Subsidiary Guarantee of Securities Purchase Agreement – Digital Angel Corp.

SUBSIDIARY GUARANTEE

SUBSIDIARY GUARANTEE, dated as of February 24, 2011 (this
“Guarantee“), made by each of the signatories hereto (together with any
other entity that may become a party hereto as provided herein, the
“Guarantors“), in favor of the purchasers signatory (together with their
permitted assigns, the “Purchasers“) to that certain Securities Purchase
Agreement, dated as of the date hereof, between Digital Angel Corporation, a
Delaware corporation (the “Company“) and the Purchasers.

W I T N E S S E T H:

WHEREAS, pursuant to that certain Securities Purchase Agreement, dated as of
the date hereof, by and between the Company and the Purchasers (the
“Purchase Agreement“), the Company has agreed to sell and issue to the
Purchasers, and the Purchasers have agreed to purchase from the Company the
Debentures, subject to the terms and conditions set forth therein; and

WHEREAS, each Guarantor will directly benefit from the extension of credit to
the Company represented by the issuance of the Debentures; and

NOW, THEREFORE, in consideration of the premises and to induce the Purchasers
to enter into the Purchase Agreement and to carry out the transactions
contemplated thereby, each Guarantor hereby agrees with the Purchasers as
follows:

1. Definitions. Unless otherwise defined herein, terms defined in the
Purchase Agreement and used herein shall have the meanings given to them in the
Purchase Agreement. The words “hereof,” “herein,” “hereto” and “hereunder” and
words of similar import when used in this Guarantee shall refer to this
Guarantee as a whole and not to any particular provision of this Guarantee, and
Section and Schedule references are to this Guarantee unless otherwise
specified. The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms. The following
terms shall have the following meanings:

“Guarantee” means this Subsidiary Guarantee, as the same may be
amended, supplemented or otherwise modified from time to time.

“Obligations” means, in addition to all other costs and expenses of
collection incurred by Purchasers in enforcing any of such Obligations and/or
this Guarantee, 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 the Company or
any Guarantor to the Purchasers, including, without limitation, all obligations
under this Guarantee, 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
Purchasers 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 Company or any Guarantor
from time to time under or in connection with this Guarantee, 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 Company or any Guarantor.

2. Guarantee.

(a) Guarantee.

(i) The Guarantors hereby, jointly and severally, unconditionally and
irrevocably, guarantee to the Purchasers and their respective successors,
indorsees, transferees and assigns, the prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration or
otherwise) of the Obligations.

(ii) Anything herein or in any other Transaction Document to the contrary
notwithstanding, the maximum liability of each Guarantor hereunder and under the
other Transaction Documents shall in no event exceed the amount which can be
guaranteed by such Guarantor under applicable federal and state laws, including
laws relating to the insolvency of debtors, fraudulent conveyance or transfer or
laws affecting the rights of creditors generally (after giving effect to the
right of contribution established in Section 2(b)).

(iii) Each Guarantor agrees that the Obligations may at any time and from
time to time exceed the amount of the liability of such Guarantor hereunder
without impairing the guarantee contained in this Section 2 or affecting the
rights and remedies of the Purchasers hereunder.

(iv) The guarantee contained in this Section 2 shall remain in full force and
effect until all the Obligations and the obligations of each Guarantor under the
guarantee contained in this Section 2 shall have been satisfied by indefeasible
payment in full.

(v) No payment made by the Company, any of the Guarantors, any other
guarantor or any other Person or received or collected by the Purchasers from
the Company, any of the Guarantors, any other guarantor or any other Person by
virtue of any action or proceeding or any set-off or appropriation or
application at any time or from time to time in reduction of or in payment of
the Obligations shall be deemed to modify, reduce, release or otherwise affect
the liability of any Guarantor hereunder which shall, notwithstanding any such
payment (other than any payment made by such Guarantor in respect of the
Obligations or any payment received or collected from such Guarantor in respect
of the Obligations), remain liable for the Obligations up to the maximum
liability of such Guarantor hereunder until the Obligations are indefeasibly
paid in full.

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

(b) Right of Contribution. Subject to Section 2(c), each Guarantor
hereby agrees that to the extent that a Guarantor shall have paid more than its
proportionate share of any payment made hereunder, such Guarantor shall be
entitled to seek and receive contribution from and against any other Guarantor
hereunder which has not paid its proportionate share of such payment. Each
Guarantor’s right of contribution shall be subject to the terms and conditions
of Section 2(c). The provisions of this Section 2(b) shall in no respect limit
the obligations and liabilities of any Guarantor to the Purchasers and each
Guarantor shall remain liable to the Purchasers for the full amount guaranteed
by such Guarantor hereunder.

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

(d) Amendments, Etc. With Respect to the Obligations. Each Guarantor
shall remain obligated hereunder notwithstanding that, without any reservation
of rights against any Guarantor and without notice to or further assent by any
Guarantor, any demand for payment of any of the Obligations made by the
Purchasers may be rescinded by the Purchasers and any of the Obligations
continued, and the Obligations, or the liability of any other Person upon or for
any part thereof, or any collateral security or guarantee therefor or right of
offset with respect thereto, may, from time to time, in whole or in part, be
renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Purchasers, and the Purchase Agreement and the
other Transaction Documents and any other documents executed and delivered in
connection therewith may be amended, modified, supplemented or terminated, in
whole or in part, as the Purchasers may deem advisable from time to time, and
any collateral security, guarantee or right of offset at any time held by the
Purchasers for the payment of the Obligations may be sold, exchanged, waived,
surrendered or released. The Purchasers shall have no obligation to protect,
secure, perfect or insure any Lien at any time held by them as security for the
Obligations or for the guarantee contained in this Section 2 or any property
subject thereto.

(e) Guarantee Absolute and Unconditional. Each Guarantor waives any
and all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by the Purchasers upon the
guarantee contained in this Section 2 or acceptance of the guarantee contained
in this Section 2; the Obligations, and any of them, shall conclusively be
deemed to have been created, contracted or incurred, or renewed, extended,
amended or waived, in reliance upon the guarantee contained in this Section 2;
and all dealings between the Company and any of the Guarantors, on the one hand,
and the Purchasers, on the other hand, likewise shall be conclusively presumed
to have been had or consummated in reliance upon the guarantee contained in this
Section 2. Each Guarantor waives to the extent permitted by law diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon the Company or any of the Guarantors with respect to the Obligations.
Each Guarantor understands and agrees that the guarantee contained in this
Section 2 shall be construed as a continuing, absolute and unconditional
guarantee of payment and performance without regard to (a) the validity or
enforceability of the Purchase Agreement or any other Transaction Document, any
of the Obligations or any other collateral security therefor or guarantee or
right of offset with respect thereto at any time or from time to time held by
the Purchasers, (b) any defense, set-off or counterclaim (other than a defense
of payment or performance or fraud by Purchasers) which may at any time be
available to or be asserted by the Company or any other Person against the
Purchasers, or (c) any other circumstance whatsoever (with or without notice to
or knowledge of the Company or such Guarantor) which constitutes, or might be
construed to constitute, an equitable or legal discharge of the Company for the
Obligations, or of such Guarantor under the guarantee contained in this Section
2, in bankruptcy or in any other instance. When making any demand hereunder or
otherwise pursuing its rights and remedies hereunder against any Guarantor, the
Purchasers may, but shall be under no obligation to, make a similar demand on or
otherwise pursue such rights and remedies as they may have against the Company,
any other Guarantor or any other Person or against any collateral security or
guarantee for the Obligations or any right of offset with respect thereto, and
any failure by the Purchasers to make any such demand, to pursue such other
rights or remedies or to collect any payments from the Company, any other
Guarantor or any other Person or to realize upon any such collateral security or
guarantee or to exercise any such right of offset, or any release of the
Company, any other Guarantor or any other Person or any such collateral
security, guarantee or right of offset, shall not relieve any Guarantor of any
obligation or liability hereunder, and shall not impair or affect the rights and
remedies, whether express, implied or available as a matter of law, of the
Purchasers against any Guarantor. For the purposes hereof, “demand” shall
include the commencement and continuance of any legal proceedings.

(f) Reinstatement. The guarantee contained in this Section 2 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Obligations is rescinded or must
otherwise be restored or returned by the Purchasers upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Company or any
Guarantor, or upon or as a result of the appointment of a receiver, intervenor
or conservator of, or trustee or similar officer for, the Company or any
Guarantor or any substantial part of its property, or otherwise, all as though
such payments had not been made.

(g) Payments. Each Guarantor hereby guarantees that payments hereunder
will be paid to the Purchasers without set-off or counterclaim in U.S. dollars
at the address set forth or referred to in the Signature Pages to the Purchase
Agreement.

3. Representations and Warranties. Each Guarantor hereby makes the
following representations and warranties to Purchasers as of the date hereof:

(a) Organization and Qualification. The Guarantor is a corporation,
duly incorporated, validly existing and in good standing under the laws of the
applicable jurisdiction set forth on Schedule 1, with the requisite corporate
power and authority to own and use its properties and assets and to carry on its
business as currently conducted. The Guarantor has no subsidiaries other than
those identified as such on the Disclosure Schedules to the Purchase Agreement.
The Guarantor is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary, except
where the failure to be so qualified or in good standing, as the case may be,
could not, individually or in the aggregate, (x) adversely affect the legality,
validity or enforceability of any of this Guarantee in any material respect, (y)
have a material adverse effect on the results of operations, assets, prospects,
or financial condition of the Guarantor or (z) adversely impair in any material
respect the Guarantor’s ability to perform fully on a timely basis its
obligations under this Guarantee (a “Material Adverse Effect“).

(b) Authorization; Enforcement. The Guarantor has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by this Guarantee, and otherwise to carry out its obligations
hereunder. The execution and delivery of this Guarantee by the Guarantor and the
consummation by it of the transactions contemplated hereby have been duly
authorized by all requisite corporate action on the part of the Guarantor. This
Guarantee has been duly executed and delivered by the Guarantor and constitutes
the valid and binding obligation of the Guarantor enforceable against the
Guarantor in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors’ rights and remedies or by other equitable principles of general
application.

(c) No Conflicts. The execution, delivery and performance of this
Guarantee by the Guarantor and the consummation by the Guarantor of the
transactions contemplated thereby do not and will not (i) conflict with or
violate any provision of its Certificate of Incorporation or By-laws or (ii)
conflict with, constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Guarantor is a party, or (iii) result in a
violation of any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority to which the Guarantor
is subject (including federal and state securities laws and regulations), or by
which any material property or asset of the Guarantor is bound or affected,
except in the case of each of clauses (ii) and (iii), such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as could
not, individually or in the aggregate, have or result in a Material Adverse
Effect. The business of the Guarantor is not being conducted in violation of any
law, ordinance or regulation of any governmental authority, except for
violations which, individually or in the aggregate, do not have a Material
Adverse Effect.

(d) Consents and Approvals. Except as set forth on Schedule 3.1(e) of
the Disclosure Schedule to the Purchase Agreement, the Guarantor is not required
to obtain any consent, waiver, authorization or order of, or make any filing or
registration with, any court or other federal, state, local, foreign or other
governmental authority or other person in connection with the execution,
delivery and performance by the Guarantor of this Guarantee.

(e) Purchase Agreement. The representations and warranties of the
Company set forth in the Purchase Agreement as they relate to such Guarantor,
each of which is hereby incorporated herein by reference, are true and correct
as of each time such representations are deemed to be made pursuant to such
Purchase Agreement, and the Purchasers shall be entitled to rely on each of them
as if they were fully set forth herein, provided that each reference in each
such representation and warranty to the Company’s knowledge shall, for the
purposes of this Section 3, be deemed to be a reference to such Guarantor’s
knowledge.

(f) Foreign Law. Each Guarantor has consulted with appropriate foreign
legal counsel with respect to any of the above representations for which
non-U.S. law is applicable. Such foreign counsel have advised each applicable
Guarantor that such counsel knows of no reason why such non-US Guarantor could
not make such representation. Such foreign counsel were provided with copies of
this Subsidiary Guarantee and the Transaction Documents prior to rendering their
advice.

4. Covenants.

(a) Each Guarantor covenants and agrees with the Purchasers that, from and
after the date of this Guarantee until the Obligations shall have been
indefeasibly paid in full, such Guarantor shall take, and/or shall refrain from
taking, as the case may be, each commercially reasonable action that is
necessary to be taken or not taken, as the case may be, so that no Event of
Default (as defined in the Debentures) is caused by the failure to take such
action or to refrain from taking such action by such Guarantor.

(b) So long as any of the Obligations are outstanding, unless Purchasers
holding at least 67% of the aggregate principal amount of the then outstanding
Debentures shall otherwise consent in writing, each Guarantor will not directly
or indirectly on or after the date of this Guarantee:

i. except for Permitted Indebtedness as defined in the Debentures and as
applied to each Guarantor in place of “Company,” enter into, create, incur,
assume or suffer to exist any indebtedness for borrowed money of any kind,
including but not limited to, a guarantee, on or with respect to any of its
property or assets now owned or hereafter acquired or any interest therein or
any income or profits therefrom;

ii. except for Permitted Liens as defined in the Debentures and as applied to
each Guarantor in place of “Company,”enter into, create, incur, assume or suffer
to exist any liens of any kind, on or with respect to any of its property or
assets now owned or hereafter acquired or any interest therein or any income or
profits therefrom;

iii. amend its certificate of incorporation, bylaws or other charter
documents so as to adversely affect any rights of any Purchaser;

iv. repay, repurchase or offer to repay, repurchase or otherwise acquire more
than a de minimis number of shares of its securities or debt obligations, except
as such may come due in the ordinary course;

v. pay cash dividends on any equity securities of the Company;

vi. enter into any transaction with any Affiliate of the Guarantor which
would be required to be disclosed in any public filing of the Company with the
Commission, unless such transaction is made on an arm153s-length basis and
expressly approved by a majority of the disinterested directors of the Company
(even if less than a quorum otherwise required for board approval); or

vii. enter into any agreement with respect to any of the foregoing.

5. Miscellaneous.

(a) Amendments in Writing. None of the terms or provisions of this
Guarantee may be waived, amended, supplemented or otherwise modified except in
writing by the Purchasers.

(b) Notices. All notices, requests and demands to or upon the
Purchasers or any Guarantor hereunder shall be effected in the manner provided
for in the Purchase Agreement, provided that any such notice, request or demand
to or upon any Guarantor shall be addressed to such Guarantor at its notice
address set forth on Schedule 5(b) hereof.

(c) No Waiver By Course Of Conduct; Cumulative Remedies. The
Purchasers shall not by any act (except by a written instrument pursuant to
Section 5(a)), delay, indulgence, omission or otherwise be deemed to have waived
any right or remedy hereunder or to have acquiesced in any default under the
Transaction Documents or Event of Default. No failure to exercise, nor any delay
in exercising, on the part of the Purchasers, any right, power or privilege
hereunder shall operate as a waiver thereof. No single or partial exercise of
any right, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. A
waiver by the Purchasers of any right or remedy hereunder on any one occasion
shall not be construed as a bar to any right or remedy which the Purchasers
would otherwise have on any future occasion. The rights and remedies herein
provided are cumulative, may be exercised singly or concurrently and are not
exclusive of any other rights or remedies provided by law.

(d) Enforcement Expenses; Indemnification.

(i) Each Guarantor agrees to pay, or reimburse the Purchasers for, all its
costs and expenses incurred in collecting against such Guarantor under the
guarantee contained in Section 2 or otherwise enforcing or preserving any rights
under this Guarantee and the other Transaction Documents to which such Guarantor
is a party, including, without limitation, the reasonable fees and disbursements
of counsel to the Purchasers.

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

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

(iv) The agreements in this Section shall survive repayment of the
Obligations and all other amounts payable under the Purchase Agreement and the
other Transaction Documents.

(e) Successor and Assigns. This Guarantee shall be binding upon the
successors and assigns of each Guarantor and shall inure to the benefit of the
Purchasers and their respective successors and assigns; provided that no
Guarantor may assign, transfer or delegate any of its rights or obligations
under this Guarantee without the prior written consent of the Purchasers.

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

(g) Counterparts. This Guarantee may be executed by one or more of the
parties to this Guarantee on any number of separate counterparts (including by
telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.

(h) Severability. Any provision of this Guarantee 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 provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

(i) Section Headings. The Section headings used in this Guarantee are
for convenience of reference only and are not to affect the construction hereof
or be taken into consideration in the interpretation hereof.

(j) Integration. This Guarantee and the other Transaction Documents
represent the agreement of the Guarantors and the Purchasers with respect to the
subject matter hereof and thereof, and there are no promises, undertakings,
representations or warranties by the Purchasers relative to subject matter
hereof and thereof not expressly set forth or referred to herein or in the other
Transaction Documents.

(k) Governing Laws. All questions concerning the construction,
validity, enforcement and interpretation of this Guarantee 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 conflicts of law thereof. Each of
the Company and the Guarantors agree that all proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Guarantee (whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, partners, members, employees or
agents) shall be commenced exclusively in the state and federal courts sitting
in the City of New York, Borough of Manhattan. Each of the Company and the
Guarantors 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 proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such proceeding
is improper. Each party hereto hereby irrevocably waives personal service of
process and consents to process being served in any such proceeding by mailing a
copy thereof via registered or certified mail or overnight delivery (with
evidence of delivery) to such party at the address in effect for notices to it
under this Guarantee and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner permitted
by law. 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 Guarantee or the transactions
contemplated hereby.

(l) Acknowledgements. Each Guarantor hereby acknowledges that:

(i) it has been advised by counsel in the negotiation, execution and delivery
of this Guarantee and the other Transaction Documents to which it is a party;

(ii) the Purchasers have no fiduciary relationship with or duty to any
Guarantor arising out of or in connection with this Guarantee or any of the
other Transaction Documents, and the relationship between the Guarantors, on the
one hand, and the Purchasers, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and

(iii) no joint venture is created hereby or by the other Transaction
Documents or otherwise exists by virtue of the transactions contemplated hereby
among the Guarantors and the Purchasers.

(m) Release of Guarantors. Each Guarantor will be released from all
liability hereunder concurrently with the indefeasible repayment in full of all
amounts owed under the Purchase Agreement, the Debentures and the other
Transaction Documents.

(n) Subordination. Purchasers hereby state and confirm that all
obligations of Guarantors as set forth and evidenced by this Subsidiary
Guarantee shall be subordinated in right of payment and priority to the payment
in full of each Guarantor153s obligations to its senior lender as set forth on
Schedule 5(n) to this Guarantee.

(o) WAIVER OF JURY TRIAL. EACH GUARANTOR AND, BY ACCEPTANCE OF
THE BENEFITS HEREOF, THE PURCHASERS, HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTEE
AND FOR ANY COUNTERCLAIM THEREIN.

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

(Signature Pages Follow)

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

SIGNATURE INDUSTRIES LIMITED

By:_________________________________

Name:

Title:

DESTRON FEARING CORPORATION

By:_________________________________

Name:

Title:

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