Document:

QuickLinks
 -- Click here to rapidly navigate through this document

 
 

Exhibit 10.2    
    

 
 

LETTER AMENDMENT NO. 1
  
    to
  
    MASTER SHELF AGREEMENT    
    

        As
of April 1, 2004 

Prudential
Investment Management, Inc.

The Prudential Insurance Company of America

Pruco Life Insurance Company

c/o Prudential Capital Group

Gateway Center Four

100 Mulberry Street

Newark, New Jersey 08102-4069 

Ladies
and Gentlemen: 

        We
refer to the Master Shelf Agreement dated as of June 3, 2003 (the "Agreement") among Crosstex Energy Services, L.P., a Delaware
limited partnership (the "Company"), Prudential Investment Management, Inc. ("Prudential"), The
Prudential Insurance Company of America ("PICA") and Pruco Life Insurance Company ("Pruco" and, together
with Prudential and PICA, the "Purchasers"). Unless otherwise defined in this Letter Amendment No. 1 to Master Shelf Agreement (this
"Amendment"), the terms defined in the Agreement shall be used herein as therein defined. 

        The
Company and its Affiliates propose to acquire LIG Pipeline Company, a Nevada corporation, pursuant to the Purchase and Sale Agreement dated as of February 13, 2004 between
Crosstex Energy, L.P., a Delaware limited liability company (the "MLP") and AEP Energy Services Investments, Inc., a Delaware corporation, as
amended by the First Amendment thereto dated as of February 13, 2004 (the "LIG Acquisition"). In order to effect the LIG Acquisition, the Company
proposes to borrow funds under the Bank Agreement and distribute such funds in cash to the MLP (the "Cash Distribution"). The MLP proposes then to make
a loan in the amount of the Cash Distribution to Crosstex Louisiana Energy, L.P., a subsidiary of the MLP ("Crosstex Louisiana"), in order to fund all
or part of the purchase price in connection with the LIG Acquisition. In connection with the LIG Acquisition, the Company and its Affiliates propose to effect a reorganization as described in the
Omnibus Agreement dated as of March 31, 2004 among the MLP, the Company, Crosstex Louisiana, Crosstex Operating GP, LLC, a Delaware limited liability company, the General Partner, LIG Liquids
Holdings, L.P., a Delaware limited partnership, Crosstex Tuscaloosa, LLC, a Louisiana limited liability company, Crosstex Treating Services GP, LLC, a Delaware limited liability company, Crosstex
Acquisition Management GP, LLC, a Delaware limited liability company, and Crosstex Gulf Coast Marketing Ltd., a Texas limited partnership (the "Omnibus
Agreement"), which specifically provides that (a) Crosstex Louisiana will transfer substantially all of the assets acquired by it and its Subsidiaries pursuant to the
LIG Acquisition to the Company and its Subsidiaries, (b) Crosstex Operating GP, LLC will be substituted as the general partner of the Company and (c) Crosstex Acquisition Management GP,
LLC and Crosstex Treating Services GP, LLC will each merge with and into Crosstex Energy Services GP, LLC (the "Reorganization"). 

        In
connection with the foregoing, the Company has requested that the Purchasers make certain amendments to the Agreement and grant a limited consent and waiver with respect to the LIG
Acquisition, the Cash Distribution and the Reorganization. Subject to the terms and conditions specified herein, the Purchasers have indicated their willingness to make such amendments, and grant such
limited consent and waiver, all as more particularly set forth herein. Accordingly, subject to satisfaction of the conditions set forth in paragraph 8 hereof, and in reliance on the
representations and warranties of the Company set forth in paragraph 7 hereof, the Purchasers hereby agree with the Company to amend the Agreement as provided in paragraphs 1 through 5 below,
and to grant the 

 

limited
consent and waiver specified in paragraph 6 below, effective in each case as of the Amendment No. 1 Effective Date (as defined in paragraph 8 below). 

1.     Amendments to Paragraph 5. Affirmative Covenants.  

        (a)   Paragraph 5C. Visitation Rights. Paragraph 5C of the Agreement is hereby amended by replacing "four
occasions in any calendar year" with "two occasions in any calendar year". 

        (b)   Paragraph 5K. Transactions with Affiliates. Paragraph 5K of the Agreement is hereby amended by adding the
following prior to the period at the end thereof: 

";
provided that this paragraph 5K shall not apply to any guaranty by the Company or a Guarantor of Debt of a Finance Entity specifically
permitted by clause (xi) of paragraph 6C(2)" 

        (c)   Paragraph 5
of the Agreement is amended by adding a new paragraph 5P to the end thereof, to read as follows: 

        "5P.
Post-Closing Requirements. 

        (i)    Within
five Business Days following the Amendment No. 1 Effective Date (or, with respect to clause (g) below, within a commercially reasonable period of
time following the Amendment No. 1 Effective Date), the Company shall deliver or cause to be delivered to each Holder the following, each in form, scope and substance satisfactory to the
Required Holder(s): 

        (a)   except
as otherwise provided by clause (ii) of this paragraph 5P and as determined by the Required Holder(s), new Security Documents and appropriate
UCC-1 and UCC-3 Financing Statements, describing as Collateral the Property being acquired by the Company and its Subsidiaries pursuant to the LIG Acquisition Documents and the
Reorganization (as defined in Amendment No. 1); 

        (b)   Guaranties
or supplements thereto executed by each of Crosstex Tuscaloosa, LLC, a Louisiana limited liability company, Crosstex LIG, LLC, a Louisiana limited liability
company, and Crosstex LIG Liquids, LLC, a Louisiana limited liability company (collectively, the "New Subsidiary Guarantors"); 

        (c)   an
Amended and Restated Pledge Agreement executed among the General Partner, the MLP and the Collateral Agent; 

        (d)   a
Pledge Agreement executed by Crosstex Energy Services GP, LLC; 

        (e)   Supplements
to the Intercreditor Agreement executed by each of the New Subsidiary Guarantors; 

        (f)    a
certificate of the secretary or assistant secretary of the General Partner certifying (I) the existence of the Company and the General Partner, (II) its
organizational documents and the Company Partnership Agreement, (III) the resolutions of the General Partner approving the LIG Acquisition, the Cash Distribution (as defined in Amendment
No. 1), the Reorganization (as defined in Amendment No. 1) and the Loan Documents (other than Amendment No. 1) executed and delivered on or before the date of such certificate,
and (IV) all documents evidencing other necessary corporate, partnership or limited liability company action and governmental approvals, if any, with respect to Amendment No. 1 and the
other Loan Documents; 

        (g)   a
certificate of the secretary or assistant secretary of each of the Guarantors certifying (I) either (A) that there have been no changes to such
Guarantor's organizational documents since June 3, 2003, or (B) its attached organizational 

2

 

documents,
(II) the resolutions of the governing body of such Guarantor approving the Loan Documents (other than Amendment No. 1) executed and delivered by such Guarantor on or before
the date of such certificate, and (III) all documents evidencing other necessary corporate, partnership or limited liability company action and governmental approvals, if any, with respect to
Amendment No. 1 and the other Loan Documents executed and delivered on or before the date of such certificate; 

        (h)   certificates
of good standing, existence and authority for the Company, the General Partner, the MLP and each of the Guarantors from each of the states in which the
Company, each such Partner and each of the Guarantors is organized; 

        (i)    a
favorable opinion of Thompson & Knight L.L.P., outside Texas counsel to the Company, the General Partner, the MLP and the Guarantors; 

        (j)    a
favorable opinion of Taylor, Porter, Brooks & Phillips L.L.P., outside Louisiana counsel to the Company, the General Partner, the MLP and the New Subsidiary
Guarantors; 

        (k)   certificate(s)
of insurance naming the Collateral Agent as loss payee or additional insured evidencing insurance which meets the requirements of this Agreement and the
Security Documents and which is in amount, form and substance and from an issuer satisfactory to the Required Holder(s); and 

        (l)    such
other approvals, opinions, evidence and documents as the Required Holder(s) may reasonably request. 

        (ii)   Within
120 days following the Amendment No. 1 Effective Date, the Company shall deliver or cause to be delivered to each Holder the following, each in
form, scope and substance satisfactory to the Required Holder(s): 

        (a)   new
Mortgages, other Security Documents and appropriate UCC-1 and UCC-3 Financing Statements, describing as Collateral the Property being
acquired by the Company and its Subsidiaries pursuant to the LIG Acquisition Documents and the Reorganization (as defined in Amendment No. 1), to the extent any of the foregoing were not
required to be delivered by such Purchaser pursuant to clause (i) of this paragraph 5P; and 

        (b)   a
favorable opinion of Taylor, Porter, Brooks & Phillips L.L.P., outside Louisiana counsel to the Company, the General Partner and the New Subsidiary Guarantors
with respect to such Security Documents." 

2.     Amendments to Paragraph 6. Negative Covenants.  

        (a)   Paragraph 6A(1). Current Ratio. Paragraph 6A(1) of the Agreement is amended by deleting such paragraph in
its entirety and replacing it with the following: 

        "6A(1).
[Intentionally omitted.]" 

        (b)   Paragraph 6A(4). Minimum Tangible Net Worth. Paragraph 6A(4) of the Agreement is amended by replacing
"$60,000,000" with "$90,000,000" and replacing "December 31, 2002" with "March 31, 2004". 

3

 

        (c)   Paragraph 6C(1). Liens, Etc.

        (I)   Clause (v)
of paragraph 6C(1) of the Agreement is amended by deleting such clause in its entirety and replacing it with the following: 

        "(v) the
negative pledge contained in the Bank Agreement and the negative pledge contained in any agreement, instrument or document executed at any time in connection with
Debt permitted by clause (xi) of paragraph 6C(2); provided that any such negative pledge in connection with Debt permitted by
clause (xi) of paragraph 6C(2) shall not place any restriction on the creation or existence of any Lien now or hereafter securing the Obligations or, as a result of the creation or
existence of any Lien securing the Obligations, cause or require the creation of any Lien securing such Debt;" 

        (II)  Clause (vii)
of paragraph 6C(1) of the Agreement is amended by replacing "$500,000" with "$1,000,000". 

        (d)   Paragraph 6C(2). Debt.

        (I)   Clause (vii)
of paragraph 6C(2) of the Agreement is amended by replacing "$5,000,000" with "$7,500,000". 

        (II)  Clause (viii)
of paragraph 6C(2) of the Agreement is amended by replacing "$3,000,000" with "$10,000,000". 

        (III) Clause (ix)
of paragraph 6C(2) of the Agreement is amended by deleting "and" at the end thereof. 

        (IV) Clause (x)
of paragraph 6C(2) of the Agreement is amended by replacing "$5,000,000" with "$7,500,000" and replacing the period at the end thereof with ";
and". 

        (V)  Paragraph 6C(2)
of the Agreement is amended by adding a new clause (xi) at the end thereof, to read as follows: 

        "(xi) unsecured
Debt of the Company and/or a Finance Entity not exceeding $125,000,000 in aggregate principal amount at any time outstanding and any unsecured guaranty of
such Debt by the Company or
any Guarantor; provided that (a) such Debt is issued within 90 days of the Amendment No. 1 Effective Date and (b) the
maturity of such Debt is at least seven years after the issuance thereof." 

        (e)   Paragraph 6C(3). Investments in Other Persons. Clause (vi) of paragraph 6C(3) of the Agreement is
amended by replacing "Limited Partner" with "MLP". 

        (f)    Paragraph 6C(5). Sales, Etc. of Property. Clause (vii) of paragraph 6C(5) of the Agreement is
amended by replacing "$3,000,000" with "$5,000,000". 

        (g)   Paragraph 6I. Amendment of Company Partnership Agreement. Paragraph 6I of the Agreement is amended by
deleting such paragraph in its entirety and replacing it with the following: 

        "6I. Amendment of Company Partnership Agreement. The Company will not amend, modify or supplement (i) the definition
of "Available Cash" without the prior written consent of the Required Holders, (ii) the rights of the OLP Preferred Units or the obligations of the Company with respect to such holders or the
OLP Preferred Units without the prior written consent of the Required Holders or (iii) any other provision of the Company Partnership Agreement if such amendment, modification or supplement
would be materially adverse to the interests of the Holders without the prior written consent of the Required Holders." 

        (h)   Paragraph 6J. Bank Agreement. Paragraph 6J of the Agreement is amended by replacing "$100,000,000" with
"$200,000,000". 

4

 

3.     Amendments to Paragraph 7A. Acceleration.  

        (a)   Clause (iii)
of paragraph 7A of the Agreement is amended by replacing "$3,000,000" with "$5,000,000". 

        (b)   Clause (v)
of paragraph 7A of the Agreement is amended by replacing "5A(iii), 5E, 5I or 5N" with "5A(iii), 5E, 5I, 5N or 5P". 

        (c)   Clause (xiii)(a)
of paragraph 7A of the Agreement is amended by replacing "$3,000,000" with "$5,000,000". 

4.     Amendment to Paragraph 8U. Ownership.  

        Clause (a) of paragraph 8U of the Agreement is amended by deleting such clause in its entirety and replacing it with the following: 

        "(a) The
General Partner is the sole general partner of the Company, and the Limited Partners are the only limited partners of the Company. As of the date hereof,
(i) the General Partner is the legal and beneficial owner of 0.001% of the OLP Common Units in the Company, and (ii) the MLP is the legal and beneficial owner of 99.999% of the OLP
Common Units in the Company and 100% of the membership interests of the General Partner. No part of the partnership interests in the Company or the membership interests of the General Partner is
subject to any Lien, other than preferential rights of the Partners under the Company Partnership Agreement and Liens in favor of the Collateral Agent." 

5.     Amendments to Paragraph 10B. Other Terms.  

        (a)   Paragraph 10B
of the Agreement is amended by inserting each of the following new definitions in the appropriate alphabetical positions: 

        "Amendment No. 1" shall mean Letter Amendment No. 1 to this Agreement, dated as of April 1, 2004. 

        "Amendment No. 1 Effective Date" shall mean the date on which Amendment No. 1 shall have become effective in accordance with
its terms. 

        "Finance Entity" means any Subsidiary of the MLP that is not also a Subsidiary of the Company and that is formed for the purpose of
issuing Debt specifically permitted by clause (xi) of paragraph 6C(2). 

        "LIG Acquisition" the acquisition of LIG Pipeline Company, a Nevada corporation, pursuant to the LIG Purchase and Sale Agreement. 

        "LIG Purchase and Sale Agreement" means the Purchase and Sale Agreement dated as of February 13, 2004 between the MLP and AEP
Energy Services Investments, Inc., a Delaware corporation, as amended by the First Amendment thereto dated as of February 13, 2004. 

        "LIG Acquisition Documents" means the LIG Purchase and Sale Agreement and all other agreements, instruments or documents executed in
connection therewith or otherwise related to the LIG Acquisition. 

        "MLP" means Crosstex Energy, L.P., a Delaware limited partnership. 

        "OLP Common Units" has the meaning set forth in the Company Partnership Agreement. 

        "OLP Preferred Units" has the meaning set forth in the Company Partnership Agreement." 

        (b)   Paragraph 10B
of the Agreement is further amended by replacing the definitions of "Bank Agreement", "Change of Control", "General Partner", "Limited Partner",
"Pledge Agreements" and 

5

 

"Responsible
Officer" therein with the following, and each reference in the Agreement to "Limited Partner" shall be amended to refer to "Limited Partners": 

        "
"Bank Agreement" means the Second Amended and Restated Credit Agreement dated as of November 26, 2002 among the Company, the
Banks, Union Bank of California, N.A., as Administrative Agent, and The Royal Bank of Canada, as Syndication Agent, as amended by that certain First Amendment thereto dated June 3, 2003, that
certain Second Amendment thereto dated as of October 30, 2003 and that certain Third Amendment thereto dated as of April 1, 2004, and as further amended, modified or supplemented from
time to time as permitted by this Agreement. 

        "Change of Control" means (a) the General Partner is no longer the sole general partner of the Company, (b) the MLP owns
less than 99.999% of the OLP Common Units, (c) the failure of the MLP
to own, directly or indirectly, 100% of the outstanding equity interests of any holder of OLP Preferred Units or (d) individuals who, at the beginning of any period of 12 consecutive months,
constitute the General Partner's Board of Directors cease for any reason (other than death or disability) to constitute a majority of the General Partner's Board of Directors then in office. 

        "General Partner" shall mean Crosstex Operating GP, LLC, a Delaware limited liability company. 

        "Limited Partners" means the MLP and the holders of the OLP Preferred Units. 

        "Pledge Agreements" means (a) the Amended and Restated Pledge Agreement among the Partners and the Collateral Agent in
substantially the form of Exhibit J attached hereto, (b) the Amended and Restated Pledge Agreement between Crosstex Treating Services, GP, LLC and the Collateral Agent in substantially
the form of Exhibit K attached hereto, each as amended by the respective First Amendments thereto dated as of June 3, 2003, (c) the Pledge Agreement, dated as of June 3,
2003, between Crosstex Acquisition Management GP and the Collateral Agent in substantially the form of Exhibit L attached hereto, and (d) any other pledge agreements executed at any time
in connection with securing any Obligations, in each case as the same may hereafter be amended, modified, supplemented or replaced from time-to-time. 

        "Responsible Officer" means the Chief Executive Officer, President, Chief Financial Officer, any Executive Vice President, any Senior Vice
President, any Vice President, Treasurer or Assistant Treasurer of the General Partner." 

        (c)   Paragraph 10B
of the Agreement is further amended by replacing "Limited Partner" with "MLP" in the definitions of "Guarantor" and "Guaranty" therein. 

        (d)   Paragraph 10B
of the Agreement is further amended by deleting the definition of "Renewal Fee" therein. 

        6.     Limited Consent and Waiver. Subject to satisfaction of the conditions set forth in paragraph 8 hereof, and in
reliance on the representations and warranties of the Company set forth in paragraph 7 hereof, effective as of the Amendment No. 1 Effective Date, the Purchasers hereby
(i) consent to the LIG Acquisition, the Cash Distribution and the Reorganization, (ii) consent to the amendment and restatement of the Company Partnership Agreement, in the form
delivered to the Purchasers on the date hereof (the "OLP Restatement") and (iii) waive any and all Defaults or Events of Default arising or which
may heretofore have arisen under the Agreement or any of the other Loan Documents as a result of the execution, delivery or performance of the transactions and agreements in connection with the LIG
Acquisition, the Cash Distribution, the Reorganization or the OLP Restatement; provided that if the Reorganization is not completed as described in the
Omnibus Agreement and such failure to be completed as described in the Omnibus Agreement would be materially adverse to the Holders, the 

6

 

foregoing
limited consent and waiver shall be void; provided, further, that the foregoing limited
consent and waiver shall not apply to any violation of paragraph 6B of the Agreement (other than as a result of the Cash Distribution), to any amendment, modification or supplement to the
definition of "Available Cash" in the Company Partnership Agreement or to any other amendment, restatement, supplement or other modification of the Company Partnership Agreement other than the OLP
Restatement. The foregoing consent and waiver shall be limited precisely as written and shall relate solely to the Agreement in the manner and to the extent described herein, and nothing in this
Amendment shall be deemed to (i) constitute a waiver of compliance by the Company with respect to any term, provision or condition of the Agreement or any other Loan Document except as
specifically provided herein, or (ii) prejudice any right or remedy that any holder of Notes may now have (after giving effect to the foregoing consent and waiver) or may have in the future
under or in connection with the Agreement or any other Loan Document. The Company agrees to deliver to each Purchaser copies of all amendments, modifications or supplements to the Omnibus Agreement. 

        7.     Representations and Warranties. In order to induce the Purchasers to enter into this Amendment, the Company hereby
represents and warrants as follows: 

        (a)   The
execution, delivery and performance by the Company of this Amendment and the Agreement, as amended hereby, have in each case been duly authorized by all necessary
limited liability company, limited partnership or other organizational action and do not and will not (i) contravene the terms of the Company Partnership Agreement or the limited liability
company agreement or certificate of formation (or other organizational documents) of the General Partner, the Company or any of their Subsidiaries, (ii) conflict with or result in any breach or
contravention of, or the creation of any Lien under, any document evidencing any contractual obligation to which the General Partner, the Company or any of their Subsidiaries is a party and which
could subject any holder of Notes to any liability, (iii) conflict with or result in any breach or contravention of any order, injunction, writ or decree of any governmental authority binding
on the General Partner, the Company, any of their Subsidiaries or their respective properties, or (iv) violate any applicable law binding on or affecting the General Partner, the Company or any
of their Subsidiaries. 

        (b)   Each
of the representations and warranties contained in paragraph 8 of the Agreement is true and correct on and as of the date hereof, and will be true and
correct immediately upon, and as of the date of, consummation of the LIG Acquisition and the Reorganization, in each case except to the extent that such representations and warranties specifically
refer to an earlier date, in which case they shall be true and correct as of such earlier date. 

        (c)   On
and as of the date hereof, and after giving effect to this Amendment, no Default or Event of Default exists under the Agreement. 

        (d)   No
Governmental Action is required for the due execution, delivery or performance by the Company or any of its Subsidiaries of this Amendment, the Agreement, as amended
hereby, or any of the Loan Documents, as amended in connection herewith, to which the Company or any of its Subsidiaries is a party. 

        (e)   This
Amendment, the Agreement, as amended hereby, and each of the Loan Documents, as amended in connection herewith, to which the Company or any of its Subsidiaries is a
party, constitute legal, valid and binding obligations of the Company or such Subsidiary, as applicable, enforceable against the Company or such Subsidiary, as applicable, in accordance with their
respective terms. 

        (f)    Each
of the Liens under the Security Documents constitutes (and each of the Liens under the Security Documents to be delivered in connection with paragraph 5P of
the Agreement, as amended hereby, will constitute) an Acceptable Security Interest on the Collateral purported to be encumbered thereby, enforceable against all third parties in all jurisdictions,
securing the payment of all obligations stated to be secured thereby under such Security Documents, and the execution, delivery and 

7

 

performance
of this Amendment and the Agreement, as amended hereby, do not adversely affect any Lien under any of the Security Documents. 

        (g)   The
quarterly and annual financial statements most recently delivered to the Purchasers pursuant to clauses (i) and (ii) of paragraph 5A of the
Agreement fairly present the Consolidated financial condition of the Company and its Subsidiaries as of the respective dates thereof and the Consolidated results of the operations of the Company and
its Subsidiaries for the respective fiscal periods ended on such dates, all in accordance with GAAP applied on a consistent basis (subject to normal year-end audit adjustments and the
absence of footnotes in the case of the quarterly financial statements). Since December 31, 2003 there has been no material and adverse change in the business, condition (financial or
otherwise), operations, performance, properties or prospects of the Company or any of its Subsidiaries. The Company and its Subsidiaries have no material contingent liabilities except as disclosed in
such financial statements or the notes thereto. 

        (h)   There
is no pending or, to the knowledge of the Company, threatened action or proceeding affecting the Company or any of its Subsidiaries before any Governmental Person,
referee or arbitrator that could reasonably be expected to have a Material Adverse Effect. 

        8.     Conditions to Effectiveness. This Amendment shall become effective as of the date (the "Amendment
No. 1 Effective Date") first above written when and if each of the conditions set forth in this paragraph 8 shall have been satisfied (or waived in writing by the
Required Holder(s)). 

        (a)   Execution and Delivery of Documents. Each Purchaser shall have received the following, each to be dated the date of
execution and delivery thereof unless otherwise indicated, and each to be in form and substance satisfactory to such Purchaser and executed and delivered by each of the parties thereto, as applicable: 

        (i)    This
Amendment, dated as of the Amendment No. 1 Effective Date. 

        (ii)   A
certificate of a Responsible Officer certifying that (A) the representations and warranties contained in this Amendment and the Agreement, as amended hereby,
are true and correct on and as of the Amendment No. 1 Effective Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they
shall be true and correct as of such earlier date, (B) no Event of Default or Default exists as of the date hereof and (C) all of the conditions specified in this paragraph 8 have
been met. 

        (iii)  Amendments
to each of the existing Mortgages. 

        (iv)  A
copy of the LIG Purchase and Sale Agreement certified by a Responsible Officer (A) as being a true and correct copy of such document as of the Amendment
No. 1 Effective Date, (B) except as otherwise disclosed in writing and acceptable to such Purchaser, as being in full force and effect and no material term or condition thereof having
been amended, modified or waived after the execution thereof and (C) except as otherwise disclosed in writing and acceptable to such Purchaser, that to the knowledge of such Responsible
Officer, none of the parties to any of the LIG Acquisition Documents shall have failed to perform any material obligation or covenant required by the LIG Acquisition Documents to be performed or
complied with by it on or before the date of closing of the LIG Acquisition. 

        (v)   A
report by Barnes and Click, Inc. regarding the Properties that are the subject of the LIG Acquisition. 

        (vi)  A
Phase I environmental review by Flat Rock Energy Partners covering those Properties to be acquired in connection with the LIG Acquisition. 

8

 

        (vii) An
executed copy of the Third Amendment to the Bank Agreement, certified by a Responsible Officer as being a true and correct copy of such document as of the Amendment
No. 1 Effective Date. 

        (viii) Supplements
as contemplated by Section 6.4(a) of the Intercreditor Agreement, executed by each additional Bank becoming a Bank in connection with the Third
Amendment to the Bank Agreement. 

        (ix)  An
executed copy of the Omnibus Agreement certified by a Responsible Officer as being a true and correct copy of such document as of the date hereof. 

        (x)   Such
additional documents or certificates with respect to such legal matters or limited liability company, limited partnership or other proceedings related to the
transactions contemplated hereby as may be reasonably requested by such Purchaser. 

        (b)   Accuracy of Representations and Warranties. The representations and warranties contained in paragraph 7 of this
Amendment shall be true and correct as of the Amendment No. 1 Effective Date. 

9.     Miscellaneous.  

        (a)   Effect on Agreement. On and after the Amendment No. 1 Effective Date, each reference in the Agreement to "this
Agreement", "hereunder", "hereof", or words of like import referring to the Agreement and each reference in the Notes and all other documents executed in connection with the Agreement to "the
Agreement", "thereunder", "thereof", or words of like import referring to the Agreement shall mean the Agreement as amended by this Amendment. The Agreement, as amended by this Amendment, is and shall
continue to be in full force and effect and is hereby in all respects ratified and confirmed. The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right,
power or remedy under the Agreement nor, except as specifically set forth and limited in paragraph 6 hereof, constitute a waiver of any provision of the Agreement. Without limiting the
generality of the foregoing, nothing in this Amendment shall be deemed (i) to constitute a waiver of compliance or consent to noncompliance by the Company or any other Person with respect to
any term, provision, covenant or condition of the Agreement or any other Loan Document not expressly described in paragraph 6 or (ii) to prejudice any right or remedy that any holder of
Notes may now have (after giving effect to the waiver set forth in paragraph 6) or may have in the future under or in connection with the Agreement or any other Loan Document. 

        (b)   Counterparts. This Amendment may be executed in any number of counterparts (including those transmitted by facsimile) and
by any combination of the parties hereto in separate counterparts, each of which counterparts shall be an original and all of which taken together shall constitute one and the same Amendment. Delivery
of this Amendment may be made by facsimile transmission of a duly executed counterpart copy hereof. 

        (c)   Expenses. The Company confirms its agreement, pursuant to paragraph 11B of the Agreement, to pay promptly all
out-of-pocket expenses of the Purchasers related to the preparation, negotiation, reproduction, execution and delivery of this Amendment and all matters contemplated hereby and
thereby, including without limitation all fees and out-of-pocket expenses of the Purchasers' special counsel. 

        (d)   Governing Law. THIS AMENDMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS
OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK.

        (e)   Affirmation of Obligations. Notwithstanding that such consent is not required under the Guaranties, each of the
Guarantors consents to the execution and delivery of this Amendment by the parties hereto. As a material inducement to the undersigned to amend the Agreement as set forth 

9

 

herein,
each of the Guarantors respectively (i) acknowledges and confirms the continuing existence, validity and effectiveness of the Guaranty to which it is a party and (ii) agrees that
the execution, delivery and performance of this Amendment shall not in any way release, diminish, impair, reduce or otherwise affect its obligations thereunder. 

        (f)    FINAL AGREEMENT. THIS AMENDMENT, TOGETHER WITH THE AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.

        {Remainder of this page blank; signature page follows.}

10

        If you agree to the terms and provisions hereof, please evidence your agreement by executing and returning at least one counterpart to the Company at 2501 Cedar Springs,
Suite 600, Dallas, Texas 85201. 

	 	 	Very truly yours,
	

 	
 	

CROSSTEX ENERGY SERVICES, L.P.
	

 	
 	

By:	
 	

Crosstex Operating GP, LLC,

its general partner
	

 	
 	

 	
 	

By:	

 
	 	 	 	 	 	/s/  WILLIAM W. DAVIS      
    Name: William W. Davis

    Title: Executive Vice President and Chief Financial Officer

Agreed to as of the Amendment Effective Date:

PRUDENTIAL
INVESTMENT MANAGEMENT, INC. 

	By:	 	 	 	 
	 	 	 	/s/  RANDALL KOB      
 Vice President	 	 
	

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
	

By:	
 	

 	
 	

 
	 	 	 	/s/  RANDALL KOB      
 Vice President	 	 
	

PRUCO LIFE INSURANCE COMPANY	
 	

 
	

By:	
 	

 	
 	

 
	 	 	 	/s/  RANDALL KOB      
 Vice President	 	 
	

 	
 	

 	
 	

 

Signature Page to Letter Amendment No. 1  

        Agreed to and acknowledged by each of the undersigned for the purposes set forth in
paragraph 9(e):

	 	 	GUARANTORS:
	

 	
 	

CROSSTEX ENERGY, L.P.
	

 	
 	

By:	
 	

Crosstex Energy GP, L.P.,

its general partner
	

 	
 	

 	
 	

By:	

Crosstex Energy GP, LLC,

its general partner
	

 	
 	

 	
 	

 	

By:

/s/  WILLIAM W. DAVIS      

	 	 	 	 	 	 	Name: William W. Davis

Title: Executive Vice-President and Chief Financial Officer
	

 	
 	

CROSSTEX CCNG GATHERING LTD.

CROSSTEX CCNG MARKETING LTD.

CROSSTEX CCNG PROCESSING LTD.

CROSSTEX CCNG TRANSMISSION LTD.

CROSSTEX GULF COAST MARKETING LTD.

CROSSTEX GULF COAST TRANSMISSION LTD.
	

 	
 	

By:	
 	

Crosstex Energy Services GP, LLC,

general partner of each above limited partnership
	

 	
 	

 	
 	

By:	

/s/  WILLIAM W. DAVIS      

	 	 	 	 	 	Name: William W. Davis

Title: Executive Vice-President and Chief Financial Officer
	

 	
 	

CROSSTEX ALABAMA GATHERING SYSTEM, L.P.

CROSSTEX MISSISSIPPI INDUSTRIAL GAS SALES, L.P.

CROSSTEX MISSISSIPPI PIPELINE, L.P.

CROSSTEX SEMINOLE GAS, L.P.

CROSSTEX ACQUISITION MANAGEMENT, L.P.
	

 	
 	

By:	
 	

Crosstex Acquisition Management GP, LLC,

general partner of each above limited partnership
	

 	
 	

 	
 	

By:	

/s/  WILLIAM W. DAVIS      

	 	 	 	 	 	Name: William W. Davis

Title: Executive Vice-President and Chief Financial Officer

Signature Page to Letter Amendment No. 1

	 	 	CROSSTEX TREATING SERVICES, L.P.
	

 	
 	

By:	
 	

Crosstex Treating Services GP, LLC,

its general partner
	

 	
 	

 	
 	

By:	

/s/  WILLIAM W. DAVIS      

	 	 	 	 	 	Name: William W. Davis

Title: Executive Vice-President and Chief Executive Officer

Signature Page to Letter Amendment No. 1  

QuickLinks

Exhibit 10.2

LETTER AMENDMENT NO. 1 to MASTER SHELF AGREEMENTQuickLinks
 -- Click here to rapidly navigate through this document

 
 

Exhibit 4.1    
    

        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 115,000 Shares of Common

Stock of Digital Angel Corporation (subject to

adjustment as provided herein)

 
 

COMMON STOCK PURCHASE WARRANT    
    

	No. 2003-1	 	Issue Date: August 28, 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 115,000 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.     70,000
shares at $2.55 per share (130% of the average closing price of the Common Stock for the three trading days immediately prior to the date hereof); 

        b.     35,000
shares at $2.75 per share (140% of the average closing price of the Common Stock for the three trading days immediately prior to the date hereof); and 

        c.     10,000
shares at $2.95 per share (150% of the average closing price of the Common Stock for the three trading days immediately prior to the date hereof.) 

 

        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 three (3) trading 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. 

2

 

        2.2    Exercise.    

        (a)   Payment
may be made either (i) in 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. 

        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 

3

 

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 current 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). 

        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. 

4

 

        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 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. Notwithstanding the foregoing, the restriction described in this paragraph
may be revoked upon seventy -five (75) calendar 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. 

        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. 

5

 

        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.    Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF. COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE
OR FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN COMPANY AND HOLDER PERTAINING TO THIS
WARRANT OR AS TO ANY MATTER ARISING OUT OF OR RELATED TO THIS WARRANT; PROVIDED, THAT HOLDER AND COMPANY ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS
MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE COUNTY OF NEW YORK, STATE OF NEW YORK; AND FURTHER PROVIDED, THAT NOTHING IN THIS AGREEMENT SHALL
BE DEEMED OR OPERATE TO PRECLUDE HOLDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT THE OBLIGATIONS, TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF HOLDER. COMPANY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT,
AND COMPANY HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON
CONVENIENS.    COMPANY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH
SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, ADDRESSED TO COMPANY, AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF COMPANY'S ACTUAL RECEIPT
THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID. THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO
ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY
DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN HOLDER AND COMPANY ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION
WITH THIS WARRANT OR THE TRANSACTIONS RELATED THERETO. THE PREVAILING PARTY SHALL BE ENTITLED TO RECOVER FROM THE OTHER PARTY ITS REASONABLE ATTORNEY'S FEES AND COSTS. IN THE EVENT THAT ANY PROVISION
OF THIS 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 UNENFORCEABILITY OF ANY OTHER
PROVISION OF THIS NOTE. NOTHING CONTAINED HEREIN SHALL BE DEEMED OR OPERATE TO PRECLUDE HOLDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION AGAINST THE COMPANY IN ANY OTHER JURISDICTION TO COLLECT
ON THE COMPANY'S OBLIGATIONS TO HOLDER OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF HOLDER. 

6

 

        16.    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 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; provided, however, that the Holder may choose to waive this provision and bring an action outside 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. 

7

 

        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      
	
 	

 	
 	

 

8

 
 

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): 

shares
of the Common Stock covered by such Warrant; or 

        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): 

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

        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 

        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)

 
 

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)	
 	

 

QuickLinks

Exhibit 4.1

COMMON STOCK PURCHASE WARRANT

Exhibit A

FORM OF SUBSCRIPTION (To be signed only on exercise of Warrant)

Exhibit B

FORM OF TRANSFEROR ENDORSEMENT (To be signed only on transfer of Warrant)

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00066-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00066-of-00352.parquet"}]]