2006 Incentive Compensation Plan for Nurez Khimji dated April 20, 2006



 Exhibit 10.27 
 

 
 Memorandum 
  

					
	To:	  	Nurez Khimji	  	April 20, 2006
			
	From:	  	Kevin McLaughlin	  	
			
	Re:	  	Senior Management Incentive Compensation Plan	  	

 In addition to your base salary of C$157,500, we are pleased to offer you the following incentive compensation for
the fiscal year ended December 31, 2006. 
 Your target incentive compensation is C$150,000 (plus a special Implanted Revenue incentive of an additional
C$50,000 as listed below) and is based upon the achievement of specific objectives. These targets and the related incentive compensation are divided into three components – quarterly, annual and Implanted Revenue. The quarterly incentive
compensation (C$75,000) rewards the achievement of budgeted revenues. The annual incentive compensation (C$75,000) rewards the achievement of specific objectives; and provides an incentive for exceeding budgeted revenues. The Implanted Revenue
incentive bonus o(C$50,000) rewards you for the achievement specifically of Implanted Division revenue. 
 Quarterly Incentive Compensation

 Your quarterly incentive compensation is calculated based upon the achievement of year-to-date revenue from all of VeriChip Corporation relative to the
December 9, 2005 budget. Your quarterly incentive compensation will be calculated at the end of each fiscal quarter; is earned in the quarter to which it relates; and shall be paid, subject to available cash / stock, within 45 calendar days of
the end of each quarter. 
 The following is the formula for your quarterly incentive compensation calculation: 

(Year-to-Date Revenue to the end of the Fiscal Quarter) / (Annual Revenue Budget of $34,852,000) * (Target Incentive Compensation) * (% of Target Incentive
Compensation) = Actual Quarterly Incentive Compensation 
 Specifically for the first quarter of 2006 your actual quarterly incentive compensation is:

 US$6,441,000 / US$34,852,000 * C$75,000 * 50% = C$13,861 
 If year-to-date revenue to the end of any fiscal quarter does not exceed 95% of the year-to-date annual revenue budget no additional incentive compensation shall be paid. Payments of quarterly incentive compensation
in the 2nd, 3rd and 4th quarters will be 








 
reduced by the actual amount paid in previous quarters. The maximum amount that you can earn during 2006 from this quarterly incentive compensation is
C$75,000 
 Annual Incentive Compensation 
 Your annual
incentive compensation shall be calculated at the end of each fiscal year; is earned in the year to which it relates; and shall be paid within 60 calendar days of the end of the year. 
 a) Achievement of Specific Objectives 
 This portion
of the annual incentive compensation pays a specific amount for the achievement of each specific objective. Partial payments will be considered extraordinary circumstances. 
  

							
	 Specific Objectives of Annual Incentive
	  	% of Target
Incentive
Compensation	 	 	 Specific
 Compensation
Amount

	 Achievement of budgeted Canadian revenue of US$28,360,000
	  	6.66	%	 	C$	10,000
	 Achievement of legacy operations (the former companies – eXI and Instantel) budgeted EBITDA of US$4,182,000
	  	10	%	 	C$	15,000
	 Completion of VeriChip Initial Public Offering with proceeds in excess of US$25M (Gross)
	  	10	%	 	C$	15,000
	 Quarterly Financial Statements by 15th of next month
	  	6.66	%	 	C$	10,000
	 Orderly transition of Accounting functions to Ottawa To be completed by December 31, 2006
	  	10	%	 	C$	15,000
	 All public filings completed on time
	  	6.66	%	 	C$	10,000
	 Sub-Total of Annual Incentive Compensation
	  	50	%	 	C$	75,000
	 Implanted Revenue in excess of US$4,000,000
	  			 	C$	25,000
	 Implanted Revenue in excess of US$6,000,000
	  			 	C$	25,000
	 Total
	  			 	C$	125,000

 b) Exceeding Budgeted Revenues 
 This portion of the annual incentive compensation is calculated based upon exceeding annual revenue from legacy operations (the former companies – eXI and
Instantel) relative to the December 9, 2005 budget 
 The following is the formula for this portion of your annual incentive compensation: 

[(Actual Annual Revenue) / (Annual Revenue Budget of US$28,360,000) – 1] * (Target Incentive Compensation) * (multiplier of 2) = Actual Annual Incentive
Compensation 
 Assuming that revenues are exceeded by 10% the following would be the calculation for this portion of your Actual Annual Incentive
Compensation: 
 [US$31,196,000 / US$28,360,000 – 1] * C$150,000 * 2 = C$30,000 







 If Actual Annual Revenue does not exceed the Annual Revenue Budget no incentive compensation shall be paid. There is no
maximum for this portion of the annual incentive compensation. 
 I look forward to working with you to achieve these performance targets.