Exhibit 10.56

2007 VeriChip Corporation Executive Management Incentive Plan

 

To:    Executive Management From:    Compensation Committee of the Board of
Directors Date:    April 2, 2007

Re: 2007 VeriChip Corporation Executive Management Incentive Plan

This Executive Management Incentive Plan (the “Plan”) is designed to recognize
and reward the contributions of management that result in the achievement of
goals and objectives that, in the judgment of the Compensation Committee of the
Board of Directors of VeriChip Corporation (the “Company”), are important to the
short-term and long-term success of the Company.

The eleven factors that will be considered in determining executive management
bonuses are (in no order of importance and in no order of likelihood of
success):

 

  1. Consolidated revenue for 2007

 

  2. Implantable division revenue for 2007

 

  3. 2007 year end common stock price per share

 

  4. Cash balance as of December 31, 2007

 

  5. Strategic partnerships and distribution agreements

 

  6. Strategic acquisition

 

  7. EBITDA of Canadian operations

 

  8. Infrastructure build out targets for VeriMed business

 

  9. Analyst coverage for common stock

 

  10. SOX and financial audit

 

  11. Discretionary by Compensation Committee of the Board

The Compensation Committee recognizes that there may be situations where the
long-term best interest of the Company and its stockholders may be in conflict
with the short -term achievement of a goal set out in this Plan. In those rare
situations, it is the clear intention of the Compensation Committee that the
executive management team take the initiative to come to the Compensation
Committee for consideration. It is clear that the primary responsibility of all
the executives of the Company is to perform their obligations and duties to the
Company and its stockholders without regard to personal short term gain.

If the Compensation Committee determines that, as a result of a change in the
business, operations, corporate structure or capital structure of the Company,
or the manner in which the Company conducts its business, or any other events or
circumstances, the performance factors are no longer suitable, the Compensation
Committee may in its discretion and to the extent it deems appropriate modify,
change or eliminate such performance factors or the related minimum acceptable
level of achievement, in whole or in part, as the Compensation Committee deems
appropriate and equitable. In addition, the Compensation Committee shall have
the authority to make equitable adjustments to the performance factors, or the
method of calculating attainment of the performance factors, in recognition of
unusual or non-recurring events affecting the Company or any subsidiary or the
financial statements of the Company or any subsidiary in response to or in
recognition of changes in applicable laws or regulations, or to account for
items of gain, loss, deduction or expense determined to be extraordinary,
nonrecurring or unusual in nature or infrequent in occurrence, including, by way
of example only, asset write-downs and litigation or claim judgments or
settlements, or related to the disposal of a segment of a business or related to
a change in accounting principles.

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Summary of Calculation of Bonus

Each executive earns points for meeting or exceeding the goals as set forth in
the table below. The points assigned reflect the seniority of the executive as
well as the anticipated involvement of that executive in achieving the goal.

Executive Management: Scott Silverman, William Caragol and Michael Feder

 

     Silverman    Caragol    Feder

Consolidated revenue of $32.0 million for 2007

   3    2    0.5

Consolidated revenue of $33.6 million for 2007

   1    1    1

Consolidated revenue of $35.2 million for 2007

   1    1    1

Implantable revenue of $250 thousand for 2007

   1    0.5    0.5

Implantable revenue of $500 thousand for 2007

   1    0.5    0.5

Implantable revenue of $750 thousand for 2007

   1    0.5    0.5

Implantable revenue of $1.0 million for 2007

   1    0.5    0.5

Implantable revenue of $2.5 million for 2007

         1

December 31, 2007 common stock price in excess of IPO price

   2    0.67   

December 31, 2007 common stock price 25% in excess of IPO price

   1    0.33   

Total cash at December 31, 2007 of $8.5 million

   1    1   

Strategic partnership and distribution agreements (other than Henry Schein)

   1    0.5    1

Strategic acquisition

   1    0.5   

EBITDA of Canadian operations of $4.8 million

   2    1   

SOX 404 and audit opinion without material deficiencies

   1    1   

VeriMed hospitals in network of 800 at December 31, 2007 and protocol adopted
hospitals of 200 at December 31, 2007

   1    0.5    2

Analyst coverage by three equity research analysts

   2    1   

Discretionary by the Compensation Committee

   Up to 10 pts.    Up to 5 pts.    Up to 2 pts.

TOTAL POINT POTENTIAL

   31 pts.    17.5 pts.    10.5 pts.

All amounts above are in U.S. dollars.

Point Value -

U.S.$50,000 for each point

Notes:

 

  1. No executive can earn more than 100% of points listed for that item.

 

  2. Revenue based points are incremental at each new level. For example, for
Mr. Silverman’s point accumulation – at $34 million of consolidated revenue 4
points are earned (3 points for $32 million, plus 1 point for reaching $33.6
million)

 

  3. EBITDA is determined after giving effect to Canadian management bonuses,
but before the impact of any bonus to the CEO of VeriChip Corporation, a
Canadian corporation.

 

  4. The year end stock price shall be calculated based on the average of the
ending price on the last twenty trading days of the year.

Pursuant to this Plan, any bonus shall be deemed earned on December 31, 2007,
and the Company shall makes its best effort to pay such bonus within sixty days
of year end.