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Exhibit 4.3    
    


THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT AND THE COMMON STOCK ISSUABLE
UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO DIGITAL ANGEL CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED. 



	 	 	Right to Purchase 125,000 Shares of Common Stock of Digital Angel Corporation (subject to adjustment as provided herein)
	
COMMON STOCK PURCHASE WARRANT
	No. 2003-1	 	Issue Date: July 31, 2003







        DIGITAL ANGEL CORPORATION, a corporation organized under the laws of the State of Delaware (the "Company"), hereby certifies that, for value received, LAURUS
MASTER FUND, LTD., or its assigns (the "Holder"), is entitled, subject to the terms set forth below, to purchase from the Company from and after the Issue Date of this Warrant and at any time
or from time to time before 5:00 p.m., New York time, through five (5) years after such date (the "Expiration Date"), up to 125,000 fully paid and nonassessable shares of Common Stock
(as hereinafter defined), $.005 par value, of the Company, at the Exercise Price (as defined below). The number and character of such shares of Common Stock and the Exercise Price are subject to
adjustment as provided herein. 


        As
used herein the following terms, unless the context otherwise requires, have the following respective meanings: 


        (a)   The
term "Company" shall include Digital Angel Corporation and any corporation which shall succeed or assume the obligations of Digital Angel Corporation hereunder. 


        (b)   The
term "Common Stock" includes (a) the Company's Common Stock, par value $.005 per share, and (b) any other securities into which or for which any of the
securities described in (a) may be converted or exchanged pursuant to a plan of recapitalization, reorganization, merger, sale of assets or otherwise. 



        (c)   The
term "Other Securities" refers to any stock (other than Common Stock) and other securities of the Company or any other person (corporate or otherwise) which the
holder of the Warrant at any time shall be entitled to receive, or shall have received, on the exercise of the Warrant, in lieu of or in addition to Common Stock, or which at any time shall be
issuable or shall have been issued in exchange for or in replacement of Common Stock or Other Securities pursuant to Section 4 or otherwise. 


        (d)   The
term "Exercise Price" shall be as follows: 



        a.     75,000
shares at $2.68 per share; 


        b.     35,000
shares at $2.91 per share; and 


        c.     15,000
shares at $3.38 per share. 






 





        1.    Exercise of Warrant.    



        1.1    Number of Shares Issuable upon Exercise.    From and after the date hereof and through and including the
Expiration Date, the Holder shall be entitled to receive, upon exercise of this Warrant, in whole or in part, by delivery of an original or fax copy of the exercise notice attached hereto as
Exhibit A (the "Exercise Notice"), shares of Common Stock of the Company, subject to adjustment pursuant to Section 4. 


        1.2    Fair Market Value.    Fair Market Value of a share of Common Stock as of a particular date (the "Determination
Date") shall mean: 



        (a)   If
the Company's Common Stock is traded on an exchange or is quoted on the National or SmallCap Market of The Nasdaq Stock Market, Inc. ("Nasdaq"), then the
closing or last sale price, respectively, reported for the last business day immediately preceding the Determination Date. 


        (b)   If
the Company's Common Stock is not traded on an exchange or on the Nasdaq but is traded on the NASD OTC Bulletin Board or BBX Exchange, then the mean of the average of
the closing bid and asked prices reported for the last business day immediately preceding the Determination Date. 



        (c)   Except
as provided in clause (d) below, if the Company's Common Stock is not publicly traded, then as the Holder and the Company agree or in the absence of
agreement by arbitration in accordance with the rules then in effect of the American Arbitration Association, before a single arbitrator to be chosen from a panel of persons qualified by education and
training to pass on the matter to be decided. 


        (d)   If
the Determination Date is the date of a liquidation, dissolution or winding up, or any event deemed to be a liquidation, dissolution or winding up pursuant to the
Company's charter, then all amounts to be payable per share to holders of the Common Stock pursuant to the charter in the event of such liquidation, dissolution or winding up, plus all other amounts
to be payable per share in respect of the Common Stock in liquidation under the charter, assuming for the purposes of this clause (d) that all of the shares of Common Stock then issuable upon
exercise of the Warrant are outstanding at the Determination Date. 




        2.    Procedure for Exercise.    


        2.1    Delivery of Stock Certificates, etc. on Exercise.    The Company agrees that the shares of Common Stock
purchased upon exercise of this Warrant shall be deemed to be issued to the Holder as the record owner of such shares as of the close of business on the date on which this Warrant shall have been
surrendered and payment made for such shares as aforesaid. As soon as practicable after the exercise of this Warrant in whole or in part, and in any event within 3 business days thereafter, the
Company at its expense (including the payment by it of any applicable issue taxes) will cause to be issued in the name of and delivered to the Holder, or as such Holder (upon payment by such holder of
any applicable transfer taxes) may direct in compliance with applicable securities laws, a certificate or certificates for the number of duly and validly issued, fully paid and nonassessable shares of
Common Stock (or Other Securities) to which such Holder shall be entitled on such exercise, plus, in lieu of any fractional share to which such holder would otherwise be entitled, cash equal to such
fraction multiplied by the then Fair Market Value of one full share, together with any other stock or other securities and property (including cash, where applicable) to which such Holder is entitled
upon such exercise pursuant to Section 1 or otherwise. 


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        2.2    Exercise.    



        (a)   Payment
may be made either in (i) cash or by certified or official bank check payable to the order of the Company equal to the applicable aggregate Exercise
Price, (ii) by delivery of the Warrant, Common Stock and/or Common Stock receivable upon exercise of the Warrant in accordance with Section (b) below, or (iii) by a combination of
any of the foregoing methods, for the number of Common Shares specified in such form (as such exercise number shall be adjusted to reflect any adjustment in the total number of shares of Common Stock
issuable to the holder per the terms of this Warrant), and the Holder shall thereupon be entitled to receive the number of duly authorized, validly issued, fully-paid and
non-assessable shares of Common Stock (or Other Securities) determined as provided herein. 



        (b)   Notwithstanding
any provisions herein to the contrary, if the Fair Market Value of one share of Common Stock is greater than the Exercise Price (at the date of
calculation as set forth below), in lieu of exercising this Warrant for cash, the Holder may elect to receive shares equal to the value (as determined below) of this Warrant (or the portion thereof
being exercised) by surrender of this Warrant at the principal office of the Company together with the properly endorsed Exercise Notice in which event the Company shall issue to the Holder a number
of shares of Common Stock computed using the following formula: 



	X=Y	 	(A-B)
	 	 	

	 	 	A





	Where X =	 	the number of shares of Common Stock to be issued to the Holder
	

Y =	
 	

the number of shares of Common Stock purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being exercised (at the date of such calculation)
	

A =	
 	

the Fair Market Value of one share of the Company's Common Stock (at the date of such calculation)
	

B =	
 	

Exercise Price (as adjusted to the date of such calculation)





        3.    Effect of Reorganization, etc.; Adjustment of Exercise Price.    


        3.1    Reorganization, Consolidation, Merger, etc.    In case at any time or from time to time, the Company shall
(a) effect a reorganization, (b) consolidate with or merge into any other person, or (c) transfer all or substantially all of its properties or assets to any other person under
any plan or arrangement contemplating the dissolution of the Company, then, in each such case, as a condition to the consummation of such a transaction, proper and adequate provision shall be made by
the Company whereby the Holder of this Warrant, on the exercise hereof as provided in Section 1 at any time after the consummation of such reorganization, consolidation or merger or the
effective date of such dissolution, as the case may be, shall receive, in lieu of the Common Stock (or Other Securities) issuable on such exercise prior to such consummation or such effective date,
the stock and other securities and property (including cash) to which such Holder would have been entitled upon such consummation or in connection with such dissolution, as the case may be, if such
Holder had so exercised this Warrant, immediately prior thereto, all subject to further adjustment thereafter as provided in Section 4. 


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        3.2    Dissolution.    In the event of any dissolution of the Company following the transfer of all or substantially
all of its properties or assets, the Company, prior to such dissolution, shall at its expense deliver or cause to be delivered the stock and other securities and property (including cash, where
applicable) receivable by the Holder of the Warrant after the effective date of such dissolution pursuant to Section 3.1 to a bank or trust company having its principal office in New York, NY,
as trustee for the Holder of the Warrant. 


        3.3    Continuation of Terms.    Upon any reorganization, consolidation, merger or transfer (and any dissolution
following any transfer) referred to in this Section 3, this Warrant shall continue in full force and effect and the terms hereof shall be applicable to the shares of stock and other securities
and property receivable on the exercise of this Warrant after the consummation of such reorganization, consolidation or merger or the effective date of dissolution following any such transfer, as the
case may be, and shall be binding upon the issuer of any such stock or other securities, including, in the case of any such transfer, the person acquiring all or substantially all of the properties or
assets of the Company, whether or not such person shall have expressly assumed the terms of this Warrant as provided in Section 4. In the event this Warrant does not continue in full force and
effect after the consummation of the transactions described in this Section 3, then only in such event will the Company's securities and property (including cash, where applicable) receivable
by the holders of the Warrant be delivered to the Trustee as contemplated by Section 3.2. 


        4.    Extraordinary Events Regarding Common Stock.    In the event that the Company shall (a) issue additional
shares of the Common Stock as a dividend or other distribution on outstanding Common Stock, (b) subdivide its outstanding shares of Common Stock, or (c) combine its outstanding shares of
the Common Stock into a smaller number of shares of the Common Stock, then, in each such event, the Exercise Price shall, simultaneously with the happening of such event, be adjusted by multiplying
the then Exercise Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such event and the denominator of which shall be the number
of shares of Common Stock outstanding immediately after such event, and the product so obtained shall thereafter be the Exercise Price then in effect. The Exercise Price, as so adjusted, shall be
readjusted in the same manner upon the happening of any successive event or events described herein in this Section 4. The number of shares of Common Stock that the holder of this Warrant shall
thereafter, on the exercise hereof as provided in Section 1, be entitled to receive shall be increased to a number determined by multiplying the number of shares of Common Stock that would
otherwise (but for the provisions of this Section 4) be issuable on such exercise by a fraction of which (a) the numerator is the Exercise Price that would otherwise (but for the
provisions of this Section 4) be in effect, and (b) the denominator is the Exercise Price in effect on the date of such exercise. 


        5.    Certificate as to Adjustments.    In each case of any adjustment or readjustment in the shares of Common Stock
(or Other Securities) issuable on the exercise of the Warrant, the Company at its expense will promptly cause its Chief Financial Officer or other appropriate designee to compute such adjustment or
readjustment in accordance with the terms of the Warrant and prepare a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or
readjustment is based, including a statement of (a) the consideration received or receivable by the Company for any additional shares of Common Stock (or Other Securities) issued or sold or
deemed to have been issued or sold, (b) the number of shares of Common Stock (or Other Securities) outstanding or deemed to be outstanding, and (c) the Exercise Price and the number of
shares of Common Stock to be received upon exercise of this Warrant, in effect immediately prior to such adjustment or readjustment and as adjusted or readjusted as provided in this Warrant. The
Company will forthwith mail a copy of each such certificate to the holder of the Warrant and any Warrant agent of the Company (appointed pursuant to Section 11 hereof). 


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        6.    Reservation of Stock, etc.    Issuable on Exercise of Warrant. The Company will at all times reserve and keep
available, solely for issuance and delivery on the exercise of the Warrant, shares of Common Stock (or Other Securities) from time to time issuable on the exercise of the Warrant. 


        7.    Assignment; Exchange of Warrant.    Subject to compliance with applicable securities laws, this Warrant, and the
rights evidenced hereby, may be transferred by any registered holder hereof (a "Transferor") with respect to any or all of the Shares. On the surrender for exchange of this Warrant, with the
Transferor's endorsement in the form of Exhibit B attached hereto (the "Transferor Endorsement Form") and together with evidence reasonably satisfactory to the Company demonstrating compliance
with applicable securities laws, which shall include, without limitation, a legal opinion from the Transferor's counsel that such transfer is exempt from the registration requirements of applicable
securities laws, the Company at its expense but with payment by the Transferor of any applicable transfer taxes) will issue and deliver to or on the order of the Transferor thereof a new Warrant of
like tenor, in the name of the Transferor and/or the transferee(s) specified in such Transferor Endorsement Form (each a "Transferee"), calling in the aggregate on the face or faces thereof for the
number of shares of Common Stock called for on the face or faces of the Warrant so surrendered by the Transferor. 


        8.    Replacement of Warrant.    On receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and, in the case of any such loss, theft or destruction of this Warrant, on delivery of an indemnity agreement or security reasonably satisfactory in form and
amount to the Company or, in the case of any such mutilation, on surrender and cancellation of this Warrant, the Company at its expense will execute and deliver, in lieu thereof, a new Warrant of like
tenor. 


        9.    Registration Rights.    The Holder of this Warrant has been granted certain registration rights by the Company.
These registration rights are set forth in a Registration Rights Agreement entered into by the Company and Purchaser of the Company's Convertible Note (the "Note") at or prior to the issue date of
this Warrant. 


        10.    Maximum Exercise.    The Holder shall not be entitled to exercise this Warrant on an exercise date, in
connection with that number of shares of Common Stock which would be in excess of the sum of (i) the number of shares of Common Stock beneficially owned by the Holder and its affiliates on an
exercise date, and (ii) the number of shares of Common Stock issuable upon the exercise of this Warrant with respect to which the determination of this proviso is being made on an exercise
date, which would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock of the Company on such date. For the purposes of the
proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and
Regulation 13d-3 thereunder. Subject to the foregoing, the Holder shall not be limited to aggregate exercises which would result in the issuance of more than 4.99%. The restriction
described in this paragraph may be revoked upon 75 days' prior notice from the Holder to the Company and is automatically null and void upon an Event of Default under the Note. 


        11.    Warrant Agent.    The Company may, by written notice to the each holder of the Warrant, appoint an agent for
the purpose of issuing Common Stock (or Other Securities) on the exercise of this Warrant pursuant to Section 1, exchanging this Warrant pursuant to Section 7, and replacing this Warrant
pursuant to Section 8, or any of the foregoing, and thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by such agent. 



        12.    Transfer on the Company's Books.    Until this Warrant is transferred on the books of the Company, the Company
may treat the registered holder hereof as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary. 


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        13.    Notices, etc.    All notices and other communications from the Company to the Holder of this Warrant shall be
mailed by first class registered or certified mail, postage prepaid, at such address as may have been furnished to the Company in writing by such holder or, until any such Holder furnishes to the
Company an address, then to, and at the address of, the last Holder of this Warrant who has so furnished an address to the Company. 


        14.    Voluntary Adjustment by the Company.    The Company may at any time during the term of this Warrant reduce the
then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company. 



        15.    Miscellaneous.    This Warrant and any term hereof may be changed, waived, discharged or terminated only by an
instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought. This Warrant shall be governed by and construed in accordance with the
laws of State of New York without regard to principles of conflicts of laws. Any action brought by either party concerning the transactions contemplated by this Warrant shall be brought only in the
state courts of New York or in the federal courts located in the state of New York. The individuals executing this Warrant on behalf of the Company agree to submit to the jurisdiction of such courts
and waive trial by jury. 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 Warrant 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 enforceability of any other provision of this Warrant. The
headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof. The invalidity or unenforceability of any provision hereof shall in no way
affect the validity or enforceability of any other provision. The Company acknowledges that legal counsel participated in the preparation of this Warrant and, therefore, stipulates that the rule of
construction that ambiguities are to be resolved against the drafting party shall not be applied in the interpretation of this Warrant to favor any party against the other party. 


        IN
WITNESS WHEREOF, the Company has executed this Warrant under seal as of the date first written above. 



	

 	
 	

DIGITAL ANGEL CORPORATION
	

 	
 	

By:	
 	

/s/  JAMES P. SANTELLI      

	

Witness:	
 	

 	
 	

 
	

/s/  REBECCA S. THOMPSON      
	
 	

 	
 	

 




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Exhibit A    
    


FORM OF SUBSCRIPTION

(To be signed only on exercise of Warrant) 



TO:    Digital
Angel Corporation 


The
undersigned, pursuant to the provisions set forth in the attached Warrant (No.            ), hereby irrevocably elects to purchase (check applicable box): 


	o
	shares
of the Common Stock covered by such Warrant; or



	o
	the
maximum number of shares of Common Stock covered by such Warrant pursuant to the cashless exercise procedure set forth in
Section 2. 




The
undersigned herewith makes payment of the full Exercise Price for such shares at the price per share provided for in such Warrant, which is $                  .
Such payment takes the form of (check
applicable box or boxes): 


	o
	$                  in
lawful money of the United States; and/or



	o
	the
cancellation of such portion of the attached Warrant as is exercisable for a total of                        shares of Common
Stock (using a
Fair Market Value of $                              per share for purposes of this calculation);
and/or



	o
	the
cancellation of such number of shares of Common Stock as is necessary, in accordance with the formula set forth in Section 2, to
exercise this Warrant with respect to the maximum number of shares of Common Stock purchaseable pursuant to the cashless exercise procedure set forth in Section 2. 






	

The undersigned requests that the certificates for such shares be issued in the name of, and delivered to ____________

whose address is ________________________________________________________________________________

______________________________________________________________________________________________

The undersigned represents and warrants that all offers and sales by the undersigned of the securities issuable upon exercise of the within Warrant shall be made pursuant to registration of the Common Stock under the Securities Act of 1933, as
amended (the "Securities Act") or pursuant to an exemption from registration under the Securities Act.





	

Dated:	
 	

	
 	

 (Signature must conform to name of holder as specified on the face of the Warrant)
	



 	

 	




 (Address)	

 	



 




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Exhibit B    
    


FORM OF TRANSFEROR ENDORSEMENT

(To be signed only on transfer of Warrant) 


        For
value received, the undersigned hereby sells, assigns, and transfers unto the person(s) named below under the heading "Transferees" the right represented by the within Warrant to
purchase the percentage and number of shares of Common Stock of Digital Angel Corporation to which the within Warrant relates specified under the headings "Percentage Transferred" and "Number
Transferred," respectively, opposite the name(s) of such person(s) and appoints each such person Attorney to transfer its respective right on the books of Digital Angel Corporation with full power of
substitution in the premises. 



	
Transferees
	
 	

Percentage Transferred
	
 	

Number Transferrred

	
 	
 	

 	
 	

 
	

 	
 	

 	
 	

 
	

 	
 	

 	
 	

 
	

 	
 	

 	
 	

 





	

Dated:	
 	

	
 	

 (Signature must conform to name of holder as specified on the face of the Warrant)
	

Signed in the presence of:	
 	

 
	

 (Name)	
 	

 (address)
	



ACCEPTED AND AGREED:	

 	





	

[TRANSFEREE]	
 	

(address)
	




 (Name)

	

 	



 




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Exhibit 4.3

Exhibit A

Exhibit B