, through Employee’s election not to renew this
Agreement at the end of the initial term or any successive one-year term
pursuant to Section 1) for any reason other than that set forth in Section 8(d),
or in the event that this Agreement is terminated due to Employee’s death,
disability or for “cause” (as defined in Section 8(a)(iii)), the Company shall
not be obligated to pay to Employee any severance payments whatsoever and
Employee shall be entitled only to that Base Salary and those benefits which he
has earned through the date of such termination.

 

(c)Fringe Benefits. So long as Employee remains in the employ of the Company,
Employee shall be provided those benefits set forth in Schedule 1 to this
Agreement. Employee shall also receive such additional benefits as may be
authorized from time to time by the Company’s Board of Directors.

 

4.NONCOMPETITION BY EMPLOYEE.

 

(a)During the term of this Agreement and for a period of two (2) years after
Employee has ceased to be employed by Company for any reason, Employee shall
not, without the prior written consent of a duly authorized officer of Company,
directly or indirectly (i) engage in the business of, or (ii) assist or have an
interest in (whether as proprietor, partner, investor, stockholders, officer,
director or any type of principal whatsoever), or (iii) enter the employment of
or act as an agent, advisor, or consultant to any person, firm, partnership,
association, corporation, business organization, entity or enterprise that is,
or is to become, directly or indirectly, engaged in any business actually or
potentially competitive with that of Company in any area or territory in which
Company offers its services or products.

 

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(b)During the term of this Agreement, and for a period of two (2) years after
Employee has ceased to be employed by Company for any reason, Employee shall
not, without the prior written consent of a duly authorized officer of Company,
solicit from any person, company, firm or organization, or any affiliate of the
foregoing, which was or is a client or associated firm of Company or which
Company was soliciting as a client or associated firm of Company during any of
the twelve (12) months immediately preceding the termination or expiration of
the Agreement, any business substantially similar to that done by Company,
including but not limited to any business Employee was soliciting or on which he
worked while employed by Company.

 

5.CONFIDENTIALITY. Employee acknowledges, understands and agrees that all trade
secrets and information relating to the business of the Company and/or its
affiliates, including without limitation, procedures, product information,
manufacturing techniques or processes, expertise, records, customer or prospect
lists and information, vendor lists and information, supplier lists and
information, internal operating forms, financial information or accounting
methods, systems, books, manuals, employee information, any confidential
information concerning the business, the Company, its affiliates, or the
business, policies or operations of the business, the Company or its affiliates
which Employee may have learned, possessed or controlled on or prior to the date
hereof or which Employee may learn, possess or control during the term of
Employee’s continued employment by the Company or any of its affiliates (as an
employee, consultant, agent or otherwise) (collectively, “Trade Secrets”) are
confidential and shall remain the sole and exclusive property of the Company and
its affiliates. Trade Secrets include both written information and information
not reduced to writing. Except as may be required pursuant to any law or the
order of a court, or except as may be public knowledge (which shall not have
become public knowledge as a result of any action of Employee), Employee shall
not, at any time, retain, duplicate, remove from the business premises of
Company or any of its affiliates, make use of, other than in the ordinary course
of fulfilling his duties as an employee of the Company, divulge or otherwise
disclose, directly or indirectly, any Trade Secrets. Employee shall not publish
or disclose, and shall exercise his best efforts to prevent others from
publishing or disclosing, any Trade Secrets and he shall not use or attempt to
use any such knowledge or information which he may have or acquire in any manner
which may injure or cause loss, whether directly or indirectly, to the Company
or its affiliates or use his personal knowledge or influence over any customers,
clients, suppliers or contractors of the Company or its affiliates so as to take
advantage of the Company’s or its affiliate’s trade or business connections or
utilize information confidentially obtained by him.

 

6.non-solicitation. Employee hereby covenants and agrees that, at all times
during his employment with the Company and for a period of two (2) years
immediately following his termination for any reason, Employee shall not employ
or seek to employ any person employed at the time by the Company or any of its
affiliates, or otherwise engage or entice, either directly or indirectly, such
person to leave such employment.

 

7.violation of agreement.

 

(a)The restrictions set forth in Sections 4, 5 and 6 shall extend to any and all
activities of Employee, whether alone or together with or on behalf of or
through any other person or entity.

 

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(b)Employee’s obligations under Sections 4, 5 and 6 shall survive termination of
this Agreement and of Employee’s employment with the Company.

 

(c)Employee acknowledges that the restrictions contained in Sections 4, 5 and 6,
in view of the nature of the business in which Company is engaged, are
reasonable and necessary to protect the legitimate interests of Company.
Employee understands that the remedies at law for his violation of any of the
covenants or provisions of Sections 4, 5 and 6 will be inadequate, that such
violations will cause irreparable injury within a short period of time, and that
Company shall be entitled to preliminary injunctive relief and other injunctive
relief against such violation. Such injunctive relief shall be in addition to,
and in no way in limitation of, any and all other remedies that Company shall
have in law and equity for the enforcement of those covenants and provisions.
Employee further acknowledges that should he violate any of the covenants or
provisions of Sections 4, 5 and 6, he will reimburse Company for its reasonable
costs and attorneys’ fees incurred to enforce the terms of this Agreement.

 

8.TERMINATION.

 

(a)Employee’s employment hereunder may be terminated by the Company immediately
upon the occurrence of any of the following events, and the Company shall have
no obligations to Employee for any period after the effective date of such
termination, except vested benefits or as otherwise provided in Section 3
herein:

 

(i)The death of Employee.

 

(ii)A mental or physical illness or injury that prevents Employee from
performing his duties hereunder for a period of 90 consecutive days or for 120
days in any 360 day period, or Employee has been declared by a court of
competent jurisdiction to be mentally incompetent or incapable of managing his
affairs.

 

(iii)For “cause” which, for the purposes of this Section, shall mean:

 

(A)Continued neglect or failure to perform his duties and responsibilities; or

 

(B)Formally being charged, either criminally or civilly, with committing fraud,
misappropriation or embezzlement, whether or not in the performance of
Employee’s duties as an employee of the Company; or

 

(C)Violations of any law which violation materially affects Employee’s
performance of his duties to the Company; or

 

(D)The conviction of, or plea of guilty or nolo contendere to, a felony or crime
involving moral turpitude; or

 

(E)Willfully engaging in conduct materially injurious to the Company or its
affiliates; or

 

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(F)Diverting any business opportunity of the Company or its affiliates for
Employee’s direct or indirect personal gain; or

 

(G)Failure to observe or perform the covenants and agreements contained in this
Agreement, including but not limited to those contained in Sections 4, 5 and 6
of this Agreement.

 

(b)Employee’s employment hereunder may be terminated at any time upon the mutual
written agreement of Employee and the Company.

 

(c)Employee’s employment hereunder may be terminated by either party with thirty
(30) days of written notice thereof. Notwithstanding the foregoing, if
Employee’s employment hereunder is terminated without “cause”, Employee shall be
paid any applicable severance benefits as set forth in Section 3(b), less
applicable deductions and withholdings.

 

(d)Employee may terminate his employment hereunder for Good Reason. For purposes
of this Agreement, “Good Reason” shall mean (i) a material diminution in
Employee’s title or duties, (ii) a material reduction in Employee’s Base Salary
except for reductions applicable to all management, (iii) excluding the
relocation of the Company’s headquarters to Fort Lauderdale, FL, a relocation of
Employee’s principal place of employment of a distance in excess of fifty (50)
miles unless such relocation is effected at the request of Employee or with
Employee’s approval or (iv) a material breach by the Company of a material term
of this Agreement. Notwithstanding the foregoing, Good Reason shall not be
deemed to exist unless Employee’s termination of employment for Good Reason
occurs within ninety (90) days following the initial existence of one of the
conditions specified in clauses (i) through (iii) above, Employee provides the
Company with written notice of the existence of such condition within ninety
(90) days after the initial existence of the condition, and the Company fails to
remedy the condition within thirty (30) days after its receipt of such notice.

 

(e)Except as may otherwise be set forth herein, in the event of termination of
Employee’s employment by the Company as permitted under clause (a) of this
Section, Employee shall be entitled only to his Base Salary and other
compensation and benefits earned through the date of termination.

 

(f)Upon the termination of his employment hereunder for any reason whatsoever,
Employee shall immediately deliver to the Company all documents, statistics,
accounts, records, programs and other items of whatever nature or description
(the “Documents”) which may be in his possession or under his control which
relate in any way to the Trade Secrets or the business or affairs of the Company
or of any of its affiliates, and no copies of any such Documents or any part
thereof shall be retained by him.

 

(g)In the event of the termination of Employee’s employment under this
Agreement, Employee shall be deemed to have resigned from all positions held in
the Company. Upon request of the Company, Employee shall promptly sign any and
all documents reflecting such resignations as of the date of termination of his
employment.

 

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9.REPRESENTATIONS. Employee hereby represents and warrants that this Agreement
constitutes his valid and binding obligation enforceable in accordance with its
terms and the execution, delivery and performance of this Agreement does not
violate any agreement, arrangement or restriction of any kind to which Employee
is a party or by which he is bound.

 

10.MISREPRESENTATION. Neither party hereto shall knowingly at any time make any
untrue statement in relation to the other or any of their affiliates and in
particular Employee shall not after the termination of his employment hereunder
wrongfully represent himself as being employed by or connected with the Company
or any affiliate of the Company.

 

11.REIMBURSEMENT OF EXPENSES. The Company shall reimburse Employee for all
ordinary and necessary out-of-pocket expenses reasonably incurred by Employee on
behalf of the business of the Company in accordance with the Company’s normal
reimbursement and travel policies, including, for the avoidance of doubt, such
out-of-pocket expenses reasonably incurred in connection with Employee working
from the Company’s West Springfield, MA headquarters until such headquarters is
relocated to Fort Lauderdale, FL (including, air/ground transportation to and
from West Springfield and lodging and meals while working in West Springfield).
Employee agrees that expense reports must be submitted to obtain reimbursement
of expenses as well as presentation of such supporting documentation as the
Company may reasonably require. Employee further agrees to submit with expense
reports such records and logs as may be required by the relevant taxing
authorities for the substantiation of each such business expense as a deduction
on the Company’s income tax returns. Any reimbursements by the Company to
Employee of any eligible expenses under this Agreement that are not excludable
from Employee’s income for Federal income tax purposes (the “Taxable
Reimbursements”) shall be made by no later than the earlier of the date on which
they would be paid under the Company’s normal policies and the last day of the
taxable year of Employee following the year in which the expense was incurred.
The amount of any Taxable Reimbursements to be provided to Employee, during any
taxable year of Employee shall not affect the expenses eligible for
reimbursement in any other taxable year of Employee. The right to Taxable
Reimbursement shall not be subject to liquidation or exchange for another
benefit.

 

12.INVENTIONS, ETC.

 

(a)It shall be part of the normal duties of Employee at all times to consider in
what manner and by what new methods or devices the products, services,
processes, equipment or systems of the Company or any of its affiliates with
which he is concerned or for which he is responsible might be improved, and
promptly to give to the President of the Company or Board of Directors full
details of any invention or improvement which he may from time to time make or
discover in the course of his duties, and to further the interests of the
Company with regard thereto. Subject only to any contrary provisions of the laws
of the United States or the Commonwealth of Massachusetts, all such materials,
inventions, improvements, methods, products, services, equipment or systems
shall be deemed to be “works made for hire”, and to the extent such items are
not works made for hire, Employee hereby irrevocably grants and assigns such
materials, inventions, improvements, methods, products, services, equipment or
systems to the Company which shall be entitled, free of charge, to the sole
ownership of any such invention or improvement.

 

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(b)Employee shall, if and when required so to do by the Company, at the expense
of the Company, apply or join with the Company in applying for patents or other
protection in any part of the world for any such discovery, invention or process
as aforesaid and shall at the expense of the Company, execute and do or cause to
be done all instruments and things reasonably necessary for vesting the said
patent or other protection when obtained and all right, title and interest to
and in the same in the Company or in such other person as the Company may
designate.

 

(c)For the purpose of this clause Employee hereby irrevocably authorizes the
company as his attorney in his name to execute any documents or take any actions
which are required in, order to give effect to the provisions of this Section
and the Company is hereby empowered to appoint and remove at its pleasure any
person as agent and substitute for and on behalf of the Company in respect of
all or any of the matters aforesaid.

 

13.NOTICES. Any notices to be given hereunder by either party to the other may
be effectuated either by personal delivery in writing, by electronic facsimile
transmission, by commercial overnight courier or by mail, postage prepaid, with
return receipt requested. Notices shall be addressed to the parties as follows:

 

If to the Company:

 

Cyalume Technologies, Inc.

96 Windsor Street

West Springfield, MA, 01089

Attention: President

 

with a copy to:

 

Greenberg Traurig, P.A.

401 East Las Olas Blvd., Suite 2000

Fort Lauderdale, FL 33301

Attention: Bruce I. March, Esq.

 

If to Employee:

 

Michael Pellicci

____________

____________

 

or to such other addresses as either the Company or Employee may designate by
written notice to each other. Notices delivered personally shall be deemed duly
given on the date of actual receipt; mailed notices shall be deemed duly given
as of the fifth (5th) day after the date so mailed. Notices hereunder may be
delivered by electronic facsimile transmission (fax) if confirmation by sender
is made within three (3) business days by mail or personal delivery.

 

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14.ATTORNEYS’ FEES. If any party shall bring an action to enforce this
Agreement, each party will bear her/his/its own attorneys’ fees and costs.

 

15.WAIVER OF BREACH. The waiver by any party to a breach of any provision in
this Agreement cannot operate or be construed as a waiver of any subsequent
breach by a party.

 

16.SEVERABILITY. The invalidity or unenforceability of any particular provision
in this Agreement shall not affect the other provisions hereof, and this
Agreement shall be construed in all respects as if the invalid or unenforceable
provision were omitted.

 

17.ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and thereof and
supersedes and cancels any and all previous agreements, written and oral,
regarding the subject matter hereof between the parties hereto, including but
not limited to the Original Agreement. Employee hereby acknowledges that any
compensation or benefits Employee otherwise may have been entitled to under the
Original Agreement are hereby waived. This Agreement shall not be changed,
altered, modified or amended, except by a written agreement signed by both
parties hereto.

 

18.GOVERNING LAW. This Agreement shall be interpreted, construed and governed
according to the laws of Delaware, without giving effect to principles of
conflicts or choice of laws of Delaware or of any other jurisdiction.

 

19.CONSENT TO JURISDICTION. Employee hereby irrevocably submits to the
jurisdiction of any court of Delaware or any federal court sitting in the State
of Delaware over any suit, action or proceeding arising out of or relating to
this Agreement. Employee hereby agrees that a final judgment in any such suit,
action or proceeding brought in any such court, after all appropriate appeals,
shall be conclusive and binding upon him.

 

20.SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their successors, permitted assigns, legal
representatives and heirs, but neither this Agreement nor any rights hereunder
shall be assignable by any of its parties except as permitted by this Section.
Employee agrees that this Agreement may be assigned or transferred by operation
of law by the Company upon a sale, merger, reorganization or other business
combination of or involving the Company; provided, however, that (i) such
assignee or other successor to the Company shall assume all obligations of the
Company hereunder and (ii) that Employee shall perform all services required
pursuant to this Agreement for any such assignee or successor.

 

21.MISCELLANEOUS. The Section headings of this Agreement are for convenience of
reference only and do not form a part hereof and do not in any way modify,
interpret, or construe the intentions of the parties. This Agreement may be
executed in one or more counterparts and all such counterparts shall constitute
one and the same instrument.

 

22.RIGHT OF SET-OFF. The Company may at any time offset against any compensation
or other remuneration due or to become due to Employee, or anyone claiming
through or under Employee, any debt or debts due or to become due from Employee
to the Company.

 

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23.SECTION 409A COMPLIANCE.

 

(a)General. It is the intention of both the Company and Employee that the
benefits and rights to which Employee could be entitled pursuant to this
Agreement comply with Section 409A of the Code and the Treasury Regulations and
other guidance promulgated or issued thereunder (“Section 409A”), to the extent
that the requirements of Section 409A are applicable thereto, and the provisions
of this Agreement shall be construed in a manner consistent with that intention.
If Employee or the Company believes, at any time, that any such benefit or right
that is subject to Section 409A does not so comply, it shall promptly advise the
other and shall negotiate reasonably and in good faith to amend the terms of
such benefits and rights such that they comply with Section 409A (with the most
limited possible economic effect on Employee and on the Company).

 

(b)Distributions on Account of Separation from Service. If and to the extent
required to comply with Section 409A, no payment or benefit required to be paid
under this Agreement on account of termination of Employee’s employment shall be
made unless and until Employee incurs a “separation from service” within the
meaning of Section 409A.

 

(c)6 Month Delay for Specified Employees.

 

(i)If Employee is a “specified employee”, then no payment or benefit that is
payable on account of Employee’s “separation from service”, as that term is
defined for purposes of Section 409A, shall be made before the date that is six
months after Employee’s “separation from service” (or, if earlier, the date of
Employee’s death) if and to the extent that such payment or benefit constitutes
deferred compensation (or may be nonqualified deferred compensation) under
Section 409A and such deferral is required to comply with the requirements of
Section 409A. Any payment or benefit delayed by reason of the prior sentence
shall be paid out or provided in a single lump sum at the end of such required
delay period in order to catch up to the original payment schedule.

 

(ii)For purposes of this provision, Employee shall be considered to be a
“specified employee” if, at the time of his or her separation from service,
Employee is a “key employee”, within the meaning of Section 416(i) of the Code,
of the Company (or any person or entity with whom the Company would be
considered a single employer under Section 414(b) or Section 414(c) of the Code)
any stock of which is publicly traded on an established securities market or
otherwise.

 

(d)No Acceleration of Payments. Neither the Company nor Employee, individually
or in combination, may accelerate any payment or benefit that is subject to
Section 409A, except in compliance with Section 409A and the provisions of this
Agreement, and no amount that is subject to Section 409A shall be paid prior to
the earliest date on which it may be paid without violating Section 409A.

 

(e)Treatment of Each Installment as a Separate Payment. For purposes of applying
the provisions of Section 409A to this Agreement, each separately identified
amount to which Employee is entitled under this Agreement shall be treated as a
separate payment. In addition, to the extent permissible under Section 409A, any
series of installment payments under this Agreement shall be treated as a right
to a series of separate payments.

 

 

 

 

 

[signatures appear on following page]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.

 

 

  CYALUME TECHNOLOGIES, INC., a Delaware corporation                    

By:

/s/ Zivi Nedivi

    Name: Zivi Nedivi     Title: CEO                             MICHAEL
PELLICCI                              /s/ Michael Pellici  

 

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SCHEDULE 1

 

TO EMPLOYMENT AGREEMENT OF

Michael Pellicci

 

 

1.Salary. The Company shall pay Employee an annual base salary (“Base Salary”)
of two hundred thirty-five thousand dollars ($235,000.00), at normal payroll
intervals and less applicable deductions and withholdings, which shall be
subject to annual adjustments at the sole discretion of the Board of Directors
of the Company.

 

2.Cash Bonus. Employee shall be eligible for an annual bonus for each fiscal
year of the Company (“Bonus”), subject to the terms and conditions of this
Section. The payment and amount of any Bonus for a given fiscal year shall be
based on performance targets mutually agreed by the Parties in writing for such
fiscal year (the “Annual Performance Targets”). The Annual Performance Targets
for the fiscal year in which the Effective Date occurs shall be the same as such
Annual Performance Targets previously established for the Chief Executive
Officer and Chief Operating Officer of the Company for such fiscal year, and the
Annual Performance Targets for each subsequent year shall be the same as such
Annual Performance Targets applicable to the Chief Executive Officer and Chief
Operating Officer of the Company which are established within forty-five (45)
days after the beginning of each such year. If the Company’s performance meets,
but does not exceed, the Annual Performance Targets for a given fiscal year, the
amount of the Bonus for such fiscal year shall equal 50% of the annualized rate
of the Base Salary in effect as of the end of such fiscal year. If the Company’s
performance exceeds the Annual Performance Targets for a given fiscal year, the
amount of the Bonus for such fiscal year shall equal 50% of the annualized rate
of the Base Salary in effect as of the end of such fiscal year, plus an
additional 1% of such annualized rate for each 1% by which the Company’s
performance exceeds the Annual Performance Targets for such fiscal year. If the
Company’s performance fails to meet the Annual Performance Targets for a given
fiscal year, the amount of the Bonus for such fiscal year shall equal 50% of the
annualized rate of Base Salary in effect at the end of such fiscal year, less 2%
of such annualized rate for each 1% by which the Company’s performance failed to
meet the Annual Performance Targets for such fiscal year, provided, however,
that Employee shall not be eligible for any Bonus for a given fiscal year in
which the Company’s performance was less than or equal to 70% of the Annual
Performance Targets for such fiscal year. Provided Employee has not been
terminated under Section 8(a) (for “cause” by the Company) prior to payment
thereof, Employee shall be eligible for (i) a Bonus for each fiscal year on the
last day of which Employee is employed hereunder and (ii) if Employee’s
employment hereunder is terminated other than on the last day of a fiscal year,
a pro-rated bonus for the fiscal years during which Employee’s employment
hereunder is terminated, based on the number of full calendar months Employee
was employed hereunder during such fiscal year. Any Bonus earned for any full or
partial fiscal year shall be paid in the following fiscal years within 30 days
after the Company’s audited financial statements are issued, but in no event
later than June 30th of such following fiscal year regardless of whether such
audited financial statement are issued by such date. For the avoidance of doubt,
the Bonus with respect to the fiscal year in which the Effective Date occurs
shall be pro-rated based on the number of full calendar months Employee was
employed hereunder during such fiscal year.

 

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3.Stock Options. Employee will be granted stock options to purchase 200,000
shares of common stock of Cyalume Technologies Holdings, Inc. (the “Stock
Options”), upon the approval by the shareholders of the currently proposed
amendment to the Cyalume Technologies Holdings, Inc. 2009 Omnibus Securities and
Incentive Plan (as may be amended from time to time, the “Plan”). The Stock
Options shall be granted under, and shall be subject to, the Plan and shall be
subject to such other terms and conditions as shall be reflected in a stock
option agreement to be executed by the Company and Employee (the “Option
Agreement”). The Option Agreement shall provide that (a) twenty percent (20%) of
the Stock Options shall vest each year on the anniversary of the Effective Date
of this Agreement over a period of five years, and (b) in the event that, prior
to the date that the Stock Options are fully vested and exercisable, (i) there
is a Change of Control (as defined in the Plan), or (ii) Employee’s engagement
with the Company is terminated by the Company other than due to death,
disability or “cause” (as set forth in Section 8(a)) or by Employee for Good
Reason (as defined in Section 8(d)), the Stock Options shall become fully vested
and exercisable as to the remaining shares (“Change of Control Shares”) as of
the date of such Change of Control (as defined in the Plan) or termination;
provided, however, that, if termination of Employee’s engagement occurs under
Sections 8(b), (c) or (d) as described in Section 3(b)(ii) of this Schedule 1
within the first eighteen (18) months after the Effective Date, then only
two-fifths (2/5) of the Change of Control Shares shall become exercisable as of
the date of such termination.

 

4.Benefits. Employee shall be provided with health, life, and disability
insurance coverage and other similar benefits substantially equivalent to those
provided to employees of the Company from time to time, all in accordance with
the standard policies of the Company; provided, that such health insurance
coverage shall not commence until January 1, 2014, at which time the Company
shall pay one hundred percent (100%) of such monthly health insurance premium.
Employee shall be permitted to participate in the Company’s 401(k) Retirement
Plan.

 

5.Paid Time Off (PTO)/Sick Days. Employee shall be provided with three (3) weeks
of PTO, accrued on a monthly basis, and with sick days in accordance with the
standard policies of the Company. Employee shall be permitted to carry over any
unused PTO into any subsequent period up to a maximum of five (5) weeks. Upon
termination of employment, Employee shall not be paid for unused sick days, but
will be paid for accrued, unused PTO.

   

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