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Exhibit
10.1
EMPLOYMENT
AGREEMENT
between
DayStar Technologies,
Inc.
and
Ratson Morad
EMPLOYMENT AGREEMENT
(“Agreement”), executed as of February 19, 2008
(“Commencement Day”) between Ratson Morad
(“Executive”), having an address of 4157 Solana Drive,
California 94306, and DayStar Technologies, Inc., a Delaware
corporation (the “Company”), having its principal
office at 2972 Stender Way, Santa Clara, CA 95054.
WHEREAS, the Company desires
to obtain the services of Executive as its President and Chief
Operating Officer, and to enter into an employment agreement
embodying the terms of such relationship; and
WHEREAS, Executive is willing
to accept such employment by the Company upon the terms and
conditions as hereinafter set forth; and
WHEREAS, the Company and
Executive desire to enter into this Agreement in order to reflect
the terms and conditions of Executive’s employment by the
Company,
NOW, THEREFORE, in
consideration of the agreements and covenants contained herein, the
Executive and the Company hereby agree as follows:
ARTICLE I Employment and
Term
Section 1.01
Position; Responsibilities.
(a) The Company hereby
employs Executive as its President and Chief Operating Officer upon
the terms and conditions hereinafter set forth.
(b) Executive shall at all
times hold the position described above or other senior management
level positions as determined by the Board of Directors of the
Company (the “Board”) or its designee, and perform the
duties, responsibilities and authorities customarily associated
with such positions or such other senior management level duties as
determined by the Board or its designee, so long as such other
duties are consistent with the Executive’s skills and there
is no reduction in Executive’s base pay and bonus target
amount. Executive shall report directly to the Chief Executive
Officer.
Section 1.02
Performance of Duties/Other Commitments and
Activities.
(a) Executive shall at all
times endeavor to perform duly and faithfully all of his duties
hereunder to the best of his abilities.
(b) Executive shall devote
his full business time, best efforts and business judgment, skill
and knowledge to the advancement of the Company’s interests
and to the discharge of his duties and responsibilities hereunder;
provided, however, that nothing herein shall be construed as
preventing Executive from engaging in any of the activities
described in clauses (i), (ii), (iii) and/or (iv) below
so long as such activities do not violate any other agreements
between Executive and the Company:
(i) investing his assets in
such form or manner as shall not require any material services on
his part in the operations or affairs of the companies or the other
entities in which such investments are made;
(ii) serving on the board of
directors of any company; provided that he obtains the prior
written approval of a majority of the Board of Directors and shall
not be required to render any material services with respect to the
operations or affairs of any such company;
(iii) engaging in religious,
charitable, educational or other community or nonprofit activities
which do not impair his ability to fulfill his duties and
responsibilities under this Agreement; or
(iv) serving in such
capacities as may be reasonably necessary for Executive to maintain
his active professional licensing as a member of any professional
organization that reasonably relates to his employment with and the
business of the Company, so long as such activities do not impair
his ability to fulfill his duties and responsibilities under this
Agreement.
(c) Executive’s base of
operations under this Agreement shall be the Company’s
headquarters offices which shall be located in the San Francisco,
California bay area.
Section 1.03 Term
. Executive’s term of employment under this Agreement (the
“Term”) shall commence on the Commencement Date and
shall expire on the third anniversary of the Commencement Date;
provided, however, that the Term shall be automatically extended
for an additional one (1) year period on the third anniversary
of the Commencement Date, and annually thereafter unless the
Executive or the Company has received a written Notice of
Non-Renewal delivered no later than thirty (30) days prior to
the anniversary date, pursuant to Section 6.01 below. In the
event Executive’s employment under this Agreement is
terminated during the Term, and prior to, or in the absence of, a
Change of Control, by the Company other than for Cause or by
Executive for Good Reason, then the provisions of paragraph of 3.09
(c) below shall apply.
Section 1.04
Representations and Warranty of Executive. Executive hereby
represents and warrants to the Company that he is not aware of any
presently existing fact, circumstance or event (including, but
without limitation, any health condition or legal constraint) which
would preclude or restrict him from providing to the Company the
services contemplated by this Agreement, or which would give rise
to any breach of any term or provision hereof, or which could
otherwise result in the termination of his employment hereunder for
Cause or Good Reason (as such terms are defined in Article 3). Any
and all agreements between Executive and any prior employer as well
as any agreements to which Executive is a party containing any
restriction upon Executive’s ability to use or disclose
confidential information or engages in any business activity are
listed in Appendix “A” and shall be promptly made
available to the Company upon request.
Section 1.05
Representations and Warranty of Company. The Company hereby
represents and warrants to Executive that it has received all
authorizations and has taken all actions, necessary or appropriate
for the due execution, delivery and performance of this
Agreement.
ARTICLE II
Compensation
Section 2.01
General. The Company shall compensate Executive for all of his
services under this Agreement, as set forth herein.
Section 2.02
Basic Compensation. Executive’s initial salary
(“Base Salary”) when annualized shall be at the rate of
$240,000 and shall be payable in bi-weekly or other installments in
accordance with the Company’s normal payment schedule for
senior management (but not less frequently than monthly). The
Executive’s performance and compensation shall be subject to
annual review on each July 1 st following the first anniversary of the
Commencement Date thereafter.
Section 2 . 03
Incentive Compensation. Executive shall be eligible to
participate in an annual Management Incentive Program for senior
management of the Company currently offered or as subsequently
modified by the Board from time to time in its discretion
(“Management Incentive Program”). The Executive and the
Company agree that Executive’s performance goals pursuant to
the Management Incentive Program shall consist of the
Company’s annual performance goals and other specific
performance goals for the Executive, as determined by
the
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Board in its discretion. The target
incentive compensation payment (the “Incentive
Payment”) for meeting all such goals shall be a percentage of
the Base Salary, as deemed appropriate by the Board.
Section 2.04 Other
Benefits.
(a) During the Term,
Executive shall be entitled to participate in all employee benefit
plans, including retirement programs, if any, group health care
plans, and all fringe benefit plans, of the Company. Such plans
shall at all times be comparable to those made available to the
senior-most management of the Company.
(b) In addition, the Company
shall provide Executive with the following benefits during the
Term: (i) Reimbursement for travel (including overnight
accommodations as reasonably deemed necessary by Executive);
(ii) Company paid cell phone and home office communication
equipment (fax, internet access, etc. without any requirement to
maintain records of specific use); and (iii) Reimbursement for
reasonable out-of-pocket home office expenses.
(c) During the Term,
Executive shall be entitled to 15 days per year of paid vacation in
accordance with the Company’s Vacation Policy and
calculations as set forth in the Company Employee Handbook. After
four (4) years of service Executive shall be entitled to an
additional 5 days of paid vacation in each calendar year. With
respect to all unused vacation time, unless otherwise approved by
the Board of Directors and the Compensation Committee of such
Board, Executive shall carry over unused vacation time for periods
prior to the calendar year in accordance with the Company’s
Employee Handbook or supplemental written policies, as determined
from time to time.
(d) Executive shall also be
entitled to such paid holidays and paid sick leave as shall be
authorized by the Company for its senior-most officers pursuant to
its written policies, as determined from time to time.
Section 2.05 Expense
Reimbursements. The Company shall reimburse Executive for all
proper expenses incurred by him in the performance of his duties
hereunder in accordance with the policies and procedures of the
Company as in effect from time to time.
Section 2.06 Excise
Tax. Notwithstanding any other provision of this Agreement, if
the aggregate present value of the “parachute payments”
to the Executive, determined under Section 280G(b) of the
Internal Revenue Code of 1986, as amended (the “Code”)
would be, but for this Section 2.06, at least three times the
“base amount” determined under such Section 280G,
then the parachute payments otherwise payable under this Agreement
(and any other amount payable hereunder or any other severance
plan, program, policy or obligation of the Company) shall be
reduced so that the aggregate present value of the parachute
payments to the Executive determined under Section 280G, does
not exceed 2.99 times the base amount. In no event, however, shall
any benefit provided hereunder be reduced to the extent such
benefit is specifically excluded from treatment under
Section 280G of the Code as a “parachute payment”
or as an “excess parachute payment”. Any decisions
regarding the requirement or implementation of such reductions
shall be made by the tax counsel and accounting firm retained by
the Company.
Section 2.07
Withholding. The Base Salary and all other payments to
Executive for his services to the Company shall be subject to all
withholding and deductions required by federal, state or other law
(including those authorized by Executive but not otherwise required
by law), including but not limited to state, federal and local
income taxes, unemployment tax, Medicare and FICA, together with
such deductions as Executive may from time to time specifically
authorize under any employee benefit program which may be adopted
by the Company for the benefit of its senior executives or
Executive.
ARTICLE III Termination of
Employment
Section 3.01 Right to
Terminate . Executive’s employment hereunder shall be
terminable by either party at any time, with or without Cause or
Good Reason, and any such termination shall not constitute a breach
of this Agreement, provided the notice set forth in subsection 3.02
is provided.
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Section 3.02
Notice. Executive shall give the Company at least sixty
(60) days’ advance written notice prior to any
termination by Executive other than for Good Reason.
Section 3.03
Termination for Good Reason . The Executive may terminate
employment for Good Reason or without Good Reason. “Good
Reason” means:
(i) the assignment to the
Executive of any duties or any other action by the Company that
results in a material diminution in the Executive’s position
or authority, duty, titles, or responsibilities, that is not
permitted under Section 1.01(b) of this Agreement that is not
remedied by the Company within sixty (60) days after receipt
of written notice thereof from the Executive;
(ii) any material failure
(any failure, whether or not material, following a Change of
Control, as defined below) by the Company to comply with any
provision of Section 2 of this Agreement that is not remedied
by the Company within sixty (60) days after receipt of written
notice thereof from the Executive;
(iii) any failure of the
Company to use its best efforts to maintain directors’ and
officers’ liability insurance coverage for
Executive.
Section 3.04
Procedure for Termination for Good Reason. A termination of
employment by the Executive for Good Reason shall be effectuated by
giving the Company written notice (“Notice of Termination for
Good Reason”) of the termination, setting forth in reasonable
detail the specific conduct of the Company that constitutes Good
Reason and the specific provision(s) of this Agreement on which the
Executive relies. A termination of employment by the Executive for
Good Reason shall be effective on the sixtieth (60
th
) day following the date
when the Notice of Termination for Good Reason is given, unless the
act or admission that constitutes the Good Reason is cured prior to
the expiration of said period and the Executive is given written
notice thereof, the notice sets forth a later date or the Company
accepts the Executive’s termination for Good Reason on an
earlier date.
Section 3.05
Termination for Cause. The Company shall have the right to
terminate Executive’s employment hereunder for Cause. For
purposes hereof, “Cause” shall be defined as the
Board’s good faith determination that the Executive has:
(i) been convicted of or entered a plea of nolo contendere
with respect to a criminal offense constituting a felony;
(ii) committed one or more acts or omissions constituting
fraud, embezzlement or breach of a fiduciary duty to the Company;
(iii) committed one or more acts constituting gross negligence
or willful misconduct; (iv) habitually abused alcohol or any
controlled substance or reported to work under the influence of
alcohol or any controlled substance (other than a controlled
substance which Executive is properly taking under a current
prescription), (v) engaged in harassment of any employee or
customer of the Company in violation of Company policy;
(vii) committed a material violation of any Company policy;
(viii) been insubordinate or dishonest; (ix) engaged in
self-dealing or in any act constituting a conflict of interest;
(ix) exposed the Company to criminal liability through
negligence or wrongdoing of any kind; (x) disclosed the
Company’s confidential information in violation of his
obligations under this Agreement; or (xi) failed, after
written warning specifying in reasonable detail the breach(es)
complained of, to substantially perform his duties under this
Agreement.
Notwithstanding the foregoing
in the event of a Change of Control, a termination by the Company
of the Executive for any reason during the twelve (12) month
period immediately following the Change of Control, other than an
intentional and malicious act or omission resulting in material
adverse consequences to the Company, shall be deemed to be a
termination without Cause for all purposes under this
Agreement.
Section 3.06
Procedure for Termination for Cause. A termination of the
Executive’s employment for Cause shall be effected in
accordance with the following procedures. The Company shall give
the Executive written notice (“Notice of Termination for
Cause”) of its intention to terminate the Executive’s
employment for Cause, setting forth in reasonable detail the
specific conduct of the Executive that it considers to constitute
Cause and the specific provision(s) of this Agreement on which it
relies and stating the date, time and place of the Special Board
Meeting. The “Special Board Meeting” means a meeting of
the Board called and held specifically for the purpose of
considering the Executive’s termination for Cause that takes
place not less than thirty (30) and not more than sixty
(60) days after the Executive receives the Notice of
Termination for Cause. The Executive shall be given an opportunity,
together with counsel, to be heard at the Special Board Meeting.
The Executive’s termination for Cause
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shall be effective when and if a
resolution is duly adopted at the Special Board Meeting, stating
that, in the good faith opinion of the Board, the Executive is
guilty of the conduct described in the Notice of Termination for
Cause, such conduct constitutes Cause under this Agreement and in
the case of a termination for Cause as defined in subsection
3.05(xi), such conduct has not ceased or been cured between the
date the Executive received the Notice of Termination for Cause and
the date of the meeting.
Section 3.07
Death. In the event that the Executive dies while employed
under this Agreement, the Company’s obligations to Executive
under this Agreement shall immediately cease. All benefits accrued
to the date of death, including vested securities, health and
disability benefits shall inure to the benefit of Executive’s
heirs and assigns.
Section 3.08
Disability. In the event that the Board determines in its sole
discretion that Executive has been disabled from substantially
performing his duties for any one hundred and twenty
(120) days within any twelve (12) month period while
employed under this Agreement, the Company may terminate
Executive’s employment for Cause.
Section 3.09
Severance Package.
(a) Change of Control
Severance Package. In the event Executive’s employment
under this Agreement is terminated during the Term, after a Change
of Control (as defined below) and prior to the thirty (30) day
period immediately following the first anniversary of the Change of
Control, by the Company other than for Cause or by Executive for
Good Reason, then:
(i) As and for a change of
control severance package (“Change of Control Severance
Package”) Executive shall receive two hundred percent
(200%) of the aggregate of (x) Executive’s annual
Base Salary for the year in which such termination occurs, and
(y) the target (i.e., at 100% goal attainment) amount of any
Incentive Payment payable to Executive for the year in which such
termination occurs under the Management Incentive Program
applicable to Executive. Such amount shall be paid either in a
single lump sum payment or ratably in accordance with the
Company’s normal salary payment schedule for senior
management (but not less frequently than monthly) over eighteen
(18) months, at the sole discretion of the Executive. During
such 18 month period, the Company shall also provide to Executive
under COBRA all Company-paid medical insurance benefits available
to other senior executives of the Company, all costs of which shall
be paid by the Company; and
(ii) All unvested warrants,
options or restricted stock then held by Executive, if any, shall
vest automatically with the termination of Executive’s
employment. Executive shall in all events be paid all accrued but
unpaid Base Salary, earned but unpaid Incentive Compensation for
any prior years, reimbursable expenses and other accrued benefits,
if any, through the date of termination.
(b) Definition of Change
in Control.
“Change in
Control” shall mean the occurrence of any of the following
events: (A) any consolidation or merger of the Company in
which the Company is not the continuing or surviving corporation or
which contemplates that all or substantially all of the business
and/or assets of the Company shall be controlled by another
corporation, in either case where the continuing, surviving or
other corporation both (i) is not directly or indirectly owned
by holders of at least 50% of the combined voting power of the
Company’s securities outstanding immediately prior to such
consolidation or merger and (ii) does not have a board of
directors approved by or consisting of more than one-half of the
Company’s Board members as the Board was constituted
immediately prior to the transaction, (B) a recapitalization
(including an exchange of Company equity securities by the holders
thereof), in either case, in which any “Person” (as
such term is used in Sections 13(d) and 14(d)(2) of the Exchange
Act) becomes the beneficial owner (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of securities of the Company
representing more than fifty percent (50%) of the combined
voting power of the Company’s then outstanding securities
having the right to vote in the election of directors and the
Company does not have a board of directors approved by or
consisting of more than one-half of the Company’s Board
members as the Board was constituted immediately prior to the
transaction; (C) any sale, lease, exchange or transfer (in one
transaction or in a series of related transactions) of all or
substantially all of the assets of the Company and its
subsidiaries; D) approval by the shareholders of the Company of any
plan or proposal for the liquidation or dissolution of the
Company,
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unless such plan or proposal is
abandoned within 60 days following such approval; or (E) any
“Person” (as such term is used in Sections 13(d) and
14(d)(2) of the Exchange Act) shall become the beneficial owner
(within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of securities of the Company representing more than 50% of the
combined voting power of the Company’s then outstanding
securities having the right to vote in the election of
directors.
(c) Regular Severance
Package.
Subject to the conditions set
forth in subsection 3.09(d), in the event Executive’s
employment under this Agreement is terminated during the Term, and
prior to or in the absence of a Change of Control (as defined
above) by the Company, by Executive for Good Reason or other than
for Cause, then as and for a severance package (“Regular
Severance Package”), Executive shall receive:
(i) one hundred percent
(100%) of the aggregate of (x) Executive’s annual
Base Salary for the year in which such termination occurs, and
(y) the amount of any Incentive Payment paid to Executive for
the prior year under the Management Incentive Program applicable to
Executive. Such amount shall be paid either in a single lump sum
payment or ratably in accordance with the Company’s normal
salary payment schedule for senior management (but not less
frequently than monthly) over eighteen (18) months, at the
sole discretion of the Company. The foregoing payment is referred
to herein as the “Regular Severance Pay”. During such
18 month period, the Company shall also provide to Executive under
COBRA (subject to Executive’s eligibility under
COBRA
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