Document:

Exhibit 10.5

TRADEMARK
LICENSE AGREEMENT

This Trademark License
Agreement (“Agreement”) is entered into as of December 20, 2006 (“Effective
Date”) by and between Welspun Pipes, Inc., a Delaware corporation (“Licensor”)
and Welspun-Lone Star Tubulars LLC, a limited liability company (“JV”).

WHEREAS, Licensor is a
licensee of the Licensed Mark (as defined below) and has the power to
sublicense the Licensed Mark to JV;

WHEREAS, pursuant to that
certain Limited Liability Company Agreement dated December 20, 2006
between Licensor and Lone Star Technologies, Inc. (“LST”) (“JV
Agreement”), Licensor and LST will form the JV to, among other things,
engage in the manufacture and sale of spiral weld pipe;

WHEREAS, pursuant to the
JV Agreement, Lone Star Steel Company, L.P. (“LSS,” and collectively
with LST, “Lone Star”) and JV have entered into that certain Trademark
License Agreement (“Lone Star License Agreement”) dated on or about the
date hereof, whereby LSS has agreed to grant JV a non-exclusive license to use
certain Marks (the “Lone Star Marks”) in connection JV’s business and
products on the terms and conditions set forth in the Lone Star License
Agreement; and

WHEREAS, in accordance
with the JV Agreement and in partial consideration of the amounts paid by the
parties pursuant to the JV Agreement, Licensor agrees to grant JV, and JV
desires to receive from Licensor, a non-exclusive sublicense to use the
Licensed Mark in connection with JV’s business and products on the terms and
conditions set forth in this Agreement.

NOW THEREFORE, in
consideration of the mutual covenants and promises contained herein, the
parties hereto agree as follows:

1.             Definitions.

1.1           “Affiliate” of a
specified Person (the “Specified Person”) means any Person (a) who,
directly or indirectly, controls, is controlled by, or is under common control
with the Specified Person, (b) who, directly or indirectly, owns or controls
more than fifty percent (50%) of the Specified Person’s outstanding voting securities
or equity interests, (c) of whom the Specified Person, directly or indirectly,
owns or controls more than fifty percent (50%) of the outstanding voting
securities or equity interests or (d) who has the right, directly or
indirectly, to appoint or elect more than fifty percent (50%) of the Specified
Person’s board of directors or equivalent managing body.

1.2           “Business Day”
means a day on which banks are open for general banking business in Dallas,
Texas, the United States of America (excluding Saturdays, Sundays and public
holidays).

 1
 

 

1.3           “Licensed Mark”
means the mark the set forth in Exhibit A attached hereto and all
trademark and service mark applications and registrations for such mark
worldwide.  The parties acknowledge and
agree that Exhibit A may be amended as agreed upon by both parties in
writing from time to time during the term of this Agreement.

1.4           “Person” means
any individual, partnership, limited liability company, corporation,
cooperative, joint venture, trust, estate or other entity.

1.5           “Territory”
means worldwide.

2.             License Grant.

2.1           License Grant.  Subject to the terms and conditions of this
Agreement, Licensor hereby grants to JV a limited, non-exclusive,
non-transferable, non-sublicensable, royalty-free, fully-paid up, perpetual
(subject to Section 5.2) sublicense to use the Licensed Mark in
connection with JV’s business and products (including, without limitation, as
JV’s corporate name, tradename, trademarks, service marks and logos, or any
part of any of the foregoing) solely
in the Territory; provided that the Licensed Mark are used only: (a) in
combination with the Lone Star Marks to identify JV as the source of products
manufactured and sold by JV (any such combination shall be referred to in this
Agreement as a “JV Mark”); and (b) in connection with the manufacture
and sale of helical submerged arc welded steel line pipe (including such line
pipe used for water lines) manufactured at JV facilities located in North
America.

2.2           Licensor’s Right to
Sublicense.  Licensor hereby
represents, warrants and covenants that:

(a)           one or more of its
Affiliates are the full and absolute owners of the Licensed Mark;

(b)           it has, and for the
duration of this Agreement will maintain, licenses from each of the owners of
the Licensed Mark, wherein all such licenses cumulatively permit Licensor to
grant the rights and sublicenses granted under this Agreement according to the
terms and conditions set forth in this Agreement; and

(c)           it is in possession of
documentation evidencing to the reasonable satisfaction of Lone Star that
Licensor has been granted licenses permitting Licensor to sublicense the
Licensed Mark in accordance with subsection (b), and will reasonably provide
all such evidence to Lone Star upon request.

3.             Ownership.

3.1           Licensor acknowledges
that (a) as between Licensor and JV, JV owns all rights, title and interest in
and to the JV Marks, (b) except as set forth herein, JV has no

 2
 

 

rights, title or interest
in or to the JV Marks and (c) all use of the JV Marks by JV shall inure to the
benefit of JV.

3.2           JV acknowledges that
(a) as between Licensor and JV, Licensor (and/or its Affiliates) owns all
rights, title and interest in and to the Licensed Mark, (b) except as set forth
herein, JV has no rights, title or interest in or to the Licensed Mark and (c)
all use of the Licensed Mark by JV shall inure to the benefit of Licensor
(and/or its Affiliates).

3.3           JV agrees not to (and
agrees not to permit or assist any third party to): (a) challenge, contest or
make any claim adverse to ownership of any Licensed Mark by Licensor and/or its
Affiliates or the validity of any Licensed Mark or the sublicense granted to JV
in Section 2 above; (b) except as expressly permitted by the terms of this
Agreement, attempt to register any Licensed Mark or any mark confusingly
similar thereto; or (c) take any action that might harm or tarnish the
reputation or goodwill of any Licensed Mark or Licensor.  If, at any time, JV acquires any rights,
title or interest in, or registrations or applications for, the Licensed Mark,
JV agrees to immediately, upon Licensor’s request and at no expense to
Licensor, assign all such rights, title, interest, registrations and
applications to Licensor (or, as applicable, its Affiliates), along with any
and all associated goodwill.

3.4           Licensor agrees to
cooperate with Lone Star and JV to file applications for, prosecute, and
maintain the registration of JV Marks in each North American country and other
countries as approved from time to time by both of Licensor and Lone Star.  Upon any termination of this Agreement
pursuant to Section 5.2: (a) JV shall abandon any and all JV Marks
incorporating the Licensed Mark and any rights therein (including, without
limitation, all contractual, statutory and common law rights); and (b) Licensor
and JV will cooperate with Lone Star to withdraw any pending applications for
the registration of any JV Marks, cancel any JV Marks registered pursuant to
this Section, and otherwise take any and all actions reasonably necessary to
effectuate JV’s abandonment of any and all JV Marks incorporating the Licensed
Mark.

4.             Quality Control
Standards; Compliance with Laws.

4.1           For Licensor’s
trademark quality control purposes, upon Licensor’s prior written request, JV
shall furnish to Licensor a sample of products and materials bearing the
Licensed Mark that JV then currently distributes or intends to distribute.  If Licensor reasonably and in good faith
believes the samples bearing the Licensed Mark do not meet the Minimum Quality
Threshold (as defined below), Licensor shall notify JV in writing, and JV shall
have a reasonable period of time (but in no event more than 30 days from the
date of receipt of notice) to make the changes and/or corrections that the
parties mutually agree are necessary to protect the Licensed Mark.  For purposes of this Agreement, “Minimum
Quality Threshold” shall mean, with respect to each product bearing the
Licensed Mark, the level of quality necessary to comply: (a) in all material
respects, with the respective specifications and technical requirements of JV’s
customers applicable to such product; and (b) in all respects, with all
statutory and regulatory standards applicable to such product, including
without limitation any and all laws or

 3
 

 

regulations applicable to
such product at any of its intended post-manufacture place of use.

4.2           Manner of Use of
Licensed Mark.  JV agrees to use the
Licensed Mark only in accordance with the provisions of Section 2 and in the
form and manner and with appropriate legends as may be prescribed by Licensor
in writing from time to time, and (except as otherwise expressly provided
herein) not to use any other trademarks or service marks in combination with
any Licensed Mark so as to create a composite mark without the prior written
approval of Licensor.  JV shall use each
Licensed Mark followed by the “®” or “TM” or “SM” symbols as directed by
Licensor in writing from time to time, where appropriate and practical.

4.3           Compliance with Laws.  JV agrees to comply with all applicable
local, state, federal and foreign laws relating to its activities under this
Agreement.

5.             Term and Termination.

5.1           Term.  This Agreement shall commence as of the
Effective Date and shall continue in effect in perpetuity, unless terminated in
accordance with the terms and conditions set forth below.

5.2           Termination.

(a)           By Licensor.  Licensor may terminate this Agreement in the
event JV breaches any material term of this Agreement and fails to cure such
breach within thirty (30) days after receipt of written notice from Licensor
describing such breach.

(b)           Termination of the
JV Agreement.  In the event the JV
Agreement is terminated for any reason, this Agreement shall immediately
terminate and the sublicenses granted pursuant to Section 2 shall also
immediately terminate except as set forth in subsection (d).

(c)           Reduction in Welspun’s
Ownership in JV.  In the event that
Welspun’s (and its Affiliates’) Percentage Interest (as defined in the JV
Agreement) is twenty percent (20%) or less, this Agreement shall immediately
terminate and the licenses granted pursuant to Section 2 shall also immediately
terminate except as set forth in subsection (d).

(d)           Limited Use of
Licensed Mark after Termination of Agreement.  In the event of termination of this Agreement
pursuant to this Section 5.2, JV may continue to use the Licensed Mark in
accordance with Section 2 and only on products manufactured prior to the
termination of this Agreement and used to fulfill orders and/or contracts
entered into by JV prior to termination of this Agreement.

 4
 

 

5.3           Survival.  In the event of any termination of this
Agreement: (a) the license granted under this Agreement shall immediately
terminate; and (b) Sections 1, 3, this 5.3, 7, 8 and 9 shall survive such
termination.

6.             Protection and
Enforcement.

Enforcement.  JV agrees to reasonably cooperate with and
assist Licensor in protecting and defending the Licensed Mark and shall
promptly notify Licensor in writing of any infringements, claims or actions by
others in derogation of the Licensed Mark of which JV becomes aware.  JV shall not take any action on account of
any such infringement, claim or action without the prior written consent of
Licensor, which consent shall not be unreasonably withheld or delayed.

7.             Warranty Disclaimer.

THE LICENSED MARK
IS BEING SUBLICENSED HEREUNDER “AS IS.” 
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, LICENSOR MAKES NO
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE LICENSED
MARK, AND LICENSOR HEREBY DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES, EXPRESS
OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, STATUTORY OR OTHERWISE,
INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OR REPRESENTATION AS TO VALIDITY,
ENFORCEABILITY, OWNERSHIP, NON-INFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.

8.             Limitation of Liability.

NOTWITHSTANDING
ANYTHING ELSE IN THIS AGREEMENT OR OTHERWISE, JV HEREBY ACKNOWLEDGES AND AGREES
THAT LICENSOR SHALL NOT BE RESPONSIBLE OR LIABLE TO JV OR ANY OTHER THIRD PARTY
WITH RESPECT TO THIS AGREEMENT OR ANY SUBJECT MATTER OF THIS AGREEMENT
(INCLUDING, WITHOUT LIMITATION, THE LICENSE OR USE OF THE LICENSED MARK),
WHETHER BASED IN CONTRACT, TORT (INCLUDING NEGLIGENCE AND STRICT LIABILITY) OR
OTHERWISE, FOR ANY (A) INCIDENTAL, CONSEQUENTIAL, INDIRECT, SPECIAL, OR
PUNITIVE DAMAGES OF ANY KIND, (B) LOSS OF REVENUE OR PROFITS, LOSS OF BUSINESS
OR OTHER FINANCIAL LOSS OR (C) COST OF PROCUREMENT OF SUBSTITUTE MARKS; EVEN IF
EITHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND EVEN IF
THE REMEDIES PROVIDED FOR IN THIS AGREEMENT FAIL OF THEIR ESSENTIAL PURPOSE.

 5
 

 

9.             General.

9.1           Waiver of Default.

A waiver of any provision
of this Agreement must be in writing signed by both parties.  No consent or waiver, express or implied, by
either party hereto with respect to any breach or default by the other party
hereunder shall be deemed or construed to be a consent or waiver with respect
to any other breach or default by such other party of the same provision or any
other provision of this Agreement. 
Failure on the part of a party to complain of any act or failure to act
of the other party or to declare such party in default shall not be deemed or
constitute a waiver by a party of any rights hereunder.

9.2           Amendment.

This Agreement shall not
be altered, modified or changed except by an amendment approved in writing by
the parties hereto.

9.3           No Third Party
Rights.

None of the provisions
contained in this Agreement shall be for the benefit of or enforceable by any
third parties, including creditors of the JV. 
The parties hereto expressly retain any and all rights to amend this
Agreement as herein provided.

9.4           Severability.

In the event any
provision of this Agreement is held to be illegal, invalid or unenforceable to
any extent, the legality, validity and enforceability of the remainder of this
Agreement shall not be affected thereby and shall remain in full force and
effect and shall be enforced to the greatest extent permitted by law.

9.5           Binding Effect;
Assignment.

This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns.  JV may
not assign or transfer this Agreement without the prior written consent of
Licensor.  Licensor may freely assign or
transfer this Agreement and its rights and obligations hereunder without the
prior consent of JV.

9.6           Headings.

The headings of the
articles and sections of this Agreement are for convenience only and shall not
be considered in construing or interpreting any of the terms or provisions
hereof.

 6
 

 

9.7           Counterparts.

This Agreement may be
executed in several counterparts, all of which together shall constitute one
agreement binding on all parties hereto, notwithstanding that all the parties
have not signed the same counterpart.

9.8           Entire Agreement.

This Agreement, together
with all exhibits hereto, contain the entire agreement between the parties and
supersedes all prior writings or agreements with respect to the subject matter
hereof.

9.9           Arbitration.

Except as provided in
this Section 9.9, any
dispute arising out of or relating to this Agreement or the breach, termination
or validity hereof shall be resolved by binding arbitration (the “Arbitration”)
conducted before a single arbitrator (the “Sole Arbitrator”) in London,
England, pursuant to the United Nations Commission on International Trade Law (“UNCITRAL”)
rules and administered by the London Court of International Arbitration (“LCIA”).  The language of the arbitration shall be
English.  Each Person involved in such
arbitration shall pay its own legal fees and expenses in connection with any
such arbitration and the Persons involved therein shall share equally the fees
and expenses of the LCIA and the Sole Arbitrator.  The Sole Arbitrator shall be an attorney
mutually agreed upon by the parties to the Arbitration or, if no agreement can
be reached, to be determined by the LCIA. 
All Arbitration proceedings and sessions shall be private and
confidential, and no one other than the parties and their legal representatives
may attend without the consent of the parties or by Order of the Sole
Arbitrator.  All information disclosed in
the course of any and all Arbitration proceedings and sessions shall be
maintained in strict confidence except to the extent disclosure of any such
information is required by Law.  The
prevailing party shall be entitled to any appropriate relief (including
monetary damages, if any), as well as reimbursement of all its actual costs
(including Sole Arbitrator’s fees and fees payable to the LCIA) and attorneys’
fees from the opposing party or parties. 
The decision of the Sole Arbitrator, and any award pursuant thereto,
shall be final, binding and conclusive on the Persons involved therein and not
be appealable on the merits.  Final
judgment on any such decision and any award may be entered by a court of competent
jurisdiction.  Notwithstanding the
foregoing, this Section 9.9 shall not prohibit any Person from
pursuing equitable relief (including immediate, preliminary and permanent
injunctive relief) to which it may be entitled in any court of competent jurisdiction
in order to preserve the status quo pending resolution of the dispute at issue.

9.10         Governing Law.

This Agreement, the
rights and obligations of the parties under this Agreement, and any claim or
controversy directly or indirectly based upon or arising out of this Agreement
or the transactions contemplated by this Agreement (whether based upon

 7
 

 

contact, tort or any other theory), including all
matters of construction, validity and performance, shall be governed by and
construed in accordance with the internal laws of the State of Delaware,
without regard to any conflict of laws provision that would require the
application of the law of any other jurisdiction.

9.11         Notices.

All notices and other
communications under this Agreement shall be in writing and shall be deemed
given (i) when delivered personally by hand (with written confirmation of
receipt), (ii) when sent by facsimile (with written confirmation of
transmission) or (iii) one Business Day following the day sent by
overnight courier (with written confirmation of receipt), in each case at the
following addresses and facsimile numbers (or to such other address or
facsimile number as a party may have specified by notice given to the other
party pursuant to this provision):

If to Welspun, to:

Welspun Pipes,
Inc. 

c/o Welspun Gujarat Stahl Rohren Limited

Village Vadadla 

Taluka Vagra 

Dahej Road 

Dist. Bharuch 

Gujarat, India

Facsimile: +91 22 2490-8020/21

Attn: Executive Director

With a copy to:

Majmudar & Co.

96, Free Press House

Free Press Journal Road

Nariman Point

Mumbai (Bombay) 400 021

India

Facsimile: +91 22 6630-7252

Attn: Akil Hirani

 8
 

 

If to JV, to:

Welspun-Lone Star
Tubulars LLC 

c/o Lone Star Technologies, Inc.

15660 N. Dallas Pkwy., Suite 500

Dallas, TX 75248

United States of America

Facsimile:  +1 972-770-6471

Attn:  General Counsel

With a copy to:

Weil, Gotshal
& Manges LLP

200 Crescent Court, Suite 300

Dallas, Texas 75201

Facsimile:  +1 214-746-7777

Attn: Mary R. Korby

9.12         Expenses.

Except as otherwise
expressly provided in this Agreement, each party will bear and be responsible
for costs and expenses incurred by it in connection with the negotiation,
execution and performance of this Agreement and the transactions contemplated
hereby.

9.13         Further Assurances.

The parties each agree to
execute and deliver such other documents or agreements and to take such other
action as may be reasonably necessary or desirable for the implementation of
this Agreement and the consummation of the transactions contemplated hereby.

(Signature Page Follows)

 9

 

 

IN WITNESS WHEREOF, the parties have caused this
Agreement to be signed by their duly authorized representatives.

THIS AGREEMENT CONTAINS A BINDING ARBITRATION
PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.

	
  

  	
   

  	
  WELSPUN PIPES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Akhil Jindal

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Akhil Jindal

  
	
   

  	
   

  	
   

  	
  Title: Authorized Signatory

  

 

 

IN WITNESS WHEREOF, the parties have caused this
Agreement to be signed by their duly authorized representatives.

THIS AGREEMENT CONTAINS A BINDING ARBITRATION
PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.

	
  

  	
   

  	
  WELSPUN-LONE STAR TUBULARS LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Nikhil Amin

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Nikhil Amin

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title: Acting PresidentExhibit 10.1

Compensation
and Change of Control Agreement

This Compensation
and Change of Control Agreement (this “Agreement”) dated as of this 18th 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 the
successor entity, if applicable), or (b) the Board of Directors replaces the
Chief Executive Officer of the Company (or the successor entity, if applicable)
that was in place prior to the occurrence of the applicable change of control
event. “Continuing Directors” for this purpose means the members of the Board
of Directors of the Company on the date of this Agreement, provided that any
person becoming a member of the Board of Directors of the Company subsequent to
such date whose nomination for election was supported by a majority of the
directors who at the time of the election or nomination for election comprised
the Continuing Directors shall be considered to be a Continuing Director.

2.3.4        For the avoidance of doubt, a Change of
Control shall not mean any merger, consolidation, reorganization, business
combination, sale, or acquisition transaction between the Company and Applied
Digital Solutions, Inc., whether directly or through controlled intermediaries,
regardless of how structured.

3.             Timing of Payment.

Notwithstanding
any other provision in this Agreement, if any amount payable under this
Agreement is subject to Section 409(A) of the Internal Revenue Code of 1986, as
amended (the “Code”), then the payment of such amount shall be restructured or
delayed, as necessary, in a manner that preserves as far as practically
possible the form and timing of the benefit and ensures the amount is paid in
compliance with Code Section 409(A).  Any
delayed payments shall be aggregated and, pending distribution, held in a

 

trust or other similar
fund if such treatment shall be determined to be permissible under applicable
law and, in any event, shall be paid in a lump sum as of the first day of the
first permissible month of distribution. 
Provided, however, that the Company does not by operation of this
requirement assume responsibility for compliance with Code Section 409(A).  The Executive is responsible for any
additional tax, interest, or penalties under Code Section 409(A) arising out of
payment under this Agreement.

4.             Release Agreement.

In order to
receive the Change of Control Payment, Executive shall execute a release of any
known or unknown claims that he may have against the Company.  The release shall be in a form reasonably
requested by the Company.  In accordance
with law, Executive shall be given a prescribed period of time to consider
whether to sign the Release Agreement and may revoke the Release Agreement
during the stipulated period following delivery of the signed Release
Agreement.

5.             Cap on Payments.

5.1           General Rules.  The Code may place significant tax burdens on
Executive and the Company if the total payments made to Executive due to a
Change of Control exceed prescribed limits. 
In order to avoid this excise tax and the related adverse tax
consequences for the Company, by signing this Agreement Executive agrees that
the Change of Control Payment will not exceed an amount equal to the Executive’s
Cap.

5.2           Special Definitions.  For purposes of this Section 5, the following
specialized terms will have the following meanings:

5.2.1        “Base Period Income”
is an amount equal to Executive’s “annualized includable compensation” for the “base
period” as defined in Sections 280G(d)(1) and (2) of the Code and the
regulations adopted thereunder. 
Generally, Executive’s “annualized includable compensation” is the
average of Executive’s annual taxable income from the Company for the “base
period,” which is the five calendar years prior to the year in which the Change
of Control occurs.  These concepts are
complicated and technical and all of the rules set forth in the applicable
regulations apply for purposes of this Agreement.

5.2.2        “Cap” or “280G Cap” shall
mean an amount equal to 2.99 times Executive’s “Base Period Income”  This is the maximum amount which Executive
may receive without becoming subject to the excise tax imposed by Section 4999
of the Code or which Company may pay without loss of deduction under Section
280G of the Code.

5.2.3        “Basic Payments” include
any “payments in the nature of compensation” (as defined in Section 280G of the
Code and the regulations adopted thereunder), made pursuant to this Agreement
or

 

otherwise, to or for Executive’s benefit, the receipt
of which is contingent on a Change of Control and to which Section 280G of the
Code applies.

5.3           Calculating the Cap.  If the Company believes that these rules will
result in a reduction of the payments to which Executive is entitled under this
Agreement, it will so notify Executive as soon as possible.  The Company will then, at its expense, retain
a “Consultant” (which shall be a law firm, a certified public accounting firm,
and/or a firm of recognized executive compensation consultants) to provide a
determination concerning whether the Basic Payments exceed the limit discussed
above (the “Determination”).  The Company
will select the Consultant.  At a
minimum, the Determination required by this Section must set forth the amount
of Executive’s Base Period Income, the value of the Basic Payments, and the
amount and present value of any excess parachute payments.  If the Determination states that there would
be an excess parachute payment, Executive’s payments under this Agreement will
be reduced to the extent necessary to eliminate the excess.  If the Consultant selected to provide the
Determination so requests, a firm of recognized executive compensation
consultants selected by the Company (which may, but is not required to be, the
Consultant) shall provide an opinion, upon which such Consultant may rely, as
to the reasonableness of any item of compensation as reasonable compensation
for services rendered before or after the Change of Control.  If the Company believes that Executive’s
Basic Payments will exceed the limitations of this Section, it will nonetheless
make payments to Executive, at the times provided above, in the maximum amount
that it believes may be paid without exceeding such limitations.  The balance, if any, will then be paid after
the opinions called for above have been received.  If the amount paid to Executive by the
Company is ultimately determined, pursuant to the Determination or by the
Internal Revenue Service, to have exceeded the limitation of this Section,
Executive shall repay the excess promptly on demand of the Company.  If it is ultimately determined, pursuant to
the Determination or by the Internal Revenue Service, that a greater payment
should have been made to Executive, the Company shall pay Executive the amount
of the deficiency, together with interest thereon from the date such amount
should have been paid to the date of such payment, so that Executive will have
received or be entitled to receive the maximum amount to which Executive is
entitled under this Agreement.  As a
general rule, the Determination shall be binding upon Executive and the
Company.  Section 280G and the excise tax
rules of Section 4999, however, are compex and uncertain and, as a result, the
Internal Revenue Service may disagree with the Consultant’s conclusions.  If the Internal Revenue Service determines
that the Cap is actually lower than calculated by the Consultant, the Cap will
be recalculated by the Consultant.  Any
payment over that revised Cap will then be repaid by Executive to the Company.  If the Internal Revenue Service determines
that the actual Cap exceeds the amount calculated by the Consultant, the
Company shall pay Executive any shortage.

5.4           Effect of Repeal or
Inapplicability.  In the event that
the provisions of Section 280G and 4999 of the Code are repealed without succession,
this Section shall be of no further force or effect.  Moreover, if the provisions of Sections 280G
and 4999 of the Code do not apply to impose the excise tax to payments under
this Agreement, then the provisions of this Section shall not apply.

 

6.             Additional
Provisions.

6.1           This Agreement shall be binding upon
the parties, their successors and assigns.

6.2           No provision of this Agreement may be
modified, waived, or discharged unless such is agreed to in writing and signed
by both parties.  No waiver by either
party of any provision or condition shall be deemed a waiver at the same or any
prior or subsequent time of any similar or dissimilar provision or condition.

6.3           This Agreement may only be amended by
a written agreement executed by the parties. 
No amendment that will result in a violation of Section 409A of the
Code, or any other provision of applicable law, may be made to this Agreement
and any such amendment shall be void.

6.4           Any payments provided for hereunder
shall be subject to applicable withholding requirements under federal, state,
or local law, and standard payroll deductions.

6.5           Nothing in this Agreement shall be
construed as an offer or commitment by the Company to continue to employ
Executive for any period of time.  Executive
acknowledges and agrees that his employment with the Company shall be on the
basis of “at will” employment relationship.

6.6           This Agreement shall be construed in
accordance with and governed by the laws of the State of Florida.  Venue for any cause of action arising under
this Agreement shall be in Palm Beach County, Florida, USA.

This Agreement is
signed as of the date set forth above.

DIGITAL ANGEL CORPORATION

	
      /s/ Kevin N.
  McGrath             

  	
   

  	
   

  	
  /s/ Thomas J. Hoyer

  	
   

  	
   

  
	
  By:       Kevin
  N. McGrath

  	
   

  	
  Thomas J. Hoyer

  
	
  Title: President
  and CEO

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00114-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00114-of-00352.parquet"}]]