Exhibit 10.5

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (this “Agreement”) is made and entered into
as of August 28, 2003, by and between Digital Angel Corporation, a Delaware
corporation (the “Company”), and Laurus Master Fund, Ltd. (the “Purchaser”).

 

This Agreement is made pursuant to the Security Agreement, dated as of the date
hereof, between the Purchaser and the Company (the “Security Agreement”), and
pursuant to the “Notes” and the “Warrant” (as defined below).

 

The Company and the Purchaser hereby agree as follows:

 

1.             DEFINITIONS.  CAPITALIZED TERMS USED AND NOT OTHERWISE DEFINED
HEREIN THAT ARE DEFINED IN THE SECURITY AGREEMENT SHALL HAVE THE MEANINGS GIVEN
SUCH TERMS IN THE SECURITY AGREEMENT.  AS USED IN THIS AGREEMENT, THE FOLLOWING
TERMS SHALL HAVE THE FOLLOWING MEANINGS:

 

“Commission” means the U.S. Securities and Exchange Commission.

 

“Effectiveness Date” means the 90th day following the applicable Filing Date.

 

“Effectiveness Period” shall have the meaning set forth in Section 2(a).

 

“Exchange Act” means the federal Securities Exchange Act of 1934, as amended.

 

“Filing Date” means, with respect to each Registration Statement required to be
filed hereunder, no later than (1)  December 28, 2003 or (2) thirty (30) days
following the date of issuance of each $1,000,000 tranche of Loans evidenced by
a Minimum Borrowing Note thereafter.

 

“Holder” or “Holders” means the Purchaser or any of its affiliates or
transferees to the extent any of them hold Registrable Securities.

 

“Indemnified Party” shall have the meaning set forth in Section 5(c).

 

“Indemnifying Party” shall have the meaning set forth in Section 5(c).

 

“Losses” shall have the meaning set forth in Section 5(a).

 

“Notes” has the meaning set forth in the Security Agreement.

 

“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.

 

“Prospectus” means the prospectus included in a Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted

 

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from a prospectus filed as part of an effective registration statement in
reliance upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Securities covered by such
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.

 

“Registrable Securities” means the shares of Common Stock issued upon the
conversion of  each Note and issuable upon exercise of the Warrants.

 

“Registration Statement” means each registration statement required to be filed
hereunder, including the Prospectus, amendments and supplements to such
registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all materials incorporated by reference or
deemed to be incorporated by reference in such registration statement.

 

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

 

“Rule 415” means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

 

“Rule 424” means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

 

“Securities Act” means the federal Securities Act of 1933, as amended.

 

“Trading Days” means a day upon which the American Stock Exchange is open for
business.

 

“Warrants” means the Common Stock purchase warrants issued pursuant to the
Security Agreement.

 

2.             REGISTRATION.

 

(A)           ON OR PRIOR TO EACH FILING DATE, THE COMPANY SHALL PREPARE AND
FILE WITH THE COMMISSION A REGISTRATION STATEMENT COVERING THE REGISTRABLE
SECURITIES FOR AN OFFERING TO BE MADE ON A CONTINUOUS BASIS PURSUANT TO RULE
415.  EACH REGISTRATION STATEMENT SHALL BE ON FORM S-3 (EXCEPT IF THE COMPANY IS
NOT THEN ELIGIBLE TO REGISTER FOR RESALE THE REGISTRABLE SECURITIES ON FORM S-3,
IN WHICH CASE SUCH REGISTRATION SHALL BE ON ANOTHER APPROPRIATE FORM IN
ACCORDANCE HEREWITH).  THE COMPANY SHALL CAUSE EACH REGISTRATION STATEMENT TO
BECOME EFFECTIVE AND REMAIN EFFECTIVE AS PROVIDED HEREIN.  THE COMPANY SHALL USE
ITS REASONABLE COMMERCIAL EFFORTS TO CAUSE EACH REGISTRATION STATEMENT TO BE
DECLARED EFFECTIVE UNDER THE SECURITIES ACT AS PROMPTLY AS POSSIBLE AFTER THE
FILING THEREOF, BUT IN ANY EVENT NO LATER THAN THE EFFECTIVENESS DATE, AND SHALL
KEEP EACH REGISTRATION STATEMENT CONTINUOUSLY EFFECTIVE UNDER THE

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Securities Act until the date which is the earlier date of when (i) all
Registrable Securities have been sold or (ii) all Registrable Securities may be
sold immediately without registration under the Securities Act and without
volume restrictions pursuant to Rule 144(k) under the Securities Act, as
determined by the counsel to the Company pursuant to a written opinion letter to
such effect, addressed and acceptable to the Company’s transfer agent and the
affected Holders (the “Effectiveness Period”).

 

(B)           IF: (I) ANY REGISTRATION STATEMENT IS NOT FILED ON OR PRIOR TO THE
APPLICABLE FILING DATE; (II) A REGISTRATION STATEMENT FILED HEREUNDER IS NOT
DECLARED EFFECTIVE BY THE COMMISSION BY THE EFFECTIVENESS DATE; (III) AFTER A
REGISTRATION STATEMENT IS FILED WITH AND DECLARED EFFECTIVE BY THE COMMISSION,
SUCH REGISTRATION STATEMENT CEASES TO BE EFFECTIVE (BY SUSPENSION OR OTHERWISE)
AS TO ALL REGISTRABLE SECURITIES TO WHICH IT IS REQUIRED TO RELATE AT ANY TIME
PRIOR TO THE EXPIRATION OF THE EFFECTIVENESS PERIOD (WITHOUT BEING SUCCEEDED
IMMEDIATELY BY AN ADDITIONAL REGISTRATION STATEMENT FILED AND DECLARED
EFFECTIVE) FOR A PERIOD OF TIME WHICH SHALL EXCEED 30 DAYS IN THE AGGREGATE PER
YEAR OR MORE THAN 20 CONSECUTIVE CALENDAR DAYS (DEFINED AS A PERIOD OF 365 DAYS
COMMENCING ON THE DATE SUCH REGISTRATION STATEMENT IS DECLARED EFFECTIVE); OR
(IV) THE COMMON STOCK IS NOT LISTED OR QUOTED, OR IS SUSPENDED FROM TRADING ON
ANY TRADING MARKET (DEFINED BELOW) FOR A PERIOD OF THREE (3) CONSECUTIVE TRADING
DAYS (PROVIDED THE COMPANY SHALL NOT HAVE BEEN ABLE TO CURE SUCH TRADING
SUSPENSION WITHIN 30 DAYS OF THE NOTICE THEREOF OR LIST THE COMMON STOCK ON ANY
OF THE NASD OTC BULLETIN BOARD, BBX EXCHANGE, NASDAQ SMALLCAP MARKET, THE NASDAQ
NATIONAL MARKET, AMERICAN STOCK EXCHANGE OR NEW YORK STOCK EXCHANGE (THE
“TRADING MARKET”)) (ANY SUCH FAILURE OR BREACH BEING REFERRED TO AS AN “EVENT,”
AND FOR PURPOSES OF CLAUSE (I), (II) OR (V), THE DATE ON WHICH SUCH EVENT
OCCURS, OR FOR PURPOSES OF CLAUSE (III), THE DATE WHICH SUCH 30 DAY OR 20
CONSECUTIVE DAY PERIOD (AS THE CASE MAY BE) IS EXCEEDED, OR FOR PURPOSES OF
CLAUSE (IV), THE DATE ON WHICH SUCH THREE (3) TRADING DAY PERIOD IS EXCEEDED,
BEING REFERRED TO AS “EVENT DATE”), THEN UNTIL THE APPLICABLE EVENT IS CURED,
THE COMPANY SHALL PAY TO EACH HOLDER AN AMOUNT IN CASH, AS LIQUIDATED DAMAGES
AND NOT AS A PENALTY, EQUAL TO 2.0% FOR EACH THIRTY (30) DAY PERIOD (PRORATED
FOR PARTIAL PERIODS) ON A DAILY BASIS OF THE ORIGINAL PRINCIPAL AMOUNT OF EACH
APPLICABLE NOTE.  SUCH LIQUIDATION DAMAGES SHALL BE PAID NOT LESS THAN EACH
THIRTY (30) DAYS DURING AN EVENT AND WITHIN THREE (3) DAYS FOLLOWING THE DATE ON
WHICH SUCH EVENT HAS BEEN CURED BY THE COMPANY.

 

3.             REGISTRATION PROCEDURES.  IF AND WHENEVER THE COMPANY IS REQUIRED
BY THE PROVISIONS HEREOF TO EFFECT THE REGISTRATION OF THE REGISTRABLE
SECURITIES UNDER THE ACT, THE COMPANY WILL, AS EXPEDITIOUSLY AS POSSIBLE:

 

(A)           PREPARE AND FILE WITH THE SEC A REGISTRATION STATEMENT WITH
RESPECT TO SUCH SECURITIES, PROMPTLY AS POSSIBLE RESPOND TO ANY COMMENTS
RECEIVED FROM THE SEC AND USE ITS BEST EFFORTS TO CAUSE SUCH REGISTRATION
STATEMENT TO BECOME AND REMAIN EFFECTIVE FOR THE PERIOD OF THE DISTRIBUTION
CONTEMPLATED THEREBY (DETERMINED AS HEREIN PROVIDED), AND PROMPTLY PROVIDE TO
THE PURCHASER COPIES OF ALL FILINGS AND SEC LETTERS OF COMMENT;

 

(B)           PREPARE AND FILE WITH THE SEC SUCH AMENDMENTS AND SUPPLEMENTS TO
SUCH REGISTRATION STATEMENT AND THE PROSPECTUS USED IN CONNECTION THEREWITH AS
MAY BE NECESSARY TO COMPLY WITH THE PROVISIONS OF THE SECURITIES ACT WITH
RESPECT TO THE DISPOSITION OF ALL SECURITIES COVERED BY THE REGISTRATION
STATEMENT AND TO KEEP SUCH REGISTRATION STATEMENT EFFECTIVE UNTIL THE EARLIER
OF: (I) SIX MONTHS AFTER THE LATEST EXERCISE PERIOD OF THE WARRANTS; (II) FOUR
YEARS AFTER THE

 

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Closing Date; or (iii) the date on which the Purchaser has disposed of all of
the Registrable Securities covered by such registration statement in accordance
with the Purchaser’s intended method of disposition set forth in such
registration statement for such period;

 

(C)           FURNISH TO THE PURCHASER SUCH NUMBER OF COPIES OF THE REGISTRATION
STATEMENT AND THE PROSPECTUS INCLUDED THEREIN (INCLUDING EACH PRELIMINARY
PROSPECTUS) AS THE PURCHASER REASONABLY MAY REQUEST TO FACILITATE THE PUBLIC
SALE OR DISPOSITION OF THE SECURITIES COVERED BY SUCH REGISTRATION STATEMENT;

 

(D)           USE ITS COMMERCIALLY REASONABLE  EFFORTS TO REGISTER OR QUALIFY
THE PURCHASER’S REGISTRABLE SECURITIES COVERED BY SUCH REGISTRATION STATEMENT
UNDER THE SECURITIES OR “BLUE SKY” LAWS OF SUCH JURISDICTIONS AS THE PURCHASER
MAY REASONABLY REQUEST; PROVIDED, HOWEVER, THAT THE COMPANY SHALL NOT FOR ANY
SUCH PURPOSE BE REQUIRED TO QUALIFY GENERALLY TO TRANSACT BUSINESS AS A FOREIGN
CORPORATION IN ANY JURISDICTION WHERE IT IS NOT SO QUALIFIED OR TO CONSENT TO
GENERAL SERVICE OF PROCESS IN ANY SUCH JURISDICTION;

 

(E)           LIST THE REGISTRABLE SECURITIES COVERED BY SUCH REGISTRATION
STATEMENT WITH ANY SECURITIES EXCHANGE ON WHICH THE COMMON STOCK OF THE COMPANY
IS THEN LISTED;

 

(F)            IMMEDIATELY NOTIFY THE PURCHASER AT ANY TIME WHEN A PROSPECTUS
RELATING THERETO IS REQUIRED TO BE DELIVERED UNDER THE SECURITIES ACT OF THE
HAPPENING OF ANY EVENT OF WHICH THE COMPANY HAS KNOWLEDGE AS A RESULT OF WHICH
THE PROSPECTUS CONTAINED IN SUCH REGISTRATION STATEMENT, AS THEN IN EFFECT,
INCLUDES AN UNTRUE STATEMENT OF A MATERIAL FACT OR OMITS TO STATE A MATERIAL
FACT REQUIRED TO BE STATED THEREIN OR NECESSARY TO MAKE THE STATEMENTS THEREIN
NOT MISLEADING IN LIGHT OF THE CIRCUMSTANCES THEN EXISTING; AND

 

(G)           MAKE AVAILABLE FOR INSPECTION BY THE PURCHASER AND ANY ATTORNEY,
ACCOUNTANT OR OTHER AGENT RETAINED BY THE PURCHASER ALL PUBLICLY AVAILABLE,
NON-CONFIDENTIAL FINANCIAL AND OTHER RECORDS, PERTINENT CORPORATE DOCUMENTS AND
PROPERTIES OF THE COMPANY, AND CAUSE THE COMPANY’S OFFICERS, DIRECTORS AND
EMPLOYEES TO SUPPLY ALL PUBLICLY AVAILABLE, NON-CONFIDENTIAL INFORMATION
REASONABLY REQUESTED BY THE ATTORNEY, ACCOUNTANT OR AGENT OF THE PURCHASER.

 

4.             REGISTRATION EXPENSES.  ALL EXPENSES RELATING TO THE COMPANY’S
COMPLIANCE WITH SECTIONS 2 AND 3 HEREOF, INCLUDING, WITHOUT LIMITATION, ALL
REGISTRATION AND FILING FEES, PRINTING EXPENSES, FEES AND DISBURSEMENTS OF
COUNSEL AND INDEPENDENT PUBLIC ACCOUNTANTS FOR THE COMPANY, FEES AND EXPENSES
(INCLUDING REASONABLE COUNSEL FEES) INCURRED IN CONNECTION WITH COMPLYING WITH
STATE SECURITIES OR “BLUE SKY” LAWS, FEES OF THE NASD, TRANSFER TAXES, FEES OF
TRANSFER AGENTS AND REGISTRARS, FEES OF, AND DISBURSEMENTS INCURRED BY, ONE
COUNSEL FOR THE HOLDERS, AND COSTS OF INSURANCE ARE CALLED “REGISTRATION
EXPENSES”. ALL SELLING COMMISSIONS APPLICABLE TO THE SALE OF REGISTRABLE
SECURITIES, INCLUDING ANY FEES AND DISBURSEMENTS OF ANY SPECIAL COUNSEL TO THE
HOLDERS BEYOND THOSE INCLUDED IN REGISTRATION EXPENSES, ARE CALLED “SELLING
EXPENSES.”   THE COMPANY SHALL BE RESPONSIBLE FOR ALL REGISTRATION EXPENSES.

 

5.             INDEMNIFICATION.

 

(A)           IN THE EVENT OF A REGISTRATION OF ANY REGISTRABLE SECURITIES UNDER
THE SECURITIES ACT PURSUANT TO THIS AGREEMENT, THE COMPANY WILL INDEMNIFY AND
HOLD HARMLESS THE

 

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Purchaser, and its officers, directors and each other person, if any, who
controls the Purchaser within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which the Purchaser
or such persons may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any registration statement under
which such Registrable Securities were registered under the Securities Act
pursuant to this Agreement, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereof, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse the Purchaser, and each such person for any
reasonable legal or other expenses incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any such case if and
to the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information furnished by or on
behalf of the Purchaser or any such person in writing specifically for use in
any such document.

 

(B)           IN THE EVENT OF A REGISTRATION OF THE REGISTRABLE SECURITIES UNDER
THE SECURITIES ACT PURSUANT TO THIS AGREEMENT, THE PURCHASER WILL INDEMNIFY AND
HOLD HARMLESS THE COMPANY, AND ITS OFFICERS, DIRECTORS AND EACH OTHER PERSON, IF
ANY, WHO CONTROLS THE COMPANY WITHIN THE MEANING OF THE SECURITIES ACT, AGAINST
ALL LOSSES, CLAIMS, DAMAGES OR LIABILITIES, JOINT OR SEVERAL, TO WHICH THE
COMPANY OR SUCH PERSONS MAY BECOME SUBJECT UNDER THE SECURITIES ACT OR
OTHERWISE, INSOFAR AS SUCH LOSSES, CLAIMS, DAMAGES OR LIABILITIES (OR ACTIONS IN
RESPECT THEREOF) ARISE OUT OF OR ARE BASED UPON ANY UNTRUE STATEMENT OR ALLEGED
UNTRUE STATEMENT OF ANY MATERIAL FACT WHICH WAS FURNISHED IN WRITING BY OR ON
BEHALF OF THE PURCHASER TO THE COMPANY EXPRESSLY FOR USE IN (AND SUCH
INFORMATION IS CONTAINED IN) THE REGISTRATION STATEMENT UNDER WHICH SUCH
REGISTRABLE SECURITIES WERE REGISTERED UNDER THE SECURITIES ACT PURSUANT TO THIS
AGREEMENT, ANY PRELIMINARY PROSPECTUS OR FINAL PROSPECTUS CONTAINED THEREIN, OR
ANY AMENDMENT OR SUPPLEMENT THEREOF, OR ARISE OUT OF OR ARE BASED UPON THE
OMISSION OR ALLEGED OMISSION TO STATE THEREIN A MATERIAL FACT REQUIRED TO BE
STATED THEREIN OR NECESSARY TO MAKE THE STATEMENTS THEREIN NOT MISLEADING, AND
WILL REIMBURSE THE COMPANY AND EACH SUCH PERSON FOR ANY REASONABLE LEGAL OR
OTHER EXPENSES INCURRED BY THEM IN CONNECTION WITH INVESTIGATING OR DEFENDING
ANY SUCH LOSS, CLAIM, DAMAGE, LIABILITY OR ACTION, PROVIDED, HOWEVER, THAT THE
PURCHASER WILL BE LIABLE IN ANY SUCH CASE IF AND ONLY TO THE EXTENT THAT ANY
SUCH LOSS, CLAIM, DAMAGE OR LIABILITY ARISES OUT OF OR IS BASED UPON AN UNTRUE
STATEMENT OR ALLEGED UNTRUE STATEMENT OR OMISSION OR ALLEGED OMISSION SO MADE IN
CONFORMITY WITH INFORMATION FURNISHED IN WRITING TO THE COMPANY BY OR ON BEHALF
OF THE PURCHASER SPECIFICALLY FOR USE IN ANY SUCH DOCUMENT.  NOTWITHSTANDING THE
PROVISIONS OF THIS PARAGRAPH, THE PURCHASER SHALL NOT BE REQUIRED TO INDEMNIFY
ANY PERSON OR ENTITY IN EXCESS OF THE AMOUNT OF THE AGGREGATE NET PROCEEDS
RECEIVED BY THE PURCHASER OF REGISTRABLE SECURITIES IN CONNECTION WITH ANY SUCH
REGISTRATION UNDER THE SECURITIES ACT.

 

(C)           PROMPTLY AFTER RECEIPT BY AN INDEMNIFIED PARTY HEREUNDER OF NOTICE
OF THE COMMENCEMENT OF ANY ACTION, SUCH INDEMNIFIED PARTY SHALL, IF A CLAIM IN
RESPECT THEREOF IS TO BE MADE AGAINST THE INDEMNIFYING PARTY HEREUNDER, NOTIFY
THE INDEMNIFYING PARTY IN WRITING THEREOF, BUT THE OMISSION SO TO NOTIFY THE
INDEMNIFYING PARTY SHALL NOT RELIEVE IT FROM ANY LIABILITY WHICH IT MAY HAVE TO
SUCH INDEMNIFIED PARTY OTHER THAN UNDER THIS SECTION 5(C) AND SHALL ONLY RELIEVE
IT

 

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from any liability which it may have to such indemnified party under this
Section 5(c) if and to the extent the indemnifying party is prejudiced by such
omission. In case any such action shall be brought against any indemnified party
and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in and, to the extent it
shall wish, to assume and undertake the defense thereof with counsel
satisfactory to such indemnified party, and, after notice from the indemnifying
party to such indemnified party of its election so to assume and undertake the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under this Section 5(c) for any legal expenses subsequently incurred by
such indemnified party in connection with the defense thereof; if the
indemnified party retains its own counsel, then the indemnified party shall pay
all fees, costs and expenses of such counsel; provided, however, that, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be reasonable defenses available to it which are different from
or additional to those available to the indemnifying party or if the interests
of the indemnified party reasonably may be deemed to conflict with the interests
of the indemnifying party, the indemnified parties shall have the right to
select one separate counsel and to assume such legal defenses and otherwise to
participate in the defense of such action, with the reasonable expenses and fees
of such separate counsel and other expenses related to such participation to be
reimbursed by the indemnifying party as incurred.

 

(D)           IN ORDER TO PROVIDE FOR JUST AND EQUITABLE CONTRIBUTION IN THE
EVENT OF JOINT LIABILITY UNDER THE SECURITIES ACT IN ANY CASE IN WHICH EITHER
(I) THE PURCHASER, OR ANY CONTROLLING PERSON OF THE PURCHASER, MAKES A CLAIM FOR
INDEMNIFICATION PURSUANT TO THIS SECTION 5(C) BUT IT IS JUDICIALLY DETERMINED
(BY THE ENTRY OF A FINAL JUDGMENT OR DECREE BY A COURT OF COMPETENT JURISDICTION
AND THE EXPIRATION OF TIME TO APPEAL OR THE DENIAL OF THE LAST RIGHT OF APPEAL)
THAT SUCH INDEMNIFICATION MAY NOT BE ENFORCED IN SUCH CASE NOTWITHSTANDING THE
FACT THAT THIS SECTION 5(C) PROVIDES FOR INDEMNIFICATION IN SUCH CASE, OR (II)
CONTRIBUTION UNDER THE SECURITIES ACT MAY BE REQUIRED ON THE PART OF THE
PURCHASER OR CONTROLLING PERSON OF THE PURCHASER IN CIRCUMSTANCES FOR WHICH
INDEMNIFICATION IS PROVIDED UNDER THIS SECTION 5(C); THEN, AND IN EACH SUCH
CASE, THE COMPANY AND THE PURCHASER WILL CONTRIBUTE TO THE AGGREGATE LOSSES,
CLAIMS, DAMAGES OR LIABILITIES TO WHICH THEY MAY BE SUBJECT (AFTER CONTRIBUTION
FROM OTHERS) IN SUCH PROPORTION SO THAT THE PURCHASER IS RESPONSIBLE ONLY FOR
THE PORTION REPRESENTED BY THE PERCENTAGE THAT THE PUBLIC OFFERING PRICE OF ITS
SECURITIES OFFERED BY THE REGISTRATION STATEMENT BEARS TO THE PUBLIC OFFERING
PRICE OF ALL SECURITIES OFFERED BY SUCH REGISTRATION STATEMENT, PROVIDED,
HOWEVER, THAT, IN ANY SUCH CASE, (A) THE PURCHASER WILL NOT BE REQUIRED TO
CONTRIBUTE ANY AMOUNT IN EXCESS OF THE PUBLIC OFFERING PRICE OF ALL SUCH
SECURITIES OFFERED BY IT PURSUANT TO SUCH REGISTRATION STATEMENT; AND (B) NO
PERSON OR ENTITY GUILTY OF FRAUDULENT MISREPRESENTATION (WITHIN THE MEANING OF
SECTION 11(F) OF THE SECURITIES ACT) WILL BE ENTITLED TO CONTRIBUTION FROM ANY
PERSON OR ENTITY WHO WAS NOT GUILTY OF SUCH FRAUDULENT MISREPRESENTATION.

 

6.             REPRESENTATIONS AND WARRANTIES.

 

(A)           THE COMMON STOCK OF THE COMPANY IS REGISTERED PURSUANT TO SECTION
12(B) OR 12(G) OF THE EXCHANGE ACT AND, SINCE JANUARY 1, 2002, EXCEPT FOR THE
COMPANY’S QUARTERLY REPORT ON FROM 10-Q FOR THE QUARTER ENDED MARCH 31, 2002,
THE COMPANY HAS TIMELY FILED ALL PROXY STATEMENTS, REPORTS, SCHEDULES, FORMS,
STATEMENTS AND OTHER DOCUMENTS REQUIRED TO BE FILED BY IT UNDER THE EXCHANGE
ACT.  THE COMPANY HAS FILED (I) ITS ANNUAL REPORT ON FORM 10-K

 

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for the fiscal year ended December 31, 2002 and (ii) its Quarterly Reports on
Form 10-Q for the fiscal quarters ended March 31, 2003 and June 30, 2003
(collectively, the “SEC Reports”).  Each SEC Report was, at the time of its
filing, in substantial compliance with the requirements of its respective form
and none of the SEC Reports, nor the financial statements (and the notes
thereto) included in the SEC Reports, as of their respective filing dates,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.  The
financial statements of the Company included in the SEC Reports comply as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the Commission or other applicable rules and
regulations with respect thereto.  Such financial statements have been prepared
in accordance with generally accepted accounting principles (“GAAP”) applied on
a consistent basis during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto or (ii) in the case
of unaudited interim statements, to the extent they may not include footnotes or
may be condensed) and fairly present in all material respects the financial
position,  the results of operations and the cash flows of the Company and its
subsidiaries, on a consolidated basis, as of, and for, the periods presented in
each such SEC Report (subject, in the case of unaudited statements, to normal
year-end adjustments).

 

(B)           THE COMPANY COMMON STOCK IS LISTED ON THE AMERICAN STOCK EXCHANGE
AND SATISFIES ALL REQUIREMENTS FOR THE CONTINUATION OF SUCH LISTING.  THE
COMPANY HAS NOT RECEIVED ANY NOTICE THAT ITS COMMON STOCK WILL BE DELISTED FROM
THE AMERICAN STOCK EXCHANGE  OR THAT THE COMMON STOCK DOES NOT MEET ALL
REQUIREMENTS FOR THE CONTINUATION OF SUCH LISTING.

 

(C)           NEITHER THE COMPANY, NOR ANY OF ITS AFFILIATES, NOR ANY PERSON
ACTING ON ITS OR THEIR BEHALF, HAS DIRECTLY OR INDIRECTLY MADE ANY OFFERS OR
SALES OF ANY SECURITY OR SOLICITED ANY OFFERS TO BUY ANY SECURITY UNDER
CIRCUMSTANCES THAT WOULD CAUSE THE OFFERING OF THE REGISTRABLE SECURITIES
PURSUANT TO THIS AGREEMENT TO BE INTEGRATED WITH PRIOR OFFERINGS BY THE COMPANY
FOR PURPOSES OF THE SECURITIES ACT WHICH WOULD PREVENT THE COMPANY FROM SELLING
THE COMMON STOCK PURSUANT TO RULE 506 UNDER THE SECURITIES ACT, OR ANY
APPLICABLE EXCHANGE-RELATED STOCKHOLDER APPROVAL PROVISIONS;  NOR WILL THE
COMPANY OR ANY OF ITS AFFILIATES OR SUBSIDIARIES TAKE ANY ACTION OR STEPS THAT
WOULD CAUSE THE OFFERING OF THE REGISTRABLE SECURITIES TO BE INTEGRATED WITH
OTHER OFFERINGS.

 

(D)           THE REGISTRABLE SECURITIES ARE RESTRICTED SECURITIES UNDER THE
SECURITIES ACT AS OF THE DATE OF THIS AGREEMENT.  THE COMPANY WILL NOT ISSUE ANY
STOP TRANSFER ORDER OR OTHER ORDER IMPEDING THE SALE AND DELIVERY OF ANY OF THE
REGISTRABLE SECURITIES AT SUCH TIME AS THE REGISTRABLE SECURITIES ARE REGISTERED
FOR PUBLIC SALE OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE, EXCEPT AS
REQUIRED BY FEDERAL OR STATE SECURITIES LAWS.

 

(E)           THE COMPANY UNDERSTANDS THE NATURE OF THE REGISTRABLE SECURITIES
ISSUABLE UPON THE CONVERSION OF EACH NOTE AND THE EXERCISE OF EACH WARRANT AND
RECOGNIZES THAT THE REGISTRABLE SECURITIES MAY HAVE A POTENTIAL DILUTIVE
EFFECT.  THE COMPANY SPECIFICALLY ACKNOWLEDGES THAT ITS OBLIGATION TO ISSUE THE
REGISTRABLE SECURITIES IS BINDING UPON THE COMPANY AND ENFORCEABLE REGARDLESS OF
THE DILUTION SUCH ISSUANCE MAY HAVE ON THE OWNERSHIP INTERESTS OF OTHER
SHAREHOLDERS OF THE COMPANY.

 

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(F)            EXCEPT FOR AGREEMENTS MADE IN THE ORDINARY COURSE OF BUSINESS,
THERE IS NO AGREEMENT THAT HAS NOT BEEN FILED WITH THE SEC AS AN EXHIBIT TO A
REGISTRATION STATEMENT OR TO A FORM REQUIRED TO BE FILED BY THE COMPANY UNDER
THE EXCHANGE ACT THE BREACH OF WHICH COULD HAVE A MATERIAL AND ADVERSE EFFECT ON
THE COMPANY AND ITS SUBSIDIARIES, OR WOULD PROHIBIT OR OTHERWISE INTERFERE WITH
THE ABILITY OF THE COMPANY TO ENTER INTO AND PERFORM ANY OF ITS OBLIGATIONS
UNDER THIS AGREEMENT IN ANY MATERIAL RESPECT.

 

(G)           THE COMPANY WILL AT ALL TIMES HAVE AUTHORIZED AND RESERVED A
SUFFICIENT NUMBER OF SHARES OF COMMON STOCK FOR THE FULL CONVERSION OF EACH NOTE
AND EXERCISE OF EACH WARRANT.

 

7.             MISCELLANEOUS.

 

(A)           REMEDIES.  IN THE EVENT OF A BREACH BY THE COMPANY OR BY A HOLDER
OF ANY OF THEIR OBLIGATIONS UNDER THIS AGREEMENT, EACH HOLDER OR THE COMPANY, AS
THE CASE MAY BE, IN ADDITION TO BEING ENTITLED TO EXERCISE ALL RIGHTS GRANTED BY
LAW AND UNDER THIS AGREEMENT, INCLUDING RECOVERY OF DAMAGES, WILL BE ENTITLED TO
SPECIFIC PERFORMANCE OF ITS RIGHTS UNDER THIS AGREEMENT.

 

(B)           NO PIGGYBACK ON REGISTRATIONS.  EXCEPT AS AND TO THE EXTENT
SPECIFIED IN SCHEDULE 7(B) HERETO, NEITHER THE COMPANY NOR ANY OF ITS SECURITY
HOLDERS (OTHER THAN THE HOLDERS IN SUCH CAPACITY PURSUANT HERETO) MAY INCLUDE
SECURITIES OF THE COMPANY IN ANY REGISTRATION STATEMENT OTHER THAN THE
REGISTRABLE SECURITIES, AND THE COMPANY SHALL NOT AFTER THE DATE HEREOF ENTER
INTO ANY AGREEMENT PROVIDING ANY SUCH RIGHT FOR INCLUSION OF SHARES IN THE
REGISTRATION STATEMENT TO ANY OF ITS SECURITY HOLDERS. EXCEPT AS AND TO THE
EXTENT SPECIFIED IN SCHEDULE 7(B) HERETO, THE COMPANY HAS NOT PREVIOUSLY ENTERED
INTO ANY AGREEMENT GRANTING ANY REGISTRATION RIGHTS WITH RESPECT TO ANY OF ITS
SECURITIES TO ANY PERSON THAT HAS NOT BEEN FULLY SATISFIED.

 

(C)           COMPLIANCE.  EACH HOLDER COVENANTS AND AGREES THAT IT WILL COMPLY
WITH THE PROSPECTUS DELIVERY REQUIREMENTS OF THE SECURITIES ACT AS APPLICABLE TO
IT IN CONNECTION WITH SALES OF REGISTRABLE SECURITIES PURSUANT TO THE
REGISTRATION STATEMENT.

 

(D)           DISCONTINUED DISPOSITION.  EACH HOLDER AGREES BY ITS ACQUISITION
OF SUCH REGISTRABLE SECURITIES THAT, UPON RECEIPT OF A NOTICE FROM THE COMPANY
OF THE OCCURRENCE OF A DISCONTINUATION EVENT (DEFINED BELOW), SUCH HOLDER WILL
FORTHWITH DISCONTINUE DISPOSITION OF SUCH REGISTRABLE SECURITIES UNDER THE
APPLICABLE REGISTRATION STATEMENT UNTIL SUCH HOLDER’S RECEIPT OF THE COPIES OF
THE SUPPLEMENTED PROSPECTUS AND/OR AMENDED REGISTRATION STATEMENT OR UNTIL IT IS
ADVISED IN WRITING (THE “ADVICE”) BY THE COMPANY THAT THE USE OF THE APPLICABLE
PROSPECTUS MAY BE RESUMED, AND, IN EITHER CASE, HAS RECEIVED COPIES OF ANY
ADDITIONAL OR SUPPLEMENTAL FILINGS THAT ARE INCORPORATED OR DEEMED TO BE
INCORPORATED BY REFERENCE IN SUCH PROSPECTUS OR REGISTRATION STATEMENT. THE
COMPANY MAY PROVIDE APPROPRIATE STOP ORDERS TO ENFORCE THE PROVISIONS OF THIS
PARAGRAPH. FOR PURPOSES OF THIS SECTION 7(D), A “DISCONTINUATION EVENT” SHALL
MEAN (I) WHEN THE COMMISSION NOTIFIES THE COMPANY WHETHER THERE WILL BE A
“REVIEW” OF SUCH REGISTRATION STATEMENT AND WHENEVER THE COMMISSION COMMENTS IN
WRITING ON SUCH REGISTRATION STATEMENT (THE COMPANY SHALL PROVIDE TRUE AND
COMPLETE COPIES THEREOF AND ALL WRITTEN RESPONSES THERETO TO EACH OF THE
HOLDERS); (II) ANY REQUEST BY THE COMMISSION OR ANY OTHER FEDERAL OR STATE
GOVERNMENTAL AUTHORITY FOR AMENDMENTS OR SUPPLEMENTS TO SUCH

 

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Registration Statement or Prospectus or for additional information; (iii) the
issuance by the Commission of any stop order suspending the effectiveness of
such Registration Statement covering any or all of the Registrable Securities or
the initiation of any Proceedings for that purpose; (iv) the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (v) the occurrence of any event or passage of time that makes the
financial statements included in such Registration Statement ineligible for
inclusion therein or any statement made in such Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to such
Registration Statement, Prospectus or other documents so that, in the case of
such Registration Statement or Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.

 

(E)           PIGGY-BACK REGISTRATIONS.  IF AT ANY TIME DURING THE EFFECTIVENESS
PERIOD, THERE IS NOT AN EFFECTIVE REGISTRATION STATEMENT COVERING ALL OF THE
REGISTRABLE SECURITIES AND THE COMPANY SHALL DETERMINE TO PREPARE AND FILE WITH
THE COMMISSION A REGISTRATION STATEMENT RELATING TO AN OFFERING FOR ITS OWN
ACCOUNT OR THE ACCOUNT OF OTHERS UNDER THE SECURITIES ACT OF ANY OF ITS EQUITY
SECURITIES, OTHER THAN ON FORM S-4 OR FORM S-8 (EACH AS PROMULGATED UNDER THE
SECURITIES ACT) OR THEIR THEN EQUIVALENTS RELATING TO EQUITY SECURITIES TO BE
ISSUED SOLELY IN CONNECTION WITH ANY ACQUISITION OF ANY ENTITY OR BUSINESS OR
EQUITY SECURITIES ISSUABLE IN CONNECTION WITH STOCK OPTION OR OTHER EMPLOYEE
BENEFIT PLANS, THEN THE COMPANY SHALL SEND TO EACH HOLDER WRITTEN NOTICE OF SUCH
DETERMINATION AND, IF WITHIN FIFTEEN (15) CALENDAR DAYS AFTER RECEIPT OF SUCH
NOTICE, ANY SUCH HOLDER SHALL SO REQUEST IN WRITING, THE COMPANY SHALL INCLUDE
IN SUCH REGISTRATION STATEMENT ALL OR ANY PART OF SUCH REGISTRABLE SECURITIES
SUCH HOLDER REQUESTS TO BE REGISTERED, SUBJECT TO CUSTOMARY UNDERWRITER CUTBACKS
APPLICABLE TO ALL HOLDERS OF REGISTRATION RIGHTS AND SUBJECT TO THE CONSENT OF
ANY SELLING STOCKHOLDER(S) UNDER SUCH REGISTRATION STATEMENT.

 

(F)            AMENDMENTS AND WAIVERS.  THE PROVISIONS OF THIS AGREEMENT,
INCLUDING THE PROVISIONS OF THIS SENTENCE, MAY NOT BE AMENDED, MODIFIED OR
SUPPLEMENTED, AND WAIVERS OR CONSENTS TO DEPARTURES FROM THE PROVISIONS HEREOF
MAY NOT BE GIVEN, UNLESS THE SAME SHALL BE IN WRITING AND SIGNED BY THE COMPANY
AND THE HOLDERS OF THE THEN OUTSTANDING REGISTRABLE SECURITIES. NOTWITHSTANDING
THE FOREGOING, A WAIVER OR CONSENT TO DEPART FROM THE PROVISIONS HEREOF WITH
RESPECT TO A MATTER THAT RELATES EXCLUSIVELY TO THE RIGHTS OF CERTAIN HOLDERS
AND THAT DOES NOT DIRECTLY OR INDIRECTLY AFFECT THE RIGHTS OF OTHER HOLDERS MAY
BE GIVEN BY HOLDERS OF AT LEAST A MAJORITY OF THE REGISTRABLE SECURITIES TO
WHICH SUCH WAIVER OR CONSENT RELATES; PROVIDED, HOWEVER, THAT THE PROVISIONS OF
THIS SENTENCE MAY NOT BE AMENDED, MODIFIED, OR SUPPLEMENTED EXCEPT IN ACCORDANCE
WITH THE PROVISIONS OF THE IMMEDIATELY PRECEDING SENTENCE.

 

(G)           NOTICES.  ANY NOTICE OR REQUEST HEREUNDER MAY BE GIVEN TO THE
COMPANY OR PURCHASER AT THE RESPECTIVE ADDRESSES SET FORTH BELOW OR AS MAY
HEREAFTER BE SPECIFIED IN A NOTICE DESIGNATED AS A CHANGE OF ADDRESS UNDER THIS
SECTION 7(G).  ANY NOTICE OR REQUEST HEREUNDER SHALL BE GIVEN BY REGISTERED OR
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, HAND DELIVERY, OVERNIGHT MAIL OR
TELECOPY (CONFIRMED BY MAIL).  NOTICES AND REQUESTS SHALL BE, IN THE CASE OF
THOSE BY HAND DELIVERY, DEEMED TO HAVE BEEN GIVEN WHEN DELIVERED TO ANY OFFICER
OF THE PARTY TO

 

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whom it is addressed, in the case of those by mail or overnight mail, deemed to
have been given when deposited in the mail or with the overnight mail carrier,
and, in the case of a telecopy, when confirmed.  The address for such notices
and communications shall be as follows:

 

If to the Company:

 

Digital Angel Corporation
490 Villaume Avenue
South St. Paul, Minnesota  55075
Attention: Mr. James P. Santelli
Facsimile: (651) 455-0217

 

 

 

With a copy to:

 

 

 

 

Michele D. Vaillancourt
Winthrop & Weinstine, P.A.
Suite 3500
225 South Sixth Street
Minneapolis, Minnesota  55402
Facsimile: (612) 604-6800

 

 

 

If to a Purchaser:

 

To the address set forth under
such Purchaser name on the
signature pages hereto.

 

 

 

If to any other Person who is then the registered Holder:

 

 

 

 

 

To the address of such Holder as it
appears in the stock transfer books
of the Company

 

 

or such other address as may be designated in writing hereafter, in the same
manner, by such Person.

 

(H)           SUCCESSORS AND ASSIGNS.  THIS AGREEMENT SHALL INURE TO THE BENEFIT
OF AND BE BINDING UPON THE SUCCESSORS AND PERMITTED ASSIGNS OF EACH OF THE
PARTIES AND SHALL INURE TO THE BENEFIT OF EACH HOLDER. THE COMPANY MAY NOT
ASSIGN ITS RIGHTS OR OBLIGATIONS HEREUNDER WITHOUT THE PRIOR WRITTEN CONSENT OF
EACH HOLDER. EACH HOLDER MAY ASSIGN THEIR RESPECTIVE RIGHTS HEREUNDER IN THE
MANNER AND TO THE PERSONS AS PERMITTED UNDER THE NOTES WITH THE PRIOR WRITTEN
CONSENT OF THE COMPANY, WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD.

 

(I)            EXECUTION AND COUNTERPARTS. THIS AGREEMENT MAY BE EXECUTED IN ANY
NUMBER OF COUNTERPARTS, EACH OF WHICH WHEN SO EXECUTED SHALL BE DEEMED TO BE AN
ORIGINAL AND, ALL OF WHICH TAKEN TOGETHER SHALL CONSTITUTE ONE AND THE SAME
AGREEMENT. IN THE EVENT THAT ANY SIGNATURE IS DELIVERED BY FACSIMILE
TRANSMISSION, SUCH SIGNATURE SHALL CREATE A VALID BINDING OBLIGATION OF THE
PARTY EXECUTING (OR ON WHOSE BEHALF SUCH SIGNATURE IS EXECUTED) THE SAME WITH
THE SAME FORCE AND EFFECT AS IF SUCH FACSIMILE SIGNATURE WERE THE ORIGINAL
THEREOF.

 

(J)            GOVERNING LAW.   THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN

 

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SUCH STATE WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF. COMPANY
HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN THE
COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR
AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN COMPANY AND PURCHASER PERTAINING TO
THIS AGREEMENT OR ANY OF THE ANCILLARY AGREEMENTS OR TO ANY MATTER ARISING OUT
OF OR RELATED TO THIS AGREEMENT OR ANY OF THE ANCILLARY AGREEMENTS; PROVIDED,
THAT PURCHASER AND COMPANY ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY
HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE COUNTY OF NEW YORK, STATE OF
NEW YORK; AND FURTHER PROVIDED, THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED
OR OPERATE TO PRECLUDE PURCHASER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION
IN ANY OTHER JURISDICTION TO COLLECT THE OBLIGATIONS, TO REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT
OR OTHER COURT ORDER IN FAVOR OF PURCHASER.  COMPANY EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY
SUCH COURT, AND COMPANY HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON
LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS.   COMPANY
HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS
ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS,
COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO COMPANY AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE
EARLIER OF COMPANY’S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN
THE U.S. MAILS, PROPER POSTAGE PREPAID. THE PARTIES DESIRE THAT THEIR DISPUTES
BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS.  THEREFORE, TO ACHIEVE THE
BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE
PARTIES HERETO WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR
PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR
OTHERWISE BETWEEN PURCHASER AND COMPANY ARISING OUT OF, CONNECTED WITH, RELATED
OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH
THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR THE TRANSACTIONS RELATED THERETO.  
THE PREVAILING PARTY SHALL BE ENTITLED TO RECOVER FROM THE OTHER PARTY ITS
REASONABLE ATTORNEY’S FEES AND COSTS.  IN THE EVENT THAT ANY PROVISION OF THIS
AGREEMENT IS INVALID OR UNENFORCEABLE UNDER ANY APPLICABLE STATUTE OR RULE OF
LAW, THEN SUCH PROVISION SHALL BE DEEMED INOPERATIVE TO THE EXTENT THAT IT MAY
CONFLICT THEREWITH AND SHALL BE DEEMED MODIFIED TO CONFORM WITH SUCH STATUTE OR
RULE OF LAW.   ANY SUCH PROVISION WHICH MAY PROVE INVALID OR UNENFORCEABLE UNDER
ANY LAW SHALL NOT AFFECT THE VALIDITY OR UNENFORCEABILITY OF ANY OTHER PROVISION
OF THIS AGREEMENT.   NOTHING CONTAINED HEREIN SHALL BE DEEMED OR OPERATE TO
PRECLUDE PURCHASER FROM BRINGING SUIT OR TAKING OTHER

 

11

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LEGAL ACTION AGAINST THE BORROWER IN ANY OTHER JURISDICTION TO COLLECT ON
THECOMPANY’S OBLIGATIONS TO PURCHASER, TO REALIZE ON ANY COLLATERAL OR ANY OTHER
SECURITY FOR SUCH OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN
FAVOR OF PURCHASER.

 

(K)           CUMULATIVE REMEDIES. THE REMEDIES PROVIDED HEREIN ARE CUMULATIVE
AND NOT EXCLUSIVE OF ANY REMEDIES PROVIDED BY LAW.

 

(L)            SEVERABILITY.  IF ANY TERM, PROVISION, COVENANT OR RESTRICTION OF
THIS AGREEMENT IS HELD BY A COURT OF COMPETENT JURISDICTION TO BE INVALID,
ILLEGAL, VOID OR UNENFORCEABLE, THE REMAINDER OF THE TERMS, PROVISIONS,
COVENANTS AND RESTRICTIONS SET FORTH HEREIN SHALL REMAIN IN FULL FORCE AND
EFFECT AND SHALL IN NO WAY BE AFFECTED, IMPAIRED OR INVALIDATED, AND THE PARTIES
HERETO SHALL USE THEIR REASONABLE EFFORTS TO FIND AND EMPLOY AN ALTERNATIVE
MEANS TO ACHIEVE THE SAME OR SUBSTANTIALLY THE SAME RESULT AS THAT CONTEMPLATED
BY SUCH TERM, PROVISION, COVENANT OR RESTRICTION. IT IS HEREBY STIPULATED AND
DECLARED TO BE THE INTENTION OF THE PARTIES THAT THEY WOULD HAVE EXECUTED THE
REMAINING TERMS, PROVISIONS, COVENANTS AND RESTRICTIONS WITHOUT INCLUDING ANY OF
SUCH THAT MAY BE HEREAFTER DECLARED INVALID, ILLEGAL, VOID OR UNENFORCEABLE.

 

(M)          HEADINGS. THE HEADINGS IN THIS AGREEMENT ARE FOR CONVENIENCE OF
REFERENCE ONLY AND SHALL NOT LIMIT OR OTHERWISE AFFECT THE MEANING HEREOF.

 

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IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED THIS REGISTRATION RIGHTS AGREEMENT
AS OF THE DATE FIRST WRITTEN ABOVE.

 

 

DIGITAL ANGEL CORPORATION

 

 

 

 

 

By:

 

 

 

 

Name: James P. Santelli

 

 

Title:Vice President, Finance and CFO

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES OF PURCHASER TO FOLLOW]

 

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IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED THIS REGISTRATION RIGHTS AGREEMENT
AS OF THE DATE FIRST WRITTEN ABOVE.

 

 

LAURUS MASTER FUND, LTD.

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

 

 

Address for Notice:

 

152 West 57th Street

 

New York, New York 10019

 

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