Filed by Bowne Pure Compliance

0001362310-07-002113.txt : 20070906 0001362310-07-002113.hdr.sgml : 20070906 20070906145535 ACCESSION NUMBER: 0001362310-07-002113 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20070906 DATE AS OF CHANGE: 20070906 GROUP MEMBERS: DIGITAL ANGEL SHARE TRUST SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: DIGITAL ANGEL CORP CENTRAL INDEX KEY: 0000771252 STANDARD INDUSTRIAL CLASSIFICATION: COMMUNICATIONS EQUIPMENT, NEC [3669] IRS NUMBER: 521233960 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-58785 FILM NUMBER: 071102539 BUSINESS ADDRESS: STREET 1: 490 VILLAUME AVENUE CITY: SOUTH ST. PAUL STATE: MN ZIP: 55075 BUSINESS PHONE: 6514551621 MAIL ADDRESS: STREET 1: 490 VILLAUME AVENUE CITY: SOUTH ST. PAUL STATE: MN ZIP: 55075 FORMER COMPANY: FORMER CONFORMED NAME: MEDICAL ADVISORY SYSTEMS INC DATE OF NAME CHANGE: 19920703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: APPLIED DIGITAL SOLUTIONS INC CENTRAL INDEX KEY: 0000924642 STANDARD INDUSTRIAL CLASSIFICATION: COMMUNICATIONS EQUIPMENT, NEC [3669] IRS NUMBER: 431641533 STATE OF INCORPORATION: MO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 1690 SOUTH CONGRESS AVENUE STREET 2: SUITE 200 CITY: DELRAY BEACH STATE: FL ZIP: 33445 BUSINESS PHONE: 561-805-8000 MAIL ADDRESS: STREET 1: 1690 SOUTH CONGRESS AVENUE STREET 2: SUITE 200 CITY: DELRAY BEACH STATE: FL ZIP: 33445 FORMER COMPANY: FORMER CONFORMED NAME: APPLIED CELLULAR TECHNOLOGY INC DATE OF NAME CHANGE: 19940606 SC 13D/A 1 c71173sc13dza.htm SCHEDULE 13D/A Filed by Bowne Pure Compliance


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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934
(Amendment No. 11 )*

Digital Angel Corporation

(Name of Issuer)

Common Stock - $0.005 par value

(Title of Class of Securities)

58449P 10 1

(CUSIP Number)

Michael Krawitz
Applied Digital Solutions, Inc.
1690 South Congress Avenue, Suite 200
Delray Beach, Florida 33445
Tel: (561) 805-8000
Fax: (561) 805-8001

Wilmington Trust Company
Rodney Square North
1100 North Market Street.
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Tel: (302) 651-1000
Fax: (302) 636-4140

(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)

August 31, 2007

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).


CUSIP No.		58449P 10 1		Page		2		of		7

NAMES OF REPORTING PERSONS
Applied Digital Solutions, Inc. (“ADS”)

I.R.S. Identification No. of above person (entity only)
43-1641533

CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)

(a) þ

(b) o

SEC USE ONLY

SOURCE OF FUNDS (SEE INSTRUCTIONS)

N/A

CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)

CITIZENSHIP OR PLACE OF ORGANIZATION

Delaware

SOLE VOTING POWER

NUMBER OF

24,495,788 shares

SHARED VOTING POWER

BENEFICIALLY

OWNED BY

1,000,000 shares (1)

EACH

SOLE DISPOSITIVE POWER

REPORTING

PERSON

24,495,788 shares

WITH

SHARED DISPOSITIVE POWER

1,000,000 shares (1)

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

25,495,788 shares

CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)

PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

56.0%

TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)

(1) The voting and dispositive powers of these ADS owned shares of Digital Angel Corporation common stock are shared with the Digital Angel Share Trust under the terms of an Amended and Restated Trust Agreement.


CUSIP No.		58449P 10 1		Page		3		of		7

NAMES OF REPORTING PERSONS
Digital Angel Share Trust

I.R.S. Identification No. of Above Person (entity only)
45-6117433

CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)

(a) þ

(b) o

SEC USE ONLY

SOURCE OF FUNDS (SEE INSTRUCTIONS)

N/A

CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)

CITIZENSHIP OR PLACE OF ORGANIZATION

Delaware

SOLE VOTING POWER

NUMBER OF

-0-

SHARED VOTING POWER

BENEFICIALLY

OWNED BY

1,000,000 shares

EACH

SOLE DISPOSITIVE POWER

REPORTING

PERSON

-0-

WITH

SHARED DISPOSITIVE POWER

1,000,000 shares

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

1,000,000 shares

CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)

PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

2.2%

TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)


CUSIP No.		58449P 10 1		Page		4		of		7

This Amendment No. 11 to Schedule 13D amends and supplements the Schedule 13D with respect to the shares of common stock, par value $0.005 per share (the “Shares”), of Digital Angel Corporation (the “Issuer”). The Schedule 13D is hereby amended and supplemented as follows:

Item 3. Source and Amount of Funds or Other Consideration.

No payments were made by or on behalf of Applied Digital Solutions, Inc., a Delaware corporation (“Applied Digital”), in connection with the execution of the secured term note between Applied Digital and the Issuer dated August 31, 2007 (the “Note”). The source and amount of consideration under the terms of the Note described in “Item 4. Purpose of Transaction” is herein incorporated by reference. The Note is incorporated by reference herein by reference to Exhibit 1 attached hereto.

Item 4. Purpose of Transaction.

On August 31, 2007, Applied Digital and the Issuer entered into the Note in the amount of $7.0 million. As part of the consideration for the Note, the Issuer agreed to issue to Applied Digital 921,402 shares of Issuer common stock.

A copy of the Note is attached hereto as Exhibit 1. The description of certain terms of the Note set forth herein does not purport to be complete and is qualified in its entirety by the provisions of the Note.

Except as set forth in this Item 4, the Reporting Persons have no present plans or proposals that relate to or that would result in any of the actions specified in clauses (a) through (j) of Item 4 of Schedule 13D.

Item 5. Interest in Securities of the Issuer.

(a) and (b). As of September 5, 2007, Applied Digital is the beneficial owner of 25,495,788, shares of the Issuer’s common stock, or approximately 56.0% of the Issuer’s common stock outstanding. Applied Digital shares voting and dispositive power with the Trust over 1,000,000 of these shares, or 2.2% of the Issuer’s common stock outstanding. Applied Digital has sole voting and dispositive power with respect to 24,495,788 of the shares, or 54% of the Issuer’s common stock outstanding. Upon dissolution of the Trust, Applied Digital will have sole voting and dispositive power with respect to the 1,000,000 shares currently held in the Trust.

Currently, Applied Digital claims beneficial ownership with respect to all 25,495,788 shares for purposes of Section 13(d) of the Securities Exchange Act of 1934 or for any other purpose.

(c). Since the most recent filing on Schedule 13D/A, the Trust has not engaged in any transaction in the Issuer’s common stock and on August 31, 2007 Applied Digital acquired 921,402 shares of the Issuer’s common stock in connection with the Note having a value of $1,428,173.

Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.

The terms of the Note described in “Item 4. Purpose of Transaction” is herein incorporated by reference.

Item 7. Material to be Filed as Exhibits.

All exhibits to the original Schedule 13D, as amended, are incorporated herein by reference. Attached hereto as exhibits are the following documents:


Exhibit 1		Secured Term Note between Applied Digital and the Issuer dated August 31, 2007

Exhibit 2		Joint Filing Agreement

SIGNATURE

After reasonable inquiry and to the best of our knowledge and belief, we certify that the information set forth in this statement is true, complete and correct.

Date: September 6, 2007

APPLIED DIGITAL SOLUTIONS, INC.

By: /s/ Lorraine M. Breece
Name: Lorraine M. Breece
Title: Senior Vice President and Acting Chief Financial Officer

DIGITAL ANGEL SHARE TRUST
By: Wilmington Trust Company, trustee

By: /s/ Lorraine M. Breece
Name: Lorraine M. Breece
Title: Attorney-in-Fact and Authorized Agent

Appendix A


Name and Current Business Address		Present Principal Occupation or Employment:
Daniel E. Penni 1690 South Congress Avenue Suite 200 Delray Beach, Florida 33445		Mr. Penni, age 59, serves as chairman of the board of ADS, and is chairman of the compensation committee and serves as a member of the audit, nominating and compliance and governance committees of ADS’ board of directors. Presently, he is a principal with the Endowment for the 21st Century. Mr. Penni is also a member of the board of directors of ADS’s majority-owned subsidiary, VeriChip, and serves as chairman of VeriChip’s compensation committee and as a member of VeriChip’s audit committee.

J. Michael Norris 1690 South Congress Avenue Suite 200 Delray Beach, Florida 33445		Mr. Norris, age 60, is a director of ADS and serves as a member of the audit and nominating committees of ADS’ board of directors. Mr. Norris currently operates his own consulting firm.

Dennis G. Rawan 1690 South Congress Avenue Suite 200 Delray Beach, Florida 33445		Mr. Rawan, age 64, is a director of ADS, and serves as chairman of the nominating committee and as chairman of the audit committee of ADS’ board of directors.

Constance K. Weaver 1690 South Congress Avenue Suite 200 Delray Beach, Florida 33445		Ms. Weaver, age 54, Ms. Weaver is a director of ADS, serves as a member of the compensation and nominating committees and as chairman of the compliance and governance committee of ADS’ board of directors. Since July 2005, Ms. Weaver has served as the executive vice president and chief marketing officer for BearingPoint, Inc.

Michael E. Krawitz 1690 South Congress Avenue Suite 200 Delray Beach, Florida 33445		Mr. Krawitz, age 37, is a director of ADS and serves as ADS’ chief executive officer and president.

Lorraine M. Breece 1690 South Congress Avenue Suite 200 Delray Beach, Florida 33445		Ms. Breece, age 55, is ADS’ chief financial officer, senior vice president, chief accounting officer, assistant secretary and treasurer.

Exhibit Index


Exhibit 1		Secured Term Note between Applied Digital and the Issuer dated August 31, 2007

Exhibit 2		Joint Filing Agreement

EX-1 2 c71173exv1.htm EXHIBIT 1 Filed by Bowne Pure Compliance

Exhibit 1

SECURED TERM NOTE

FOR VALUE RECEIVED, APPLIED DIGITAL SOLUTIONS, INC., a Delaware corporation (the “Company”), promises to pay to KALLINA CORPORATION, 874 Walker Road, Suite C, Dover, DE 19904, Fax: 914-949-9618 (the “Holder”) or its registered assigns or successors in interest, the sum of Seven Million Dollars ($7,000,000), together with any accrued and unpaid interest hereon, on August 31, 2009 (the “Maturity Date”) if not sooner indefeasibly paid in full.

Capitalized terms used herein without definition shall have the meanings ascribed to such terms in that certain Securities Purchase Agreement dated as of the date hereof between the Company and the Holder (as amended, modified and/or supplemented from time to time, the “Purchase Agreement”).

The following terms shall apply to this Secured Term Note (this “Note”):

ARTICLE I
CONTRACT RATE AND AMORTIZATION

1.1 Contract Rate. Subject to Sections 3.2 and 4.10, interest payable on the outstanding principal amount of this Note (the “Principal Amount”) shall accrue at a rate per annum equal to the “prime rate” published in The Wall Street Journal from time to time (the “Prime Rate”), plus three percent (3.0%) (the “Contract Rate”). The Contract Rate shall be increased or decreased as the case may be for each increase or decrease in the Prime Rate in an amount equal to such increase or decrease in the Prime Rate; each change to be effective as of the day of the change in the Prime Rate. The Contract Rate shall not at any time be less than eleven percent (11.0%). Interest shall be (i) calculated on the basis of a 360 day year, and (ii) payable monthly, in arrears, commencing on September 1, 2007, on the first business day of each consecutive calendar month thereafter through and including the Maturity Date, and on the Maturity Date, whether by acceleration or otherwise.

1.2 Contract Rate Payments. The Contract Rate shall be calculated on the last business day of each calendar month hereafter (other than for increases or decreases in the Prime Rate which shall be calculated and become effective in accordance with the terms of Section 1.1) until the Maturity Date and shall be subject to adjustment as set forth herein.

1.3 Principal Payments. Amortizing payments of the Principal Amount shall be made by the Company on March 1, 2008 and on the first business day of each succeeding month thereafter through and including the Maturity Date (each, an “Amortization Date”). Commencing on the first Amortization Date, the Company shall make monthly payments to the Holder on each Amortization Date, each such payment in the amount of $166,666.67 of outstanding Principal Amount, together with any accrued and unpaid interest on such portion of the Principal Amount plus any and all other unpaid amounts which are then owing under this Note, the Purchase Agreement and/or any other Related Agreement (collectively, the “Monthly Amount”). Any outstanding Principal Amount together with any accrued and unpaid interest and any and all other unpaid amounts which are then owing by the Company to the Holder under this Note, the Purchase Agreement and/or any other Related Agreement shall be due and payable on the Maturity Date.

ARTICLE II
REDEMPTION AND ADDITIONAL MANDATORY REPAYMENTS

2.1 Optional Redemption in Cash. The Company may prepay this Note at any time (“Optional Redemption”) by paying to the Holder a sum of money equal to one hundred three percent (103%) of the Principal Amount outstanding at such time together with accrued but unpaid interest thereon and any and all other sums due, accrued or payable to the Holder arising under this Note, the Purchase Agreement or any other Related Agreement (the “Redemption Amount”) outstanding on the Redemption Payment Date (as defined below). The Company shall deliver to the Holder a written notice of redemption (the “Notice of Redemption”) specifying the date for such Optional Redemption (the “Redemption Payment Date”), which date shall be no later than seven (7) business days after the date of the Notice of Redemption (the “Redemption Period”). On the Redemption Payment Date, the Redemption Amount must be paid in good funds to the Holder. In the event the Company fails to pay the Redemption Amount on the Redemption Payment Date as set forth herein, then such Redemption Notice will be null and void.

2.2 Additional Mandatory Repayments. On each date on or after the date hereof upon which the Company receives any cash proceeds from any Intercompany Debt Payment (as defined below), an amount equal to 100% of the Net Debt Proceeds (as defined below) therefrom shall be applied on such date as a mandatory repayment of the Principal Amount outstanding under this Note. The term “Intercompany Debt” shall mean the indebtedness under that certain Commercial Loan Agreement between the Company and VeriChip Corporation, dated December 27, 2005, as amended, and the notes and other agreements and instruments entered into in connection therewith (the “Commercial Loan Agreement”). The term “Intercompany Debt Payment” shall mean each payment of principal, interest and/or fees to the Company in respect of Intercompany Debt. The term “Net Debt Proceeds” means the cash payments received by the Company from VeriChip Corporation in connection with payments on Intercompany Debt. Notwithstanding anything herein to the contrary, the prepayment penalty set forth in Section 2.1 shall not apply to payments made by the Company to Holder relating to Intercompany Debt.

ARTICLE III
EVENTS OF DEFAULT

3.1 Events of Default. The occurrence of any of the following events set forth in this Section 3.1 shall constitute an event of default (“Event of Default”) hereunder:

(a) The Company fails to pay when due any installment of principal, interest or other invoiced fees hereon in accordance herewith, or the Company fails to pay any of the other Obligations (under and as defined in the Master Security Agreement) when due, and, in any such case, such failure shall continue for a period of five (5) business days following the date upon which such payment was due. For purposes herein, “invoiced fees” shall mean fees set forth on those regularly scheduled monthly invoices received by the Company from the Holder;

(b) The Company breaches any covenant or any other term or condition of this Note in any material respect and such breach, if subject to cure, continues for a period of twenty (20) days following the occurrence thereof;

(c) Any material representation or warranty made by the Company in this Note, the Purchase Agreement or any other Related Agreement (other than the Registration Rights Agreement) shall at any time be false or misleading in any material respect on the date as of which made or deemed made;

(d) The occurrence of any material default (or similar term) in the observance or performance of any other agreement relating to any indebtedness or contingent obligation of the Company or any of its Subsidiaries beyond the period of grace (if any) or that is not waived, the effect of which default is to cause, or permit the holder or holders of such indebtedness or beneficiary or beneficiaries of such contingent obligation to cause, such indebtedness to become due prior to its stated maturity or such contingent obligation to become payable;

(e) The Company breaches any of their material agreements (other than this Note, the Purchase Agreement, the Related Agreements, and the agreements described in clause (d) of this definition), and such breach could reasonably be expected to have a Material Adverse Effect;

(f) The Company or any of its Subsidiaries shall (i) apply for, consent to or suffer to exist the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property, (ii) make a general assignment for the benefit of creditors, (iii) commence a voluntary case under the federal bankruptcy laws (as now or hereafter in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a petition seeking to take advantage of any other law providing for the relief of debtors, (vi) acquiesce to, without challenge within ten (10) days of the filing thereof, or failure to have dismissed, within thirty (30) days, any petition filed against it in any involuntary case under such bankruptcy laws, or (vii) take any action for the purpose of effecting any of the foregoing;

(g) (i) Attachments or levies in excess of $500,000 in the aggregate are made upon the Company or any of its Subsidiary’s assets or (ii) a judgment is rendered against the Company’s property involving a liability of more than $500,000 which shall not have been paid, vacated, discharged, stayed or bonded within thirty (30) days from the entry thereof;

(h) The Company shall admit in writing its inability, or be generally unable, to pay its debts as they become due or cease operations of its present business;

(i) A Change of Control (as defined below) shall occur with respect to the Company, unless Holder shall have expressly consented to such Change of Control in writing. A “Change of Control” shall mean any event or circumstance as a result of which (i) any “Person” or “group” (as such terms are defined in Sections 13(d) and 14(d) of the Exchange Act, as in effect on the date hereof), other than the Holder, is or becomes the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of more than 50% on a fully diluted basis of the then outstanding voting equity interest of the Company, or (ii) the consolidation, merger or other business combination of the Company with or into any other entity, immediately following which the prior stockholders of the Company fail to own, directly or indirectly, at least fifty one percent (51%) of the surviving entity; provided however, that a Change of Control shall not be deemed to have occurred if (i) the Company enters into a consolidation, merger, share exchange or other business combination with an affiliate or subsidiary of the Company reasonably acceptable to Holder, (ii) the surviving entity assumes all of the obligations of the Company under the Purchase Agreement and the Related Agreements and (iii) after assuming all of the obligations under the Purchase Agreement and the Related Agreements, the surviving entity is and would be Solvent until such obligations are paid in full or otherwise discharged;

(j) (i) The indictment of the Company or any of its Subsidiaries or any executive officer of the Company for a felony under any criminal statute, (ii) the conviction of the Company or any of its Subsidiaries or any executive officer of the Company for a misdemeanor under any criminal statute, or (iii) the commencement of a criminal or civil proceeding against the Company or any of its Subsidiaries or any executive officer of the Company or any of its Subsidiaries pursuant to which statute or proceeding penalties or remedies reasonably available include forfeiture of a material portion of the property of the Company or any of its Subsidiaries;

(k) (i) An Event of Default shall occur under and as defined in the Purchase Agreement or any other Related Agreement, (ii) the Company or any of its Subsidiaries or Pledged Subsidiaries shall breach any term or provision of the Purchase Agreement or any other Related Agreement (other than the Registration Rights Agreement), in any respect material to the Company and such breach, if capable of cure, continues unremedied for a period of fifteen (15) days after the occurrence thereof, or (iii) any proceeding shall be brought by the Company to challenge the validity, binding effect of the Purchase Agreement or any Related Agreement. For purposes of this paragraph the term Related Agreement shall exclude the Grant Shares as defined in the Securities Purchase Agreement; and

(l) An Event of Default shall occur under and as defined in the that certain Security Agreement, dated as of the date hereof, by and among Digital Angel Corporation (“DOC”), certain direct and indirect Subsidiaries of DOC and the Holder and/or any ancillary agreement referred to therein, and such Event of Default, if capable of cure, continues unremedied for a period of five (5) days after the occurrence thereof.

3.2 Default Interest. Following the occurrence and during the continuance of an Event of Default, the Company shall pay additional interest on the outstanding principal balance of this Note in an amount equal to one percent (1%) per month, and all outstanding obligations under this Note, the Purchase Agreement and each other Related Agreement, including unpaid interest, shall continue to accrue interest at such additional interest rate from the date of such Event of Default until the date such Event of Default is cured or waived.

ARTICLE IV
MISCELLANEOUS

4.1 Issuance of New Note. Upon any partial redemption of this Note, a new Note containing the same date and provisions of this Note shall, at the request of the Holder, be issued by the Company to the Holder for the principal balance of this Note and interest which shall not have been paid as of such date. Subject to the provisions of Article III of this Note, the Company shall not pay any costs, fees or any other consideration to the Holder for the production and issuance of a new Note.

4.2 Cumulative Remedies. The remedies under this Note shall be cumulative.

4.3 Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder hereof in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.

4.4 Notices. Any notice herein required or permitted to be given shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party notified, (b) when sent by confirmed telex or facsimile if sent during normal business hours of the recipient, if not, then on the next business day, (c) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the Company at the address provided in the Purchase Agreement executed in connection herewith, and to the Holder at the address provided in the Purchase Agreement for the Holder, with a copy to Portfolio Services, c/o Laurus Capital Management, LLC, 335 Madison Avenue, 10^th Floor, New York, New York 10017, facsimile number (212) 581-5037, or at such other address as the Company or the Holder may designate by ten days advance written notice to the other parties hereto.

4.5 Amendment Provision. The term “Note” and all references thereto, as used throughout this instrument, shall mean this instrument as originally executed, or if later amended or supplemented, then as so amended or supplemented, and any successor instrument as such successor instrument may be amended or supplemented.

4.6 Assignability. This Note shall be binding upon the Company and its successors and assigns, and shall inure to the benefit of the Holder and its successors and assigns, and may be assigned by the Holder in accordance with the requirements of the Purchase Agreement. The Company may not assign any of its obligations under this Note without the prior written consent of the Holder, any such purported assignment without such consent being null and void.

4.7 Cost of Collection. In case of any Event of Default under this Note, the Company shall pay the Holder the Holder’s reasonable costs of collection, including reasonable attorneys’ fees.

4.8 Governing Law, Jurisdiction and Waiver of Jury Trial.

(a) THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

(b) THE COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE COMPANY, ON THE ONE HAND, AND THE HOLDER, ON THE OTHER HAND, PERTAINING TO THIS NOTE OR ANY OF THE OTHER RELATED AGREEMENTS OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS NOTE OR ANY OF THE RELATED AGREEMENTS; PROVIDED, THAT THE COMPANY ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE COUNTY OF NEW YORK, STATE OF NEW YORK; AND FURTHER PROVIDED, THAT NOTHING IN THIS NOTE SHALL BE DEEMED OR OPERATE TO PRECLUDE THE HOLDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT THE OBLIGATIONS, TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE HOLDER. THE COMPANY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND THE COMPANY HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. THE COMPANY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE COMPANY AT THE ADDRESS SET FORTH IN THE PURCHASE AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE COMPANY’S ACTUAL RECEIPT THEREOF.

(c) THE COMPANY DESIRES THAT ITS DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE COMPANY HERETO WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN THE HOLDER AND/OR THE COMPANY ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS NOTE, ANY OTHER RELATED AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO.

4.9 Severability. In the event that any provision of this Note is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of this Note.

4.10 Maximum Payments. Nothing contained herein shall be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law. In the event that the rate of interest required to be paid or other charges hereunder exceed the maximum rate permitted by such law, any payments in excess of such maximum rate shall be credited against amounts owed by the Company to the Holder and thus refunded to the Company.

4.11 Security Interest. The Holder has been granted a security interest (i) in certain assets of the Company as more fully described in the Master Security Agreement dated as of the date hereof and (ii) in the equity interests of the Company’s Subsidiaries pursuant to the Stock Pledge Agreement dated as of the date hereof.

4.12 Construction. Each party acknowledges that its legal counsel participated in the preparation of this Note and, therefore, stipulates that the rule of construction that ambiguities are to be resolved against the drafting party shall not be applied in the interpretation of this Note to favor any party against the other.

5.13 Registered Obligation. This Note is intended to be a registered obligation within the meaning of Treasury Regulation Section 1.871-14(c)(1)(i) and the Company (or its agent) shall register this Note (and thereafter shall maintain such registration) as to both principal and any stated interest. Notwithstanding any document, instrument or agreement relating to this Note to the contrary, transfer of this Note (or the right to any payments of principal or stated interest thereunder) may only be effected by (i) surrender of this Note and either the reissuance by the Company of this Note to the new holder or the issuance by the Company of a new instrument to the new holder, or (ii) transfer through a book entry system maintained by the Company (or its agent), within the meaning of Treasury Regulation Section 1.871-14(c)(1)(i)(B).

[Balance of page intentionally left blank; signature page follows]

IN WITNESS WHEREOF, the Company has caused this Secured Term Note to be signed in its name effective as of this 31 day of August, 2007.


APPLIED DIGITAL SOLUTIONS, INC.
By:	/s/ Lorraine M. Breece
	Name:	Lorraine M. Breece
	Title:	SVP, ACFO


WITNESS:
/s/ Carol E. Olson

EX-2 3 c71173exv2.htm EXHIBIT 2 Filed by Bowne Pure Compliance

Exhibit 2

JOINT FILING AGREEMENT

In accordance with Rule 13d-1(k)(1) promulgated under the Securities Exchange Act of 1934, the undersigned agree to the joint filing of Amendment No. 11 to the Statement on Schedule 13D (including any and all subsequent amendments thereto) with respect to the shares of common stock, $0.005 par value, of Digital Angel Corporation, a Delaware corporation (formerly Medical Advisory Systems, Inc., a Delaware corporation) and further agree to the filing of this agreement as an exhibit thereto. In addition, as signified by their signatures thereto, each party to this agreement expressly authorizes the other party to this agreement to file on its behalf any and all amendments to such Statement on Schedule 13D.

Date: September 6, 2007

APPLIED DIGITAL SOLUTIONS, INC.

By: /s/ Lorraine M. Breece
Name: Lorraine M. Breece
Title: Acting Chief Financial Officer

DIGITAL ANGEL SHARE TRUST
By: Wilmington Trust Company, trustee

By: /s/ Lorraine M. Breece
Name: Lorraine M. Breece
Title: Attorney-in-Fact and Authorized Agent