Document:

Filed by Bowne Pure Compliance

Exhibit 4.6

	 	 	 
	RECORDATION REQUESTED BY:
     
MILE HIGH BANKS
     
DTC BRANCH
     
8400 E. CRESCENT PKWY #150
     
GREENWOOD VILLAGE, CO 80111
	 	 
	 
	 	 
	WHEN RECORDED MAIL TO:
     
MILE HIGH BANKS
     
DTC BRANCH
     
8400 E. CRESCENT PKWY #150
     
GREENWOOD VILLAGE, CO 80111
	 	 
	 
	 	 
	SEND TAX NOTICES TO:
     
NETREIT, A CALIFORNIA CORPORATION
     
365 S. RANCHO SANTA FE ROAD, SUITE 300
     
SAN MARCOS, CA 92078

	 	FOR RECORDER’S USE ONLY

DEED OF TRUST

MAXIMUM PRINCIPAL AMOUNT SECURED. The Lien of this Deed of Trust shall not exceed at any one time
$6,597,500.00 except as allowed under applicable Colorado law.

THIS DEED OF TRUST is dated July 9, 2008, among NETREIT, A CALIFORNIA CORPORATION, whose address
is 365 S. RANCHO SANTA FE ROAD, SUITE 300, SAN MARCOS, CA 92078 (“Grantor”); MILE HIGH BANKS,
whose address is DTC BRANCH, 8400 E. CRESCENT PKWY #150, GREENWOOD VILLAGE, CO 80111 (referred to
below sometimes as “Lender” and sometimes as “Beneficiary”); and the Public Trustee of DENVER
COUNTY County, Colorado (referred to below as “Trustee”).

CONVEYANCE
AND GRANT. For valuable consideration, Grantor hereby irrevocably grants, transfers and
assigns to Trustee for the benefit of Lender as Beneficiary all of Grantor’s right, title, and
interest in and to the following described real property, together with all existing or
subsequently erected or affixed buildings, improvements and fixtures; all easements, rights of
way, and appurtenances; all water, water rights and ditch rights (including stock in utilities
with ditch or irrigation rights); and all other rights, royalties, and profits relating to the
real property, including without limitation all minerals, oil, gas, geothermal and similar
matters, (the “Real Property”) located in DENVER COUNTY County, State of Colorado:

LOTS 30 THROUGH 35, INCLUSIVE, BLOCK 339, EXCEPT THE REAR 6 FEET AND THE EASTERLY 4 FEET
THEREOF, CAPITOL AVENUE SUBDIVISION, THIRD FILING, CITY AND COUNTY OF DENVER, STATE OF COLORADO

The Real Property or its address is commonly known as 727 COLORADO BOULEVARD, DENVER, CO 80206.

CROSS-COLLATERALIZATION. In addition to the Note, this Deed of Trust secures all obligations,
debts and liabilities, plus interest thereon, of Grantor to Lender, or any one or more of them, as
well as all claims by Lender against Grantor or any one or more of them, whether now existing or
hereafter arising, whether related or unrelated to the purpose of the Note, whether voluntary or
otherwise, whether due or not due, direct or indirect, determined or undetermined, absolute or
contingent, liquidated or unliquidated, whether Grantor may be liable individually or jointly with
others, whether obligated as guarantor, surety, accommodation party or otherwise, and whether
recovery upon such amounts may be or hereafter may become barred by any statute of limitations,
and whether the obligation to repay such amounts may be or hereafter may become otherwise
unenforceable.

REVOLVING LINE OF CREDIT. This Deed of Trust secures the Indebtedness including, without
limitation, a revolving line of credit, which obligates Lender to make advances to Grantor so long
as Grantor complies with all the terms of the Note.

Grantor presently assigns to Lender (also known as Beneficiary in this Deed of Trust) all of
Grantor’s right, title, and interest in and to all present and future leases of the Property and
all Rents from the Property. In addition, Grantor grants to Lender a Uniform Commercial Code
security interest in the Personal Property and Rents.

THIS DEED OF TRUST, INCLUDING THE ASSIGNMENT OF RENTS AND THE SECURITY INTEREST IN THE RENTS AND
PERSONAL PROPERTY, IS GIVEN TO SECURE (A) PAYMENT OF THE INDEBTEDNESS AND (B) PERFORMANCE OF ANY
AND ALL OBLIGATIONS UNDER THE NOTE, THE RELATED DOCUMENTS, AND THIS DEED OF TRUST. THIS DEED OF
TRUST IS GIVEN AND ACCEPTED ON THE FOLLOWING TERMS:

PAYMENT AND PERFORMANCE. Except as otherwise provided in this Deed of Trust, Grantor shall pay to
Lender all amounts secured by this Deed of Trust as they become due, and shall strictly and in a
timely manner perform all of Grantor’s obligations under the Note, this Deed of Trust, and the
Related Documents.

POSSESSION AND MAINTENANCE OF THE PROPERTY. Grantor agrees that Grantor’s possession and use of
the Property shall be governed by the following provisions:

Possession and Use. Until the occurrence of an Event of Default, Grantor may (1) remain in
possession and control of the Property; (2) use, operate or manage the Property; and (3)
collect the Rents from the Property.

Duty to Maintain. Grantor shall maintain the Property in tenantable condition and promptly
perform all repairs, replacements, and maintenance necessary to preserve its value.

Compliance
With Environmental Laws. Grantor represents and warrants to
Lender that: (1) During
the period of Grantor’s ownership of the Property, there has been no use, generation,
manufacture, storage, treatment, disposal, release or threatened release of any Hazardous
Substance by any person on, under, about or from the Property; (2) Grantor has no knowledge of,
or reason to believe that there has been, except as previously disclosed to and acknowledged by
Lender in writing, (a) any breach or violation of any Environmental Laws, (b) any use,
generation, manufacture, storage, treatment, disposal, release or threatened release of any
Hazardous Substance on, under, about or from the Property by any prior owners or occupants of
the Property, or (c) any actual or threatened litigation or claims of any kind by any person
relating to such matters; and (3) Except as previously disclosed to and acknowledged by Lender
in writing, (a) neither Grantor nor any tenant, contractor, agent or other authorized user of
the Property shall use, generate, manufacture, store, treat, dispose of or release any Hazardous
Substance on, under, about or from the Property; and (b) any such activity shall be conducted in
compliance with all applicable federal, state, and local laws, regulations and ordinances,
including without limitation all Environmental Laws. Grantor authorizes Lender and its agents to
enter upon the Property to make such inspections and tests, at Grantor’s expense, as Lender may
deem appropriate to determine compliance of the Property with this section of the Deed of Trust.
Any inspections or tests made by Lender shall be for Lender’s purposes only and shall not be
construed to create any responsibility or liability on the part of Lender to Grantor or to any
other person. The representations and warranties contained herein are based on Grantor’s due
diligence in investigating the Property for Hazardous Substances.

 

 

 

					
	 	 	 	 	 
	 
	 	DEED OF TRUST	 	 
	Loan No: 05500412-10
	 	(Continued)
	 	Page 2

Grantor hereby (1) releases
and waives any future claims against Lender for indemnity or contribution in the event Grantor
becomes liable for cleanup or other costs under any such laws; and (2) agrees to indemnify,
defend, and hold harmless Lender against any and all claims, losses, liabilities, damages,
penalties, and expenses which Lender may directly or indirectly sustain or suffer resulting
from a breach of this section of the Deed of Trust or as a consequence of any use, generation,
manufacture, storage, disposal, release or threatened release occurring prior to Grantor’s
ownership or interest in the Property, whether or not the same was or should have been known to
Grantor. The provisions of this section of the Deed of Trust, including the obligation to
indemnify and defend, shall survive the payment of the Indebtedness and the satisfaction and
reconveyance of the lien of this Deed of Trust and shall not be affected by Lender’s
acquisition of any interest in the Property, whether by foreclosure or otherwise.

Nuisance, Waste. Grantor shall not cause, conduct or permit any nuisance nor commit, permit, or
suffer any stripping of or waste on or to the Property or any portion of the Property. Without
limiting the generality of the foregoing, Grantor will not remove, or grant to any other party
the right to remove, any timber, minerals (including oil and gas), coal, clay, scoria, soil,
gravel or rock products without Lender’s prior written consent.

Removal of Improvements. Grantor shall not demolish or remove any Improvements from the Real
Property without Lender’s prior written consent. As a condition to the removal of any
Improvements, Lender may require Grantor to make arrangements satisfactory to Lender to replace
such Improvements with Improvements of at least equal value.

Lender’s Right to Enter. Lender and Lender’s agents and representatives may enter upon the
Real Property at all reasonable times to attend to Lender’s interests and to inspect the Real
Property for purposes of Grantor’s compliance with the terms and conditions of this Deed of
Trust.

Compliance with Governmental Requirements. Grantor shall promptly comply with all laws,
ordinances, and regulations, now or hereafter in effect, of all governmental authorities
applicable to the use or occupancy of the Property, including without limitation, the Americans
With Disabilities Act. Grantor may contest in good faith any such law, ordinance, or regulation
and withhold compliance during any proceeding, including appropriate appeals, so long as
Grantor has notified Lender in writing prior to doing so and so long as, in Lender’s sole
opinion, Lender’s interests in the Property are not jeopardized. Lender may require Grantor to
post adequate security or a surety bond, reasonably satisfactory to Lender, to protect Lender’s
interest.

Duty to Protect. Grantor agrees neither to abandon or leave unattended the Property. Grantor
shall do all other acts, in addition to those acts set forth above in this section, which from
the character and use of the Property are reasonably necessary to protect and preserve the
Property.

DUE ON SALE — CONSENT BY LENDER. Lender may, at Lender’s option, declare immediately due and
payable all sums secured by this Deed of Trust upon the sale or transfer, without Lender’s prior
written consent, of all or any part of the Real Property, or any interest in the Real Property. A
“sale or transfer” means the conveyance of Real Property or any right, title or interest in the
Real Property; whether legal, beneficial or equitable; whether voluntary or involuntary; whether
by outright sale, deed, installment sale contract, land contract, contract for deed, leasehold
interest with a term greater than three (3) years, lease-option contract, or by sale, assignment,
or transfer of any beneficial interest in or to any land trust holding title to the Real Property,
or by any other method of conveyance of an interest in the Real Property. If any Grantor is a
corporation, partnership or limited liability company, transfer also includes any change in
ownership of more than twenty-five percent (25%) of the voting stock, partnership interests or
limited liability company interests, as the case may be, of such Grantor. However, this option
shall not be exercised by Lender if such exercise is prohibited by federal law or by Colorado law.

TAXES AND LIENS. The following provisions relating to the taxes and liens on the Property are part
of this Deed of Trust:

Payment.
Grantor shall pay when due (and in all events prior to delinquency) all taxes, special
taxes, assessments, charges (including water and sewer), fines and impositions levied against
or on account of the Property, and shall pay when due all claims for work done on or for
services rendered or material furnished to the Property. Grantor shall maintain the Property
free of all liens having priority over or equal to the interest of Lender under this Deed of
Trust, except for the lien of taxes and assessments not due and except as otherwise provided in
this Deed of Trust.

Right to Contest. Grantor may withhold payment of any tax, assessment, or claim in connection
with a good faith dispute over the obligation to pay, so long as Lender’s interest in the
Property is not jeopardized. If a lien arises or is filed as a result
of nonpayment, Grantor
shall within fifteen (15) days after the lien arises or, if a lien is filed, within fifteen
(15) days after Grantor has notice of the filing, secure the discharge of the lien, or if
requested by Lender, deposit with Lender cash or a sufficient corporate surety bond or other
security satisfactory to Lender in an amount sufficient to discharge the lien plus any costs
and attorneys’ fees, or other charges that could accrue as a result of a foreclosure or sale
under the lien. In any contest, Grantor shall defend itself and Lender and shall satisfy any
adverse judgment before enforcement against the Property. Grantor shall name Lender as an
additional obligee under any surety bond furnished in the contest proceedings.

Evidence of Payment. Grantor shall upon demand furnish to Lender satisfactory evidence of
payment of the taxes or assessments and shall authorize the appropriate governmental official
to deliver to Lender at any time a written statement of the taxes and assessments against the
Property.

Notice of Construction. Grantor shall notify Lender at least fifteen (15) days before any work is
commenced, any services are furnished, or any materials are supplied to the Property, if any
mechanic’s lien, materialmen’s lien, or other lien could be asserted on account of the work,
services, or materials. Grantor will upon request of Lender furnish to Lender advance assurances
satisfactory to Lender that Grantor can and will pay the cost of such improvements.

PROPERTY DAMAGE INSURANCE. The following provisions relating to insuring the Property are a part of this Deed of
Trust.

Maintenance of Insurance. Grantor shall procure and maintain policies of fire insurance with
standard extended coverage endorsements on a replacement basis for the full insurable value
covering all Improvements on the Real Property in an amount sufficient to avoid application of
any coinsurance clause, and with a standard mortgagee clause in favor of Lender. Grantor shall
also procure and maintain comprehensive general liability insurance in such coverage amounts as
Lender may request with Trustee and Lender being named as additional insureds in such liability
insurance policies. Additionally, Grantor shall maintain such other insurance, including but
not limited to hazard, business interruption, and boiler insurance, as Lender may reasonably
require. Policies shall be written in form, amounts, coverages and basis reasonably acceptable
to Lender and issued by a company or companies reasonably acceptable to Lender. Grantor, upon
request of Lender, will deliver to Lender from time to time the policies or certificates of
insurance in form satisfactory to Lender, including stipulations that coverages will not be
cancelled or diminished without at least ten (10) days prior written notice to Lender. Each
insurance policy also shall include an endorsement providing that coverage in favor of Lender
will not be impaired in any way by any act, omission or default of Grantor or any other person.
Should the Real Property be located in an area designated by the Director of the Federal
Emergency Management Agency as a special flood hazard area, Grantor agrees to obtain and
maintain Federal Flood Insurance, if available, within 45 days after notice is given by Lender
that the Property is located in a special flood hazard area, for the full unpaid principal
balance of the loan and any prior liens on the property securing the loan, up to the maximum
policy limits set under the National Flood Insurance Program, or as otherwise required by
Lender, and to maintain such insurance for the term of the loan.

Application of Proceeds. Grantor shall promptly notify Lender of any loss or damage to the
Property. Lender may make proof of loss if Grantor fails to do so within fifteen (15) days of
the casualty. Whether or not Lender’s security is impaired, Lender may, at Lender’s election,
receive and retain the proceeds of any insurance and apply the proceeds to the reduction of the
Indebtedness, payment of any lien affecting the Property, or the restoration and repair of the
Property. If Lender elects to apply the proceeds to restoration and
repair, Grantor shall
repair or replace the damaged or destroyed Improvements in a manner satisfactory to Lender.
Lender shall, upon satisfactory proof of such expenditure, pay or reimburse Grantor from the
proceeds for the reasonable cost of repair or restoration if Grantor is not in default under
this Deed of Trust. Any proceeds which have not been disbursed within 180 days after their
receipt and which Lender has not committed to the repair or restoration of the Property shall
be used first to pay any amount owing to Lender under this Deed of Trust, then to pay accrued
interest, and the remainder, if any, shall be applied to the principal balance of the
Indebtedness. If Lender holds any proceeds after payment in full of the Indebtedness, such
proceeds shall be paid to Grantor as Grantor’s interests may appear.

 

 

 

					
	 	 	 	 	 
	 
	 	DEED OF TRUST	 	 
	Loan No: 05500412-10
	 	(Continued)
	 	Page 3

Grantor’s Report on Insurance. Upon request of Lender, however not more than once a year,
Grantor shall furnish to Lender a report on each existing policy of insurance showing: (1) the
name of the insurer; (2) the risks insured; (3) the amount of the policy; (4) the property
insured, the then current replacement value of such property, and the manner of determining
that value; and (5) the expiration date of the policy. Grantor shall, upon request of Lender,
have an independent appraiser satisfactory to Lender determine the cash value replacement cost
of the Property.

LENDER’S EXPENDITURES. If any action or proceeding is commenced that would materially affect
Lender’s interest in the Property or if Grantor fails to comply with any provision of this Deed of
Trust or any Related Documents, including but not limited to Grantor’s failure to discharge or pay
when due any amounts Grantor is required to discharge or pay under this Deed of Trust or any
Related Documents, Lender on Grantor’s behalf may (but shall not be obligated to) take any action
that Lender deems appropriate, including but not limited to discharging or paying all taxes,
liens, security interests, encumbrances and other claims, at any time levied or placed on the
Property and paying all costs for insuring, maintaining and preserving the Property. All such
expenditures incurred or paid by Lender for such purposes will then bear interest at the rate
charged under the Note from the date incurred or paid by Lender to the date of repayment by
Grantor. All such expenses will become a part of the Indebtedness and, at Lender’s option, will
(A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be
payable with any installment payments to become due during either (1) the term of any applicable
insurance policy; or (2) the remaining term of the Note; or (C) be treated as a balloon payment
which will be due and payable at the Note’s maturity. The Deed of Trust also will secure payment
of these amounts. Such right shall be in addition to all other rights and remedies to which Lender
may be entitled upon Default.

WARRANTY; DEFENSE OF TITLE. The following provisions relating to ownership of the Property are a
part of this Deed of Trust:

Title. Grantor warrants that: (a) Grantor holds good and marketable title of record to the
Property in fee simple, free and clear of all liens and encumbrances other than those set forth
in the Real Property description or in any title insurance policy, title report, or final title
opinion issued in favor of, and accepted by, Lender in connection with this Deed of Trust, and
(b) Grantor has the full right, power, and authority to execute and deliver this Deed of Trust
to Lender.

Defense of Title. Subject to the exception in the paragraph above, Grantor warrants and will
forever defend the title to the Property against the lawful claims of all persons. In the event
any action or proceeding is commenced that questions Grantor’s title or the interest of Trustee
or Lender under this Deed of Trust, Grantor shall defend the action at Grantor’s expense.
Grantor may be the nominal party in such proceeding, but Lender shall be entitled to
participate in the proceeding and to be represented in the proceeding by counsel of Lender’s
own choice, and Grantor will deliver, or cause to be delivered, to Lender such instruments as
Lender may request from time to time to permit such participation.

Compliance With Laws. Grantor warrants that the Property and Grantor’s use of the Property
complies with all existing applicable laws, ordinances, and regulations of governmental
authorities.

Survival of Representations and Warranties. All representations, warranties, and agreements
made by Grantor in this Deed of Trust shall survive the execution and delivery of this Deed of
Trust, shall be continuing in nature, and shall remain in full force and effect until such time
as Grantor’s Indebtedness shall be paid in full.

CONDEMNATION. The following provisions relating to condemnation proceedings are a part of this
Deed of Trust:

Proceedings. If any proceeding in condemnation is filed, Grantor shall promptly notify Lender
in writing, and Grantor shall promptly take such steps as may be necessary to defend the action
and obtain the award. Grantor may be the nominal party in such proceeding, but Lender shall be
entitled to participate in the proceeding and to be represented in the proceeding by counsel of
its own choice, and Grantor will deliver or cause to be delivered to Lender such instruments
and documentation as may be requested by Lender from time to time to permit such participation.

Application
of Net Proceeds. If all or any part of the Property is condemned by eminent domain
proceedings or by any proceeding or purchase in lieu of condemnation, Lender may at its
election require that all or any portion of the net proceeds of the award be applied to the
Indebtedness or the repair or restoration of the Property. The net proceeds of the award shall
mean the award after payment of all reasonable costs, expenses, and attorneys’ fees incurred by
Trustee or Lender in connection with the condemnation.

IMPOSITION OF TAXES, FEES AND CHARGES BY GOVERNMENTAL AUTHORITIES. The following provisions
relating to governmental taxes, fees and charges are a part of this Deed of Trust:

Current Taxes, Fees and Charges. Upon request by Lender, Grantor shall execute such documents
in addition to this Deed of Trust and take whatever other action is requested by Lender to
perfect and continue Lender’s lien on the Real Property. Grantor shall reimburse Lender for all
taxes, as described below, together with all expenses incurred in recording, perfecting or
continuing this Deed of Trust, including without limitation all taxes, fees, documentary
stamps, and other charges for recording or registering this Deed of Trust.

Taxes. The following shall constitute taxes to which this section applies: (1) a specific tax
upon this type of Deed of Trust or upon all or any part of the Indebtedness secured by this
Deed of Trust; (2) a specific tax on Grantor which Grantor is authorized or required to deduct
from payments on the Indebtedness secured by this type of Deed of Trust; (3) a tax on this type
of Deed of Trust chargeable against the Lender or the holder of the
Note; and (4) a specific
tax on all or any portion of the Indebtedness or on payments of principal and interest made by
Grantor.

Subsequent Taxes. If any tax to which this section applies is enacted subsequent to the date
of this Deed of Trust, this event shall have the same effect as an Event of Default, and
Lender may exercise any or all of its available remedies for an Event of Default as provided
below unless Grantor either (1) pays the tax before it becomes delinquent, or (2) contests the
tax as provided above in the Taxes and Liens section and deposits with Lender cash or a
sufficient corporate surety bond or other security satisfactory to Lender.

SECURITY AGREEMENT; FINANCING STATEMENTS. The following provisions relating to this Deed of Trust
as a security agreement are a part of this Deed of Trust:

Security Agreement. This instrument shall constitute a Security Agreement to the extent any of
the Property constitutes fixtures, and Lender shall have all of the rights of a secured party
under the Uniform Commercial Code as amended from time to time.

Security Interest. Upon request by Lender, Grantor shall take whatever action is requested by
Lender to perfect and continue Lender’s security interest in the Rents and Personal Property.
In addition to recording this Deed of Trust in the real property records, Lender may, at any
time and without further authorization from Grantor, file executed counterparts, copies or
reproductions of this Deed of Trust as a financing statement. Grantor shall reimburse Lender
for all expenses incurred in perfecting or continuing this security
interest. Upon default,
Grantor shall not remove, sever or detach the Personal Property from the Property. Upon
default, Grantor shall assemble any Personal Property not affixed to the Property in a manner
and at a place reasonably convenient to Grantor and Lender and make it available to Lender
within three (3) days after receipt of written demand from Lender to the extent permitted by
applicable law.

Addresses. The mailing addresses of Grantor (debtor) and Lender (secured party) from which
information concerning the security interest granted by this Deed of Trust may be obtained
(each as required by the Uniform Commercial Code) are as stated on the first page of this Deed
of Trust.

 

 

 

					
	 	 	 	 	 
	 
	 	DEED OF TRUST	 	 
	Loan No: 05500412-10
	 	(Continued)
	 	Page 4

FURTHER ASSURANCES; ATTORNEY-IN-FACT. The following provisions relating to further assurances and
attorney-in-fact are a part of this Deed of Trust:

Further Assurances. At any time, and from time to time, upon request of Lender, Grantor will
make, execute and deliver, or will cause to be made, executed or delivered, to Lender or to
Lender’s designee, and when requested by Lender, cause to be filed, recorded, refiled, or
rerecorded, as the case may be, at such times and in such offices and places as Lender may deem
appropriate, any and all such mortgages, deeds of trust, security deeds, security agreements,
financing statements, continuation statements, instruments of further assurance, certificates,
and other documents as may, in the sole opinion of Lender, be necessary or desirable in order
to effectuate, complete, perfect, continue, or preserve (1) Grantor’s obligations under the
Note, this Deed of Trust, and the Related Documents, and (2) the liens and security interests
created by this Deed of Trust as first and prior liens on the Property, whether now owned or
hereafter acquired by Grantor. Unless prohibited by law or Lender agrees to the contrary in
writing, Grantor shall reimburse Lender for all costs and expenses incurred in connection with
the matters referred to in this paragraph.

Attorney-in-Fact. If Grantor fails to do any of the things referred to in the preceding
paragraph, Lender may do so for and in the name of Grantor and at Grantor’s expense. For such
purposes, Grantor hereby irrevocably appoints Lender as Grantor’s attorney-in-fact for the
purpose of making, executing, delivering, filing, recording, and doing all other things as may
be necessary or desirable, in Lender’s sole opinion, to accomplish the matters referred to in
the preceding paragraph.

FULL
PERFORMANCE. Upon the full performance of all the obligations under the Note and this Deed of
Trust, Trustee may, upon production of documents and fees as required under applicable law,
release this Deed of Trust, and such release shall constitute a release of the lien for all such
additional sums and expenditures made pursuant to this Deed of Trust. Lender agrees to cooperate
with Grantor in obtaining such release and releasing the other collateral securing the
Indebtedness. Any release fees required by law shall be paid by Grantor, if permitted by
applicable law.

EVENTS OF DEFAULT. Each of the following, at Lender’s option, shall constitute an Event of
Default under this Deed of Trust:

Payment Default. Grantor fails to make any payment
when due under the Indebtedness.

Other Defaults. Grantor fails to comply with or to perform any other term, obligation, covenant
or condition contained in this Deed of Trust or in any of the Related Documents or to comply
with or to perform any term, obligation, covenant or condition contained in any other agreement
between Lender and Grantor.

Compliance Default. Failure to comply with any other term, obligation, covenant or condition
contained in this Deed of Trust, the Note or in any of the Related
Documents.

Default on Other Payments. Failure of Grantor within the time required by this Deed of Trust to
make any payment for taxes or insurance, or any other payment necessary to prevent filing of or
to effect discharge of any lien.

Default in Favor of Third Parties. Should Grantor default under any loan, extension of credit,
security agreement, purchase or sales agreement, or any other agreement, in favor of any other
creditor or person that may materially affect any of Grantor’s property or Grantor’s ability to
repay the Indebtedness or perform their respective obligations under this Deed of Trust or any
of the Related Documents.

False Statements. Any warranty, representation or statement made or furnished to Lender by
Grantor or on Grantor’s behalf under this Deed of Trust or the Related Documents is false or
misleading in any material respect, either now or at the time made or furnished or becomes
false or misleading at any time thereafter.

Defective Collateralization. This Deed of Trust or any of the Related Documents ceases to be in
full force and effect (including failure of any collateral document to create a valid and
perfected security interest or lien) at any time and for any reason.

Insolvency. The dissolution or termination of Grantor’s existence as a going business, the
insolvency of Grantor, the appointment of a receiver for any part of Grantor’s property, any
assignment for the benefit of creditors, any type of creditor workout, or the commencement of
any proceeding under any bankruptcy or insolvency laws by or against Grantor.

Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings,
whether by judicial proceeding, self-help, repossession or any other method, by any creditor of
Grantor or by any governmental agency against any property securing the Indebtedness. This
includes a garnishment of any of Grantor’s accounts, including deposit accounts, with Lender.
However, this Event of Default shall not apply if there is a good faith dispute by Grantor as
to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture
proceeding and if Grantor gives Lender written notice of the creditor or forfeiture proceeding
and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in
an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond
for the dispute.

Breach of Other Agreement. Any breach by Grantor under the terms of any other agreement between
Grantor and Lender that is not remedied within any grace period provided therein, including
without limitation any agreement concerning any indebtedness or other obligation of Grantor to
Lender, whether existing now or later.

Events Affecting Guarantor. Any of the preceding events occurs with respect to any guarantor,
endorser, surety, or accommodation party of any of the Indebtedness or any guarantor, endorser,
surety, or accommodation party dies or becomes incompetent, or revokes or disputes the validity
of, or liability under, any Guaranty of the Indebtedness.

Adverse Change. A material adverse change occurs in Grantor’s financial condition, or Lender
believes the prospect of payment or performance of the Indebtedness is impaired.

Insecurity. Lender in good faith believes itself insecure.

RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this Deed of Trust, at any
time thereafter, Trustee or Lender may exercise any one or more of the following rights and
remedies:

Election of Remedies. Election by Lender to pursue any remedy shall not exclude pursuit of any
other remedy, and an election to make expenditures or to take action to perform an obligation
of Grantor under this Deed of Trust, after Grantor’s failure to perform, shall not affect
Lender’s right to declare a default and exercise its remedies.

Accelerate Indebtedness. Lender shall have the right at its option without notice to Grantor to
declare the entire Indebtedness immediately due and payable, including any prepayment penalty
which Grantor would be required to pay.

Foreclosure. Lender shall have the right to cause all or any part of the Real Property, and
Personal Property, if Lender decides to proceed against it as if it were real property, to be
sold by the Trustee according to the laws of the State of Colorado as respects foreclosures
against real property. The Trustee shall give notice in accordance with the laws of Colorado.
The Trustee shall apply the proceeds of the sale in the following order: (a) to all costs and
expenses of the sale, including but not limited to Trustee’s fees, attorneys’ fees, and the
cost of title evidence; (b) to all sums secured by this Deed of Trust; and (c) the excess, if
any, to the person or persons legally entitled to the excess.

UCC Remedies. With respect to all or any part of the Personal Property, Lender shall have all
the rights and remedies of a secured party under the Uniform Commercial Code.

Collect Rents. Lender shall have the right, without notice to Grantor to take possession of
and manage the Property and collect the Rents, including amounts past due and unpaid, and
apply the net proceeds, over and above Lender’s costs, against the Indebtedness. In
furtherance of this right, Lender may require any tenant or other user of the Property to make
payments of rent or use fees directly to Lender. If the Rents are collected by Lender, then
Grantor irrevocably designates Lender as Grantor’s attorney-in-fact to endorse instruments
received in payment thereof in the name of Grantor and to negotiate the same and collect the
proceeds. Payments by tenants or other users to Lender in response to Lender’s demand shall
satisfy the obligations for which the payments are made, whether or not any proper grounds for
the demand existed. Lender may exercise its rights under this subparagraph either in person,
by agent, or through a receiver.

 

 

 

					
	 	 	 	 	 
	 
	 	DEED OF TRUST	 	 
	Loan No: 05500412-10
	 	(Continued)
	 	Page 5

Appoint Receiver. Lender shall have the right to have a receiver appointed to take possession
of all or any part of the Property, with the power to protect and preserve the Property, to
operate the Property preceding foreclosure or sale, and to collect the Rents from the Property
and apply the proceeds, over and above the cost of the receivership, against the Indebtedness.
The receiver may serve without bond if permitted by law. Lender’s right to the appointment of
a receiver shall exist whether or not the apparent value of the Property exceeds the
Indebtedness by a substantial amount. Employment by Lender shall not disqualify a person from
serving as a receiver. Receiver may be appointed by a court of competent jurisdiction upon ex
parte application and without notice, notice being expressly waived.

Tenancy at Sufferance. If Grantor remains in possession of the Property after the Property is
sold as provided above or Lender otherwise becomes entitled to possession of the Property upon
default of Grantor, Grantor shall become a tenant at sufferance of Lender or the purchaser of
the Property and shall, at Lender’s option, either (1) pay a reasonable rental for the use of
the Property, or (2) vacate the Property immediately upon the demand of Lender.

Other Remedies. Trustee or Lender shall have any other right or remedy provided in this Deed
of Trust or the Note or available at law or in equity.

Sale of the Property. In exercising its rights and remedies, Lender shall be free to designate
on or before it files a notice of election and demand with the Trustee, that the Trustee sell
all or any part of the Property together or separately, in one sale or by separate sales.
Lender shall be entitled to bid at any public sale on all or any portion of the Property. Upon
any sale of the Property, whether made under a power of sale granted in this Deed of Trust or
pursuant to judicial proceedings, if the holder of the Note is a purchaser at such sale, it
shall be entitled to use and apply all, or any portion of, the Indebtedness for or in
settlement or payment of all, or any portion of, the purchase price of the Property purchased,
and, in such case, this Deed of Trust, the Note, and any documents evidencing expenditures
secured by this Deed of Trust shall be presented to the person conducting the sale in order
that the amount of Indebtedness so used or applied may be credited thereon as having been
paid.

Attorneys’ Fees; Expenses. If Lender forecloses or institutes any suit or action to enforce any
of the terms of this Deed of Trust, Lender shall be entitled to recover such sum as the court
may adjudge reasonable as attorneys’ fees at trial and upon any appeal. Whether or not any
court action is involved, and to the extent not prohibited by law, all reasonable expenses
Lender incurs that in Lender’s opinion are necessary at any time for the protection of its
interest or the enforcement of its rights shall become a part of the Indebtedness payable on
demand and shall bear interest at the Note rate from the date of the expenditure until repaid.
Expenses covered by this paragraph include, without limitation, however subject to any limits
under applicable law, Lender’s attorneys’ fees whether or not there is a lawsuit, including
attorneys’ fees and expenses for bankruptcy proceedings (including efforts to modify or vacate
any automatic stay or injunction), appeals, and any anticipated post-judgment collection
services, the cost of searching records, obtaining title reports (including foreclosure
reports), surveyors’ reports, and appraisal fees, title insurance, and fees for the Trustee, to
the extent permitted by applicable law. Grantor also will pay any court costs, in addition to
all other sums provided by law.

Rights of Trustee. To the extent permitted by applicable law, Trustee shall have all of the
rights and duties of Lender as set forth in this section.

NOTICES. Any notice required to be given under this Deed of Trust, including without limitation
any notice of default and any notice of sale shall be given in writing, and shall be effective
when actually delivered, when actually received by telefacsimile (unless otherwise required by
law), when deposited with a nationally recognized overnight courier, or, if mailed, when deposited
in the United States mail, as first class, certified or registered mail postage prepaid, directed
to the addresses shown near the beginning of this Deed of Trust. All copies of notices of
foreclosure from the holder of any lien which has priority over this Deed of Trust shall be sent
to Lender’s address, as shown near the beginning of this Deed of Trust. Any party may change its
address for notices under this Deed of Trust by giving formal written notice to the other parties,
specifying that the purpose of the notice is to change the party’s address. For notice purposes,
Grantor agrees to keep Lender informed at all times of Grantor’s current address. Unless otherwise
provided or required by law, if there is more than one Grantor, any notice given by Lender to any
Grantor is deemed to be notice given to all Grantors.

SUBSEQUENT TRANSACTIONS INVOLVING REAL ESTATE. Grantor shall not allow or permit the real property
described in this document to become encumbered by any lien, security interest, or charge, other
than the encumbrance created by this Deed of Trust, without the prior written consent of the
lender. This includes any and all security interests, even if junior in right to the security
interests granted under this Deed of Trust.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Deed of Trust:

Amendments. This Deed of Trust, together with any Related Documents, constitutes the entire
understanding and agreement of the parties as to the matters set forth in this Deed of Trust. No alteration of or amendment
to this Deed of Trust shall be effective unless given in writing and signed by the party or
parties sought to be charged or bound by the alteration or amendment.

Annual Reports. If the Property is used for purposes other than Grantor’s residence, Grantor
shall furnish to Lender, upon request, a certified statement of net operating income received
from the Property during Grantor’s previous fiscal year in such form and detail as Lender shall
require. “Net operating income” shall mean all cash receipts from the Property less all cash
expenditures made in connection with the operation of the Property.

Caption Headings. Caption headings in this Deed of Trust are for convenience purposes only
and are not to be used to interpret or define the provisions of this Deed of Trust.

Merger. There shall be no merger of the interest or estate created by this Deed of Trust with
any other interest or estate in the Property at any time held by or for the benefit of Lender
in any capacity, without the written consent of Lender.

Governing Law. This Deed of Trust will be governed by federal law applicable to Lender and,
to the extent not preempted by federal law, the laws of the State of Colorado without regard to
its conflicts of law provisions. This Deed of Trust has been accepted by Lender in the State
of Colorado.

Choice of Venue. If there is a lawsuit, Grantor agrees upon Lender’s request to submit to
the jurisdiction of the courts of BOULDER County, State of Colorado.

No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Deed of
Trust unless such waiver is given in writing and signed by Lender. No delay or omission on
the part of Lender in exercising any right shall operate as a waiver of such right or any other
right. A waiver by Lender of a provision of this Deed of Trust shall not prejudice or
constitute a waiver of Lender’s right otherwise to demand strict compliance with that provision
or any other provision of this Deed of Trust. No prior waiver by Lender, nor any course of
dealing between Lender and Grantor, shall constitute a waiver of any of Lender’s rights or of
any of Grantor’s obligations as to any future transactions. Whenever the consent of Lender is
required under this Deed of Trust, the granting of such consent by Lender in any instance shall
not constitute continuing consent to subsequent instances where such consent is required and in
all cases such consent may be granted or withheld in the sole discretion of Lender.

 

 

 

					
	 	 	 	 	 
	 
	 	DEED OF TRUST	 	 
	Loan No: 05500412-10
	 	(Continued)
	 	Page 6

Severability. If a court of competent jurisdiction finds any provision of this Deed of Trust
to be illegal, invalid, or unenforceable as to any circumstance, that
finding shall not make the offending provision illegal, invalid, or
unenforceable as to any other circumstance. If feasible, the offending provision shall be
considered modified so that it becomes legal, valid and enforceable. If the offending provision
cannot be so modified, it shall be considered deleted from this Deed of Trust. Unless otherwise
required by law, the illegality, invalidity, or unenforceability of any provision of this Deed
of Trust shall not affect the legality, validity or enforceability of any other provision of
this Deed of Trust.

Successors and Assigns. Subject to any limitations stated in this Deed of Trust on transfer of
Grantor’s interest, this Deed of Trust shall be binding upon and inure to the benefit of the
parties, their successors and assigns. If ownership of the Property becomes vested in a person
other than Grantor, Lender, without notice to Grantor, may deal with Grantor’s successors with
reference to this Deed of Trust and the Indebtedness by way of forbearance or extension without
releasing Grantor from the obligations of this Deed of Trust or liability under the
Indebtedness.

Time is of the Essence. Time is of the essence in the performance of this Deed of Trust.

Waiver of Homestead Exemption. Grantor hereby releases and waives all rights and benefits of
the homestead exemption laws of the State of Colorado as to all Indebtedness secured by this
Deed of Trust.

DEFINITIONS. The following capitalized words and terms shall have the following meanings when used
in this Deed of Trust. Unless specifically stated to the contrary, all references to dollar
amounts shall mean amounts in lawful money of the United States of America. Words and terms used
in the singular shall include the plural, and the plural shall include the singular, as the
context may require. Words and terms not otherwise defined in this Deed of Trust shall have the
meanings attributed to such terms in the Uniform Commercial Code:

Beneficiary. The word “Beneficiary” means MILE HIGH BANKS, and its successors and assigns.

Borrower. The word “Borrower” means NETREIT, A CALIFORNIA CORPORATION and includes all
co-signers and co-makers signing the Note and all their successors and assigns.

Deed
of Trust. The words “Deed of Trust” mean this Deed of Trust among Grantor, Lender, and
Trustee, and includes without limitation all assignment and security interest provisions
relating to the Personal Property and Rents.

Default. The word “Default” means the Default set forth in this Deed of Trust in the section
titled “Default”.

Environmental Laws. The words “Environmental Laws” mean any and all state, federal and local
statutes, regulations and ordinances relating to the protection of human health or the
environment, including without limitation the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq.
(“CERCLA”), the Superfund Amendments and Reauthorization
Act of 1986, Pub. L. No. 99-499
(“SARA”), the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or other applicable
state or federal laws, rules, or regulations adopted pursuant thereto.

Event of Default. The words “Event of Default” mean any of the events of default set forth in
this Deed of Trust in the events of default section of this Deed of Trust.

Grantor. The word “Grantor” means NETREIT, A CALIFORNIA CORPORATION.

Guaranty. The word “Guaranty” means the guaranty from guarantor, endorser, surety, or
accommodation party to Lender, including without limitation a guaranty of all or part of the
Note.

Hazardous Substances. The words “Hazardous Substances” mean materials that, because of their
quantity, concentration or physical, chemical or infectious characteristics, may cause or pose
a present or potential hazard to human health or the environment when improperly used, treated,
stored, disposed of, generated, manufactured, transported or otherwise handled. The words
“Hazardous Substances” are used in their very broadest sense and include without limitation any
and all hazardous or toxic substances, materials or waste as defined by or listed under the
Environmental Laws. The term “Hazardous Substances” also includes, without limitation,
petroleum and petroleum by-products or any fraction thereof and asbestos.

Improvements. The word “Improvements” means all existing and future improvements, buildings,
structures, mobile homes affixed on the Real Property, facilities, additions, replacements and
other construction on the Real Property.

Indebtedness. The word “Indebtedness” means all principal, interest, and other amounts, costs
and expenses payable under the Note or Related Documents, together with all renewals of,
extensions of, modifications of, consolidations of and substitutions for the Note or Related
Documents and any amounts expended or advanced by Lender to discharge Grantor’s obligations or
expenses incurred by Trustee or Lender to enforce Grantor’s obligations under this Deed of
Trust, together with interest on such amounts as provided in this
Deed of Trust. Specifically,
without limitation, Indebtedness includes all amounts that may be indirectly secured by the
Cross-Collateralization provision of this Deed of Trust.

Lender. The word “Lender” means MILE HIGH BANKS, its successors and assigns.

Note. The word “Note” means the promissory note dated July 9, 2008, in the original
principal amount of $6,597,500.00 from Grantor to Lender, together with all renewals of,
extensions of, modifications of, refinancings of, consolidations of, and substitutions for the
promissory note or agreement. The maturity date of the Note is July 9, 2011.

Personal Property. The words “Personal Property” mean all equipment, fixtures, and other
articles of personal property now or hereafter owned by Grantor, and now or hereafter attached
or affixed to the Real Property; together with all accessions, parts, and additions to, all
replacements of, and all substitutions for, any of such property; and together with all
proceeds (including without limitation all insurance proceeds and refunds of premiums) from any
sale or other disposition of the Property.

Property. The word “Property” means collectively the Real Property and the Personal Property.

Real Property. The words “Real Property” mean the real property, interests and rights, as
further described in this Deed of Trust.

Related Documents. The words “Related Documents” mean all promissory notes, credit agreements,
loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of
trust, security deeds, collateral mortgages, and all other instruments, agreements and
documents, whether now or hereafter existing, executed in connection with the Indebtedness.

Rents. The word “Rents” means all present and future rents, revenues, income, issues,
royalties, profits, and other benefits derived from the Property.

Trustee. The word “Trustee” means the Public Trustee of DENVER COUNTY County, Colorado.

 

 

	 	 	 	 	 
	 
	 	DEED OF TRUST	 	 
	Loan No: 05500412-10
	 	(Continued)
	 	Page 7

GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS DEED OF TRUST, AND GRANTOR AGREES TO
ITS TERMS.

GRANTOR:

	 	 	 	 	 
	NETREIT, A CALIFORNIA CORPORATION

 	 
	By:  	/s/
Kenneth W. Elsberry
 	 
	 	 	KENNETH   W.   ELSBERRY,
Secretary &  CFO   of	 
	 	 	 NETREIT, A   CALIFORNIA CORPORATION 	 
	 

CORPORATE ACKNOWLEDGMENT

	 	 	 	 	 	 	 	 	 	 	 
	STATE OF Colorado

	 	 
	 	 	 	 	)	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	)	 SS
	COUNTY OF El Paso

	 	 
	 	 	 	 	)	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 

On this 9th day of July, 2008, before me, the undersigned Notary Public, personally appeared
KENNETH W. ELSBERRY, Secretary & CFO of NETREIT, A CALIFORNIA CORPORATION, and known to me to be an
authorized agent of the corporation that executed the Deed of Trust and acknowledged the Deed of
Trust to be the free and voluntary act and deed of the corporation, by authority of its Bylaws or
by resolution of its board of directors, for the uses and purposes therein mentioned, and on oath
stated that he or she is authorized to execute this Deed of Trust and in fact executed the Deed of
Trust on behalf of the corporation.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	(STAMP)	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By

	 	/s/ [ILLEGIBLE]
	 	 	 	 	 	Residing at	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Notary Public in and for the State of	 	 	 	 	 	My commission expires	 	 
	 

	 	 	 	 
	 	 	 	 	 	 	 	 

LASER
PRO Lending, Ver. 5.40.00.003 Copr. Harland Financial Solutions, Inc.
1997, 2008.

 All Rights Reserved. — CO
I:\CFI\LPL\G01.FC TR-1533 PR-8Filed by Bowne Pure Compliance

EXHIBIT 10.1

STOCK PURCHASE AGREEMENT

by and between

Sterling Hallmark, Inc.

(“Purchaser”)

and

Digital Angel Corporation

(“Seller”)

July 10, 2008

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	1.
	 	PURCHASE AND SALE OF THE SHARES	 	 	1	 
	 
	 	 	 	 	 	 
	2.
	 	CONSIDERATION	 	 	1	 
	2.1
	 	Purchase Price	 	 	1	 
	 
	 	 	 	 	 	 
	3.
	 	CLOSING	 	 	1	 
	3.1
	 	Closing	 	 	1	 
	 
	 	 	 	 	 	 
	4.
	 	TAXES AND PREPAID ITEMS	 	 	2	 
	 
	 	 	 	 	 	 
	5.
	 	REPRESENTATIONS AND WARRANTIES OF SELLER	 	 	2	 
	5.1
	 	Organization and Corporate Power	 	 	2	 
	5.2
	 	Due Authorization; Effect of Transaction	 	 	2	 
	5.3
	 	Financial Statements	 	 	2	 
	5.4
	 	Accounts Receivable	 	 	3	 
	5.5
	 	Liabilities	 	 	3	 
	5.6
	 	Capitalization	 	 	3	 
	5.7
	 	Dividends and Distributions	 	 	3	 
	5.8
	 	Subsidiaries	 	 	3	 
	5.9
	 	Real Property	 	 	4	 
	5.10
	 	Leases	 	 	4	 
	5.11
	 	Personal Properties	 	 	4	 
	5.12
	 	Employment Arrangements	 	 	4	 
	5.13
	 	Material Contracts and Arrangements	 	 	5	 
	5.14
	 	Ordinary Course of Business	 	 	5	 
	5.15
	 	Litigation and Compliance with Laws	 	 	6	 
	5.16
	 	Tax Returns	 	 	6	 
	5.17
	 	Environmental Matters	 	 	7	 
	5.18
	 	Trademarks, Licenses, Etc	 	 	7	 
	5.19
	 	Insurance Policies	 	 	8	 
	5.20
	 	Extraordinary Events	 	 	8	 
	5.21
	 	Adverse Restrictions	 	 	8	 
	5.22
	 	Material Information	 	 	8	 
	5.23
	 	Omitted	 	 	9	 
	5.24
	 	Certain Transactions	 	 	9	 
	5.25
	 	No Governmental Authorizations or Approvals Required	 	 	9	 
	5.26
	 	Employee Benefit Plans	 	 	9	 
	5.27
	 	Continuing Representations	 	 	10	 
	 
	 	 	 	 	 	 
	6.
	 	REPRESENTATIONS, WARRANTIES, AND AGREEMENTS OF PURCHASER	 	 	10	 

 

i

 

	 	 	 	 	 	 	 
	6.1
	 	Organizational and Corporate Power	 	 	10	 
	6.2
	 	Due Authorization: Effect of Transaction	 	 	10	 
	6.3
	 	Sufficient Funds	 	 	11	 
	6.4
	 	Continuing Representation	 	 	11	 
	 
	 	 	 	 	 	 
	7.
	 	COVENANTS AND AGREEMENTS	 	 	11	 
	7.1
	 	Seller's Covenants and Agreements Pending Closing	 	 	11	 
	 
	 	 	 	 	 	 
	8.
	 	CONDITIONS OF PURCHASER'S OBLIGATIONS	 	 	12	 
	8.1
	 	Opinion of Seller's Counsel	 	 	12	 
	8.2
	 	No Opposition	 	 	12	 
	8.3
	 	Noncompetition Agreement	 	 	13	 
	8.4
	 	Permits, Etc.	 	 	13	 
	8.5
	 	Insurance	 	 	13	 
	8.6
	 	Representations and Covenants	 	 	13	 
	8.7
	 	Satisfaction of Counsel	 	 	13	 
	8.8
	 	Instruments of Transfer	 	 	13	 
	8.9
	 	Taxes	 	 	13	 
	8.10
	 	Verizon Settlement	 	 	14	 
	8.11
	 	Intercompany Loans	 	 	14	 
	8.12
	 	Diligence	 	 	14	 
	8.13
	 	Releases	 	 	14	 
	8.14
	 	Consents	 	 	14	 
	8.15
	 	Terminations	 	 	15	 
	 
	 	 	 	 	 	 
	9.
	 	CONDITIONS OF SELLER'S OBLIGATIONS	 	 	15	 
	9.1
	 	Representations and Covenants	 	 	15	 
	9.2
	 	No Opposition	 	 	15	 
	9.3
	 	Noncompetition Agreement	 	 	15	 
	9.4
	 	Consent	 	 	15	 
	9.5
	 	Verizon	 	 	15	 
	 
	 	 	 	 	 	 
	10.
	 	INDEMNIFICATION	 	 	15	 
	10.1
	 	Indemnification by Seller	 	 	15	 
	10.2
	 	Indemnification by Purchaser	 	 	16	 
	10.3
	 	Notice of Claim	 	 	16	 
	10.4
	 	Set-Off or Reimbursement	 	 	17	 
	10.5
	 	Limitations	 	 	17	 
	11.
	 	OMITTED	 	 	17	 
	12.
	 	BROKERAGE FEE	 	 	17	 
	13.
	 	AMENDMENTS; WAIVERS	 	 	18	 
	14.
	 	ASSIGNMENT; SUCCESSORS AND ASSIGNS	 	 	18	 

 

ii

 

	 	 	 	 	 	 	 
	15.
	 	SEVERABILITY	 	 	18	 
	16.
	 	COUNTERPARTS	 	 	19	 
	17.
	 	SECTION AND OTHER HEADINGS	 	 	19	 
	18.
	 	NOTICES	 	 	19	 
	19.
	 	GENDER	 	 	20	 
	20.
	 	LAW TO GOVERN	 	 	20	 
	21.
	 	COURTS	 	 	20	 
	22.
	 	ATTORNEYS FEES	 	 	20	 

EXHIBITS

A INTENTIONALLY OMITTED

B ENVIRONMENTAL DEFINITIONS

C OPINION OF COUNSEL

D NONCOMPETITION AGREEMENT

E VERIZON SETTLEMENT DOCUMENTS

F PROMISSORY NOTE

G SECURITY AGREEMENT

 

iii

 

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (this “Agreement”), entered into this 10th
day of July, 2008, by and between Sterling Hallmark, Inc., a California corporation
(“Purchaser”), and Digital Angel Corporation, dba Digital Angel, a Delaware corporation
(“Seller”).

W I T N E S S E T H T H A T:

WHEREAS, Purchaser desires to purchase and Seller desires to sell and convey to Purchaser all
of the issued and outstanding stock of Computer Equity Corporation, a Delaware corporation (“CEC”)
consisting of one hundred shares of $.001 par value common stock (the “Shares”) upon the terms and
subject to the conditions set forth herein;

WHEREAS, Government Telecommunications, Inc., a Virginia corporation (“GTI”), is a
wholly owned subsidiary CEC; and

NOW, THEREFORE, in consideration of the agreements of the parties hereto, and intending to be
legally bound hereby, the parties hereto agree as follows:

1. PURCHASE AND SALE OF THE SHARES.

Subject to the terms and conditions of this Agreement and in reliance upon the representations
and warranties of the parties set forth herein, the Seller hereby agrees to sell to Purchaser, and
Purchaser hereby agrees to purchase from the Seller, the Shares on the Closing Date (as defined in
Section 3) for the consideration set forth in Section 2.

2. CONSIDERATION.

2.1 Purchase Price. The purchase price shall be Six Hundred Thousand Dollars
($600,000) (the “Purchase Price”). The Purchase Price shall be payable as follows:

(a) At the Closing, Purchaser shall tender to Seller the sum of $400,000.00 in cash.

(b) The balance of the Purchase Price of $200,000 shall be payable according to a promissory
note (the “Promissory Note”) executed by Purchaser in the form attached hereto as Exhibit F.

(c) Contemporaneous with Closing, Purchaser shall, as security for Purchaser’s payment
obligations arising under the Promissory Note, execute a security agreement, a copy of which is
attached hereto as Exhibit G, pledging the Shares being acquired hereunder as collateral.

2.2 Intentionally Omitted.

 

1

 

3. CLOSING.

3.1 Closing. The closing of the sale and purchase (the “Closing”) shall take
place at the offices of Weintraub Law Group PC, 12687 Carroll Canyon Road, Suite 230, San Diego, CA
92131, at 10:00 a.m. on July 10, 2008, or at such other time and place as may be mutually agreed
upon (the “Closing Date”).

4. TAXES AND PREPAID ITEMS.

Except as otherwise provided herein, Seller will pay all sales, use, franchise, and other
taxes and charges, including, without limitation, ad valorem, or other taxes on any real estate
owned by CEC and GTI, which may become payable in connection with the sale of the Shares pursuant
to the terms of this Agreement, and any and all other taxes and charges accruing out of the
operation of CEC or GTI’s businesses prior to the Closing Date.

5. REPRESENTATIONS AND WARRANTIES OF SELLER.

Seller represents, warrants, covenants and agrees that:

5.1 Organization and Corporate Power. Seller, CEC and GTI are corporations duly
organized, validly existing, and in good standing under the laws of their jurisdictions of
incorporation and is duly qualified and in good standing as foreign corporations in each other
jurisdiction in which it owns or leases properties, conducts operations, or maintains a stock of
goods, with full power and authority (corporate and other) to carry on the business in which it is
engaged (a true and correct list of each such jurisdiction is set forth in Schedule 5.1 of
the Disclosure Schedule) except where the failure to be so qualified would not have a material
adverse effect on Seller, CEC or GTI, and to execute and deliver and carry out the transactions
contemplated by this Agreement.

5.2 Due Authorization; Effect of Transaction. No provisions of the Certificate of
Incorporation or Bylaws of CEC or GTI, or of any agreement, instrument, or understanding, or any
judgment, decree, rule, or regulation, to which Seller, CEC or GTI is a party or by which Seller,
CEC or GTI are bound, has been or will be violated by the execution and delivery by Seller of this
Agreement or the performance or satisfaction of any agreement or condition herein contained upon
its part to be performed or satisfied, and all requisite corporate and other authorizations for
such execution, delivery, performance, and satisfaction have been duly obtained. Upon execution
and delivery, this Agreement will be a legal, valid, and binding obligation of Seller, enforceable
in accordance with its terms, except to the extent that enforceability may be limited
by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar
laws affecting any rights, powers, privileges, remedies and interests of creditors generally, (ii)
principles of equity affecting the enforcement of obligations generally (regardless of whether
enforceability is considered in a proceeding in equity, at law or otherwise), or (iii) the
discretionary power of the court or other authority before which may be brought any proceeding
seeking equitable or other remedies, including (without limitation) specific performance,
injunctive relief and indemnification. Seller, CEC and GTI are not in default in the performance,
observance, or fulfillment of any of the terms or conditions of its Certificate of Incorporation or
Bylaws.

 

2

 

5.3 Financial Statements. Except as set forth on Schedule 5.3 of the
Disclosure Schedule, Seller has delivered to Purchaser consolidated balance sheets of GTI as at the
close of its fiscal year for each of the three years ending December 31, 2005, 2006 and 2007,
respectively, together with related consolidated statements of operations, consolidated statements
of changes in stockholders’ equity, and consolidated statements of cash flows for the respective
years then ended. Seller has also delivered to Purchaser the consolidated trial balance for the
month of March 2008 for GTI.

The financial statements specified above, including in each case the notes to such financial
statements, are hereinafter sometimes collectively referred to as the “Financial
Statements.” All of the Financial Statements are true, correct, and complete, in all material
respects, have been prepared in accordance with generally accepted accounting principles
consistently followed throughout the periods (except as set forth in such notes or statements) and
fairly present the financial condition of GTI and the results of their operations as at the dates
thereof and throughout the periods covered thereby. The Financial Statements reflect or provide
for all claims against, and all debts and liabilities of, GTI, fixed or contingent, as at the dates
thereof, and there has not been any change between the date of the most recent Financial Statements
and the date of this Agreement that has materially or adversely affected the business or
properties or condition or prospects, financial or other, or results of operations of GTI, and no
fact or condition exists or is contemplated or threatened, which might cause any such change at any
time in the future.

5.4 Accounts Receivable. Except as set forth in Schedule 5.4 of the
Disclosure Schedule, subject to the bad debt reserve shown in the Financial Statements, all
customer and trade notes and accounts receivable owned by CEC and GTI on the date of the most
recent balance sheet included in the Financial Statements are fully collectible in the aggregate,
to the extent of the aggregate face value thereof as indicated on such balance sheet. Since April
30, 2008 to the Closing Date, the Seller has remitted to GTI one hundred (100%) percent of GTI’s
Accounts Receivable received on behalf of GTI in a lock-box account administered by the Seller.

5.5 Liabilities. Except as set forth in Schedule 5.5 of the Disclosure
Schedule, CEC and GTI have no liabilities of any nature, whether absolute, contingent, or
otherwise, except as set forth in the most recent balance sheet included in the Financial Statements, other than liabilities subsequently incurred in the ordinary course of
business. CEC and GTI are not in material breach or default or in arrears in respect of the terms
or conditions of any such liabilities and no waiver or forbearance has been granted by any holder
of any such liability with respect to any such liability. Except as set forth in Schedule
5.5 of the Disclosure Schedule, all liabilities of CEC and GTI will be paid in full on or
before the Closing Date.

 

3

 

5.6 Capitalization. The capitalization of CEC and GTI are as set forth in
Schedule 5.6 of the Disclosure Schedule; and all of the outstanding capital stock of CEC
and GTI are duly authorized and validly issued, fully paid, and nonassessable.

5.7 Dividends and Distributions. From the end of its most recent fiscal year to the
date hereof, CEC and GTI have not declared or paid any dividend or declared or made any
distribution whatsoever to its stockholders, either in cash, stock, or other property, through
purchases or redemptions of stock or otherwise.

5.8 Subsidiaries. CEC and GTI do not own except for CEC owning all of the issued and
outstanding shares of GTI), directly or indirectly, any of the capital stock of any corporation,
association, trust or similar entity, any interest in the equity of any partnership or similar
entity, any share in any joint venture, or any other equity or proprietary interest in any entity
or enterprise, however organized and however such interest may be denominated or evidenced.

5.9 Real Property. Neither CEC nor GTI own any real property.

5.10 Leases. The leases listed and described in Schedule 5.10 of the
Disclosure Schedule constitute all the leases of real or personal property under which CEC and GTI
are bound or to which CEC and GTI are parties. Each lease listed in Schedule 5.10 of the
Disclosure Schedule is valid, binding, subsisting, and enforceable in accordance with its terms,
and neither CEC or GTI nor any landlord or lessor is in default or in arrears in the performance or
satisfaction of any agreement or condition on its part to be performed or satisfied thereunder, and
no waiver or indulgence has been granted by any of the landlords or lessors under those leases.
Seller is not the landlord or lessor under any leases of real or personal property relating to
GTI’s business.

5.11 Personal Properties. CEC and GTI own and have good and marketable title to all
the tangible and intangible personal property and assets, other than the leaseholds referred to in
Schedule 5.10 of the Disclosure Schedule, reflected upon the most recent balance sheet
included in the Financial Statements or used by CEC and GTI in its business if not so reflected,
free and clear of all mortgages, liens, encumbrances, equities, claims, and obligations to other
persons, of whatever kind and character, except as set forth in Schedule 5.11 of the Disclosure Schedule. Schedule 5.11 of
the Disclosure Schedule contains an identification of certain major items of fixed assets and
machinery and equipment. The fixed assets and machinery and equipment, taken as a whole, are in a
state of good repair and maintenance and are in good operating condition, normal wear and tear
excepted; inventory is up to normal commercial standards and no inventory that is obsolete or
unmarketable is reflected in the most recent balance sheets included in the Financial Statements.
All items included in such inventory are covered on the books of CEC and GTI, and are valued on the
Financial Statements at the lower of cost or market and, in any event, at not greater than their
net realizable value, on an item by item basis.

 

4

 

5.12 Employment Arrangements. Except as set forth Schedule 5.12 of the
Disclosure Schedule, CEC and GTI have no obligation, contingent or otherwise, under any employment
agreement, collective bargaining or other labor agreement, any agreement containing severance or
termination pay arrangements, deferred compensation agreement, retainer or consulting arrangements,
pension or retirement plan, bonus or profit-sharing plan, stock option or purchase plan, or other
employee contract or non-terminable arrangement (whether or not that arrangement imposes a penalty
for termination), group life, health, medical or hospitalization insurance plan or program, or
other employee or fringe benefit plan, including vacation plans or programs and sick leave plans or
programs. CEC and GTI or its employees are not now and for the past five years have not been
subject to or involved in or, to the best of Seller’s knowledge, threatened with any union
elections, petitions therefor or other organizational activities. CEC and GTI have performed all
obligations required to be performed under all such written agreements, plans, and arrangements and
is not in breach of or in default or arrears under the terms thereof in any material respect.

5.13 Material Contracts and Arrangements. Except as set forth in Schedule
5.13 of the Disclosure Schedule, CEC and GTI have no contract or arrangement, including,
without limitation, any commitments or obligations, contingent or otherwise, under any contract or
arrangement (i) for the purchase or sale of inventory in excess of $15,000 in any one instance,
(ii) for the purchase or sale of supplies, services or other items in excess of $15,000 in any one
instance, (iii) for the purchase, sale or lease of any equipment or machinery, (iv) for the
performance of service for others in excess of $15,000 in any one instance, or (v) extending beyond
December 31, 2008. Each of such contracts and arrangements is valid, binding, subsisting, and
enforceable in accordance with its terms and CEC and GTI have performed in all material respects
all obligations required to be performed under any such contract or arrangement and is not in
breach or default or in arrears in any material respect or in any other respect that would permit
the other party to cancel such contract or arrangement under the terms thereof. To the best
knowledge of Seller, after due inquiry, each of the contracts, if any, set forth in Schedule
5.13 of the Disclosure Schedule calling for the performance of services or the sale of
inventory can be satisfied or performed by CEC and GTI without any material loss to them.

5.14 Ordinary Course of Business. CEC and GTI, from the date of the balance sheet
(excluding the consolidated trial balance sheet of March 31, 2008) contained in the most recent Financial Statements to the date
hereof,

(a) have operated its business in the normal, usual, and customary manner in the
ordinary and regular course of business;

(b) have not sold or otherwise disposed of any of its properties or assets, other than
inventory sold in the ordinary course of business;

(c) except in each case in the ordinary course of business,

(i) have not amended or terminated any outstanding lease, contract, or
agreement; and

 

5

 

(ii) have not incurred any obligations or liabilities (fixed, contingent, or
other).

(d) have not made any transactions outside the ordinary course of business in its
inventory or any additions to its property or any purchases of machinery or equipment,
except for normal maintenance and replacements;

(e) have not discharged or satisfied any lien or encumbrance or paid any obligation or
liability (absolute or contingent) other than current liabilities or obligations under
contracts then existing or thereafter entered into in the ordinary course of business, and
commitments under leases existing on that date or incurred since that date in the ordinary
course of business;

(f) have not mortgaged, pledged, or subjected to lien or any other encumbrances, any of
its assets, tangible or intangible;

(g) have not sold or transferred any tangible asset or cancelled any debts or claims
except in each case in the ordinary course of business;

(h) have not sold, assigned, or transferred any patents, trademarks, trade names, trade
secrets, copyrights, or other intangible assets;

(i) have not increased the compensation payable or to become payable to any of its
officers, employees, or agents;

(j) have not suffered any material damage, destruction, or loss (whether or not covered
by insurance) or any acquisition or taking of property by any governmental authority;

(k) have not waived any rights that individually or in the aggregate exceed $5,000;

(l) have not experienced any organized work stoppage or industrial action; or

(m) have not entered into any other transaction or transactions that individually or in
the aggregate are material to CEC or GTI, other than in the ordinary course of business.

 

6

 

5.15 Litigation and Compliance with Laws. Schedule 5.15 of the Disclosure
Schedule contains a brief description of all pending litigation or legal or other actions, suits,
proceedings, or investigations, at law or in equity or admiralty, or before any federal, state,
municipal, or other governmental department (including, without limitation, the National Labor
Relations Board), commission, board, agency, or instrumentality, domestic or foreign, in which CEC
and GTI or any of its officers or directors, in such capacity, is engaged, or, to the knowledge and
belief of Seller, with which CEC and GTI or any of its officers or directors is threatened in
connection with the business or affairs or properties or assets of CEC and GTI. CEC and GTI are in
compliance in all material respects with all laws and governmental rules and regulations, domestic
and foreign, and all requirements of insurance carriers, applicable to its business or affairs or
properties or assets, including, without limitation, those relating to environmental protection,
water or air pollution, and similar matters.

5.16 Tax Returns. Except as set forth on Schedule 5.16 of the Disclosure
Schedule, CEC and GTI have filed, in accordance with applicable law, all federal, state, county,
and local income and franchise tax returns and all real and personal property tax returns that are
required to be filed, and the provision for taxes shown on the most recent balance sheet included
in the Financial Statements is sufficient to satisfy all taxes of any kind of CEC and GTI,
including interest and penalties in respect thereof, whether disputed or not, and whether accrued,
due, absolute, contingent, or other for all periods ended on or prior to the date of such balance
sheet. As of the date hereof no tax liabilities have been assessed or proposed that remain unpaid,
and CEC and GTI have not signed any extension agreement with the Internal Revenue Service or any
state or local taxing authority, except as relating to those income tax returns listed on Schedule
5.16. CEC and GTI have paid all taxes that have become due pursuant to such returns and have paid
all installments of estimated taxes due. All taxes and other assessments and levies that CEC and
GTI are required by law to withhold or to collect have been duly withheld and collected, and have
been paid over to the proper governmental authorities to the extent due and payable. From the end
of its most recent fiscal year to the date hereof CEC and GTI have not made any payment of or on
account of any federal, state, or local income, franchise, or any real or personal property taxes,
other than state taxes imposed from time to time under $5,000 in the aggregate. Seller is not
aware of any basis upon which any assessment for a material amount of additional federal income
taxes could be made. The information shown on the federal income tax returns of CEC and GTI
heretofore delivered to Purchaser is true, accurate, and complete and fairly presents the
information purported to be shown.

5.17 Environmental Matters. Without limiting the generality of Section 5.15:

(i) CEC and GTI are in compliance in all material respects with all applicable
Environmental Laws (as such term is defined in Exhibit B hereto);

(ii) CEC and GTI have obtained all material permits and approvals required under
Environmental Laws, including, without limitation, all material environmental, health and
safety permits, licenses, approvals, authorizations, variances, agreements, and waivers of
federal, state, and local governmental authorities (“Permits”) necessary for the
conduct of its business and the operation of its facilities, and all such Permits are in
good standing and CEC and GTI are in compliance with all terms and conditions of such
Permits;

(iii) There are no conditions or circumstances associated with the currently owned or
leased properties or operations of CEC and GTI that may give rise to Remedial Action.

 

7

 

(iv) CEC and GTI have not received any written notice or claim to the effect that it
is or is reasonably expected to be liable to any person as a result of a Release (as such
term is defined in Exhibit B hereto) or threatened Release or any notice letter or
request for information under CERCLA (as such term is defined in Exhibit B hereto);
and

(v) No Environmental Lien (as such term is defined in Exhibit B hereto) and no
unrecorded Environmental Lien of which Seller, CEC and GTI have written notice has attached
to any property of CEC and GTI.

5.18 Trademarks, Licenses, Etc. Schedule 5.18 of the Disclosure Schedule sets
forth all of the trademarks, trade names, service marks, patents, copyrights, registrations, or
applications with respect thereto, and licenses, other than off-the-shelf licenses, or rights under
them owned, used, or intended to be acquired or used by CEC and GTI, and, to the extent indicated
in Schedule 5.18 of the Disclosure Schedule, they have been duly registered or an
application has been filed in such offices as are indicated therein. CEC and GTI are the sole and
exclusive owner of the trademarks, trade names, service marks, and copyrights, the holder of the
full record title to the trademark registrations and the sole owner of the inventions covered by
the patents and patent applications, all as set forth in Schedule 5.18 of the Disclosure
Schedule. CEC and GTI have the sole and exclusive right, to the extent listed in Schedule
5.18 of the Disclosure Schedule, to use such trademarks, trade names, service marks, patents
and copyrights, and, except to the extent set forth in Schedule 5.18 of the Disclosure
Schedule, all of them are free and clear of any mortgages, liens, encumbrances, equities, licenses,
claims, and obligations to other persons of whatever kind and character.

5.19 Insurance Policies. The insurance policies listed and described briefly in
Schedule 5.19 of the Disclosure Schedule constitute all of the policies in force and effect
in respect of the business, properties and assets, including, without limitation, insurance on
personnel, of CEC and GTI. CEC and GTI are not in material default under any such policy. The
insurance policies so listed and identified are sufficient in nature, scope, and amounts to insure
adequately (and, in any event, in amounts sufficient to prevent CEC and GTI from becoming a
co-insurer within the terms of such policies) the business, properties, and assets of CEC and GTI.
CEC and GTI has not been refused insurance by any insurance carrier to which it has applied for
insurance.

5.20 Extraordinary Events. From the end of its most recent fiscal year to the date
hereof, neither the business nor properties nor condition, financial or other, nor results of
operations of CEC and GTI have been materially and adversely affected in any way as the result of
any fire, explosion, accident, casualty, labor disturbance, requisition, or taking of property by
any governmental body or agency, flood, embargo, or Act of God or the public enemy, or cessation,
interruption, or diminution of operations, whether or not covered by insurance.

 

8

 

5.21 Adverse Restrictions. Except as set forth on Schedule 5.21, the
execution and delivery of this Agreement and the consummation of the transactions contemplated
hereby are not events that of themselves or with the giving of notice or the passage of time or
both, could constitute, on the part of CEC and GTI, a violation of or conflict with or result in
any breach of, or default under the terms, conditions, or provisions of, any judgment, law, or
regulation, or of the Certificate of Incorporation or Bylaws of CEC and GTI, any agreement or
instrument to which CEC and GTI are parties or by which it is bound, or result in the creation or
imposition of any lien, charge, or encumbrance of any nature whatsoever on the property or assets
of CEC and GTI and no such event of itself or with the giving of notice or the passage of time or
both will result in the acceleration of the due date of any obligation of CEC or GTI.

5.22 Material Information. Neither the Financial Statements nor this Agreement
(including the Schedules and Exhibits hereto) nor any certificate or other information or document
furnished or to be furnished by Seller to Purchaser contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact required to be stated herein or
therein or necessary to make the statements herein or therein not misleading.

5.23 Omitted.

5.24 Certain Transactions. None of the officers, directors, or employees of CEC and
GTI are presently a party to any transaction with Seller, CEC and GTI (other than for services as
officers, directors, and employees), including, without limitation, any contract, agreement, or
other arrangement providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from, any officer, director, any such employee,
any member of a family of any officer, director, or such employee or any corporation, partnership,
trust, or other entity in which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee, or partner.

5.25 No Governmental Authorizations or Approvals Required. Except as set forth in
Schedule 5.25 of the Disclosure Statement, no authorization or approval of, or filing with,
any governmental agency, authority, or other body will be required in connection with the execution
and delivery of this Agreement or the consummation of the transactions contemplated hereby.

5.26 Employee Benefit Plans.

 

9

 

Schedule 5.26 of the Disclosure Schedule contains a true, correct, and complete list
of all pension, profit sharing, retirement, deferred compensation, welfare, insurance disability,
bonus, vacation pay, severance pay, and other similar plans, programs, or agreements, and every
material personnel policy, whether reduced to writing or not, relating to any persons employed by
CEC and GTI and maintained at any time by CEC and GTI or by any other member (hereinafter,
“Affiliate”) of a controlled group of corporations, group of trades, or businesses under
common control or affiliated service group that includes CEC and GTI (as defined for purposes of
Section 414(b), (c), and (m) of the Code) (collectively, the “Plans”). Seller has made
available to Purchaser true, correct, and complete copies of all Plans that have been reduced to
writing, together with all documents establishing or constituting any related trust, annuity
contract, insurance contract, or other funding instrument, and true, correct, and complete written
summaries of those that have not been reduced to writing. For each “defined benefit plan,” Seller
has made available a copy of the latest annual actuarial report, and for all Plans the latest Forms
5500. Except as set forth in Schedule 5.26 of the Disclosure Schedule, neither CEC and GTI
nor any Affiliate has any obligation or other employee benefit plan liability under applicable law;
nor has CEC or GTI or any Affiliate ever been obligated to contribute to any “multi-employer plan,”
as defined in Section 3(37) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”). Neither CEC or GTI nor any Affiliate has incurred any “withdrawal liability”
calculated under Section 4211 of ERISA and there has been no event or circumstance that would cause
them to incur any such liability. Neither CEC and GTI nor any Affiliate has ever maintained a Plan
providing health or life insurance benefits to former employees. No plan previously maintained by
CEC and GTI or its Affiliates that was subject to ERISA has been terminated; no proceedings to
terminate any such plan have been instituted within the meaning of Subtitle C of Title IV of ERISA;
and no reportable event within the meaning of Section 4043 of Subtitle C has occurred with respect
to any such Plan, and no liability to the Pension Benefit Guaranty Corporation has been incurred.
For each Plan, CEC and GTI and every Affiliate are in compliance, in all material respects, with
all requirements prescribed by all statutes, regulations, orders, or rules currently in effect, and
they have in all material respects performed all obligations required to be performed by them.
Neither CEC and GTI nor any Affiliate, nor any of their directors, officers, employees, or agents,
nor any trustee or administrator of any trust created under the Plans, have engaged in or been a
party to any “prohibited transaction” as defined in Section 4975 of the Code and Section 406 of ERISA that could
subject CEC and GTI or Purchaser or their affiliates, directors, or employees or the Plans or the
trusts relating thereto or any party dealing with any of the Plans or trusts to any tax or penalty
on “prohibited transactions” imposed by Section 4975 of the Code. Except as set forth in
Schedule 5.26 of the Disclosure Schedule, neither the Plans nor the trusts created
thereunder have incurred any “accumulated funding deficiency,” as such term is defined in Section
412 of the Code and regulations issued thereunder, whether or not waived.

Each Plan intended to qualify under Section 401(a) of the Code has been determined by the
Internal Revenue Service to so qualify, and the trusts created thereunder have been determined to
be exempt from tax under Section 501(a) of the Code; copies of all determination letters have been
delivered to Purchaser; and nothing has occurred since the date of such determination letters that
might cause the loss of such qualification or exemption. For each funded defined benefit plan, the
present value of the actuarial accrued liability, determined on a plan termination basis, does not
exceed the fair market value of the assets held under such Plan, and there is no unpaid
contribution for any Plan year ended prior to the Closing Date as required under Section 412 of the
Code. For each Plan that is a qualified profit sharing or stock bonus plan, all employer
contributions accrued for plan years ending prior to the Closing Date under the Plan terms and
applicable law have been made.

Except as set forth in Schedule 5.26 of the Disclosure Schedule, all of the
liabilities with respect to all of the Plans are accurately reflected in the Financial Statements
and CEC’s and GTI’s Balance Sheets.

 

10

 

5.27 Continuing Representations. The representations and warranties of Seller herein
contained (a) shall survive the Closing for a period of eighteen (18) months and (b) relating to
Sections 5.2, 5.16 and 5.17 shall survive the Closing for the applicable statute of
limitations.

6. REPRESENTATIONS, WARRANTIES, AND AGREEMENTS OF PURCHASER.

Purchaser represents and warrants as follow:

6.1 Organization and Corporate Power. Purchaser is a limited liability company duly
organized, validly existing, and in good standing under the laws of its jurisdiction of formation.

6.2 Due Authorization; Effect of Transaction. No provision of Purchaser’s Certificate
of Incorporation or Bylaws, or of any agreement, instrument, or understanding, or any judgment,
decree, rule, or regulation, to which Purchaser is a party or by which it is bound, has been, or
will be violated by the execution by Purchaser of this Agreement or the performance or satisfaction
of any agreement or condition herein contained upon its part to be performed or satisfied, and all requisite corporate and other
authorizations for such execution, delivery, performance, and satisfaction have been duly obtained.
Upon execution and delivery, this Agreement will be a legal, valid, and binding obligation of
Purchaser, enforceable in accordance with its terms. Purchaser is not in default in the
performance, observance, or fulfillment of any of the terms or conditions of its Certificate of
Incorporation or Bylaws.

6.3 Sufficient Funds. The Purchaser currently has sufficient immediately available
funds in cash and will at the Closing have sufficient immediately available funds, in cash, to pay
the cash portion of the purchase price and to pay any other amounts payable pursuant to this
Agreement. The Purchaser will ensure that the Purchaser and any lender to the Purchaser, or
subsidiary of the Purchaser, in connection with the transactions contemplated by this Agreement,
comply with the policies and procedures for the assignment of claims under the Assignment of Claims
Act of 1940, as amended, and Federal Acquisition Regulation subpart 32.8, 52.232-23 and 52.232-33.

6.4 Continuing Representations. The representations and warranties of Purchaser
herein contained shall survive the Closing for a period of three (3) years.

7. INTENTIONALLY OMITTED.

8. CONDITIONS OF PURCHASER’S OBLIGATIONS.

The obligations of Purchaser hereunder are subject to the fulfillment to the reasonable
satisfaction of the Purchaser, prior to or at the Closing, of each of the following conditions:

8.1 Opinion of Seller’s Counsel. Seller shall have furnished Purchaser with an
opinion, dated the Closing Date, of Holland & Knight, LLP, counsel for Seller, in form and
substance reasonably satisfactory to the Purchaser and its counsel, attached hereto as Exhibit C.

 

11

 

8.2 No Opposition. No suit, action, or proceeding shall be pending or threatened at
any time prior to or on the Closing Date before or by any court or governmental body (a) seeking to
restrain or prohibit, or to obtain damages or other relief in connection with, the execution and
delivery of this Agreement or the consummation of the transactions contemplated hereby; or (b) that
might materially and adversely affect the business or properties or condition, financial or other,
or results of operations of CEC and GTI.

8.3 Noncompetition Agreement. The Seller shall have executed and delivered to
Purchaser a Noncompetition Agreement, in substantially the form of Exhibit D hereto.

8.4 Permits, Etc. Purchaser shall have obtained, all such permits, licenses,
approvals, authorizations, variances, agreements, and warranties from federal, state, and local
governmental authorities, which Purchaser shall, in the exercise of its sole discretion, deem
necessary or desirable for the operation by Purchaser of the businesses of CEC and GTI after the
Closing.

8.5 Insurance. CEC and GTI shall have obtained appropriate binders or consents as to
policies of insurance to be assigned to Purchaser hereunder.

8.6 Representations and Covenants. The representations and warranties of Seller
contained in this Agreement or otherwise made in writing by it or him or on its or his behalf
pursuant hereto or otherwise made in connection with the transactions contemplated hereby shall be
true and correct at and as of the Closing Date with the same force and effect as though made on and
as of such date; each and all of the covenants, agreements, and conditions to be performed or
satisfied by Seller hereunder at or prior to the Closing Date shall have been duly performed or
satisfied; and Seller shall have furnished Purchaser with such certificates and other documents
evidencing the truth of such representations and warranties and the performance and satisfaction of
such covenants, agreements, and conditions as Purchaser shall have reasonably requested.

8.7 Satisfaction of Counsel. The validity of all transactions herein mentioned, as
well as the form and substance of all opinions, bills of sale, assignments, deeds, stock powers,
certificates, documents, and other instruments hereunder, shall be satisfactory in all reasonable
respects to Weintraub Law Group PC, counsel to Purchaser.

8.8 Intentionally Omitted.

8.9 Taxes.

(a) Seller shall be responsible for the payment of all federal, state and local income,
payroll and franchise taxes (“Taxes”) of GTE and CEC incurred through the Closing Date,
included, but not limited to, the taxes incurred as a result of the elimination of
intercompany loans as set forth in Section 8.11. To the extent that Taxes have not
been paid as of the Closing Date, the parties shall adjust the Purchase Price accordingly.

 

12

 

(b) Straddle Period. In the case of any taxable period that includes (but does not end
on) the Closing Date (a “Straddle Period”), the amount of any Taxes based on or measured by
income or receipts of CEC and GTI for the Pre-Closing Tax Period shall be determined based
on an interim closing of the books as of the close of business on the Closing and the amount
of other Taxes of GTE and CEC for a Straddle Period that relates to the Pre-Closing Tax
Period shall be deemed to be the amount of such Tax for the entire taxable period multiplied
by a fraction the numerator of which is the number of days in the taxable period ending on the Closing Date and the denominator of which is the
number of days in such Straddle Period.

(c) Responsibility for Filing Tax Returns. Purchaser shall prepare or cause to be
prepared and file or cause to be filed all Tax Returns for CEC and GTI that are filed after
the Closing Date except for those income tax returns included on Schedule 5.16. Purchaser
shall permit Sellers to review and comment on each such Tax Return described in the
preceding sentence prior to filing.

8.10 Verizon Settlement. Verizon Federal, Inc., the Seller and GTI shall have
executed the Amendment to the Settlement Agreement, the Promissory Note in the amount of $250,000,
the Promissory Note in the amount of $750,000 and the Verizon Security Agreement, collectively
attached hereto as Exhibit E.

8.11 Intercompany Loans. All intercompany loans between CEC, GTI and Seller shall
have been forgiven in full, and each of Seller, CEC and GTI shall have released all security
interests it may have in any of the assets of CEC and GTI. Seller shall be responsible for all
taxes incurred as a result of the transactions set forth in this Section 8.11, and such
transactions shall be deemed to have occurred prior to the Closing Date. To the extent that a tax
liability is to be recognized, the Seller shall pay to GTI from the Purchase Price the amount of
such tax liability.

8.12 Diligence. Purchaser shall have completed its diligence review of the business,
properties, assets, and liabilities of Seller, CEC and GTI, with results satisfactory to Purchaser.

8.13 Releases. Seller, CEC and GTI shall have obtained releases of all issued and
outstanding shares of GTI and CEC that have been pledged to (i) Kallina Corporation, or its
affiliates and assigns, pursuant to that certain Stock Pledge Agreement dated August 31, 2007 among
Kallina Corporation, Seller, CEC, Digital Angel Corporation and Digital Angel Technology
Corporation, and (ii) Laurus Master Fund, Ltd., or its affiliates and assigns, pursuant to that
certain Stock Pledge Agreement dated August 24, 2006 among Laurus Master Fund, Ltd., Seller and
CEC. Seller, CEC and GTI shall have received releases of UCC-1 filing statements of Citizens
Leasing Corp. and Elliot International, L.P., Midsummer Investment, Ltd., Elliott Associates, L.P.,
Omicron Master Trust, Islandia, L.P. and Portside Growth and Opportunity Fund.

 

13

 

8.14 Consents. Seller, CEC and GTI shall have received a written consent to transfer
the Deed of Lease Agreement dated July 31, 1989, as amended, supplemented or modified from time to
time, between Brit-Southgate LLC and GTI for real property located at the Southgate Business
Center, 4500 Southgate Place, Chantilly, Virginia 20151.

8.15 Terminations. The GTI 2008 Executive Team Bonus Plan, the GTI Non-management
Bonus Plan and the CEC/GTI Employee Handbook have been terminated as of the Closing Date and will
have no force or affect after the Closing Date.

9. CONDITIONS OF SELLER’S OBLIGATIONS.

The obligations of Seller hereunder are subject to the fulfillment to the reasonable
satisfaction of Seller prior to or at the Closing of each of the following conditions:

9.1 Representations and Covenants. The representations and warranties of Purchaser
contained in this Agreement or otherwise made in writing by it or on its behalf pursuant hereto or
otherwise made in connection with the transactions contemplated hereby shall be true and correct at
and as of the Closing Date with the same force and effect as though made on and as of such date;
each of the covenants, agreements, and conditions to be performed or satisfied by Purchaser
hereunder at or prior to the Closing Date shall have been duly performed or satisfied; and
Purchaser shall have furnished Seller with such certificates or other documents evidencing the
truth of such representations and warranties and the performance and satisfaction of such
covenants, agreements, and conditions as Seller shall have reasonably requested.

9.2 No Opposition. No suit, action, or proceeding shall be pending or threatened on
the Closing Date before or by any court or governmental authority seeking to restrain or prohibit
the execution and delivery of this Agreement or the consummation of the transactions contemplated
hereby.

9.3 Promissory Note and Security Agreement. Purchaser shall have executed and
delivered to Seller a Promissory Note and Security Agreement, in substantially the forms of
Exhibit F and Exhibit G hereto.

9.4 Consent. Seller shall have received a full consent from its third party lender
for all transactions contemplated hereby.

9.5 Verizon. Purchaser shall have wire transferred, simultaneously with the Close,
the sum of One Million Five Hundred Thousand Dollars ($1,500,000) to Verizon Federal, Inc. and
received a full release from Verizon Federal of any and all obligations relating to that certain
Confidential Settlement Agreement and Release effective as of December 19, 2007, between Seller,
Verizon and GTI.

10. INDEMNIFICATION .

 

14

 

10.1 Indemnification by Seller.

(a) Seller hereby agrees to indemnify, defend, and hold Purchaser and its officers,
directors, employees, attorneys and accountants (collectively with Purchaser, the “Purchasing Parties”) harmless from and against the amount of any actual damage,
loss, cost, or expense (including reasonable attorneys’ fees and settlement costs)
(collectively “Loss”) to Purchasing Parties occasioned or caused by, resulting from, or
arising out of:

(i) Any failure by Seller to perform, abide by, or fulfill any of the
agreements, covenants, or obligations set forth in or entered into, in connection
with this Agreement to be so performed or fulfilled by Seller.

(ii) Any material inaccuracy in or breach of any of the Seller’s
representations or warranties set forth in this Agreement, or any certificate or
Schedule or other writing furnished pursuant hereto.

(iii) Any liability or obligation for any tort or any breach or violation of
any contractual, quasi-contractual, legal, fiduciary, or equitable duty by Seller,
whether before, at, or after the Closing.

The amount of any Loss shall be the amount of cash reimbursement or set-off that, when
received by the Purchaser incurring such loss, shall place the Purchaser in the same
financial position it or they would have been in if such Loss has not occurred.

10.2 Indemnification by Purchaser.

(a) Purchaser hereby agrees to indemnify, defend, and hold Seller and its
officers, directors, employees, attorneys and accountants harmless from and against any Loss
occasioned or caused by, resulting from, or arising out of:

(i) Any failure by Purchaser to perform, abide by, or fulfill any of the
agreements, covenants, or obligations set forth in or entered into, in connection
with this Agreement to be so performed or fulfilled by Purchaser;

(ii) Any inaccuracy in or breach of any of the Purchaser’s representations or
warranties set forth in this Agreement, or any certificate or Schedule or other
writing furnished pursuant hereto; or

(iii) the ownership, use or operations of CEC and GTI from and after the
Closing.

 

15

 

10.3 Any party entitled to indemnification pursuant to Article 10 (the “Indemnitee”) shall
give prompt written notice to the party from whom such indemnification is sought (the
“Indemnitors”) of any claim (actual or threatened) or other event that in the judgment of the
Indemnitee might result or has resulted in a Loss by the Indemnitee hereunder, and the Indemnitor
shall have the right to assume the defense of such claim or any litigation resulting therefrom;
provided that counsel for the Indemnitor, who shall conduct the defense of such claim
(actual or threatened) or litigation, shall be reasonably satisfactory to the Indemnitee, and the
Indemnitee may participate in such defense at their expense, and provided, further, that
the omission by the Indemnitee to give notice as provided herein shall not relieve the Indemnitor
of its obligations hereunder except to the extent that the omission results in a failure of actual
notice to the Indemnitor and the Indemnitor is damaged solely as a result of the failure to give
notice. The Indemnitor, in the defense of any such claim or litigation, shall not, except with the
consent of the Indemnitee, consent to the entry of any judgment or decree or enter into any
settlement that does not include as an unconditional term thereof the giving by the claimant or
plaintiff to the Indemnitor of a release from all liability in respect to such claim or litigation,
and the Indemnitee shall not have liability with respect to any payment made by the Indemnitor in
connection with the settlement, satisfaction, or compromise of any claim unless the Indemnitee
shall have approved thereof in advance in writing, which approval shall not unreasonably be
withheld or delayed. If the Indemnitee shall not have received notice that the Indemnitor shall
assume the defense of such claim within twenty (20) days after the notice is sent to the Indemnitor
of the existence of such claim, the Indemnitee shall be free to proceed with the defense of such
claim. Each such notice shall be accompanied (or followed as promptly as is reasonably practicable
after the amount of such Loss becomes determinable) by a certificate signed by an officer of the
Indemnitee or the attorney for the Indemnitee, as the case may be, and setting forth in reasonable
detail the calculation of the amount of such Loss in accordance with the provisions hereof, and
accompanied by copies of all relevant documents and records. The omission to give such notice or
provide such certificate by the Indemnitee shall not relieve the Indemnitor of its obligation under
this Section 10.2 except to the extent such omission results in a failure of actual notice
to the Indemnitor and the Indemnitor is damaged solely by such failure to give notice. No Loss
shall be considered to have occurred with respect to any payment made by any Indemnitee in
settlement, satisfaction, or compromise of any claim unless the Indemnitor shall have approved
thereof in advance and in writing.

10.4 Set-Off or Reimbursement. The Indemnitee shall have the right to set-off against
any payments due and payable by the Indemnitee to the Indemnitor as provided for herein (or, if
such amounts have theretofore been paid, then to receive prompt reimbursement from the Indemnitor
of an amount equal to) the amount of all Losses incurred by the Indemnitee. The Indemnitee shall
deliver to the Indemnitor a written notice explaining the nature and amount of each such set-off or
required reimbursement as promptly as is reasonably practicable after the Indemnitee shall have
determined to make such set-off or to require such reimbursement. The Indemnitee may make such
set-offs or require such reimbursements in any order they choose.

 

16

 

10.5 Limitations. The aggregate maximum total liability of Seller for all Loss under
this Article 10 shall be six hundred thousand dollars ($600,000.00). The foregoing
limitation on liability shall not apply to Loss relating, arising or resulting from fraud,
intentional misconduct or bad faith of Seller in which a court of competent jurisdiction issues a
judgment, order or decree concluding that such party’s action or inaction constituted fraud,
intentional misconduct or bad faith. Seller shall not be required pursuant to Article 10
of this Agreement to indemnify the Purchasing Parties for any Loss until the aggregate amount of
the Loss under Article 10 exceeds twenty five thousand dollars ($25,000) (the “Basket
Amount”), after which Seller shall be obligated for any and all Loss up to the aggregate maximum total liability of Seller,
including the Basket Amount.

11. OMITTED.

12. BROKERAGE FEE.

Seller and Purchaser each represent that no broker has been involved in this transaction and
each party agrees to indemnify and hold the others harmless from payment of any brokerage fee,
finder’s fee, or commission claimed by any party who claims to have been involved because of
association with such party.

13. AMENDMENTS; WAIVERS.

This Agreement constitutes the entire agreement of the parties related to the subject matter
of this Agreement, supersedes all prior or contemporary agreements, representations, warranties,
covenants, and understandings of the parties. This Agreement may not be amended, nor shall any
waiver, change, modification, consent, or discharge be affected, except by an instrument in writing
executed by or on behalf of the party against whom enforcement of any amendment, waiver, change,
modification, consent, or discharge is sought.

Any waiver of any term or condition of this Agreement, or of the breach of any covenant,
representation, or warranty contained herein, in any one instance, shall not operate as or be
deemed to be or construed as a further or continuing waiver of such term, condition, or breach of
covenant, representation, or warranty, nor shall any failure at any time or times to enforce or
require performance of any provision hereof operate as a waiver of or affect in any manner such
party’s right at a later time to enforce or require performance of such provision or of any other
provision hereof; and no such written waiver, unless it, by its own terms, explicitly provides to
the contrary, shall be construed to effect a continuing waiver of the provision being waived and no
such waiver in any instance shall constitute a waiver in any other instance or for any other
purpose or impair the right of the party against whom such waiver is claimed in all other instances
or for all other purposes to require full compliance with such provision.

14. ASSIGNMENT; SUCCESSORS AND ASSIGNS.

This Agreement shall not be assignable by any party without the written consent of the others.
This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and permitted assigns.

15. SEVERABILITY.

 

17

 

If any provision or provisions of this Agreement shall be, or shall be found to be, invalid,
inoperative, or unenforceable as applied to any particular case in any jurisdiction or
jurisdictions, or in all jurisdictions or in all cases, because of the conflict of any provision
with any constitution or statute or rule of public policy or for any other reason, such
circumstance shall not have the effect of rendering the provision or provisions in question
invalid, inoperative, or unenforceable in any other jurisdiction or in any other case or
circumstance or of rendering any other provision or provisions herein contained invalid,
inoperative, or unenforceable to the extent that such other provisions are not themselves actually
in conflict with such constitution, statute, or rule of public policy, but this Agreement shall be
reformed and construed in any such jurisdiction or case as if such invalid, inoperative, or
unenforceable provision had never been contained herein and such provision reformed so that it
would be valid, operative, and enforceable to the maximum extent permitted in such jurisdiction or
in such case.

16. COUNTERPARTS.

This Agreement may be executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same instrument, and in pleading
or proving any provision of this Agreement it shall not be necessary to produce more than one such
counterpart. Facsimile transmission (which shall be deemed to include the e-mail delivery of
documents in Adobe pdf or similar static image format) of any signed original counterpart and
retransmission of any signed facsimile transmission shall be deemed the same as the delivery of an
original.

17. SECTION AND OTHER HEADINGS.

The headings contained in this Agreement are for reference purposes only and shall not in any
way effect the meaning or interpretation of this Agreement.

18. NOTICES.

All notices, requests, demands, and other communications hereunder shall be in writing and
shall be deemed to have been duly given if delivered or mailed, postage prepaid, certified mail,
return receipt requested:

	 	(a)	 	TO SELLER: If to Seller:

	 
	 	 	 	Digital Angel Corporation

1690 S. Congress Avenue, Suite 201

Delray Beach, Florida 33445

Attn: Lorraine Breece, CFO

Email: lbreece@digitalangel.com

Facsimile: 561-276-0977

 

18

 

	 	 	 	With a copy to:

	 
	 	 	 	Patricia Petersen at the same address and fax number above

Email: ppetersen@digitalangelcorp.com

	 
	 	(b)	 	TO PURCHASER: If to Purchaser:

	 
	 	 	 	Sterling Hallmark, Inc.

27131 Calle Arroyo, Suite 1705

San Juan Capistrano, California 92675

Attn: Kevin Kelly

Email: pkkelly1@cox.net

Facsimile: 949-248-8926

	 
	 	 	 	with a copy to:

	 
	 	 	 	Weintraub Law Group PC

10085 Carroll Canyon Road

Suite 230

San Diego, California 92131

Attn: Richard A. Weintraub, Esq.

Email: rick@weintraublawgroup.com

Facsimile: 858-566-7015

and/or to such other person(s) and address(es) as either party shall have specified in
writing to the other.

19. GENDER.

Whenever used herein, the singular number shall include the plural, the plural shall include
the singular, and the use of any gender shall include all genders.

20. LAW TO GOVERN.

This Agreement shall be governed by and construed and enforced in accordance with the law
(other than the law governing conflict of law questions) of Delaware.

21. COURTS.

Any action to enforce, arising out of, or relating in any way to, any of the provisions of
this Agreement may be brought and prosecuted in such court or courts located in Orange County,
California as is provided by law; and the parties consent to the jurisdiction of the court or
courts located in Orange County, California and to service of process by registered mail, return
receipt requested, or in any other manner provided by law.

 

19

 

22. ATTORNEYS FEES.

In the event of any controversy, including, but not limited to, any arbitration or litigation
in a court of law or equity between the parties hereof, the prevailing shall be entitled to
reasonable attorney’s fees and costs incurred therein.

[This space left intentionally blank. Signature page follows.]

 

20

 

IN WITNESS WHEREOF, Seller and Purchaser have caused this Agreement to be executed as of the
date first above written.

	 	 	 	 	 
	 	 	STERLING HALLMARK, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Kevin Kelly
	 

	 	 	 	 
	 

	 	Name:
	 	Kevin Kelly
	 

	 	 	 	 
	 

	 	Title:
	 	Chief Financial Officer
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	DIGITAL ANGEL CORPORATION
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Lorraine M. Breece
	 

	 	 	 	 
	 

	 	Name:
	 	Lorraine M. Breece
	 

	 	 	 	 
	 

	 	Title:
	 	Senior Vice President and Chief Financial Officer
	 

	 	 	 	 

 

 

 

EXHIBIT B

Certain Defined Terms

“CERCLA” means the Comprehensive Environmental Response, Compensation, and Liability
Act (42 U.S.C. Section 9601 et seq.), as amended or supplemented from time to time.

“Contaminant” means any waste, pollutant, hazardous material, hazardous substance,
toxic substance, hazardous waste, special waste, petroleum, or petroleum-derived substance or
waste, including, without limitation, any pollutant material, substance, or waste regulated under
any Environmental Law.

“Environmental Laws” means all federal, state, local, and foreign laws or regulations,
codes, orders, decrees, judgments, or injunctions issued, promulgated, approved, or entered
thereunder relating to pollution or protection of the environment, including, releases or
threatened releases of contaminants (including, without limitation, oil, asbestos, and radiation)
into the environment (including, without limitation, ambient air, surface water, ground water, land
surface, or subsurface strata) or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling of pollutants, contaminants.
Environmental Laws shall include, without limitation, CERCLA, the Hazardous Material Transportation
Act (49 U.S.C. Section 1801 et seq.), the Solid Waste Disposal Act (42 U.S.C. Section 6901 et
seq.), the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act
(42 U.S.C. Section 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. Section 2601 et
seq.), the Occupational Safety and Health Act (29 U.S.C. Section 651 et seq.), the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Section 136 et seq.), the Food, Drug, and
Cosmetic Act (21 U.S.C. Section 301 et seq.), the Medical Waste Tracking Act of 1988, Pub. L. No.
100-582, 102 Stat. 2950 (1988), as such laws have been amended or supplemented from time to time,
and any analogous local, or foreign, statutes, ordinances, or bylaws.

“Environmental Liabilities and Costs” means, as to CEC and GTI, all liabilities,
obligations, responsibilities, remedial actions, losses, damages, punitive damages, consequential
damages, treble damages, costs, and expenses (including, without limitation, all reasonable fees,
disbursements and expenses of counsel, expert and consulting fees, and costs of investigation and
feasibility studies), fines, penalties, sanctions and interest incurred as a result of any claim or
demand, by any corporation, partnership, trust, individual, or other entity (“Person”),
arising from environmental, health, or safety conditions or a Release or threatened Release
resulting from the past operations of CEC and GTI, or for which CEC and GTI are responsible under
any Environmental Law.

“Environmental Lien” means any lien or similar interest in favor of any federal,
state, or local governmental authority for Environmental Liabilities and Costs.

“Release” means, as to the Seller, any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, pouring, emptying, escaping, dumping,
discarding, leaching, or migration of a Contaminant into the indoor or outdoor environment or
into or out of any property while owned, leased, or controlled by Seller, including, without
limitation, the movement of Contaminants through or in the air, soil, surface water, groundwater,
or property, including, without limitation, the abandonment or discarding of barrels, containers,
and other closed receptacles containing any contaminant.

 

 

 

“Remedial Action” means all actions necessary to (i) clean up, remove, treat, or in
any other way address Contaminants in the indoor or outdoor environment, (ii) prevent a Release or
condition that is reasonably likely to result in a Release or minimize further release of
Contaminants so they do not migrate or endanger or threaten to endanger public health or welfare or
the indoor or outdoor environment, or (iii) perform pre-remedial studies and investigations and
post-remedial monitoring and care.

"Tax” or “Taxes” means any federal, state, local, or foreign income, gross receipts, license,
payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, customs
duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not and including any obligations to
indemnify or otherwise assume or succeed to the Tax liability of any other Person.

"Tax Return” means any return, declaration, report, claim for refund, or information return or
statement relating to Taxes, including any schedule or attachment thereto, and including any
amendment thereof.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00144-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00144-of-00352.parquet"}]]