Document:

Exhibit 10.23

SUBSIDIARY GUARANTEE

THIS SUBSIDIARY GUARANTEE (this “Guarantee”),
dated as of February 6, 2007, made by each of the undersigned guarantors
(together with any other entity that may become an additional guarantor
hereunder, the “Guarantors”), in favor of the
purchasers (the “Purchasers”) of Senior
Secured Debentures, dated as of the date hereof (the “Debentures”),
issued by Digital Angel Corporation, a Delaware corporation (the “Company”), and Imperium Advisers,
LLC, as the Collateral Agent (the “Collateral Agent”).  Capitalized terms used herein and not
otherwise defined shall have the respective meanings specified in the Purchase
Agreement (as defined below).

W I T N E S S E T H:

WHEREAS, pursuant to that certain Securities Purchase Agreement, dated as of
the date hereof, by and between the Company and the Purchasers (the “Purchase Agreement”), the Company
has agreed to sell and issue to the Purchasers, and each of the Purchasers has
agreed to purchase from the Company the Debentures; and

WHEREAS, each Guarantor, as
a subsidiary of the Company, will directly or indirectly benefit from the
extension of credit to the Company represented by the issuance of the
Debentures.

NOW,
THEREFORE, in consideration of the agreements herein contained and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:

1.             GUARANTEE.

      
         1.1           Guarantee of Obligations.

(a)           Each Guarantor hereby, jointly and
severally, unconditionally and irrevocably, guarantees to each Purchaser and
its lawful successors, endorsees, transferees and assigns, the prompt and
complete payment and performance by the Company when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations and undertakings of
the Company of whatever nature, monetary or otherwise, under the Debentures,
the Purchase Agreement, the Warrants, the Registration Rights Agreement, the
Security Agreement and the other Transaction Documents, together with all
reasonable attorneys’ fees, disbursements and all other costs and expenses of
collection incurred by Purchasers in enforcing any of such Obligations and/or
this Guarantee (collectively, the “Obligations”).  This Guarantee shall remain in full force and
effect until all the Obligations and the obligations of each Guarantor under
this Guarantee shall have been satisfied by payment and performance in
full.  Each Guarantor shall be regarded,
and shall be in the same position, as principal debtor with respect to the
Obligations.

(b)           Anything herein or in any other
Transaction Document to the contrary notwithstanding, the maximum liability of
each Guarantor hereunder and under the other Transaction Documents shall in no
event exceed the amount which can be guaranteed by such 

Guarantor under applicable federal and
state laws, including laws relating to the insolvency of debtors, fraudulent
conveyance or transfer or laws affecting the rights of creditors generally
(after giving effect to the right of contribution established in Section 1.3 of this Guarantee).

1.2           Guarantee Absolute and
Unconditional.  Each Guarantor
understands and agrees that this Guarantee shall be construed as a continuing,
absolute and unconditional guarantee of payment and performance without regard
to (a) the validity or enforceability of the Purchase Agreement or any other
Transaction Document, any of the Obligations or any other collateral security
therefor or guarantee or right of offset with respect thereto at any time or
from time to time held by the Purchasers, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance or fraud or
misconduct by Purchasers) which may at any time be available to or be asserted
by the Company or any other Person against the Purchasers, or (c) any other
circumstance whatsoever (with or without notice to or knowledge of the Company
or such Guarantor) which constitutes, or might be construed to constitute, an
equitable or legal discharge of the Company for the Obligations, or of such
Guarantor under this Guarantee, in bankruptcy or in any other instance.

1.3           Right of Contribution. Each
Guarantor hereby agrees that to the extent that a Guarantor shall have paid
more than its proportionate share of any payment made hereunder, such Guarantor
shall be entitled to seek and receive contribution from and against any other
Guarantor hereunder which has not paid its proportionate share of such
payment.  Each Guarantor’s right of
contribution shall be subject to the terms and conditions of Section 1.4 of this Guarantee. The
provisions of this Section 1.3 shall in no
respect limit the obligations and liabilities of any Guarantor to the
Purchasers, and each Guarantor shall remain liable to the Purchasers for the
full amount guaranteed by such Guarantor hereunder.

1.4           No Subrogation.  Notwithstanding any payment made by any
Guarantor hereunder or any set-off or application of funds of any Guarantor by
the Purchasers, no Guarantor shall be entitled to be subrogated to any of the
rights of the Purchasers against the Company or any other Guarantor or any
collateral security or guarantee or right of offset held by the Purchasers for
the payment of the Obligations, nor shall any Guarantor seek or be entitled to
seek any contribution or reimbursement from the Company or any other Guarantor
in respect of payments made by such Guarantor hereunder, until all amounts
owing to the Purchasers by the Company on account of the Obligations are paid
in full. If any amount shall be paid to any Guarantor on account of such
subrogation rights at any time when all of the Obligations shall not have been
paid in full, such amount shall be held by such Guarantor in trust for the
benefit of the Purchasers, segregated from other funds of such Guarantor, and
shall, forthwith upon receipt by such Guarantor, be turned over to the
Purchasers in the exact form received by such Guarantor (duly indorsed by such
Guarantor to the Purchasers, if required), to be applied against the
Obligations, whether matured or unmatured, in such order as the Purchasers may
determine.

1.5           Modification of Guaranteed
Obligations. Each Guarantor shall remain obligated hereunder
notwithstanding that, without any reservation of rights against any Guarantor
and without notice to or further assent by any Guarantor, any demand for
payment of any of the Obligations made by the Purchasers may be rescinded by
the Purchasers and any of the Obligations continued, and the Obligations, or
the liability of any other Person upon or for any part thereof, or any collateral
security or guarantee therefor or right of offset with respect thereto, may,
from time 

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to time, in whole or in part, be renewed,
extended, amended, modified, accelerated, compromised, waived, surrendered or
released by the Purchasers, and the Purchase Agreement and the other
Transaction Documents and any other documents executed and delivered in
connection therewith may be amended, modified, supplemented or terminated, in
whole or in part, as the Purchasers may deem advisable from time to time, and any
collateral security, guarantee or right of offset at any time held by the
Purchasers for the payment of the Obligations may be sold, exchanged, waived,
surrendered or released.  The Purchasers
shall have no obligation to protect, secure, perfect or insure any Lien at any
time held by them as security for the Obligations or for this Guarantee or any
property subject thereto.

1.6           Waiver.  Each Guarantor waives any and all notice of
the creation, renewal, extension or accrual of any of the Obligations and notice
of or proof of reliance by the Purchasers upon the guarantees contained in this
Section 1 or acceptance of the
guarantees contained in this Section 1.  The Obligations shall conclusively be deemed
to have been created, contracted or incurred, or renewed, extended, amended or
waived, in reliance upon the guarantees contained in this Section
1.  All dealings between
the Company and any of the Guarantors, on the one hand, and the Purchasers, on
the other hand, shall be conclusively presumed to have been had or consummated
in reliance upon the guarantees contained in this Section
1.  Each Guarantor waives
to the extent permitted by law diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon the Company or any of the
Guarantors with respect to the Obligations.

1.7           Enforcement of Guarantee.

(a)           When making any demand hereunder or
otherwise pursuing its rights and remedies hereunder against any Guarantor, the
Collateral Agent, acting on behalf of each Purchaser, may, but shall be under
no obligation to, make a similar demand on or otherwise pursue such rights and
remedies as the Collateral Agent, acting on behalf of the Purchasers, may have
against the Company, any other Guarantor or any other Person or against any collateral
security or guarantee for the Obligations or any right of offset with respect
thereto, and any failure by the Collateral Agent, acting on behalf of the
Purchasers, to make any such demand, to pursue such other rights or remedies or
to collect any payments from the Company, any other Guarantor or any other
Person or to realize upon any such collateral security or guarantee or to
exercise any such right of offset, or any release of the Company, any other
Guarantor or any other Person or any such collateral security, guarantee or
right of offset, shall not relieve any Guarantor of any obligation or liability
hereunder, and shall not impair or affect the rights and remedies, whether
express, implied or available as a matter of law, of the Purchasers against any
Guarantor. For the purposes hereof, “demand”
shall include the commencement and continuance of any legal proceedings.

(b)           Expenses; Indemnification.

(i)            Each Guarantor agrees to pay, or
reimburse the Collateral Agent, acting on behalf of the Purchasers, all of the
Collateral Agent’s costs and expenses incurred in collecting against such
Guarantor under this Guarantee or otherwise enforcing or preserving any rights
under this Guarantee and the other Transaction Documents to which such
Guarantor is a 

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party, including, without limitation, the
reasonable fees and disbursements of counsel to the Collateral Agent.

(ii)
          Each Guarantor agrees to pay,
and to save the Purchasers harmless from, any and all liabilities with respect
to, or resulting from any delay in paying, any and all stamp, excise, sales or
other taxes which may be payable or determined to be payable in connection with
any of the transactions contemplated by this Guarantee.

(iii)
         Each Guarantor agrees to pay, and
to save the Purchasers harmless from, any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of this Guarantee to the
extent the Company would be required to do so pursuant to the Purchase
Agreement.

(iv)
         [Reserved]

(v)
          Notwithstanding anything to the
contrary in this Agreement, with respect to any defaulted non-monetary
Obligations the specific performance of which by the Guarantors is not
reasonably possible (e.g., the issuance of the Company’s Common Stock), the
Guarantors shall only be liable for making the Purchasers whole on a monetary
basis for the Company’s failure to perform such Obligations in accordance with
the Transaction Documents.

1.8           Right to Set-Off.  Each Guarantor hereby irrevocably authorizes
the Collateral Agent, acting on behalf of the Purchasers, at any time and from
time to time while an Event of Default (as defined in the Debentures) under any
of the Transaction Documents shall have occurred and be continuing, without
notice to such Guarantor or any other Guarantor, any such notice being
expressly waived by each Guarantor, to set-off and appropriate and apply any
and all deposits, credits, indebtedness or claims, in any currency, in each
case whether direct or indirect, absolute or contingent, matured or unmatured,
at any time held or owing by a Purchaser to or for the credit or the account of
such Guarantor, or any part thereof in such amounts as the Collateral Agent may
elect, against and on account of the obligations and liabilities of such
Guarantor to the Purchasers hereunder in any currency arising hereunder or
under the Security Agreement as the Collateral Agent may elect, whether or not
a Purchaser has made any demand for payment and although such obligations,
liabilities and claims may be contingent or unmatured.  The Collateral Agent shall notify such
Guarantor promptly of any such set-off and the application made by the
Collateral Agent of the proceeds thereof, provided that
the failure to give such notice shall not affect the validity of such set-off
and application. The rights of each Purchaser under this Section
1.8 are in addition to other rights and remedies (including,
without limitation, other rights of set-off) which the Collateral Agent, acting
on behalf of the Purchasers, may have.

1.9           Payments.  In addition to the terms of the Guaranty set
forth in Section 1.1 of this
Guarantee, and in no manner imposing any limitation on such terms, it is
expressly understood and agreed that, if, at any time, any of the Obligations
are declared to be immediately due and payable by a Guarantor, then the
Guarantors shall, upon ten (10) Business Days’ notice, pay to the Collateral
Agent, acting on behalf of the Purchasers, the entire amount of such
Obligations as has been declared due and payable to the Purchasers.  Payment by the Guarantors shall be made to
the 

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Collateral Agent in immediately available
Federal funds to an account designated by the Collateral Agent or at the
address set forth herein for the giving of notice to the Collateral Agent or at
any other address that may be specified in writing from time to time by the
Collateral Agent, and shall be credited and applied to the Obligations.

1.10         Release. Subject to Section 2 of this Guarantee, each
Guarantor will be released from all liability hereunder concurrently with the
repayment and performance in full of all amounts owed under the Purchase
Agreement, the Debentures and the other Transaction Documents, and all other
Obligations.  No payment made by the
Company, any of the Guarantors, any other guarantor or any other Person or
received or collected by the Purchasers or the Collateral Agent from the
Company, any of the Guarantors, any other guarantor or any other Person by
virtue of any action or proceeding or any set-off or appropriation or
application at any time or from time to time in reduction of or in payment of
the Obligations shall be deemed to modify, reduce, release or otherwise affect
the liability of any Guarantor hereunder which shall, notwithstanding any such
payment (other than any payment made by such Guarantor in respect of the
Obligations or any payment received or collected from such Guarantor in respect
of the Obligations), remain liable for the Obligations up to the maximum
liability of such Guarantor hereunder until the Obligations are paid and
performed in full.

2.             REINSTATEMENT.

The guarantees
contained in Section 1 of this Guarantee
shall continue to be effective, or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any of the Obligations is rescinded or
must otherwise be restored or returned by the Purchasers or the Collateral
Agent upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Company or any Guarantor, or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, the Company or any Guarantor or any substantial part of its
property, or otherwise, all as though such payments had not been made.

3.             REPRESENTATIONS AND WARRANTIES.

Each Guarantor
hereby represents and warrants to the Collateral Agent and Purchasers as
follows:

3.1           Organization and Qualification.
Each Guarantor is duly organized, validly existing and in good standing under
the laws of its formation, with the requisite power and authority to own and
use its properties and assets and to carry on its business as currently
conducted.  Each Guarantor is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, except where the failure to be
so qualified or in good standing, as the case may be, could not, individually
or in the aggregate, (x) adversely affect the legality, validity or
enforceability of any of this Guarantee in any material respect, (y) have a
material adverse effect on the results of operations, assets, prospects, or
financial condition of the Guarantor or (z) adversely impair in any material
respect the Guarantor’s ability to perform fully on a timely basis its
obligations under this Guarantee (a “Material Adverse Effect”).

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3.2           Authorization; Enforcement.  Each Guarantor has the requisite corporate
power and authority to enter into and to consummate the transactions
contemplated by this Guarantee, and otherwise to carry out its obligations
hereunder. The execution and delivery of this Guarantee by each Guarantor and
the consummation by it of the transactions contemplated hereby have been duly
authorized by all requisite corporate action on the part of the Guarantor, and
no further consent or authorization of the Guarantor, its board of directors,
shareholders, or to its knowledge, any governmental authority or organization,
or any other person or entity is required in connection therewith. This
Guarantee has been duly executed and delivered by each Guarantor and
constitutes the valid and binding obligation of such Guarantor enforceable
against such Guarantor in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application.

3.3           No Conflicts. The execution,
delivery and performance of this Guarantee by each Guarantor and the
consummation by each Guarantor of the transactions contemplated thereby do not
and will not (i) conflict with or violate any provision of its certificate of
incorporation, by-laws or any other governing document or (ii) conflict with,
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which such Guarantor is a party or by which it or any of its
asset or properties are bound or affected, or (iii) result in a violation of
any law, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which such Guarantor is
subject (including Federal and state securities laws and regulations), or by
which any of its properties or assets are bound or affected. The business of
each Guarantor is not being conducted in violation of any law, ordinance or
regulation of any governmental authority, except for violations which, individually
or in the aggregate, do not have a Material Adverse Effect.

3.4           Purchase Agreement. The
representations and warranties of the Company set forth in the Purchase
Agreement as they relate to each Guarantor, each of which is hereby
incorporated herein by reference, are true and correct as of each time such
representations are deemed to be made pursuant to such Purchase Agreement, and
the Purchasers shall be entitled to rely on each of them as if they were fully
set forth herein, provided, that each reference in
each such representation and warranty to the Company’s knowledge shall, for the
purposes of this Section 3.4, be deemed to be
a reference to such Guarantor’s knowledge.

3.5           Independence of Parties.  The Purchasers have no fiduciary relationship
with or duty to any Guarantor arising out of or in connection with this
Guarantee or any of the other Transaction Documents; the relationship between
the Guarantors, on the one hand, and the Purchasers, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor; and no
joint venture is created hereby or by the other Transaction Documents or
otherwise exists by virtue of the transactions contemplated hereby among the
Guarantors and the Purchasers.

3.6           Counsel.  Each Guarantor has been advised by counsel in
the negotiation, execution and delivery of this Guarantee and the other
Transaction Documents to which it is a party.

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4.             FURTHER ASSURANCES.

Each Guarantor
covenants and agrees with the Collateral Agent, on behalf of each Purchaser,
that, from and after the date of this Guarantee until the Obligations shall
have been paid in full, such Guarantor shall (i) take, and/or shall refrain
from taking, as the case may be, such commercially reasonable action (including
complying with all of the obligations in Section 2 of the Debentures, which
obligations are incorporated by reference herein and shall be binding on each
Guarantor) that is necessary to be taken or not taken, as the case may be, so
that no Event of Default (as defined in the Debentures) is caused by the
failure to take such action or to refrain from taking such action by such
Guarantor and (ii) execute and deliver to the Collateral Agent, from time to
time, any additional instruments or documents which are reasonably necessary to
cause this Guarantee to be, become or remain valid and effective in accordance
with its terms.

5.             MISCELLANEOUS.

5.1           Severability.  In the event that any provision of this
Guarantee becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Guarantee shall continue in full force and
effect without said provision; provided that
in such case the parties shall negotiate in good faith to replace such
provision with a new provision which is not illegal, unenforceable or void, as
long as such new provision does not materially change the economic or other
benefits or burdens of this Guarantee to the parties.

5.2           Successors and Assigns.  The terms and conditions of this Guarantee
shall inure to the benefit of and be
binding upon the respective successors and permitted assigns of the
parties.  Nothing in this Guarantee, express or implied, is intended to confer upon
any party other than the parties hereto or their respective successors and
permitted assigns any rights, remedies, obligations or liabilities under or by
reason of this Guarantee, except as expressly provided in this Guarantee.  A
Purchaser may assign its rights hereunder in connection with any valid private
sale or transfer of its Debentures as permitted under the Purchase Agreement
and/or the Debentures, in which case the term “Purchaser” shall be deemed to
refer to such transferee as though such transferee were an original signatory
hereto. No Guarantor may assign its rights or obligations under this Guarantee.

5.3           Injunctive Relief. 
Each Guarantor acknowledges and agrees that a breach by it of its
obligations hereunder will cause irreparable harm to each Purchaser and that
the remedy or remedies at law for any such breach will be inadequate and agrees,
in the event of any such breach, in addition to all other available remedies,
the Collateral Agent, acting on behalf of the Purchasers, shall be entitled to
an injunction restraining any breach and requiring immediate and specific
performance of such obligations without the necessity of showing economic loss
or the posting of any bond.

5.4           Governing Law; Jurisdiction.  This Guarantee shall be governed by and construed under the laws of the State of New
York applicable to contracts made and to be performed entirely within the State
of New York.  Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City and County of New York for the adjudication of any
dispute hereunder or in connection herewith or with any transaction
contemplated hereby and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought 

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in an inconvenient forum or that
the venue of such suit, action or proceeding is improper.  Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof to such party at the address in effect
for notices to it under this Guarantee and
agrees that such service shall constitute good and sufficient service of
process and notice thereof.  Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law.

5.5           Counterparts. 
This Guarantee may be
executed in any number of counterparts, each of which shall be deemed an
original, and all of which together shall constitute one and the same instrument.  This Guarantee may be executed and delivered by facsimile transmission.

5.6           Headings. 
The headings used in this Guarantee are used for convenience only and are not to be considered in
construing or interpreting this Guarantee.

5.7           Notices.  Any
notice, demand or request required or permitted to be given by a Guarantor, the
Collateral Agent or a Purchaser pursuant to the terms of this Guarantee shall
be in writing and shall be deemed delivered (i) when delivered personally,
against written receipt therefor, or by verifiable facsimile transmission,
unless such delivery is made on a day that is not a Business Day, in which case
such delivery will be deemed to be made on the next succeeding Business Day,
(ii) on the next Business Day after timely delivery to a nationally recognized
overnight courier and (iii) on the Business Day actually received if deposited
in the U.S. mail (certified or registered mail, return receipt requested,
postage prepaid), addressed as follows:

If to a Guarantor:

c/o Digital Angel Corporation

Suite 201

1690 South Congress

Delray Beach, Florida 33483

Attn:  Kevin McGrath

Tel:         (561) 276-0477

Fax:         (561) 805-8001

with a copy (which shall
not constitute notice) to:

Winthrop & Weinstine,
P.A.

Suite 3500

225 South 6th Street

Minneapolis, Minnesota
55402

Attn:       Philip T. Colton

Tel:         (612) 604-6729

Fax:         (612) 604-6929

If to the Collateral Agent:

Imperium Advisers,
LLC

153 East 53rd Street

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29th Floor

New York, NY 10022

Attn:       Maurice Hryshko, Esq.

Tel:         (212) 433-1360

Fax:         (212) 433-1361

and if to any Purchaser, to such
address for such party as shall appear on the signature page of the Purchase
Agreement executed by such party, or as shall be designated by such party in
writing to the other parties hereto in accordance with this Section 5.7. Written
confirmation of receipt generated by the sender’s facsimile machine containing
the time, date, recipient facsimile number and an image of the first page of
such transmission shall be rebuttable evidence of receipt by facsimile in
accordance with clause (i) above.

5.8           Entire Agreement; Amendments.  This Guarantee and the other Transaction Documents constitute the entire agreement
between the parties with regard to the subject matter hereof and thereof,
superseding all prior agreements or understandings, whether written or oral,
between or among the parties.  No (i)
amendment to this Agreement or (ii) waiver of any agreement or other obligation
of the Company under this Agreement may be made or given except pursuant to a
written instrument executed by the Company and (i) prior to the Termination
Date, by the holders of a majority of the aggregate principal of the Debentures
then outstanding and the holders of a majority of the aggregate number of the
Warrant Shares into which the Warrants then outstanding are exercisable (without
regard to any limitation on the exercise of the Warrants), and (ii) on and after the Termination Date, by
the holders of a majority of the aggregate number of the Warrant Shares into
which the Warrants then outstanding are exercisable (without regard to
any limitation on the exercise of the Warrants).  No waiver of any provision of this Agreement
applicable to any Purchaser may be made except
pursuant to a written instrument executed by such Purchaser and the
Company.  Any waiver given pursuant
hereto shall be effective only in the specific instance and for the specific
purpose for which given.

5.9           Additional Guarantors.  During the period beginning on the Execution
Date and ending on the Termination Date, if a Guarantor creates or acquires any
new Subsidiary that owns, at the time of creation or acquisition or any time
thereafter, assets having a fair market value in excess of $50,000, then such
Guarantor shall cause such new Subsidiary to become party to (i) this Guarantee
for all purposes of this Guarantee by executing and delivering an Assumption
Agreement in the form of Annex 1 hereto and (ii) the Security Agreement for all
purposes of such agreement.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS
WHEREOF, the undersigned has caused this Guarantee to be duly executed and
delivered as of the date first above written.

	
  

  	
  DIGITAL ANGEL TECHNOLOGY CORPORATION, AS GUARANTOR

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Patricia
  Petersen

  
	
   

  	
   

  	
  Name: Patricia Petersen

  
	
   

  	
   

  	
  Title: Assistant Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  OUTERLINK CORPORATION, AS GUARANTOR

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Patricia
  Petersen

  
	
   

  	
   

  	
  Name: Patricia Petersen

  
	
   

  	
   

  	
  Title: Assistant Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DSD HOLDING A/S, AS GUARANTOR

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Patricia
  Petersen

  
	
   

  	
   

  	
  Name: Patricia Petersen

  
	
   

  	
   

  	
  Title: Assistant Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SIGNATURE INDUSTRIES LIMITED, AS GUARANTOR

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Patricia
  Petersen

  
	
   

  	
   

  	
  Name: Patricia Petersen

  
	
   

  	
   

  	
  Title: Assistant Secretary

  

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IN WITNESS
WHEREOF, the undersigned has caused this Guarantee to be duly executed and
delivered as of the date first above written.

	
  

  	
  DIGITAL ANGEL
  INTERNATIONAL, INC., AS GUARANTOR

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Patricia Petersen

  
	
   

  	
   

  	
  Name: Patricia Petersen

  
	
   

  	
   

  	
  Title: Assistant Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DIGITAL ANGEL HOLDINGS,
  LLC, AS GUARANTOR

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Patricia Petersen

  
	
   

  	
   

  	
  Name: Patricia Petersen

  
	
   

  	
   

  	
  Title: Assistant Secretary

  

 

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IN WITNESS
WHEREOF, the undersigned has caused this Guarantee to be duly executed and
delivered as of the date first above written.

	
  

  	
  IMPERIUM ADVISERS, LLC, AS COLLATERAL AGENT

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Maurice Hryshko

  
	
   

  	
   

  	
  Name: Maurice Hryshko

  
	
   

  	
   

  	
  Title: Counsel

  

 12
 

Annex 1 to

SUBSIDIARY GUARANTEE

ASSUMPTION
AGREEMENT, dated as
of               ,           made
by                            ,
a                corporation
(the “Additional Guarantor”), in favor of the Purchasers pursuant to the
Purchase Agreement referred to below. All capitalized terms not defined herein
shall have the meaning ascribed to them in such Purchase Agreement.

W I T N E S S E T H :

                WHEREAS, Digital Angel
Corporation, a Delaware corporation (the “Company”), and the Purchasers have
entered into a Securities Purchase Agreement, dated as of February 6, 2007 (as
amended, supplemented or otherwise modified from time to time, the “Purchase
Agreement”);

                WHEREAS, in connection with the
Purchase Agreement, the Company and its Subsidiaries (other than the Additional
Guarantor) have entered into the Subsidiary Guarantee, dated as of February 6,
2007 (as amended, supplemented or otherwise modified from time to time, the “Guarantee”)
in favor of the Purchasers;

                WHEREAS, the Purchase Agreement
requires the Additional Guarantor to become a party to the Guarantee; and

       
        WHEREAS, the Additional
Guarantor has agreed to execute and deliver this Assumption Agreement in order
to become a party to the Guarantee;

NOW, THEREFORE, IT IS AGREED:

1.             Guarantee.  By executing and delivering this Assumption
Agreement, the Additional Guarantor, as provided in Section 5.9 of the
Guarantee, hereby becomes a party to the Guarantee as a Guarantor thereunder
with the same force and effect as if originally named therein as a Guarantor
and, without limiting the generality of the foregoing, hereby expressly assumes
all obligations and liabilities of a Guarantor thereunder.  The Additional Guarantor hereby represents
and warrants that each of the representations and warranties contained in
Section 3 of the Guarantee is true and correct on and as the date hereof as to
such Additional Guarantor (after giving effect to this Assumption Agreement) as
if made on and as of such date.

      
         2.             Governing Law. THIS ASSUMPTION AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY
WITHIN THE STATE OF NEW YORK.

 13
 

IN WITNESS
WHEREOF, the undersigned has caused this Assumption Agreement to be duly
executed and delivered as of the date first above written.

	
  

  	
  [ADDITIONAL GUARANTOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 14Exhibit 10.24

REGISTRATION
RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of February 6,
2007, is by and between DIGITAL ANGEL CORPORATION, a Delaware corporation (the “Company”), and each of the entities
whose names appear on the signature pages hereof.  Such entities are each referred to herein as
an “Investor” and, collectively, as the “Investors”.

The Company has agreed, on the terms and subject to
the conditions set forth in the Securities Purchase Agreement, dated as of the
date hereof (the “Securities Purchase Agreement”),
to issue and sell to each Investor named therein (A) one or more 10.25% Senior
Secured Debentures in the form attached to the Securities Purchase Agreement
(each, a “Debenture” and, collectively,
the “Debentures”) and (B) a Warrant in
the form attached to the Securities Purchase Agreement (each, a “Warrant” and, collectively, the “Warrants”).

Upon the satisfaction or waiver of certain conditions,
the Company is permitted to pay the principal and interest on the Debentures in
shares (the “Stock Option Shares”) of its
common stock, par value $0.005 per share (the “Common
Stock”).  The Warrants are
exercisable into shares of Common Stock (the “Warrant
Shares”) in accordance with their terms.

In order to induce each Investor to enter into the
Securities Purchase Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended (the “Securities Act”), and under
applicable state securities laws.

In consideration
of each Investor entering into the Securities Purchase Agreement, and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:

1.             DEFINITIONS.

For purposes of this Agreement, the following terms
shall have the meanings specified:

“Effective Date”
means the date on which the Registration Statement is declared effective by the
Commission.

“Filing Deadline”
means the forty-fifth (45th) calendar day following the Closing Date.

“Holder”
means any person owning or having the right to acquire, under the Debentures or
through exercise of the Warrants or otherwise, Registrable Securities,
including initially each Investor and thereafter any permitted assignee
thereof.

“Registrable Securities”
means the Stock Option Shares, the Warrant Shares and any other shares of
Common Stock (or other securities) issued or issuable pursuant to the terms of
the Debentures or the Warrants, and any shares of capital stock issued or
issuable from 

time to time (with any adjustments) in replacement of,
in exchange for or otherwise in respect of the Stock Option Shares and the
Warrant Shares.

“Registration Deadline”
means the ninetieth (90th)
calendar day following the Closing Date; provided, however,
that if the Commission reviews and has written comments to the filed
Registration Statement that would require the filing of a pre-effective
amendment thereto with the Commission, the Registration Deadline shall mean the
one hundred thirty fifth (135th)
calendar day following the Closing Date.

“Registration Period”
has the meaning set forth in Section 2(b)
of this Agreement.

“Registration Statement”
means a registration statement or statements prepared in compliance with the
Securities Act and pursuant to Rule 415 under the Securities Act (“Rule 415”) or any successor rule
providing for the offering of securities on a continuous or delayed basis.

Capitalized terms used
herein and not otherwise defined shall have the respective meanings specified
in the Securities Purchase Agreement.

All definitions contained
in this Agreement are equally applicable to the singular and plural forms of
the terms defined. The words “hereof”, “herein” and “hereunder” and words of
similar import contained in this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement.

2.             REGISTRATION.

(a)           Filing
of Registration Statement.  On or
before the Filing Deadline, the Company shall prepare and file with the
Commission a Registration Statement on Form S-3 as a “shelf” registration
statement under Rule 415 covering the resale of a number of shares of
Registrable Securities equal to two hundred percent (200%) of the sum of (i)
the number of Stock Option Shares that would be issuable if the Debentures were
then repaid in full in Stock Option Shares (and not in cash) plus (ii) the number of Warrant Shares that would be
issuable if the Warrants were then exercised in full; in each such case,
without regard to any limitation or restriction on (x) the issuance of such
Registrable Securities or (y) the exercise of any Warrants.  Such Registration Statement shall state, to
the extent permitted by Rule 416 under the Securities Act, that it also covers
such indeterminate number of additional shares of Common Stock as may become
issuable upon the repayment of the Debentures and exercise of the Warrants in
order to prevent dilution resulting from stock splits, stock dividends or
similar events.

(b)           Effectiveness.  The Company shall use its best efforts to
cause the Registration Statement to become effective as soon as practicable
following the filing thereof, but in no event later than the Registration
Deadline. The Company shall respond promptly to any and all comments made by
the staff of the Commission with respect to a Registration Statement, and shall
submit to the Commission, within two (2) Business Days after the Company learns
that no review of such Registration Statement will be made by the staff of the
Commission or that the staff of the Commission has no further comments on such
Registration Statement, as the case may be, a request 

 2
 

for acceleration of the effectiveness of such
Registration Statement to a time and date not later than two (2) Business Days
after the submission of such request. The Company will maintain the
effectiveness of each Registration Statement filed pursuant to this Agreement
until the earlier to occur of (i) the date on which all of the Registrable
Securities eligible for resale thereunder have been publicly sold pursuant to
the Registration Statement or Rule 144, and (ii) the date on which all of the
Registrable Securities remaining to be sold under such Registration Statement
(in the reasonable opinion of counsel to the Company) may be immediately sold
to the public under Rule 144(k) under the Securities Act (“Rule
144(k)”) or any successor provision (the period beginning on the
Registration Deadline and ending on the earliest to occur of clause (i) or (ii)
above being referred to herein as the “Registration Period”)
or until such later date as the Company shall determine.

(c)           Registration
Default.  If (i) the Registration
Statement is not filed on or before the Filing Deadline or declared effective
by the Commission on or before the Registration Deadline, (ii) after a
Registration Statement has been declared effective by the Commission, sales of
Registrable Securities (other than such Registrable Securities as are then
freely saleable pursuant to Rule 144(k)) cannot be made by a Holder under a
Registration Statement for any reason not within the exclusive control of such
Holder or (iii) an amendment or supplement to a Registration Statement, or a
new registration statement, required to be filed pursuant to the terms of Section 3(j), is not filed on or
before the date required thereby (each of the foregoing clauses
(i), (ii) and (iii)
being referred to herein as a “Registration Default”),
the Company shall, no later than two (2) Business Days after the date on which
such Registration Default occurs, make a cash payment to each Holder equal to such
Holder’s pro rata share (based on the number of
Registrable Securities then held by or issuable to such Holder as compared to
the number of Registrable Securities then held by or issuable to all Holders;
in each case, without regard to any limitation or restriction on (x) the
issuance of such Registrable Securities or (y) the exercise of any Warrants) of
one percent (1%) of the aggregate Purchase Price paid by all Holders (such
amount, the “Registration Default Payment Amount”).  In addition to the foregoing payment, the
Company shall, for each calendar month in which a Registration Default occurred
and/or existed, make an additional cash payment to each Holder equal to such
Holder’s pro rata share of the Registration
Default Payment Amount (pro rated for
partial months), and the payment for each such calendar month shall be due on
the last day of such calendar month; provided, however,
that if the applicable Registration Default is cured prior to the end of a
calendar month, then the cash payment for such month shall be made no later
than two (2) Business Days after the date on which such Registration Default
was cured.  Notwithstanding the
foregoing, the total amount of liquidated damages payable by the Company pursuant
to this Section 2(c) shall be capped
at an aggregate amount of nine percent (9%) of the aggregate Purchase Price
paid by all Holders.  Any such payment
shall be in addition to any other remedies available to each Holder at law or
in equity, whether pursuant to the terms hereof, under any of the other
Transaction Documents or otherwise.

(d)           Allocation of Registered Shares.
The initial number of Stock Option Shares and Warrant Shares included in any
Registration Statement and each increase in the number thereof included therein
shall be allocated pro rata among
the Holders based on the number of Registrable Securities then held by or
issuable to such Holder as compared to the number of Registrable Securities
then held by or issuable to all Holders (in each case, without regard to any
limitation or restriction on (x) the issuance of such Registrable Securities or
(y) the exercise of any Warrants).  In 

 3
 

the event that a
Holder sells or otherwise transfers any of such Holder’s Registrable
Securities, each transferee shall be allocated the portion of the then
remaining number of Registrable Securities included in such Registration
Statement and allocable to such Holder.

(e)           Registration
of Other Securities.  During the
period beginning on the date hereof and ending on the Effective Date, the Company
shall refrain from filing any registration statement (other than (i) a
Registration Statement filed hereunder or that otherwise includes the
Registrable Securities or (ii) a registration statement on Form S-8 with
respect to stock option plans and agreements and stock plans currently in
effect and disclosed in the Securities Purchase Agreement or the schedules
thereto).  In no event shall the Company
include any securities other than Registrable Securities on any Registration
Statement filed by the Company on behalf of the Holders pursuant to the terms
hereof.

3.             OBLIGATIONS OF THE COMPANY.

In addition to performing its obligations hereunder,
including, without limitation, those pursuant to Section
2 above, the Company shall, with respect to each Registration
Statement:

(a)           prepare
and file with the Commission such amendments and supplements to such
Registration Statement and the prospectus used in connection with such
Registration Statement as may be necessary to comply with the provisions of the
Securities Act or to maintain the effectiveness of such Registration Statement
during the Registration Period, or as may be reasonably requested by a Holder
in order to incorporate information concerning such Holder or such Holder’s
intended method of distribution;

(b)           as soon as practicable following the
Closing, take all steps necessary and otherwise use its best efforts to secure
the listing on the Principal Market of all Registrable Securities issuable
under the Debentures and upon exercise of the Warrants, and at any Holder’s
request, provide such Holder with reasonable evidence thereof;

(c)           so long as a Registration Statement
is effective covering the resale of the applicable Registrable Securities owned
by a Holder, furnish to each Holder such number of copies of the prospectus
included in such Registration Statement, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other
documents as such Holder may reasonably request in order to facilitate the
disposition of such Holder’s Registrable Securities;

(d)           use
commercially reasonable efforts to register or qualify the Registrable
Securities under the securities or “blue sky” laws of such jurisdictions within
the United States as shall be reasonably requested from time to time by a
Holder, and do any and all other acts or things which may reasonably be
necessary or advisable to enable such Holder to consummate the public sale or
other disposition of the Registrable Securities in such jurisdictions; provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such jurisdiction;

(e)           notify
each Holder immediately after becoming aware of the occurrence of any event
(but shall not, without the prior written consent of such Holder, disclose to
such Holder any facts or circumstances constituting material non-public
information) as a result of which the prospectus 

 4
 

included in such Registration Statement, as then in
effect, contains an untrue statement of material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and as promptly as practicable prepare and file with the Commission
and furnish to each Holder a reasonable number of copies of a supplement or an
amendment 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;

(f)            use
commercially reasonable efforts to prevent the issuance of any stop order or
other order suspending the effectiveness of such Registration Statement and, if
such an order is issued, to use commercially reasonable efforts to obtain the
withdrawal thereof at the earliest possible time and to notify each Holder in
writing of the issuance of such order and the resolution thereof;

(g)           furnish
to each Holder, on the date that such Registration Statement, or any successor
registration statement, becomes effective, a letter, dated such date, signed by
outside counsel to the Company and addressed to such Holder, confirming such
effectiveness and, to the knowledge of 
such counsel, the absence of any stop order;

(h)           [Reserved]

(i)            permit
counsel for each Holder to review such Registration Statement and all
amendments and supplements thereto, and any comments made by the staff of the
Commission and the Company’s responses thereto, within three Business Days
prior to the filing thereof with the Commission (or, in the case of comments
made by the staff of the Commission, within a reasonable period of time
following the receipt thereof by the Company); and

(j)            in
the event that, at any time, the number of shares available under the
Registration Statement is insufficient to cover one hundred and twenty-five
percent (125%) of the Registrable Securities issued or issuable to the Holders
under the Debentures and the Warrants (such number to be determined (x) using
92% of the VWAP or the Exercise Price, as applicable, in effect at such time
and (y) without regard to any limitation or restriction on (1) the issuance of
such Registrable Securities or (2) the exercise of any Warrants) the Company
shall promptly amend such Registration Statement or file a new registration
statement, in any event as soon as practicable, but not later than the tenth (10th) day following notice from a
Holder of the occurrence of such event, so that such Registration Statement or
such new registration statement, or both, covers no less than two hundred
percent (200%) of the Registrable Securities issued or issuable to the Holders
under the Debentures and the Warrants (such number to be determined (x) using
92% of the VWAP or the Exercise Price, as applicable, in effect at such time
and (y) without regard to any limitation or restriction on (1) the issuance of
such Registrable Securities or (2) the exercise of any Warrants).  The Company shall use its best efforts to
cause such amendment and/or new Registration Statement to become effective as
soon as practicable following the filing thereof. Any Registration Statement
filed pursuant to this Section 3(j)
shall state that, to the extent permitted by Rule 416 under the Securities Act,
such Registration Statement also covers such indeterminate number of additional
shares of Common Stock as may become issuable under the Debentures and the
Warrants in order to prevent dilution resulting from stock splits, stock
dividends or similar events. Unless and until such amendment or 

 5
 

new Registration Statement becomes effective, each
Holder shall have the rights described in Section 2(c)
of this Agreement.

4.             OBLIGATIONS OF EACH HOLDER.

In connection with the registration of Registrable Securities pursuant
to a Registration Statement, each Holder shall:

(a)  within
three (3) Business Days after receipt of written request from the Company, furnish
to the Company in writing such information regarding itself and the intended
method of disposition of such Registrable Securities as the Company shall
reasonably request in order to effect the registration thereof;

(b)  upon
receipt of any notice from the Company of the happening of any event of the
kind described in Sections 3(e) or 3(f) of this Agreement, immediately
discontinue any sale or other disposition of such Registrable Securities
pursuant to such Registration Statement until the filing of an amendment or
supplement as described in such Section 3(e) or
withdrawal of the stop order referred to in such Section
3(f), and use commercially reasonable efforts to maintain the
confidentiality of such notice and its contents;

(c)  to the
extent required by applicable law, deliver a prospectus to the purchaser of
such Registrable Securities;

(d)  promptly
notify the Company when it has sold all of the Registrable Securities
beneficially owned by it; and

(e)  notify the Company in the event that any information
supplied by such Holder in writing for inclusion in such Registration Statement
or related prospectus contains an untrue statement of material fact 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; and
immediately discontinue any sale or other disposition of such Registrable
Securities 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.

5.             INDEMNIFICATION.

In the event that any Registrable Securities are
included in a Registration Statement under this Agreement:

(a)           the
Company shall indemnify and hold harmless each Holder, the officers, directors,
employees, agents and representatives of such Holder, and each person, if any,
who controls such Holder within the meaning of the Securities Act or the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”), against any losses, claims, damages, liabilities or
reasonable out-of-pocket expenses (whether joint or several) (collectively,
including reasonable legal expenses or other expenses reasonably incurred in
connection with investigating or defending same, “Losses”),

 6
 

insofar as any such Losses arise out of or are based
upon (i) any untrue statement or alleged untrue statement of a material fact
contained in such Registration Statement under which such Registrable
Securities were registered, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, or (ii)
the omission or alleged omission to state therein a material fact required to
be stated therein, or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.  Subject to the provisions of Section 5(c) of this Agreement, the
Company will reimburse such Holder, and each such officer, director, employee,
agent, representative or controlling person, for any reasonable legal expenses
or other out-of-pocket expenses (promptly as such expenses are incurred) by any
such entity or person in connection with investigating or defending any Loss; provided, however, that the foregoing indemnity shall not
apply to amounts paid in settlement of any Loss if such settlement is effected
without the consent of the Company (which consent shall not be unreasonably
withheld), nor shall the Company be obligated to indemnify any person for any
Loss to the extent that such Loss arises out of or is based upon (i) any
omission to state a material fact required to be stated therein or necessary to
make statements therein not misleading that conforms in all material respects
to written information furnished by such person expressly for use in such
Registration Statement or (ii) a failure of such person to deliver or cause to
be delivered the final prospectus contained in the Registration Statement and
made available by the Company, if such delivery is required by applicable law.

(b)           each
Holder who is named in such Registration Statement as a selling shareholder,
acting severally and not jointly, shall indemnify and hold harmless the
Company, the officers, directors, employees, agents and representatives of the
Company, and each person, if any, who controls the Company within the meaning
of the Securities Act or the Exchange Act, against any Losses to the extent
(and only to the extent) that any such Losses arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact stated
therein or any omission to state a material fact required to be stated therein
or necessary to make statements therein not misleading that conforms in all
material respects to written information furnished by such person expressly for
use in such Registration Statement. 
Subject to the provisions of Section 5(c)
of this Agreement, such Holder will reimburse any reasonable legal or other
expenses (promptly as such expenses are incurred) by the Company and any such
officer, director, employee, agent, representative, or controlling person, in connection
with investigating or defending any such Loss; provided,
however, that the foregoing indemnity shall not apply to amounts
paid in settlement of any such Loss if such settlement is effected without the
consent of such Holder (which consent shall not be unreasonably withheld); and provided, further, that, in no event shall any indemnity
under this Section 5(b) exceed the
amount of the net proceeds resulting from the sale of Registrable Securities by
such Holder under such Registration Statement.

(c)           Promptly
after receipt by an indemnified party under this Section
5 of notice of the commencement of any action or proceeding
(including any governmental action or proceeding), such indemnified party will,
if a claim in respect thereof is to be made against any indemnifying party
under this Section 5, promptly
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in and to assume
the defense thereof with counsel selected by the indemnifying party and
reasonably acceptable to the indemnified party; provided,
however, that an indemnified party shall have the right to retain
its own counsel, with the reasonably incurred fees and expenses of such counsel
to be 

 7
 

paid by the indemnifying party, if representation of
such indemnified party by the counsel retained by the indemnifying party would
be inappropriate under applicable standards of professional conduct due to
actual or potential conflicting interests between such indemnified party and
any other party represented by such counsel in such action or proceeding.  The failure by an indemnified party to notify
the indemnifying party within a reasonable time following the commencement of any
action or proceeding of which the indemnified party is aware, to the extent
materially prejudicial to such indemnifying party’s ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 5
with respect to such action or proceeding, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 5 or with respect to any
other action or proceeding.

(d)           In
the event that the indemnity provided in Sections 5(a) or
5(b) is unavailable or insufficient
to hold harmless an indemnified party for any reason, the Company and each
Holder agree, severally and not jointly, to contribute to the aggregate Losses
to which the Company or such Holder (or its respective officers, directors,
employees, agents, representatives or controlling persons), may be subject in
such proportion as is appropriate to reflect the relative fault of the Company
and such Holder in connection with the statements or omissions which resulted
in such Losses; provided, however, that in no
case shall such Holder be responsible for any amount in excess of the net
proceeds resulting from the sale of Registrable Securities under the
Registration Statement.  Relative fault
shall be determined by reference to whether any alleged untrue statement or
omission relates to information provided by the Company or by such Holder.  The Company and each Holder agree that it
would not be just and equitable if contribution were determined by pro rata allocation or any other method of
allocation which does not take account of the equitable considerations referred
to above.  Notwithstanding the provisions
of this Section 5(d), no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who is
not guilty of such fraudulent misrepresentation.  For purposes of this Section
5, each person who controls a Holder within the meaning of
either the Securities Act or the Exchange Act and each officer, director,
employee, agent or representative of such Holder shall have the same rights to
contribution as such Holder, and each person who controls the Company within
the meaning of either the Securities Act or the Exchange Act and each officer,
director, employee, agent or representative of the Company shall have the same
rights to contribution as the Company, subject in each case to the applicable
terms and conditions of this Section 5(d).

(e)           The
obligations of the Company and each Holder under this Section 5
shall survive the repayment of the Debentures and exercise of the Warrants in
full, the completion of any offering or sale of Registrable Securities pursuant
to a Registration Statement under this Agreement, or otherwise.

6.             REPORTS.

With a view to making available to each Holder the benefits of Rule 144
and any other similar rule or regulation of the Commission that may at any time
permit such Holder to sell securities of the Company to the public without
registration, the Company agrees to:

 8
 

(a)           make
and keep public information available, as those terms are understood and
defined in Rule 144;

(b)           file
with the Commission in a timely manner all reports and other documents required
of the Company under the Exchange Act; and

(c)           furnish
to such Holder, so long as such Holder owns any Registrable Securities,
promptly upon written request (i) a written statement by the Company, if true,
that it has complied with the reporting requirements of Rule 144 and the
Exchange Act, (ii) to the extent not publicly available through the Commission’s
EDGAR database, a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company with the
Commission, and (iii) such other information as may be reasonably requested by
such Holder in connection with such Holder’s compliance with any rule or
regulation of the Commission which permits the selling of any such securities
without registration.

7.             MISCELLANEOUS.

(a)           Expenses
of Registration.  Except as otherwise
provided in the Securities Purchase Agreement, all reasonable expenses, other
than underwriting discounts and commissions and fees and expenses of counsel
and other advisors to each Holder, incurred in connection with the
registrations, filings or qualifications described herein, including (without
limitation) all registration, filing and qualification fees, printers’ and
accounting fees, the fees and disbursements of counsel for the Company, and the
fees and disbursements incurred in connection with the letter described in Section 3(g) of this Agreement,
shall be borne by the Company.

(b)           Amendment;
Waiver.  Except as expressly provided herein, neither this Agreement nor any
term hereof may be amended or waived except pursuant to a written instrument
executed by the Company and the Holders of at least two-thirds (2/3) of the Registrable
Securities then held by or issuable to all Holders (without regard to any
limitation or restriction on (i) the issuance of such Registrable Securities or
(ii) the exercise of any Warrants).  Any waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.

(c)           Notices.  Any notice, demand or request required or permitted
to be given by the Company or a Holder pursuant to the terms of this Agreement
shall be in writing and shall be deemed delivered (i) when delivered personally
or by verifiable facsimile transmission, unless such delivery is made on a day
that is not a Business Day, in which case such delivery will be deemed to be
made on the next succeeding Business Day and (ii) on the next Business Day
after timely delivery to a reputable overnight courier, addressed as follows:

	
  

  	
  If to the Company:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Digital Angel Corporation

  	
   

  
	
   

  	
  Suite 201

  	
   

  
	
   

  	
  1690 South Congress

  	
   

  
	
   

  	
  Delray Beach, Florida  33483

  	
   

  
	
   

  	
  Attn:   Kevin McGrath

  	
   

  

 9
 

 

	
  

  	
  Tel:

  	
  (561) 276-0477

  	
   

  
	
   

  	
  Fax:

  	
  (561) 805-8001

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  with a copy (which shall not constitute notice) to:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Winthrop &
  Weinstine, P.A.

  	
   

  
	
   

  	
  Suite 3500

  	
   

  
	
   

  	
  225 South 6th Street

  	
   

  
	
   

  	
  Minneapolis,
  Minnesota 55402

  	
   

  
	
   

  	
  Attn:

  	
  Philip T. Colton

  	
   

  
	
   

  	
  Tel:

  	
  (612) 604-6729

  	
   

  
	
   

  	
  Fax:

  	
  (612) 604-6929

  	
   

  
					

 

and if to a Holder, to
such address for such party as shall appear on the signature page of the
Securities Purchase Agreement executed by such party, or as shall be designated
by such party in writing to the other parties hereto in accordance this Section 7(c).

(d)           Assignment.  Upon the transfer of any Debenture, Warrant or
Registrable Securities by a Holder, the rights of such Holder hereunder with
respect to such securities so transferred shall be assigned automatically to
the transferee thereof, and such transferee shall thereupon be deemed to be a “Holder”
for purposes of this Agreement, as long as: (i) the Company is, within a
reasonable period of time following such transfer, furnished with written
notice of the name and address of such transferee, (ii) the transferee agrees
in writing with the Company to be bound by all of the provisions hereof, and
(iii) such transfer is made in accordance with the applicable law and the
requirements of the Securities Purchase Agreement, the Debentures or the
Warrants, as applicable.

(e)           Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed an original, and all of which
together shall be deemed one and the same instrument.  This Agreement, once executed by a party, may
be delivered to any other party hereto by facsimile transmission.

(f)            Governing
Law.  This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed entirely within the State of
New York.

(g)           Holder of Record.  A person is deemed to be a Holder whenever
such person owns or is deemed to own of record such Registrable Securities. If
the Company receives conflicting instructions, notices or elections from two or
more persons with respect to the same Registrable Securities, the Company shall
act upon the basis of instructions, notice or election received from the record
owner of such Registrable Securities.

(h)           Entire Agreement.
This Agreement and the other Transaction Documents constitute the entire
agreement among the parties hereto with respect to the subject matter hereof
and thereof, superseding all prior agreements and understandings, whether
written or oral, between or among the parties hereto.

 10
 

(i)            Headings.  The headings in this Agreement are for
convenience only and are not to be considered in construing or interpreting
this Agreement.

(j)            Third Party
Beneficiaries.  This
Agreement is intended for the benefit of the parties hereto and their
respective permitted successors and assigns, and is not for the benefit of, nor
may any provision hereof be enforced by, any other person.

[Signature Page to Follow]

 11
 

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

	
  DIGITAL ANGEL CORPORATION

  	
   

  	
   

  	
   

  

 

 

	
  By:

  	
   

  	
  /s/ Kevin N. McGrath

  	
   

  
	
   

  	
   

  	
  Name: Kevin N. McGrath

  	
   

  
	
   

  	
   

  	
  Title:   President
  and Chief Executive Officer

  	
   

  

 

 

 

	
  IMPERIUM MASTER FUND, LTD.

  	
   

  	
   

  	
   

  

 

 

	
  By:

  	
   

  	
  Imperium Advisers, LLC

  	
   

  

 

 

	
  

  	
  By:

  	
   

  	
  /s/ Maurice Hryshko

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Maurice Hryshko

  	
   

  
	
   

  	
   

  	
   

  	
  Title:   Counsel

  	
   

  

 

 12

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