VeriChip CORP
EXHIBIT 10.2
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<TYPE>EX-10.2
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<FILENAME>c72604exv10w2.htm
<DESCRIPTION>EXHIBIT 10.2
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<TITLE>Filed by Bowne Pure Compliance</TITLE>
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<DIV align="right" style="font-size: 10pt; margin-top: 10pt"><B>Exhibit&nbsp;10.2</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF (A)&nbsp;AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAWS OR (B)&nbsp;AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.</B>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>THIS NOTE IS REGISTERED WITH THE AGENT PURSUANT TO SECTION 11.4(B) OF THE PURCHASE AGREEMENT (AS
DEFINED BELOW). TRANSFER OF ALL OR ANY PORTION OF THIS NOTE IS PERMITTED SUBJECT TO THE PROVISIONS
SET FORTH IN SUCH SECTION 11.4(B) WHICH REQUIRE, AMONG OTHER THINGS, THAT NO TRANSFER IS EFFECTIVE
UNTIL THE TRANSFEREE IS REFLECTED AS SUCH ON THE REGISTRY MAINTAINED WITH THE AGENT PURSUANT TO
SUCH SECTION 11.4(B).</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><U><B>SECURED TERM NOTE</B></U>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">FOR VALUE RECEIVED, VERICHIP CORPORATION, a Delaware corporation (&#147;<U>CHIP</U>&#148;), XMARK
CORPORATION, a Canada corporation (&#147;<U>MARK</U>&#148; and together with CHIP, each a &#147;<U>Company</U>&#148;
and collectively the &#147;<U>Companies</U>&#148;), hereby, jointly and severally, promise to pay to VALENS
OFFSHORE SPV II, CORP. or its registered assigns or successors (as applicable, the &#147;<B>Holder</B>&#148;) in
interest, the sum of Eight Million Dollars of the United States (U.S. $8,000,000), together with
any accrued and unpaid interest hereon, on March&nbsp;31, 2009 (the &#147;<B>Maturity Date</B>&#148;) if not sooner
indefeasibly paid in full.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Capitalized terms used herein without definition shall have the meanings ascribed to such
terms in that certain Securities Purchase Agreement dated as of the date hereof (as amended,
restated, modified and/or supplemented from time to time, the &#147;<B>Purchase Agreement</B>&#148;) among the
Companies, the Holder, each other Purchaser that becomes a party thereto and LV Administrative
Services, Inc., as administrative and collateral agent for the Purchasers (the &#147;<B>Agent</B>&#148; together
with the Purchasers, collectively, the &#147;<B>Creditor Parties</B>&#148;).
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">The following terms shall apply to this Secured Term Note (this &#147;<B>Note</B>&#148;):
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>ARTICLE I<BR>
CONTRACT RATE AND AMORTIZATION</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">1.1 <U>Contract Rate</U>. Subject to Sections&nbsp;2.2 and 3.9, interest payable on the
outstanding principal amount of this Note (the &#147;<B>Principal Amount</B>&#148;) shall accrue at a rate per annum
equal to twelve percent (12%) (the &#147;<B>Contract Rate</B>&#148;). Interest shall be (i)&nbsp;calculated on the basis
of a 360&nbsp;day year, and (ii)&nbsp;payable monthly, in arrears, commencing on April&nbsp;1, 2008, on the first
business day of each consecutive calendar month thereafter through and including the Maturity Date,
and on the Maturity Date, whether by acceleration or otherwise. The Contract Rate expressed as an
annual rate of interest for the purposes of the Interest Act (Canada) shall be such rate multiplied
by 365 (or, where the period for which the interest is being calculated includes February&nbsp;29th,
366) and divided by 360.
</DIV>
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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">1.2 <U>Principal Payments</U>. The entire outstanding principal balance under this Note
together with any accrued and unpaid interest and any and all other unpaid amounts which are then
owing by the Companies to the Holder under this Note shall be due and payable on the Maturity Date.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">1.3 <U>Optional Redemption</U>. Subject to <U>Section&nbsp;1.4</U>, the Companies may prepay
this Note at any time in full (&#147;<B>Optional Redemption</B>&#148;) without penalty or premium by paying to the
Holder a sum of money equal to one hundred percent (100%) of the Principal Amount outstanding at
such time together with accrued but unpaid interest thereon and any and all other sums due, accrued
or payable to the Holder arising under this Note (including <U>Section&nbsp;1.5</U>), the Purchase
Agreement or any other Related Agreement (the &#147;<B>Redemption Amount</B>&#148;). The Companies shall deliver to
the Holder a written notice of redemption (the &#147;<B>Notice of Redemption</B>&#148;) specifying than an Optional
Redemption will occur within seven (7)&nbsp;business days after the date of delivery of the Notice of
Redemption (the &#147;<B>Redemption Period</B>&#148;). On or before the expiration of the Redemption Period, the
Redemption Amount must be paid in good funds to the Holder. In the event the Companies fail to pay
the Redemption Amount as set forth herein, then such Redemption Notice will be null and void. In
the event that the Redemption Amount is paid to the Holder within six (6)&nbsp;months of the date of
issue of this Note, upon receipt in full of the Redemption Amount in good funds, the Holder will
rebate to the Companies fifty percent (50%) of any fees it received from the Company on the date of
issue of this Note. If any Notes issued pursuant to the Purchase Agreement, in addition to this
Note, are outstanding (collectively, the &#147;<B>Outstanding Notes</B>&#148;) and the Companies pursuant to this
<U>Section&nbsp;1.3</U> elects to make an Optional Redemption, then the Companies shall take the same
action with respect to all Outstanding Notes and make such payments to all holders of Outstanding
Notes on a pro rata basis based upon the Redemption Amount of each Outstanding Note.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">1.4 <U>Mandatory Prepayments</U>. Upon receipt by any Company or any of its Subsidiaries of
proceeds arising from a sale by any Company or any of its Subsidiaries of any of its property or
assets (other than sales of assets permitted by the Master Security Agreement or the Purchase
Agreement), the Companies shall immediately pay or cause to be paid to the Holder an amount equal
to the lesser of (x)&nbsp;100% of the net proceeds of such sale and (y)&nbsp;the outstanding principal amount
of the Obligations. If the Companies are required to make a mandatory prepayment pursuant to this
<U>Section&nbsp;1.4</U>, then the Companies shall take the same action with respect to all Outstanding
Notes and make such payments to all holders of Outstanding Notes on a pro rata basis based upon the
Principal Amount of each Outstanding Note. The foregoing shall not be deemed to be a consent by
any Creditor Party to any such sale transaction to the extent that such consent is required from
any Creditor Party pursuant to the Purchase Agreement or the Related Agreements.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">1.5 <U>Exit Fee</U>. Upon any repayment or prepayment of all amounts outstanding under this
Note including, without limitation, following acceleration of all amounts due and owing under this
Note as a result of the occurrence of an Event of Default, the Companies shall, jointly and
severally, pay the Holder an exit fee equal to (x)&nbsp;U.S. $120,000 if such amounts are paid prior to
the six (6)&nbsp;month anniversary of the date hereof and (y)&nbsp;U.S. $240,000 if such amounts are paid on
or after the six (6)&nbsp;month anniversary of the date hereof.
</DIV>
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<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>ARTICLE II<BR>
EVENTS OF DEFAULT</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">2.1 <U>Events of Default</U>. The occurrence of any of the following events set forth in
this Section&nbsp;2.1 shall constitute an event of default (&#147;<B>Event of Default</B>&#148;) hereunder:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 12%">(a)&nbsp;Any Company shall fail to pay when due any installment of principal, interest or other
invoiced fees hereon in accordance herewith, or any Company fails to pay any of the other
Obligations (under and as defined in the Master Security Agreement) when due, and, in any such
case, such failure shall continue for a period of five (5)&nbsp;business days following the date upon
which any such payment was due. For purposes herein, &#147;invoiced fees&#148; shall mean fees set forth on
those regularly scheduled monthly invoices received by any Company from the Holder or Agent;
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 12%">(b)&nbsp;Any Company or any of its Subsidiaries breaches any covenant or any other term or
condition of this Note in any material respect and such breach, if subject to cure, continues for a
period of twenty (20)&nbsp;days after the occurrence thereof.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 12%">(c)&nbsp;Any material representation or warranty made or furnished by any Company or any of its
Subsidiaries in this Note, the Purchase Agreement or any other Related Agreement (other than the
Registration Rights Agreement) shall at any time be false or misleading in any material respect on
the date as of which made or deemed made.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 12%">(d)&nbsp;The occurrence of any material default (or similar term) in the observance or performance
of any other agreement or condition relating to any indebtedness in excess of $100,000 or
contingent obligation in excess of $100,000 of any Company or any of its Subsidiaries (including,
without limitation, the indebtedness owing by CHIP pursuant to that certain Commercial Loan
Agreement dated December&nbsp;27, 2005 between Applied Digital Solutions, Inc. and CHIP, as amended,
restated, modified and/or supplemented from time to time and any other Subordinated Debt (as
defined below)) beyond the period of grace (if any) or that is not waived, the effect of which
default (i)&nbsp;is to cause, or permit the holder or holders of such indebtedness or beneficiary or
beneficiaries of such contingent obligation to cause, such indebtedness to become due prior to its
stated maturity or such contingent obligation to become payable or (ii)&nbsp;could materially impair the
rights of any Creditor Party under the Purchase Agreement or any Related Agreement;
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 12%">(e)&nbsp;Any Company breaches any of their material agreements (other than this Note, the Purchase
Agreement, the Related Agreements, and the agreements described in clause (d)&nbsp;of this definition),
and such breach could reasonably be expected to have a Material Adverse Effect;
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 12%">(f)&nbsp;Any Company or any of its Subsidiaries shall (i)&nbsp;apply for, consent to or suffer to exist
the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of
itself or of all or a substantial part of its property, (ii)&nbsp;make a general assignment for the
benefit of creditors, (iii)&nbsp;commence a voluntary case under the federal bankruptcy laws (as now or
hereafter in effect), (iv)&nbsp;be adjudicated a bankrupt or insolvent, (v)&nbsp;file a petition seeking to
take advantage of any other law providing for the relief of debtors, (vi)
acquiesce to, without challenge within ten (10)&nbsp;days of the filing thereof, or failure to have
dismissed, within thirty (30)&nbsp;days, any petition filed against it in any involuntary case under
such bankruptcy laws, or (vii)&nbsp;take any action for the purpose of effecting any of the foregoing;
</DIV>
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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 12%">(g)&nbsp;(1)&nbsp;Attachments or levies in excess of U.S. $250,000 (or the Canadian dollar equivalent)
in the aggregate are made upon any Company or the Companies in the aggregate or any Company&#146;s
Subsidiary&#146;s assets or (2)&nbsp;a judgment is rendered against the Company&#146;s or, the Companies in the
aggregate, property involving a liability of more than U.S. $250,000 (or the Canadian dollar
equivalent) which shall not have been paid, vacated, discharged, stayed or bonded within thirty
(30)&nbsp;days from the entry thereof;
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 12%">(h)&nbsp;Any Company or any of its Subsidiaries shall admit in writing its inability, or be
generally unable, to pay its debts as they become due or cease operations of its present business;
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 12%">(i)&nbsp;A Change of Control (as defined below) shall occur with respect to any Company, unless the
Agent shall have expressly consented to such Change of Control in writing. A &#147;Change of Control&#148;
shall mean any event or circumstance as a result of which (i)&nbsp;any &#147;Person&#148; or &#147;group&#148; (as such
terms are defined in Sections 13(d) and 14(d) of the Exchange Act, as in effect on the date
hereof), other than the Holder and Applied Digital Solutions, Inc. is or becomes the &#147;beneficial
owner&#148; (as defined in Rules&nbsp;13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of
more than 50% on a fully diluted basis of the then outstanding voting equity interest of any
Company, or (ii)&nbsp;the consolidation, merger or other business combination of any Company with or
into any other entity, immediately following which the prior stockholders of such Company fail to
own, directly or indirectly, at least fifty one percent (51%) of the surviving entity;
<U>provided</U>, <U>however</U>, that a Change of Control shall not be deemed to have occurred if
(i)&nbsp;such Company enters into a consolidation, merger, share exchange or other business combination
with an affiliate or subsidiary of such Company reasonably acceptable to Holder, (ii)&nbsp;the surviving
entity assumes all of the obligations of such Company under the Purchase Agreement and the Related
Agreements and (iii)&nbsp;after assuming all of the obligations under the Purchase Agreement and the
Related Agreements, the surviving entity is and would be Solvent until such obligations are paid in
full or otherwise discharged;
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 12%">(j)&nbsp;(1)&nbsp;The indictment of any Company or any of its Subsidiaries or any executive officer of
any Company or any of its Subsidiaries for a felony under any criminal statute, (2)&nbsp;the conviction
of any Company or any of its Subsidiaries or any executive officer of any Company or any of its
Subsidiaries for a misdemeanor under any criminal statute, or (3)&nbsp;the commencement of a criminal or
civil proceeding against any Company or any of its Subsidiaries or any executive officer of any
Company or any of its Subsidiaries pursuant to which statute or proceeding penalties or remedies
reasonably available include forfeiture of a material portion of the property of such Company or
any of its Subsidiaries;
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 12%">(k)&nbsp;(1)&nbsp;An Event of Default shall occur under and as defined in the Purchase Agreement or any
other Related Agreement, (2)&nbsp;any Company or any of its Subsidiaries shall breach any term or
provision of the Purchase Agreement or any other Related Agreement (other than the Registration
Rights Agreement) in any respect material to any Company and such breach, if capable of cure,
continues unremedied for a period of fifteen (15)
days after the occurrence thereof or (3)&nbsp;any proceeding shall be brought by any Company to
challenge the validity, binding effect of the Purchase Agreement or any Related Agreement;
</DIV>
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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 12%">(l)&nbsp;An SEC stop trade order or Principal Market trading suspension of the Common Stock shall
be in effect for five (5)&nbsp;consecutive days or five (5)&nbsp;days during a period of ten (10)&nbsp;consecutive
days, excluding in all cases a suspension of all trading on a Principal Market, provided that CHIP
shall not have been able to cure such trading suspension within thirty (30)&nbsp;days of the notice
thereof or list the Common Stock on another Principal Market within sixty (60)&nbsp;days of such notice;
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 12%">(m)&nbsp;CHIPs failure to deliver Common Stock to the Holder pursuant to and in the form required
by the Purchase Agreement and, if such failure to deliver Common Stock shall not be cured within
three (3)&nbsp;business days or the Companies are required to issue a replacement Note to the Holder and
the Companies shall fail to deliver such replacement Note within seven (7)&nbsp;business days; or
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 12%">(n)&nbsp;Any Company or any of its Subsidiaries shall take or participate in any action which would
be prohibited under the provisions of any subordination agreement governing any indebtedness for
borrowed money of such Company or any of its Subsidiaries which has been subordinated in right of
payment to the obligations hereunder (&#147;<B>Subordinated Debt</B>&#148;) or make any payment on the Subordinated
Debt to a person or entity that was not entitled to receive such payments under the provisions of
any subordination agreement governing such Subordinated Debt.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">2.2 <U>Default Interest</U>. Following the occurrence and during the continuance of an Event
of Default, the Companies shall, jointly and severally, pay additional interest on the outstanding
principal balance of this Note in an amount equal to one percent (1.00%) per month, and all
outstanding obligations under this Note, the Purchase Agreement and each other Related Agreement,
including unpaid interest, shall continue to accrue interest at such additional interest rate from
the date of such Event of Default until the date such Event of Default is cured or waived.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>ARTICLE III<BR>
MISCELLANEOUS</B>
</DIV>



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">3.1 <U>Cumulative Remedies</U>. The remedies under this Note shall be cumulative.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">3.2 <U>Failure or Indulgence Not Waiver</U>. No failure or delay on the part of the Holder
hereof in the exercise of any power, right or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or privilege. All rights and
remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">3.3 <U>Notices</U>. Any notice herein required or permitted to be given shall be given in
writing in accordance with the terms of the Purchase Agreement.
</DIV>
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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">3.4 <U>Amendment Provision</U>. The term &#147;<B>Note</B>&#148; and all references thereto, as used
throughout this instrument, shall mean this instrument as originally executed, or if later amended
or supplemented, then as so amended or supplemented, and any successor instrument as such successor
instrument may be amended or supplemented.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">3.5 <U>Assignability</U>. This Note shall be binding upon the Companies and their
successors and assigns, and shall inure to the benefit of the Holder and its successors and
assigns, and may be assigned by the Holder in accordance with the requirements of the Purchase
Agreement. No Company may assign any of its obligations under this Note without the prior written
consent of the Holder, any such purported assignment without such consent being null and void.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">3.6 <U>Cost of Collection</U>. In case of the occurrence of an Event of Default under this
Note, the Companies shall, jointly and severally, pay the Holder the Holder&#146;s reasonable costs of
collection, including reasonable attorneys&#146; fees.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">3.7 <U>Governing Law, Jurisdiction and Waiver of Jury Trial</U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 12%">(a)&nbsp;THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 12%">(b)&nbsp;EACH COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN THE
COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY
CLAIMS OR DISPUTES BETWEEN SUCH COMPANY, ON THE ONE HAND, AND THE HOLDER, ON THE OTHER HAND,
PERTAINING TO THIS NOTE OR ANY OF THE OTHER RELATED AGREEMENTS OR TO ANY MATTER ARISING OUT OF OR
RELATED TO THIS NOTE OR ANY OF THE RELATED AGREEMENTS; <U>PROVIDED</U>, THAT EACH COMPANY
ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF
THE COUNTY OF NEW YORK, STATE OF NEW YORK; AND <U>FURTHER</U> <U>PROVIDED</U>, THAT NOTHING IN
THIS NOTE SHALL BE DEEMED OR OPERATE TO PRECLUDE THE HOLDER FROM BRINGING SUIT OR TAKING OTHER
LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT THE OBLIGATIONS (AS DEFINED IN THE MASTER
SECURITY AGREEMENT), TO REALIZE ON THE COLLATERAL (AS DEFINED IN THE MASTER SECURITY AGREEMENT) OR
ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF
THE HOLDER. EACH COMPANY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY
ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH COMPANY HEREBY WAIVES ANY OBJECTION WHICH IT
MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR <U>FORUM NON CONVENIENS</U>.
EACH COMPANY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN
ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE
MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH COMPANY AT THE
ADDRESS SET FORTH IN THE PURCHASE AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED
UPON ACTUAL RECEIPT THEREOF.
</DIV>
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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 12%">(c)&nbsp;EACH COMPANY DESIRES THAT ITS DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE
LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, EACH COMPANY HERETO WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR
PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN
THE HOLDER AND SUCH COMPANY ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS NOTE, ANY OTHER RELATED AGREEMENT OR
THE TRANSACTIONS RELATED HERETO OR THERETO.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">3.8 <U>Severability</U>. In the event that any provision of this Note is invalid or
unenforceable under any applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed modified to conform
with such statute or rule of law. Any such provision which may prove invalid or unenforceable
under any law shall not affect the validity or enforceability of any other provision of this Note.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">3.9 <U>Maximum Payments</U>. Nothing contained herein shall be deemed to establish or
require the payment of a rate of interest or other charges in excess of the maximum permitted by
applicable law. In the event that the rate of interest required to be paid or other charges
hereunder exceed the maximum rate permitted by such law, any payments in excess of such maximum
rate shall be credited against amounts owed by the Companies to the Holder and thus refunded to the
Companies.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">3.10 <U>Security Interest</U>. The Agent, for the ratable benefit of the Creditor Parties,
has been granted a security interest in certain assets of the Companies as more fully described in
the Master Security Agreement and the other Related Agreements.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">3.11 <U>Construction; Counterparts</U>. Each party acknowledges that its legal counsel
participated in the preparation of this Note and, therefore, stipulates that the rule of
construction that ambiguities are to be resolved against the drafting party shall not be applied in
the interpretation of this Note to favor any party against the other. This Note may be executed by
the parties hereto in one or more counterparts, each of which shall be deemed an original and all
of which when taken together shall constitute one and the same instrument. Any signature delivered
by a party by facsimile or electronic transmission shall be deemed to be an original signature
hereto.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">3.12 <U>Registered Obligation</U>. This Note shall be registered (and such registration
shall thereafter be maintained) as set forth in <U>Section&nbsp;11.4(b)</U> of the Purchase Agreement.
Notwithstanding any document, instrument or agreement relating to this Note to the contrary,
transfer of this Note (or the right to any payments of principal or stated interest thereunder) may
only be effected by (i)&nbsp;surrender of this Note and either the reissuance by the Companies of this
Note to the new holder or the issuance by the Companies of a new instrument to the new holder
or (ii)&nbsp;registration of such holder as an assignee in accordance with <U>Section&nbsp;11.4(b)</U>
of the Purchase Agreement.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 8%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->7<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">3.13 <U>Judgment Currency</U>. If, for the purpose of obtaining or enforcing judgment
against the Companies in any court in any jurisdiction, it becomes necessary to convert into any
other currency (such other currency being hereinafter in this section referred to as the &#147;<B>Judgment
Currency</B>&#148;) an amount due under this Note in any currency (the &#147;<B>Obligation Currency</B>&#148;) other than the
Judgment Currency, the conversion shall be made at the Exchange Rate (as hereinafter defined)
prevailing on the business day immediately preceding (a)&nbsp;the date of actual payment of the amount
due, in the case of any proceeding in the courts of New York or in the courts of any other
jurisdiction that will give effect to such conversion being made on such date, or (b)&nbsp;the date on
which the foreign court determines, in the case of any proceeding in the courts of any other
jurisdiction (the applicable date as of which such conversion is made pursuant to this section
being hereinafter in this section referred to as the &#147;<B>Judgment Conversion Date</B>&#148;).
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">If, in the case of any proceeding in the court of any jurisdiction referred to in the
preceding paragraph, there is a change in the Exchange Rate prevailing between the Judgment
Conversion Date and the date of actual receipt of the amount due in immediately available funds,
the Companies shall pay, on a joint and several basis, such adjusted amount as may be necessary to
ensure that the amount actually received in the Judgment Currency, when converted at the Exchange
Rate prevailing on the date of payment, will produce the amount of the Obligation Currency which
could have been purchased with the amount of the Judgment Currency stipulated in the judgment or
judicial order at the Exchange Rate prevailing on the Judgment Conversion Date. Any amount due from
the Companies under this section shall be due as a separate debt and shall not be affected by
judgment being obtained for any other amounts due under or in respect of this Note. &#147;<B>Exchange
Rate</B>&#148; means, in relation to any amount of currency to be converted into another currency pursuant
to this <U>Section&nbsp;3.13</U>, the relevant exchange rate as published in the Wall Street Journal on
the relevant date of calculation.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt">&#091;Balance of page intentionally left blank; signature page follows&#093;
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->8<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%"><B>IN WITNESS WHEREOF</B>, the Company has caused this Secured Term Note to be signed in its name
effective as of this 29th day of February, 2008.
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">VERICHIP CORPORATION<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/ Scott R. Silverman
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top">Name:&nbsp;&nbsp;</TD>
    <TD align="left">Scott R. Silverman&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top">Title:&nbsp;&nbsp;</TD>
    <TD align="left">Chief Executive Officer and Chairman<br>
of the Board&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">WITNESS:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="35%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ Susan D
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">XMARK CORPORATION<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/ Scott R. Silverman
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top">Name:&nbsp;&nbsp;</TD>
    <TD align="left">Scott R. Silverman&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top">Title:&nbsp;&nbsp;</TD>
    <TD align="left">Chairman of the Board&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">WITNESS:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="35%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ Susan D
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>



<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>



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