SECOND AMENDMENT TO SECURITY AGREEMENT

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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").

 

 

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:

 

 

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.

 

By:   /s/ William J. Caragol                        

     Print Name:     William J. Caragol        

     Title:      CFO                                      

By:      /s/ Evan McKeown                 

      Print Name:    Evan McKeown    

      Title:     CFO                                   

 

 

 

 

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