Exhibit 10.112


    
      

    


    Exhibit
      10.112

    


    Incentive
      and Recognition Policy

    


    To:    
      Executive
      Management

    From: Compensation
      Committee

    Date:
       April
      2, 2007

    


    Re:
      2007 Incentive and Recognition Policy

    


    The
      Compensation Committee recognizes the significantly improved strategic position
      of Applied Digital Solutions, Inc. (the “Company”), both in terms of financial
      health and in terms of the VeriChip IPO. While genuinely appreciated, there
      remains much more to be achieved. This policy is designed to strongly motivate
      senior management to achieve goals that, in the judgment of the Compensation
      Committee, are important to the value of the long-run per share price. The
      intent is to motivate the executive team to reach for the best performance
      and
      result for the Company and its shareholders. 

    


    The
      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.

            	
              Engaging
                in a strategic transaction to better the long-term profitability
                and value
                of the Company

            


    

    
      	 	
              2.

            	
              Earnings
                per share for the year and EBITDA for the year (i.e., earnings per
                share
                before interest, taxes, depreciation and
                amortization)

            


    

    
      	 	
              3.

            	
              Improved
                valuation in InfoTech during 2007

            


    

    
      	 	
              4.

            	
              Realization
                of profit from the pending USPS
                matter

            


    

    
      	 	
              5.

            	
              Continued
                404 clean opinion

            


    

    
      	 	
              6.

            	
              Increased
                analyst coverage

            


    

    
      	 	
              7.

            	
              Audit
                committee assessment 

            


    

    
      	 	
              8.

            	
              Excellent
                communication with shareholders through timely, accurate and quality
                reporting

            


    

    
      	 	
              9.

            	
              Debt
                reduction

            


    

    
      	 	
              10.

            	
              Thermo
                Life progress

            


    

    
      	 	
              11.

            	
              Improved
                value in, or valuable sale of, the Company’s investments in the Company’s
                subsidiaries

            


    

    


    The
      Compensation Committee recognizes that there may be situations where the
      long-term best interest of the Company and its shareholders 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 this Committee that the executive
      team
      takes the initiative to come to the 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 shareholders without
      regard to personal short-term gain. Moreover, recognizing that accounting
      charges occasionally do not reflect operational achievements (such as non-cash
      charges), such amounts would generally be excluded from calculation (as
      determined by the Compensation Committee at the time any bonuses would be
      calculated). 

    



    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

         

      

    


    Calculation
      of Bonus

    Each
      executive officer earns points for meeting or exceeding the goals as set forth
      in the tables below. The points and values reflect the seniority of the officer
      as well as the anticipated involvement of that officer in effecting the
      goal.

    


    CEO:
      Michael Krawitz

    
      	
              Major
                strategic transaction 

            	
              6

            
	
              Positive
                EPS and positive EBITDA for the year, 50% of points for
                each

            	
              5

            
	
              InfoTech
                Valuation (20% of points listed for each 20% increase in stock price
                from
                12/31/06) or major transaction involving InfoTech

            	
              1

            
	
              Postal
                Service (20% of points for each $250K of recovery)

            	
              0.5

            
	
              404
                clean opinion and audit clean opinion

            	
              1

            
	
              Analyst
                coverage (50% of points for coverage by new, credible analyst, additional
                50% for second or more)

            	
              1

            
	
              ThermoLife
                disposition or licensing agreement 

            	
              1

            
	
              Paying
                off Laurus (if Laurus is replaced with comparable instrument, points
                are
                discretionary)

            	
              3

            
	
              Subsidiary
                transaction: EITHER transactions that yield $30MM to Applied Digital
                OR
                improve stock price of public subs; if the latter, then 20% of points
                for
                each $0.30 in increased stock price

            	
              5

            


    

     

    
      	 	 
	
              Maximum
                Potential Points (point value is $50,000 per point)

            	
              23.5

            
	
              Maximum
                Potential Dollars if all is achieved fully

            	
              $1,175,000

            
	
              Expected
                bonus based on difficulty assessment

            	
              $331,250

            


    

    


    


    



    
      
        2

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Interim
      CFO: Lorraine Breece

    
      	
              Major
                strategic transaction 

            	
              4

            
	
              Positive
                EPS and positive EBITDA for the year, 50% of points for
                each

            	
              4

            
	
              404
                clean opinion and audit clean opinion

            	
              3

            
	
              Audit
                Committee discretion

            	
              1

            
	
              Analyst
                coverage (50% of points for coverage by new, credible analyst, additional
                50% for second or more)

            	
              1

            
	
              Timely,
                accurate and quality filings

            	
              1

            
	
              Paying
                off Laurus (if Laurus is replaced with comparable instrument, points
                are
                discretionary)

            	
              3

            
	
              Subsidiary
                transaction: EITHER transactions that yield $30MM to Applied Digital
                OR
                improve stock price of public subs; if the latter, then 20% of points
                for
                each $0.30 in increased stock price

            	
              2

            
	
              Maximum
                Potential Points (point value is $25,000 per point)

            	
              19

            
	
              Maximum
                Potential Dollars if all is achieved fully

            	
              $475,000

            
	
              Expected
                bonus based on difficulty assessment

            	
              $172,500

            


    

    


    


    


    
      	
              No
                officer can earn more than 100% of points listed for that
                item

            	 


    

    


    To
      the extent of any ambiguity or need for interpretation, the Compensation
      Committee shall have authority, in its sole discretion, to make final
      determinations. This incentive plan does not create a contract of employment
      or
      otherwise bind the Company to employ the named officer. If the officer is
      terminated for cause or resigns (without good cause) prior to the payment of
      any
      bonus, then no portion of the bonus shall be payable without the consent of
      the
      Compensation Committee which it may exercise in its sole discretion. If the
      named executive is terminated not for cause (or terminates employment with
      good
      reason), the Compensation Committee will make a pro rata adjustment based on
      the
      percentage of the goal achieved before the departure. “Expected bonus” is based
      on the Committee’s assessment of difficulty but is neither a minimum nor a
      maximum, solely an informed estimate.


    
      
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