Pledge and Security Agreement – Digital Angel Corp.

PLEDGE AND SECURITY AGREEMENT

THIS PLEDGE AND SECURITY AGREEMENT (this “Agreement“), dated as of
February 24, 2011, is made by Digital Angel Corporation and Pledgor153s
wholly-owned subsidiary Destron Fearing Corporation (collectively referred to
herein as the “Pledgor“), both with an address at 490 Villaume Avenue,
South Saint Paul, MN 55075, in favor of the holders of the Pledgor153s 16% Senior
Secured Convertible Debentures due July 1, 2012, in the original aggregate
principal amount of $2,000,000 (collectively, the “Debentures“) signatory
hereto, their endorsees, transferees and assigns (collectively, the
“Pledgees).

WHEREAS, Pledgees have agreed to loan to the Pledgor the amount of $2,000,000
to be evidenced by the Debentures to be delivered upon execution hereof; and

WHEREAS, a condition precedent to the loan is that Pledgor shall have
executed and delivered to the Pledgees a pledge agreement providing for the
pledge to the Pledgees of, and the grant to the Pledgees of a security interest
in, 3,646,166 shares of Signature Industries Limited, a limited company formed
under the laws of England and Wales (“Signature“) that are wholly owned
by Pledgor and Pledgor153s wholly-owned subsidiary Destron Fearing Corporation
(such pledged shares of common stock of Signature, the “Pledged
Shares“), as set forth on Schedule A annexed hereto.

NOW, THEREFORE, in consideration of the premises and the agreements herein
contained and in order to induce the Pledgees to make the loan described above,
the Pledgor hereby agrees with the Pledgees as follows:

SECTION 1. Definitions. All terms used in this Agreement which are
defined in the Debenture, Article 8 or Article 9 of the Uniform Commercial Code
(the “UCC“) currently in effect in the State of New York and which are
not otherwise defined herein shall have the same meanings herein as set forth
therein, provided that terms used herein which are defined in the UCC as in
effect in the State of New York on the date hereof shall continue to have the
same meaning notwithstanding any replacement or amendment of such statute.

SECTION 2. Pledge and Grant of Security Interest. As collateral
security for all of the Obligations (as defined in Section 3 hereof), the
Pledgor hereby pledges and assigns to the Pledgees, and grants to the Pledgees a
continuing security interest in, the Pledgor153s right, title and interest in and
to the Pledged Shares, the certificates representing such Pledged Shares, all
options and other rights, contractual or otherwise, in respect thereof and all
dividends, distributions, cash, instruments, investment property and other
property (including, without limitation, any stock dividend and any distribution
in connection with a stock split) from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the Pledged
Shares (collectively, the “Pledged Collateral“).

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SECTION 3. Security for Obligations. The security interest created
hereby in the Pledged Collateral constitutes continuing collateral security for
all of the following obligations, whether now existing or hereafter incurred
(collectively, the “Obligations“), all of the liabilities and obligations
(primary, secondary, direct, contingent, sole, joint or several) due or to
become due, or that are now or may be hereafter contracted or acquired, or owing
to, of Pledgor to the Pledgees, including, without limitation, all obligations
under this Agreement, the Debentures and any other instruments, agreements or
other documents executed and/or delivered in connection herewith or therewith,
in each case, whether now or hereafter existing, voluntary or involuntary,
direct or indirect, absolute or contingent, liquidated or unliquidated, whether
or not jointly owed with others, and whether or not from time to time decreased
or extinguished and later increased, created or incurred, and all or any portion
of such obligations or liabilities that are paid, to the extent all or any part
of such payment is avoided or recovered directly or indirectly from any of the
Pledgees as a preference, fraudulent transfer or otherwise as such obligations
may be amended, supplemented, converted, extended or modified from time to time.
Without limiting the generality of the foregoing, the term “Obligations” shall
include, without limitation: (i) principal of, and interest on the Debentures
and the loans extended pursuant thereto; (ii) any and all other fees,
indemnities, costs, obligations and liabilities of the Pledgor from time to time
under or in connection with this Agreement, the Debentures, and any other
instruments, agreements or other documents executed and/or delivered in
connection herewith or therewith; and (iii) all amounts (including but not
limited to post-petition interest) in respect of the foregoing that would be
payable but for the fact that the obligations to pay such amounts are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving the Pledgor.

SECTION 4. Delivery of the Pledged Collateral.

(a) Pledgees shall hold the Pledged Shares, together with undated stock
powers executed in blank, signature guaranteed suitable for transfer, for their
benefit and Pledgor further agrees to execute such other documents and to take
such other actions as the Pledgees reasonably deem necessary or desirable to
create and perfect the security interests intended to be created hereunder, to
effect the foregoing and to permit the Pledgees to exercise any of their rights
and remedies hereunder.

(b) If Pledgor shall receive, by virtue of its being or having been an owner
of any Pledged Collateral, any (i) stock certificate (including, without
limitation, any certificate representing a stock dividend or distribution in
connection with any increase or reduction of capital, reclassification, merger,
consolidation, sale of assets, combination of shares, stock split, spin-off or
split-off), promissory note or other instrument, (ii) option or right, whether
as an addition to, substitution for, or in exchange for, any Pledged Collateral,
or otherwise, (iii) dividends or interest payable in cash or in securities or
other property, (iv) dividends, interest and other distributions paid or payable
other than in cash in respect of, and instruments and other property received,
receivable or otherwise distributed in respect of or in exchange for, any
Pledged Collateral, (v) dividends or other distributions in connection with a
partial or total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in surplus, or (vi) cash paid, payable or
otherwise distributed in redemption of, or in exchange for, any Pledged
Collateral, such stock certificate, promissory note, instrument, option, right,
property, payment or distribution constituting Pledged Collateral shall be, and
shall forthwith be delivered to the Pledgees to hold as, Pledged Collateral and
shall be received in trust for the benefit of the Pledgees, shall be segregated
from Pledgor153s other property and shall be delivered forthwith to the Pledgees
in the exact form received, with any necessary endorsement and/or appropriate
stock powers duly executed in blank, to be held by the Pledgees as Pledged
Collateral and as further collateral security for the Obligations.

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SECTION 5. Representations and Warranties. The Pledgor represents and
warrants as follows:

(a) The execution, delivery and performance by the Pledgor of this Agreement
and the exercise by the Pledgees of any of its rights and remedies in accordance
with the terms of this Agreement and applicable securities law will not
contravene any law or any contractual restriction binding on or affecting the
Pledgor or any of its properties and do not and will not result in or require
the creation of any lien upon or with respect to any of its properties other
than pursuant to this Agreement.

(b) The Pledgor is and will be at all times the beneficial owner of the
Pledged Collateral free and clear of any lien or option except for the security
interest created by this Agreement.

(c) No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or other regulatory body is required for
the grant by the Pledgor, or the perfection of the security interest purported
to be created hereby in the Pledged Collateral or the exercise by the Pledgees
of any of their rights and remedies hereunder, except as may be required in
connection with any sale of any Pledged Collateral by laws affecting the
offering and sale of securities generally, including the foreclosure procedures
sanctioned under the interpretations of the securities laws.

(d) This Agreement creates a valid security interest in favor of the Pledgee
in the Pledged Collateral as security for the Obligations. Such security
interest is, or in the case of Pledged Collateral in which the Pledgor obtains
rights after the date hereof, will be, a perfected, first priority security
interest. All action necessary to perfect and protect such security interest has
been duly taken, except for the Pledgees having possession of security
certificates constituting Pledged Collateral after the date hereof and obtaining
control of uncertificated securities and security entitlements constituting
Pledged Collateral after the date hereof.

SECTION 6. Covenants as to the Pledged Collateral. So long as any of
the Obligations shall remain outstanding, the Pledgor will, unless the Pledgees
shall otherwise consent in writing:

(a) keep adequate records concerning the Pledged Collateral and permit the
Pledgees or any agents or representatives of the Pledgees at any reasonable time
and from time to time to examine and make copies of and abstracts from such
records;

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(b) at its expense, promptly deliver to the Pledgees a copy of each notice or
other communication received by it in respect of the Pledged Collateral;

(c) at its expense, defend the Pledgees153 right, title and security interest
in and to the Pledged Collateral against the claims of any person or entity;

(d) at its expense, at any time and from time to time, promptly execute and
deliver all further instruments and documents and take all further action that
may be necessary or desirable or that the Pledgees may reasonably request in
order to (i) perfect and protect the security interest purported to be created
hereby or (ii) enable the Pledgees to exercise and enforce their rights and
remedies hereunder in respect of the Pledged Collateral;

(e) not sell, assign (by operation of law or otherwise), transfer, exchange
or otherwise dispose of any Pledged Collateral or any interest therein;

(f) not create or suffer to exist any lien upon or with respect to any
Pledged Collateral except for the security interest created hereby;

(g) not make or consent to any amendment or other modification or waiver with
respect to any Pledged Collateral or enter into any agreement or permit to exist
any restriction with respect to any Pledged Collateral other than pursuant
hereto; and

(h) not take or fail to take any action which would in any manner impair the
value or enforceability of the Pledgees153 security interest in any Pledged
Collateral.

SECTION 7. Voting Rights, Etc. in Respect of the Pledged Collateral.

(a) So long as no Event of Default or event which, with the giving of notice
or lapse of time or both, would constitute an Event of Default, shall have
occurred and be continuing:

(i) the Pledgor may exercise any and all voting and other consensual rights
pertaining to any Pledged Collateral for any purpose not inconsistent with the
terms of the Debenture; and

(ii) Pledgees will execute and deliver (or cause to be executed and
delivered) to the Pledgor all such proxies and other instruments as Pledgor may
reasonably request for the purpose of enabling Pledgor to exercise the voting
and other rights which it is entitled to exercise pursuant to paragraph Section
7(a)(i) hereof.

(b) Upon the occurrence and during the continuance of an Event of Default or
an event which, with the giving of notice or the lapse of time or both, would
constitute an Event of Default:

(i) all rights of the Pledgor to exercise the voting and other consensual
rights which they would otherwise be entitled to exercise pursuant to Section
7(a)(i) hereof shall cease, and all such rights shall thereupon become vested in
the Pledgees which shall thereupon have the sole right to exercise such voting
and other consensual rights; and

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(ii) without limiting the generality of the foregoing, the Pledgees may at
their option exercise any and all rights of conversion, exchange, subscription
or any other rights, privileges or options pertaining to any Pledged Collateral
as if it were the absolute owner thereof, including, without limitation, the
right to exchange, in its discretion, any and all of such Pledged Collateral
upon the merger, consolidation, reorganization, recapitalization or other
adjustment of the Pledgor, or upon the exercise of any right, privilege or
option pertaining to any Pledged Collateral, and, in connection therewith, to
deposit and deliver any and all of the Pledged Collateral with any committee,
depository, transfer agent, registrar or other designated agent upon such terms
and conditions as it may determine.

SECTION 8. Additional Provisions Concerning the Pledged Collateral.

(a) The Pledgor hereby authorizes the Pledgees to file, without the signature
of the Pledgor where permitted by law, one or more financing or continuation
statements, and amendments thereto, relating to the Pledged Collateral.

(b) The Pledgor hereby irrevocably appoints Pledgee as the Pledgor153s
attorney-in-fact and proxy, with full authority, exercisable only during the
existence of an Event of Default, in the place and stead of the Pledgor and in
the name of the Pledgor or otherwise, from time to time in Pledgee153s discretion,
to take any action and to execute any instrument which Pledgee may deem
necessary or advisable to accomplish the purposes of this Agreement (subject to
the rights of the Pledgor under Section 7(a) hereof), including, without
limitation, to receive, endorse and collect all instruments made payable to the
Pledgor representing any dividend or other distribution in respect of any of
Pledgee153s Pledged Collateral and to give full discharge for the same. This power
is coupled with an interest and is irrevocable until all of the Obligations are
satisfied in full.

(c) If the Pledgor fails to perform any agreement or obligation contained
herein, Pledgee itself may perform, or cause performance of, such agreement or
obligation with respect to Pledged Collateral, and the expenses of Pledgee
incurred in connection therewith shall be payable by the Pledgor pursuant to
Section 10 hereof and shall be secured by the Pledged Collateral.

SECTION 9. Remedies Upon Default. If any Event of Default shall have
occurred and be continuing, in the event that the proceeds of any such sale,
collection or realization are insufficient to pay all amounts to which the
Pledgee is legally entitled, the Pledgor shall be liable for the deficiency,
together with interest thereon at the highest rate specified in the Debenture
for interest on overdue principal thereof or such other rate as shall be fixed
by applicable law, together with the costs of collection and the reasonable fees
of any attorneys employed by Pledgee to collect such deficiency.

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SECTION 10. Indemnity and Expenses.

(a) The Pledgor agrees to indemnify and hold harmless Pledgee and all of its
stockholders, partners, members, officers, directors, employees and direct or
indirect investors and any of the foregoing persons153 agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) from and against any and
all third-party claims, damages, losses, liabilities, obligations, penalties,
costs and expenses (including, without limitation, reasonable attorneys153 fees
and disbursements) to the extent that they arise out of or otherwise result from
Pledgor153s breach of this Agreement (including, without limitation, enforcement
of this Agreement), except, to the extent any such indemnified person or entity,
claims, losses or liabilities result from such person or entity153s gross
negligence or willful misconduct and except to the extent that such claims,
losses or liabilities result from failure of such indemnified person or entities
to comply with the securities laws.

(b) The Pledgor will pay to Pledgee upon demand the amount of any and all
costs and expenses, including the fees and disbursements of Pledgee’s counsel
and of any experts and agents, which Pledgee may incur in connection with (i)
the custody, preservation, use or operation of, or the sale of, collection from,
or other realization upon, any of Pledged Collateral, (ii) the exercise or
enforcement of any of the rights of Pledgee hereunder or (iii) the failure by
Pledgor to perform or observe any of the provisions hereof.

SECTION 11. Notices. Whenever notice is required to be given under
this Agreement, unless otherwise provided herein, such notice shall be given in
accordance with the terms of the Debenture.

SECTION 12. Security Interest Absolute. To the extent permitted by
law, all rights of Pledgee and the Pledgor hereunder shall be absolute and
unconditional irrespective of: (i) any lack of validity or enforceability of any
ancillary agreement or any other agreement or instrument relating thereto, (ii)
any change in the time, manner or place of payment of, or in any other term in
respect of, all or any of the Obligations, or any other amendment or waiver of
or consent to any departure from any guaranty, for all or any of the
Obligations, or (iii) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Pledgor in respect of the
Obligations. All authorizations and agencies contained herein with respect to
any of the Pledged Collateral are irrevocable and powers coupled with an
interest.

SECTION 13. Miscellaneous.

(a) No amendment of any provision of this Agreement shall be effective unless
it is in writing and signed by the Pledgor and Pledgee, and no waiver of any
provision of this Agreement, and no consent to any departure by the Pledgor
therefrom, shall be effective unless it is in writing and signed by Pledgee, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.

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(b) No failure on the part of Pledgee to exercise, and no delay in
exercising, any right hereunder or under any ancillary agreement shall operate
as a waiver thereof nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right. The rights and remedies of the Pledgee provided herein and in the
ancillary agreements are cumulative and are in addition to, and not exclusive
of, any rights or remedies provided by law. The rights of the Pledgee under any
ancillary agreement against any party thereto are not conditional or contingent
on any attempt by Pledgee to exercise any of its rights under any other document
against such party or against any other person or entity.

(c) Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining portions
hereof or thereof or affecting the validity or enforceability of such provision
in any other jurisdiction.

(d) This Agreement shall create a continuing security interest in the Pledged
Collateral and shall (i) remain in full force and effect until the satisfaction
in full or release of the Obligations and (ii) be binding on the Pledgor and its
successors and assigns and shall inure, together with all rights and remedies of
the Pledgee hereunder, to the benefit of the Pledgee and its successors,
transferees and assigns, provided that no such transfer or assignment shall be
valid if it is in violation of applicable securities laws. Without limiting the
generality of clause (ii) of the immediately preceding sentence, subject to
compliance with the applicable securities laws and applicable provisions of the
ancillary agreements, Pledgee may assign or otherwise transfer all or any
portion of the Debenture, and its rights under the ancillary agreements, to any
other person or entity, and such other person or entity shall thereupon become
vested with all of the benefits in respect thereof granted to Pledgee herein or
otherwise unless such benefit is unavailable due to the status of such
transferee or otherwise under applicable law. Upon any such permitted assignment
or transfer, all references in this Agreement to Pledgee shall mean the assignee
of Pledgee. None of the rights or obligations of the Pledgor hereunder may be
assigned or otherwise transferred without the prior written consent of Pledgee.

(e) Upon the satisfaction in full of the Obligations, (i) this Agreement and
the security interest created hereby shall terminate and all rights to the
Pledged Collateral, if any shall be remaining, shall revert to the Pledgor, and
(ii) the Pledgee shall, upon the Pledgor153s request and at the Pledgor153s expense,
(A) return to the Pledgor such of the Pledged Collateral as shall not have been
sold or otherwise disposed of, dealt with or applied pursuant to the terms
hereof and of the ancillary agreements and (B) execute and deliver to the
Pledgor, without recourse, representation or warranty, such documents as the
Pledgor shall reasonably request to evidence such termination.

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(f) 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 New York, without regard to
the principles of conflict of law thereof. Each party hereby irrevocably submits
to the exclusive jurisdiction of the state and federal courts sitting in the
City of New York, borough of Manhattan, 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 attorneys153 fees and other costs and
expenses incurred with the investigation, preparation and prosecution of such
proceeding.

IN WITNESS WHEREOF, the Pledgor has caused this Agreement to be executed and
delivered by its officer thereunto duly authorized, as of the date first above
written.

			DIGITAL ANGEL CORPORATION
			By:
				Name:
				Title:
			DESTRON FEARING CORPORATION
			By:
				Name:
				Title:
[HOLDERS]
By:
	Name:
	Title:

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