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                                                                   EXHIBIT 10.6

                              PLEDGE AGREEMENT


                  PLEDGE AGREEMENT (this "Agreement"), dated as of June 30,
                                          ---------
2003, made by Applied Digital Solutions, Inc., a Missouri corporation (the
"Pledgor"), in favor of the investors set forth on the Collateral Schedule
 -------
attached hereto, each in its capacity as agent with respect to the
collateral pledged to it hereunder (each, a "Pledgee" only with respect to
                                             -------
the collateral pledged to it hereunder, and collectively, the "Pledgees").
                                                               --------

                  WHEREAS:

                  A. The Pledgor and the Pledgees are parties to a
Securities Purchase Agreement, dated as of the date hereof (as amended or
otherwise modified from time to time, the "Securities Purchase Agreement");
                                           -----------------------------

                  B. Pursuant to the Securities Purchase Agreement, the
Pledgees, severally but not jointly, have agreed to purchase certain 8.5%
Convertible Exchangeable Debentures (the "Debentures") from the Pledgor,
                                          ----------
which, among other things, are exchangeable by each Pledgee for up to an
aggregate number of shares (collectively, the "DOC Shares") of the common
                                               ----------
stock, par value $.005 per share, of Digital Angel Corporation ("DOC"), set
                                                                 ---
forth opposite such Pledgee's name on the Collateral Schedule attached
hereto; and

                  C. It is a condition precedent to the purchase of the
Debentures by the Pledgees pursuant to the Securities Purchase Agreement
that the 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 the DOC Shares pledged to each Pledgee as
specified in the Collateral Schedule (the "Pledged Shares");
                                           --------------

                  NOW, THEREFORE, in consideration of the premises and the
agreements herein contained and in order to induce the Pledgees to enter
into the Securities Purchase Agreement, the Pledgor hereby agrees with the
Pledgees as follows:

                  SECTION 1. Definitions. All terms used in this Agreement
                             -----------
which are defined in the Securities Purchase Agreement or in 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 each Pledgee, and grants
to each Pledgee a continuing security interest in, the Pledgor's right,
title and interest in and to such Pledgee's 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 but

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not limited to, 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").
                    ------------------

                  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 (the "Obligations"):
                         -----------

                  (a) the prompt payment by the Pledgor to each Pledgee, as
         and when due and payable (by scheduled maturity, required
         prepayment, acceleration, demand or otherwise), of all amounts from
         time to time owing by it in respect of interest, principal and
         other charges of the Debentures and the other Transaction Documents
         (including, without limitation, all interest that accrues after the
         commencement of any case, proceeding or other action relating to
         bankruptcy, insolvency or reorganization of the Pledgor whether or
         not the payment of such interest is unenforceable or is not
         allowable due to the existence of such case, proceeding or other
         action), all fees, commissions, expense reimbursements,
         indemnifications and all other amounts due or to become due to the
         Pledgees under the Transaction Documents; and

                  (b) the delivery to each Pledgee of its Pledged Shares
         upon exchange of such Pledgee's Debenture or upon exercise of such
         Pledgee's Warrants.

                  SECTION 4.  Delivery of the Pledged Collateral.
                              ----------------------------------

                  (a) The Trustee shall continue of hold the Pledged Shares
         in the name of the Trust for the benefit of the Pledgees pursuant
         to the Trust Agreement. The Pledgor further agrees to execute such
         other documents and to take such other actions as any Pledgee deems
         reasonably necessary or desirable to create and perfect the
         security interests intended to be created hereunder, to effect the
         foregoing and to permit such Pledgee to exercise any of its rights
         and remedies hereunder.

                  (b) If the 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 Trustee to hold as, Pledged Collateral and shall,
         if received by the

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         Pledgor, be received in trust for the benefit of the Pledgees, shall
         be segregated from the Pledgor's other property and shall be
         delivered forthwith to the Trustee in the exact form received, with
         any necessary endorsement and/or appropriate stock powers duly
         executed in blank, to be held by the Trustee as Pledged Collateral
         and as further collateral security for the Obligations.

                  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 their
         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 Pledgees 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 each Pledgee's 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
Purchasers' Representative shall otherwise consent in writing:

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

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

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                  (c) at its expense, defend each Pledgee's right, title and
         security interest in and to the Pledged Collateral against the
         claims of any Person;

                  (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 any Pledgee may reasonably request in order to (i) perfect and
         protect the security interest purported to be created hereby, or
         (ii) enable such Pledgee to exercise and enforce its 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;

                  (h) not take or fail to take any action which would in any
         manner impair the value or enforceability of each Pledgee's
         security interest in any Pledged Collateral; and

                  (i) in the event that any Pledgee exercises its rights
         under any of the Transaction Documents as to any of such Pledgee's
         Pledged Shares in compliance with applicable securities laws and
         interpretations thereof, the Pledgor shall cause, at its expense,
         its legal counsel to issue an opinion (provided that the requisite
         legal and factual criteria for issuing such an opinion are present
         in the transaction) addressed to DOC and DOC's transfer agent,
         providing that such Pledgee's Pledged Shares can be reissued
         without legends or any other restriction on the transfer thereof.

                  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 Transaction Documents; and

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

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

                           (ii) without limiting the generality of the
                  foregoing, each Pledgee may at its option exercise any and
                  all rights of conversion, exchange, subscription or any
                  other rights, privileges or options pertaining to any of
                  such Pledgee's 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
                  Pledgee's Pledged Collateral upon the merger,
                  consolidation, reorganization, recapitalization or other
                  adjustment of DOC, or upon the exercise by DOC 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 each Pledgee 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 each Pledgee
         the Pledgor's 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 such Pledgee's discretion, to
         take any action and to execute any instrument which such 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 such
         Pledgee's 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, each Pledgee itself may perform, or
         cause performance of, such agreement or obligation with respect to
         such Pledgee's Pledged Collateral, and the expenses of such Pledgee
         incurred in connection therewith shall be payable by the Pledgor
         pursuant to Section 10 hereof and shall be secured by the Pledged
         Collateral.

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                  SECTION 9. Remedies Upon Default. If any Event of Default
                             ---------------------
shall have occurred and be continuing:

                  (a) The Pledgee may exercise in respect of such Pledgee's
         Pledged Collateral its rights as a third-party beneficiary under
         the Trust Agreement.

                  (b) In the event that the proceeds of any such sale,
         collection or realization are insufficient to pay all amounts to
         which the applicable Pledgee is legally entitled, the Pledgor shall
         be liable for the deficiency, together with interest thereon at the
         highest rate specified in such Pledgee's 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 such Pledgee to
         collect such deficiency.

                  SECTION 10. Indemnity and Expenses.
                              ----------------------

                  (a) The Pledgor agrees to indemnify and hold harmless each
         Pledgee and all of their respective stockholders, partners,
         members, officers, directors, employees and direct or indirect
         investors and any of the foregoing Persons' 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 attorney's fees and disbursements)
         to the extent that they arise out of or otherwise result from this
         Agreement (including, without limitation, enforcement of this
         Agreement), except, as to any such indemnified Person, claims,
         losses or liabilities resulting solely and directly from such
         Person's gross negligence or willful misconduct as determined by a
         final judgment of a court of competent jurisdiction and except to
         the extent that such claims, losses or liabilities result from
         failure of such indemnified Persons to comply with the securities
         laws.

                  (b) The Pledgor will pay to each Pledgee upon demand the
         amount of any and all costs and expenses, including the fees and
         disbursements of such Pledgee's counsel and of any experts and
         agents, which such 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 such Pledgee's
         Pledged Collateral, (ii) the exercise or enforcement of any of the
         rights of such Pledgee hereunder or (iii)the failure by the 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 Section 9(f) of the Securities Purchase
Agreement.

                  SECTION 12. Security Interest Absolute. To the extent
                              --------------------------
permitted by law, all rights of the Pledgees and the Pledgor hereunder shall
be absolute and unconditional irrespective of: (i) any lack of validity or
enforceability of any Transaction Document 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

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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
         Purchasers' Representative, 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
         Purchasers' Representative, and then such waiver or consent shall
         be effective only in the specific instance and for the specific
         purpose for which given.

                  (b) No failure on the part of any Pledgee to exercise, and
         no delay in exercising, any right hereunder or under any
         Transaction Document 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 Pledgees provided herein and in the
         Transaction Documents are cumulative and are in addition to, and
         not exclusive of, any rights or remedies provided by law. The
         rights of the Pledgees under any Transaction Document against any
         party thereto are not conditional or contingent on any attempt by a
         Pledgee to exercise any of its rights under any other document
         against such party or against any other Person.

                  (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 Pledgees hereunder, to the benefit of the Pledgees and their
         respective successors, transferees and assigns; provided that no
         such transfer or assignement 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 Transaction Documents, any Pledgee may assign or
         otherwise transfer all or any portion of the Debentures, and its
         rights under the Transaction Documents, to any other Person, and
         such other Person shall thereupon become vested with all of the
         benefits in respect thereof granted to such 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 a Pledgee shall mean the assignee of such Pledgee. None of the
         rights or obligations of the Pledgor hereunder may be assigned or
         otherwise transferred without the prior written consent of
         Purchasers' Representative.

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                  (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 Pledgees will,
         upon the Pledgor's request and at the Pledgor's 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 Transaction Documents 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. Notwithstanding
         the foregoing, the Pledged Collateral shall decrease by any shares
         of DOC Common Stock that have been transferred to Pledgee in
         connection with an exercise of Warrants or the conversion or
         payment of interest or the mandatory redemption under the
         Debentures.

                  (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
         conflicts 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
         attorneys' fees and other costs and expenses incurred with the
         investigation, preparation and prosecution of such Proceeding.

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

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

                                   APPLIED DIGITAL SOLUTIONS, INC.



                                   By: /s/ Scott Silverman
                                      ----------------------------------
                                      Name: Scott Silverman
                                      Title: CEO


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                             COLLATERAL SCHEDULE

                                     TO

                              PLEDGE AGREEMENT


                               Pledged Shares
                               --------------


Name of Pledgee     Number of Pledged Shares     Class     Certificate No(s).
---------------     ------------------------     -----     ------------------


                                             Common Stock


                                             Common Stock


                                             Common Stock


                                             Common Stock


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