Exhibit 10.1

May 7, 2007

Mr. Raja Venkatesh

1150 Stafford Drive

Cupertino, California 95014

Dear Raja:

I am exceedingly pleased to extend our offer to you for the position of
Executive Vice President and Chief Financial Officer, Treasurer, and Secretary
for DayStar Technologies, Inc. (referred to hereafter as “DayStar” or the
“Company”). Your employment at the Company will be conditioned upon Board of
Directors approval and signing a formal employment contract. Your employment is
anticipated to start May 8, 2007. Your primary business location shall be in
Santa Clara, California. You will report directly to me. I am pleased to outline
the following compensation package, which I believe is commensurate with our
confidence in your ability to successfully lead the financial efforts at
DayStar.

The key elements of our offer include:

 

  1. Base Salary and Annual Incentive. You shall be paid an annual base salary
of $240,000 to be earned and paid bi-weekly. You will also be eligible for
additional bonuses beginning in 2007. These additional bonuses will provide you
with eligibility to earn an incentive compensation targeted at 30% of your base
salary for achieving agreed upon objectives and metrics. The specific goals and
objectives will be determined no later than 60 days after your initial date of
employment.

 

  2.

Stock Incentive. I will propose at the next meeting of the Board of Directors,
that you are granted 2% (two percent) of the number of fully diluted shares of
company stock as of the date of grant, in a combination of Options and
Restricted Shares. The exercise price of the Options will be the closing price
of the common stock on the date of grant. The grant of Restricted Shares will be
limited to 50,000 shares, and the remainder of the 2% will be made up in
Options. A further 0.5% (one-half percent) of the number of fully-diluted shares
of company stock will be granted (“Earned Shares”) as Options (bringing your
total to 2.5% of fully diluted Company shares), depending upon achievement of
goals that bring significant value to the company, no later than March 31, 2009.
In the event the company issues any additional shares of common stock, whether
upon exercise of options or warrants, or issuance of preferred stock, you will
receive an Option to purchase additional shares so that the total number of
shares that have been or may in the future be issued under this Section 2 is
equal to the sum of: 1.) 2% of the total outstanding fully diluted shares, plus
2.) the percentage of Earned Shares granted (e.g., if you have reached 50% of
your target goals you would have earned an additional 0.25% of the outstanding
shares, so at that point you would be brought up to 2.25% of the outstanding
shares). These additional grants will be made on a quarterly basis by the
Compensation Committee in accordance with Daystar’s EIP program. Notwithstanding
the foregoing, the maximum number of shares that could be issued to you under
this Section 2 will be limited to 2% plus the percentage of earned shares (for a
maximum of 2.5%) of the fully diluted number of shares as of the second
anniversary of your employment date. The specific goals and objectives will be
determined no later than 60

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days after your initial date of employment. All options to purchase shares of
the Company will have an exercise price equal to the market price as of the date
of grant. The Options will be subject to vesting over a three year period and
the Restricted Shares will be subject to repurchase at par value over the same
three year period, and each will be subject to the other standard terms of the
Company’s forms of Option Agreement and Restricted Stock Agreement, each of
which you will be required to execute.

 

  3. Employment and Change of Control Agreement. See Attached Executive
Employment Agreement

 

  4. Vacation: You are eligible for three weeks annual vacation based on the
Company’s accrual schedule. This is also covered in the attached Executive
Employment Agreement.

 

  5. Employee Benefits. You are eligible for all normal Daystar employee
benefits including healthcare, dental, etc. I am enclosing an employee benefits
summary, which provides general information on our various benefit plans. These
plans have different eligibility dates, depending on the benefit provided.

 

  6. Business Tools. A cell phone and laptop computer will be provided as
needed.

 

  7. Other Conditions. As you know, there are several other essential conditions
of your employment with Daystar. These include the following:

First, you must read and agree to the terms imbedded within the Executive
Employment Agreement regarding Employee Patent, Confidentiality Information and
Non-Compete Agreement.

Second, it is essential that you immediately identify any circumstances or
agreements with prior employers—including, but not limited to non-compete
agreements—which might interfere or limit in any way your ability to work at
DayStar and to fully perform your duties and responsibilities. This information
must be communicated to myself immediately.

Third, your employment is also contingent upon your compliance with the US
Immigration Law. The law requires you to complete the US Government Eligibility
Verification form (I-9) and to provide us documents on your first day of
employment which documents verify your identity and employment eligibility.

The entire leadership team and the Board of Directors are sincerely enthusiastic
about the prospect of you joining and leading our financial operations team. It
is apparent to all of us here that your experience will compliment Daystar’s
business initiatives, culture and strategy. We are all convinced that together
we will capitalize on the challenges that lie before us. This is truly a unique
opportunity for both yourself and DayStar and we look forward to sharing the
excitement with you. Should you have any questions, please do not hesitate to
contact me directly.

 

Sincerely,

 

/s/ Stephan J. De Luca

  Stephan DeLuca, Ph.D.   CEO  

Enclosures

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I acknowledge and accept this offer of employment with DayStar Technologies:

 

Name:  

/s/ Raja H. Venkatesh

      Date: May 8, 2007

Enclosures:

    Executive Employment Agreement

    Restricted Stock Agreement