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Exhibit 10.1    
    

EXECUTION COPY  

  
 

    REGISTRATION RIGHTS AGREEMENT    
    

        This Registration Rights Agreement (this "Agreement") is made and entered into as of August 15, 2003, among
Digital Angel Corporation, a Delaware corporation (the "Company"), and the warrant holders signatory hereto (each such warrant holder is a "Holder" and
all such warrant holders are, collectively, the "Holders").

        This
Agreement is made pursuant to that certain Agreement Letter dated as of the date hereof among the Company and the Holders (the "Letter
Agreement").

        The
Company and the Holders hereby agree as follows: 

        1.    Definitions    

        Capitalized terms used and not otherwise defined herein that are defined in the Letter Agreement shall have the meanings given such terms in the Letter
Agreement. As used in this Agreement, the following terms shall have the following meanings: 

        "Effectiveness Date" means February 1, 2004. 

        "Filing Date" means 60 days prior to February 1, 2004. 

        "Prospectus" means the prospectus included in the Registration Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus. 

        "Rule 415" means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from
time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule. 

        "Rule 424" means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from
time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule. 

        "Warrants" shall mean the Common Stock purchase warrants issued to the Holders pursuant to the Letter Agreement. 

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        2.    S-3 Registration Statement    

        (a)   On
or prior to the Filing Date, the Company shall use its best efforts to prepare and file a registration statement with the SEC on Form S-3
under the Securities Act (or in the event that the Company is ineligible to use such form, such other form as the Company is eligible to use under the Securities Act) (the "Registration Statement"),
covering the resale of the Common Stock held by the Holders upon exercise of their Warrants (the "Registrable Securities") and shall contain (unless
otherwise directed by the Holders) substantially the "Plan of Distribution" attached hereto as Annex A, which Registration Statement (including any
amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or
necessary to make the statements therein not misleading. The Company shall use its best efforts to cause the Registration Statement and other filings to be declared effective prior to
February 1, 2004 and shall use its best efforts to keep such Registration Statement continuously effective under the Securities Act until the date when all Registrable Securities covered by the
Registration Statement have been sold or may be sold without volume restrictions pursuant to Rule 144(k) as determined by the counsel to the Company pursuant to a written opinion letter to such
effect, addressed and acceptable to the Company's transfer agent and the affected Holders (the "Effectiveness Period"). The Company shall immediately
notify the Holders via facsimile of the effectiveness of the Registration Statement on the day that the Company receives notification of the effectiveness of the Registration Statement from the
Commission. The Holders covenant and agree that any and all sales of Registrable Securities will be made in accordance with the "Plan of Distribution" attached hereto as Annex
A (or such other "Plan of Distribution" as the Holders might direct and to which the Company agrees). 

        (b)   If:
(i) the Registration Statement is not filed on or prior to the Filing Date (if the Company files the Registration Statement without affording the Holders the
opportunity to review and comment on the same as required by Section 3(a), the Company shall not be deemed to have satisfied clause (i)), or (ii) the Company fails to file with
the Commission a request for acceleration in accordance with Rule 461 promulgated under the Securities Act, within five Trading Days of the date that the Company is notified (orally or in
writing, whichever is earlier) by the Commission that a Registration Statement will not be "reviewed," or not subject to further review, or (iii) prior to its Effectiveness Date, the Company
fails to file a pre-effective amendment and otherwise respond in writing to comments made by the Commission in respect of such Registration Statement within fifteen Trading Days
after the receipt of comments by or notice from the Commission that such amendment is required in order for the Registration Statement to be declared effective, or (iv) after the Effectiveness
Date, the Registration Statement ceases for any reason to remain continuously effective as to all Registrable Securities for which it is required to be effective, or the Holders are not permitted to
utilize the Prospectus therein to resell such Registrable Securities for fifteen consecutive Trading Days in any individual case or an aggregate of twenty Trading Days during any twelve month period
(which need not be consecutive Trading Days), (any such failure or breach being referred to as an "Event", and for purposes of clause (i) the
date on which such Event occurs, or for purposes of clause (ii) the date on which such five Trading Day period is exceeded, or for purposes of clause (iii) the date which such fifteen
Trading Day period is exceeded, or for purposes of clause (iv) the date on which such fifteen or twenty Trading Day period, as applicable, is exceeded being referred to as  "Event Date"), then on
each such Event Date and every monthly anniversary thereof until the applicable Event is cured or until the Registrable
Securities can be resold pursuant to Rule 144, the Company shall pay to each Holder an 

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amount
in cash, as liquidated damages and not as a penalty, equal to 2.0% per month of, if the Warrants are "in the money" and then held by the Holder, the value of any outstanding Warrants (valued at
the difference between the average VWAP during the applicable month and the Exercise Price multiplied by the number of shares of Common Stock the Warrants are exercisable into). If the Company fails
to pay any liquidated damages pursuant to this Section in full within seven days after the date payable, the Company will pay interest thereon at a rate of 18% per annum (or such lesser maximum amount
that is permitted to be paid by applicable law) to the Holder, accruing daily from the date such liquidated damages are due until such amounts, plus all such interest thereon, are paid in full. The
liquidated damages pursuant to the terms hereof shall apply on a pro-rata basis for any portion of a month prior to the cure of an Event. 

        3.    Registration Procedures    

        In
connection with the Company's registration obligations hereunder, the Company shall: 

        (a)   Not
less than five Trading Days prior to the filing of the Registration Statement or any related Prospectus or any amendment or supplement thereto (including any
document that would be incorporated or deemed incorporated therein by reference), (i) furnish to each Holder copies of all such documents proposed to be filed, which documents (other than those
incorporated or deemed to be incorporated by reference) will be subject to the review of such Holders, and (ii) cause its officers and directors, counsel and independent certified public
accountants to respond to such inquiries as shall be necessary, in the reasonable opinion of respective counsel, to conduct a reasonable investigation within the meaning of the Securities Act. The
Company shall not file the Registration Statement or any such Prospectus or any amendments or supplements thereto to which the Holders of a majority of Registrable Securities shall reasonably and in
good faith object, provided, that the Company is notified of such objection in writing no later than five Trading Days after the Holders have been so furnished copies of such documents (it being
understood that during any such period of good faith objection by such Holders, any timing deadlines on the Company shall be tolled). Any prospectus supplements required to be filed less than five
Trading Days after the occurrence of any event shall not be subject to prior approval by the Holders, but the Company shall provide pre-filing copies to the Holders. 

        (b)   (i) Prepare
and file with the Commission such amendments, including post-effective amendments, to the Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep the Registration Statement continuously effective as to the applicable Registrable Securities for the Effectiveness Period; (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus supplement (subject to the terms of this Agreement), and as so supplemented or amended to be filed pursuant to Rule 424;
(iii) respond as promptly as reasonably possible, and in any event within fifteen Trading Days, to any comments received from the Commission with respect to the Registration Statement or any
amendment thereto and as promptly as reasonably possible provide the Holders true and complete copies of all correspondence from and to the Commission relating to the Registration Statement; and
(iv) comply in all material respects with the provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by the Registration
Statement during the applicable period in accordance (subject to the terms of this Agreement) with the intended methods of disposition by the Holders thereof set forth in the Registration Statement as
so amended or in the Prospectus as so supplemented. 

        (c)   If
during the Effectiveness Period, the number of Registrable Securities at any time exceeds 85% of the number of shares of Common Stock then registered in a
registration statement, then the Company shall file as soon as reasonably practicable but in any case prior to the applicable Filing Date, an additional registration statement covering the resale of
Registrable Securities by the Holders of not less than 150% of the number of such Registrable Securities. 

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        (d)   Notify
the Holders of Registrable Securities to be sold (which notice shall, pursuant to clauses (ii) through (vi) hereof shall be accompanied by an
instruction to suspend the use of the Prospectus until the requisite changes have been made) as promptly as reasonably possible (and, in the case of (i)(A) below, not less than five Trading Days prior
to such filing) and (if requested by any such Person) confirm such notice in writing no later than one Trading Day following the day (i)(A) when a Prospectus or any Prospectus supplement or
post-effective amendment to the Registration Statement is proposed to be filed; (B) when the Commission notifies the Company whether there will be a "review" of the Registration
Statement and whenever the Commission comments in writing on the Registration Statement (the Company shall provide true and complete copies thereof and all written responses thereto to each of the
Holders); and (C) with respect to the Registration Statement or any post-effective amendment, when the same has become effective; (ii) of any request by the Commission or any
other Federal or state governmental authority for amendments or supplements to the Registration Statement or Prospectus or for additional information; (iii) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose; (iv) of the
receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the
initiation or threatening of any Proceeding for such purpose; (v) of the occurrence of any event or passage of time that makes the financial statements included in the Registration Statement
ineligible for inclusion therein or any statement made in the Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material
respect or that requires any revisions to the Registration Statement, Prospectus or other documents so that, in the case of the Registration Statement or the Prospectus, as the case may be, it will
not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; and (vi) the occurrence or existence of any pending corporate development with respect to the Company that the Company believes may be material and that,
in the determination of the Company, makes it not in the best interests of the Company to allow continued availability of the Registration Statement or Prospectus. 

        (e)   Promptly
deliver to each Holder, without charge, as many copies of the Prospectus (including the form of prospectus) and each amendment or supplement thereto as such
Persons may reasonably request. Subject to the terms of this Agreement, the Company hereby consents to the use of the Prospectus and each amendment or supplement thereto by each of the selling Holders
in connection with the offering and sale of the Registrable Securities covered by the Prospectus and any amendment or supplement thereto. 

        (f)    Use
commercially reasonable efforts to register or qualify the resale of such Registrable Securities as required under applicable securities or Blue Sky laws of each
State within the United States as any Holder requests in writing, and to keep each such registration or qualification (or exemption therefrom) effective during the Effectiveness Period; provided, that
the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified or would subject the Company to service of process or any material tax in
any such jurisdiction where it is not then so subject. 

        (g)   Cooperate
with the Holders to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant
to the Registration Statement, which certificates shall be free of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as any
such Holders may request. 

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        (h)   Upon
the occurrence of any event contemplated by Section 3(d), as promptly as reasonably possible, prepare a supplement or amendment, including a
post-effective amendment, to the Registration Statement or a supplement to the Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other
required document so that, as thereafter delivered, neither the Registration Statement nor the Prospectus will contain an untrue statement of a material fact or omit 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. If the Company notifies the Holders in accordance with
clauses (ii) through (vi) of Section 3(d) above to suspend the use of the use of any Prospectus until the requisite changes to the Prospectus have been made, or the Company
otherwise notifies the Holders of its election to suspend the availability of the Registration Statement and Prospectus pursuant to clause (vi) of Section 3(d), then the Holders shall
suspend use of such Prospectus. The Company will use its best efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable, except that in the case of suspension of
the availability of the Registration Statement and Prospectus pursuant to clause (vi) of Section 3(d), the Company shall not be required to take such action until such time as it shall
determine that the continued availability of the Registration Statement and Prospectus is no longer not in the best interests of the Company. Notwithstanding the Company's right to suspend the use of
the prospectus hereunder, the Company shall remain liable to the Holders for any suspensions of the Registration Statement hereunder which otherwise require payment thereunder. 

        (i)    Comply
with all applicable rules and regulations of the Commission. 

        (j)    Use its best efforts to avoid the issuance of, or, if issued, obtain the withdrawal of
(i) any order suspending the effectiveness of the Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, at the earliest practicable moment.

        (k)   The
Company may require, at any time prior to the third Trading Day prior to the Filing Date, each Holder to furnish to the Company a statement or agreement as to any
such Holder's membership in or affiliation with a member of, whether direct or indirect, the National Association of Securities Dealers, Inc., such Holder's sale and distribution of the
Registrable Securities pursuant to the Registration Statement and Prospectus, the number of shares of Common Stock beneficially owned by such Holder and, if requested by the Commission, the
controlling person thereof, within three Trading days of the Company's request. During any periods that the Company is unable to meet its obligations hereunder with respect to the registration of the
Registrable Securities solely because any Holder fails to furnish requested information within three Trading Days of the Company's request, any liquidated damages that are accruing at such time shall
be tolled and any Event of Default that may otherwise occur solely because of such delay shall be suspended, until such information is delivered to the Company. 

        4.    Registration Expenses.    All fees and expenses incident to the performance of or compliance with this Agreement
by the Company shall be borne by the Company whether or not any Registrable Securities are sold pursuant to the Registration Statement. The fees and expenses referred to in the foregoing sentence
shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses (A) with respect to filings required to be made with the
Principal Market on which the Common Stock is then listed for trading, and (B) in compliance with applicable state securities or Blue Sky laws (including, without limitation, fees and disbursements of
counsel for the Company in connection with Blue Sky qualifications or exemptions of the Registrable Securities and determination of the eligibility of the Registrable Securities for investment under
the laws of such jurisdictions as requested by the Holders)), (ii) printing expenses (including, without limitation, 

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expenses
of printing certificates for Registrable Securities and of printing prospectuses requested by the Holders), (iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel for the Company, and (v) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this
Agreement. In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including,
without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses incurred in connection
with the listing of the Registrable Securities on any securities exchange as required hereunder. In no event shall the Company be responsible for any broker or similar commissions or any legal fees or
other costs of the Holders. 

        5.    Indemnification    

        (a)    Indemnification by the Company.    The Company shall, notwithstanding any termination of this Agreement,
indemnify and hold harmless each Holder, the officers, directors, agents, brokers (including brokers who offer and sell Registrable Securities as principal as a result of a pledge or any failure to
perform under a margin call of Common Stock), investment advisors and employees of each of them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act) and the officers, directors, agents and employees of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and
all losses, claims, damages, liabilities, costs (including, without limitation, costs of preparation and reasonable attorneys' fees) and expenses (collectively, "Losses"), as incurred, arising out of
or relating to any untrue or alleged untrue statement of a material fact contained in the Registration Statement, the Prospectus or any form of prospectus or in any amendment or supplement thereto or
in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the
case of the Prospectus or form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading, except to the extent, but only to the extent, that
(1) such untrue statements or omissions or alleged untrue statements or omissions are based upon information regarding such Holder furnished in writing to the Company by or on behalf of such
Holder expressly for use therein, or to the extent that such information relates to such Holder or such Holder's proposed method of distribution of Registrable Securities and was reviewed and
expressly approved in writing by such Holder expressly for use in the Registration Statement, the Prospectus or such form of Prospectus or in any amendment or supplement thereto or (2) in the
case of an occurrence of an event of the type specified in Section 3(d)(ii)-(vi), the use by such Holder of an outdated or defective Prospectus after the Company has notified such Holder in
writing that the Prospectus is outdated or defective and prior to the receipt by such Holder of the Advice contemplated in Section 6(e). The Company shall notify the Holders promptly of the
institution, threat or assertion of any Proceeding arising from or in connection with the transactions contemplated by this Agreement of which the Company is aware. 

        (b)    Indemnification by Holders.    Each Holder shall, notwithstanding any termination of this Agreement, severally
and not jointly, indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities
Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all
Losses arising out of or based upon any untrue statement of a material fact contained in the Registration Statement, the Prospectus, or any form of prospectus, or in any amendment or supplement
thereto, or arising out of or based upon: (i) such Holder's failure to comply with the prospectus delivery requirements of the Securities Act or with the plan of distribution, or
(ii) any omission of a material fact required to be stated therein or necessary to make the statements therein not misleading to the extent, but only to the extent, such untrue statement or
omission is contained in any information so furnished in writing by or on behalf of such Holder to the Company specifically for inclusion in the 

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Registration
Statement or the Prospectus or to the extent that (1) such untrue statements or omissions are based upon information regarding such Holder furnished in writing to the Company by or
on behalf of such Holder expressly for use therein, or to the extent such information relates to such Holder or such Holder's proposed method of distribution of Registrable Securities and was reviewed
and expressly approved in writing by such Holder expressly for use in the Registration Statement, such Prospectus or the form of Prospectus or in any amendment or supplement thereto or (2) in
the case of an occurrence of an event of the type specified in Section 3(d)(ii)-(vi), the use by such Holder of an outdated or defective Prospectus after the Company has notified such Holder in
writing that the Prospectus is outdated or defective and prior to the receipt by such Holder of the Advice contemplated in Section 6(e). In no event shall the liability of any selling Holder
hereunder be greater in amount than the dollar amount of the net proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation. 

        (c)    Conduct of Indemnification Proceedings.    If any Proceeding shall be brought or asserted against any Person
entitled to indemnity hereunder (an "Indemnified Party"), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the "Indemnifying Party") in writing, and the
Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this
Agreement, except (and only) to the extent that such failure shall have prejudiced the Indemnifying Party. 

        An
Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be
at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such fees and expenses; or (2) the Indemnifying Party shall have
failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have been advised by counsel that a material conflict of
interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing
that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and the expense of one such counsel
for each Holder shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which
any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding. 

        Subject
to the terms of this Agreement, all fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten Trading Days of written notice thereof to the
Indemnifying Party (regardless of whether it is ultimately determined that an Indemnified Party is not entitled to indemnification hereunder; provided, that the Indemnifying Party may require such
Indemnified Party to undertake to reimburse all such fees and expenses to the extent it is finally judicially determined that such Indemnified Party is not entitled to indemnification hereunder). 

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        (d)    Contribution.    If a claim for indemnification under Section 5(a) or 5(b) is unavailable to an
Indemnified Party (by reason of public policy or otherwise), then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions,
statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by
reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken
or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties' relative intent, knowledge, access to information and opportunity to correct or
prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in Section 5(c), any
reasonable attorneys' or other reasonable fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if
the indemnification provided for in this Section was available to such party in accordance with its terms. 

        The
parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation or by any other method of
allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 5(d), no Holder shall
be required to contribute, in the aggregate, any amount in excess of the amount by which the proceeds actually received by such Holder from the sale of the Registrable Securities subject to the
Proceeding exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. 

        The
indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties. 

        6.    Miscellaneous    

        (a)    Amendments and Waivers.    The provisions of this Agreement, including the provisions of this sentence, may not
be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and the Holders
of at least 67% of the then outstanding Registrable Securities. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates
exclusively to the rights of Holders and that does not directly or indirectly affect the rights of other Holders may be given by Holders of all of the Registrable Securities to which such waiver or
consent relates; provided, however, that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the
provisions of the immediately preceding sentence. 

        (b)    No Inconsistent Agreements.    Neither the Company nor any of its subsidiaries has entered, as of the date
hereof, nor shall the Company or any of its subsidiaries, on or after the date. of this Agreement, enter into any agreement with respect to its securities, that would have the effect of
impairing the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. Except as and to the extent specified in Schedule 6(b) hereto, neither the
Company nor any of its subsidiaries has previously entered into any agreement granting any registration rights with respect to a material amount of its securities to any Person that have not been
satisfied in full. 

        (c)    No Piggyback on Registrations.    Except as and to the extent specified in Schedule 6(c) hereto, neither
the Company nor any of its security holders (other than the Holders in such capacity pursuant hereto) may include securities of the Company in the Registration Statement other than the Registrable
Securities. 

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        (d)    Compliance.    Each Holder covenants and agrees that it will comply with the prospectus delivery
requirements
of the Securities Act as applicable to it in connection with sales of the Registrable Securities pursuant to the Registration Statement. 

        (e)    No Underwriters.    Each Holder covenants that it does not have any agreement or understanding, directly or
indirectly, with any person to distribute the common stock. 

        (f)    Discontinued Disposition.    Each Holder agrees by its acquisition of such Registrable Securities that, upon
receipt of a notice from the Company of the occurrence of any event of the kind described in Sections 3(d)(ii), (iii) or (vi), such Holder will forthwith discontinue disposition of such
Registrable Securities under the Registration Statement until such Holder's receipt of the copies of the supplemented Prospectus and/or amended Registration Statement contemplated by
Section 3(h), or until it is advised in writing (the "Advice") by the Company that the use of the applicable Prospectus may be resumed, and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be incorporated by reference in the Prospectus or Registration Statement. The Company may provide appropriate stop orders to
enforce the provisions of this paragraph. 

        (g)    Piggy-Back Registrations.    If at any time during the Effectiveness Period there is not an
effective Registration Statement covering all of the Registrable Securities and the Company shall determine to prepare and file with the Commission a registration statement relating to an offering for
its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under
the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection
with stock option or other employee benefit plans, then the Company shall send to each Holder written notice of such determination and, if within fifteen days after receipt of such notice, any such
Holder shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such holder requests to be registered; provided, that the
Company shall not be required to register any Registrable Securities pursuant to this Section 6(g) that are eligible for resale pursuant to Rule 144(k) promulgated under the Securities
Act. 

        (h)    Notices.    Any and all notices or other communications or deliveries required or permitted to be provided
hereunder shall be delivered as set forth in the Letter Agreement. 

        (i)    Successors and Assigns.    This Agreement shall inure to the benefit of and be binding upon the successors and
permitted assigns of each of the parties and shall inure to the benefit of each Holder. The Company may not assign its rights or obligations hereunder without the prior written consent of all of the
Holders of the then-outstanding Registrable Securities. 

        (j)    Counterparts.    This Agreement may be executed in any number of counterparts, each of which when so executed
shall be deemed to be an original and, all of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by facsimile transmission, such signature
shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature were the original
thereof. 

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        (k)    Governing Law.    All questions concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Delaware, without regard to the principles of conflicts of law thereof. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the city of Wilmington for the adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, 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 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 Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably
waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated
hereby. If either party shall commence a Proceeding to enforce any provisions of this Agreement, then the prevailing party in such Proceeding shall be reimbursed by the other party for its attorneys'
fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Proceeding. 

        (1)    Cumulative Remedies.    The remedies provided herein are cumulative and not exclusive of any remedies provided
by law. 

        (m)    Severability.    If any term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and
shall in no way be affected, impaired or invalidated, and the parties hereto shall use their reasonable efforts to find and employ an alternative means to achieve the same or substantially the same
result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable. 

        (n)    Headings.    The headings in this Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof. 

        (o)    Independent Nature of Holders' Obligations and Rights.    The obligations of each Holder hereunder are several
and not joint with the obligations of any other Holder hereunder, and no Holder shall be responsible in any way for the performance of the obligations of any other Holder hereunder. Nothing contained
herein or in any other agreement or document delivered at any closing, and no action taken by any Holder pursuant hereto or thereto, shall be deemed to constitute the Holders as a partnership, an
association, a joint venture or any other kind of entity, or create a presumption that the Holders are in any way acting in concert with respect to such obligations or the transactions contemplated by
this Agreement. Each Holder shall be entitled to protect and enforce its rights including, without limitation, the rights arising out of this Agreement, and it shall not be necessary for any other
Holder to be joined as an additional party in any proceeding for such purpose. 

*******************

10

 

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

	 	 	DIGITAL ANGEL CORPORATION
	

 	
 	

By:	
 	

/s/  RANDOLPH K. GEISSLER      

	 	 	 	 	Name:	Randolph K. Geissler
	 	 	 	 	Title	CEO

[SIGNATURE
PAGE OF HOLDERS FOLLOWS] 

11

 
[SIGNATURE
PAGE OF HOLDERS TO RRA] 

	ELLIOTT ASSOCIATES, L.P.	 	 
	By: Elliott Capital Advisors, L.P., as general partner

By: Braxton Associates, Inc., as general partner	 	 
	

By:	

/s/  ELLIOT GREENBERG      
 Elliot Greenberg, Vice-President	
 	

 
	

 	

 	
 	

 
	
ELLIOTT INTERNATIONAL, L.P.	
 	

 
	By: Elliott International Capital Advisors Inc.,

as Attorney-in-Fact	 	 
	

By:	

/s/  ELLIOT GREENBERG      
 Elliot Greenberg, Vice-President	
 	

 

12

 
[SIGNATURE
PAGE OF HOLDERS TO RRA] 

	OMICRON MASTER TRUST	 	 
	By: Omicron Capital L.P., as advisor

By: Omicron Capital Inc., its general partner	 	 
	

By:	

/s/  BRUCE BERNSTEIN      
 Bruce Bernstein, President	
 	

 

13

 
[SIGNATURE
PAGE Of HOLDERS TO RRA) 

	MIDSUMMER INVESTMENT, LTD.	 	 
	

By:	

/s/  SCOTT KAUFMAN      
 Scott Kaufman, Authorized Signatory

	
 	

 

14

 
[SIGNATURE
PAGE OF HOLDERS TO RRA] 

	ISLANDIA, L.P.	 	 
	

By:	
 	

/s/  EDGAR BERNER      
	
 	

 
	 	 	Name:	Edgar Berner	 	 
	 	 	Title:	Vice President of John Lang, Inc., General Partner	 	 

15

 
[SIGNATURE
PAGE OF HOLDERS TO RRA] 

	PORTSIDE GROWTH AND OPPORTUNITY FUND	 	 
	

By:	
 	

/s/  MARLAN OGILVIE      
	
 	

 
	 	 	Name:	Marlan Ogilvie	 	 
	 	 	Title:	General Counsel	 	 

16

  

 
 

Plan of Distribution    
    

        After the date of this Prospectus, the selling shareholders or any of their pledgees, assignees and successors-in-interest may, from time
to time, sell any or all of their shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. After the date of this Prospectus, the selling shareholders may use any one or more of the following methods when selling shares: 

	•
	ordinary
brokerage transactions and transactions in which the broker-dealer solicits purchasers;

	•
	block
trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the
transaction; 

purchases
by a broker-dealer as principal and resale by the broker-dealer for its account; 

	•
	an
exchange distribution in accordance with the rules of the applicable exchange;

	•
	privately
negotiated transactions;

	•
	settlement
of short sales; 

broker-dealers
may agree with the selling shareholders to sell a specified number of such shares at a stipulated price per share; 

	•
	a
combination of any such methods of sale; and

	•
	any
other method permitted pursuant to applicable law. 

        After
the date of this Prospectus, the selling shareholders may also sell shares that qualify for sale pursuant to Rule 144 under the Securities Act, rather than under this
prospectus. In effecting sales, broker-dealers engaged by the selling shareholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts
from the selling shareholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The selling shareholders do not expect these
commissions and discounts to exceed what is customary in the types of transactions involved. Broker-dealers may agree to sell a specified number of such shares at a stipulated price per share and, to
the extent such broker-dealer is unable to do so acting as agent for us or a selling shareholder, to purchase as principal any unsold shares at the price required to fulfill the broker-dealer
commitment. Broker-dealers who acquire shares as principal may thereafter resell such shares from time to time in transactions, which may involve block transactions and sales to and through other
broker-dealers, including transactions of the nature described above, in the over-the-counter markets or otherwise at pries and on terms then prevailing at the time of sale, at
prices than related to the then-current market price or in negotiated transactions. In connection with such resales, broker-dealers may pay to or receive from the purchasers such shares
commissions as described above. 

        The
selling shareholders may from time to time pledge or grant a security interest in some or all of the Shares or common stock or Warrants owned by them and, if they default in the
performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to time under this prospectus, or under an amendment to this
prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 amending the list of selling shareholders to include the pledgee, transferee or other successors in
interest as selling shareholders under this prospectus. 

        The
selling shareholders also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling
beneficial owners for purposes of this prospectus. 

17

 

        The
selling shareholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be "underwriters" within the meaning of the Securities Act in
connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. The selling shareholders have informed the Company that none of them have any agreement or understanding, directly or indirectly, with any person to
distribute the common stock. 

        The
Company is required to pay all fees and expenses incurred by the Company incident to the registration of the shares. The Company has agreed to indemnify the selling shareholders
against certain losses, claims, damages and liabilities, including liabilities under the Securities Act. 

18

 
 
 

SCHEDULE 6(b)    
    

Registration
rights have been issued to Applied Digital Solutions, Inc. in connection with this overall transaction and otherwise, including prior Stock Purchase Agreements and Warrants between
Digital Angel Corporation and Applied Digital Solutions, Inc. 

	2
	Registration
rights contained in that certain Registration Rights Agreement in favor of Laurus Master Fund, Ltd. dated July 31, 2003.

	3
	Registration
rights contained in certain proposed Stock Purchase Agreement between Digital Angel Corporation and Longview International Equity Fund, L.P., dated June 20, 2003.

	4.
	Registration
rights contained in that certain Warrant in favor of Redington, Inc. dated April 2, 2002.

	5.
	Registration
rights contained in that certain Warrant Agreement between Digital Angel Corporation (f/k/a Medical Adivsory Systems, Inc.) and Ryan, Beck & Co., Inc.
dated May, 19, 2000.

	6.
	Registration
rights contained in that certain Warrant Certificate in favor of Randy F. Rock dated May 19, 2000. 

Registration
rights contained in that certain Warrant Certificate in favor of Michael J. Kollender dated May 19, 2000. 

	8.
	Registration
rights contained in that certain Warrant Certificate in favor of Jeffrey Sherry dated May 19, 2000.

	9.
	Registration
rights contained in that certain Warrant granted to IBM Credit Corporation dated April 10, 2001. 

19

 
 
 

SCHEDULE 6(c)    
    

	1.
	All
warrants and shares that have been issued in connection with this overall transaction and, in particular, all warrants and shares that have been issued to Applied Digital
Solutions, Inc.

	2.
	All
securities relating to that certain Registration Rights Agreement in favor of Laurus Master Fund, Ltd. dated July 31, 2003.

	3.
	All
securities relating to that certain proposed Stock Purchase -Agreement between Digital Angel Corporation and Longview International Equity Fund, L.P., dated June 20, 2003.

	4.
	All
securities relating to that certain Warrant in favor of Redington, Inc. dated April 2, 2002.

	5.
	All
securities relating to that certain Warrant Agreement between Digital Angel Corporation (f/k/a Medical Adivsory Systems, Inc.) and Ryan, Beck & Co., Inc. dated
May, 19, 2000.

	6.
	All
securities relating to that certain Warrant Certificate in favor of Randy F. Rock dated May 19, 2000.

	7.
	All
securities relating to that certain Warrant Certificate in favor of Michael J. Kollender dated May 19, 2000.

	8.
	All
securities relating to that certain Warrant Certificate in favor of Jeffrey Sherry dated May 19, 2000.

	9.
	All
securities relating to that certain Warrant granted to IBM Credit Corporation dated April 10, 2001. 

20

QuickLinks

Exhibit 10.1

REGISTRATION RIGHTS AGREEMENT

Plan of Distribution

SCHEDULE 6(b)

SCHEDULE 6(c)QuickLinks
 -- Click here to rapidly navigate through this document

 
 

Exhibit 10.2    
    

[Applied
Digital Solutions, Inc. letterhead] 

August 15,
2003 

Via Facsimile and Overnight Courier Service

Midsummer
Investment, Ltd.

c/o Midsummer Capital, LLC

485 Madison Avenue, 23rd Floor

New York, New York 10022

Attn: Scott Kaufman 

Feldman
Weinstein LLP

420 Lexington Avenue

New York, New York 10170

Attn: Joseph Smith 

	 	 	Re:	Waiver pursuant to Section 6(c) of the Registration Rights Agreement among Applied Digital Solutions, Inc., a Missouri corporation ("ADSX" or, the "Company") and the purchasers identified on the signature pages thereto (the "Purchasers")(the "Waiver")

Gentlemen:

        As
previously discussed with Joseph Smith, Esq., on August 14, 2003, the Company acquired additional shares of common stock of its majority-owned subsidiary Digital Angel
Corporation ("DOC") in a strategic investment in consideration for shares of ADSX common stock. The significant terms of the transaction, include the
following: 

          (i)  ADSX
purchased 3,000,000 newly-issued shares of DOC common stock, at $2.64 per share in consideration for newly-issued shares of ADSX common stock  ("ADSX Shares") in an aggregate amount equal to the purchase
price of $7,920,000; 

         (ii)  The
closing price per share of the ADSX Shares will equal the average of the ADSX VWAP for the ten trading days prior to the closing date, subject to a floor price of
$.40; 

        (iii)  DOC
granted a five-year Warrant to ADSX, exercisable for a number of shares of DOC common stock (ranging from 500,000 to 1,000,000), such exercise period
commencing February 1, 2004, with a fixed exercise price equal to the average of the DOC VWAP for a 10-day trading period commencing January 2, 2004; 

        (iv)  Subject
to timely receipt of the Waiver, DOC will grant a five-year Warrant to the Purchasers, exercisable for an aggregate of 500,000 shares of DOC common
stock (divided among them pro rata in accordance with their purchase amount of the Purchase Agreement), such exercise period commencing February 1, 2004, with a fixed exercise price of $2.64,
and with registration rights on the underlying shares using its best efforts to have any such registration statement effective prior to February 1, 2004; and 

         (v)  Subject
to timely receipt of the Waiver, ADSX will file a registration statement with the Securities and Exchange Commission (the
"Commission") covering the resale of the ADSX Shares, such filing to occur within 60 calendar days following execution of the stock purchase agreement. 

        In
exchange for the consideration set forth above and in the Letter Agreement of even date herewith, this Waiver shall confirm your waiver of the Section 6(c) provision entitled
"No Piggyback on Registrations" in the Registration Rights Agreement; provided however, the Company agrees not to file any other registration statement
on Form S-I or S-3 prior to the filing (with the Commission) of the initial Registration Statement required by the Registration Rights Agreement, with the understanding
that this paragraph shall not prohibit the Company from filing amendments to registration statements already filed. 

        The Waiver and Letter Agreement each must be received by the Company fully executed by no later than 5:00 p.m. on August 26, 2003, and if not
received by such date the offer and all provisions under the Waiver and the Letter Agreement shall be null and void.

        We
look forward to, hearing from you as soon as possible. 

	 	 	Very truly yours,
	

 	
 	
Applied Digital Solutions, Inc.
	

 	
 	

By:	

/s/  SCOTT SILVERMAN      

	 	 	 	Name:	 	Scott Silverman
	 	 	 	Title:	 	Chief Executive Officer
	cc: Harvey Goldman, Esq.	 	 	 	 	 

[Waiver
Letter Signatures] 

	Agreed and accepted:	 	 
	
 ELLIOTT ASSOCIATES L.P.
 By: Elliott Capital Advisors, L.P., as general partner

By: Braxton Associates, Inc., as general partner	
 	

 
	

By:	

/s/  ELLIOT GREENBERG      
	
 	

 
	 	Elliot Greenberg, Vice-President	 	 
	
ELLIOTT INTERNATIONAL, L.P.
 By: Elliott International Capital Advisors Inc.,

as Attorney-In-Fact	
 	

 
	

By:	

/s/  ELLIOT GREENBERG      
	
 	

 
	 	Elliot Greenberg, Vice-President	 	 
	
MIDSUMMER INVESTMENT, LTD.	
 	

 
	

By:	

/s/  SCOTT KAUFMAN      
	
 	

 
	 	Scott Kaufman, Authorized Signatory	 	 
	
OMICRON MASTER TRUST

By: Omicron Capital L.P. as advisor

By: Omicron Capital Inc., its general partner	
 	

 
	

By:	

/s/  BRUCE BERNSTEIN      
	
 	

 
	 	Bruce Bernstein, President	 	 
	
ISLANDIA, L.P.	
 	

 
	

By:	

/s/  EDGAR BERNER      
	
 	

 
	Name:	Edgar Berner	 	 
	Title:	Vice President of John Lang, Inc., General Partner	 	 
	
PORTSIDE GROWTH AND OPPORTUNITY FUND	
 	

 
	

By:	

/s/  MARLAN OGILVIE      
	
 	

 
	Name:	Marlan Ogilvie	 	 
	Title:	General Counsel	 	 

QuickLinks

Exhibit 10.2

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