Exhibit 10.1
TVIA, INC.
EMPLOYMENT AGREEMENT
     This Employment Agreement (the “Agreement”) is made and entered into by and
between Eli Porat (“Employee”) and Tvia, Inc. (the “Company”), effective as of
October 13, 2008 (the “Effective Date”).
W I T N E S S E T H:
     WHEREAS, Employee is currently employed by the Company;
     WHEREAS, the Company and Employee wish amend and restate in written form
Employee’s current terms of employment with the Company;
     WHEREAS, the Company and the Employee previously entered into an Executive
Severance Agreement dated November 20, 2001 (the “Severance Agreement”);
     WHEREAS, in lieu of the benefits provided under the Severance Agreement,
the Company wishes to provide Employee with a cash incentive to remain employed
with the Company; and
     WHEREAS, subject to the valid execution of this Agreement, Employee and the
Company agree to terminate the Severance Agreement in accordance with Section
9(b) of the Severance Agreement and that neither the Company nor Employee shall
have any rights or obligation under the Severance Agreement on or after the
Effective Date.
     NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and in consideration of the continuing employment of Employee by the Company,
the parties agree as follows:
     1. Recitals. All of the above recitals are hereby incorporated into this
Agreement by reference as though set forth verbatim herein.
     2. Termination of Severance Agreement. Pursuant to Section 9(b) of the
Severance Agreement, and subject to the valid execution of this Agreement, the
Company and Employee hereby agree that this Agreement constitutes an effective
termination of the Severance Agreement and all of the Company’s and Employee’s
respective rights and obligations thereunder.
     3. Title and Cash Compensation. Employee’s title is, and shall remain,
Chief Executive Officer. As of the Effective Date, Employee’s monthly base
salary is $20,000 per month or $240,000 on an annualized basis.
     4. Equity Awards. The Company and Employee acknowledge that Employee may
have received certain equity awards prior to the date hereof. Any such awards
that are outstanding as of the date hereof shall remain outstanding and subject
to the Company’s applicable equity compensation plan and award agreement, and
shall be unaffected by this Agreement.

 

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     5. Other Benefits. Employee will continue to be eligible to receive the
Company’s standard employee benefits.
     6. Retention Bonus. In addition to the benefits provided under Sections 3
through 5 of this Agreement, Employee is eligible to receive a retention bonus
equal to $180,000 (the “Retention Bonus”). Employee’s Retention Bonus shall be
payable in twelve (12) equal monthly installments of $15,000 (each an
“Installment Payment”). The first Installment Payment will be made on the first
regular payroll date following the first (1st) monthly anniversary of the
Effective Date and the remaining Installment Payments will be made on the like
payroll date of each month thereafter for the next eleven (11) months (each a
“Payment Date”), subject to Employee’s continued employment with the Company
through each Payment Date. If the Payment Date falls on a day of the month that
does not exist for a particular month, the Payment Date for such month will be
the last day of the month. The Company has sole discretion to determine if
Employee has satisfied the requirements of this Section 3. Each Installment
Payment (if any) shall be paid within thirty (30) days following the Payment
Date.
     7. Termination for other than Cause or Good Reason. If, during the twelve
(12) month period immediately following a Liquidity Event (as defined in the
Tvia, Inc. Transaction Bonus Plan), the Company terminates the employment of
Employee without Cause (as defined below) or Employee terminates employment for
Good Reason (as defined below) prior to payment of all Installment Payments, the
Company shall accelerate payment of the remaining unpaid Installment Payments.
In such case, the Company will make a single lump payment to Employee in an
amount equal to the total value of the remaining unpaid Installment Payment
within thirty (30) days of Employee’s termination of employment.
     8. Other Termination. If Employee’s employment with the Company terminates
for Cause, death or disability, or voluntarily by Employee other than for Good
Reason, Employee shall not be entitled to receive any Installment Payments after
the date of Employee’s termination of employment.
     9. Cause. For purposes of this Agreement, “Cause” is defined as (i) an act
of dishonesty made by Employee in connection with Employee’s responsibilities as
an employee, (ii) Employee’s conviction of, or plea of nolo contendere to, a
felony, (iii) Employee’s gross misconduct, or (iv) Employee’s continued
substantial violations of his or her employment duties after Employee has
received a written demand for performance from the Company which specifically
sets forth the factual basis for the Company’s belief that Employee has not
substantially performed his or her duties.
     10. Good Reason. For purposes of this Agreement, “Good Reason” will mean
Employee’s termination of employment within ninety (90) days following the
expiration of any cure period (discussed below) following the occurrence of one
or more of the following, without Employee’s consent:
          (a) A material reduction in Employee’s authority, duties, or
responsibilities relative to Employee’s duties, position or responsibilities in
effect immediately prior to such reduction; provided, however, that a reduction
in duties, position or responsibilities solely by virtue of the Company being
acquired and made part of a larger entity shall not constitute “Good Reason”;

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          (b) A material reduction by the Company of Employee’s base salary in
effect immediately prior to such reduction;
          (c) A material change in the geographic location at which Employee
must perform services (Employee and the Company agree that the relocation of
Employee to a facility that is more than thirty-five (35) miles from Employee’s
current location is a material change in geographic location); and
          (d) any material breach by the Company of any material provision of
this Agreement.
     Employee will not resign for Good Reason without first providing the
Company with written notice of the acts or omissions constituting the grounds
for Good Reason within ninety (90) days of the initial existence of the grounds
for Good Reason and a reasonable cure period of not less than thirty (30) days
following the date of such notice.
     11. Section 409A. The foregoing provisions are intended to comply with the
requirements of Section 409A of the Internal Revenue Code of 1986, as amended
and any final regulations and guidance promulgated thereunder (“Section 409A”)
so that none of the benefits to be provided hereunder will be subject to the
additional tax imposed under Section 409A, and any ambiguities herein will be
interpreted to so comply. The Company and Employee agree to work together in
good faith to consider amendments to this Agreement and to take such reasonable
actions which are necessary, appropriate or desirable to avoid imposition of any
additional tax or income recognition prior to actual payment to Employee under
Section 409A.
     12. At-Will Employment. The Company and Employee agree that Employee’s
employment with the Company is and shall continue to be “at-will” and may be
terminated at any time with or without cause or notice by either the Company or
Employee. No provision of this Agreement shall be construed as conferring upon
Employee a right to continue as an employee of the Company.
     13. Successors.
          (a) Company’s Successors. Any successor to the Company (whether direct
or indirect and whether by purchase, lease, merger, consolidation, liquidation
or otherwise) to all or substantially all of the Company’s business and/or
assets shall assume the Company’s obligations under this Agreement and agree
expressly to perform the Company’s obligations under this Agreement in the same
manner and to the same extent as the Company would be required to perform such
obligations in the absence of a succession. For all purposes under this
Agreement, the term “Company” shall include any parent or subsidiary of the
Company or any successor to the Company’s business and/or assets or which
becomes bound by the terms of this Agreement by operation of law.
          (b) Employee’s Successors. Without the written consent of the Company,
Employee shall not assign or transfer this Agreement or any right or obligation
under this Agreement to any other person or entity, any attempt to assign or
transfer this Agreement or any right or obligation under this Agreement shall be
void. Notwithstanding the foregoing, the terms of this

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Agreement and all rights of Employee hereunder shall inure to the benefit of,
and be enforceable by, Employee’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
     14. Integration. This Agreement represents the entire agreement and
understanding between the parties as to the subject matter hereof and supersedes
all prior or contemporaneous agreements whether written or oral.
     15. Severability. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision hereof, which shall remain in full force and effect.
     16. Waiver; Amendment. No provision of this Agreement may be modified,
amended, waived or discharged unless the modification, amendment, waiver or
discharge is agreed to in writing and signed by Employee and by an authorized
officer of the Company (other than Employee). No waiver by either party of any
breach of, or of compliance with, any condition or provision of this Agreement
by the other party shall be considered a waiver of any other condition or
provision or of the same condition or provision at another time.
     17. Headings. All captions and section headings used in this Agreement are
for convenient reference only and do not form a part of this Agreement.
     18. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal substantive laws, but not the choice of law rules,
of the State of California. Employee hereby expressly consents to the personal
jurisdiction of the state and federal courts located in the State of California
for any action or proceeding arising from or relating to this Agreement and/or
relating to any arbitration in which the parties are participants.
     19. Withholding Taxes. All payments made pursuant to this Agreement shall
be subject to withholding of applicable income, employment and other taxes.
     20. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
[Signature page follows]

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     IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Company by its duly authorized officer, effective as of the day and
year first above written.

            TVIA, INC.
      By:   /s/ Eli Porat                 Title:   Chief Executive Officer      
      Date:   October 16, 2008     

            EMPLOYEE:
      /s/ Eli Porat       Eli Porat            Date:  October 16, 2008  

[Signature page to Employment Agreement]