Document:

Filed by Bowne Pure Compliance

Exhibit 10.11

EMPLOYMENT AGREEMENT

THIS AGREEMENT, dated as of the 25th day of September 2008 and made effective as of
the 31st day of May, 2008, between Community Bankers Trust Corp., a corporation
organized and existing under the laws of the State of Delaware (“Company”), and Gary A.
Simanson (“Employee”).

WHEREAS, the respective mergers of TransCommunity Financial Corporation (“TFC”) and BOE
Financial Services of Virginia, Inc. (“BOE”) with and into the Company became effective on May 31,
2008 (the “Merger Date”); and

WHEREAS, as contemplated by the merger agreements with TFC and BOE, Employee shall become an
employee of the Company at the Merger Date.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the parties do hereby
agree as follows:

1. Employment. Effective at the Merger Date, Employee shall be employed by the
Company on the terms and subject to the conditions set forth in this Agreement.

2. Term. The term of the employment hereunder shall commence on the Merger Date and
shall continue until the third anniversary of the Merger Date, unless terminated earlier as
provided herein (the “Term”); provided, however, that on each anniversary of the Merger
Date, upon the review and approval of the Company’s Board of Directors, the Term shall be extended
by an additional year unless the Company or Employee gives written notice at least thirty (30) days
prior to an anniversary date that no further extensions shall occur.

3. Position and Responsibilities. Commencing upon the Merger Date, Employee shall
serve as the Vice Chairman and Chief Strategic Officer of the Company. Employee shall have the
duties, responsibilities, rights, power and authority that may be from time to time delegated or
assigned to him by the Board of Directors of the Company.

4. Duties. During the period of employment hereunder, Employee shall devote his time,
attention, skills and efforts to the business of the Company and the faithful performance of his
duties and responsibilities hereunder. Employee shall be loyal to the Company, but shall not be
precluded from engaging in such other business pursuits as may be permitted by the Company.
Employee will be permitted to work from the location of his choice.

5. Compensation and Benefits.

(a) Annual Base Salary. During the Term, the Company shall pay Employee an
annual base salary of $270,000, subject to applicable federal and state income and social
security tax withholding requirements (the “Base Salary”). The Base Salary shall be
payable in accordance with the Company’s customary payroll practices and may be increased, but not decreased, upon regular reviews in accordance with senior management
compensation policies and performance of Employee.

 

 

 

(b) Reimbursement of Expenses. The Company shall pay or reimburse Employee for
all reasonable travel and other business related expenses incurred by him in performing his
duties under this Agreement. Such expenses shall be appropriately documented and submitted
to the Company in accordance with the Company’s policies and procedures as established from
time to time.

(c) Vacation and Sick Leave. Employee shall be provided with vacation and sick
leave in accordance with the Company’s policies and procedures for senior executives as
established from time to time, but in no event less than four weeks of vacation annually.

(d) Employee Benefit Plans. During the Term, Employee shall be entitled to
participate in the employee benefit plans of the Company or its successors or assigns, as
presently in effect or as they may be modified or added to from time to time, to the extent
such benefit plans are provided to other similarly situated senior executive employees on a
basis not less favorable than that provided to such class of employees.

(e) Incentive Bonus Plans. During the Term, Employee shall be entitled to
participate in the Company’s incentive-based bonus plans, applicable to his employment
position, in accordance with both the terms and conditions of such plans and the Company’s
policies and procedures as established from time to time.

(f) Signing and Other Bonuses; Other Employment Benefits. Employee
will receive a signing bonus in the amount of $750,000. In addition, Employee shall be
entitled to receive a cash bonus payment for the financial advisory and other services
rendered by Employee in connection with the negotiation and consummation of any merger or
other business combination involving the Company or any of its affiliates or the acquisition
by the Company or any of its affiliates of a substantial equity interest in or a substantial
portion of the assets or deposits of another financial institution. The amount of any such
cash bonus shall be determined in the sole discretion of the Board of Directors of the
Company. The Company will provide Employee with an appropriate automobile or automobile
allowance, including appropriate insurance coverage and maintenance expenses, as determined
by the Board of Directors of the Company.

(g) Stock Compensation. Employee will be entitled to receive during the Term
stock awards under the Company’s stock incentive plan in such amounts and subject to such
terms and conditions as determined by the Compensation Committee or the Board of Directors.
In addition, and in connection with the initial grant of stock awards made after the Merger
Date to the other senior executive officers of the Company, Employee shall receive a stock
option or other stock award to purchase or acquire such number of shares of the Company
common stock as determined by the appropriate committee of the Board of Directors with such
terms and conditions as may be set forth in a separate stock award agreement.

 

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6. Termination of Employment.

(a) Termination Upon Death or Disability. If Employee dies while employed by
the Company, the Company will pay his beneficiary designated in writing or, if none, his
estate, as applicable, an amount equal to two (2) months of Employee’s Base Salary in effect
at his death. Such amount shall be payable in a lump sum payment within twenty (20) days of
Employee’s death. If the Company determines that the Disability, as hereinafter defined, of
Employee has occurred, it may terminate Employee’s employment and this Agreement upon thirty
(30) days written notice, provided that, within such thirty day notice period, Employee
shall not have returned to performance of Employee’s assigned duties. If Employee’s
employment is terminated for Disability, Employee shall be entitled only to the disability
benefits provided under the policy of disability insurance provided for all employees, as
such policy may be changed from time to time. For the purpose of this Agreement,
“Disability” shall be as defined under the Company’s disability insurance policy
maintained for Employee from time to time.

(b) Termination for Cause. Employee’s employment may be terminated for Cause
at any time without further liability on the part of the Company. If the Company terminates
Employee for Cause, Employee shall have no right to render services or to receive
compensation or other benefits under this Agreement for any period after such termination.
Termination for Cause shall be effective immediately or upon such notice to Employee as may
determined by the Company. For the purpose of this Agreement, “Cause” means: (A)
the repeated failure of Employee to perform his responsibilities and duties hereunder after
reasonable notice and opportunity to cure; (B) the commission of an act by Employee
constituting dishonesty or fraud against the Company or the Bank; (C) the conviction of or
the entering of a guilty or no contest plea with respect to a felony or any crime involving
moral turpitude; (D) any breach by Employee of a material term of this Agreement, or
violation in any material respect of any code or standard of behavior generally applicable
to officers of the Company or the Bank, after being advised in writing of such breach or
violation and being given a reasonable opportunity and period (as determined by the Company)
to remedy such breach or violation; or (E) the willful engaging by Employee in conduct that
is reasonably likely to result, in the good faith judgment of the Company, in material
injury to the Company or any of its subsidiaries, monetarily or otherwise.

(c) Termination Without Cause. The Company shall have the right to terminate
Employee’s employment at any time without Cause. In the event the Company shall terminate
Employee’s employment without Cause during the Term, Employee shall be entitled to the
following, provided Employee executes a general release of claims prepared by the Company:

(i) For twenty-four (24) months following the date of termination, the Company
shall continue to pay Employee his Base Salary in effect on the date of termination,
such payments to be made on the same periodic dates as salary payments would have
been made to Employee had his employment not been terminated, subject to applicable federal and state income and social security tax
withholding requirements.

 

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(ii) For twenty-four (24) months following the date of termination, Employee
shall continue to receive any health care (medical, dental and vision) plan coverage
provided to Employee and his spouse and dependents at the date of termination, with
the Company paying the normal Company paid contribution, on a monthly or more
frequent basis, for similarly situated active employees during such health care
continuation period, provided that Employee’s continued participation is possible
under the general terms and provisions of such plans and programs. If the Company
reasonably determines that maintaining such coverage for Employee for Employee’s
spouse or dependents is not possible under the terms and provisions of such plans
and programs or any provision of law would create an adverse tax effect for Employee
or the Company due to such participation, the Company shall provide substantially
identical benefits directly or through a separate insurance arrangement.

(iii) The Company’s obligation to provide Employee and his dependents with
health care plan coverage pursuant to Section 6(c)(ii) hereof shall terminate with
respect to each particular type of insurance if and when Employee has obtained
coverage under one or more welfare benefit plans of a subsequent employer that
provides for equal or greater benefits to Employee and his dependents with respect
to that specific type of benefit.

(iv) If Employee dies while receiving such continued health care coverage,
Employee’s spouse and dependents will continue to be covered under all applicable
health care plans during the remainder of the coverage period as described above.
Employee’s spouse and dependents will become eligible for COBRA continuation
coverage for health and dental benefits at the end of such health care continuation
coverage period.

(d) Termination by Employee for Good Reason. Employee may terminate his
employment for Good Reason and will be entitled to the payments and other benefits provided
in Section 6(c), provided Employee executes a general release of claims prepared by the
Company. For purposes of this Agreement, “Good Reason” shall mean:

(i) the continued assignment to Employee of duties inconsistent with Employee’s
position, authority, duties or responsibilities as contemplated by Sections 3 and 4
hereof;

(ii) any action taken by the Company which results in a substantial reduction
in the status of Employee, including a significant diminution in Employee’s
position, authority, duties or responsibilities; or

 

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(iii) any failure by the Company, or any successor entity following a Change of
Control, to comply with the provisions of Section 5 or to honor any other term or
provision of this Agreement.

Notwithstanding the above, Good Reason shall not include the removal of Employee as an
officer of any subsidiary of the Company (including the Bank) in order that Employee might
concentrate his efforts on the Company, any resignation by Employee where Cause for
Employee’s termination by the Company exists, or an isolated, insubstantial and/or
inadvertent action not taken in bad faith by the Company and which is remedied by the
Company within a reasonable time after receipt of notice thereof given by Employee.

(e) Termination by Employee. Employee shall have the right at any time
voluntarily to terminate his employment, upon thirty (30) days written notice, in which
event Employee shall be entitled only to the Base Salary through the date of termination.

7. Change in Control.

(a) Termination Following Change in Control. Notwithstanding Sections 6(c) and
6(d) above, if the Company terminates Employee’s employment without Cause or if Employee
resigns with Good Reason within one hundred twenty (120) days after the occurrence of Good
Reason, in either case within two (2) years of a Change in Control (as defined herein),
Employee will be entitled to the following benefits, subject to applicable federal and state
income and social security tax withholding requirements and the execution by Employee of a
general release of claims prepared by the Company:

(i) Accrued Obligations. The “Accrued Obligations” are the sum
of: (1) Employee’s Base Salary through the date of termination at the rate then in
effect; (2) the amount, if any, of any incentive or bonus compensation theretofore
earned which has not yet been paid; (3) the product of the annual bonus paid or
payable, including by reason of deferral, for the most recently completed year
(excluding any bonus paid or payable pursuant to Section 5(f)) and a fraction, the
numerator of which is the number of days in the current year through the date of
termination and the denominator of which is 365; and (4) any benefits or awards
(including both the cash and stock components) which pursuant to the terms of any
plans, policies or programs have been earned or become payable, but which have not
yet been paid to Employee (but not including amounts that previously had been
deferred at Employee’s request, which amounts will be paid in accordance with
Employee’s existing directions). The Accrued Obligations will be paid to Employee
in a lump sum payment of cash or stock, as applicable, as soon as administratively
feasible after the date of termination; provided, however, that if payment of any
such Accrued Obligations at such time would result in a prohibited acceleration
under Section 409A of the Internal Code of 1986 (the “Code”), such Accrued
Obligations shall be paid at the time the Accrued Obligations would have been paid
under the applicable plan, policy, program or arrangement relating to such Accrued
Obligation had Employee remained employed by the Company.

 

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(ii) Salary Continuance Benefit. The “Salary Continuance
Benefit” is an amount equal to 2.99 times Employee’s Final Compensation. For
purposes of this Agreement, “Final Compensation” means the Base Salary in
effect at the date of termination, plus the average of the annual bonus (excluding
any bonus paid or payable pursuant to Section 5(f)) paid or payable for the two most
recently completed years (both of which shall include any amount contributed
therefrom by Employee to any salary reduction agreement or any other program that
provides for pre-tax salary reductions or compensation deferrals). The Salary
Continuance Benefit will be paid to Employee in a lump sum cash payment as soon as
administratively feasible following the date of termination.

(iii) Health Care Continuance Benefit. (1) For thirty-six (36) months
following the date of termination, coverage under any health care (medical, dental
and vision) plan or plans (“Health Care Plans”) shall continue with the
Company paying the normal Company paid contribution for similarly situated active
employees and with such coverage being available on the same basis as available to
similarly situated active employees during such continuation period (the “Health
Care Continuance Benefit”), provided that Employee’s continued participation is
possible under the general terms and provisions of such plans. If participation in
any one or more of the Health Care Plans is not possible under the terms of the
Health Care Plan or any provision of law would create an adverse tax effect for
Employee or the Company due to such participation, the Company will provide
substantially identical benefits directly or through a separate insurance
arrangement. The Health Care Continuance Benefit as to any Health Care Plan will
cease if and when Employee has obtained coverage under one or more welfare benefit
plans of a subsequent employer that provides for equal or greater benefits to
Employee and his dependents with respect to the specific type of benefit.

(v) Continuance of Health Care Continuation Benefits Upon Death. If
Employee dies while receiving a Health Care Continuance Benefit, Employee’s spouse
and dependents will continue to be covered under all applicable Health Care Plans
during the remainder of the thirty-six (36) month coverage period as described
above. Employee’s spouse and dependents will become eligible for COBRA continuation
coverage for health and dental benefits at the end of such thirty-six (36) month
period.

(b) Parachute Limitation and Excise Tax Gross-up. In the event any payment or
distribution by the Company to or for the benefit of Employee (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this Section 7(b)) (the
“Total Payments”) would subject Employee to the excise tax imposed by Section 4999 of the
Code or any interest or penalties are incurred by Employee with respect to such excise tax
(collectively, the “Excise Tax”) on “excess parachute payments” (as defined in Section 280G
of the Code and the regulations related thereto), then Employee will be entitled to receive
an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the
Employee of all taxes (including any income and employment taxes and

 

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interest or penalties imposed with respect to such taxes) and the Excise Tax imposed on the
Gross-Up Payment, Employee retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed on the Total Payments. Notwithstanding the foregoing, if the amount of the Total
Payments that exceeds three times the Employee’s “base amount” (as defined in Section 280G
of the Code) is less than $25,000, then the Total Payments shall be reduced to the extent
necessary so that the Total Payments would not subject Employee to any Excise Tax. All
determinations required to be made under this Section 7(b), including whether and when a
Gross-Up Payment is required and the amount of such Gross-Up Payment, will be made by the
independent accounting firm of the Company immediately prior to Employee’s termination of
employment (the “Accounting Firm”). All fees and expenses of the Accounting Firm will be
borne solely by the Company, and any determination by the Accounting Firm will be binding
upon the Company Bank and Employee. Any Gross-Up Payment, as determined pursuant to this
Section 7(e), will be paid by the Company to Employee within ten days of the receipt of the
Accounting Firm’s determination.

(i) If the Accounting Firm determines that no Excise Tax is payable by
Employee, it shall so indicate to Employee in writing.

(ii) In the event there is an under-payment of the Gross-Up Payment due to the
uncertainty in the application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm and Employee thereafter is required to
make a payment of any Excise Tax, the Accounting Firm will determine the amount of
any such under-payment that has occurred and such amount will be promptly paid by
the Company to or for the benefit of Employee.

(c) Change of Control Defined. A “Change in Control” means the occurrence of
any of the following events:

(i) The acquisition by one person, or more than one person acting as a group,
of ownership of stock in the Company that, together with stock held by such person
or group, constitutes more than 25% of the total fair market value or total voting
power of the stock of the Company; however, if any one person, or more than one
person acting as a group, is considered to own more than 25% of the total fair
market value or total voting power of the stock of the Company, the acquisition of
additional stock by the same person or persons will not be considered a Change in
Control and an increase of the effective percentage of stock owned by any one
person, or more than one person acting as a group, as a result of a transaction in
which the Company acquires its stock in exchange for property will be treated as an
acquisition of stock for purposes of this paragraph; provided,
further, however, that the following acquisitions will not
constitute a Change in Control: (A) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any entity controlled
by the Company, (B) any acquisition directly from the Company (excluding an
acquisition by virtue of the exercise of a conversion privilege), or (C) any
acquisition pursuant to a reorganization, merger, share exchange, or consolidation
by any corporation owned or proposed to be owned, directly

 

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or indirectly, by shareholders of the Company if the shareholders’ ownership of
securities of the corporation resulting from such transaction constitutes a
majority of the ownership of securities of the resulting entity and at least a
majority of the members of the board of directors of the corporation resulting from
such transaction were members of the Incumbent Board (as defined below) at the time
of the execution of the initial agreement providing for such transaction.

(ii) Where individuals who, as of the Merger Date, constitute the Board of
Directors of the Company (the “Incumbent Board”) cease for any reason to constitute
at least a majority of such Board of Directors; provided, however, that any
individual becoming a director subsequent to the Merger Date whose election, or
nomination for election, by the shareholders was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be considered
as though such individual were a member of the Incumbent Board.

(iii) The Company consummates after the Merger Date (A) a reorganization,
merger, share exchange or consolidation of the Company with any other entity,
except as provided above in subparagraph (c)(i)(C), or (B) the sale or other
disposition of all or substantially all of the assets of the Company.

For purposes of this Section, the provisions of section 318(a) of the Code regarding
the constructive ownership of stock will apply to determine stock ownership;
provided, that stock underlying unvested options (including options exercisable for
stock that is not substantially vested) will not be treated as owned by the individual who
holds the option. Notwithstanding the foregoing, the consummation of the Merger shall not
constitute a Change of Control.

(d) Restrictive Covenants. If, after the occurrence of a Change of Control,
Employee’s employment is terminated without Cause or Employee terminates for Good Reason,
the restrictive covenants set forth in Sections 8(e) and 8(g) will be applicable for twelve
(12), and not twenty-four (24), months following the date of termination of employment.

8. Restrictive Covenants.

(a) Ownership of Work Product. The Company shall own all Work Product arising
during the course of Employee’s employment. For purposes hereof, “Work Product”
shall mean all intellectual property rights, including all Trade Secrets, United States and
international copyrights, patentable inventions, and other intellectual property rights in
any programming, documentation, technology or other work product that relates to the
Company, the Bank, their respective businesses or customers and that Employee conceives,
develops, or delivers to the Company or its banking subsidiary (the “Bank”) at any
time during his employment. Employee agrees to take such actions and execute such further
acknowledgments and assignments as the Company may reasonably request to give effect to this
provision.

 

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(b) Protection of Trade Secrets. Employee agrees to maintain in strict
confidence and, except as necessary to perform his duties for the Company and the Bank,
Employee agrees not to use or disclose any Trade Secrets, as defined by applicable law, of
the Company and the Bank during or after his employment.

(c) Protection of Other Confidential Information. In addition, Employee agrees
to maintain in strict confidence and, except as necessary to perform his duties for the
Company, not to use or disclose any Confidential Business Information of the Company or the
Bank during his employment and for a period of twenty-four (24) months following termination
of his employment. “Confidential Business Information” shall mean any internal,
non-public information (other than Trade Secrets addressed above) concerning the Company’s
and the Bank’s financial position and results of operations (including revenues, assets, net
income, etc.); annual and long-range business plans; product or service plans; marketing
plans and methods; training, educational and administrative manuals; customer and supplier
information and purchase histories; and employee lists. The provisions of Sections 7(b) and
7(b) shall also apply to protect Trade Secrets and Confidential Business Information of
third parties provided to the Company or the Bank under an obligation of secrecy.

(d) Return of Materials. Employee shall return to the Company, promptly upon
its request and in any event upon termination of his employment, all media, documents,
notebooks, computer programs, handbooks, data files, models, samples, price lists, drawings,
customer lists, prospect data, or other material of any nature whatsoever (in tangible or
electronic form) in Employee’s possession or control, including all copies thereof, relating
to the Company, the Bank, and their respective businesses or customers. Upon the request of
the Company, Employee shall certify in writing compliance with the foregoing requirement.

(e) No Solicitation of Customers. During Employee’s employment with the
Company and, subject to Section 7(d), for twenty-four (24) months thereafter, Employee shall
not (except on behalf of or with the prior written consent of the Company), either directly
or indirectly, on Employee’s own behalf or in the service or on behalf of others, (A)
solicit, divert, or appropriate to or for a Competing Business, or (B) attempt to solicit,
divert, or appropriate to or for a Competing Business, any person or entity that is or was a
customer of the Company or the Bank or any of their affiliates at any time during the twelve
(12) months prior to the date of termination and with whom Employee has had material
contact. A “Competing Business” shall mean a depository financial institution or
holding company providing services that are the same as or substantially similar to those
provided to the customer by the Company or the Bank at the time of termination of Employee’s
employment.

(f) No Recruitment of Personnel. During Employee’s employment with the Company
and for twenty-four (24) months thereafter, Employee shall not, either directly or
indirectly, on Employee’s own behalf or in the service or on behalf of others, (A) solicit, divert, or hire away, or (B) attempt to solicit, divert, or hire away, any
employee of or consultant to the Company or the Bank.

 

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(g) Non-Competition. During Employee’s employment with the Company and,
subject to Section 7(d), for twenty-four (24) months thereafter, Employee shall not (without
the prior written consent of the Company) compete with the Company, the Bank or any of their
affiliates by, directly or indirectly, (i) forming, serving as an organizer, director or
officer of, or consultant to, or acquiring or maintaining more than a 1% passive investment
in, a depository financial institution or holding company if such depository institution or
holding company has one or more offices or branches located within a ten (10) mile radius of
the headquarters or any branch banking office of the Company or the Bank, or for which
regulatory approval is pending, as of the date of termination of employment, or (ii) acting
as a financial advisor to any person or entity in connection with (A) a proposed merger,
acquisition of stock or assets involving a depository financial institution or holding
company in which one of the parties to the transaction is headquartered within a twenty (20)
mile radius of the headquarters or any branch banking office of the Company or the Bank or
(B) a deposit assumption transaction involving the assumption of deposits and/or related
purchase of assets in which the deposits to be sold and assumed are held at a banking office
located within a ten (10) mile radius of the headquarters or any branch banking office of
the Company or the Bank; provided, however, that any activity that cannot be reasonably
construed to have the potential to compete with or to further competition with the Company
or the Bank shall not be prohibited by this Agreement.

9. General Provisions.

(a) Entire Agreement. Except as provided in the next sentence, this Agreement
contains the entire understanding between the parties hereto relating to the employment of
Employee by the Company and supersedes any and all prior employment or compensation
agreements between Employee and the Company, including agreements in effect immediately
prior to the Merger. It is specifically agreed and acknowledged that the exercisability of
stock options and vesting of restricted stock, benefits or other rights on account of the
Merger constituting a “change of control” (as defined in any applicable plan or agreement
providing for rights upon the occurrence of a change of control) in plans or agreements
other than those designated as severance, separation, change of control or employment
agreements shall not be superseded by this Agreement and shall operate in accordance with
their terms.

(b) Assignability. Neither this Agreement nor any right or interest hereunder
shall be assignable by Employee without the Company’s prior written consent, with the sole
exception that the Company or Bank shall be permitted to assign this Agreement to the
appropriate person, entity or successor entity in connection with a Change of Control.

(c) Binding Agreement. This Agreement shall be binding upon, and inure to the
benefit of, Employee and the Company and their respective successors and assigns. The
Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets
of the Company to assume expressly and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if no such
succession had taken place.

 

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(d) Amendment of Agreement. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.

(e) Severability. If any provision contained in this Agreement shall for any
reason be held invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provision of this Agreement, but this
Agreement shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein. If a court determines that this Agreement or any covenant
contained herein is unreasonable, void or unenforceable, for any reason whatsoever, then in
such event the parties hereto agree that the duration, geographical or other limitation
imposed herein should be such as the court, or jury, as the case may be, determines to be
fair and reasonable, it being the intent of each of the parties hereto to be subject to an
agreement that is necessary for the protection of the legitimate interest of the Company and
its successors or assigns and that is not unduly harsh in curtailing the legitimate rights
of Employee.

(f) Notices. All notices under this Agreement shall be in writing and shall be
deemed effective when delivered in person (with respect to the Company or the Bank, to the
Company’s Chief Executive Officer) or when mailed if mailed by certified mail, return
receipt requested. Notices mailed shall be addressed, in the case of Employee, to his last
known residential address, and in the case of the Company or the Bank, to the Company’s
corporate headquarters, attention of the Chief Executive Officer, or to such other address
as Employee or the Company any designate in writing at the time or from time to time to the
other party in accordance with this Section.

(g) Waiver. No delay or omission by either party hereto in exercising any
right, power or privilege hereunder shall impair such right, power or privilege, nor shall
any single or partial exercise of any right, power or privilege preclude any further
exercise thereof or the exercise of any other right, power of privilege. The provisions of
this Section 8(g) cannot be waived except in writing signed by both parties.

(h) Governing Law. This Agreement has been executed and delivered in the
Commonwealth of Virginia, and its validity, interpretation, performance and enforcement
shall be governed by the laws of the Commonwealth of Virginia.

(i) Fees and Expenses. The Company will pay or reimburse Employee for all
costs and expenses, including, without limitation, court costs and reasonable attorneys’
fees, incurred by Employee (i) in contesting or disputing any termination of the Employee’s
employment or (ii) in seeking to obtain or enforce any right or benefit provided by this
Agreement, in each case provided Employee’s claim is substantially upheld by a court of
competent jurisdiction. Any reimbursements to be paid by the Company to Employee under this Section 8(i) must be paid as soon as administratively
feasible after the termination of any such litigation or other proceeding, or the settlement
thereof, under terms on which the Employee’s claim is substantially upheld.

 

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(j) Deferred Compensation Omnibus Provision. Notwithstanding any other
provision of this Agreement, it is intended that any payment or benefit which is provided
pursuant to or in connection with this Agreement which is considered to be deferred
compensation subject to Section 409A of the Code shall be provided and paid in a manner, and
at such time, including without limitation payment and provision of benefits only in
connection with the occurrence of a permissible payment event contained in Section 409A
(e.g. death, disability, separation from service from the Company and its affiliates as
defined for purposes of Section 409A of the Code), and in such form, as complies with the
applicable requirements of Section 409A of the Code to avoid the unfavorable tax
consequences provided therein for non compliance. Notwithstanding any other provision of
this Agreement, the Company’s Compensation Committee or Board of Directors is authorized to
amend this Agreement, to amend or void any election made by Employee under this Agreement
and/or to delay the payment of any monies and/or provision of any benefits in such manner as
may be determined by it to be necessary or appropriate to comply, or to evidence or further
evidence required compliance, with Section 409A of the Code (including any transition or
grandfather rules thereunder). For purposes of this Agreement, all rights to payments and
benefits hereunder shall be treated as rights to receive a series of separate payments and
benefits to the fullest extent allowed by Section 409A of the Code. If Employee is a key
employee (as defined in Section 416(i) of the Code without regard to paragraph (5) thereof)
and any of the Company’s stock is publicly traded on an established securities market or
otherwise, then payment of any amount or provision of any benefit under this Agreement which
is considered deferred compensation subject to Section 409A of the Code shall be deferred
for six (6) months as required by Section 409A(a)(2)(B)(i) of the Code (the “409A Deferral
Period”). In the event such payments are otherwise due to be made in installments or
periodically during the 409A Deferral Period, the payments which would otherwise have been
made in the 409A Deferral Period shall be accumulated and paid in a lump sum as soon as the
409A Deferral Period ends, and the balance of the payments shall be made as otherwise
scheduled. In the event benefits are required to be deferred, any such benefit may be
provided during the 409A Deferral Period at Employee’s expense, with Employee having a right
to reimbursement from the Company once the 409A Deferral Period ends, and the balance of the
benefits shall be provided as otherwise scheduled. For purposes of this Agreement,
termination of employment and date of termination or cessation of employment will be read to
mean a “separation from service” within the meaning of Section 409A of the Code where it is
reasonably anticipated that no further services would be performed after such date or that
the level of bona fide services Employee would perform after that date (whether as an
employee or independent contractor) would permanently decrease to less than 50% of the
average level of bona fide services performed over the immediately preceding thirty-six (36)
month period.

 

-12-

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above stated.

	 	 	 	 	 
	 	Community Bankers Trust Corp.

 	 
	 	By:  	/s/ George M. Longest
 	 
	 	 	George M. Longest, Jr. 	 
	 	 	President and Chief Executive Officer 	 
	 
	 	Employee

 	 
	 	/s/ Gary A Simanson
 	 
	 	Gary A. Simanson 	 
	 	 	 
	 

 

-13-Filed by Bowne Pure Compliance

Exhibit 10.1

ASSET PURCHASE AGREEMENT

THIS AGREEMENT made as of the 12th day of November, 2008 (the “Effective Date”), by and among
Destron Fearing Corporation, a Delaware corporation (“Seller”), Digital Angel Corporation, a
Delaware Corporation (“Digital Angel”), and VeriChip Corporation, a Delaware corporation (“Buyer”).

R E C I T A L S

WHEREAS, Seller is the wholly-owned subsidiary of Digital Angel and is the owner of certain
proprietary technologies, processes, and other assets relating to and used in the business of
manufacturing and selling radio-frequency and visual identification products;

WHEREAS, a component of Seller’s business includes the manufacture and sale of
human-implantable passive radio-frequency identification microchips (“Human RFID Product”), which
are exclusively sold to Buyer and components related thereto, including readers, transponders,
implanters, and packaging devices, and related services (the “Business”);

WHEREAS, Buyer develops, markets, and sells RFID systems used to identify, locate and protect
people, including the identification of people in medical emergencies, which systems use the Human
RFID Product, and components related thereto, including readers, transponders, implanters, and
packaging devices, and which future systems, products, components and services developed by or on
behalf of Buyer may use the Human RFID Product or portions thereof (“Human RFID Field”); and

WHEREAS, Seller desires to sell and deliver to Buyer, and Buyer desires to purchase and
receive from Seller all, right, title and interest in and to certain Seller’s assets used or useful
in connection with the operation of the Business in the Human RFID Field, so as to permit Buyer to
independently pursue the development and improvement of the Business in the Human RFID Field.

 

 

 

IT IS THEREFORE AGREED:

ARTICLE I.

ASSETS TO BE PURCHASED

1.1. Description of Assets. Upon the terms and subject to the conditions hereof, on
the Closing Date (as defined in Section 9.1) Seller shall sell, transfer, assign and deliver to
Buyer, and Buyer shall purchase from Seller, all of Seller’s right, title and interest in and to
all of Seller’s assets that are limited to the operation of the Business in the Human RFID Field,
excluding the Excluded Assets (as defined below), but including, without limitation, the following
assets (collectively referred to as the “Purchased Assets”) which shall be conveyed in the manner
described:

(a) The patents and patent applications, including divisions, continuations,
renewals, reissuances, and extensions of the foregoing (as applicable) listed on
Schedule 1.1(a) shall be transferred and assigned to Buyer (“the Assigned
Patents”), pursuant to an Assignment of Patent, annexed hereto as Schedule X,
and Seller and Digital Angel shall receive from Buyer a full and irrevocable covenant
not to sue for Seller’s or Digital Angel’s use of such patents and patent applications
as more fully described in Section 5.4 of this Agreement;

(b) The patents and patent applications, including divisions, continuations,
renewals, reissuances, and extensions of the foregoing (as applicable) listed on
Schedule 1.1(b) are used or usable by Seller in its business and shall be
retained by Seller for use in its business (“Retained Patents”), but Buyer shall receive
from Seller and Digital Angel a full and irrevocable covenant not to sue for Buyer’s use
of such patents and patent applications in its Business as more fully described in
Section 4.7 of this Agreement;

(c) The FDA classification decision issued to Seller on October 12, 2004 (“FDA
Decision”) for the Human RFID Product identified as 21 CFR §880.6300 as an “Implantable
Radiofrequency Transponder System for Patient Identification and Health Information,”
including all records and papers relating to such FDA Decision, shall be assigned and
delivered to Buyer;

(d) The goodwill, supplier relationships, licenses, permits, production documents,
technical specifications, assembly standards, and packaging instructions, relating to or
used in the manufacture and assembly of the Human RFID Product, applicable only to the
Human RFID Product, and other general intangibles of Seller relating to the Business,
shall be assigned and delivered to Buyer;

(e) All of Seller’s rights, obligations, and interest in that certain Glucose
Sensor Development Agreement among Seller, Buyer, and Receptors LLC dated as of January
1, 2008 shall be assigned to Buyer and Seller shall have no further rights relating
thereto, except that Buyer’s rights to sue are limited as set forth in the covenant not
to sue set forth in Section 5.4 of this Agreement;

(f) Copies of all papers and records (in paper or electronic format) primarily
relating to the Business, and all technical and descriptive materials primarily relating
to the Business, shall be delivered to Buyer;

(g) Copies of all manufacturing designs, design specifications (including design
logic and flowcharts) technical information, manufacturing instructions, schematic
designs, printed circuit board layouts, testing specifications, user guides, processes,
improvements, copyrights, mask works, design rights, and know-how relating to, used or
useful with respect to the Human RFID Products and components related thereto, including
the pocket readers, transponders, implanters, and packaging devices relating thereto, in
each case as used in the past and as currently used, (“Know-How”) shall be delivered to
Buyer; and

(h) Seller shall, transfer all Know-How and technical expertise to Buyer relating
to the manufacture of the Human RFID Products and components related
thereto, including the pocket readers, transponders, implanters, and packaging
devices for sale in the Human RFID Field, and shall provide Buyer with training, support
and continued transfers of such Know-How and technical expertise, as more fully
described in Article 10 of this Agreement.

 

- 2 -

 

1.2. Excluded Assets. Notwithstanding anything in this Agreement to the contrary, all
of the assets owned by Seller relating to any business or venture of Seller that may also have
application to the Human RFID Field and related Business (excluding, however, the Purchased Assets
listed above) are retained by Seller and are not transferred by this Agreement (collectively, the
“Excluded Assets”); however, Seller agrees that the Buyer may use any intellectual property rights
of Seller (that exist as of the date of this Agreement) that are included in such Excluded Assets
that are necessary to the Business.

1.3. Certain Agreements. Upon Closing, the parties agree to terminate, assign, or
enter into certain agreements, as follows:

(a) FDA Decision Assignment. Seller shall assign the FDA Decision
regarding the Human RFID Product to Buyer through delivery of an assignment letter in a
form substantially similar to that set forth in Exhibit A to this Agreement, which
assignment letter shall be delivered by Seller to Buyer at Closing.

(b) 2006 Tax Allocation Agreement. Upon Closing, the 2006 Tax Allocation
Agreement dated as of December 21, 2006, between Buyer and Digital Angel, shall
immediately terminate and shall be of no further effect.

(c) Letter Agreements between Digital Angel and Buyer. Simultaneously with
the Closing, the Letter Agreement dated as of May 15, 2008, between Buyer and Digital
Angel, shall be terminated and shall have no further force or effect, except for
Sections 8(b) and 8(f) thereunder. Additionally, the Letter Agreement dated as of
December 17, 2007 between Buyer and Digital Angel, shall be terminated and shall have no
further force or effect.

(d) Resignation of Joseph J. Grillo. Simultaneously with the Closing,
Joseph J. Grillo, Digital Angel’s Chief Executive Officer and President, shall resign
from Buyer’s Board of Directors.

(e) Benefits Programs. Buyer’s participation in Digital Angel’s health and
other employee benefit plans and insurance programs, including medical, hospitalization,
dental, vision, disability and life, as well as Buyer’s participation in the Digital
Angel 401(k) Plan (the “DA Plan”), shall cease no later than January 1, 2009. Buyer and
Digital Angel shall take all action necessary to spin-off the assets of the DA Plan
attributable to employees of Buyer into a separate defined contribution plan (the
“Spun-Off Plan”), the terms of which will be substantially identical to the DA Plan, as
soon as practicable after Closing. No distribution of account balances shall be made to
any employees of Buyer solely as a result of the transactions contemplated by this
Agreement, including the cessation of Buyer’s status as a participating employer in the
DA Plan.

 

- 3 -

 

(f) Amended and Restated Supply, License and Development Agreement. Upon
Closing, the Amended and Restated Supply, License, and Development Agreement dated as of
December 27, 2005 (as amended) between Seller and Buyer, including but not limited to
the letter agreement amendment dated December 17, 2007, shall immediately terminate and
have no further effect, and all obligations and claims of Buyer and Seller thereunder
shall be terminated and released. Notwithstanding the foregoing, Seller agrees that (i)
the product warranties under Sections 8(b) of the Amended and Restated Supply, License,
and Development Agreement shall continue to apply to products sold to Buyer under such
Agreement, subject to the limitations of Section 8(c), (d) and (e) thereof, and (ii) the
indemnification provisions of Section 8(f), (g) and (h) of the Amended and Restated
Supply, License, and Development Agreement shall survive through March 4, 2013 for
claims associated with the products purchased under the Amended and Restated Supply,
License, and Development Agreement.

(g) Glucose Sensor Development Agreement. Upon Closing, Seller shall
assign to Buyer and Buyer shall accept all of Seller’s rights, obligations, and interest
in that certain Glucose Sensor Development Agreement dated January 1, 2008 among Seller,
Buyer, and Receptors LLC (the “Glucose Sensor Development Agreement”).

ARTICLE II.

ASSUMPTION OF LIABILITIES AND OBLIGATIONS

2.1 Other than assuming Seller’s obligations to perform under applicable assigned agreements,
if any, Buyer shall have no responsibility or liability for any liabilities or other obligations of
Seller and Seller shall retain, and be responsible for paying, performing and discharging when due,
all liabilities of Seller, regardless of when incurred. Buyer is not, directly or indirectly,
assuming any debt, or liability of or claim against Seller of any kind whatsoever, whether known or
unknown, actual or contingent, matured or unmatured, currently existing or arising in the future.

ARTICLE III.

PURCHASE PRICE

3.1 Consideration. The aggregate consideration to be paid by Buyer to Seller for the
Purchased Assets, the agreement not to compete and Seller Covenant Not to Sue, and the assignment
of certain contracts, shall be Five Hundred Thousand Dollars ($500,000.00) payable in cash on the
Closing Date (the “Purchase Price”).

3.2 Allocation of Purchase Price. The manner in which the purchase price set forth in
Section 3.1 shall be allocated among the Assets shall be as set forth in Schedule 3.2
attached hereto. Seller and Buyer agree that the purchase price allocation set forth in
Schedule 3.2 has been determined in good faith and at arm’s length, and that neither party
shall take a position in reporting income taxes which is inconsistent with such allocation.

3.3 Transfer Taxes. Seller shall pay any sales, use, excise or other transfer taxes
imposed upon Seller by applicable law in connection with the transfer of the Assets. To the
extent permitted by applicable law, the parties hereto shall cooperate in minimizing any
sales, use, excise or other transfer taxes.

 

- 4 -

 

ARTICLE IV.

COVENANTS, REPRESENTATIONS AND WARRANTIES

OF SELLER AND/OR DIGITAL ANGEL

As an inducement to Buyer to enter into and perform its obligations under this Agreement,
Seller and Digital Angel, as applicable, hereby represent, warrant and covenant to Buyer as
follows:

4.1. Organization; Enforceability. Each of Seller and Digital Angel is a corporation
duly organized, validly existing and in good standing under the laws of the State of Delaware. The
execution and delivery of this Agreement, and consummation of the transactions contemplated herein,
have been duly and validly authorized by the Board of Directors of Seller and by the Board of
Directors of Digital Angel. This Agreement will, upon execution and delivery, be a legal, valid
and binding obligation of both Seller and Digital Angel, enforceable against Seller and Digital
Angel in accordance with its terms, except as may be limited by bankruptcy, insolvency or other
laws affecting creditors’ rights generally.

4.2. No Breach or Default. Except as set forth in Schedule 4.2, the execution
and delivery of this Agreement, and the consummation of the transactions herein provided will not:

(a) Result in the breach of any of the terms or conditions of, or constitute a
default under, or in any manner release Seller from any obligations under, or accelerate
any mortgage, note, bond, contract, indenture, agreement, license or other instrument or
obligation of any kind or nature to which Seller is now a party or by which any of its
properties or assets may be bound or affected;

(b) Violate any order, writ, injunction or decree of any court, administrative
agency or governmental body or require the approval, consent or permission of any
governmental body or agency which has not been heretofore obtained; or

(c) Violate any provision of the Certificate of Incorporation or Bylaws of Seller.

4.3. Bankruptcy and Insolvency. No petition in bankruptcy (voluntary or otherwise),
assignment for the benefit of creditors or petition seeking reorganization or arrangement or other
action under federal or state bankruptcy laws is pending on behalf of or against Seller.

4.4. Title to Assets. Except as set forth in Schedule 4.2, all of the
Purchased Assets are owned by Seller. On the Closing Date, Seller will convey to Buyer good and
marketable title to all of the Purchased Assets, free and clear of all leases, security interests,
liens, encumbrances on title, mortgages, pledges, conditional sale and other title-retention
agreements, covenants, restrictions, easements, reservations and other burdens or charges of title
every kind and nature (collectively, “Liens”).

 

- 5 -

 

4.5. Intellectual Property.

(a) Except as set forth on Schedule 4.2, as of the Closing Date, Seller is
the owner of all right, title and interest in and to each of the Assigned Patents and
each such Assigned Patent is free and clear of any Liens.

(b) To the Knowledge of Seller and Digital Angel, the use, operation or other
exploitation of the Purchased Assets transferred to Buyer hereunder by Seller prior to
the date hereof does not infringe or misappropriate any of the intellectual property
rights of any other person or entity, and Seller has not received written notice from
any person or entity claiming that such Purchased Assets infringes or misappropriates
any of the intellectual property rights of any person or entity. To the Knowledge of
Seller and Digital Angel, the use, operation or other exploitation of the Purchased
Assets in the Human RFID Field does not infringe or misappropriate any of the
intellectual property rights of any other person or entity. Seller has not licensed from
any third party any intellectual property rights that would be necessary for Buyer’s
manufacture, sale and exploitation of the Human RFID Products sold by Buyer as of the
date of this Agreement. The term “Knowledge” as used in this Agreement shall mean the
actual knowledge of Joseph Grillo, Lorraine Breece, Patricia Petersen, Randy Geissler,
and Ezequiel Mejia.

(c) To Seller’s and Digital Angel’s Knowledge, no person or entity is infringing
upon the Assigned Patents in the Human RFID Field.

(d) To the Knowledge of Seller and Digital Angel, none of the Assigned Patents is
subject to any proceeding or outstanding decree, order, judgment or settlement agreement
or stipulation that restricts in any manner the use, transfer or licensing thereof by
Seller or may affect the validity, use (as contemplated by this Agreement) or
enforceability of such Assigned Patents.

(e) To the Knowledge of Seller and Digital Angel, the Know-How is not subject to
any proceeding or outstanding decree, order, judgment or settlement agreement or
stipulation that restricts in any manner the use, transfer or licensing thereof by
Seller or may affect the use (as contemplated by this Agreement) of such Know-How (as
contemplated by this Agreement).

4.6. Litigation and Governmental Action. There are no suits, actions or claims,
legal, administrative or arbitration proceedings pending or, to Seller’s or Digital Angel’s
Knowledge, threatened against Seller or Digital Angel, or to which Seller or Digital Angel is a
party (whether or not covered by insurance) which in any manner relate to or affect the Purchased
Assets. To Seller’s and Digital Angel’s Knowledge, no claims or suits will arise as a direct or
indirect result of this transaction. To Seller’s and Digital Angel’s Knowledge, there is not
outstanding any notice, order, writ, injunction or decree of any court, governmental agency or
arbitration tribunal relating to or affecting the Purchased Assets.

 

- 6 -

 

4.7. Seller Covenant Not To Sue. As inducement for the purchase of the Purchased
Assets by Buyer, Seller and Digital Angel each agrees to the provisions set forth in this Section
4.7.

(a) Definitions. For purposes of this Section 4.7, the
following definitions apply:

(i) “Affiliate” means any person or entity controlled by, under common
control with, or which controls, another person or entity.

(ii) “Buyer Parties” means Buyer, and any and all manufacturers, suppliers,
distributors, sellers, sublicensees, purchasers, contractors, or users of
any component, equipment, or product manufactured or sold by or for Buyer
for use in the Human RFID Field, or any services relating to the Human RFID
Field, and including Buyer’s successors and assigns.

(iii) “Improvements” means any invention, discovery or development,
modification, derivative work, enhancement or improvement to the Subject
Technology, created by or on behalf of any Buyer Party, Seller or Digital
Angel for use with, or otherwise useful with respect to, the Subject
Technology, that exist as of the date of this Agreement.

(iv) “Know-How” means the trade secrets and business know-how of Seller,
relating to devices and processes which are useful in the Human RFID Field,
including specifically the past, present and future information and Know-How
(as defined in section 1.1(g) above) used or useful in the manufacture of
the Human RFID Product, components related thereto, including readers,
transponders, implanters, and packaging devices, and related services, and
under any other intellectual property owned by Seller or its Affiliates that
is, or could be, used for human applications whether or not covered in the
Retained Patents, that exist as of the date of this Agreement.

(v) “Licensed Territory” means the world.

(vi) “Subject Technology” means the Retained Patents, the Know-How, any
copyrights related to the Know-How, and all Improvements, that exist as of
the date of this Agreement.

 

- 7 -

 

(b) Covenant Not to Sue.

(i) Each of Digital Angel and Seller on its own behalf and on behalf of all
of its Affiliates, irrevocably relinquishes to Buyer, waives with respect to
Buyer and agrees to not assert against any Buyer Party at any time after the
Closing Date, any and all claims Seller or Digital Angel may have, now or in
the future, whether arising at law or equity (including rights of
accounting, notice of transfer or disclosure and sharing of profits,
but excluding only the rights and obligations expressly set forth in this
Agreement), relating to or arising out of the Subject Technology, arising
from the manufacture, use, sale, offer for sale, importation, modification
or improvement of any product or service in the Human RFID Field, including,
without limitation, claims for patent and copyright infringement.

(ii) Each of Digital Angel and Seller, on its own behalf and on behalf of
all of its Affiliates, covenants not to sue any Buyer Party in connection
with any Improvements, Digital Angel and Seller acknowledging that Buyer
Parties may copy, make derivative works of, sublicense, distribute and
publicly perform any of the Subject Technology including any Improvements
thereto, subject only to the obligations of Section 10.2 below.

(iii) Each of Digital Angel and Seller irrevocably covenants to require (i)
any transferee, assignee or successor to any of the Subject Technology and
(ii) any exclusive licensee of any of the Subject Technology to agree that
it will be bound by the covenant not to assert claims against the Buyer
Parties set forth in this Section 4.7, and that it will require any of its
transferees, assignees or successors to agree to be bound by such covenant.

(c) Additional Warranties.

(i) To the Knowledge of Seller and Digital Angel, Seller hereby represents
and warrants to Buyer that it is the lawful owner of all proprietary rights
in and to the Subject Technology (excluding Improvements made by Buyer).

(ii) To the Knowledge of Seller and Digital Angel, Seller knows of no third
party intellectual property rights, or any intellectual property rights held
by any of its Affiliates, which would be infringed by Buyer’s use of the
Subject Technology in the Human RFID Field. Seller has not licensed the
Subject Technology to any third party for use in the Human RFID Field.

(d) Term and Termination. The term applicable to this Section 4.7 shall
begin on the Effective Date and shall continue until the expiration of all of the
rights under the Subject Technology. No termination or expiration of the Agreement
shall cause this Section 4.7 to terminate.

(e) Assignment. Seller shall not assign or license the Retained Patents or
the Know-How to any assignee or licensee whose business includes the manufacture or
sale of Human RFID Product.  Buyer may transfer, assign and sublicense any of the
rights privileges, obligations, or benefits conferred by this Section 4.7
except to any entity whose business would be competitive with Seller’s or Digital
Angel’s.

 

- 8 -

 

4.8 Additional Seller Covenants. Seller, on behalf of itself, its Affiliates, and its
successors and assigns covenants and agrees that it shall not transfer, assign, sublicense or
otherwise grant to any third party, rights to use any of the rights under the Retained Patents or
Know-How in the Human RFID Field.

4.9 Glucose Sensor Development Agreement. To the Knowledge of Seller and Digital
Angel, Seller has not breached or defaulted on its obligations under the Glucose Sensor Development
Agreement, and has received no notice of any breach or default under such agreement. Seller will
continue to hold in confidence and shall not use any confidential information received in
connection with the Glucose Sensor Development Agreement.

4.10 Know-How. Seller hereby grants to Buyer a license to use the Know-How. Buyer
shall have the right to copy, make derivative works of, improve, modify, sublicense, and distribute
the Know-How.

4.11 Chip Storage. Seller currently is storing approximately 13,000 chips that are
owned by Buyer. Buyer agrees to take possession of such chips no later than December 31, 2009.
Upon the request of Buyer, Seller will re-sterilize and repackage the chips for a new five year
life at Buyer’s expense.

4.12 No Knowledge of Invalidity. The Seller has no Knowledge of information,
materials, facts, or circumstances that would constitute prior art or that would render any of the
Assigned Patents invalid or unenforceable. To the Knowledge of Seller and Digital Angel, neither
the Seller, Digital Angel nor any of their affiliates has misrepresented, or failed to disclose, or
knows of any misrepresentation or failure to disclose, any fact or circumstances in any application
for the Assigned Patents that would constitute fraud or a misrepresentation with respect to the
application or that would otherwise, as a matter of law, cause any Assigned Patents to be rendered
unenforceable.

4.13 Infringement Claims. To the Knowledge of Seller and Digital Angel, the Seller
has the sole and exclusive right to bring actions for management or unauthorized use of the
Assigned Patents and Retained Patents (including the right to seek past and future damages).

4.14 No Disputes. There are no contracts or material disputes between the Seller and
any third party with respect to the Assigned Patents, Retained Patent and Know-How under which
there is any material dispute regarding the scope of the contract or regarding performance under
the contract.

4.15 Access To Patent/Intellectual Property Counsel. Seller and Digital Angel agree
that Buyer shall have access to, and may engage as counsel to Buyer, the patent and intellectual
property counsel engaged by either of them, and each agrees to execute any conflict waiver
reasonably requested by such counsel, excluding, however, any engagement directly adverse to Seller
or Digital Angel.

 

- 9 -

 

ARTICLE V.

REPRESENTATIONS AND WARRANTIES OF BUYER

As an inducement to Seller to enter into and perform its obligations under this Agreement,
Buyer hereby represents, warrants and covenants to Seller as follows:

5.1. Organization; Enforceability. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. The execution and delivery
of this Agreement, and consummation of the transactions contemplated herein, have been duly and
validly authorized by the Board of Directors of Buyer. This Agreement will, upon execution and
delivery, be a legal, valid and binding obligation of Buyer, enforceable against Buyer in
accordance with its terms, except as may be limited by bankruptcy, insolvency or other laws
affecting creditors’ rights generally.

5.2. No Breach or Default. The execution and delivery of this Agreement, and the
consummation of the transactions herein provided will not:

(a) Result in the breach of any of the terms or conditions of, or constitute a
default under, or in any manner release Buyer from any obligations under, or accelerate
any mortgage, note, bond, contract, indenture, agreement, license or other instrument or
obligation of any kind or nature to which Buyer is now a party or by which any of its
properties or assets may be bound or affected;

(b) Violate any order, writ, injunction or decree of any court, administrative
agency or governmental body or require the approval, consent or permission of any
governmental body or agency which has not been heretofore obtained; or

(c) Violate any provision of the Certificate of Incorporation or Bylaws of Buyer.

5.3. Bankruptcy and Insolvency. No petition in bankruptcy (voluntary or otherwise),
assignment for the benefit of creditors or petition seeking reorganization or arrangement or other
action under federal or state bankruptcy laws is pending on behalf of or against Buyer.

5.4 Buyer’s Covenant Not to Sue. For the life of the Assigned Patents, Buyer agrees
and covenants not to bring any legal or administrative proceeding whatsoever against Seller or
Digital Angel for any and all past, present, or future claims of infringement of the Assigned
Patents arising from the manufacture, use, sale, offer for sale or import of any product in the
animal applications field, which such product, but for the covenant not to sue granted herein,
would directly infringe, induce infringement of, or contribute to the infringement of a viable
claim of the Assigned Patents (the “Buyer Covenant Not to Sue”). This Buyer Covenant Not to Sue
does not grant to Seller a license, implied license or any other right to any of the Assigned
Patents.

 

- 10 -

 

ARTICLE 6.

AS IS, WHERE IS

6.1 Except for the representations and warranties of Seller and Digital Angel expressly set
forth in this Agreement, Buyer agrees that the Purchased Assets are being acquired “as is, where
is” at Closing, and in their condition at Closing “with all faults,” and that buyer is relying on
its own examination of the Purchased Assets.  Without limiting the generality of the foregoing and
except for the representations and warranties expressly set forth in this Agreement, Buyer
understands and agrees that Seller and Digital Angel expressly disclaim any representations or
warranties as to the title, condition, value or quality of the Purchased Assets, and any
representation or warranty of merchantability, usage, suitability or fitness for any particular
purpose with respect to the Purchased Assets or any part thereof, or as to the workmanship thereof
or the absence of any defects therein, whether latent or patent.  Except for the representations
and warranties of Seller and Digital Angel expressly set forth in this Agreement, Buyer further
agrees that no information or material provided by or communication made by Seller or Digital
Angel, or by any representative of either Seller or Digital Angel, will constitute, create or
otherwise cause to exist any representation or warranty.

ARTICLE 7.

CONDITIONS PRECEDENT TO BUYER’S OBLIGATIONS

Unless waived by Buyer, the obligations of Buyer under this Agreement with respect to the
Closing are subject to the fulfillment of each of the following conditions precedent:

7.1 Seller’s Closing Documents. Seller shall have executed (as appropriate) and
delivered to Buyer all of the documents to be provided by it pursuant to Article 9 hereof which are
to be delivered to Buyer.

7.2 Authorization. Seller shall have provided evidence that execution of the
Agreement and consummation of all transactions contemplated herein have been duly authorized.

7.3 Conveyance Instruments. Warranty bills of sale and other sufficient instruments
of conveyance and transfer as shall be effective to vest in Buyer all of Seller’s title to and
interest in the Purchased Assets.

ARTICLE 8.

CONDITIONS PRECEDENT TO SELLER’S OBLIGATIONS

Unless waived by Seller, the obligations of Seller under this Agreement with respect to the
Closing are subject to the fulfillment of each of the following conditions precedent:

8.1 Cash Payment. Buyer shall have delivered the Purchase Price to Seller.

8.2 Buyer’s Closing Documents. Buyer shall have executed (as appropriate) and
delivered to Seller all of the documents to be provided by it pursuant to Article 9 hereof which
are to be delivered to Seller.

 

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8.3 Authorization. Buyer shall have provided evidence that execution of the Agreement
and consummation of all transactions contemplated herein have been duly authorized.

8.4 Lenders’ Consent. Seller shall have received the consent of its lenders for the
transactions contemplated hereby, including the agreement to release the security interests held by
lenders in the Purchased Assets immediately upon payment by Buyer of the Purchase Price.

8.5 Sale of VeriChip Shares. Digital Angel shall have executed and closed on a
transaction to sell all of the common stock of Buyer (VeriChip Corporation) owned by Digital Angel.

ARTICLE 9.

CLOSING

9.1 Closing. The consummation of the purchase and sale of the Purchased Assets and
the related transactions and deliveries provided for herein (“Closing”) shall take place upon
satisfaction of all conditions set forth in Sections 7 and 8 of this Agreement (“Closing Date”) on
November 12, 2008 or such other date as the parties may mutually agree.

9.2 Documents to be Delivered by Seller. At the Closing, the following instruments
and documents shall be delivered or provided to Buyer by Seller:

(a) Warranty bills of sale and other sufficient instruments of conveyance and transfer as
shall be effective to vest in Buyer all of Seller’s title and interest in the Purchased Assets;

(b) Assignment of the FDA Approval to Buyer; and

(c) Assignment of Patents.

9.3 Documents to be Delivered by Buyer. At the Closing, the following instruments and
documents shall be delivered or provided by Buyer to the party or parties indicated:

(a) Purchase Price.

 

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ARTICLE 10.

TRANSFER OF KNOW-HOW AND CONFIDENTIAL INFORMATION 

10.1 Know-How Transfer. Seller agrees to provide to Buyer 40 hours (or such greater
number of hours as the parties may mutually agree in writing) of access to one or more of Seller’s
technical consultants who is skilled and knowledgeable regarding the Human RFID Products between
the Effective Date and December 31, 2009 (the “Know-How Transfer Period”), to teach and explain to
Buyer all vendors, supplier, and technical information necessary to manufacture all components
including, without limitation, the pocket readers, transponders, implanters, and packaging
necessary to manufacture products for the Human RFID Field that are
compatible to and replicate the Business (“Confidential Information”). Seller shall not be
obligated to retain any employees of Seller during the Know-How Transfer Period. Seller further
agrees that Buyer may, after March 10, 2009, enter into a direct consulting or other arrangement
with Ezequiel Mejia for additional services. Buyer is granted a right and an irrevocable license
to use, copy, modify, make derivative works of, sublicense, distribute any and all such
Confidential Information in the manufacturing, developing, improving, selling and marketing of
Human RFID Products in the Human RFID Field, subject to the conditions detailed below in Section
10.2.

10.2 Confidentiality. Each party agrees to keep the Confidential Information
confidential. Each party shall limit disclosure of the Confidential Information to its employees,
directors, officers, consultants, contractors, attorneys, advisors and agents who otherwise have a
need to know the Confidential Information in connection with its business and provided that are
advised of and agree to the obligations contained in this Section 10.2. Each party shall use at
least the same degree of care in handling the Confidential Information as it uses with regard to
its other confidential information, and, at a minimum, shall use reasonable care to protect the
Confidential Information. The obligations of this Section 10.2 are continuing in nature and shall
survive termination or expiration of this Agreement.

ARTICLE 11.

POST-CLOSING OBLIGATIONS OF THE PARTIES

On and after the Closing Date:

11.1 Each party shall execute all certificates, instruments and other documents and take all
actions reasonably requested by the other party to effectuate the purposes of this Agreement and to
consummate and evidence the consummation of the transactions herein provided for. From time to time
at or after the Closing Date, at the request of Buyer, Seller and Digital Angel each will execute
and deliver such other instruments of conveyance, assignment, transfer and delivery and take such
actions as Buyer reasonably may request in order to (i) effectuate the release of any liens, claims
or encumbrances on any of the Purchased Assets, and to record the release of any such liens, claims
or encumbrances in the offices in which any such liens have been filed, and (ii) effectuate the
transfer of the Purchased Assets that constitute intellectual property, including the filing of the
transfer with the U.S. Patent Office.

11.2 Seller shall take all actions reasonably necessary or appropriate to put the Buyer in
immediate actual possession and operating control of all of the Purchased Assets.

11.3 Seller and Digital Angel, jointly and severally, will indemnify and hold Buyer harmless
from any damage, loss, liability or expense (including, without limitation, reasonable expenses of
investigation, reasonable attorneys’ fees and other reasonable legal costs and expenses) arising
out of any breach of a representation or warranty or covenant made by Seller or Digital Angel in
this Agreement, in any exhibit or schedule attached to this Agreement, or in any agreement,
instrument, or document provided to Buyer by or on behalf of Seller in connection with the
transactions contemplated hereby. Buyer will indemnify and hold Seller and Digital Angel harmless
from any damage, loss, liability or expense (including, without limitation, reasonable expenses of
investigation, reasonable attorneys’ fees and other reasonable legal costs
and expenses) arising out of any breach of a representation or warranty or covenant made by Buyer
in this Agreement, in any exhibit or schedule attached to this Agreement, or in any agreement,
instrument, or document provided to Seller by or on behalf of Buyer in connection with the
transactions contemplated hereby. The indemnification obligations under this Section 11.3 shall
survive execution of this Agreement for a period of two (2) years. The maximum liability of Seller
and Digital Angel or Buyer under this Section 11.3 shall be $250,000.

 

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ARTICLE 12.

NON-COMPETITION

12.1 Non-Competition.  During the period beginning on the Closing Date and ending five
(5) years later (the “Non-Compete Period”), (i) the Buyer and its successors and assigns
shall not engage (whether as an owner, operator, manager, employee, officer, director, consultant,
advisor, representative or otherwise), directly or indirectly anywhere in any business competitive
with Seller and/or Seller’s business operations (as presently conducted by the Closing Date), and
(ii) the Seller, Digital Angel, and their respective successors and assigns shall not engage
(whether as an owner, operator, manager, employee, officer, director, consultant, advisor,
representative or otherwise), directly or indirectly anywhere in any business competitive with
Buyer and/or Buyer’s business operations (as conducted prior to May 15, 2008) or grant to any third
party a license to use the Retained Patents in the Human RFID Field. The Buyer, the Seller and
Digital Angel each expressly acknowledge and agree that each and every restriction imposed by this
Section 12.1 is reasonable with respect to subject matter and time period.

12.2 Injunctive Relief; Enforcement.   Each the Buyer and Seller acknowledges and
agrees that in the event of a breach of any of the provisions of this Article 12, monetary damages
shall not constitute a sufficient remedy.  Consequently, in the event of any such breach, the
non-breaching party and/or its respective successors or assigns may, in addition to other rights
and remedies existing in their favor, apply to any court of law or equity of competent jurisdiction
for specific performance and/or injunctive or other relief in order to enforce or prevent any
violations of the provisions hereof, in each case without the requirement of posting a bond or
providing actual damages.  If the final judgment of a court of competent jurisdiction declares that
any term or provision of this Article 12 is invalid or unenforceable, each of Buyer and Seller
agree that the court making the determination of invalidity or unenforceability shall have the
power to reduce the scope, duration, or area of the term or provision, to delete specific words or
phrases, or to replace any invalid or unenforceable term or provision with a term or provision that
is valid and enforceable and that comes closest to expressing the intention of the invalid or
unenforceable term or provision, and this Agreement shall be enforceable as so modified after the
expiration of the time within which the judgment may be appealed.

 

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ARTICLE 13.

TERMINATION

13.1 Termination. Subject to Section 4.7(d), this Agreement may be terminated and
the transactions contemplated hereby abandoned at any time prior to the Closing:

(a) by mutual written consent of Buyer and Seller;

(b) by Buyer or Seller if (i) there shall be a final non-appealable
order of a federal or state court in effect preventing consummation of the
transactions contemplated hereby; or (ii) there shall be any statute, rule,
regulation or order enacted, promulgated or issued or deemed applicable to the
transactions contemplated by this Agreement by any governmental entity that
would make consummation of the transactions contemplated by this Agreement
illegal;

(c) by Buyer if it is not in material breach of its obligations
under this Agreement and there has been a material breach of any material
representation, warranty, covenant or agreement contained in this Agreement on
the part of Seller and such breach has not been cured within ten (10) calendar
days after written notice to Seller; or

(d) by Seller if it is not in material breach of its obligations
under this Agreement and there has been a material breach of any material
representation, warranty, covenant or agreement contained in this Agreement on
the part of any Buyer and such breach has not been cured within ten (10)
calendar days after written notice to Buyer.

ARTICLE 14.

WAIVERS; AMENDMENTS; ASSIGNMENT; SUCCESSORS AND ASSIGNS

14.1 Effect of Waiver. 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 any other
breach of such term, condition, 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.

14.2 Modification of Agreement. This Agreement may not be amended, nor shall any
waiver, change, modification, consent or discharge be effected, 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.

14.3 Assignment; Successors and Assigns. Except as otherwise specifically set forth
in this Agreement, this Agreement shall not be assignable by any party without the prior written
consent of the other; notwithstanding the foregoing, this Agreement may be transferred by the Buyer
in connection with a merger, consolidation, or the sale of substantially all of its assets. This
Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns. This Agreement is not intended and shall not be
construed to create any rights in or to be enforceable in any part by persons other than the
parties hereto.

 

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ARTICLE 15.

MISCELLANEOUS PROVISIONS

15.1 Severability. If any provision of this Agreement shall be held or deemed to be,
or shall in fact 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.

15.2 Binding Effect. The Covenants Not to Sue set forth in Sections 4.7 and 5.4
above inure to the benefit of, and are binding on, the successors, transferees, and/or assignees of
(a) the parties, (b) substantially the entire business of each of the parties, and (c) any of the
Assigned Patents or Retained Patents.

15.3 Additional Third-Party Beneficiaries. The Covenants Not to Sue set forth in
Sections 4.7 and 5.4 above inure to the benefit of the customers, distributors, dealers and users,
officers, agents, employees, and/or other authorized representatives of the parties hereto.

15.4 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.

15.5 Notices. All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given if sent by facsimile or delivered
via certified or registered mail, or recognized courier, delivery confirmation or return receipt
requested:

	 	 	 	 	 
	 	(a)
	If to Seller, to:	 	DESTRON FEARING CORPORATION
	 
	 	 	 	 490 Villaume Avenue
	 
	 	 	 	South St. Paul, Minnesota 55075-2443
	 
	 	 	 	Attention:  President
	 
	 	 	 	Facsimile:  651-455-0217
	 
	 	 	 	 
	 
	 	with a copy to:	 	Digital Angel Corporation
	 
	 	 	 	Attention:  General Counsel
	 
	 	 	 	Facsimile:  561-431-8562

 

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	 	(b)
	If to Buyer, to:	 	VERICHIP CORPORATION
	 
	 	 	 	 1690 South Congress Avenue, Suite 200
	 
	 	 	 	Delray Beach, Florida 33445
	 
	 	 	 	Attention:  William J. Caragol
	 
	 	 	 	Facsimile:  561-805-8001
	 
	 	 	 	 
	 
	 	with a copy to:	 	Holland & Knight LLP
	 
	 	 	 	One East Broward Boulevard, Suite 1300
	 
	 	 	 	Fort Lauderdale, Florida 33301
	 
	 	 	 	Attention:  Tammy Knight, Esq.
	 
	 	 	 	Facsimile:  954-463-2030

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

15.6 Entire Agreement. Seller and Buyer agree that this Agreement and its Exhibit
and Schedules and the other contracts and deeds referenced in and required by this Agreement,
constitute the entire agreement among the parties with respect to the subject matter hereof and
supersedes all prior understandings and agreements with respect thereto.

15.7 Governing Law and Venue. 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 the
State of New York. Any action to enforce the terms of this Agreement shall be brought in a court
of competent jurisdiction located in New York, New York.

15.8 Captions and Headings. Captions and Section headings used herein are for
convenience only and are not a part of this Agreement and shall not be used in construing it.

15.9 Time of the Essence. Time shall be of the essence of this Agreement and of
every part hereof.

15.10 Expenses. Each of the parties shall pay all costs and expenses incurred or to
be incurred by it in negotiating and preparing this Agreement and in closing and carrying out the
transactions contemplated by this Agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;

SIGNATURE PAGE FOLLOWS]

 

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

	 	 	 	 	 
	 	

SELLER:

DESTRON FEARING CORPORATION

 	 
	 	By:  	/s/ Joseph J. Grillo
 	 
	 	 	Joseph J. Grillo 	 
	 	

DIGITAL ANGEL CORPORATION

 	 
	 	By:  	/s/ Joseph J. Grillo
 	 
	 	 	Joseph J. Grillo 	 
	 	

BUYER:

VERICHIP CORPORATION

 	 
	 	By:  	/s/ William J. Caragol
 	 
	 	 	William J. Caragol 	 

 

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SCHEDULE 1.1(a)  —  ASSIGNED PATENTS

	 	 	 
	Patent #	 	Title
	7,125,382

	 	“Embedded Bio-Sensor System”
	 
	 	 
	7,297,112

	 	“Embedded Bio-Sensor System”
	 
	 	 
	2008/0033273

	 	“Embedded Bio-Sensor System”
	 
	 	 
	7,241,266

	 	“Transponder for Embedded Bio-Sensor using Body Energy as a
Power Source”

 

- 19 -

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