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Exhibit 10.3
 
THIRD AMENDMENT TO SECURITY AGREEMENT
 
This Third Amendment to Security Agreement (the “Third Amendment”) is dated as
of the 8th day of February, 2007 and is entered into by and between VERICHIP
CORPORATION, a Delaware corporation with a principal place of business at 1690
South Congress Avenue, Suite 200, Delray Beach, Florida 33445 (“the Debtor”),
and Applied Digital Solutions, Inc., a Missouri corporation located at 1690
South Congress Avenue, Suite 200, Delray Beach, Florida 33445 (the “Secured
Party”).
 
R E C I T A L S:
 
WHEREAS, Secured Party and Debtor have previously entered into a Security
Agreement dated as of December 27, 2005, as amended by that First Amendment to
Security Agreement, dated October 6, 2006 and that Second Amendment to Security
Agreement dated January 19, 2007 (the “Security Agreement”) securing the
obligations of Debtor under the Commercial Loan Agreement dated December 27,
2005, as amended by that First Amendment to Commercial Loan Agreement dated
October 6, 2006 and that Second Amendment to Commercial Loan Agreement dated
January 19, 2007, and the Second Amended and Restated Working Capital Revolving
Line of Credit made pursuant to the Credit Agreement dated January 19, 2007; and
 
WHEREAS, Debtor and Lender have executed and delivered that certain Third
Amendment to the Commercial Loan Agreement of even date herewith and that
certain Third Amended and Restated Revolving Line of Credit Note—Working Capital
of even date herewith in the principal amount of $14,500,000.00 (the “Loan”).
 
NOW THEREFORE, in consideration of the mutual covenants, for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereby agree as follows:
 
W I T N E S S E T H:
 
1. Incorporation and Recitals. The above recitals are true and correct and are
incorporated herein by reference.
 
2. Definitions. All capitalized terms used herein shall, except as modified
herein, have the meaning subscribed to them in the Security Agreement. All
references to the “Security Agreement” set forth in the Loan Documents are
hereby deemed to include reference to the Security Agreement, as hereby amended.
All references to the Security Agreement set forth in the Credit Agreement as
amended by that First Amendment to Commercial Loan Agreement dated as of
October 6, 2006, as amended by that Second Amendment to Commercial Loan
Agreement dated as of January 19, 2007, and as amended by that Third Amendment
to Commercial Loan Agreement dated as of even date herewith (the “Credit
Agreement”) and all other documents executed by Debtor, and/or Lender in
connection with the Loan (the “Loan Documents”) are hereby deemed to refer to
the Security Agreement, as hereby amended.
 
3. Representations and Warranties. The terms and conditions, representations and
warranties, and covenants as set forth in the Security Agreement and all other
loan documents executed by Debtor in favor of Lender in connection with the Loan
are hereby ratified and affirmed by Debtor, and Debtor hereby agrees that the
said terms and conditions, and covenants are valid, true and correct as if made
on the date hereof. The Debtor hereby ratifies, affirms and acknowledges the
continuing and unconditional security interest in the Collateral as described in
the Security Agreement.

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4. Cooperation; Further Assurances. Debtor agrees to cooperate with Lender so
that the interests of Lender are protected and the intent of the Security
Agreement can be effectuated. Debtor agrees to execute all documents and to
provide whatever further assurances Lender may request or deem necessary to
effectuate the terms of the Security Agreement.
 
5. No Implied Modifications. Except as expressly modified hereby, all terms and
provisions of the Security Agreement shall remain unchanged and in full force
and effect.
 
6. Counterparts. The Security Agreement may be executed in any number of
counterparts, and all such counterparts shall together constitute but one
instrument.
 
[Signature Page to Follow]

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IN WITNESS WHEREOF, the parties have executed this Third Amendment to Security
Agreement as of the day and year first written above.
 

 
DEBTOR:
     
VERICHIP CORPORATION
       
By:
/s/ William J. Caragol
 
Print Name:
William J. Caragol
 
Title:
Chief Financial Officer
       
LENDER:
     
APPLIED DIGITAL SOLUTIONS, INC.
       
By:
/s/ Lorraine Breece
 
Print Name:
Lorraine Breece
 
Title:
Senior Vice President and Chief Accounting Officer

 
 

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