Indemnification Agreement – Digital Angel Corp.

INDEMNIFICATION AGREEMENT

This Agreement, effective as of July 22, 2011, is between Digital Angel
Corporation, a Delaware corporation (“Parent”) and Patricia M. Petersen
(“Indemnitee”).

WHEREAS, Indemnitee has served as an officer and director
(and governor and manager in the case of limited liability companies named
herein) of Destron Fearing Corporation, a Delaware corporation and wholly-owned
subsidiary of Parent (“Destron”), and Destron153s various direct and indirect
subsidiaries, including, without limitation, Digital Angel Technology
Corporation, Fearing Manufacturing Co., Inc., Digital Angel Holdings, LLC,
Digital Angel International, Inc., Digital Angel S.A., Digital Angel Chile S.A.,
Digital Angel Paraguay S.A., Digital Angel Uruguay S.A., Digital Angel do Brasil
Produtos de Informatica LTDA, GT Acquisition Sub., Inc., C-Scan, LLC,
DSD-Holding A/S, Destron Fearing A/S, and Daploma Polska Sp. z.o.o.
(collectively with Destron, the “Companies”).

WHEREAS, Indemnitee has also served as legal counsel to the
Companies.

WHEREAS, Parent has entered into a Stock Purchase Agreement
dated May 6, 2011 with Allflex USA, Inc. (“Purchaser”), whereby the Parent will
sell all the shares of Destron to the Purchaser (“Purchase”).

WHEREAS, as a condition to the closing of the Purchase, the
Indemnitee is required to resign her positions at the Companies and to enter
into an agreement to release certain rights to indemnification by such Companies
(“Release”).

WHEREAS, in order to induce the Indemnitee to enter into the
Release so that the Purchase may be closed, the Parent desires to enter into
this Indemnification Agreement to indemnify the Indemnitee for acts performed or
not performed for or on behalf of any of the Companies by the Indemnitee while
she served as an officer and director (or governor and manager in the case of
limited liability companies) of any of the Companies or as legal counsel to any
of the Companies.

WHEREAS, the Indemnitee will continue to provide services to
the Parent, directly or indirectly, and, therefore, the Parent also desires to
indemnify the Indemnitee for acts performed or not performed for or on behalf of
the Parent by the Indemnitee while she served or continues to as an officer
and/or legal counsel of the Parent.

NOW, THEREFORE, in consideration of the above premises, the
covenants contained in this Agreement and of Indemnitee153s continuing service to
Parent, directly or indirectly, the parties, intending to be legally bound,
agree as follows:

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ARTICLE I – DEFINITIONS

(a) Claim. Any threatened, pending or completed litigation, action,
suit, or proceeding, including any settlement or appeal, whether civil,
criminal, administrative or investigative and/or any inquiry or investigation,
whether conducted by any of the Companies, the Parent or any other party that
Indemnitee in good faith believes might lead to the institution of any such
action, suit or proceeding relating to any Indemnifiable Event.

(b) Expenses. Any losses, damages, obligations, penalties, fines,
judgments, awards, costs, disbursements and liabilities (including amounts paid
in settlement) and expenses (including, without limitation, all reasonable
hourly attorney fees) and other out-of-pocket expenses incurred at the Parent153s
request or otherwise incurred in connection with the investigation of any
threatened, pending or completed Claims or the preparation for, the defense of,
or the furnishing of evidence in, any Claim relating to any Indemnifiable Event.

(c) Indemnifiable Event. Any event, occurrence or circumstance related
to the fact that Indemnitee is or was a director, officer, governor, manager or
legal counsel, as applicable, of any of the Companies or the Parent (or is or
was serving at the request of any of the Companies or the Parent as a director,
officer, governor, manager, employee, trustee, agent, legal counsel or fiduciary
of another corporation, partnership, joint venture, employee benefit plan, trust
or other enterprise or legal entity) by reason of anything done or not done by
Indemnitee in any such capacities.

ARTICLE II – AGREEMENT TO INDEMNIFY

(a) In the event Indemnitee was, is or becomes a party to or witness or other
participant in, or is threatened to be made a party to or witness or other
participant in, a Claim by reason of (or arising in part out of) an
Indemnifiable Event, Parent shall indemnify Indemnitee to the fullest extent
permitted by law against any and all Expenses incurred in connection with such
Claim.

(b) Notwithstanding the foregoing, the Indemnitee shall not be entitled to
indemnification for Expenses which are finally judicially determined to have
resulted primarily from Indemnitee153s gross negligence or bad faith in fulfilling
her duties to the applicable Company or Parent.

(c) Further, the obligations of Parent under Article II(a) shall be subject
to the condition that Parent153s Board of Directors shall not have determined that
Indemnitee would not be permitted to be indemnified under applicable law.
However, to the extent that Indemnitee has been successful on the merits or
otherwise in defense of any Claim relating in whole or in part to an
Indemnifiable Event, including dismissal without prejudice, Indemnitee shall be
indemnified against Expenses incurred in connection with that Claim. In
connection with any determination by Parent153s Board of Directors as to whether
Indemnitee is entitled to be indemnified, the burden of proof shall be on Parent
to establish that Indemnitee is not so entitled.

(d) Expenses will be reimbursed or advanced (“Expense Advance”) when and as
incurred promptly upon submission by Indemnitee of statements to the Parent. If,
when and to the extent that Parent153s Board of Directors determines that
Indemnitee would not be permitted to be so indemnified under applicable law or
under Article II(a), Parent shall not be obligated to reimburse or advance
Expenses to Indemnitee and shall be entitled to be reimbursed by Indemnitee (who
hereby agrees to reimburse Parent) for all such amounts paid; provided, however,
that if Indemnitee has commenced legal proceedings in a court of competent
jurisdiction to secure a determination that Indemnitee should be indemnified
under applicable law or this Agreement, any determination made by Parent153s Board
of Directors that Indemnitee would not be permitted to be indemnified under
applicable law or this Agreement shall not be binding and Indemnitee shall not
be required to reimburse Parent for any such amounts paid until a final judicial
determination is made.

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(e) If any Claim is commenced as to which Indemnitee proposes to demand
indemnification, Indemnitee will notify the Parent with reasonable promptness;
provided, however, that any failure by Indemnitee to notify the
Parent will relieve the Parent from its obligations hereunder only to the extent
the Parent has been prejudiced by such failure or delay.

(f) Indemnitee will have the right to retain counsel of her own choice to
represent her, and the Parent will pay the reasonable Expenses of one such
counsel only. The Parent retains the right to participate in the defense of such
Claim as to which Indemnitee seeks indemnification through counsel of the
Parent153s choice (the cost of which will be paid by the Parent) and Indemnitee
will reasonably cooperate with such counsel and the Parent (including, to the
extent possible and consistent with her own interests, keeping the Parent
reasonably informed of such defense).

(g) The Parent will be liable for any settlement of any Claim against
Imdemnitee made with the Parent153s written consent, which consent will not be
unreasonably withheld

ARTICLE III – ADDITIONAL EXPENSES

To the fullest extent permitted by law, Parent shall indemnify Indemnitee
against any and all Expenses which are incurred by Indemnitee in connection with
any action brought by Indemnitee for (i) payment of Expenses or Expense
Advancement by Parent under this Agreement relating to Claims for Indemnifiable
Events and/or (ii) recovery under any liability insurance policies maintained by
Parent, regardless of whether Indemnitee ultimately is determined to be entitled
to such indemnification, Expenses, Expense Advances or insurance recovery, as
the case may be.

ARTICLE IV – PARTIAL INDEMNITY

If Indemnitee is entitled to indemnification by Parent for some or a portion
of the Expenses but not, however, for the total amount, Parent shall
nevertheless indemnify Indemnitee for the portion to which Indemnitee is
entitled.

ARTICLE V – PRESUMPTIONS

For purposes of this Agreement, to the fullest extent permitted by law, the
termination of any Claim (whether with or without court approval) or conviction,
or upon a plea of nolo contendere, or its equivalent, shall not create a
presumption that Indemnitee did not meet any particular standard of conduct or
have any particular belief or that a court has determined that indemnification
is not permitted by applicable law.

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ARTICLE VI – INSURANCE

To the extent Parent maintains an insurance policy or policies providing
liability insurance, Indemnitee shall be covered by such policy or policies, in
accordance with its or their terms to the maximum extent of the coverage
available for any director or officer of Parent.

ARTICLE VII – AMENDMENTS

No supplement, modification or amendment of this Agreement shall be binding
unless executed in writing by both of the parties. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provisions (whether or not similar) nor shall such waiver constitute a
continuing waiver.

ARTICLE VIII – SUBROGATION

In the event of payment under this Agreement, Parent shall be subrogated to
the extent of such payment to all of the rights of recovery of Indemnitee, who
shall execute all papers required and shall do everything that may be necessary
to secure such rights, including the execution of such documents necessary to
enable Parent effectively to bring suit to enforce such rights.

ARTICLE IX – DUPLICATE PAYMENTS

Parent shall not be liable under this Agreement to make any payment in
connection with any Claim made against Indemnitee to the extent Indemnitee has
otherwise actually received payment (under any insurance policy, Bylaw or
otherwise) of the amounts otherwise indemnifiable.

ARTICLE X – NONEXCLUSIVITY

In regards to the indemnification rights relating to Indemnitee153s position at
the Parent, the rights of the Indemnitee shall be in addition to any other
rights Indemnitee may have under the Parent153s Certificate of Incorporation,
Bylaws or the laws of Delaware. To the extent that a change in the laws of
Delaware (whether by statute or judicial decision) permits greater
indemnification by agreement than would be afforded currently under the Parent153s
Certificate of Incorporation, Bylaws or this Agreement, this Agreement shall be
deemed amended to permit the greater benefits so afforded by such change
immediately upon the occurrence of such change without further action by the
parties.

ARTICLE XI – SEVERABILITY

The provisions of this Agreement shall be severable in the event that any of
the provisions hereof (including any provision within a single section,
paragraph or sentence) are held by a court of competent jurisdiction to be
invalid, void or otherwise unenforceable in any respect, and the validity and
enforceability of any such provision in every other respect and of the remaining
provisions shall not be in any way impaired, and shall remain enforceable to the
fullest extent permitted by law.

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ARTICLE XII – GOVERNING LAW

This Agreement shall be governed by and construed and enforced in accordance
with the laws of Minnesota applicable to contracts made and to be performed in
such State without giving effect to the principles of conflicts of laws.

In Witness Whereof, the parties have duly executed and delivered this
Indemnification Agreement.

PARENT:

DIGITAL ANGEL CORPORATION

By: Joseph J. Grillo

Its: CEO

INDEMNITEE:

/s/ Patricia M. Petersen

Patricia M. Petersen