**EXHIBIT10.1**

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**EMPLOYMENTAGREEMENT**

THIS AGREEMENT(“Agreement”) made and entered into as of this 8th day of March,2002, by and between DIGITAL ANGEL CORPORATION, a Delaware corporation(“Company”) and RANDOLPH K. GEISSLER (“Employee”).

**BACKGROUND**

 

Company presently employsEmployee as its president and chief executive officer pursuant to a writtenAgreement dated as of September 8, 2000. Company and Employee desire to amend such Agreement and further desirethat such employment continues upon the terms and conditions set forth in thisAgreement.

**TERMS AND CONDITIONS**

 

1.             Employment. Company hereby employs Employee, and Employee hereby accepts suchemployment by Company, on the terms and conditions set forth below.

2.             Capacity. Employee shall serve as Company’s president and chief executiveofficer.  Employee shall perform suchservices for Company and its subsidiaries and affiliates as Company’s board ofdirectors shall direct from time to time. However, no such services shall be of a nature which are notcommensurate with, and/or are beneath the dignity of, Employee’s title.

3.             Term. Company’s employment of Employee under this Agreement shall be for aninitial term of five years commencing on March 8, 2002 and ending on March 7,2007.  

 

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The term of Employee’semployment under this Agreement shall automatically be renewed for successiveadditional one year terms on each anniversary of the commencement of Employee’semployment under this Agreement, beginning with the March 8, 2003 anniversarydate, each of which terms shall be added at the end of the then existing term(taking into account any prior extensions or failures to extend), unless eitherparty notifies the other at least 30 days prior to an anniversary date of thisAgreement.  For example, unless eitherparty notifies the other to the contrary on or before February 6, 2003, theterm of this Agreement shall be extended from March 8, 2007 to March 7,2008.  For further example, and assumingthe term of this Agreement has been extended to March 7, 2008, if one partynotifies the other that it does not desire to extend the term of this Agreementfor an additional year and such notice is given on or before February 6, 2004,the term of this Agreement shall not be extended from March 8, 2008 to March 7,2009.  Notwithstanding the foregoing,the term of this Agreement may end prior to the termination date determinedunder this paragraph 3 as provided in paragraphs 9, 10, 11 and 12.

4.             Service While Employed.  Employee agrees to devote his best efforts, his full diligence,and substantially all of his business time, to his duties hereunder and shallnot engage, either directly or indirectly, in any business or other activitywhich is competitive with or adverse to the interests or the business of Company.  Employee may engage in other businessactivities provided that they do not interfere with the performance of hisduties described herein.

5.             Items Furnished and Relocation.  Company shall furnish Employee with suchprivate office, an executive assistant, secretarial assistance, and such otherfacilities, equipment and services suitable to his position, adequate toperform his duties hereunder, and 

 

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consistent with pastpractices.  Without his consent,Employee shall not be relocated from Hudson, Wisconsin, and his office shallremain in St. Paul, Minnesota.

6.             Compensation, Vacations and Reimbursement.  As partial compensation for his services toCompany, Company agrees to pay Employee an annual salary in regular monthly orother agreed upon installments of not less than $250,000 and an annual bonus ofnot less than $50,000.  Employee shallalso be entitled to receive such bonuses (in addition to that required underthe preceding sentence), incentive compensation, and other compensation, ifany, as Company’s board of directors, executive committee, compensationcommittee, or other designated committee shall award Employee from time to timewhether in cash, Company stock, stock options, other stock based compensation,other form of remuneration, or any combination of the foregoing.  In addition, Company shall pay Employeemonthly payments of $5,000 each as a flexible perquisite allowance to be usedby Employee for such purposes as he shall determine.  All such compensation shall be subject to legally required incomeand employment tax withholding. Employee shall be entitled to paid vacations, reimbursement for allreasonable business expenses, and an automobile allowance in accordance withpast practices.

7.             Other Benefits. In addition to his compensation described in paragraph 6 above, Employeeshall be entitled to participate in such bonus, profit sharing, deferredcompensation and pension plans of Company for which he is eligible.

8.             Welfare and Fringe Benefits.  In addition to his compensation described inparagraph 6 and the benefits described in paragraph 7 above, Employee shall beentitled to participate in such welfare and fringe benefits plans and programsof the Company for which he is eligible.

 

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9.             Death and Disability.  If Employee dies during the term of this Agreement, hisemployment shall be deemed to have been terminated as of the last day of themonth in which his death occurs, and Company will pay to Employee’s personalrepresentative all salary and other compensation due Employee through the endof such month.  If Employee becomespermanently disabled so that he cannot perform his duties hereunder, asdetermined by a physician selected by or acceptable to Company, his employmentshall be deemed to have been terminated as of the last day of the month inwhich such determination is made, and he will receive his salary and othercompensation through the end of such month. For purposes of the foregoing computations, Employee shall be deemed tohave earned the same percentage of his minimum annual bonus for such employmentyear as the number of days in the employment year through the date hisemployment is deemed to terminate is of 365.

10.           Retirement.  From and after the time Employee attains age65, he may retire at any time by notifying Company at least 120 days prior tohis retirement date or be retired by Company upon at least two years notice.

11.           Default.  In the event that Company fails to perform amaterial provision of this Agreement and such failure continues for 30 daysafter notification from Employee, the Employee may terminate this Agreement bynotice to the Company.  Company mayterminate this Agreement upon Employee’s material default.  Employee’s material default shall mean (a)Employee’s willful and continued failure to perform the requirements of hisduties hereunder (other than as a result of total or partial incapacity due tophysical or mental illness) for 30 days after a written demand is deliveredto  Employee on behalf of Company whichspecifically identifies the manner in which it is alleged that Employee has notsubstantially performed his 

 

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duties, (b) Employee’sdishonesty in the performance of his duties hereunder, (c) an act or acts onEmployee’s part involving moral turpitude or constituting a felony under thelaws of the United States or any state thereof, (d) any other act or omissionwhich materially injures the financial condition or business reputation ofCompany or any of its subsidiaries or affiliates, or (e) Employee’s materialbreach of his non-compete and confidentiality obligations under paragraphs 4and/or 13 of this Agreement, respectively. Any termination shall be without prejudice to any rights or remedieswhich Employee or Company may have.

12.           Change in Control.  Notwithstanding any other provision of thisAgreement, should a Change of Control (as defined below) occur, Employee, athis sole option and discretion, may terminate his employment under thisAgreement at any time within one year after such change of control upon 15 daysnotice.  In the event of suchtermination, Company shall pay to Employee a severance payment equal to threetimes the base amount as defined in Section 280G(b)(3) of the Internal RevenueCode of 1986, as amended (“Code”) minus $1.00 which shall be payable no laterthan one month after the effective date of the Employee’s termination ofemployment.  In addition, in the eventof a Change of Control, all outstanding stock options held by Employee shallbecome fully exercisable (to the extent not already exercisable).  For purposes of this Agreement, a Change inControl shall be deemed to occur (a) if any person, as such term is used inSections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934 (“ExchangeAct”), is or becomes the “beneficial owner” (as defined in Rule 13d-3promulgated under the Exchange Act), directly or indirectly, of securities ofCompany representing 20% or more of the combined voting power (i) of Company’sthen outstanding securities or (ii) on a fully diluted basis, (b) upon thefirst purchase of the common stock of 

 

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Company pursuant to atender or exchange offer (other than a tender or exchange offer made byCompany), (c) upon the approval by Company’s stockholders of a merger orconsolidation, a sale or disposition of all or substantially all of Company’sassets or a plan of liquidation or dissolution of Company, or (d) if, duringany period of 2 consecutive years, individuals who at the beginning of suchperiod constitute the board of directors of Company cease for any reason toconstitute at least a majority thereof, unless the election or nomination forthe election by Company’s stockholders of each new director was approved by avote of at least 2/3 of the directors then still in office who were directorsat the beginning of the period. Notwithstanding the foregoing, a Change in Control shall not be deemedto occur if Company either merges or consolidates with or into another companyor sells or disposes of all or substantially all of its assets to anothercompany, if such merger, consolidation, sale or disposition is in connectionwith a corporate restructuring wherein the stockholders of Company immediatelybefore such merger, consolidation, sale or disposition own, directly orindirectly, immediately following such merger, consolidation, sale ordisposition at least 80% of the combined voting power of all outstandingclasses of securities of the company resulting from such merger orconsolidation, or to which Company sells or disposes of its assets, insubstantially the same proportion as their ownership in Company immediatelybefore such merger, consolidation, sale or disposition.

13.           Nondisclosure; Return of Records.  Employee will not, except as authorized byCompany, publish or disclose to others, or use for his own benefit, orauthorize anyone else to publish or disclose or use, or copy or make notes ofany secret, proprietary, or confidential information or knowledge of data ortrade secrets of or relating to the business activities of Company which maycome to Employee’s knowledge during his employment with 

 

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the Company.  Upon termination of Employee’s employmentfor any reason, Employee will deliver to Company, without retaining any copies,notes or excerpts, all records, notes, data, memoranda, and all other documentsor materials made or compiled by Employee, or made available to him by Companyduring his employment, which are in Employee’s possession and/or control andwhich are the property of Company and/or which relate to Employee’s employmentor the business activities of Company.

14.           Binding Effect.  This Agreement shall be binding upon andinure to the benefit of Company and any successors or assigns of Company, andEmployee, his heirs, personal representatives and assigns, except that, unlessotherwise agreed to by Employee, Employee’s obligations to perform services andrights to receive payment therefore shall be nonassignable and nontransferable.

15.           Entire Agreement:  Modification.  This Agreement constitutes the entire agreement between theparties with respect to the subject matter and supersedes all prior orcontemporaneous agreements not set forth in this agreement.  This Agreement may not be modified otherthan by an agreement in writing signed by each of the parties.

16.           Waiver.   Any failure by either party to enforce anyprovision of this Agreement shall not operate as a waiver of such provision orany other provision.  Any waiver byeither party of any breach of any provision of this Agreement shall not operateas a waiver of any other breach of such provision or any other provision ofthis agreement.

17.           Severability.  The invalidity or unenforceability of anyparticular provision of this Agreement shall not effect the other provisions ofthis Agreement, and this Agreement shall be construed in all respects as ifsuch invalid or unenforceable provision were omitted.

 

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18.           Paragraph Headings. Paragraphheadings throughout this Agreement are solely for the convenience of theparties and shall not be construed as a part of any section or as modifying thecontents of any section.

19.           Governing Law.  This Agreement shall be governed andconstrued in accordance with the laws of the State of Minnesota.

20.           Notices.  All notices under this Agreement shall bepersonally delivered, sent certified mail, postage prepaid, to Company at itscorporate office and to Employee at his principal residence, or sent bytelecopy.

21.           Supplemental Compensation.  Upon the termination of Employee’semployment with Company for any reason other than Company’s termination due tohis material default, as described in paragraph 11, Employee shall be entitledto receive from Company 60 equal monthly payments, with the first such paymentdue on the second first day of the month after termination of employment, equalto 1/60 of his highest compensation (salary, bonus, and perks) over any oneyear period during his employment by Company. If Employee should die before all or any part of the above describedmonthly payments have been made, all payments or all remaining payments shallbe made to his designated beneficiary, if any, otherwise to his estate.  Notwithstanding the foregoing, the aggregateamount payable under this paragraph 21 shall be reduced, but not below zero, bythe amount, if any, payable under paragraph 12.

22.           Non-Competition.  During the period that Employee is entitledto receive payments under paragraph 21, Employee shall not engage, directly orindirectly, either on his own behalf or on behalf of any other person, firm,corporation or other entity, in any business competitive with the business ofCompany, in the geographic area in which Company is 

 

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conducting business atthe time of termination of Employee’s employment, or own more than 5% of anysuch firm, corporation or other entity. In addition, Employee must furnish Company with such information asCompany shall from time to time request in order to determine that Employee isin compliance with the requirements of the preceding provisions of thisparagraph 22.  The payments to bemade under paragraph 21 are conditioned upon Employee’s complying with theprovisions of this paragraph 22, and, in the event that such provisions are notcomplied with, Company may suspend such payments for any period of time inwhich Employee is not in compliance with the preceding provisions of thisparagraph 22.

23.           Company.  For purposes of paragraphs 4, 13, and 22 ofthis Agreement, the Company shall mean Digital Angel Corporation and allsubsidiaries and affiliates of it.

24.           Salary in Stock or Cash.  At least 10 days prior to each March 8 thatthis Agreement is in effect, Employee shall elect the amount or percentage, ifany, of his salary for the 12 month period beginning on that date which hedesires to be payable in company common stock (“Stock”).  To the extent Employee elects to have all orpart of his salary paid in Stock, the per share value of the Stock, which shallbe used to determine the number of shares payable for the employment year,shall be the average closing price for the last five business days prior to theapplicable each March 1, or, if the shares are not publicly traded, thevalue as determined by the board of directors. Any election shall be irrevocable. If Employee fails to make a timely election, his entire salary for theemployment year shall be paid in cash. Any shares of Stock payable to Employee shall be subject to suchtransfer restrictions as are required by applicable securities law and a legendto such effect shall be placed on the certificates.  Employee represents and warrants that any Stock which will bepaid to him pursuant to this paragraph 24 shall be 

 

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acquired for investmentpurposes and not for resale or distribution. Company shall include such Stock in any subsequent registration to theextent practical.  If any portion ofEmployee’s salary is paid in Stock, Employee shall tender to Company the amountrequired for income and employment tax withholding on any such payment.  If, and to the extent such amount is not sotendered, Company may withhold the number of shares of Stock equal to theamount such required withholding from the shares of Stock issued to Employee.  Notwithstanding the foregoing provisions ofthis paragraph 24 for the first year of his employment, all of hiscompensation shall be payable in cash unless otherwise elected by Employee onor before June 1, 2002.  Any suchelection made by Employee shall apply only to salary payable after suchelection is made.

25.           Other Matters.  For purposes of this paragraph 25, thefollowing words shall have the following respective meanings:

(a)           Gross Up Payment.  A payment that covers all federal and stateincome taxes payable by Employee, if any, which would not have been incurred byEmployee if another payment or transfer and the Gross Up Payment had not beenmade to Employee.

(b)           Changeof Control.  As defined in paragraph12 of this Agreement.

(c)           TriggeringEvent.  A Change of Control,termination of Employee’s employment for any reason other than due to hismaterial default, as described in paragraph 11, if he ceases to be Company’spresident and chief executive officer for any reason other than termination dueto his material default, as described in paragraph 11, or the sale byCompany of the stock of Company subsidiaries or the sale by 

 

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Company subsidiaries of assets, outside the ordinary course ofbusiness, having aggregate proceeds of at least $110 million.

Within 10 days of theoccurrence of a Triggering Event, Company shall pay to Employee the sum of$4,000,000.  If the Triggering Event isthe Employee’s death, such amount shall be paid to his designated beneficiary,if any, otherwise to his estate.  Companymay pay such amount in cash or in Company’s common stock or in a combination ofcash and common stock.  Common Stockused in payment shall be valued as described in paragraph 24.  The allocation of cash and stock forpayments provided pursuant to this paragraph 25 shall include at leastsufficient cash to cover the tax liability associated with such payments, andshall otherwise be structure to maximize tax efficiency to both Company andEmployee.

26.           Excise Gross Up.  In the event that any payment or benefitreceived or to be received by Employee under this Agreement and/or underanother plan of or agreement with Company is subject to the excise tax (“ExciseTax”) under Section 4999 of the Internal Revenue Code of 1986, as amended(“Code”), Company shall pay Employee an amount (“Excise Gross Up Payment”) thatcovers all Excise Taxes incurred or to be incurred by Employee because of anysuch payment or benefit and all federal and state income taxes and Excise Taxeson the Excise Gross Up Payment and which, therefore, will place Employee in thesame position that he would have been in had no such payment or benefit beensubject to the Excise Tax.  The ExciseTax Gross Up Payment (or portion thereof) shall be made upon the earlier of theimposition of any Excise Tax upon Employee or his payment of any Excise Tax.

27.           Work Product. Employee shallpromptly disclose to Company all inventions made by Employee during the termhereof, assign such inventions to Company, and 

 

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execute such documents asare required for Company to obtain patent and/or copyright protection.

28.           Effect of Amendment.  This Agreement shall supersede allagreements between the parties relating to Employee’s employment by Company.

IN WITNESS WHEREOF, theparties have duly executed this Agreement as of the day and year first abovewritten.

 
|   |   |   |   |   |   |   | DIGITAL ANGEL CORPORATION |                 |
|--------|--------|--------|--------|--------|--------|--------|---------------------------|----------------------|
|   |   |   |   |   |   |   |                      |                 |   |   |   |   |   |
|   |   |   |   |   |   |   | By:                       |                 |   |   |
|   |   |   |   |   |   |   | Title:                    |                 |   |   |
|   |   |   |   |   |   |   |                      | “Company”  |   |   |   |   |
|   |   |   |   |   |   |   |                      |                 |   |   |   |   |   |
|   |   |   |   |   |   |   |                      |                 |   |
|   |   |   |   |   |   |   | Randolph K. Geissler      |                 |   |   |   |
|   |   |   |   |   |   |   |                      |                 |   |   |   |   |   |
|   |   |   |   |   |   |   |                      | “Employee” |   |   |   |   |
|   |   |   |   |   |   |   |                      |                 |   |   |   |   |   |

 

 

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