Exhibit 10.5

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (this “Agreement”) is made and entered into
as of July 31, 2003, by and between Digital Angel Corporation, a Delaware
corporation (the “Company”), and Laurus Master Fund, Ltd., a Cayman Islands
company (the “Purchaser”).

 

This Agreement is being entered into in connection with a Securities Purchase
Agreement dated as of the date hereof between the Purchase and the Company (the
“Purchase Agreement”) and pursuant to the Note and Warrant.

 

The Company and the Purchaser hereby agree as follows:

 

1.                                       DEFINITIONS.  CAPITALIZED TERMS USED
AND NOT OTHERWISE DEFINED HEREIN THAT ARE DEFINED IN THE PURCHASE AGREEMENT
SHALL HAVE THE MEANINGS GIVEN SUCH TERMS IN THE PURCHASE 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 Closing Date.

 

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

 

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

 

“Filing Date” means, with respect to the Registration Statement required to be
filed hereunder, the 30th day following the Closing Date.

 

“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).

 

“Note” means the convertible promissory note issued by the Company to the
Purchaser on the date hereof.

 

“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 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

 

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covered by the 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 the Note and issuable upon exercise of the Warrant.

 

“Registration Statement” means the 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 material 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 Securities Act of 1933, as amended.

 

“Warrant” means the Common Stock purchase warrant issued pursuant to the
Purchase Agreement.

 

2.                                       REGISTRATION.

 

(A)                                  ON OR PRIOR TO THE 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.  THE 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 THE REGISTRATION
STATEMENT TO BECOME EFFECTIVE AND REMAIN EFFECTIVE AS PROVIDED HEREIN.  THE
COMPANY SHALL USE ITS REASONABLE COMMERCIAL EFFORTS TO CAUSE THE 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 THE REGISTRATION STATEMENT CONTINUOUSLY
EFFECTIVE UNDER THE 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), 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”).

 

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(B)                                 IF: (I) ANY REGISTRATION STATEMENT IS NOT
FILED ON OR PRIOR TO THE 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 THE REGISTRATION STATEMENT IS DECLARED EFFECTIVE); OR
(IV) THE COMMON STOCK IS NOT LISTED OR QUOTED, OR IS SUSPENDED FROM TRADING ON
ANY TRADING MARKET, 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 (IV) 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 THE 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 COMMISSION A
REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES, PROMPTLY AS POSSIBLE
RESPOND TO ANY COMMENTS RECEIVED FROM THE COMMISSION 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 COMMISSION LETTERS
OF COMMENT;

 

(B)                                 PREPARE AND FILE WITH THE COMMISSION 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
WARRANT; (II) FOUR YEARS AFTER THE 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

 

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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 REASONABLY REQUESTS; 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 AND FOR ALL SELLING EXPENSES, OTHER THAN SELLING EXPENSES
CONSISTING OF BROKERAGE COMMISSIONS.

 

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 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)

 

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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 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

 

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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, 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, EXCEPT FOR THE COMPANY’S QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2002.  THE COMPANY HAS FILED (I) ITS ANNUAL
REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002 AND (II) ITS
QUARTERLY REPORT ON FORM 10-Q FOR THE FISCAL QUARTER ENDED MARCH 31, 2003
(COLLECTIVELY, THE “SEC REPORTS”).  THE COMPANY IS ELIGIBLE TO FILE WITH THE
COMMISSION A REGISTRATION STATEMENT ON FORM S-3 PURSUANT TO INSTRUCTION I.B.3
THEREOF.  EACH SEC REPORT WAS, AT THE TIME OF ITS FILING, IN SUBSTANTIAL
COMPLIANCE WITH THE

 

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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 condition, 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.

 

(B)                                 THE COMPANY COMMON STOCK IS LISTED FOR
TRADING 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 THE NOTE AND THE EXERCISE
OF THE 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.

 

(F)                                    EXCEPT FOR AGREEMENTS MADE IN THE
ORDINARY COURSE OF BUSINESS, THERE IS NO AGREEMENT THAT HAS NOT BEEN FILED WITH
THE COMMISSION 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

 

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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 THE NOTE AND EXERCISE OF THE 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 THE 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 (AS
HEREINAFTER DEFINED), SUCH HOLDER WILL FORTHWITH DISCONTINUE DISPOSITION OF SUCH
REGISTRABLE SECURITIES UNDER THE 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; (II) 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); (III) ANY REQUEST BY THE COMMISSION OR ANY OTHER
FEDERAL OR STATE GOVERNMENTAL AUTHORITY FOR AMENDMENTS OR SUPPLEMENTS TO THE
REGISTRATION STATEMENT OR PROSPECTUS OR FOR ADDITIONAL INFORMATION; (IV) THE
ISSUANCE BY THE COMMISSION OF ANY STOP ORDER SUSPENDING THE EFFECTIVENESS OF THE
REGISTRATION STATEMENT COVERING ANY OR ALL OF THE REGISTRABLE SECURITIES OR THE
INITIATION OF ANY PROCEEDINGS FOR THAT PURPOSE; (V) THE RECEIPT BY

 

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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 (vi) the occurrence of any event or passage of
time that makes the financial statements included in the Registration Statement
ineligible for inclusion therein or any statement made in the 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 the Registration Statement, Prospectus or other
documents so that, in the case of the Registration Statement or the 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 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 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:

 

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If to the Company:                                             Digital Angel
Corporation
490 Villaume Avenue
South St. Paul, MN 55075
Attention:  Mr. James P. Santelli
Facsimile:  651-455-0217

 

With a copy to:                                                            
Michele D. Vaillancourt, Esq.
Winthrop & Weinstine, P.A.
Suite 3500
225 South Sixth Street
Minneapolis, MN  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 NOTE.

 

(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 IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.  ANY ACTION BROUGHT BY EITHER
PARTY AGAINST THE OTHER CONCERNING THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT SHALL BE BROUGHT ONLY IN THE STATE COURTS OF NEW YORK OR IN THE
FEDERAL COURTS LOCATED IN THE STATE OF NEW YORK.  BOTH PARTIES AND THE
INDIVIDUAL SIGNING THIS AGREEMENT ON BEHALF OF THE COMPANY AGREE TO SUBMIT TO
THE JURISDICTION OF SUCH COURTS.  THE PREVAILING PARTY SHALL BE ENTITLED TO
RECOVER FROM THE OTHER PARTY ITS REASONABLE ATTORNEYS’ FEES AND COSTS.  IN THE
EVENT THAT ANY PROVISION OF THIS AGREEMENT IS INVALID OR UNENFORCEABLE UNDER

 

10

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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.  Each party hereto
hereby irrevocably waives personal service of process and consents to process
being served in any such Proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof.  Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law.  Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating to
this Agreement, all documents, instruments and agreements entered into in
connection herewith and/or the transactions contemplated hereby.

 

(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.

 

IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
as of the date first written above.

 

 

DIGITAL ANGEL CORPORATION

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

[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:

 

 

 

 

 

c/o Laurus Capital Management, LLC
152 West 57th Street, 4th Floor
New York, New York 10019
Attention:  David Grin

 

 

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