--------------------------------------------------------------------------------

 
Exhibit 10.4

FOURTH AMENDMENT TO
COMMERCIAL LOAN AGREEMENT
AND
SECURITY AGREEMENT
 
This FOURTH AMENDMENT TO COMMERCIAL LOAN AGREEMENT and SECURITY AGREEMENT, dated
as of February 13, 2007 (this "Fourth Amendment"), is between VERICHIP
CORPORATION, a Delaware corporation (the "Borrower" or "Debtor"), and APPLIED
DIGITAL SOLUTIONS, INC., a Missouri corporation (the "Lender").
 
Recitals:

WHEREAS, on December 27, 2005, the Borrower and the Lender entered into a
Commercial Loan Agreement (the "Agreement") pursuant to which Lender made a Loan
to Borrower subject to the terms and conditions contained in the Agreement;
 
WHEREAS, on October 6, 2006, the Borrower and the Lender entered into a First
Amendment to Commercial Loan Agreement pursuant to which Lender increased the
principal amount of the Loan by Four Million Five Hundred Thousand Dollars
($4,500,000.00) (including a change in the applicable interest rate) in order to
meet the Borrower's working capital needs, IPO costs, and cash needs in
connection with Perceptis' potential election to take its final (deferred)
payment in cash and to make certain other amendments to the Agreement contained
herein;
 
WHEREAS, on January 19, 2007, the Borrower and the Lender entered into a Second
Amendment to Commercial Loan Agreement pursuant to which Lender increased the
principal amount of the Loan by One Million Five Hundred Thousand Dollars
($1,500,000.00) in order to meet the Borrower's working capital needs and IPO
costs;
 
WHEREAS, on February 8, 2007, the Borrower and the Lender entered into a Third
Amendment to Commercial Loan Agreement, a Third Amended and Restated Revolving
Line of Credit Note, and a Third Amendment to Security Agreement, pursuant to
which certain payment terms were changed and the revolving nature of the Loans
would be deemed changed upon the occurrence of certain events; and
 
WHEREAS, the Lender and the Borrower desire to clarify certain terms now
existing under the Loan Documents;
 
NOW THEREFORE, in consideration of the mutual covenants and agreements set forth
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
 
Agreement.
 
1.
Recitals. The foregoing recitals are true and correct and are hereby
incorporated by this reference.

 
2.
Definitions. All capitalized terms used herein, except as modified or defined in
this Fourth Amendment, shall have the meaning given to such terms in the
Agreement or in the Security Agreement as applicable. All references to the
Agreement in all documents executed by Borrower, Guarantor and/or Lender in
connection with the Agreement are hereby deemed to refer to the Agreement, as
hereby amended.

 
1

--------------------------------------------------------------------------------

 

3.
Amendments: The following sections of the Agreement or the Security Agreement,
as indicated, are hereby amended or clarified as follows:

 

 
a.
Credit Agreement.

(i)   Bank Accounts. Section VIII (O) of the Agreement shall be deleted and
replaced by the following: "Borrower shall maintain its primary operating and
deposit accounts at such locations and with such financial institutions as shall
be approved by Lender from time to time, such approval not to be unreasonably
conditioned or withheld."

(ii)   Capital Structure. For the avoidance of doubt, the Lender hereby ratifies
and confirms that the Borrower's IPO shall not be deemed a breach of or an event
of default under the Agreement, including without limitation, under Sections IX
(C) or XI (4) thereof.

(iii)  Permitted Liens. Section VII (N) of the Agreement is hereby amended by
removing the parenthetical "("Permitted Encumbrances")" at the end of the
sentence and replacing it with the following: "or any other liens arising in the
ordinary course of the Borrower's business or by operation of law so long as, in
any such case, either such lien shall not be prior in right and dignity to the
lien in favor of the Lender or the existence of such lien shall not have a
material adverse effect on the Borrower ("Permitted Encumbrances")."

b.    Security Agreement. For the avoidance of doubt, the Lender hereby ratifies
and confirms that the existence of any lien on the Debtor's assets, including
the Collateral, shall not be deemed a breach of or an event of default under the
Security Agreement, including without limitation, Sections 3(e) and 5(b)
thereof, if such liens arise in the ordinary course of the Debtor's business or
by operation of law and, in any such case, either such lien shall not be prior
in right and dignity to the security interest granted to the Lender under the
Security Agreement or the existence of such lien shall not have a material
adverse effect on the Debtor.

4.
Representations and Warranties. The terms and conditions, representations and
warranties, and covenants as set forth in the Agreement, the Security Agreement,
and all other loan documents executed by Borrower in favor of Lender in
connection with the Loan are hereby ratified and affirmed by Borrower, and
Borrower hereby agrees that the said terms and conditions, and covenants are
valid, true and correct as if made on the date hereof.

 
5.
No Implied Modifications; Inconsistencies. Except as expressly modified hereby,
all terms and provisions of the Agreement and the Security Agreement shall
remain unchanged and in full force and effect. In the event of an inconsistency
between the terms of this Fourth Amendment and the terms of the Agreement or the
Security Agreement, the terms hereof shall control.

 
6.
Counterparts. This Fourth Amendment may be executed in any number of
counterparts, and all such counterparts shall together constitute but one
instrument.

 
7.
Governing Law. This Fourth Amendment shall be governed by and construed in
accordance with the laws of the State of New Hampshire.

 
[Signature Page to Follow]
 
2

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have by their duly authorized
representatives executed this Fourth Amendment on the date first above written.
 

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

 
 
3

--------------------------------------------------------------------------------