Exhibit 10.1
Compensation and Change of
Control Agreement
This Compensation and Change of
Control Agreement (this “Agreement”) dated as of this
18 th day of December, 2007, is entered into
between Digital Angel Corporation (the “Company”) and
Thomas J. Hoyer (the “Executive).
BACKGROUND
A.
The Company desires to employ Executive as its Vice President,
Chief Financial Officer, and Treasurer, and Executive desires to
accept such employment with the Company.
B.
The Company desires to provide to Executive certain compensation,
stock option grants, and benefits in connection with his
employment, and the Company further desires to provide Executive
with certain additional compensation in the event of a change of
control event at the Company. The Company and Executive, by
this Agreement, desire to set forth the details of such
compensation arrangements.
AGREEMENT
1.
Compensation and Benefits . The compensation and
benefits payable and provided to Executive for services rendered
shall include the following:
1.1
Base salary of $265,000 per year, payable bi-weekly in accordance
with the Company’s normal payroll practices.
1.2
Car allowance of $10,000 per year, payable bi-weekly in accordance
with the Company’s normal payroll practices.
1.3
Target annual bonus of 60% of base salary based upon plan metrics,
the Company’s performance, and individual contribution.
Bonus will have a cap equal to 120% of base salary.
1.4
Grant of stock options for 250,000 shares of Company stock with a
strike price equal to market closing price as of the date that
Executive begins working for the Company. The stock options
will vest ratably over the next five years and will be subject to
the terms of the Company’s stock option plan.
1.5
Executive will be eligible to participate in the Company’s
401(k) plan, health insurance, disability and life insurance, and
any other welfare benefit plan, program, or fringe benefit of
employment made available to similarly situated employees that may
be in effect from time to time.
2.
Change of Control Benefit .
2.1
In the event of a Change of Control event (defined below), Company
will pay to Executive the Change of Control Payment set forth in
this Agreement. The Change of Control Payment is payable only
upon a Change of Control and a termination of Executive’s
Employment within three (3) months following such Change of Control
(whether through voluntary resignation or involuntary
termination).
2.2
The Change of Control Payment is equal to the sum of: (a) 200% of
Executive’s base salary in effect at the time of the Change
of Control, plus (b) 200% of Executive’s target bonus (or
average annual bonus of the most recent three (3) years if this is
larger). In addition, in the event of a Change of Control,
all unvested stock options will be immediately vested. Except
as provided in Section 3 of this Agreement, the Change of Control
Payment will be paid in one lump sum within fifteen (15) business
days following the date on which the Release Agreement required
pursuant to Section 4 of this Agreement becomes
irrevocable.
2.3
For purposes of this Agreement, “Change of Control”
means the occurrence of any of the following events, each of which
shall be determined independently of the others:
2.3.1
a transaction or series of transactions (other than an offering of
stock to the general public through a registration statement filed
with the Securities and Exchange Commission) whereby any
“person” or related “group” of
“persons” (as such terms are used in Sections 13(d) and
14(d)(2) of the Exchange Act) (other than the Company, any of its
Affiliates, any trustee or other fiduciary holding securities under
an employee benefit plan of the Company or any Affiliate, or any
“person” that, prior to such transaction, directly or
indirectly controls, is controlled by, or is under common control
with, the Company) becomes a “beneficial owner” (as
such term is used in Rule 13d-3 promulgated under the Exchange Act)
of fify percent (50%) or more of the stock of the Company entitled
to vote in the election of directors; or
2.3.2
the Company (whether directly or indirectly involving one or more
intermediaries) completes a (1) merger, consolidation,
reorganization, or business combination, or (2) sale or other
disposition of all or substantially all of its assets in any single
transaction or series of related transactions, or (3) the
acquisition of assets or stock of another entity, in each case
excepting any transaction:
2.3.2.1 which results in the
Company’s voting securities outstanding immediately before
the transaction continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
Company or the person that, as a result of the transaction,
controls, directly or indirectly, the Company or owns, directly or
indirectly, all or substantially all of the Company’s assets
or otherwise succeeds to the business of the Company (the Company
or such person, the “Successor Entity”))
directly or indirectly, at least a
majority of the combined voting power of the Successor
Entity’s outstanding voting securities immediately after the
transaction, and
2.3.2.2
after which, no Person or group beneficially owns voting
securities representing 50% or more of the combined voting power of
the Successor Entity; provided, however, that no Person or group
shall be treated for purposes of this provision as beneficially
owning 50% or more of the combined voting power of the Successor
Entity solely as a result of the voting power held in the Company
prior to the consummation of the transaction.
2.3.3
Notwithstanding the foregoing, if, immediately after the occurrence
of any event enumerated above, the Continuing Directors control the
majority of the Board of Directors of the Company (or, in the case
of any merger or combination in which the Company is not the
surviving entity, continue to constitute a majority of the board of
directors of such successor entity), such event shall not
constitute a Change of Control for purposes of this Agreement until
such time as (a) the Continuing Directors no longer constitute a
majority of the Board of Directors of the Company (or t
