Exhibit 10.1





Exhibit 10.1



SETTLEMENT AGREEMENT AND GENERAL RELEASE




This Settlement Agreement and General Release (the “Agreement”) is entered into as of March 3,
2009, by and among Jerome C. Artigliere (“Artigliere” or “Plaintiff”), Artigliere, Clark & Martino,
P.A. (“C&M”) and Baker & Hostetler, LLP (“B&H”; each a “Stock Recipient” and collectively, the
“Stock Recipients”), Digital Angel Corporation f/k/a Applied Digital Solutions, Inc. (“DIGA”),
VeriChip Corporation (“VeriChip”), Scott Silverman (“Silverman”), Michael Krawitz (“Krawitz”) , and
Kevin McLaughlin (“McLaughlin,” together with DIGA, VeriChip, Silverman and Krawitz, collectively,
the “Defendants”), and Baker & Hostetler, LLP (“Escrow Agent”).



RECITALS




A. On or about July 8, 2008, Plaintiff filed a lawsuit against DIGA and VeriChip entitled
Artigliere v. VeriChip Corporation, et al., in the Circuit Court of the Fifteenth Judicial District
in and for Palm Beach County, Florida, and on September 12, 2008, Plaintiff amended his complaint
to add, among other things, claims against Silverman, Krawitz, and McLaughlin (collectively, the
“Action”).



B. The parties, through their counsel, reached a settlement of the Action on February 12, 2009
during a voluntary mediation in the Action.



C. The parties entered into a Settlement Agreement, dated February 12, 2009 (the “Original
Agreement”) and now desire to enter into this Agreement in furtherance of their settlement.



 


 









 





AGREEMENT




In consideration of the recitals and mutual promises contained in this Agreement, the adequacy
of which are hereby acknowledged, the parties agree to settle their disputes on the following
terms.



1. Consideration.




a. Cash. The Cash Component of the settlement amounts to Three Hundred Fifty
Thousand Dollars (US$350,000.00) payable as follows: Two Hundred Seventy-Five Thousand
Dollars (US$275,000.00) from VeriChip and Seventy-Five Thousand Dollars (US$75,000.00) from
its insurer, XL Specialty Insurance Company (“XL”). XL shall pay $75,000; and VeriChip
shall pay the sum of One Hundred Ninety Four Thousand Five Hundred Fifty Three and Twenty
One Cents(US$194,553.21) via wire transfer pursuant to the wire transfer instructions
attached hereto as Exhibit A or delivery of a check made payable to the Baker &
Hostetler, LLP Trust Account (“Cash Consideration”), within ten (10) calendar days of the
execution of this Agreement by all parties hereto (the “Execution Date”). The $75,000 of the
Cash Consideration payable by XL Specialty Insurance Company is in settlement of claims
asserted in the Action unrelated to any wages or compensation purportedly due to Artigliere
as payment for such wages or compensation is excluded from coverage under the policy. One
Hundred Twenty Eight Thousand Two Hundred Twelve Dollars and Eighty Four Cents
(US$128,212.84) of the Cash Component represents attorneys’ fees and costs payable to C&M
and B&H for litigating this Action (“Law Firm Cash Consideration”). One Hundred Forty Six
Thousand Seven Hundred Eighty Seven Dollars and Sixteen Cent (US$146,787.16) of the Cash
Component shall be transferred to Artigliere from the Baker & Hostetler LLP Trust Account in
settlement of the claims asserted by him in this Action involving his purported entitlement
to certain options to purchase VeriChip common stock (“Artigliere Cash Consideration”).




b. DIGA Promissory Note. DIGA shall execute and deliver to Plaintiff, or
Plaintiff’s assignee or designee, a promissory note in the principal sum of Two Hundred
Fifty Thousand Dollars (US$250,000.00) in the form attached hereto as Exhibit B
(“Note Consideration”). The Note Consideration represents payment solely for the claims
asserted in this Action involving the purported failure of DIGA to timely register the DIGA
 shares Artigliere claimed he was entitled to and not any wages or compensation to
Artigliere.


 


2









 






c. VeriChip Stock. VeriChip agrees to give Plaintiff, or Plaintiff’s assignee
or designee, in the manner specified in Section 3 below, unregistered shares of VeriChip
common stock (the “VeriChip Common Stock”) which, as of the dates specified below, shall be
worth Two Hundred Fifty Thousand Dollars (US$250,000.00) (the “Stock Consideration”).
Plaintiff may direct that the shares be issued in three (3) separate certificates, each to
be issued to a different person or entity, with the total shares not to exceed the number of
 shares set forth above. $75,000 of the Stock Consideration represents attorneys’ fees and
costs payable to C&M and B&H for litigating this Action (“Law Firm Stock Consideration”).
$175,000 of the Stock Consideration represents the settlement of the claims asserted by
Artigliere in this Action involving his purported entitlement to certain options to purchase
VeriChip stock (“Artigliere Stock Consideration”).




d. Sole Consideration. The consideration set forth in Sections 1(a)-(c) above
shall be the only payments, in cash or otherwise, now or in the future, due to Plaintiff or
his successors, heirs and assigns, from the Defendants or any other Defendant Released
Parties (as defined below). The Defendants obligations under this Agreement shall be several
and not joint.



2. Dismissal of the Action. Within ten (10) days from the Execution Date,
Plaintiff shall file with the court a dismissal with prejudice (the “Dismissal”) of the
Action.




3. Stock Consideration.




a. Name. The stock certificates evidencing the shares for the Stock
Consideration shall be issued to Stock Recipients in the percentage and number of shares
opposite such Stock Recipient’s name on Exhibit C.


 


3









 






b. Delivery of Stock Consideration. Within five (5) business days of the
Execution Date (the “Issuance Date”), VeriChip shall cause its transfer agent to issue and
deliver to Escrow Agent duly authorized, validly issued, fully paid and non-assessable
 shares of VeriChip Common Stock (the “Restricted Shares”) valued at Three
Hundred Thousand Dollars (US$300,000.00) in the name of the Stock Recipients in
accordance with Exhibit C (the “Escrow”). The Restricted Shares to be placed in Escrow
shall be determined by dividing the sum of Three Hundred Thousand Dollars ($300,000.00) by
the VeriChip Average Trading Price (as defined below) preceding the Execution Date. For
example, if the calculation of the VeriChip Average Trading Price is forty cents ($0.40) per
share on the Execution Date, the number of unregistered shares to be deposited into Escrow
shall be Seven Hundred Fifty Thousand (750,000) shares. Notwithstanding anything herein to
the contrary, VeriChip shall not be required to issue Stock Consideration to Stock
Recipients if the aggregate Stock Consideration issued hereunder would exceed 19.9% of the
common stock of VeriChip outstanding on any of the following dates: the Issuance Date or
any Escrow Release Date (as defined below).




c. Restrictive Legend. The stock certificates representing the Restricted
Shares or Additional Shares (as defined below) will bear a legend stating that they have not
been registered and that they are subject to the restrictions set forth in this Agreement.
VeriChip agrees to issue certificates without the legend representing the Restricted Shares,
upon resale subject to an effective registration statement after such Restricted Shares are
registered under the Securities Act of 1933, as amended (the “Securities Act”). VeriChip
agrees to issue certificates without the legend representing the Additional Shares, after
the date which is six (6) months from the date such Additional Shares were issued to Stock
Recipients in compliance with Rule 144.




d. Delivery Of Unrestricted Stock Certificates. Within forty-five (45) days of
the Execution Date, VeriChip will cause to be filed with the Securities and Exchange
Commission (“SEC”) a registration statement (each a “Registration Statement”) covering the
Restricted Shares issued so as to insure that those shares are registered for resale on or
before September 3, 2009 (the “Registration Deadline). Upon the effectiveness of the
Registration Statement (the “Effective Date”), the Escrow Agent may request on behalf of the
Stock Recipients that VeriChip remove the restrictive
legend thereon; provided such shares are registered and sold pursuant to an effective
Registration Statement.


 


4









 






e. Average Trading Price. As used herein, “VeriChip Average Trading Price”
shall mean the volume weighted average price per share of the VeriChip Common Stock as
reported on The NASDAQ Global Market (or, if the Common Stock is not then listed or quoted
and traded on The NASDAQ Global Market, then the NASDAQ Capital Market or over-the-counter
or other market on which the VeriChip Common Stock is traded) for the 10 consecutive trading
day period preceding the applicable measurement date.




f. Amount of Stock Payment Prior to the Registration Deadline. In the event
the Registration Statement is declared effective by the SEC on or prior to the Registration
Deadline, the Escrow Agent shall be promptly notified of the effective date of the
Registration Statement. Within one (1) business day of being provided notice of the
Effective Date, Escrow Agent shall notify VeriChip of the proposed number of shares of
VeriChip Common Stock to be released from Escrow (the “Escrow Agent Notice”) that have a
value, based on the VeriChip Average Trading Price preceding the Effective Date, of Two
Hundred Fifty Thousand Dollars (US$250,000.00) (the “Target Value”). If on or before 5:00
p.m. on the date which is two (2) business days following VeriChip’s receipt of the Escrow
Agent Notice, VeriChip shall object to the number of shares of VeriChip Common Stock to be
released to Stock Recipients (“VeriChip Objection Notice”), then Escrow Agent shall not
disburse the shares to Stock Recipients which exceed the number of undisputed shares to
which VeriChip has no objection until the dispute is resolved. However, if VeriChip does not
deliver a VeriChip Objection Notice to Escrow Agent on or before 5:00 p.m. on the date which
is four (4) business days following VeriChip’s receipt the Escrow Agent Notice, then Escrow
Agent may disburse that number of shares equaling the Target Value to Stock Recipients in
accordance with their percentage interests set forth in Exhibit C.


 


5









 






g. Amount of Stock Payment after the Registration Deadline. In the event the
Registration Statement is not declared effective by the SEC by the Registration Deadline,
the Escrow Agent shall within one (1) business day after the Registration Deadline provide
VeriChip with an Escrow Agent Notice notifying VeriChip of the proposed number of shares of
VeriChip Common Stock to be released from Escrow that have a value based on the VeriChip
Average Trading Price preceding the Escrow Release Date, of Three Hundred Thousand Dollars
(US$300,000.00) (the “Penalty Value” and the Target Value, each an “Applicable Value”). The
date(s) the Escrow Agent releases the Restricted Shares or any Additional Shares to the
Stock Recipients shall be known as an “Escrow Release Date.” If on or before 5:00 p.m. on
the date which is two (2) business days following VeriChip’s receipt of the Escrow Agent
Notice, VeriChip provides the Escrow Agent with VeriChip Objection Notice, then Escrow Agent
shall not disburse the shares to Stock Recipients which exceed the number of undisputed
 shares to which VeriChip has no objection until the dispute is resolved. However, if
VeriChip does not deliver a VeriChip Objection Notice to Escrow Agent on or before 5:00 p.m.
on the date which is four (4) business days following VeriChip’s receipt the Escrow Agent
Notice, then Escrow Agent may disburse that number of shares equaling the Penalty Value to
Stock Recipients. After the Registration Deadline, VeriChip’s obligations to have the
Registration Statement declared effective shall terminate on the earlier of the date (i) any
Stock Recipient is able to sell the Restricted Shares pursuant to an exemption from
registration under Rule 144 or (ii) that is twelve (12) months following the issuance of the
Restricted Shares.




h. Difference In Value. If the aggregate number of Restricted Shares in the
Escrow is less than the Applicable Value on the Escrow Release Date, then VeriChip shall
cause its transfer agent to issue in each Stock Recipient’s name (in accordance with their
percentage interests set forth on Exhibit C) stock certificates representing such number of
additional shares of VeriChip Common Stock (“Additional Shares”) that have a value, based on
the VeriChip Average Trading Price


 


6









 






preceding the Effective Date, equal to the difference between the value of the Restricted Shares held
in the Escrow and the Applicable Value. Such Additional Shares shall be delivered to the
Escrow Agent to be held for the benefit of the Stock Recipients. If the value of the
Restricted Shares held in the Escrow exceeds the Applicable Value on the Escrow Release
Date, those shares representing the excess value (the “Excess Shares”) shall be immediately
returned to VeriChip for cancellation. The certificate(s) representing Excess Shares must
be returned bearing the such Stock Recipient’s endorsement(s) with Medallion signature
guarantee(s), or with stock power(s) bearing such Stock Recipient’s signature with Medallion
signature guarantee(s), as required by VeriChip’s transfer agent to allow cancellation of
the Restricted Shares. The Stock Recipients or their assigns will reasonably assist in
paperwork required by VeriChip’s transfer agent required to cancel the shares.



4. Sale of VeriChip Common Stock by Plaintiff or Stock Recipients. Plaintiff, Stock
Recipients and their designees and assignees agree that in the aggregate they, he or it will not
sell on the open market in any one day a number of shares of VeriChip Common Stock which exceeds
the average daily trading volume of the VeriChip Common Stock for the 10 consecutive trading day
period preceding the Execution Date.



5. VeriChip Option To Pay Cash. Notwithstanding anything herein to the contrary, in
its sole and absolute discretion, VeriChip shall have the option of paying the Applicable Value, in
whole or in part, through a payment by a check, wire transfer of funds or other cash equivalent.



6. Merger, Etc. If there occurs any merger of VeriChip with or into another Person
(other than a merger or consolidation of VeriChip in which VeriChip is the continuing entity and
which does not result in any reorganization or reclassification of VeriChip’s outstanding Common
Stock) or the sale or conveyance of all or substantially all of the assets of VeriChip to another
person, then, the Stock Recipients will be entitled to receive upon surrender
of the Restricted Shares the same kind and amounts of securities or other assets, or both,
that are issuable or distributable to the holders of outstanding VeriChip Common Stock upon such
merger, sale or conveyance. “Person” means and includes an individual, bank, partnership, joint
venture, limited liability company, corporation, trust, unincorporated organization and government
or any department or agency thereof.


 


7









 





7. Release of Escrow. The Escrow Agent agrees to release the Stock Consideration from
Escrow as provided in Section 3 above. The parties acknowledge that the only terms and conditions
upon which the Stock Consideration is to be released from Escrow is as set forth in Section 3 of
this Agreement. Any dispute with respect to the release of the Stock Consideration shall be
resolved pursuant to Section 26 or by written agreement among the parties. VeriChip shall be
obligated, however, under any circumstance, to authorize the Escrow Agent to release any amounts of
undisputed shares to which VeriChip agrees the Stock Recipients are entitled.



8. Termination of Escrow. The Escrow shall terminate upon the earlier to occur of the
following:



a. upon the mutual written consent of VeriChip and Stock Recipients
(written notice of which shall be given jointly to the Escrow Agent); or



b. upon the disbursement of all of the Stock Consideration from Escrow.




9. Mutual General Releases.




a. By Plaintiff. Except for obligations under this Agreement, Plaintiff (for
himself and his successors in interest, predecessors in interest, heirs, assigns, employees,
attorneys, partners, officers and directors) hereby unconditionally remises, releases,
acquits, satisfies and forever discharges Defendants and their respective past and present
parents, subsidiaries, affiliates, predecessor entities, officers, directors, stockholders,
employees, insurers, attorneys, accountants, heirs, predecessors, successors and assigns
(collectively, the “Defendant Released Parties”), of and from any and all claims, actions,
causes of action, suits, debts, sums of money, accounts, reckonings, contracts,
controversies, agreements,


 


8









 






promises, damages, costs, expenses (including but not limited to attorneys’ fees), and demands whatsoever, in law or in equity, which
Plaintiff had or now has, or which any successor or assign of Plaintiff hereafter can, shall
or may have, against any of the Defendant Released Parties for, upon, or by reason of any
matter, cause or thing whatsoever, from the beginning of the world to the date of this
Agreement, whether known or unknown, direct or indirect, vested or contingent, suspected or
unsuspected, asserted or unasserted (the “Claims”). Without limiting the generality of the
foregoing, this release includes the release of any and all Claims which were or could have
been raised or asserted by Plaintiff against the Defendant Released Parties in the Action.
Notwithstanding the foregoing, Plaintiff expressly excludes from the effect of this release
and does not release the Defendant Released Parties from: (a) the terms and conditions of
the definitive settlement documents to which reference is made above, and (b) to the extent
the Defendant Released Parties have any authority to bind IFTH Acquisition Corp.,
Plaintiff’s rights to exercise Plaintiff’s options in IFTH Acquisition Corp., formerly known
as Infotech and referred to hereafter as “Infotech.” The parties also agree that nothing
contained in this Agreement shall have any effect on Plaintiff’s rights to exercise
Plaintiff’s options in Infotech, to the extent the Defendant Released Parties have any
authority to bind Infotech, they agree that Plaintiff’s options are valid and enforceable
through their expiration date.




b. By Defendants. Except for obligations under this Agreement, Defendants (for
themselves and their successors in interest, predecessors in interest, heirs, assigns,
employees, attorneys, partners, officers and directors) hereby unconditionally remise,
release, acquit, satisfy and forever discharge Plaintiff and his past and present agents,
attorneys, accountants, insurers, servants, and employees (collectively, the “Plaintiff
Released Parties”), of and from any and all Claims. Without limiting the generality of the
foregoing, this release includes the release of any and all Claims which were or could have
been raised or asserted by Defendants against the Artigliere Released Parties in the Action.
Notwithstanding the foregoing, Defendants expressly exclude from the effect of this release
and do not release: (i) the Artigliere Released Parties from the
terms and conditions of this Agreement including, but not limited to, the
indemnification provision in Paragraph 10 (e) herein; or (ii) the Defendant Released Parties
from the terms and conditions of this Agreement.


 


9









 






c. Mutual Limited Release Among Defendants. Defendants hereby mutually remise,
release, acquit, satisfy, and forever discharge each other (including their respective past
and present parent, subsidiary, affiliate or predecessor entities, and any and all of his,
her, its and/or their respective past and present officers, directors, agents, attorneys,
accountants, insurers, servants, employees, and stockholders, and their respective heirs and
personal representatives) of and from any and all, and all manner of, claims, actions,
causes of action, suits, debts, sums of money, accounts, reckonings, contracts,
controversies, agreements, promises, damages, and demands whatsoever, in law or in equity,
which any of one them had or now has, or which any successor or assign of any one of them
hereafter can, shall or may have, against each other by reason of the subject matter of the
Action, including but not limited to any cross-claims or third-party claims which were or
could have been asserted in the Action. It is expressly understood and agreed that this
paragraph is not a general release and shall not be construed or interpreted as such. It is
further understood that the limited release in this paragraph does not release (a) VeriChip
from its indemnification obligations to Krawitz, Silverman and/or McLaughlin in the event of
a breach (or purported breach claimed by Artigliere) of this Agreement by VeriChip, or (b)
DIGA from its indemnification obligations to Krawitz, Silverman and/or McLaughlin in the
event of a breach (or purported breach claimed by Artigliere) of this Agreement by DIGA.




10. Tax Issues.



a. DIGA agrees to provide Clark & Martino, P.A. with a 1099 for the Note Consideration and
one-half of the Law Firm Stock Consideration.



b. VeriChip agrees to provide Baker & Hostetler, LLP with a 1099 for the Law Firm Cash
Consideration and one-half of the Law Firm Stock Consideration.


 


10









 





c. VeriChip will provide Artigliere with a Form W-2 for the Artigliere Cash Consideration and
the Artigliere Stock Consideration.



d. VeriChip will withhold Eighty Thousand Four Hundred Forty Six Dollars and Seventy Nine
Cents (US$80,446.79) of the Cash Component for the payment of applicable employee’s tax obligations
for Federal Income and other applicable taxes (the “Withholding Amount”) relating to Artigliere.
VeriChip agrees to pay the Withholding Amount to the U.S. Treasury or other governmental body when
it is due and owing.



e. Artigliere (for himself and his successors in interest, predecessors in interest, heirs,
assigns, employees, attorneys, partners, officers and directors) agrees to hold harmless, defend,
and indemnify the Defendant Released Parties from and against any and all claims, losses, demands,
causes of action, deficiencies, suits, judgments, debts, damages, penalties, audits, expenses or
liabilities, including reasonable attorneys’ fees and costs arising from (i) any failure on
Artigliere’s part to pay any and all applicable taxes due by him as a result of consideration
received as a result of the settlement of this Action; or (ii) any audit by the IRS or any other
governmental body relating to the taxes due by Artigliere as a result of consideration received as
a result of the settlement of this Action.



11. Costs. Each party shall bear his or its own attorneys’ fees and costs arising out
of or related to the Action and the Claims released herein, and no further Claim shall be made
therefor.



12. Confidentiality. The parties and their respective officers, agents,
representatives, successors, assigns, heirs, and attorneys agree that this Agreement shall be
confidential, and they will not disclose, disseminate, or publish the existence of this Agreement,
or any of its terms, directly or indirectly, specifically or generally, to any person, corporation,
association, or other entity, except as necessarily disclosed by the parties hereto: (a) to enforce
the terms of this Agreement; (b) for use by their attorneys, boards of directors and/or trustees,
or accountants in their capacity as such; (c) to comply with any governmental or law enforcement
agency or any regulatory organization having jurisdiction over some or all of the parties; or (d)
as required pursuant to any lawfully issued subpoena or other legal process. This provision is
tantamount to an injunction issued by a court of competent jurisdiction and will subject the
breaching party to sanctions, injunctive relief, or any other equitable or legal right which any
party hereto may have hereunder for any failure by a party to perform his or its obligations
hereunder.


 


11









 





13. No Admission of Liability. Each of the parties hereto understands and agrees that
by providing the consideration referred to above, and by executing this Agreement, neither they nor
or any of them admit any negligence, carelessness, liability, obligation, misconduct or wrongdoing
of any kind or nature whatsoever. The settlement is made entirely as a compromise and for the
purpose of settling a dispute, and to compromise, settle and extinguish all claims, acts, damages,
demands, rights of action and causes of action claimed by any party hereto, or any of them, against
any other party hereto, or any of them.



14. Mutual Non-Disparagement. Each of the parties agrees that it shall not publicly
or privately disparage the other or the agents, servants or employees of the other, but rather
shall act in good faith to refrain from any conduct or communication which might reasonably be
expected to interfere with the business and/or personal interests of the other.



15. Independent Counsel. Each party acknowledges that he or it has been represented
by counsel of his or its own choice throughout all of the negotiations which preceded the execution
of this Agreement and in connection with the preparation and execution of this Agreement.



16. Application To Successors/Predecessors. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective past and present attorneys,
representatives, predecessors, successors and assigns. All of the covenants herein contained in
favor of Plaintiff, on the one hand, and the Defendants, on the other hand, are for the express
benefit of each and all of said parties.




17. Representations and Warranties of the Parties.




a. Each person executing this Agreement warrants that he or it has the authority to
execute this Agreement from the party or parties on whose behalf such person is purporting
to execute it.


 


12









 






b. Each party represents and warrants that there has been no grant, sale, assignment,
transfer or other conveyance of any interests and/or rights in, to and into the Claims which
the parties are releasing in this Agreement. Each party agrees that he will defend and hold
harmless any of the other released parties under this Agreement, including payment of those
parties’ reasonable costs and attorneys fees, in the event that a third party makes any
Claim or other demand based on or arising from any of the Claims which were released in this
Agreement.




c. Each party has carefully read and reviewed this Agreement and understands it fully,
and each party specifically does not rely upon any statement, representation, legal opinion,
accounting opinion or promise of any other party or any person representing such other
party, in executing this Agreement or in making the settlement provided for herein, except
as expressly stated in this Agreement.




d. Each party has made such an investigation of the law and facts pertaining to this
settlement and this Agreement and of all matters pertaining thereto as it deems necessary.
Each party has been represented by competent counsel of its own choosing who has provided
such party any and all advice on this settlement and this Agreement as it deems necessary.
This Agreement has been carefully read by, the contents hereof are known and understood by,
and it is signed freely by each party executing this Agreement.




e. This Agreement is the result of arms’ length negotiation between the parties.




f. Each party to this Agreement agrees that, absent and subject to an order from a
court of competent jurisdiction or similar compulsion of law, such party will not, either
directly or indirectly, take any action which would interfere with the performance of this
Agreement by any party hereto, or which would adversely affect any of the rights provided
for herein.


 


13









 






g. Each party to this Agreement agrees that the $75,000 of the Cash Consideration
payable by XL Specialty Insurance Company is in settlement of claims
asserted in the Action unrelated to any wages or compensation purportedly due to
Artigliere as payment for such wages or compensation is excluded from coverage under the
Policy.




h. Each party to this Agreement agrees that the Note Consideration represents payment
solely for the claims asserted in this Action involving the purported failure of DIGA to
timely register the DIGA shares Artigliere claimed he was entitled to and not any wages or
compensation to Artigliere.




18. Representations and Warranties of Plaintiff and Stock Recipients.




a. The Stock Consideration to be received hereunder by each Stock Recipient will be
acquired for his or its own account, not as nominee or agent, for investment purposes and
not with a view to, or for offer or sale in connection with directly or indirectly, any
distribution in violation of the Securities Act or any other applicable securities law and
with no intention of participating in the formulation, determination or direction of the
basic business decisions of VeriChip.




b. No Stock Recipient is a registered broker dealer or engaged in the business of being
a broker dealer.




c. Each Stock Recipient can bear the economic risk and complete loss of his or its
investment in the Stock Consideration and he or it has such knowledge and experience in
financial or business matters that he or it is capable of evaluating the merits and risks of
the investment contemplated hereby.




d. Each Stock Recipient has had access to all financial and other information
concerning VeriChip and the Stock Consideration as he or it wished to examine in order to
make a decision regarding the settlement consideration to be received hereunder, including
an opportunity to ask questions of and receive information from management of VeriChip.




e. Each Stock Recipient is an accredited investor as defined in Rule 501(a) of
Regulation D, as amended, under the Securities Act.


 


14









 






f. The Stock Recipients and Artigliere agree that the Law Firm Cash Consideration
represents attorneys’ fees and costs payable to C&M and B&H for litigating this Action.




g. The Stock Recipients and Artigliere agree that the Law Firm Stock Consideration
represents attorneys’ fees and costs payable to C&M and B&H for litigating this Action.



19. Plaintiff’s and Stock Recipients’ Further Obligations. Plaintiff and Stock
Recipients agree to:




a. timely furnish to VeriChip in writing such information regarding itself and the
intended method of disposition of the Stock Consideration as VeriChip shall reasonably
request in order to effect the registration thereof or to comply with applicable law;




b. to the extent required by applicable law, deliver a preliminary and definitive
prospectus to the purchaser of the Stock Consideration sold under any Registration
Statement;




c. notify VeriChip when it has sold all of the Stock Consideration held by it;




d. notify VeriChip promptly in the event that any information supplied by Plaintiff or
any Stock Recipient in writing for inclusion in such Registration Statement or related
prospectus is untrue or omits to state a material fact required to be stated therein or
necessary to make such information not misleading in light of the circumstances then
existing; immediately discontinue any sale or other disposition of the Stock Consideration
pursuant to such Registration Statement until the filing of an amendment or supplement to
such prospectus as may be necessary so that such prospectus does not contain an untrue
statement of material fact or omit 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 provide VeriChip with updates
on such information as may be appropriate to make such amendment or supplement
effective for such purpose;


 


15









 






e. otherwise use commercially reasonable efforts to assist VeriChip and the
underwriters, if any, in the preparation of documentation reasonably necessary or desirable
to effectuate the resale of the Stock Consideration pursuant to any Registration Statement
filed in accordance herewith;




f. upon receipt of a notice from VeriChip of the occurrence of a Discontinuation Event
(as defined below), Plaintiff will direct each Stock Recipient, and Plaintiff and each Stock
Recipient agree to discontinue forthwith any disposition of such Stock Consideration under
the applicable Registration Statement until the Plaintiff’s and Stock Recipients’ receipt of
the copies of the supplemented prospectus and/or amended Registration Statement or until it
is advised in writing by VeriChip 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. VeriChip may provide appropriate stop orders to enforce the provisions of this
paragraph. For purposes of this Agreement, a “Discontinuation Event” shall mean (i) when
the SEC notifies VeriChip whether there will be a “review” of such Registration Statement
and whenever the SEC comments in writing on such Registration Statement (VeriChip shall
provide true and complete copies thereof and all written responses thereto to the
Plaintiff); (ii) any request by the SEC or any other Federal or state governmental authority
for amendments or supplements to such Registration Statement or prospectus or for additional
information; (iii) the issuance by the SEC of any stop order suspending the effectiveness of
such Registration Statement covering any or all of the Stock Consideration or the initiation
of any proceedings for that purpose; (iv) the receipt by VeriChip of any notification with
respect to the suspension of the qualification or exemption from qualification of any of the
Stock Consideration for sale in any jurisdiction, or the initiation or threatening of any
proceeding for such purpose; and/or (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.


 


16









 





20. Entire Agreement. This Agreement and the Exhibits hereto contain the entire
agreement of the parties concerning the subject matter hereof, supersede all prior understandings,
discussions and agreements of the parties concerning the subject matter hereof and cannot be
altered, modified or amended except by writing dated after the date hereof and signed by each of
the parties hereto. This Agreement specifically supersedes and replaces the Original Agreement.



21. Notices. Except as expressly provided above, all demands, notices and
communications under this Agreement shall be sent via overnight or hand delivery as follows
(subject to the right of each party to change this notice designation by written notice to the
other, delivered by personal courier, overnight delivery or certified mail):




TO
PLAINTIFF/STOCK RECIPIENTS:




Jerome C. Artigliere

48 Stumpfield Road

Kensington, NH 03833




With a copy to:


David S. Oliver, Esq.

Baker & Hosteler LLP

SunTrust Center, Suite 2300

200 South Orange Avenue

Orlando, Florida 32802





and



J. Daniel Clark, Esq.

Clark & Martino, P.A.

3407 W. Kennedy Blvd.

Tampa, FL 33609-2905



 


17









 








TO VERICHIP, SILVERMAN, KRAWITZ and MCLAUGHLIN:




VeriChip Corporation

1690 South Congress Avenue

Suite 200

Delray Beach, Florida 33445

Attention: Mr. William J. Caragol

Acting Chief Financial Officer





TO DIGA:




Digital Angel Corporation

490 Villaume Avenue

South St. Paul, Minnesota 55075Attn:
 Attn: Patricia Petersen

General Counsel




In each case, with a copy to:




Louise McAlpin, Esq.

Holland & Knight LLP

701 Brickell Avenue, Suite 3000

Miami, Florida 33131




TO ESCROW AGENT:




David S. Oliver, Esq.

Baker & Hostetler, LLP

SunTrust Center, Suite 2300

200 South Orange Avenue

Orlando, Florida 32802



22. Construction of Agreement. This Agreement shall be construed as a whole according
to its fair meaning, and as if jointly drafted by all parties. The language of this Agreement
shall not be construed for or against any party. No provision of this Agreement shall be construed
against any party by virtue of the activities of that party or such party’s attorneys. The
headings used in this Agreement are for reference only and shall not affect the construction of the
Agreement.


 


18









 





23. Severability. The parties hereto covenant and agree that in the event that any
provision of this Agreement should be held by a court of competent jurisdiction to be void,
voidable, illegal or unenforceable in any respect, the remaining portions thereof and provisions
hereof shall nevertheless remain in full force and effect as if such void, voidable, illegal or
unenforceable provision had never been contained in this Agreement.



24. Waiver. No breach of any provision hereof can be waived unless in writing.
Waiver of any one breach of any provision hereof shall not be deemed to be a waiver of any other
breach of the same or any other provision hereof.



25. Amendments In Writing. This Agreement may be amended only by a written agreement
executed by or on behalf of each of the parties hereto.



26. Governing Law and Venue. This Agreement shall be construed in accordance with,
and governed by, the laws of the State of Florida without regard to its conflict of laws
provisions. The parties agree that any action to enforce this Agreement shall be brought in the
15th Judicial Circuit Court in and for Palm Beach County, Florida. Moreover, each party
agrees and consents to the exercise of personal jurisdiction in these courts for the purpose of any
enforcement action.



27. Prevailing Party Fees and Costs. In the event of any proceeding to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled to recover all
reasonable costs thereof, including reasonable attorneys’ fees and fees on appeal.



28. Execution in Counterparts. This Agreement may be executed and delivered in two or
more counterparts, each of which, including but not limited to pages transmitted by facsimile or by
electronic transmission, when so executed and delivered, shall be deemed to be an original.



(Remainder of page intentionally left blank; signature page follows)





 


19









 







IN WITNESS WHEREOF, the parties hereto each have approved and executed this Agreement effective as
of the date set forth above.



	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	VERICHIP CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Jerome C. Artigliere
	 	 	 	By:
	 	/s/ William J. Caragol	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	Jerome C. Artigliere
	 	 	 	 	 	William J. Caragol	 	 
	 

	 	 	 	 	 	 	 	Acing Chief Financial Officer	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	DIGITAL ANGEL CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Scott Silverman
	 	 	 	By:
	 	/s/ Patricia M. Petersen	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	Scott Silverman
	 	 	 	 	 	Patricia M. Petersen	 	 
	 

	 	 	 	 	 	 	 	General Counsel	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Michael Krawitz
	 	 	 	By:
	 	/s/ Kevin McLaughlin	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	Michael Krawitz
	 	 	 	 	 	Kevin McLaughlin	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	ESCROW AGENT:	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	BAKER & HOSTETLER, LLP	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ David S. Oliver
 

Name: David S. Oliver
	 	 	 	 	 	 	 	 
	 

	 	Title:   Partner	 	 	 	 	 	 	 	 






[Additional Signature Page to Follow]




 


 









 







STOCK RECIPIENTS:




	 	 	 	 	 	 	 
	By:	 	/s/ Jerome C. Artigliere	 	 
	 	 	 	 	 
	 	 	Jerome C. Artigliere	 	 
	 
	 	 	 	 	 	 
	BAKER & HOSTETLER, LLP	 	 
	 
	 	 	 	 	 	 
	By:	 	/s/ David S. Oliver	 	 
	 	 	 	 	 
	 

	 	Name:
	 	David S. Oliver	 	 
	 

	 	Title:
	 	Partner	 	 
	 
	 	 	 	 	 	 
	CLARK & MARTINO, P.A.	 	 
	 
	 	 	 	 	 	 
	By:	 	/s/ J. Daniel Clark	 	 
	 	 	 	 	 
	 

	 	Name:
	 	J. Daniel Clark	 	 
	 

	 	Title:
	 	Partner/Shareholder	 	 






 


 









 





Exhibit A




Wire Transfer Instructions



 


 









 





Exhibit B




PROMISSORY NOTE




			
	 	 	 
	 US$250,000.00
	 	South St. Paul, Minnesota

March 3, 2009






FOR VALUE RECEIVED, the undersigned, Digital Angel Corporation, a Delaware corporation
(“Maker”), promises to pay to the order of Jerome C. Artigliere or his successors, assigns or
designees (“Payee”), at Payee’s address located at the Clark & Martino P.A. Trust Account, c/o J.
Daniel Clark, Esq., 3407 W. Kennedy Blvd., Tampa, Florida 33609-2905, the principal sum of Two
Hundred Fifty Thousand Dollars and 00/100 (US$250,000.00), with interest thereon as provided below
in lawful money of the United States of America.



Interest on this Promissory Note (“Note”) shall accrue on the principal at the prime rate
published in the Wall Street Journal on the date of execution of this Note until the
Maturity Date (as defined below). Interest shall be calculated and charged daily on the basis of
actual days elapsed over a three hundred sixty (360) day banking year, on the unpaid principal
balance outstanding from time to time. Commencing on March 31, 2009, and continuing on the last
day of each and every month after such date through and including the Maturity Date, the said
principal sum, together with interest on said principal sum, shall be paid in equal, consecutive
monthly installments of $7,297.88. The outstanding principal balance and all interest on said
principal shall be due and payable on or before March 31, 2012 (the “Maturity Date”).



Each payment of principal, interest and expenses to Payee shall be made on a Business Day (as
hereinafter defined), and any payment otherwise falling due on a day other than a Business Day
shall be payable on the next succeeding Business Day. As used herein, “Business Day” shall
mean a day other than a Saturday, a Sunday, or a day on which banks located in Delray Beach,
Florida are required or permitted by law to remain closed. The aforesaid payments shall be applied
first to accrued interest on the unpaid balance at the rate hereinabove specified and lastly to the
payment of principal.



The word “holder,” as used in the Note, shall mean the Payee or endorsee of the Note who is in
possession of it.



It is further agreed hereby that if any payment of principal or interest shall not be made as
and when due and such failure shall continue for a period of five (5) business days following the
date upon which such payment was due; or upon the insolvency, bankruptcy or dissolution of the
Maker; then, in any or all such events, the entire amount of principal of the Note with all
interest then accrued, shall, at the option of the holder of the Note and without notice, become
and be due and collectible, time being of the essence for all sums due under the Note. If the Note
shall not be paid at maturity, it may be placed in the hands of an attorney at law for collection,
and in that event, Maker hereby agrees to pay the holder hereof in addition to the sums above
stated, a reasonable sum for attorney’s fees, including appellate fees.



After maturity or default, the Note shall bear interest at eighteen percent (18%) per annum;
provided further, however, that in no event shall such rate exceed the highest rate permissible
under the applicable law.


 


 









 





THE NOTE MAY BE PREPAID IN WHOLE OR IN PART AT ANY TIME WITHOUT PENALTY UPON NOT LESS THAN
FIVE (5) DAYS PRIOR WRITTEN NOTICE TO THE PAYEE. THE PAYMENT OF ANY LARGER OR ADDITIONAL SUM IN
ADVANCE OF THE PAYMENTS HEREIN REQUIRED SHALL NOT RELIEVE THE MAKER OF THE PAYMENT OF ANY OTHER
SUMS DUE AS HEREIN PROVIDED.



No delay or omission on the part of the Payee in exercising any right, privilege or remedy
shall impair such right, privilege or remedy or be construed as a waiver thereof or of any other
right, privilege or remedy. No waiver of any right, privilege or remedy or any amendment to the
Note shall be effective unless made in writing and signed by the Payee. The acceptance by the Payee
hereof of any payment after any default hereunder shall not operate to extend the time of payment
of any amount then remaining unpaid hereunder or constitute a waiver of any rights of the Payer
hereof under the Note. The unenforceability or invalidity of any provision of this Note as to any
person or circumstances shall not render that provision or those provisions unenforceable or
invalid as to any other provisions or circumstances, and all provisions hereof, in all other
respects, shall remain valid and enforceable. All persons now or at any time liable for payment of
the Note hereby waive presentment, protest, notice of protest, and notice of dishonor. The
indebtedness evidenced by this Note shall be subordinated in right of payment and priority to the
payment in full of the Maker’s obligations to its senior lenders, Laurus Master Fund, Ltd. and its
affiliates.



The Note and the provisions hereof shall be binding upon the Maker and the Maker’s successors
and assigns and shall inure to the benefit of the Payee, the Payee’s heirs, administrators,
executors, successors, legal representatives and assigns. The Maker may not assign its rights or
obligations under the Note.



The Note may not be amended, changed or modified in any respect except by a written document
that has been executed by each party. The Note is to be construed according to the applicable laws
of the State of Florida, without regard to its conflicts of law principles. Any action brought
upon the enforcement of this Note is hereby authorized to be instituted and prosecuted in the state
and federal courts located in Palm Beach County, Florida.



MAKER AND PAYEE HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT MAKER OR
PAYEE, OR ANY OTHER PERSON MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION BASED HEREON,
OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THE NOTE AND ANY DOCUMENT CONTEMPLATED TO BE
EXECUTED IN CONJUNCTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN), OR ACTIONS OF EITHER OR ANY PARTY.


 


 









 





IN WITNESS WHEREOF, the undersigned has executed this Note on the date set forth above.



	 	 	 	 	 	 	 
	 	 	DIGITAL ANGEL CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	 
 

Name:
	 	 
	 

	 	 	 	Title:	 	 






 


 









 





Exhibit C




	 	 	 	 	 	 	 	 	 
	Stock Recipient	 	% of Restricted Shares Issued	 	 	Number of Shares Issued	 
	 
	 	 	 	 	 	 	 	 
	Jerome C. Artigliere
	 	 	70	%	 	 	601,719	 
	 
	 	 	 	 	 	 	 	 
	Baker & Hostetler, LLP
	 	 	15	%	 	 	128,940	 
	 
	 	 	 	 	 	 	 	 
	Clark & Martino, P.A.
	 	 	15	%	 	 	128,940