Exhibit 10.1


    
      

    

     

    
      Exhibit
        10.1 

       

       

      TRANSITION
        SERVICES AGREEMENT 

       

      This
        TRANSITION SERVICES AGREEMENT (this “Agreement”),
        dated
        as of December 27, 2005 (the “Effective
        Date”),
        is
        entered into between Applied Digital Solutions, Inc., a Missouri corporation
        (“ADSX”),
        and
        Verichip Corporation, a Delaware corporation (“Verichip”;
        references to Verichip in this Agreement shall include Verichip’s subsidiary
        companies Verichip Inc. and Instantel Inc.). 

       

      Preliminary
        Statements 

       

      A.
        Verichip desires that ADSX provide certain Transition Services (as defined
        below) to Verichip upon the terms and subject to the conditions of this
        Agreement. 

       

      B.
        ADSX
        is willing to provide such Transition Services to Verichip upon the terms
        and
        subject to the conditions of this Agreement. 

       

      Agreement
        

       

      In
        consideration of the mutual covenants contained herein, together with other
        good
        and valuable consideration, the receipt and sufficiency of which are hereby
        acknowledged, the parties hereto agree as follows: 

       

      1.
        Services and Compensation. 

       

      1.1
        Transition
        Services.
        During
        the Term (as defined below), ADSX shall provide or cause to be provided to
        Verichip certain administrative transition services and payment of expenses
        that
        ADSX has provided to Verichip prior to the Effective Date, as requested from
        time to time by Verichip. These transition services and payment of expenses
        include those transition services set forth on Schedule 1-A and those transition
        expenses set forth on Schedule 1-B (the “transition services” and the
“transition expenses” shall be referred to collectively in this Agreement as the
“Transition
        Services”).
        ADSX
        shall not be obligated to expand the scope of the Transition Services
        significantly beyond the scope of those services and expenses being provided
        to
        Verichip prior to the Offering (as defined below). 

       

      1.2
        Compensation
        for Transition Services.
        

       

      (a)
        As
        compensation for the Transition Services to be provided by ADSX to Verichip
        hereunder, the following shall be payable by VeriChip Corporation on a monthly
        basis: 

       

      (i)
        the
        amounts specified as “Costs Allocated to Verichip” on Schedule 1-C,


       

      (ii)
        the
        reasonable out-of-pocket direct expenses incurred by ADSX in connection with
        providing Transition Services, 

       

      (iii)
        services and expenses incurred by ADSX on behalf of Verichip in connection
        with
        the contemplated initial public offering (the “Offering”)
        by
        Verichip of shares of its common stock, and 


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      


      (iv)
        charges by third party service providers that may or may not be incurred
        as part
        of the Offering that are attributable to Transition Services provided to
        or for
        Verichip and are not included in (i) or (ii) above. 

       

      (b)
        Charges for the Transition Services shall be invoiced by ADSX, on or about
        the
        tenth day of the calendar month next following the calendar month in which
        the
        Transition Services have been performed, and such invoice shall be payable
        by
        Verichip within 30 days following receipt thereof. ADSX shall submit to
        Verichip, together with each invoice, reasonable documentation supporting
        each
        of the invoiced amounts and shall maintain accurate and complete books of
        account necessary to support the amounts set forth on all invoices.


       

      1.3
        Additional
        Services.
        The
        parties agree to use commercially reasonable efforts to reach agreement on
        any
        additional services which Verichip may require of ADSX beyond the scope of
        the
        Transition Services (the “Additional
        Services”),
        and
        the applicable service fees, payment procedures and other rights and obligations
        with respect thereto. 

      


      1.4
        Cooperation.
        Verichip and ADSX agree to use their commercially reasonable efforts to
        cooperate with and provide the other with any information necessary to
        facilitate ADSX’s ability to provide the Transition Services. Each party will
        use its commercially reasonable efforts, and will cooperate as reasonably
        required, to obtain any consents or approvals from third parties necessary
        to
        facilitate the ability of ADSX to provide the Transaction Services and the
        Additional Services. 

       

      2.
        Term and Termination. 

       

      2.1
        Term.
        The
        term of this Agreement (the “Term”)
        shall
        commence on the Effective Date and shall continue in effect with respect
        to the
        Transition Services until such time as Verichip shall request ADSX to cease
        performing such services; provided that ADSX shall not be obligated, except
        as
        provided in Section 2.2, to continue to provide the Transition Services
        after the second anniversary of the Effective Date unless the parties otherwise
        agree to do so. 

       

      2.2
        Termination.
        Except
        as provided in Section 2.1, this Agreement may not be terminated by either
        party for any reason other than upon thirty days’ prior written notice to the
        other party of a material default in the delivery of Transition Services
        or in
        payment therefor by such other party as herein provided. Unless otherwise
        extended by agreement of the parties in writing, this Agreement shall terminate
        on the second anniversary of the Effective Date, except for any Transition
        Services not then completed, as to which this Agreement shall expire upon
        completion of those Transition Services, but in no event longer than thirty
        days
        after the second anniversary of the Effective Date. 

       

      2.3
        Transition.
        Upon
        the expiration or termination of this Agreement or upon Verichip’s request, ADSX
        shall provide conversion and all other services necessary for an orderly
        transition of the Transition Services, in whole or in part, to another provider
        and/or to Verichip itself, including, without limitation, the transfer of
        all
        employee records, financial or tax records and other data in the possession,
        custody or control of ADSX; provided,
        however,
        Verichip agrees that ADSX shall retain copies of all records and other data
        transferred to Verichip under this provision including without limitation
        workpapers and other documents that form the 

       

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      basis
        of
        the ADSX audit or review of its financial statements, and memoranda,
        correspondence, communications, other documents, and records (including
        electronic records), which are created, sent or received in connection with
        the
        audit or review, or as otherwise required by federal securities statutes
        and
        regulations, the ADSX corporate document retention policies and other applicable
        law. The provisions of this Section 2.3 shall survive the expiration or
        termination of this Agreement. 

       

      3.
        Cooperation of the Parties. 

       

      3.1
        Access
        to Personnel and Records.
        ADSX
        and Verichip shall cooperate with each other in providing reasonable access
        to
        personnel and records needed to perform or document the Transition Services
        and
        their cost. 

       

      3.2
        Further
        Assurances.
        ADSX
        and Verichip shall take all other actions reasonably necessary for the
        Transition Services to be performed on a timely basis and in a manner consistent
        with past care and practice unless otherwise specifically agreed in writing.
        

       

      4.
        Standard of Care; Limitations on Liability. 

       

      4.1
        Standard
        of Care.
        In the
        performance of the Transition Services, ADSX shall provide the Transition
        Services promptly and in a professional manner, and shall exercise the degree
        of
        care normally exercised by it in connection with its own affairs, but in
        no
        event less than the standard of care exercised by it in delivering services
        to
        Verichip prior to the Effective Date. Except in cases of gross negligence
        or
        willful misconduct, ADSX shall have no liability to Verichip with regard
        to the
        breach of any duty or obligation to Verichip herein set forth. 

       

      4.2
        Limitation
        on Damages.
        In no
        event shall ADSX be liable to Verichip for any special, indirect, incidental,
        consequential, punitive or similar damages, including but not limited to
        lost
        profits, loss of data or business interruption losses. This limitation shall
        apply even if ADSX has been notified of the possibility or likelihood of
        such
        damages occurring and regardless of the form of action, whether in contract,
        negligence, strict liability, tort, products liability or otherwise.


       

      5.
        Miscellaneous. 

       

      5.1
        Entire
        Agreement.
        This
        Agreement constitutes the entire agreement of the parties hereto and supersedes
        all prior and contemporaneous agreements and understandings (including term
        sheets), both written and oral, between the parties hereto, or either of
        them,
        with respect to the subject matter hereof. 

       

      5.2
        Governing
        Law.
        This
        Agreement shall be governed by, and construed in accordance with, the laws
        of
        the State of Florida. NO ACTION, SUIT OR PROCEEDING MAY BE BROUGHT OR MAINTAINED
        CONCERNING MATTERS COVERED BY THIS AGREEMENT EXCEPT IN A COURT OF THE STATE
        OF
        FLORIDA OR COURTS OF THE UNITED STATES OF AMERICA SITTING IN THE COUNTY OF
        PALM
        BEACH, STATE OF FLORIDA. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY
        IRREVOCABLY AND UNCONDITIONALLY AGREES TO BE SUBJECT TO, AND HEREBY CONSENTS
        AND
        SUBMITS TO, THE JURISDICTION OF THE COURTS OF 

       

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      THE
        STATE
        OF FLORIDA AND OF THE FEDERAL COURTS SITTING IN THE COUNTY OF PALM BEACH,
        STATE
        OF FLORIDA. 

       

      5.3
        Amendment
        and Modification.
        This
        Agreement may be amended, modified or supplemented only by a written agreement
        signed by each of ADSX and Verichip. 

       

      5.4
        Assignment;
        Binding Effect.
        Neither
        this Agreement nor any of the rights, benefits or obligations hereunder may
        be
        assigned by ADSX or Verichip (whether by operation of law or otherwise) without
        the prior written consent of the other party. Subject to the preceding sentence,
        this Agreement shall be binding upon, inure to the benefit of and be enforceable
        by ADSX and Verichip and their respective successors and permitted assigns.
        

       

      5.5
        No
        Third Party Beneficiaries.
        Nothing
        in this Agreement, express or implied, is intended to or shall confer upon
        any
        person (other than Verichip, ADSX and their respective successors or permitted
        assigns) any legal or equitable right, benefit or remedy of any nature
        whatsoever under or by reason of this Agreement and no person (other than
        as so
        specified) shall be deemed a third party beneficiary under or by reason of
        this
        Agreement. 

       

      5.6
        Counterparts.
        This
        Agreement may be executed in one or more counterparts, each of which shall
        be
        deemed to be an original, but all of which together shall constitute one
        agreement binding on ADSX and Verichip, notwithstanding that not all parties
        are
        signatories to the same counterpart. 

       

      5.7
        Confidentiality.
        ADSX
        and Verichip shall preserve in strict confidence any confidential information
        obtained from the other party and identified as such by such other party,
        and
        shall refrain from: (i) disclosing any such information without the prior
        written consent of the other party, except as otherwise required by law,
        including without limitation, the Securities Act of 1933, as amended, and
        the
        rules and regulations promulgated thereunder, and the Securities Exchange
        Act of
        1934, as amended, and the rules and regulations promulgated thereunder, or
        (ii) using such information other than in the performance of Transition
        Services under this Agreement, unless such information (a) is in the public
        domain through no fault of such party, (b) is or hereafter becomes known to
        the public through no fault of the receiving party or (c) is provided to
        the receiving party by a third party having no confidential obligation to
        the
        other party to this Agreement with regard to such information. 

       

      5.8
        Independent
        Contractor.
        The
        relationship of the parties to each other under this Agreement shall be that
        of
        independent contractor. 

       

      5.9
        Personnel.
        Both
        parties hereto agree that they shall take appropriate action by instruction
        of
        or agreement with their respective personnel to ensure that all personnel
        performing or otherwise involved with Transition Services under this Agreement
        shall be bound by and comply with all of the terms and conditions of this
        Agreement, including, but not limited to, the terms and conditions of
        Section 5.7 hereof. 

       

      5.10
        Notices.
        All
        notices, requests, consents and other communications hereunder must be in
        writing and will be deemed to have been duly given: (i) when received if
        personally delivered or sent by facsimile, (ii) one business day after
        being sent by nationally recognized overnight delivery service, or
        (iii) five business days after being sent by nationally registered or


       

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      certified
        mail, return receipt requested, postage prepaid, and in each case addressed
        as
        follows (any party by written notice to the other party in the manner prescribed
        by this Section 5.10 may change the address or the persons to whom notices
        thereof shall be directed): 

       

      
        	 	 	 	 	 
	
                 

              	
                 

              	
                To
                  ADSX at:

              	
                  

              	
                Applied
                  Digital Solutions, Inc.

              
	
                 

              	
                 

              	
                 

              	
                  

              	
                1690
                  South Congress Avenue, Suite 200

              
	
                 

              	
                 

              	
                 

              	
                  

              	
                Delray
                  Beach, Florida 33445

              
	
                 

              	
                 

              	
                 

              	
                  

              	
                Attention:
                  Michael E. Krawitz, Esq.

              
	
                 

              	
                 

              	
                 

              	
                  

              	
                Fax
                  Number: 561-805-8001

              
	 	 	 
	
                 

              	
                 

              	
                with
                  a copy to:

              	
                  

              	
                Holland
                  & Knight LLP

              
	
                 

              	
                 

              	
                 

              	
                  

              	
                701
                  Brickell Avenue

              
	
                 

              	
                 

              	
                 

              	
                  

              	
                Suite
                  3000

              
	
                 

              	
                 

              	
                 

              	
                  

              	
                Miami,
                  Florida 33131

              
	
                 

              	
                 

              	
                 

              	
                  

              	
                Attention:
                  Harvey A. Goldman, Esq.

              
	
                 

              	
                 

              	
                 

              	
                  

              	
                Fax
                  Number: 305-789-7799

              
	 	 	 
	
                 

              	
                 

              	
                To
                  Verichip at:

              	
                  

              	
                Verichip
                  Corporation

              
	
                 

              	
                 

              	
                 

              	
                  

              	
                1690
                  South Congress Avenue, Suite 200

              
	
                 

              	
                 

              	
                 

              	
                  

              	
                Delray
                  Beach, Florida 33445

              
	
                 

              	
                 

              	
                 

              	
                  

              	
                Attention:
                  Kevin H. McLaughlin

              
	
                 

              	
                 

              	
                 

              	
                  

              	
                Fax
                  Number: 561-805-8001

              
	 	 	 
	
                 

              	
                 

              	
                with
                  a copy to:

              	
                  

              	
                Akin
                  Gump Strauss Hauer & Feld LLP

              
	
                 

              	
                 

              	
                 

              	
                  

              	
                590
                  Madison Avenue

              
	
                 

              	
                 

              	
                 

              	
                  

              	
                New
                  York, New York 10022-2524

              
	
                 

              	
                 

              	
                 

              	
                  

              	
                Attention:
                  Seth R. Molay, Esq.

              
	
                 

              	
                 

              	
                 

              	
                  

              	
                Fax
                  Number: 214-969-4343

              


      

       

      [Signature
        page to follow] 

       

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      IN
        WITNESS WHEREOF, the parties hereto have duly caused the execution of this
        Agreement by their duly authorized representative or officer, as of the day
        and
        year first above written. 

      
         

      

      
         

      

      
        	 	APPLIED
                DIGITAL SOLUTIONS, INC.
	 	 	 
	
                 

              	
                
                  By:  
                    

                

              	
                /s/
                  Evan
                  McKeown                                            
                  

              
	
                 

              	
                 

              	
                Name:

              	
                Evan
                  McKeown

              
	
                 

              	
                 

              	
                Title:

              	
                Chief
                  Financial Officer

              
	 
	
                 

              
	 	VERICHIP
                CORPORATION
	 	 	 
	
                 

              	
                
                  By:

                

              	
                /s/
                  Kevin H.
                  McLaughlin                        
                            

              
	
                 

              	
                 

              	
                Name:  
                  

              	
                Kevin
                  H. McLaughlin

              
	
                 

              	
                 

              	
                Title:

              	
                Chief
                  Executive Officer