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 (1⁄4th) 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.


 


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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.


 


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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.                                       Termination.


 


4.1         Termination for Cause.  The
Company shall terminate this Agreement for Cause (as defined herein) by
delivery of written notice to EXECUTIVE specifying the cause or causes relied
upon for such termination.  If EXECUTIVE’s
employment under this Agreement is terminated by the Company for Cause before the last day of any calendar month,
EXECUTIVE shall be entitled to receive as compensation for such calendar month,
only the Base Salary set forth in Section 4.1 prorated to the date of
termination on the basis of a 30-day calendar month, and will forfeit any
claims to a bonus or other compensation or benefits.  Vesting of EXECUTIVE’s stock options in the
event of termination for Cause shall be governed by the provisions of the Company’s
2005 Inducement Stock Incentive Plan.  Grounds
for the Company to terminate this Agreement for “Cause” shall include only the
occurrence of any of the following events:


 


4.1.1                      EXECUTIVE’s willful misconduct or gross negligence in the performance of his
duties hereunder;


 


4.1.2                      EXECUTIVE’s willful failure or refusal to
perform in the usual manner at the usual time those duties which he regularly
and routinely performs in connection with the business of the Company or such
other duties reasonably related to the capacity in which he is employed hereunder which may be assigned to him by the Chief
Executive Officer of the Company, if such failure or refusal has not been
substantially cured to the satisfaction of the Company’s Chief Executive
Officer within thirty (30) days after written notice of such failure or refusal
has been given by the Company to EXECUTIVE;


 


4.1.3                      EXECUTIVE’s performance of any material action when specifically and
reasonably instructed not to do so by the Chief Executive Officer;


 


4.1.4                      EXECUTIVE engaging or in any manner participating in any
activity which is directly competitive with or intentionally injurious to the
Company;


 


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4.1.5                      EXECUTIVE’s commission of any fraud, or use
or appropriation for his personal use or benefit of any funds, properties or opportunities of the Company not authorized by the Chief Executive Officer to be so used or
appropriated; or


 


4.1.6                      EXECUTIVE’s conviction of any crime involving moral turpitude; or


 


4.1.7                      EXECUTIVE’s willful or grossly negligent violation of the
Company’s Code of Ethics.


 


For this purpose of this
definition, no act or failure to act by the EXECUTIVE shall be considered “willful”
or “grossly negligent” if the EXECUTIVE acted (or failed to act) in good faith
with the reasonable belief that his actions or omissions were in the Company’s
best interest.


 


Any notice of termination
given pursuant to Section 5.1 shall effect termination as of the date
specified in such notice, or in the event no such date is specified, on the
last day of the month in which such notice is delivered.


 


4.2         Termination Without Cause.  The Company may voluntarily
terminate this Agreement, and EXECUTIVE’s employment, without Cause by giving
not less than thirty (30) days written notice to EXECUTIVE.  Any such notice shall specify the exact date
of termination (the “Termination Date”). 
If EXECUTIVE’s employment under this Agreement is terminated by the
Company without Cause (as defined herein), EXECUTIVE shall be entitled to
receive (a) his Base Salary at a rate existing at the date of termination
for an additional nine (9) months after the Termination Date (all Base
Salary payments shall be paid over time in accordance with the Company’s
general payroll practices, as and when such Base Salary would have been paid
had EXECUTIVE’s employment not terminated); and (b) any business expenses
which are properly owing to EXECUTIVE through the date of termination.  Notwithstanding the foregoing, EXECUTIVE
shall not be entitled to any options granted to EXECUTIVE to purchase shares of
the Company’s stock that are unvested on the date of such termination without
Cause. The payments provided for in this paragraph shall be in lieu of, and not
in addition to, severance, if any, payable under any other plan or policy now
in effect or adopted or modified from time to time by the Company.  Notwithstanding anything in this agreement to
the contrary, EXECUTIVE’s right to receive this severance pay is conditioned
upon EXECUTIVE’s execution and delivery of a General Release, releasing all
claims EXECUTIVE may have or claim to have against the Company and its respective
agents and representatives, in a form acceptable to Company, in its sole
discretion.  EXECUTIVE shall not be under
any obligation to mitigate the Company’s obligation by securing other
employment or otherwise.  During
the period when such severance compensation is being paid to EXECUTIVE, he
shall not (i) engage, directly or indirectly, in any other business
activity that is competitive with, or that places him in a competing position
to that of the Company or any Affiliated Company (provided that EXECUTIVE may
own less than two percent (2%) of the outstanding securities of any publicly
traded corporation), or (ii) hire, solicit, or attempt to hire on behalf
of himself or any other party any employee or exclusive consultant of the
Company.


 


4.2.1                      EXECUTIVE may voluntarily terminate this
Agreement upon no less than thirty (30) days written notice of such termination
submitted to the Board of
Directors, and in such event EXECUTIVE shall be entitled to receive all amounts
due to him through the date of termination, but not to any severance payments.


 


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5.                                       Death
or Disability During Employment.


 


5.1         This Agreement shall terminate without notice upon the date of EXECUTIVE’s death or the date when
EXECUTIVE becomes “completely disabled” as that term is defined in Section 6.4.


 


5.2         In the event of EXECUTIVE’s death, all rights of EXECUTIVE to compensation
hereunder shall automatically terminate immediately upon his death, except that EXECUTIVE’s heirs, personal
representatives or estate shall be entitled to any unpaid portion of his salary
and accrued benefits earned up to the date of his death.


 


5.3         In the event EXECUTIVE is disabled, EXECUTIVE shall be entitled to
receive such disability benefits as would apply to other senior Executives in the Company, subject to the terms and
conditions of any such Company disability program.


 


5.4         The term “completely disabled” as used in this Agreement shall mean the
inability of EXECUTIVE to perform his duties under this Agreement because he
has become permanently disabled within the meaning of any policy and disability
income insurance covering Executives of the Company then in force.  In the event the Company has no policy of
disability income insurance covering Executives of the Company in force when EXECUTIVE becomes
disabled, the term “completely disabled” shall mean the inability of EXECUTIVE
to perform his normal and customary duties under this Agreement for a total of
four (4) consecutive months by reason of any incapacity, physical or
mental, based upon medical advice or an opinion provided by a licensed
physician, acceptable to the Company in its sole discretion, determines to have
incapacitated EXECUTIVE from satisfactorily performing all of his usual
services for the Company during the foreseeable future.  The action of the Company shall be final and
binding and the date such action is taken shall be the date of such complete
disability for purposes of this Agreement, and upon such date this Agreement
shall become null and void and of no further force and effect.


 


6.                                       Proprietary
and Confidential Information.


 


6.1         Proprietary Information and Inventions
Assignment Agreement.  EXECUTIVE represents and warrants that he has
executed and delivered to the Company the Company’s Employee Proprietary
Information and Inventions Assignment Agreement, attached hereto and
incorporated herein by reference. 
EXECUTIVE will not disclose, nor use in the performance of his
responsibilities at Digirad, any trade secret or other confidential information
of any former employer, unless he first obtains written authorization for its
disclosure and use.


 


6.2         Preservation and Return of Property.  EXECUTIVE will exercise
reasonable care, consistent with good business judgment to preserve in good
working order, subject to reasonable wear and tear from authorized usage, and
to prevent loss of, any equipment, instruments or accessories of the Company in
his custody for the purpose of conducting the business of the Company.  Upon request, EXECUTIVE will promptly surrender the same to the
Company at the conclusion of his employment, or if not surrendered, EXECUTIVE
will account to the Company to its reasonable satisfaction as to the present
location of all such instruments or accessories and the business purpose for
their placement at such location.  At the
conclusion of EXECUTIVE’s employment with the Company, he agrees to return such
instruments or accessories to the Company or to account for same to the Company’s
reasonable satisfaction.


 


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6.3         No Inconsistent Agreements.  EXECUTIVE affirms that he has no
agreement with any other party that would preclude his compliance with any
obligations under this Agreement.


 


7.                                       Assignment
and Binding Effect.


 


7.1         This Agreement shall be binding upon and inure to the benefit of
EXECUTIVE and EXECUTIVE’s heirs, executors, administrators, estate, beneficiaries,
and legal representatives.  Neither this
Agreement nor any rights or obligations under this Agreement shall be assignable by either party without the prior express
written consent of the other party.  This
Agreement shall be binding upon and inure to the benefit of the Company and its
successors, assigns and legal representatives.


 


8.                                       Notices.


 


8.1         All notices or demands of any kind required or permitted to be given by
the Company or EXECUTIVE under this Agreement shall be given in writing and
shall be personally delivered (and receipted for) or sent by facsimile (with
confirmation of receipt), or sent by recognized commercial overnight courier,
or mailed by certified mail, return receipt requested, postage prepaid,
addressed as follows:


 


If
to the Company:


 


Chief Executive Officer


Digirad Corporation


13950 Stowe Drive


Poway, California


Telephone:  (858)726-1600


Facsimile:  (858)
726-1700


 


If
to EXECUTIVE:


 


Mark Casner


c/o Digirad Corporation


13950 Stowe Drive


Poway, California


Telephone:  (858)
726-1600


Facsimile:  (858)
726-1700


 


Any such written notice
shall be deemed received when personally delivered or upon receipt in the event
of facsimile or overnight courier, or three (3) days after its deposit in
the United States mail by certified mail as specified above.  Either Party may change its address for
notices by giving notice to the other Party in the manner specified in this
section.


 


9.                                       Choice
of Law.


 


9.1         This Agreement is made in Poway, California.  This Agreement shall be construed and interpreted
in accordance with the internal laws of the State of California.  Each of the parties hereto


 


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agrees to the exclusive jurisdiction of the state and federal courts
located in the State of California for any and all actions between the
parties.  Any controversy or claim
arising out of or relating to this Agreement or breach thereof, whether
involving remedies at law or in equity, shall be adjudicated in San Diego County,
California.


 


10.                                 Integration.


 


10.1                                  This Agreement contains the entire agreement
of the parties relating to the subject matter of this Agreement, and supersedes
all prior oral and written employment agreements or arrangements between the
Parties.  This Agreement cannot be
amended or modified except by a written agreement signed by EXECUTIVE and the
Company.


 


11.                                 Waiver.


 


11.1                                  No term, covenant or condition of this
Agreement or any breach thereof shall be deemed waived, except with the written
consent of the Party against whom the waiver is claimed, and any waiver of any
such term, covenant, condition or breach shall not be deemed to be a waiver of
any preceding or succeeding breach of the same or any other term, covenant,
condition or breach.  No failure to
exercise, delay in exercising, or single or partial exercise of any right,
power or remedy by either party hereto shall constitute a waiver thereof or
shall preclude any other or further exercise of the same or any other right,
power or remedy.


 


12.                                 Severability.


 


12.1                                  The unenforceability, invalidity, or
illegality of any provision of this Agreement shall not render any other
provision of this Agreement unenforceable, invalid or illegal.


 


13.                                 Interpretation;
Construction.


 


13.1                                  The headings set forth in this Agreement are
for convenience only and shall not be used in interpreting this Agreement.  The Parties acknowledge that each Party and
its counsel has reviewed and revised, or had an opportunity to review and
revise, this Agreement, and the normal rule of construction to the effect
any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Agreement.


 


14.                                 Attorneys’
Fees.


 


14.1                                  In any controversy or claim arising out of or
relating to this Agreement or the breach thereof, which results in legal
action, proceeding or arbitration, the prevailing party in such action, as
determined by the court or arbitrator, shall be entitled to recover reasonable
attorneys’ fees and costs incurred in such action.


 


15.                                 Counterparts.


 


15.1                                  This Agreement may be executed in any number
of counterparts, each of which when so executed and delivered shall together
constitute an original thereof.


 


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16.                                 Representations
and Warranties.


 


16.1                                  EXECUTIVE represents and warrants that he is
not restricted or prohibited, contractually or otherwise, from entering into
and performing each of the terms and covenants contained in this Agreement, and
that his execution and performance of this Agreement will not violate or breach
any other agreement between EXECUTIVE and any other person or entity.


 


17.                                 Arbitration.  Any
controversy or claim arising out or relating to this Agreement, or the breach
hereof, or arising out of or relating to the rights, duties or obligations of
the Company or of EXECUTIVE shall be settled by binding arbitration conducted
in San Diego County, California in accordance with, and by an arbitrator
appointed pursuant to the rules of the American Arbitration Association in
effect at the time, and the judgment upon the award rendered pursuant thereto
shall be in writing and may be entered in any court having jurisdiction, and
all rights or remedies of the Company and of the Executive to the contrary are
hereby expressly waived.  The Company
shall pay the arbitration fees and costs for such arbitrator.


 


IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.


 


	
  THE COMPANY:

  	
   

  	
  EXECUTIVE:

  
	
  DIGIRAD CORPORATION

  	
   

  	
  MARK CASNER

  
	
  a Delaware Corporation

  	
   

  	
   

  
	
  By:

  	
  /s/ Gerhard Burbach 

  	
  , 

  	
   

  
	
  Gerhard Burbach 

  	
   

  	
   

  
	
  Chief Executive Officer

  	
   

  	
  /s/ Mark Casner

  
	
   

  	
   

  	
  Name of Executive

  
				



 


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