Exhibit 10.4


    
      

    


    Exhibit
      10.4 

     

    REVOLVING
      LINE OF CREDIT NOTE 

    WORKING
      CAPITAL 

     

    
      	 	 	 
	
              $8,500,000.00
                U.S.

            	
               

            	
              December 27, 2005

            


    

     

    FOR
      VALUE
      RECEIVED, the undersigned, VeriChip Corporation, a Delaware corporation with
      a
      principal place of business at 1690 South Congress Avenue, Suite 200, Delray
      Beach, Florida 33445 (the “Borrower”), hereby promises to pay to the order of
      Applied Digital Solutions, Inc., a Missouri corporation located at 1690 South
      Congress Avenue, Suite 200, Delray Beach, Florida 33445 (the “Lender”), at such
      address, or such other place or places as the holder hereof may designate in
      writing from time to time hereafter, the maximum principal sum of Eight Million
      Five Hundred Thousand Dollars ($8,500,000.00), or, if less, so much thereof
      as
      may be advanced or readvanced by the Lender to the Borrower pursuant to the
      terms of the Loan Agreement (as hereinafter defined), together with interest
      as
      provided for hereinbelow, in lawful money of the United States of America.
      

     

    Interest
      shall be calculated and charged daily on the basis of actual days elapsed over
      a
      three hundred sixty (360) day banking year, on the unpaid principal balance
      outstanding from time to time at a variable rate equal to the Prime Rate of
      interest (the “Prime Rate”), expressed as a percentage as it exists from time to
      time. The Prime Rate means the highest Prime Rate of interest as published
      in
      the Wall Street Journal from time to time. 

     

    The
      Borrower shall make a balloon payment of principal, interest and any fees or
      expenses outstanding on December 27, 2010 (the “Maturity Date”) unless a
      change of ownership or management occurs, as defined in Section IX. C. of the
      Loan Agreement as defined below, or an initial public offering of the Borrower’s
      common stock is consummated, in which case the Borrower shall, within two
      business days of such event, repay in full all principal, interest and any
      fees
      or expenses outstanding hereunder. 

     

    The
      Note
      is issued under, and is subject to, the Commercial Loan Agreement of even date
      between the Borrower and the Lender, as it may be amended from time to time
      (the
“Loan Agreement”). The holder of this Note is entitled to all of the benefits
      and rights of the Lender under the Loan Agreement. However, neither this
      reference to the Loan Agreement nor any provision thereof shall impair the
      absolute and unconditional obligation of the undersigned to pay the principal
      and interest on this Note as herein provided. Any capitalized term used in
      this
      Note that is not otherwise expressly defined herein shall have the meaning
      ascribed thereto in the Loan Agreement. 

     

    The
      holder may impose upon the undersigned a delinquency charge of $35.00 or five
      percent (5.00%) of the amount of the principal and/or interest payment not
      paid on or before the thirtieth (30th) day after such installment is due,
      whichever is greater. The entire principal balance hereof, together with accrued
      interest, shall after maturity, whether by demand, acceleration or otherwise,
      bear interest at the contract rate of this Note plus an additional three percent
      (3.00%) per annum. Upon default by Borrower under the terms of this Note or
      any other Loan Documents, interest shall accrue at a variable rate equal to
      the
      contract rate of this Note plus three percent (3.00%). 


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    Page
      2


     

    The
      undersigned agrees to pay on demand all reasonable out-of-pocket costs of
      collection hereof, including court costs, service fees, and reasonable
      attorney’s fees, whether or not any foreclosure or other action is instituted by
      the holder in its discretion. 

     

    The
      word
“holder”, as used in this Note, shall mean the payee or endorsee of this Note
      who is in possession of it, or the bearer, if this Note is at that time payable
      to the bearer. 

     

    The
      indebtedness evidenced by this Note is secured by the Loan Documents as defined
      in the Loan Agreement. Any default by the undersigned under the Loan Documents
      shall constitute a default under this Note entitling the holder to declare
      the
      entire principal amount of the indebtedness evidenced hereby, together with
      all
      accrued interest thereon, immediately due and payable. 

     

    No
      delay
      or omission on the part of the holder in exercising any right, privilege or
      remedy shall impair such right, privilege or remedy or be construed as a waiver
      thereof or of any other right, privilege or remedy. No waiver of any right,
      privilege or remedy or any amendment to this Note shall be effective unless
      made
      in writing and signed by the holder. Under no circumstances shall an effective
      waiver of any right, privilege or remedy on any one occasion constitute or
      be
      construed as a bar to the exercise of or a waiver of such right, privilege
      or
      remedy on any future occasion. The acceptance by the holder hereof of any
      payment after any default hereunder shall not operate to extend the time of
      payment of any amount then remaining unpaid hereunder or constitute a waiver
      of
      any rights of the holder hereof under this Note. 

     

    All
      rights and remedies of the holder, whether granted herein or otherwise, shall
      be
      cumulative and may be exercised singularly or concurrently, and the holder
      shall
      have, in addition to all other rights and remedies, the rights and remedies
      of a
      secured party under the Uniform Commercial Code of New Hampshire. The holder
      shall have no duty as to the collection or protection of the Collateral or
      of
      any income thereon, or as to the preservation of any rights pertaining thereto
      beyond the safe custody thereof. Surrender of this Note, upon payment or
      otherwise, shall not affect the right of the holder to retain the Collateral
      as
      security for the payment and performance of any other liability of the
      undersigned to the holder. 

     

    Every
      maker, endorser, or guarantor of this Note, or the obligations represented
      by
      this Note, waives all exemption rights, valuation and appraisement, presentment,
      protest and demand, demand for payment, notice of dishonor and protest and
      all
      other demands and notices in connection with the delivery, acceptance,
      performance, default or enforcement of this Note, and assents to any extension
      or postponement of the time of payment or any other indulgence, to any
      substitution, exchange or release of Collateral, and/or to the addition or
      release of any other party or person primarily or secondarily liable.


     

    This
      Note
      may be prepaid in whole or in part without penalty. 


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    Page
      3


     

    This
      Note
      and the provisions hereof shall be binding upon the undersigned and the
      undersigned’s heirs, administrators, executors, successors, legal
      representatives and assigns and shall inure to the benefit of the holder, the
      holder’s heirs, administrators, executors, successors, legal representatives and
      assigns. 

     

    This
      Note
      may not be amended, changed or modified in any respect except by a written
      document that has been executed by each party. This Note constitutes a New
      Hampshire sealed instrument and contract to be governed by the laws of such
      state and to be paid and performed therein. 

     

    
      	 	 	 	 	 
	
              IN
                THE PRESENCE OF:

            	
               

            	
               

            
	 	 
	
               

            	
               

            	
              VeriChip
                Corporation

            
	 	 	 
	
              /s/
                Keevin
                Vanloo                                                   
                

            	
               

            	
              By:

            	
               

            	
              /s/
                Nurez
                Khimji                                                            
                

            
	
               

            	
               

            	
              Name:

            	
               

            	
              Nurez
                Khimji

            
	
               

            	
               

            	
              Title:

            	
               

            	
              Chief
                Financial Officer