Document:

Revolving Line of Credit Note Working Capital of the Registrant

 Exhibit 10.5 
  
 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%). 

 VERICHIP WORKING CAPITAL NOTE 
 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. 

 VERICHIP WORKING CAPITAL NOTE 
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 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 OfficerSecurity Agreement dated December 27, 2005

 Exhibit 10.6 
  
 SECURITY AGREEMENT 
  
 SECURITY AGREEMENT (the “Agreement”) made December 27, 2005 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”). 
  
 WITNESSETH: 
  
 WHEREAS, pursuant to a Commercial Loan Agreement of even date (the “Loan
Agreement”), Secured Party has granted to Debtor Eight Million Five Hundred Thousand Dollars ($8,500,000.00) in a Working Capital Revolving Line of Credit (the “Loan”); and 
  
 WHEREAS, the obligation of the Secured Party to make the Loan to the Debtor is subject to the condition, among others, that the Debtor shall
execute and deliver this Agreement and grant the security interests hereinafter described. Terms not otherwise defined herein shall have the meanings ascribed to them in the Loan Agreement. 
  
 NOW, THEREFORE, in consideration of the willingness of the Secured Party to make the Loan to
the Debtor and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: 
  
 1. Security Interest. As security for the Secured Obligations described in Section 2 hereof, the Debtor hereby grants to the Secured Party a first priority
security interest in and lien on all of the property described below (hereinafter referred to collectively as the “Collateral”): 
  
 a. All equipment, including machinery, motor vehicles, office equipment, furniture, fixtures, along with all other parts, tools, trade-ins, repairs,
accessories, accessions, modifications and replacements, whether now owned or subsequently acquired, constructed or attached or added to or placed in, the foregoing (collectively, the “Equipment”); 
  
 b. All inventory, wherever located, including goods, merchandise and other
personal property, held for sale or lease or furnished or to be furnished under a contract of service, or constituting raw materials, work in process or materials used or consumed in the Debtor’s business, or consigned to others or held by
others for return to the Debtor, whether now owned or subsequently acquired or manufactured and wherever located (collectively, the “Inventory”); 
  
 c. All accounts receivable, including, without limitation, accounts, contracts, contract rights, chattel paper, instruments, rents, deposits, general
intangibles and any other obligations of any kind, whether now existing or hereafter arising out of or in connection, with the sale or lease of goods or the rendering of services and all rights now or hereafter existing in and to all security
agreements, notes, leases, licenses, franchises, supply agreements and other contracts securing or otherwise relating to any such accounts, contracts, contract rights, chattel paper, instruments, rents, deposits, general intangibles or obligations
(any and all such accounts, contracts, contract rights, chattel paper, instruments, rents, deposits, general intangibles and obligations being the “Receivables” and any and all such security agreements, notes, leases, licenses, franchises,
supply agreements and other contracts being the “Related Contracts”); 

 VERICHIP SECURITY AGREEMENT 
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 d. All general intangibles, including, but not limited to, corporate names, trade names, trademarks,
trade secrets, books and records, customer lists, blue prints and plans, computer programs, tapes and related electronic data, processing software and all corporate ledgers; 
  
 e. Any and all additions, accessions, substitutions or replacements to or for any of the foregoing; 
  
 f. Any and all products and proceeds of any or all of the foregoing,
including, without limitation, cash, cash equivalents, tax refunds and the proceeds of insurance policies providing coverage against the loss or destruction of or damage to any of the Collateral, or any indemnity, warranty or guarantee payable by
reason of loss or damage to or otherwise with respect to any of the Collateral (whether or not the Secured Party is the loss payee thereof); 
  
 g. All of the Debtor’s after-acquired property of the kinds and types described in paragraphs (a) - (f) herein; 
  
 h. All records and data relating to any of the property described above,
whether in the form of a writing, photograph, microfilm, microfiche or electronic media, together with all of the Debtor’s right, title and interest in and to all computer software required to utilize, create, maintain and process any of such
records or data or electronic media; and also in (i) all checks, money, securities, bank accounts, deposit accounts and other accounts in the possession of or held by the Secured Party whether in the name of the Debtor or in the name of the Secured
Party, and (ii) all other property given by the Debtor to the Secured Party pursuant to this agreement. The property described in (i) and (ii) above are held in the possession of the Secured Party by agreement of Debtor and Secured Party. All of the
said Collateral (which throughout this Agreement includes after-acquired Collateral) is to secure the payment and performance of all of the Secured Obligations. 
  

2. Secured Obligations. The security interest hereby granted shall secure the following (the “Secured Obligations”): 
  
 a. The Debtor’s repayment of the principal amount of the Loan, together
with interest, late charges and any other applicable charges to the Secured Party pursuant to the Loan; 
  
 b. The Debtor’s payment or performance of its obligations under the Loan Agreement and under the other Loan Documents (as defined, described and
identified in the Loan Agreement, hereinafter the “Loan Documents”), as the same may be amended, modified, extended, renewed, replaced or restated; and 
  
 c. The payment of all other sums with interest and charges thereon advanced in accordance herewith to protect the validity,
security and priority of this Agreement, the Loan Agreement or the Loan Documents. 

 VERICHIP SECURITY AGREEMENT 
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 3. Warranties and Representations of the Debtor. Debtor hereby makes the following representations and warranties
that shall survive the execution and delivery of this Agreement and shall be continuing representations and warranties as long as any Secured Obligations remains outstanding: 
  
 a. All representations and warranties made in the Loan Agreement and the Loan Documents relating to the Debtor and the
Collateral are true, accurate and complete in all material respects; 
  
 b. The Debtor’s principal place of business is located at 1690 South Congress Avenue, Suite 200, Delray Beach, Florida; the Debtor’s executive offices and the office where its books and records are kept and are to be kept
concerning the Receivables, Related Contracts, and other Collateral are at the aforesaid address; and the Debtor has no other places of business except those set forth on Schedule I hereto; 
  
 c. The Debtor conducts business only under and through the business and trade
name “VeriChip Corporation.” 
  
 d. No material
authorization, approval or other action by, and no notice to or filing with, any governmental authority or other person is required either (i) for the grant by the Debtor of the security interests granted hereby or for the execution, delivery or
performance of this Agreement by the Debtor, or (ii) for the perfection of or the remedies hereunder, except the filing of financing statements; 
  
 e. The Debtor has good and marketable title to all of the Collateral pledged by it hereunder, free and clear of any liens, security interests,
encumbrances or interests or claims of any other person or entity, except those set forth on Schedule II hereto and there are no sums owed with respect to the Collateral. 
  
 f. Upon the filing of UCC-1 financing statements being delivered at or prior to the execution hereof, the Secured Party will
have a valid, perfected first security interest in all of the Collateral; 
  
 g. The Debtor has not performed any acts which might prevent the Secured Party from enforcing any of the material terms and conditions of this Agreement or which would limit any of them in any such enforcement;

  
 h. Schedule III attached hereto sets forth the description and
location of all Collateral not located at the Debtor’s principal place of business, together with a list of the record owners of and record holders of liens against the real estate on which such Collateral is located; and 
  
 i. No effective financing statements or other similar instrument in effect
covering all or any part of the Collateral is on file in any recording office, except as may have been filed in favor of Secured Party relating to this Agreement. 

 VERICHIP SECURITY AGREEMENT 
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 4. Affirmative Covenants of the Debtor. 
  
 a. The Debtor shall promptly notify and provide the Secured Party with a complete description of the opening of any new
places of business, the closing of any existing places of business, the conduct of business under any names or through any entities other than those set forth herein, the relocation of any of the Collateral to any new place of business or any other
act which would affect the financing statements filed by the Secured Party; 
  
 b. The Debtor shall continuously take all steps that are necessary or prudent to protect the security interests of the Secured Party in the Collateral; 
  
 c. The Debtor shall defend the Collateral against the claims and demands of all persons; 
  
 d. The Debtor shall deliver and pledge to the Secured Party, endorsed or
accompanied by instruments of assignment or transfer satisfactory to the Secured Party, any Instruments, documents and chattel paper which the Secured Party may reasonably specify; 
  
 e. The Debtor shall comply, in all material respects, with all governmental regulations applicable to the Collateral or any
part thereof or to the operation of the Debtor’s business; provided, however, that the Debtor may contest any governmental regulation in any reasonable manner which shall not, in the reasonable opinion of the Secured Party, adversely affect the
Secured Party’s rights or the first priority of its security interest in the Collateral; 
  
 f. The Debtor shall pay promptly when due, all taxes, assessments and governmental charges or levies imposed upon the Collateral or in respect of its income or profits therefrom, as well as all claims of any kind,
except that no such charge need be paid if (i) the validity thereof is being contested in good faith by appropriate proceedings, (ii) such proceedings do not involve any danger of the sale, forfeiture or loss of any of the Collateral or any interest
therein; and (iii) such charge is adequately reserved against in accordance with the generally accepted accounting principles; 
  
 g. The Debtor shall cause the Equipment to be maintained and preserved in the same condition, repair and working order as when new and shall make all
repairs, replacements, additions and other improvements necessary to maintain the Equipment in such good condition; 
  
 h. The Debtor shall maintain Inventory sufficient to meet the needs of its business; 
  
 i. The Debtor shall preserve all beneficial Related Contracts; 
  
 j. The Debtor shall take all commercially reasonable steps necessary to collect the Receivables; 
  
 k. The Debtor shall assure that (i) no Receivable is or shall be subject to
any defense, offset, counterclaim, discount or allowance, (ii) no agreement under which any deduction, discount, credit or allowance of any kind may be granted or allowed shall have been or shall thereafter be made by Debtor with any account party
without the consent of Secured Party, (iii) all statements 

 VERICHIP SECURITY AGREEMENT 
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 made and all unpaid balances appearing in the invoices, documents and agreements relating to each Receivable are and
shall be true, genuine, and correct in all respects, and (iv) no Receivable shall be converted to a note or other instrument unless the same shall be delivered to the possession of the Secured Party within ten (10) days of the date of execution of
such note or instrument; 
  
 l. The Debtor shall, with respect to
any Collateral which consists of trucks, automobiles or other motor vehicles, or any other Collateral required to be titled, deliver all titles thereto to the Secured Party to be held by the Secured Party and shall make, execute and deliver any and
all applications, and take such other action to assure that the Secured Party is listed of record as a lienholder on all title certificates; 
  
 m. Debtor shall keep accurate and complete records listing and describing the Collateral and, when requested by Secured Party, Debtor shall give Secured
Party a certificate listing and describing the Collateral and setting forth the total value of the Inventory, the total value of the Equipment, the amount of the Receivables designating how many dates the Receivables are from the date of invoice,
the face value of any instruments, and any other information Secured Party may request. Upon reasonable notice, Secured Party shall have the right at any time to inspect the Collateral and to audit and make copies of any records or other writings
that relate to the Collateral or the general financial condition of Debtor. Bank shall use its best efforts to commence such inspections during reasonable business hours. Secured Party may remove such records and writings for the purpose of having
copies made thereof; 
  
 n. The Debtor shall advise the Secured
Party promptly, in reasonable detail, (i) of any lien, security interest, encumbrance or claim made or asserted against any of the Collateral, (ii) of any material change, substantial loss or depreciation in the composition of the Collateral, and
(iii) of the occurrence of any other material adverse effect on the aggregate value, enforceability or collectibility of the Collateral or on the security interests created hereunder; 
  
 o. The Debtor shall give, execute, deliver and file or record in the proper governmental offices any instrument, paper or
document, including, but not limited to, one or more financing statements under the Uniform Commercial Code, reasonably satisfactory to the Secured Party or take any action which the Secured Party may deem necessary or desirable in order to create,
preserve, perfect, extend, continue, modify, terminate or otherwise effect any security interest granted pursuant hereto, or to enable the Secured Party to exercise or enforce any of its rights hereunder; and 
  
 5. Negative Covenants of the Debtor. Except as otherwise provided in the Loan
Agreement, without the prior written consent of the Secured Party, the Debtor shall not: 
  
 a. Transfer, sell or assign any of the Collateral other than in the ordinary course of business; 
  
 b. Allow or permit any other security interest or lien to attach to any of the Collateral (other than the Maytag subordinated debt); 

 VERICHIP SECURITY AGREEMENT 
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 c. File, authorize or permit to be filed in any jurisdiction any financing statement relating to any of
the Collateral unless the Secured Party is named as sole secured party; 
  
 d. Permit any of the Collateral to be levied upon under any legal process; 
  
 e. Permit anything to be done that may materially impair the value of any of the Collateral or the security therein intended to be afforded hereby; or 
  
 f. Use the Collateral in violation of any law or in any manner inconsistent with any policy of insurance thereon.

  
 6. Fixtures. It is the intention of the parties hereto that none of the
Collateral shall become fixtures. Without limiting the generality of the foregoing, the Debtor will, if requested by the Secured Party, obtain waivers of lien, in form satisfactory to the Secured Party, from each mortgagee or lessor of real property
(other than the Secured Party) on which any of the Collateral is or is to be located. 
  
 7. Insurance. Debtor shall, at its own expense, maintain insurance covering the Collateral against such risks, with such insurers, in such form and in such amounts as shall, from time to time, be required by Secured Party, but in any
event, in such amounts and with such coverage as is customary in Debtor’s type of business. All insurance policies shall be written so as to be payable in the event of loss to Secured Party and shall provide for thirty (30) days written notice
to Secured Party of cancellation or modification. At the request of Secured Party, all insurance policies shall be furnished to and held by Secured Party. Debtor hereby assigns to Secured Party return premiums, dividends and other amounts which may
be or become due upon cancellation of any such policies for any reason whatsoever and directs the insurers to pay Secured Party any sums so due. Secured Party is hereby appointed as attorney irrevocable to collect return premiums, dividends and
other amounts due on any insurance policy and the proceeds of such insurance, to settle any claim with the insurers in the event of loss or damage, to endorse settlement drafts and, upon occurrence of an Event of Default (as defined hereinbelow), to
cancel, assign or surrender any insurance policies. If, while any Secured Obligations are outstanding, any return premiums, dividends, other amounts or proceeds are paid to Secured Party under such policies, Secured Party may, at Secured
Party’s option, take either or both of the following actions: (i) apply such return premiums, dividends, other amounts and proceeds in whole or in part to the payment or satisfaction of any of the Secured Obligations in whatever order Secured
Party determines; or (ii) pay over such return premiums, dividends, other amounts and proceeds in whole or in part to Debtor for the purpose of repairing or replacing the Collateral destroyed or damaged, any return premiums, dividends, other amounts
and proceeds so paid over by Secured Party to be secured by this Agreement. 
  
 8.
Receivables. Debtor agrees that Secured Party may communicate with account debtors in order to verify the existence, amount, and terms of any Receivables. Secured Party may notify account debtors of the security interests established herein
and require that payments on Receivables be made directly to Secured Party, and upon the request of Secured Party, Debtor shall notify account debtors and indicate on all billings that payments and returns are to be made directly to Secured Party.
In furtherance of the foregoing, Debtor hereby appoints Secured Party attorney 

 VERICHIP SECURITY AGREEMENT 
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 irrevocable with full power to collect, compromise, endorse, sell or otherwise deal with the Receivables or proceeds
thereof and to perform the terms of any contract in order to create Receivables in Secured Party’s name or in the name of Debtor. This Agreement may be, but need not be, supplemented by separate assignment of Receivables and contract rights
and, if such assignments are given, the rights and security interests given thereby shall be in addition to and not in limitation of the rights and security interests granted by this Agreement. 
  
 9. Events of Default. The following events shall be deemed “Events of
Default” hereunder: 
  
 a. An Event of Default under the
Loan Agreement or any of the Loan Documents; 
  
 b. Any
representation or warranty or statement of fact made to Secured Party at any time by Debtor is false or misleading or becomes false or misleading in any material respect; 
  
 c. Debtor fails to materially observe or perform any covenant, warranty or agreement required to be observed or performed by
it under this Agreement; 
  
 d. Debtor shall be in default under
any obligation undertaken by Debtor which default has a material adverse effect on the financial condition of Debtor or on the value of the Collateral; 
  
 e. Uninsured loss, theft, damage or destruction of any substantial portion of any of the Collateral; or 
  
 f. Debtor or any guarantor of any of the Secured Obligations is or becomes
insolvent or is involved in any financial difficulty as evidenced by (i) an assignment, composition or similar device for the benefit of creditors, (ii) general failure to pay debts when due, (iii) attachment or receivership of assets not dissolved
within thirty (30) days, (iv) the appointment of a custodian, trustee or receiver for a substantial portion of any of their respective properties, (v) the liquidation or sale of all or substantially all of their respective properties, (vi) the
filing by Debtor or any guarantor of a petition under any Chapter of the United States Bankruptcy Code or the institution of any other proceeding under any law relating to bankruptcy, bankruptcy reorganization, insolvency or relief of Debtors, or
(vii) the filing against Debtor or any guarantor of an involuntary petition under any Chapter of the United States Bankruptcy Code or the institution of any other proceeding under any law relating to bankruptcy, bankruptcy reorganization, insolvency
or relief of debtors where such proceeding is not dismissed within sixty (60) days from the date on which it is filed or instituted. 
  
 10. Rights and Remedies of Secured Party on Default. Upon the occurrence of any Event of Default, Secured Party shall have, by way of example and not of
limitation, the following rights and remedies: 
  
 a. Secured
Party may declare the Secured Obligations, or any of them, to be immediately due and payable without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived; 

 VERICHIP SECURITY AGREEMENT 
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 b. In addition to all other rights and remedies contained in this Agreement, the Loan Agreement, and in
the Loan Documents, Secured Party may exercise the rights and remedies accorded Secured Party by the Uniform Commercial Code or by any other applicable law, all of which rights and remedies shall be cumulative and non-exclusive to the extent
permitted by law; 
  
 c. Secured Party shall have the right to
enter and/or remain upon the Premises of Debtor, or any other place or places where any of the Collateral is located and kept, without any obligation to pay rent to Debtor or others, and remove Collateral therefrom to the premises of the Secured
Party or any agent of Secured Party for such time as Secured Party may desire in order to maintain, collect, sell and/or prepare the Collateral for sale, liquidation or collection; 
  
 d. Secured Party may require the Debtor at Debtor’s cost to assemble the Collateral and make it available to Secured
Party at a place designated by Secured Party; 
  
 e. Secured Party
may take possession of and use and operate the Collateral in the manner and for the purposes as set forth in Section 11 hereinbelow; 
  
 f. Secured Party may sell, lease or otherwise dispose of the Collateral as set forth in Section 12 hereinbelow; 
  
 g. Secured Party shall have the right to set-off, without notice to the
Debtor, any and all deposits or other sums at any time or times credited or due from Secured Party to Debtor, whether in a special account or other account or represented by a certificate of deposit (whether or not matured); which deposit and other
sums shall, at all times, constitute additional security for the Secured Obligations; 
  
 h. Secured Party may perform any warranty, covenant or agreement which Debtor has failed to perform under this Agreement; and 
  
 i. Secured Party may take any other action that Secured Party deems necessary or desirable to protect the Collateral or the security interests granted
herein. 
  
 11. Rights of Secured Party to Use and Operate Collateral. Upon
the occurrence of any Event of Default, but subject to the provisions of the Uniform Commercial Code or other applicable law, the Secured Party shall have the right and power to take possession of all or any part of the Collateral, and to exclude
the Debtor and all persons claiming under the Debtor wholly or partly therefrom, and thereafter to hold, store and/or use, operate, manage and control the same. Upon any such taking of possession, the Secured Party may, from time to time, at the
expense of the Debtor, make all such repairs, replacements, alterations, additions and improvements to and of the Collateral as the Secured Party may reasonably deem proper. In any such case, subject as aforesaid, the Secured Party shall have the
right to manage and control the Collateral and to carry on the business and to exercise all rights and powers of the Debtor in respect thereto as the Secured Party shall deem best, including the right to enter into any and all such agreements with
respect to the leasing and/or operation of the Collateral or any part thereof as the Secured Party may see fit; and the Secured Party shall be entitled to collect and receive all rents, issues, profits, fees, revenues and other income of the same
and every part thereof. Such rents, issues, profits, fees, revenues and 

 VERICHIP SECURITY AGREEMENT 
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 other income shall be applied to pay the expenses of holding and operating the Collateral and of conducting the business
thereof and of all maintenance, repairs, replacements, alterations, additions and improvements and to make all payments which the Secured Party may be required or may elect to make, if any, for taxes, assessments, insurance and other charges upon
the Collateral or any part thereof and all other payments which the Secured Party may be required or authorized to make under any provision of this Agreement (including reasonable legal costs and attorneys’ fees). The remainder of such rents,
issues, profits, fees, revenues and other income shall be applied to the payment of the Secured Obligations in such order of priority as the Secured Party shall determine and any surplus shall be returned to the Debtor. Without limiting the
generality of the foregoing, the Secured Party shall have the right to apply for and have a receiver appointed by a court of competent jurisdiction in any action taken by the Secured Party to enforce its rights and remedies hereunder in order to
manage, protect and preserve the Collateral and continue the operation of the business of the Debtor and to collect all revenues and profits thereof and apply the same to the payment of all expenses and other charges of such receivership including
the compensation of the receiver and to the payment of the Secured Obligations as aforesaid until a sale or other disposition of such Collateral shall be finally made and consummated. 
  
 12. Rights of Secured Party to Sell Collateral. Upon ten (10) days prior written notice by registered or certified mail by Secured
Party to Debtor at the address of the Debtor set forth above (or at such other address or addresses as the Debtor shall specify in writing by like notice to the Secured Party) of the time and place of any intended disposition of Collateral, then
Secured Party shall have the right and power to sell, assign, lease or otherwise dispose of the Collateral from any business premises of the Debtor, either at public auction or private sale, by liquidation sale or other disposition, or as if the
sale was being made in the ordinary course of Debtor’s business, with or without notice to the public that the said sale or disposition is for the benefit of the Secured Party; provided, however, that if the Collateral is perishable or
threatens to decline speedily in value or is of a type customarily sold on a recognized market, then Secured Party shall have the right and power to dispose of the Collateral without prior notice to Debtor and Debtor expressly waives any rights to
notice under such circumstances. The notices described above shall be deemed to meet any requirement hereunder or under any applicable law (including the Uniform Commercial Code) that reasonable notification be given of the time and place of such
sale or other disposition. After deducting all costs and expenses of collection, storage, custody, sale or other disposition and delivery (including reasonable legal costs and attorneys’ fees) and all other charges against the Collateral, the
residue of the proceeds of any such sale or disposition shall be applied to the payment of the Secured Obligations in such order of priority as the Secured Party shall determine and any surplus shall be returned to the Debtor. In the event the
proceeds of any sale, lease or other disposition of the Collateral hereunder are insufficient to pay all of the Secured Obligations in full, the Debtor will be liable for the deficiency, together with interest thereon at the maximum rate provided in
the Loan Agreement and the cost and expenses of collection of such deficiency, including, without limitation, reasonable fees of attorneys, experts and agents, expenses and disbursements. 
  
 13. Attorney-in-Fact. The Secured Party is hereby appointed the attorney-in-fact, with full power of substitution, of the Debtor for
the purpose of carrying out the provisions of this Agreement and taking any action and executing any instruments (including, without limitation, financing or continuation statements, conveyances, assignments and transfers) which the Secured

 VERICHIP SECURITY AGREEMENT 
 Page 10 
  

 Party may deem necessary or advisable to accomplish the purposes hereof, which appointment as attorney-in-fact is coupled
with an interest and is irrevocable. The Debtor shall indemnify and hold harmless the Secured Party from and against any liability or damage that it may incur in the exercise and performance, in good faith, of the Secured Party’s powers and
duties as such attorney-in-fact. 
  
 14. Waiver, etc. The Debtor hereby
waives presentment, demand, notice, protest and, except as is otherwise provided herein, all other demands and notices in connection with this Agreement or the enforcement of the Secured Party’s rights hereunder or in connection with any
Secured Obligations or any Collateral. The Debtor further consents to and waives notice of the granting of renewals, extensions of time for payment or other indulgences to the Debtor or to any account debtor in respect of any Receivable,
substitution, release or surrender of any Collateral, addition or release of persons primarily or secondarily liable on any Secured Obligation or on any Receivable or other Collateral, or the acceptance of partial payments on any Secured Obligation
or on any account receivable or other Collateral and/or the settlement or compromise thereof. No delay or omission on the part of the Secured Party in exercising any right hereunder shall operate as a waiver of such right or of any other right
hereunder. Any waiver of any such right on any one occasion shall not be construed as a bar to or waiver of any such right on any such future occasion. 
  
 15. Termination; Assignments, etc. This Agreement and the security interest in the Collateral created hereby shall terminate when all of the Secured Obligations
have been paid, performed and finally discharged in full. In the event of a sale or assignment by the Secured Party of all or any of the Secured Obligations held by it, such Secured Party may assign or transfer its rights and interests under this
Agreement in whole or in part to the purchaser or purchasers of such Secured Obligations, whereupon such purchaser or purchasers shall become vested with all of the powers and rights of such Secured Party hereunder, and such Secured Party shall
thereafter be forever released and fully discharged from any liability or responsibility hereunder, with respect to the rights and interests so assigned. 
  
 16. Notices. All notices, requests, demands and other communications provided for hereunder shall be in writing (including telegraphic communication) and shall be
either mailed by certified mail, return receipt requested, or delivered by overnight courier service to the applicable party at the following addresses: 
  

			
	If to the Debtor:	  	VeriChip Corporation
	 	  	1690 South Congress Avenue, Suite 200
	 	  	Delray Beach, Florida 33445
		
	If to the Secured Party:	  	Applied Digital Solutions, Inc.
	 	  	1690 South Congress Avenue, Suite 200
	 	  	Delray Beach, Florida 33445
		
	with a copy to:	  	Patricia K. Mellor, Esquire
	 	  	Merra, Kanakis, Creme & Mellor, PC
	 	  	60 Main Street
	 	  	Nashua, New Hampshire 03060

 VERICHIP SECURITY AGREEMENT 
 Page 11 
  

 or, as to each party, at such other address as shall be designated by such parties in a written notice to the other party
complying as to delivery with the terms of this Section. All such notices, requests, demands and other communication shall be effective on the date of first attempted delivery. 
  
 17. Miscellaneous. 
  
 a. The powers conferred on the Secured Party hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the safe custody of any Collateral in its possession and the accounting for monies actually received by it hereunder, the Secured Party shall not have any duty as to any Collateral or
as to the taking of any necessary steps to parties pertaining to any Collateral; 
  
 b. No provision hereof shall be amended except by a writing signed by the Secured Party and the Debtor; 
  
 c. Any provision of this Agreement that is prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof; 
  
 d. This
Agreement shall be binding upon and shall inure to the benefit of the successors and assigns of the Secured Party and the Debtor; 
  
 e. No delay, failure to enforce, or single or partial exercise on the part of the Secured Party in connection with any of its rights hereunder shall
constitute an estoppel or waiver thereof, or preclude other or further exercises or enforcement thereof and no waiver of any default hereunder shall be a waiver of any subsequent default; and 
  
 f. This Agreement shall be governed as to its validity, interpretation and
effect in accordance with the laws of the State of New Hampshire. 
  
 IN WITNESS
WHEREOF, the undersigned have set their hands and seals to this Agreement all as of the day and year first above written. 
  

					
	 	  	VeriChip Corporation
			
	 /s/ Brian Murphy

	  	By:	 	 /s/ Kevin McLaughlin

	Witness	  	Name:	 	Kevin McLaughlin
	 	  	Title:	 	Chief Executive Officer
		
	 	  	Applied Digital Solutions, Inc.
			
	 /s/ Brian Murphy

	  	By:	 	 /s/ Evan McKeown

	Witness	  	Name:	 	Evan McKeown
	 	  	Title:	 	 Chief Financial Officer
 Senior Vice
President

 VERICHIP SECURITY AGREEMENT 
 Page 12 
  

 SCHEDULE I 
  

Other Business Locations 

 VERICHIP SECURITY AGREEMENT 
 Page 13 
  

 SCHEDULE II 
  
 Liens, Encumbrances, etc. 
  
 None 

 VERICHIP SECURITY AGREEMENT 
 Page 14 
  

 SCHEDULE III 
  
 Locations of Collateral

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