Exhibit 10.1
EXECUTIVE EMPLOYMENT
AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT
(this “Agreement”) is made and entered into effective
as of September 14, 2005 by and between Digirad Corporation, a
Delaware Corporation (the “Company”) and Mark Casner
(“EXECUTIVE”). The Company and EXECUTIVE are
hereinafter collectively referred to as the “Parties,”
and individually referred to each or any as a
“Party.”
RECITALS
A.
WHEREAS, the Company wishes to
employ EXECUTIVE on the terms and conditions set forth in this
Agreement; and
B.
WHEREAS, EXECUTIVE desires to become
an employee of the Company on the terms and conditions set forth in
this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of
the promises and the mutual covenants herein contained, and for
other good and valuable consideration, the sufficiency of which is
hereby acknowledged, the Parties, intending to be legally bound,
agree as follows:
1.
Employment.
1.1
Title/Responsibilities
. EXECUTIVE
shall serve as President of the Company’s wholly-owned
subsidiary, Digirad Imaging Solutions, Inc.
(“DIS”), and shall have the normal duties,
responsibilities and authority of such office, unless otherwise
determined from time to time by the Company’s Chief Executive
Officer or its Board of Directors. EXECUTIVE shall do and
perform all services, acts, or responsibilities necessary or
advisable to carry out the job duties of President of DIS as
assigned by the Company’s Chief Executive Officer, provided,
however, that at all times during his employment EXECUTIVE shall be
subject to the direction and policies from time to time established
by the Board of Directors of the Company.
1.2
Full Time
Attention . EXECUTIVE shall
devote his best efforts and his full business time and attention to
the performance of the services customarily incident to such office
and to such other services as the Company’s Board of
Directors may reasonably request.
1.3
Other
Activities . Except upon the prior
written consent of the Board of Directors, EXECUTIVE shall not
during the period of employment engage, directly or indirectly, in
any other business activity (whether or not pursued for pecuniary
advantage) that is or may be competitive with, or that might place
him in a competing position to that of the Company or any other
corporation or entity that directly or indirectly controls, is
controlled by, or is under common control with the Company (an
“Affiliated Company”), provided that EXECUTIVE may own
less than two percent of the outstanding securities of any such
publicly traded competing corporation. EXECUTIVE shall also
disclose to and obtain the prior consent of the Board of Directors
for any other, non-competitive business activities in which he may
wish to engage, such as joining the board of directors of another
entity.
1.4
No Other
Promises . The position of President
of DIS is regarded as providing a potential succession planning
candidate for the role of Chief Executive Officer of the
Company. However, the parties agree and acknowledge that,
when and if a successor to the Chief Executive Officer may be
needed, the selection of such a successor is in the sole and
absolute discretion of the Company’s Board of
Directors.
2.
Term of
Employment.
2.1
Employment At
Will . EXECUTIVE’s
employment is at will, and not for any specific term.
EXECUTIVE’S employment may be terminated by EXECUTIVE or by
the Company at any time for any reason, with or without cause or
notice, and without liability of any kind other than as
specifically set forth below.
3.
Compensation.
3.1
Base
Salary. Beginning on the date
EXECUTIVE commences his duties as President of DIS, anticipated to
occur no later than October 3, 2005 (the “Start
Date”), Company shall pay EXECUTIVE a salary (the “Base
Salary”) of two hundred fifty thousand Dollars ($250,000.00)
per year, payable every two weeks in accordance with the
Company’s normal payroll practices for Executives. The
Company’s Board of Directors shall provide EXECUTIVE with
annual performance reviews, and, thereafter, EXECUTIVE shall be
entitled to such Base Salary as the Board of Directors may from
time to time establish in its sole discretion.
3.2
Stock
Options . Contingent upon
EXECUTIVE commencing employment on the Start Date, EXECUTIVE shall
also receive from the Company stock options granting EXECUTIVE the
right to purchase two hundred thousand (200,000) shares of the
Company’s common stock at the price in effect at the close of
business on the Start Date. One fourth (¼th) of the
shares subject to the option shall vest and become exercisable one
year after the Start Date, and an additional one forty-eighth
(1/48th) of the shares subject to the option shall vest and become
exercisable on the corresponding day of each month thereafter, or
to the extent such a month does not have the corresponding day, on
the last day of any such month, until all the shares are vested and
exercisable, subject to EXECUTIVE continuing to be an employee on
each such date.
3.3
The terms and
conditions of this stock option grant shall be governed by the
Company’s 2005 Inducement Stock Incentive Plan and shall be
set forth in a separate stock option agreement.
3.4
Other
Compensation . In addition to the Base
Salary payable to EXECUTIVE hereunder, EXECUTIVE shall be entitled
to the following benefits:
3.4.1
Performance
Bonus . Beginning in 2006,
EXECUTIVE shall receive an annual performance bonus of up to fifty
(50) percent of Base Salary conditioned upon achievement of certain
corporate performance milestones as well as performance milestones
personal to EXECUTIVE, all to be established and determined by the
Company’s Board of Directors. The Board of Directors or
Compensation Committee, as applicable, shall, in their respective
sole discretion, determine whether such performance milestones have
been attained.
2
3.4.2
Signing
Bonus . EXECUTIVE shall
receive a signing bonus of twenty five thousand Dollars ($25,000),
less applicable tax and other withholdings, on the Company’s
first regular payday after the Start Date. Should EXECUTIVE
voluntarily resign prior to completing one (1) year of
service, one hundred (100) percent of the after-tax amount of the
signing bonus would be repayable to the Company at the time of
resignation; should EXECUTIVE voluntarily resign prior to
completing two (2) years of service, fifty (50) percent of the
after-tax amount of the signing bonus would be repayable to the
Company at the time of resignation. The signing bonus would
not be repayable to the Company in the event of a termination
without cause by the Company.
3.4.3
Moving
Expenses . Company will furnish
reimbursement to EXECUTIVE for expenses associated with his
relocation to San Diego, California. Specifically, Company
will reimburse EXECUTIVE for (a) standard realtor’s fees
incurred in selling his home in Minnesota; (b) the reasonable
costs of moving EXECUTIVE’s household goods from Minnesota to
San Diego, California, as pre-approved by the Company; and
(c) reasonable California housing costs for three
(3) months commencing on the Start Date, and, should EXECUTIVE
be unable to sell his home in Minnesota during that time, for up to
an additional three (3) months or until EXECUTIVE has sold his
Minnesota home, whichever occurs first; all as pre-approved by the
Company. Reimbursement of covered expenses will be made
within twenty (20) business days of submission, by EXECUTIVE to
Company, of receipts or other proofs of the expense item. Any
relocation expense reimbursement payments under this subparagraph
that are taxable to EXECUTIVE will be “grossed up” to
avoid tax expenses to EXECUTIVE. Should EXECUTIVE voluntarily
resign prior to completing one (1) year of service, one
hundred (100) percent of the aggregate after-tax relocation
reimbursement amount would be repayable to the Company at the time
of resignation; should EXECUTIVE voluntarily resign prior to
completing two (2) years of service, fifty (50) percent of the
aggregate after-tax relocation reimbursement amount would be
repayable to the Company at the time of resignation.
Relocation expense reimbursement payments would not be repayable to
the Company in the event of a termination without cause by the
Company.
3.4.4
Benefits
. Benefits
to which other executive officers of the Company are entitled as
determined by the Company’s Board of Directors, on terms
comparable thereto, including but not limited to, participation in
any and all pension and profit sharing plans, bonus and incentive
payment programs, group life insurance policies and plans, medical,
health, dental and disability insurance policies and plans, and the
like, which may be maintained by the Company, in the sole
discretion of the Company’s Board of Directors, for the
benefit of its executive officers. The currently effective
waiting period for all health-related insurance benefits (the first
of the month following 30 days of employment) is
applicable.
3
3.4.5
Paid Time
Off . EXECUTIVE shall be
entitled to ten (10) days of paid holidays and sixteen (16)
days of paid time off per year, accruing annually beginning on the
Start Date.
3.4.6
Expense
Reimbursement . The Company shall
reimburse EXECUTIVE for all reasonable out-of-pocket expenses
incurred by him in the course of performing his duties under this
Agreement, which conform to the Company’s policies in effect
from time to time with respect to travel, entertainment and other
business expenses, subject to the Company’s requirements with
respect to reporting and documentation of such expenses pursuant to
Company policy.
3.5
Withholdings.
Except as
expressly stated herein, all of EXECUTIVE’s compensation
shall be subject to customary federal, state, local and other
withholding taxes and any other employment taxes as are commonly
required to be collected or withheld by the Company.
4.
Terminatio
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