Exhibit 10.13
EMPLOYMENT
AGREEMENT
AGREEMENT, dated as of the 23
rd day of January, 2006, by and between Cyalume
Technologies, Inc., a Delaware corporation with principal executive
offices at 96 Windsor Street, West Springfield, Massachusetts 01089
(the “ Company ”), and Edgar E. Cranor, residing
at 24 Lincoln Park, Longmeadow, MA 01106 (“
Employee ”).
WHEREAS the Company is presently engaged in the
business of developing, manufacturing and selling luminescent
chemical devices and materials for sale primarily to customers in
the government, military and safety fields of use (the “
Business ”); and
WHEREAS Employee shall serve as the Vice
President, Technology of the Company, and Employee and the Company
are desirous of formalizing their understanding for
Employee’s employment, all upon the terms and subject to the
conditions hereinafter provided.
NOW, THEREFORE, in consideration of the mutual
covenants and agreements herein contained, the parties hereto,
intending to be legally bound, agree as follows:
The Company agrees to employ Employee, and
Employee agrees to be employed by the Company, upon the terms and
subject to the conditions of this Agreement.
The term of this Agreement shall be for a period
of three (3) years commencing on the date hereof (the
“Commencement Date”) and continuing automatically for
successive one-year periods thereafter unless terminated by the
Company no less than ninety (90) days prior to the third
anniversary hereof or the end of any subsequent period (the
“Term”).
3.
Duties; Best Efforts; Indemnification.
(a) Employee
shall serve as Vice President, Technology of the Company, and shall
report directly to the President and to such person or persons as
may be designated by the Board of Directors of the Company (the
“Board”). Employee shall be responsible for
all research and development, new product development, overseeing
chemical purchasing and mixing operations, setting new product
strategy, and overseeing maintenance and protection of the
Company’s intellectual property. During the Term,
Employee shall also have such other powers and duties as may be
from time to time prescribed by the Board or its designees which
are consistent with Employee’s position and duties
hereunder.
(b) Employee
shall perform his duties, responsibilities and functions to the
Company to the best of his abilities and in a manner consistent
with the office of Vice President, Technology and shall comply with
the lawful policies and procedures of the Company. In
performing his duties and exercising his authority under this
Agreement, Employee shall support and implement the lawful business
and strategic plans approved from time to time by the Board and
shall support and cooperate with the Company’s efforts to
expand its businesses and operate profitably and in conformity with
law and the business and strategic plans approved by the
Board. Employee shall devote all of his business time,
attention and energies, on a full time and exclusive basis, to the
business and affairs of the Company and shall not during the Term
be engaged in any other business activities, whether or not such
business activities are pursued for gain, profit or other pecuniary
advantage, without Board consent; provided, however, that,
it shall not be a violation of this Agreement for Employee to (i)
serve on corporate, civic or charitable boards or committees or
(ii) manage passive personal investments, in either case so long as
any such activities do not interfere with the performance of his
responsibilities as an employee of the Company in accordance with
this Agreement or adversely affect or negatively reflect upon the
Company.
4.
Compensation and Benefits.
(a) The
Company shall pay to Employee a base salary (the “Base
Salary”) at a rate of $160,000 per annum, payable in
accordance with the Company’s payroll practices for its
executive employees. The Board will review the Base
Salary for possible increase not less than annually during the
Term, but the Employee shall be entitled to receive at least the
amount of any cost-of-living increases granted to the
Company’s employees in general.
(b) Employee
may, at the discretion of the Board of Directors of the Company, be
granted stock options, share appreciation rights or bonuses under
plans adopted by the Board for the benefit of the executives and
key management personnel of the Company.
(c) In
addition to the Base Salary, the Employee shall be entitled to
payment of the following annual bonus compensation, paid after the
final closing of the fiscal year during the Term and verification
of the financial results for such fiscal year by the Board of
Directors of the Company:
i.
If the Company achieves at least 85% but less than 100% of its
budgeted EBITDA, the amount of such bonus shall be 15% of the
Employee’s Base Salary.
ii.
If the Company achieves at least 100% but less than 120% of its
budgeted EBITDA, the amount of such bonus shall be 30% of the
Employee’s Base Salary.
iii.
If the Company achieves at least 120% of its budgeted EBITDA, the
amount of such bonus shall be 45% of the Employee’s Base
Salary.
iv.
If the Company achieves percentages of its budgeted EBITDA
between those levels listed above, the bonus amount will be
adjusted proportionately.
For purposes of this Agreement,
“EBITDA” shall mean for each applicable fiscal year,
(a) the net income of the Company; plus, (b) in each case, to the
extent deducted in determining net income for such period, the
Company’s (i) taxes, (ii) interest expenses and (iii)
amortization and depreciation, as calculated by the Company’s
Chief Financial Officer based on the amounts as set forth in the
Company’s annual audited consolidated financial statements
prepared by the Company’s independent certified public
accountants.
(d) Employee
shall be entitled to participate in or receive benefits under any
pension plan, health, and accident plan or any other employee
benefit plan or arrangement made available now or in the future by
the Company as determined by the Board. In the event
that the Employee elects not to participate in the Company health
plan, the Company will reimburse the Employee for the cost of a
similar plan from another source, provided that such reimbursement
does not exceed the cost which the Company would have paid for
similar coverage had the Employee remained in the Company health
plan.
(e) The
Company shall promptly pay to Employee the approved reasonable
expenses incurred by him in the performance of his duties hereunder
in accordance with the Company’s policies in effect from time
to time, including, without limitation, those incurred in
connection with business related travel or entertainment, or if
such expenses are paid directly by Employee, shall promptly
reimburse him for such payment, provided the Employee provides
proper documentation thereof in accordance with the Company’s
policy.
(f) Employee
shall be entitled to paid vacation days in each calendar year
determined by the Company from time to time, but not less than
fifteen (15) days in any calendar year, subject to the
Company’s vacation policies for its key management
personnel. Vacation shall be prorated in any calendar
year of the Term during which Employee is employed hereunder for
less than an entire year in accordance with the number of days in
such year during which he is so employed. Employee shall
be entitled to carry over unused vacation to successive calendar
years, with a maximum accrual of 20 days. Employee shall
also be entitled to all paid holidays given by the Company to its
key management employees.
(g) The
Company may, at its discretion, subscribe for and maintain, on
behalf of the Company, life insurance, key-man insurance and
long-term disability insurance with respect to Employee, in such
amount and upon such terms or conditions as the Company may deem
reasonable. Employee shall cooperate with the Company in
connection with the obtaining of any such policies, including the
submission to physical examination and blood testing.
Employee’s employment hereunder shall be
terminated upon Employee’s death or Disability or
Employee’s voluntarily leaving the employ of the Company, and
may be terminated by the Company as follows:
(a)
For Cause. The Company shall have the right to
terminate Employee’s employment for
“Cause.” A termination for
“Cause” is a termination evidenced by a resolution
adopted by the Board finding that Employee has:
i.
breached or failed to comply with any of the material terms of this
Agreement, including, without limitation, Sections 3, 7, 8, 9 or 12
of this Agreement;
ii.
failed to perform his duties under this Agreement, including
refusing to carry out the instructions of the Board or its
designees, or disregarding the lawful instructions from the Board
or its designees, in any case which instructions are consistent
with the responsibilities and duties of Employee contemplated by
this Agreement;
iii.
engaged in gross negligence or gross misconduct in connection with
or arising out of the performance of his duties
hereunder;
iv.
been under the influence of drugs (other than prescription
medicine or other medically-related drugs to the extent that they
are taken in accordance with their directions) or alcohol during
the performance of his duties under this Agreement, or while under
the influence of drugs or alcohol, engages in inappropriate
conduct;
v.
engaged in behavior that would
constitute grounds for liability for sexual harassment (as
proscribed by the U.S. Equal Employment Opportunity Commission
Guidelines, the Massachusetts Commission Against Discrimination
and/or any other applicable state regulatory body) or, in the
reasonable opinion of the Board, other egregious conduct violative
of laws governing the workplace; or
vi.
committed any act of fraud, larceny,
misappropriation of funds or embezzlement or been convicted of a
felony or a crime of moral depravity;
provided,
however , that any act or
failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or based upon the advice of counsel for
the Company shall be conclusively presumed to be done, or omitted
to be done, by Employee in good faith and in the best interests of
the Company.
(b)
For Disability. The Company shall have the right
to terminate Employee’s employment as a result of
Employee’s “Disability.” For purposes
of this Agreement, a termination for “Disability” shall
occur:
i.
immediately
after the Board has provided a written termination notice to
Employee supported by a written statement from a reputable
independent physician selected by the Company to the effect that
Employee shall have become so incapacitated as to be unable to
resume, within 90 days, his employment hereunder by reason of
physical or mental illness or injury, or
ii.
upon rendering of a written termination notice by the Company
after Employee has been unable to substantially perform his duties
hereunder for 90 consecutive days or for 90 days in any 360 day
period by reason of any physical or mental illness or
injury.
(c) Employee
agrees to make himself available and to cooperate in any reasonable
examination by a reputable independent physician selected by the
Company for the purpose of determining disability pursuant to
Section 5(b)(i).
(a)
Death or Disability. In the event of the
termination of Employee’s employment as a result of his death
or Disability, the Company shall:
i. pay
to Employee or his estate, as the case may be, the Base Salary plus
accrued and unpaid bonus, if any, in accordance with Section 4(b)
through the date of his death or Disability (pro rated for any
partial month);
ii. assign
rights to Employee or his estate, as the case may be, to all of
Employee’s vested stock options; and
iii.
reimburse Employee, or his estate, as the case may be, for any
expenses pursuant to Section 4(d) (the amounts payable pursuant to
the foregoing clauses (i) and (ii) are hereafter referred to as the
“Accrued Obligations”).
(b)
For Cause by the Company, by Employee voluntarily or upon
expiration of the Term. In the event that
Employee’s employment is terminated by the Company for Cause
or by Employee voluntarily (other than as a result of the
Company’s material breach of this Agreement) or upon
expiration of the Term, the Company shall pay to Employee the
Accrued Obligations and Employee shall have no further entitlement
to any other compensation or benefits from the Company, except as
set forth herein.
(c)
Other than as a result of Employee’s death or Disability,
or by the Company otherwise than for Cause . In the
event that Employee’s employment is terminated other than by
reason of his death or Disability or is terminated by
the Company otherwise than for Cause, then, subject to receipt of a
release of the Company and its directors, officers and employees
and their respective successors and assigns of claims of Employee
against them arising out of or by reason of his termination of
employment hereunder, the Company shall:
i. Provide
six months notice of such termination
ii. pay
to Employee the Accrued Obligations; and
ii. continue
to pay Employee the Base Salary plus benefits in accordance with
Section 4(c), for six (6) months.
