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Exhibit 10.3

SECOND AMENDMENT TO SECURITY AGREEMENT

This Second Amendment to Security Agreement (the “Second Amendment”) is dated as
of the 19th day of January, 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 (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 (the "Credit Agreement") and the Amended and Restated Working
Capital Revolving Line of Credit made pursuant to the Credit Agreement (the
"Loan").
 
WHEREAS, Debtor has requested and Lender has agreed to increase the principal
amount of the Loan in the amount of $1,500,000.00 subject to certain terms and
conditions;
 
WHEREAS, Debtor and Lender have agreed to certain modifications to the Security
Agreement, as amended; and
 
WHEREAS, Debtor and Lender have executed and delivered that certain Second
Amendment to the Credit Agreement of even date herewith and that certain Second
Amended and Restated Revolving Line of Credit Note - Working Capital of even
date herewith in the principal amount of $14,500,000.00.
 
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, and as amended by that Second Amendment to Commercial Loan Agreement
dated as of even date herewith (the "Credit Agreement") and all other documents
 

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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. Amendment to Amount of Loan: The first whereas clause is amended by replacing
"Thirteen Million Dollars ($13,000,000.00)" with "Fourteen Million Five Hundred
Thousand Dollars ($14,500,000.00)".
 
4. 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.
 
5. 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.
 
6. 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.
 
IN WITNESS WHEREOF, the parties have executed this Second 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:      CFO                                      

LENDER:

APPLIED DIGITAL SOLUTIONS, INC.

By:      /s/ Evan McKeown                 
      Print Name:    Evan McKeown    
      Title:     CFO                                   
 
 
 
 
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