Document:

Exhibit 10.2

    
      

    

    

    Exhibit
      10.2

    SECOND
      AMENDED AND RESTATED

    REVOLVING
      LINE OF CREDIT NOTE

    WORKING
      CAPITAL

    

    

      
        	
                $14,500,000.00
                  U.S.

              	
                January
                  19, 2007

              

      

    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 Fourteen
      Million Five Hundred Thousand Dollars ($14,500,000.00), 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 herein below, 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 fixed rate equal to twelve percent (12%)
      per
      annum (the “Interest Rate”). The Interest Rate will apply to the outstanding
      amount under the Loan Agreement and this Second Amended and Restated Revolving
      Line of Credit Note (the "Note") effective from and after October 6, 2006 which
      is the date of the Amended and Restated Revolving Line of Credit Note in the
      principal amount of $13,000,000.00 from the Borrower in favor of the Lender
      (the
      "Amended and Restated Note"). For avoidance of doubt, the interest rate
      described in the Revolving Line of Credit Note dated December 27, 2005 in the
      principal amount of $8,500,000.00 from the Borrower in favor of the Lender
      (the
      "Original Note") applied to the outstanding amounts under the Original Note
      prior to the date of the Amended and Restated Note. 

     

    The
      Borrower shall make the following payments with each such payment consisting
      of
      principal and interest:

     

    (a)
      Seven
      Million Dollars ($7,000,000) within ten (10) days after the consummation of
      an
      initial public offering of the Borrower's common stock pursuant to an effective
      registration statement filed with the Securities and Exchange Commission (an
      "IPO"). 

    

    (b)
      Assuming the consummation of the IPO described in (a) above occurs, Two Hundred
      Fifty Thousand Dollars ($250,000) on the first day of each month commencing
      in
      January 2008 through August 2008;

    

    (b)
      Assuming the consummation of the IPO described in (a) above occurs, Three
      Hundred Fifty Thousand Dollars ($350,000) on the first day of each month
      commencing in September 2008 through July 2009; and

    
      
        
 

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c)
      one
      final balloon payment on
      August
      1,
      2009,
      equal
      to
      the outstanding principal amount then due under the Loans and the other
      Obligations, plus all accrued and unpaid
      interest
      and any fees or expenses outstanding.

     

    Notwithstanding
      the above payment schedule, in the event an IPO is not consummated on or before
      July 1, 2008, the outstanding principal amount then due under the Loans and
      the
      other Obligations, plus all accrued and unpaid interest and any fees or expenses
      outstanding, shall be due and payable on July 1, 2008, unless extended pursuant
      to the terms of the Loan Agreement.

     

    All
      payments made hereunder shall be applied first to any then unpaid, but accrued,
      interest and then to principal. 

     

    The
      Note
      is issued under, and is subject to, the Commercial Loan Agreement dated December
      27, 2005, as amended by that First Amendment to Commercial Loan Agreement dated
      October 6, 2006 and that Second Amendment to Commercial Loan Agreement dated
      January 19, 2007, 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%). 

     

    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

     

    
      
        
 

        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    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. 

     

    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
      amends and restates the Amended and Restated Note. 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/
        John H. Nichols    
                                                    
        By:
        /s/
        Daniel A.
        Gunther               

      Print
        Name:
        Daniel A. Gunther       

      Title:
        President
               
                

    

     

    
 

    

    
 

     

    3Exhibit 10.3

    
      

    

    Exhibit
      10.3

    

    SECOND
      AMENDMENT TO SECURITY AGREEMENT 

    

    This
      Second Amendment to Security Agreement (the “Second Amendment”) is dated as of
      the 19th day of January, 2007 and is entered into by and between VERICHIP
      CORPORATION, a Delaware corporation with a principal place of business at 1690
      South Congress Avenue, Suite 200, Delray Beach, Florida 33445 ("the Debtor"),
      and Applied Digital Solutions, Inc., a Missouri corporation located at 1690
      South Congress Avenue, Suite 200, Delray Beach, Florida 33445 (the "Secured
      Party"). 

     

    R E C I T A L S:

     

    WHEREAS,
      Secured Party and Debtor have previously entered into a Security Agreement
      dated
      as of December 27, 2005, as amended by that First Amendment to Security
      Agreement, dated October 6, 2006 (the "Security Agreement") securing the
      obligations of Debtor under the Commercial Loan Agreement dated December 27,
      2005, as amended by that First Amendment to Commercial Loan Agreement dated
      October 6, 2006 (the "Credit Agreement") and the Amended and Restated Working
      Capital Revolving Line of Credit made pursuant to the Credit Agreement (the
      "Loan"). 

     

    WHEREAS,
      Debtor has requested and Lender has agreed to increase the principal amount
      of
      the Loan in the amount of $1,500,000.00 subject to certain terms and conditions;
      

     

    WHEREAS,
      Debtor and Lender have agreed to certain modifications to the Security
      Agreement, as amended; and

     

    WHEREAS,
      Debtor and Lender have executed and delivered that certain Second Amendment
      to
      the Credit Agreement of even date herewith and that certain Second Amended
      and
      Restated Revolving Line of Credit Note - Working Capital of even date herewith
      in the principal amount of $14,500,000.00.

     

    NOW
      THEREFORE, in consideration of the mutual covenants, for good and valuable
      consideration, the receipt and sufficiency of which is hereby acknowledged,
      the
      parties hereby agree as follows:

     

    W I T N E S S E T H:

     

    
      
        1. 
          Incorporation and Recitals.
          The
          above recitals are true and correct and are incorporated herein by
          reference.

         

      

    

    2. 
      Definitions.
      All
      capitalized terms used herein shall, except as modified herein, have the meaning
      subscribed to them
      in the
      Security Agreement. All references to the "Security Agreement" set forth in
      the
      Loan Documents are hereby deemed to include reference to the Security Agreement,
      as hereby amended. All references to the Security Agreement set forth in the
      Credit Agreement as amended by that First Amendment to Commercial Loan Agreement
      dated as of October 6, 2006, and as amended by that Second Amendment to
      Commercial Loan Agreement dated as of even date herewith (the "Credit
      Agreement") and all other documents

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    executed
      by Debtor, and/or Lender in connection with the Loan (the "Loan Documents")
      are
      hereby deemed to refer to the Security Agreement, as hereby amended.

     

    3. Amendment
      to Amount of Loan:
      The
      first whereas clause is amended by replacing "Thirteen Million Dollars
      ($13,000,000.00)" with "Fourteen Million Five Hundred Thousand Dollars
      ($14,500,000.00)".

     

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

     

    5. Cooperation;
      Further Assurances.
      Debtor
      agrees to cooperate with Lender so that the interests of Lender are protected
      and the intent of the Security Agreement can be effectuated. Debtor agrees
      to
      execute all documents and to provide whatever further assurances Lender may
      request or deem necessary to effectuate the terms of the Security
      Agreement.

     

    6. No
      Implied Modifications.
      Except
      as expressly modified hereby, all terms and provisions of the Security Agreement
      shall remain unchanged and in full force and effect.

     

    IN
      WITNESS WHEREOF, the parties have executed this Second Amendment to Security
      Agreement as of the day and year first written above.

     

    DEBTOR:

    

    VERICHIP
      CORPORATION

    

    

    By:   /s/
      William J. Caragol   
                    

        
      Print Name:     William J. Caragol
        

        
      Title:      CFO                                      

    

    LENDER:

    

    APPLIED
      DIGITAL SOLUTIONS, INC.

    

    By:      /s/
      Evan
      McKeown                 

         
      Print Name:    Evan McKeown    

         
      Title:     CFO                                   
      

     

     

     

     

    2

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