Group Purchasing Agreement



 Exhibit 10.17 
  
 CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND 
 FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT 
 HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTION. 
  

  
 GROUP PURCHASING PROGRAM AGREEMENT 
  
 THIS AGREEMENT is made and entered into as of October 28, 2004, by and between Henry Schein, Inc., a Delaware corporation (hereinafter
“HSI”) and VeriChip Corporation, a Delaware corporation (hereinafter referred to as “VeriChip”). 
  
 WITNESSETH: 
  
 WHEREAS, VeriChip wishes to appoint HSI as a distribution vendor for VeriChip product purchases; 
  
 WHEREAS, HSI is a distributor of a broad range of medical, surgical, laboratory and
pharmaceutical products and supplies to health care professionals, and wishes to assist VeriChip; and 
  
 NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, HSI and VeriChip agree as follows: 
  
 1. Term of Agreement. The term of this Agreement shall be for a period of two (2) years commencing on the date upon which the VeriChip Corporation
receives from the FDA written clearance to market the VeriChip system within the United States and completes all related regulatory documents. 
  
 2. Program. In consideration of the mutual covenants and conditions herein contained, HSI will distribute products as may mutually agreed by HSI and
pursuant to the terms and conditions set forth herein (the “Program”). 
  
 3. Obligations of HSI. HSI shall distribute (on a consignment basis) the VeriChip line of products (“Products”) that are compliant with all FDA requisite manufacturing, packaging and labeling standards to health care
professionals. HSI will accept a quantity of VeriChip products on consignment to their distribution center located in Indianapolis, IN; provided that such quantity has been be agreed to by both parties (it being understood that such amount shall
initially be an amount mutually agreed but no more than 100 starter sets and 100 boxes of 10-count insertion sets, although the Parties may agree to other amounts from time to time). HSI will be responsible for the Products in its warehouse, so it
agrees to maintain insurance on such Products in an amount at least equal to the wholesale value of such Products. As it determines in its sole business judgment, HSI will promote VeriChip products in their line of direct to physician marketing
materials using such means as it deems appropriate. HSI will provide payment for product shipped to health care professionals to VeriChip within 30 days after the close of each month. The initial wholesale prices (i.e. the prices that HSI pays to
VeriChip) are set forth on Exhibit A. VeriChip may change its prices on 60 days’ notice to HSI. HSI will provide a monthly statement to VeriChip that details each transaction in which a VeriChip product was sold. HSI in a timely fashion will
provide a listing of the EID numbers of the VeriChip insertion sets sold to a specific physician’s office. 
  
 4. Obligations of VeriChip. VeriChip will provide the VeriChip line of products that are compliant with all FDA requisite manufacturing, packaging and
labeling standards. This includes: 
  

	 	•	 	VeriChip Starter Kit; 

  

	 	•	 	VeriChip Insertion Set; and 

  

	 	•	 	VeriChip Readers 

  

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 VeriChip will “activate” the VeriChip EID numbers upon written notification by HSI of sale. 
  
 VeriChip will provide requested Products to HSI within the prescribed period of time set
forth in this agreement, provided, however, that VeriChip shall not be obligated to leave amounts on consignment in HSI’s distribution facility in excess of the amounts mutually agreed to pursuant to Section 3. VeriChip will accept returns
within 30 days of shipping. If VeriChip requests that inventory being held on consignment be returned to it, VeriChip shall pay such cost of return shipping. VeriChip will notify HSI of product modifications or changes. 
  
 VeriChip will guarantee that if it reduces its MSRP on any Products, it will proportionately
reduce the prices charged to HSI (referenced in Exhibit A) on such Products. 
  
 5. Relationship of the Parties 
  

	 	5.1.	The relationship of HSI and under this Agreement is that of independent contractors and that relationship shall continue as such throughout the term of this Agreement and any
extension thereof. It is further agreed that nothing contained in this Agreement shall be construed to constitute either Party as a partner, officer, employee, or agent of the other, and no officer, employee or agent of either Party shall be deemed
to be the officer, employee, or agent of the other. Neither Party may use the others trademarks or trade names for any purpose except as set forth herein. 

  

	 	5.2.	Neither Party shall have the authority to make any agreement or commitment, or incur any liability on behalf of the other, nor shall either Party be liable for any acts, omissions
to act, contracts, commitments, promises, or representations made by the other Party, except as specifically authorized in this Agreement or as the Parties may hereafter agree in writing. 

  

	 	5.3.	(a) The indemnification obligations set forth in Exhibit B shall be incorporated herein and be binding on the Parties] 

  
 (b) The indemnity provisions, as set forth in this Article 5 and Exhibit B
shall survive the termination of this Agreement for any reason. 
  
 6.
Compliance with Laws. The Parties agree that in carrying out their duties and responsibilities under this Agreement, they will neither undertake nor cause nor permit to be undertaken, any activity which either 
  

	 	(i).	is illegal under any applicable laws, decrees, rules, or regulations in effect; or 

  

	 	(ii).	would have the effect of causing the other Party to be in violation of any laws, decrees, rules or regulations in effect in any jurisdiction where the other Party conducts business.


  
 7. Confidentiality of
Information.  
  

	 	7.1.	 VeriChip acknowledges that for purposes of effectuating this Agreement, there may be revealed to VeriChip in confidence certain trade secrets, proprietary or
confidential information of HSI; provided that VeriChip may disclose such information if required by 



  

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law or legal process. VeriChip acknowledges that no right is given to, or acquired by, to disclose or reveal any portion of thereof without the express prior
written consent of HSI. This obligation will survive the termination of this Agreement. 


  

	 	7.2.	HSI acknowledges that for purposes of effectuating this Agreement, there may be revealed to HSI in confidence certain trade secrets, proprietary or confidential information of
VeriChip; provided that HSI may disclose such information if required by law or legal process. HSI acknowledges that no right is given to, or acquired by, HSI to disclose or reveal any portion of thereof without the express prior written consent of
VeriChip. This obligation will survive the termination of this Agreement. 

  

	 	7.3.	Notwithstanding anything herein to the contrary, if required by applicable law (including securities laws and regulations) either party may disclose this Agreement.


  
 8. Termination. Either Party shall have the right
to terminate this Agreement for “cause” at any time, by giving written notice to the other Party in the event that the other Party: 
  

	 	(i).	commits a noncurable default or violation of this Agreement; or 

  

	 	(ii).	commits a curable default or violation of this Agreement, which is not remedied within thirty (30) days after written notice thereof. 

  
 On termination of this Agreement, HSI shall return any Products held by it
on consignment and shall, within 30 days of termination, pay for any Products shipped to it and not returned. 
  
 11. Arbitration. 
  

	 	11.1.	Any dispute, controversy, or claim between HSI and arising out of or relating to this Agreement, or the breach, termination, or validity thereof shall be finally settled by
arbitration, conducted on a confidential basis, under the then current Commercial Arbitration Rules of the American Arbitration Association (“Association”). The arbitrators shall determine the matters in dispute strictly in accordance with
the terms of this Agreement and the substantive domestic law of the State of New York, excluding its principals of conflicts of law. 

  

	 	11.2.	The arbitration shall be conducted by three arbitrators at the Association’s regional office located nearest to HSI. Each Party shall choose one arbitrator and the chosen
arbitrators shall select a third arbitrator. 

  

	 	11.3.	The award of the arbitrators shall be the sole and exclusive remedy between the Parties regarding any claims, counter claims, issues or accountings presented or pled to the
arbitrators, provided that the arbitrators shall have no authority to award punitive damages or any form of noncompensatory damages. Judgment upon the arbitrators’ award may be entered and enforced in any court of competent jurisdiction. Each
Party shall bear its own cost of the arbitration, including but not limited to the cost of attorney’s fees, and each shall bear one-half the cost of the arbitrators’ fees. 

  

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	 	11.4.	Neither Party shall institute a proceeding hereunder unless at least sixty (60) days prior thereto such Party shall have furnished to the other Party written notice by
certified mail of its intent to do so. 

  

	 	11.5.	Neither Party shall be hereby excluded from seeking provisional remedies in the courts of any jurisdiction including, but not limited to, temporary restraining orders and
preliminary injunctions, to protect its rights and interest, but such shall not be sought as a means to avoid or stay arbitration. 

  
 12. Notices. Any and all notices, requests, demands, consents, approvals or other communications required or permitted to be given under any provision of
this Agreement shall be in writing and shall be deemed given upon personal delivery or the mailing thereof by first class certified mail, return receipt requested, postage prepaid, as follows: 
  
 If to HSI: 
 Henry Schein, Inc. 
 135 Duryea Road 
 Melville, NY 11747 
 Attention: Louis Ferraro 
  
 With a copy: 
 Michael
Ettinger, Esq. 
 Henry Schein, Inc. 
 135 Duryea Road 
 Melville, NY 11747 
  
 If to VeriChip: 
 VeriChip Corporation 
 1690 South congress Ave., Suite 200 
 Delray Beach, FL 33445 
 Attn: President 
  
 With a copy: 
 Applied Digital

 1690 South Congress Ave., Suite 200 
 Delray Beach, FL 33445 
 Attn: General Counsel 
  
 Any Party may change its
address for the purposes of this Agreement by notice to the other Parties given as aforesaid. 
  
 13. Entire Agreement. Each Party acknowledges that it has read this Agreement, fully understands it, and agrees to be bound by its terms and further agrees that it is the complete and exclusive statement
of the agreement between the Parties, which supersedes and merges all prior proposals, understandings and all other agreements, oral and written, between the Parties relating to the subject matter of this Agreement. This Agreement cannot be modified
or altered except by written instrument duly executed by authorized executive officers of both Parties. 
  

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 14. Assignment. This Agreement may not be assigned by a Party without the consent of the other Party, such
consent not to be unreasonably withheld. 
  
 15. Governing Law. This
Agreement shall be governed by the laws of the State of New York excluding its principles of conflicts of laws. 
  
 16. Waiver. No delay or omission by either Party to exercise any right or power hereunder shall impair such right or power or be construed to be a waiver
thereof. A waiver by either of the Parties of any of the covenants to be performed by the other or any breach thereof shall not be construed to be a waiver of any succeeding breach thereof or of any other covenant herein contained. All remedies
provided for in this Agreement shall be cumulative and in addition to and not in lieu of any other remedies available to either Party at law, in equity of otherwise. 
  
 17. Severability. If any provision of this Agreement is declared or found to be illegal, unenforceable, or void, then both
Parties shall be relieved of all obligations arising under such provision, but only to the extent that such provision is illegal, unenforceable, or void, it being the intent and agreement of the Parties that this Agreement shall be deemed amended by
modifying such provision to the extent necessary to make it legal and enforceable while preserving its intent or, if that is not possible, by substituting therefore another provision that is legal and enforceable and achieves the same objective.

  
 18. Section Headings. The headings contained in this Agreement
are for convenience of reference only and are not intended to have any substantive significance in interpreting this Agreement. 
  
 IN WITNESS WHEREOF, the Parties have executed this Agreement under seal effective the date first written above. 
  

							
	HENRY SCHEIN, INC.	 	VERICHIP CORPORATION
				
	 By:
	 	 /s/ Louis Ferraro

	 	 By:
	 	 /s/ Kevin McLaughlin


	 	 	Louis Ferraro	 	 	 	Kevin McLaughlin
	 	 	V.P. General Manager	 	 	 	CEO
	 	 	 	 	 	 	November 4, 2004

  

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 EXHIBIT A 
  

PRODUCTS AND PRICES 
  

			
	VeriChip Corporation Products:
	VeriChip Starter Kit -	  	$***
	 	  	1 box of (10) VeriChip Insertions sets
	 	  	1 VeriMed Pocket Reader
	 	  	1 Introductory CD
	VeriChip Insertion Set -	  	One box of ten (10) insertion sets $*** ($*** per insertion set)
	VeriChip Pocket Reader -	  	One unit per box $***

  

	***	CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.


  

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 EXHIBIT B 
  

VeriChip Corporation and its subsidiaries (referred to herein as “SUPPLIER”), hereby guarantees that each article whether drug, medical
device or other (collectively the “PRODUCTS”) constituting or being part of any shipment or delivery now or hereafter made to Henry Schein, Inc. or any affiliate, subsidiary or division thereof (collectively, “HSI”),
(i) will not at the time of each shipment or delivery be adulterated or misbranded within the meaning of the United States of America Federal Food, Drug and Cosmetic Act, or within the meaning of any applicable federal, state or local law,
within which the definitions of “adulteration” or “misbranding” are substantially the same as those contained in the Federal Food Drug and Cosmetic Act, as said Act and such laws are constituted and effective at the time of such
shipment or delivery, nor will such food, drug, device or cosmetic be an article which may not, under the provisions of Sections 405, 505 and/or 512 of said Act, be introduced into interstate commerce and (ii), (i) will not at the time of each
shipment or delivery be adulterated or misbranded within the meaning of the United States of America Federal Food, Drug and Cosmetic Act, or within the meaning of any applicable federal, state or local law, within which the definitions of
“adulteration” or “misbranding” are substantially the same as those contained in the Federal Food Drug and Cosmetic Act, as said Act and such laws are constituted and effective at the time of such shipment or delivery, nor will
such food, drug, device or cosmetic be an article which may not, under the provisions of Sections 405, 505 and/or 512 of said Act, be introduced into interstate commerce and (ii) will, at the time of each shipment or deliver, be in compliance
with all applicable County, State, Local, Industry, Professional Association or other Regulatory Authority laws, standards, practices or regulations including but not limited to, any requirement of the Government of the United State of America and
any European Community Directives to include the Medical Device Directives Customs regulations for the countries of origin and destination for all shipments, The Foreign Corrupt Practices Act or any similar regulation in other countries and all
relevant clauses of any applicable ISO Standards. The PRODUCTS provided by SUPPLIER to HIS will, at all times, be in compliance with all applicable laws, standards, practices and regulations. 
  
 SUPPLIER shall indemnify HSI and hold HSI harmless against any and all costs, claims,
including, without limitation, claims of product liability, whether sounding in tort or in contract, damages, including, without limitation, actual, punitive and/or exemplary damages, liabilities, litigation, fees and expenses, including without
limitation, reasonable attorneys’ fees and expenses (including its own attorneys’ fees and expenses, incurred as a result of: 
  

	 	(i)	any claim of trademark, trade dress, trade secret, copyright or patent infringement arising out of HSI’s distribution of the PRODUCTS (except in cases where HSI has supplied
the trademark which is the basis for the claim), or 

  

	 	(ii)	any alleged or actual use or misuse of the PRODUCTS unless caused by HSI or its affiliates, or 

  

	 	(iii)	any breach by SUPPLIER of any obligation to HSI, including, without limitation, those contained herein, or 

  

	 	(iv)	any negligent or willful action or omission of SUPPLIER or any of its agents, employees, representatives, successors or assigns in connection with the manufacture, development,
sale, distribution, storage or dispensing of the PRODUCTS, or 

  

	 	(v)	any action, including, but not limited to, an action for the recall or seizure of the PRODUCTS, brought by the Federal Environmental Protection Agency, the Federal Food and Drug
Administration, the Federal Trade Commission, the European Community and/or any other individual country, and/or state, provincial or local agency or regulatory body. 

  
 SUPPLIER agrees to maintain comprehensive “occurrence” general liability insurance, including “occurrence” product
liability, contractual liability insurance and advertising injury coverage, with minimum limits of liability of $3,000,000.00 and to deliver to HSI a certificate thereof with HIS and its subsidiaries as an additionally named insured thereon.

  
 SUPPLIER represents and warrants that it complies with all federal, state,
local and other applicable laws, regulations, conventions or treaties regulating any environmental matters; and those prohibiting any form of 
  

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 child labor or other abuse or exploration of labor in the manufacturing and delivery of
SUPPLIER’S products or services. 
  
 SUPPLIER warrants that packaging,
including cartons, ship cases, and pallets shall be adequately marked, in compliance with all applicable regulations and of sufficient strength to maintain the quality of the PRODUCTS during normal transportation and storage. 
  
 SUPPLIER will provide notice to HSI of any regulatory action related to supplier operations,
whether or not directly related to the PRODUCTS. SUPPLIER shall be responsible for notifying the appropriate federal state and local authorities of any customer complaints or other occurrences regarding the PRODUCTS which are required to be so
reported, evaluating all complaints and responding to HSI in writing on the resolution of any complaints from HSI for its customers. 
  
 If SUPPLIER private labels any product for HSI, SUPPLIER agrees: (a) to make no changes in the product, labeling or packaging of the product without first obtaining
HSI’s written approval, and (b) to allow duly authorized representatives of HSI to enter and inspect SUPPLIER’S facilities during normal business hours to determine SUPPLIER’S adherence to quality assurance and regulatory
compliance standards. 
  
 This guaranty shall be continuing and shall be binding
upon SUPPLIER and his or its heirs, executors, administrators, successors and/or assigns and shall inure to the benefit of HSI, its successors and assigns and to the benefit of its officers, directors, agents and employees. This Agreement shall
supercede any and all prior agreements or understanding, written or oral, between HSI and Supplier regarding the subject of indemnification rights between the parties. 
  
 This AGREEMENT shall be governed by the laws of the State of New York excluding its principles of conflicts
of laws. 
  
 This Continuing Guaranty and Indemnification shall cover all the
PRODUCTS and shall survive the termination of the distribution arrangement between SUPPLIER and HSI. 
  

			
	 SUPPLIER:

	
	 VERICHIP CORPORATION

		
	BY:	 	 /s/     Kevin McLaughlin

	 	 	 (Officerof Company Only)
 Name: Kevin McLaughlin
 Title: CEO
 Date: November 4, 2004



  
 Note: Agreement must be
executed by an authorized officer of Supplier. 
  
 This
document contains proprietary information. It may not be disclosed without prior written approval from 
 Henry Schein. 
  

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