Document:

VeriChip Corporation 2005 Flexible Stock Plan

 Exhibit 10.2 
 VERICHIP CORPORATION 
 2005 FLEXIBLE STOCK PLAN 
 (Restated to reflect the reverse stock splits as of December 20, 2005 
 and as of December 18, 2006) 
 (As Amended and Restated on December [ ],
2006) 

 VERICHIP CORPORATION 
 2005 FLEXIBLE STOCK PLAN 
 (As Amended and Restated on December [ ], 2006) 
 TABLE OF CONTENTS 
  

			
	 	  	Page
	 1. NAME AND PURPOSE
	  	
		
	 1.1. Name
	  	1
	 1.2. Purpose
	  	1
		
	 2. DEFINITIONS OF TERMS AND RULES OF CONSTRUCTION
	  	
		
	 2.1. General Definitions
	  	
	 2.1.1. Affiliate
	  	1
	 2.1.2. Agreement
	  	1
	 2.1.3. Benefit
	  	1
	 2.1.4. Board
	  	1
	 2.1.5. Cash Award
	  	1
	 2.1.6. Change of Control
	  	1
	 2.1.7. Code
	  	2
	 2.1.8. Company
	  	2
	 2.1.9. Committee
	  	2
	 2.1.10. Common Stock
	  	2
	 2.1.11. Director
	  	2
	 2.1.12. Effective Date
	  	2
	 2.1.13. Employee
	  	2
	 2.1.14. Employer
	  	2
	 2.1.15. Exchange Act
	  	2
	 2.1.16. Fair Market Value
	  	2
	 2.1.17. Fiscal Year
	  	2
	 2.1.18. ISO
	  	2
	 2.1.19. NQSO
	  	2
	 2.1.20. Option
	  	2
	 2.1.21. Other Stock Based Award
	  	2
	 2.1.22. Parent
	  	3
	 2.1.23. Participant
	  	3
	 2.1.24. Performance Based Compensation
	  	3
	 2.1.25. Performance Share
	  	3
	 2.1.26. Plan
	  	3
	 2.1.27. Reload Option
	  	3
	 2.1.28. Restricted Stock
	  	3
	 2.1.29. Rule 16b-3
	  	3
	 2.1.30. SEC
	  	3
	 2.1.31. Share
	  	3
	 2.1.32. SAR
	  	3
	 2.1.33. Subsidiary
	  	3
	 2.2. Other Definitions
	  	3
	 2.3. Conflicts
	  	3

  

 i 

			
	 3. COMMON STOCK
	  	
		
	 3.1. Number of Shares
	  	4
	 3.2. Reusage
	  	4
	 3.3. Adjustments
	  	4
		
	 4. ELIGIBILITY
	  	
		
	 4.1. Determined By Committee
	  	4
		
	 5. ADMINISTRATION
	  	
		
	 5.1. Committee
	  	4
	 5.2. Authority
	  	5
	 5.3. Delegation
	  	5
	 5.4. Determination
	  	5
		
	 6. AMENDMENT
	  	
		
	 6.1. Power of Board
	  	5
	 6.2. Limitation
	  	5
		
	 7. TERM AND TERMINATION
	  	
		
	 7.1. Term
	  	6
	 7.2. Termination
	  	6
		
	 8. MODIFICATION OR TERMINATION OF BENEFITS
	  	
		
	 8.1. General
	  	6
	 8.2. Committee’s Right
	  	6
	 8.3. Compliance with Applicable Laws
	  	6
		
	 9. CHANGE OF CONTROL
	  	
		
	 9.1. Vesting and Payment
	  	6
	 9.2. Other Action
	  	6
		
	 10. AGREEMENTS AND CERTAIN BENEFITS
	  	
		
	 10.1. Grant Evidenced by Agreement
	  	7
	 10.2. Provisions of Agreement
	  	7
	 10.3. Transferability
	  	7

  

 ii 

			
	 11. REPLACEMENT AND TANDEM AWARDS
	  	
		
	 11.1. Replacement
	  	7
	 11.2. Tandem Awards
	  	7
		
	 12. PAYMENT, DIVIDENDS AND WITHHOLDING
	  	
		
	 12.1. Payment
	  	7
	 12.2. Dividend Equivalents
	  	8
	 12.3. Withholding
	  	8
		
	 13. OPTIONS
	  	
		
	 13.1. Types of Options
	  	8
	 13.2. Grant of ISOs and Option Price
	  	8
	 13.3. Other Requirements for ISOs
	  	8
	 13.4. NQSOs
	  	8
	 13.5. Determination by Committee
	  	8
		
	 14. SARS
	  	
		
	 14.1. Grant and Payment
	  	8
	 14.2. Grant of Tandem Award
	  	8
	 14.3. ISO Tandem Award
	  	8
	 14.4. Payment of Award
	  	8
		
	 15. ANNUAL LIMITATIONS
	  	
		
	 15.1. Limitation on Options and SARs
	  	8
	 15.2. Limitation on Performance Shares
	  	9
	 15.3. Computations
	  	9
		
	 16. RESTRICTED STOCK AND PERFORMANCE SHARES
	  	
		
	 16.1. Restricted Stock
	  	9
	 16.2. Cost of Restricted Stock
	  	9
	 16.3. Non-Transferability
	  	9
	 16.4. Performance Shares
	  	9
	 16.5. Grant
	  	9

  

 iii 

			
	 17. CASH AWARDS
	  	
		
	 17.1. Grant
	  	9
	 17.2. Annual Limits
	  	10
	 17.3. Restrictions
	  	10
		
	 18. OTHER STOCK BASED AWARDS AND OTHER BENEFITS
	  	
		
	 18.1. Other Stock Based Awards
	  	10
	 18.2. Other Benefits
	  	10
		
	 19. MISCELLANEOUS PROVISIONS
	  	
		
	 19.1. Underscored References
	  	10
	 19.2. Number and Gender
	  	10
	 19.3. Unfunded Status of Plan
	  	10
	 19.4. Termination of Employment
	  	10
	 19.5. Designation of Beneficiary
	  	11
	 19.6. Governing Law
	  	11
	 19.7. Purchase for Investment
	  	11
	 19.8. No Employment Contract
	  	11
	 19.9. No Effect on Other Benefits
	  	11
	 19.10. Limitation on Exercise
	  	11

  

 iv 

 VERICHIP CORPORATION 
 2005 FLEXIBLE STOCK PLAN 
 (As Amended and Restated on December [ ], 2006) 
 1.NAME AND PURPOSE 
 1.1 Name. 
 The name of this Plan is the “VeriChip Corporation 2005 Flexible Stock Plan.” 
 1.2 Purpose. 
 The Company has established this Plan to attract, retain, motivate and reward
Employees and Directors and to encourage ownership of the Company’s Common Stock by them. The Company also intends in appropriate circumstances to grant awards of its common stock in lieu of cash compensation pursuant to the mutual agreement of
the Participant and the Company. 
 2. DEFINITIONS OF TERMS AND RULES OF CONSTRUCTION 
 2.1 General Definitions. 
 The following words
and phrases, when used in the Plan, unless otherwise specifically defined or unless the context clearly otherwise requires, shall have the following respective meanings: 
 2.1.1 Affiliate. 
 A Parent or Subsidiary of the Company. 
 2.1.2 Agreement. 
 The document which evidences
the grant of any Benefit under the Plan and which sets forth the Benefit and the terms, conditions and provisions of, and restrictions relating to, such Benefit. 
 2.1.3 Benefit. 
 Any benefit granted to a Participant under the Plan. 
 2.1.4 Board. 
 The Board of Directors of the
Company. 
 2.1.5 Cash Award. 
 A
Benefit payable in the form of cash. 
 2.1.6 Change of Control. 
 If any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3 promulgated under the Exchange Act),
directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company’s then outstanding securities; upon the first purchase of the Common Stock pursuant to a tender or exchange offer (other
than a tender or exchange offer made by the Company); upon the approval by the Company’s stockholders of a merger or consolidation, a sale or disposition of all or substantially all of the Company’s assets or a plan of liquidation or
dissolution of the Company; or if during an period of two consecutive years, individuals who at the beginning of such period constitute the Board cease for any reason to constitute at least a majority thereof, unless the election or nomination for
the election by the Company’s stockholders of each new director was approved by a vote of at least 2/3 of the Board then still in office who were members of the Board at the beginning of the period. Notwithstanding the foregoing, a Change in
Control shall not be deemed to occur if the Company either merges or consolidates with or into another company or sells or disposes of all or substantially all of its assets to another company, if such merger, consolidation, sale or disposition is
in connection with a corporate restructuring wherein the stockholders of the Company immediately before such merger, consolidation, sale or disposition own, directly or indirectly, immediately following such merger, consolidation, sale or
disposition of at least 80% of the combined voting power of all outstanding classes of securities of the company resulting from such merger or consolidation, or to which the Company sells or disposes of its assets, in substantially the same
proportion as their ownership in the Company immediately before such merger, consolidation, sale or disposition. 
  

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 2.1.7 Code. 
 The Internal Revenue Code of 1986, as amended. Any reference to the Code includes the regulations promulgated pursuant to the Code. 
 2.1.8 Company. 
 VeriChip Corporation. 
 2.1.9 Committee. 
 A Committee described in Section 5.1. 
 2.1.10 Common Stock. 
 The Company’s
common stock which presently has a par value of $0.01 per Share. 
 2.1.11 Director. 
 A member of the Board or a member of the Board of Directors of an Affiliate. 
 2.1.12 Effective Date. 
 The date that the Plan is approved by the shareholders of the Company
which was April 27, 2005. 
 2.1.13 Employee. 
 Any person employed by the Employer. 
 2.1.14 Employer. 
 The Company and all Affiliates. 
 2.1.15 Exchange
Act. 
 The Securities Exchange Act of 1934, as amended. 
 2.1.16 Fair Market Value. 
 The last sale price on the date for which Fair Market Value is
being determined or, in case no such sale takes place on such date, the average of the closing bid and asked prices of the Shares on such date, in either case as reported in the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange, Inc. (the “NYSE”) or, if the Shares are not listed or admitted to trading on the NYSE, as reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange on which the Shares are listed or admitted to trading or, if the Shares are not listed or admitted to trading on any national securities exchange, the last quoted sale price
on such date or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market on such date, as reported by the National Association of Securities Dealers, Inc. Automated Quotations System or such other system
then in use, or, if on any such date the Shares are not quoted by any such organization, the average of the closing bid and asked prices on such date as furnished by a professional market maker making a market in the Shares selected by the
Committee. If the Shares are not publicly held or so listed or publicly traded, the determination of the Fair Market Value per Share shall be made in good faith by the Committee. 
 2.1.17 Fiscal Year. 
 The taxable year of the Company which is the calendar year. 

2.1.18 ISO. 
 An Incentive Stock Option as
defined in Section 422 of the Code. 
 2.1.19 NQSO. 
 A non-qualified stock Option, which is an Option that does not qualify as an ISO. 
 2.1.20 Option. 

An option to purchase Shares granted under the Plan. 
 2.1.21 Other Stock Based Award. 
 An award under Section 3.1 that is valued in whole or in part by reference to,
or is otherwise based on, Common Stock. 
  

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 2.1.22 Parent. 
 Any corporation (other than the Company or a Subsidiary) in an unbroken chain of corporations ending with the Company, if, at the time of the grant of an Option or other Benefit, each of the corporations (other than
the Company) owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. 
 2.1.23 Participant. 
 An individual who is granted a Benefit under the Plan. Benefits may be granted only to
Employees, members of the Board, (including former Employees and former members of the Board if in connection with their separation from the Company), employees and owners of entities which are not Affiliates but which have a direct or indirect
ownership interest in an Employer or in which an Employer has a direct or indirect ownership interest, individuals who, and employees and owners of entities which, are customers and suppliers of an Employer, individuals who, and employees and owners
of entities which, render services to an Employer, and individuals who, and employees and owners of entities, which have ownership or business affiliations with any individual or entity previously described. 
 2.1.24 Performance Based Compensation. 
 Compensation which meets the requirements of Section 162(m)(4)(C) of the Code. 
 2.1.25 Performance Share. 
 A Share awarded to a Participant under Section 16.4 of the Plan. 
 2.1.26 Plan. 
 The VeriChip Corporation 2005 Flexible Stock Plan and all amendments and
supplements to it. 
 2.1.27 Reload Option. 
 An Option to purchase the number of Shares used by a Participant to exercise an Option and to satisfy any withholding requirement incident to the exercise of such Option. 
 2.1.28 Restricted Stock. 
 Shares issued under
Section 16.1 of the Plan. 
 2.1.29 Rule 16b-3. 
 Rule 16b-3 promulgated by the SEC, as amended, or any successor rule in effect from time to time. 
 2.1.30 SEC.

 The Securities and Exchange Commission. 
 2.1.31 Share. 
 A share of Common Stock. 
 2.1.32 SAR. 
 A stock appreciation right, which is the right to receive an amount equal to the
appreciation, if any, in the Fair Market Value of a Share from the date of the grant of the right to the date of its payment. 
 2.1.33 Subsidiary.

 Any corporation, other than the Company, in an unbroken chain of corporations beginning with the Company if, at the time of grant of an
Option or other Benefit, each of the corporations, other than the last corporation in the unbroken chain, owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 2.2 Other Definitions. 
 In
addition to the above definitions, certain words and phrases used in the Plan and any Agreement may be defined in other portions of the Plan or in such Agreement. 
 2.3 Conflicts. 
 In the case of any conflict in the terms of the Plan relating to a Benefit, the provisions in the
section of the Plan which specifically grants such Benefit shall control those in a different section. In the case of any conflict between the terms of the Plan relating to a Benefit and the terms of an Agreement relating to a Benefit, the terms of
the Plan shall control. 
  

 3 

 3.COMMON STOCK 
 3.1 Number of Shares. 
 The number of Shares which may be issued or sold or for which Options, SARs or Performance
Shares may be granted under the Plan shall be 277,778. Such Shares may be authorized but unissued Shares, Shares held in the treasury, or both. The full number of Shares available may be used for any type of Option or other Benefit, including ISOs.

 3.2 Reusage. 
 If an Option or
SAR expires or is terminated, surrendered, or canceled without having been fully exercised, if Restricted Shares or Performance Shares are forfeited, or if any other grant results in any Shares not being issued, the Shares covered by such Option or
SAR, grant of Restricted Shares, Performance Shares or other grant, as the case may be, shall again be available for use under the Plan. Any Shares which are used as full or partial payment to the Company upon exercise of an Option or for any other
Benefit that requires a payment to the Company shall be available for purposes of the Plan. 
 3.3 Adjustments. 
 If there is any change in the Common Stock of the Company by reason of any stock dividend, spin-off, split-up, spin-out, recapitalization, merger,
consolidation, reorganization, combination or exchange of shares, or otherwise, the number of SARs and number and class of shares available for Options and grants of Restricted Stock, Performance Shares and Other Stock Based Awards and the number of
Shares subject to outstanding Options, SARs, grants of Restricted Stock which are not vested, grants of Performance Shares which are not vested, and Other Stock Based Awards, and the price thereof, as applicable, may be appropriately adjusted by the
Committee. 
 4. ELIGIBILITY 
 4.1 Determined
By Committee. 
 The Participants and the Benefits they receive under the Plan shall be determined solely by the Committee. In making
its determinations, the Committee shall consider past, present and expected future contributions of Participants and potential Participants to the Employer, including, without limitation, the performance of, or the refraining from the performance
of, services. Unless specifically provided otherwise herein, all determinations of the Committee in connection with the Plan or an Agreement shall be made in its sole discretion. 
 5. ADMINISTRATION 
 5.1 Committee. 
 The Plan shall be administered by the Committee. The Committee shall consist of two or more members of the Board all of whom shall be “independent
directors” as defined in Nasdaq Rule 4200(a)(15), provided, however, (i) if the Company is a “controlled company” as defined in Nasdaq Rule 4350(c)(5), the Committee may include one or more of directors who are not
“independent” as defined in Nasdaq Rule 4200(a)(15) as and to the extent permitted by the rules of Nasdaq and (ii) if the Committee is composed of at least three members, the Board may appoint one member who is not
“independent” as so defined as and to the extent premitted by, and subject to the requirements of, Nasdaq Rule 4350(c)(3). Subject to the foregoing, at least two members of the Committee shall each be an “outside director” as
defined in Section 162(m) of the Code and a “nonemployee director” as defined in Rule 16b-3 promulgated under the Exchange Act and the Committee shall be authorized to delegate to such members of the Committee all authority under this
Plan as and to the extent necessary or desirable to ensure compliance with, or to obtain benefits of, said Section 162(m) and/or Rule 16b-3. Notwithstanding the foregoing, the Board may appoint an additional Committee that does not consist
solely of outside directors and nonemployee directors to administer the Plan with respect to Participants whose Benefits are not affected by the restrictions of Rule 16b-3 or Section 162(m) of the Code. The Committee shall use its best efforts
to grant Options, SARs, Restricted Stock, Performance Shares, Cash Awards and Other Stock Based Awards under this Plan to an Employee which will qualify as “performance-based compensation” for purposes of Section 162(m) of the Code,
except where the Committee deems that the Company’s interests when viewed broadly will be better served by a grant which is free of the conditions required to so qualify any such grant for purposes of Section 162(m) of the Code.

 If the Committee does not include the entire Board, it shall serve at the pleasure of the Board, which may from time to time appoint
members in substitution for members previously appointed and fill vacancies, however caused, 
  

 4 

 in the Committee. The Committee may select one of its members as its Chairman and shall hold its meetings at such times
and places as it may determine. A majority of its members shall constitute a quorum. All determinations of the Committee made at a meeting at which a quorum is present shall be made by a majority of its members present at the meeting. Any decision
or determination reduced to writing and signed by a majority of the members shall be fully as effective as if it had been made by a majority vote at a meeting duly called and held. 
 5.2 Authority. 
 Subject to the terms of the Plan, the Committee shall have discretionary
authority to: 
 (a) determine the individuals to whom Benefits are granted, the type and amounts of Benefits to be granted
and the date of issuance and duration of all such grants; 
 (b) determine the terms, conditions and provisions of, and
restrictions relating to, each Benefit granted; 
 (c) interpret and construe the Plan and all Agreements; 
 (d) prescribe, amend and rescind rules and regulations relating to the Plan; 
 (e) determine the content and form of all Agreements; 
 (f) determine all questions relating to Benefits under the Plan; 
 (g) maintain accounts, records and ledgers relating to Benefits; 
 (h) maintain records concerning its decisions and proceedings; 
 (i) employ agents, attorneys, accountants or other persons for such purposes as the Committee considers necessary or desirable;

 (j) take, at any time, any action required or permitted by Section 9.1 or 9.2(a), respectively, irrespective of
whether any Change of Control has occurred or is imminent; 
 (k) determine, except to the extent otherwise provided in the
Plan, whether and the extent to which Benefits under the Plan will be structured to conform to the requirements applicable to Performance-Based Compensation, and to take such action, establish such procedures, and impose such restrictions at the
time such Benefits are granted as the Committee determines to be necessary or appropriate to conform to such requirements; and 
 (l) do and perform all acts which it may deem necessary or appropriate for the administration of the Plan and carry out the purposes of the Plan. 
 5.3 Delegation. 
 Except as required by Rule 16b-3 with respect to grants of Options, Stock Appreciation Awards,
Performance Shares, Other Stock Based Awards, or other Benefits to individuals who are subject to Section 16b-3of the Exchange Act or as otherwise required for compliance with Rule 16b-3 or other applicable law, the Committee may delegate all
or any part of its authority under the Plan to any Employee, Employees or committee. 
 5.4 Determination. 
 All determinations of the Committee shall be final. 
 6.AMENDMENT 
 6.1 Power of Board. 
 Except as hereinafter provided, the Board shall have the sole right and power to amend the Plan at any time and from time to time. 
 6.2 Limitation. 
 The Board may not amend the Plan, without approval of the shareholders of the Company: 

(a) in a manner which would cause Options which are intended to qualify as ISOs to fail to qualify; 
 (b) in a manner which would cause the Plan to fail to meet the requirements of Rule 16b-3; 
 (c) in a manner which would violate applicable law (including applicable rules of any stock exchange on which Common Stock is traded); or

  

 5 

 (d) in a manner which would result in: 
  

	 	(1)	any material increase in the number of Shares to be issued under the Plan (other than to reflect a reorganization, stock split, merger, spinoff or similar transaction);

  

	 	(2)	any material increase in Benefits to Participants, including any material change to permit a repricing (or decrease in exercise price) of outstanding Options, reduce the price at
which Shares or Options to purchase Shares may be offered, or extend the duration of the Plan; 

  

	 	(3)	any material expansion of the class of Participants eligible to participate in the Plan; and 

  

	 	(4)	any expansion in the types of Options or Benefits provided under the Plan. 

 7.TERM AND TERMINATION 
 7.1 Term. 
 The Plan shall commence as of the Effective Date and, subject to the terms of the Plan, including those requiring approval by the shareholders of the Company and those limiting the period over which ISOs or any other
Benefits may be granted, shall continue in full force and effect until the earlier of the tenth anniversary of the Effective Date or the date the Plan is terminated by the Board pursuant to Section 7.2. 
 7.2 Termination. 
 The Plan may be terminated
at any time by the Board. 
 8. MODIFICATION OR TERMINATION OF BENEFITS 
 8.1 General. 
 Subject to the provisions of Section 8.2, the amendment or termination of
the Plan shall not adversely affect a Participant’s right to any Benefit granted prior to such amendment or termination. 
 8.2 Committee’s
Right. 
 Any Benefit granted may be converted, modified, forfeited or canceled, in whole or in part, by the Committee if and to the
extent permitted in the Plan or applicable Agreement or with the consent of the Participant to whom such Benefit was granted. Except as may be provided in an Agreement, the Committee may, in its sole discretion, in whole or in part, waive any
restrictions or conditions applicable to, or accelerate the vesting of, any Benefit. 
 8.3 Compliance with Applicable Laws. 
 The Plan shall be administered and interpreted in accordance with applicable federal tax laws, including Section 409A of the Code, and the
regulations promulgated thereunder. 
 9.CHANGE OF CONTROL 
 9.1 Vesting and Payment. 
 In the event of a Change of Control: 
 (a) all outstanding Options shall become fully exercisable, except to the extent that the right to exercise the Option is subject to restrictions established in connection with an SAR that is issued in tandem with the
Option; 
 (b) all outstanding SARs shall become immediately payable, except to the extent that the right to exercise the SAR is subject to restrictions
established in connection with an Option that is issued in tandem with the SAR; 
 (c) all Shares of Restricted Stock shall become fully vested; 

(d) all Performance Shares shall be deemed to be fully earned and shall be paid out in such manner as determined by the Committee; and 
 (e) all Cash Awards, Other Stock Based Awards and other Benefits shall become fully vested and/or earned and paid out in such manner as determined by the Committee.

 9.2 Other Action. 
 In the event
of a Change of Control, the Committee, in its sole discretion, may, in addition to the provisions of Section 9.1 above and to the extent not inconsistent therewith: 
 (a) provide for the purchase of any Benefit for an amount of cash equal to the amount which could have been attained upon the exercise or realization of such Benefit had such Benefit been currently exercisable or
payable; 
  

 6 

 (b) make such adjustment to the Benefits then outstanding as the Committee deems appropriate to reflect such transaction
or change; and/or 
 (c) cause the Benefits then outstanding to be assumed, or new Benefits substituted therefor, by the surviving corporation in such
change. 
 10. AGREEMENTS AND CERTAIN BENEFITS 
 10.1 Grant Evidenced by Agreement. 
 The grant of any Benefit under the Plan shall be evidenced by an Agreement which
shall describe the specific Benefit granted and the terms and conditions of the Benefit. Except as otherwise provided in an Agreement, all capitalized terms used in the Agreement shall have the same meaning as in the Plan, and the Agreement shall be
subject to all of the terms of the Plan. 
 10.2 Provisions of Agreement. 
 Each Agreement shall contain such provisions that the Committee shall determine to be necessary, desirable and appropriate for the Benefit granted which
may include, but not necessarily be limited to, the following with respect to any Benefit: description of the type of Benefit; the Benefit’s duration; its transferability; if an Option, the exercise price, the exercise period and the person or
persons who may exercise the Option; the effect upon such Benefit of the Participant’s death, disability, changes of duties or termination of employment; the Benefit’s conditions; when, if, and how any Benefit may be forfeited, converted
into another Benefit, modified, exchanged for another Benefit, or replaced; and the restrictions on any Shares purchased or granted under the Plan. 
 10.3 Transferability. 
 Unless otherwise specified in an Agreement or permitted by the Committee, each Benefit granted
shall be not transferable other than by will or the laws of descent and distribution and shall be exercisable during a Participant’s lifetime only by him. 
 11. REPLACEMENT AND TANDEM AWARDS 
 11.1 Replacement. 
 The Committee may permit a Participant to elect to surrender a Benefit in exchange for a new Benefit. 
 11.2 Tandem Awards. 
 Awards may be granted by
the Committee in tandem. However, no Benefit may be granted in tandem with an ISO except SARs. 
 12. PAYMENT, DIVIDENDS AND WITHHOLDING

 12.1 Payment. 
 Upon the
exercise of an Option or in the case of any other Benefit that requires a payment by a Participant to the Company, the amount due the Company is to be paid: 
  

	 	(a)	in cash, including by means of a so-called “cashless exercise” of an Option; 

  

	 	(b)	by the surrender of all or part of a Benefit (including the Benefit being exercised); 

  

	 	(c)	by the tender to the Company of Shares owned by the optionee and registered in his name having a Fair Market Value equal to the amount due to the Company; 

 

	 	(d)	in other property, rights and credits deemed acceptable by the Committee, including the Participant’s promissory note; or 

  

	 	(e)	by any combination of the payment methods specified in (a), (b), (c) and (d) above. 

 Notwithstanding, the foregoing, any method of payment other than (a) may be used only with the consent of the Committee or if and to the extent so
provided in an Agreement. The proceeds of the sale of Shares purchased pursuant to an Option and any payment to the Company for other Benefits shall be added to the general funds of the Company or to the Shares held in treasury, as the case may be,
and used for the corporate purposes of the Company as the Board shall determine. 
  

 7 

 12.2 Dividend Equivalents. 
 Grants of Benefits in Shares or Share equivalents may include dividend equivalent payments or dividend credit rights. 
 12.3 Withholding. 
 To the extent specified in the Agreement, the Company may, at the time any distribution is made
under the Plan, whether in cash or in Shares, or at the time any Option is exercised, withhold from such distribution or Shares issuable upon the exercise of an Option, any amount necessary to satisfy federal, state and local income and/or other tax
withholding requirements with respect to such distribution or exercise of such Options. The Committee or the Company may require a participant to tender to the Company cash and/or Shares in the amount necessary to comply with any such withholding
requirements. 
 13.OPTIONS 
 13.1 Types of
Options. 
 It is intended that both ISOs and NQSOs, which may be Reload Options, may be granted by the Committee under the Plan.

 13.2 Grant of ISOs and Option Price. 
 Each ISO must be granted to an Employee and granted within ten years from the earlier of the date of adoption by the Board or the Effective Date. The purchase price for Shares under any ISO shall be no less than the Fair Market Value of the
Shares at the time the Option is granted. 
 13.3 Other Requirements for ISOs. 
 The terms of each Option which is intended to qualify as an ISO shall meet all requirements of Section 422 of the Code. 
 13.4 NQSOs. 
 The terms of each NQSO shall
provide that such Option will not be treated as an ISO. The purchase price for Shares under any NQSO shall be no less than 100% of the Fair Market Value of the Shares at the time the Option is granted. 
 13.5 Determination by Committee. 
 Except as
otherwise provided in Section 13.1 through Section13.4, the terms of all Options shall be determined by the Committee. 
 14. SARS

 14.1 Grant and Payment. 
 The Committee may grant SARs. Upon electing to receive payment of a SAR, a Participant shall receive payment in Shares. 
 14.2 Grant of
Tandem Award. 
 The Committee may grant SARs in tandem with an Option, in which case: the exercise of the Option shall cause a
correlative reduction in SARs standing to a Participant’s credit which were granted in tandem with the Option; and the payment of SARs shall cause a correlative reduction of the Shares under such Option. 
 14.3 ISO Tandem Award. 
 When SARs are granted
in tandem with an ISO, the SARs shall have such terms and conditions as shall be required for the ISO to qualify as an ISO. 
 14.4 Payment of
Award. 
 SARs shall be paid by the Company to a Participant, to the extent payment is elected by the Participant (and is otherwise
due and payable), as soon as practicable after the date on which such election is made. 
 15. ANNUAL LIMITATIONS 
 15.1 Limitation on Options and SARs. 
 The
number of (a) Shares covered by Options where the purchase price is no less than the Fair Market Value of the Shares on the date of grant plus (b) SARs which may be granted to any Participant in any Fiscal Year shall not exceed 333,333.

  

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 15.2 Limitation on Performance Shares 
 The number of Shares covered by Performance Shares in any Fiscal Year shall not exceed 166,667. 
 15.3 Computations. 
 For purposes of
Section 15.1, Shares covered by an Option that is canceled shall count against the maximum, and, if the exercise price under an Option is reduced, the transaction shall be treated as a cancellation of the Option and a grant of a new Option; and
SARs covered by a grant of SARs that is canceled shall count against the maximum; and, if the Fair Market Value of a Share on which the appreciation under a grant of SARs will be calculated is reduced, the transaction will be treated as a
cancellation of the SARs and the grant of a new grant of SARs. 
 16. RESTRICTED STOCK AND PERFORMANCE SHARES 
 16.1 Restricted Stock. 
 The Committee may grant
Benefits in Shares available under Section 3.1 of the Plan as Restricted Stock. Shares of Restricted Stock shall be issued and delivered at the time of the grant or as otherwise determined by the Committee, but shall be subject to
forfeiture until provided otherwise in the applicable Agreement or the Plan. Each certificate representing Shares of Restricted Stock shall bear a legend referring to the Plan and the risk of forfeiture of the Shares and stating that such Shares are
nontransferable until all restrictions have been satisfied and the legend has been removed. At the discretion of the Committee, the grantee may or may not be entitled to full voting and dividend rights with respect to all shares of Restricted Stock
from the date of grant. 
 16.2 Cost of Restricted Stock. 
 Unless otherwise determined by the Committee, grants of Shares of Restricted Stock shall be made at a per Share cost to the Participant equal to par value. 
 16.3 Non-Transferability. 
 Shares of
Restricted Stock shall not be transferable until after the removal of the legend with respect to such Shares. 
 16.4 Performance Shares.

 Performance Shares are the right of an individual to whom a grant of such Shares is made to receive Shares or cash equal to the Fair
Market Value of such Shares at a future date in accordance with the terms and conditions of such grant. The terms and conditions shall be determined by the Committee, in its sole discretion, but generally are expected to be based substantially upon
the attainment of targeted profit and/or performance objectives. The Committee shall determine the performance targets which will be applied with respect to each grant of Performance Shares at the time of grant, but in no event later than 90 days
after the beginning of the period of service to which the performance targets relate. The performance criteria applicable to Performance Shares will be one or more of the following: (1) stock price; (2) average annual growth in earnings
per share; (3) increase in shareholder value; (4) earnings per share; (5) net income; (6) return on assets; (7) return on shareholders’ equity; (8) increase in cash flow; (9) operating profit or operating
margins; (10) revenue growth of the Company; and (11) operating expenses. Each performance target applicable to a Performance Share award and the deadline for satisfying each such target shall be stated in the Agreement between the Company
and the Employee. The Committee must certify in writing that each such target has been satisfied before the Performance Shares award becomes effective. 
 16.5 Grant. 
 The Committee may grant an award of Performance Shares. The number of Performance Shares and the terms
and conditions of the grant shall be set forth in the applicable Agreement. 
 17.CASH AWARDS 
 17.1 Grant. 
 The Committee may grant Cash
Awards at such times and (subject to Section 17.2) in such amounts as it deems appropriate. 
  

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 17.2 Annual Limits. 
 The amount of any Cash Award in any Fiscal Year to any Participant shall not exceed the greater of $100,000 or 100% of his cash compensation (excluding any Cash Award under this Section 17.2) for such Fiscal
Year. 
 17.3 Restrictions. 
 Cash
Awards may be subject or not subject to conditions (such as an investment requirement), restricted or nonrestricted, vested or subject to forfeiture and may be payable currently or in the future or both. The Committee may make grants of Cash Awards
that are intended to be Performance Based Compensation and grants of Cash Awards that are not intended to be Performance Based Compensation. 
 The Committee shall determine the performance targets which will be applied with respect to each grant of Cash Awards that are intended to be Performance Based Compensation at the time of grant, but in no event later than 90 days after the
beginning of the period of service to which the performance targets relate. The performance criteria applicable to Performance Based Compensation awards will be one or more of the following: (1) stock price; (2) average annual growth in
earnings per share; (3) increase in shareholder value; (4) earnings per share; (5) net income; (6) return on assets; (7) return on shareholders’ equity; (8) increase in cash flow; (9) operating profit or
operating margins; (10) revenue growth of the Company; and (11) operating expenses. Each performance target applicable to a Cash Award intended to be Performance Based Compensation and the deadline for satisfying each such target shall be
stated in the Agreement between the Company and the Employee. The Committee must certify in writing that each such target has been satisfied before the Performance Based Compensation award is paid. 
 18. OTHER STOCK BASED AWARDS AND OTHER BENEFITS 
 18.1
Other Stock Based Awards. 
 The Committee shall have the right to grant Other Stock Based Awards which may include, without
limitation, the grant of Shares based on certain conditions, the payment of cash based on the performance of the Common Stock, and the grant of securities convertible into Shares. 
 18.2 Other Benefits. 
 The Committee shall have the right to provide types of Benefits under
the Plan in addition to those specifically listed, if the Committee believes that such Benefits would further the purposes for which the Plan was established. 
 19.MISCELLANEOUS PROVISIONS 
 19.1 Underscored References. 
 The underscored references contained in the Plan are included only for convenience, and they shall not be construed as a part of the Plan or in any
respect affecting or modifying its provisions. 
 19.2 Number and Gender. 
 The masculine and neuter, wherever used in the Plan, shall refer to either the masculine, neuter or feminine; and, unless the context otherwise requires,
the singular shall include the plural and the plural the singular. 
 19.3 Unfunded Status of Plan. 
 The Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation. With respect to any payments or deliveries of
Shares not yet made to a Participant by the Company, nothing contained herein shall give any rights that are greater than those of a general creditor of the Company. The Committee may authorize the creation of trusts or other arrangements to meet
the obligations created under the Plan to deliver Shares or payments hereunder consistent with the foregoing. 
 19.4 Termination of Employment.

 If the employment of a Participant by the Company terminates for any reason, except as otherwise provided in an Agreement, all
unexercised, deferred, and unpaid Benefits may be exercisable or paid only in accordance with rules established by the Committee, provided however if a Participant is an Employee and he or she is “Terminated for Cause”, as defined herein
below, or violates any of the terms of their employment after they have become vested in ant of their rights herein, the Participant’s full interest in such rights shall terminate on the date of such termination of employment and all rights
thereunder shall cease. Whether a Participant’s employment is Terminated for Cause shall be determined by the Board. Cause shall include, but not be limited to gross negligence, willful misconduct, flagrant or repeated violations of the
Employer’s policies, rules or ethics, a material breach by the Participant of any employment agreement between the Participant and the Employer, intoxication, substance abuse, sexual or other unlawful harassment, disclosure of confidential or
proprietary information, engaging in a business competitive with the Employer, or dishonest, illegal or immoral conduct. 
  

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 19.5 Designation of Beneficiary. 
 A Participant may file with the Committee a written designation of a beneficiary or beneficiaries (subject to such limitations as to the classes and
number of beneficiaries and contingent beneficiaries as the Committee may from time to time prescribe) to exercise, in the event of the death of the Participant, an Option, or to receive, in such event, any Benefits. The Committee reserves the right
to review and approve beneficiary designations. A Participant may from time to time revoke or change any such designation of beneficiary and any designation of beneficiary under the Plan shall be controlling over any other disposition, testamentary
or otherwise; provided, however, that if the Committee shall be in doubt as to the right of any such beneficiary to exercise any Option or to receive any Benefit, the Committee may determine to recognize only an exercise by the legal representative
of the recipient, in which case the Company, the Committee and the members thereof shall not be under any further liability to anyone. 
 19.6
Governing Law. 
 This Plan shall be construed and administered in accordance with the laws of the State of Delaware, without regard
to any applicable conflicts of law. By accepting an Option, the Employee irrevocably and unconditionally consents to submit to the exclusive jurisdiction of the courts of the State of Florida or of the United States of America, in each case located
in Palm Beach County, Florida, for any litigation arising out of or relating to this Plan (and agrees not to commence any litigation relating thereto except in such courts). The Employee also irrevocably and unconditionally waives any objection to
the laying of venue of any litigation arising out of or related to the Option or this Plan in the courts of the State of Florida or of the United States of America, in each case located in Palm Beach County, Florida, and hereby further irrevocably
and unconditionally waives and agrees not to plead or claim in any such court that any such litigation brought in any such court has been brought in an inconvenient forum. 
 19.7 Purchase for Investment. 
 The Committee may require each person purchasing Shares
pursuant to an Option or other award under the Plan to represent to and agree with the Company in writing that such person is acquiring the Shares for investment and without a view to distribution or resale. The certificates for such Shares may
include any legend which the Committee deems appropriate to reflect any restrictions on transfer. All certificates for Shares delivered under the Plan shall be subject to such stock-transfer orders and other restrictions as the Committee may deem
advisable under all applicable laws, rules and regulations, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate references to such restrictions. 
 19.8 No Employment Contract. 
 Neither the
adoption of the Plan nor any Benefit granted hereunder shall confer upon any Employee any right to continued employment nor shall the Plan or any Benefit interfere in any way with the right of the Employer to terminate the employment of any of its
Employees at any time. 
 19.9 No Effect on Other Benefits. 
 The receipt of Benefits under the Plan shall have no effect on any benefits to which a Participant may be entitled from the Employer, under another plan or otherwise, or preclude a Participant from receiving any such
benefits. 
 19.10 Limitation on Exercise 
 Notwithstanding anything herein or in the stock option award, no holder of an Option may exercise such Option if the Company’s common stock is not then traded publicly on the bulletin board or on a stock exchange or stock market,
except: (i) in connection with a sale of all or part of the Company’s common stock, or (ii) within two months prior to the expiration of the Option as provided in the stock option award (or as may be extended by the Committee).

  

 11Amended and Restated Transition Services Agreement

 Exhibit 10.9 
 AMENDED AND RESTATED TRANSITION SERVICES AGREEMENT 
 This AMENDED AND RESTATED TRANSITION SERVICES
AGREEMENT (this “Agreement”), dated as of December 21, 2006, is entered into between Applied Digital Solutions, Inc., a Missouri corporation (“ADSX”), and VeriChip Corporation, a Delaware corporation
(“VeriChip”; references to VeriChip in this Agreement shall include VeriChip’s direct and indirect subsidiary companies). 
 Preliminary Statements 
 A. ADSX and VeriChip are parties to a Transition Services Agreement, dated December 27, 2005
(the “Original Agreement”) providing for ADSX’s provision to VeriChip of transition services. 
 B. ADSX and VeriChip desire
to amend and restate the Original Agreement to reflect the terms and conditions set forth herein, with the terms hereof superseding the terms of the Original Agreement. 
 C. ADSX and VeriChip desire that this Amended and Restated Transition Services Agreement become effective as of the date of completion of VeriChip’s initial public offering (the “Offering”) of
securities (the “Effective Date”), at which time VeriChip will pay to ADSX, out of the net proceeds of the Offering, the amounts due and payable under the terms of the Original Agreement, which VeriChip acknowledges have been added
to VeriChip’s indebtedness under the terms of the separate loan agreement between the parties. 
 Agreement 
 In consideration of the mutual covenants contained herein, together with other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows: 
 1. Services and Compensation. 
 1.1 Transition Services. During the Term (as defined below), ADSX shall provide or cause to be provided to VeriChip certain administrative services
that ADSX has provided to VeriChip prior to December 27, 2005 (i.e., the effective date of the Original Agreement) and ADSX shall pay certain expenses, in each case as requested from time to time by VeriChip. These services and payment of
expenses include those transition services set forth on Schedule 1-A and those transition expenses set forth on Schedule 1-B. Such “transition services” and the “transition expenses” are referred to collectively in this Agreement
as the “Transition Services”). ADSX shall not be obligated to expand the scope of the Transition Services significantly beyond the scope of those services and expenses being provided to VeriChip prior to the Offering (as defined
below). 

 1.2 Additional Services. The parties agree to use commercially reasonable efforts to reach
agreement regarding the provision of additional services which VeriChip may request of ADSX beyond those included in the Transition Services set forth on Schedule 1-A or 1-B (the “Additional Services”), and the applicable service
fees, payment procedures and other rights and obligations with respect thereto. In the event the parties reach agreement as to the provision of Additional Services, Schedules 1-A and 1-B shall be amended to reflect such Additional Services and the
applicable fees relating thereto. 
 1.3 Compensation for Transition Services and Additional Services. 
 (a) As compensation for the Transition Services and Additional Services to be provided by ADSX to VeriChip hereunder, the following shall be payable by
VeriChip Corporation on a monthly basis: 
 (i) the amounts specified as “Costs Allocated to VeriChip” on Schedule 1-C, as such
schedule may be amended from time to time upon the mutual agreement of the parties, 
 (ii) the reasonable out-of-pocket direct expenses
incurred by ADSX in connection with providing Transition Services and/or Additional Services, 
 (iii) the costs of the services and
expenses incurred by ADSX on behalf of VeriChip in connection with the Offering, and 
 (iv) charges by third party service providers
incurred in connection with the Offering that are attributable to Transition Services provided to or for VeriChip and are not included in (i) or (ii) above. 
 (b) Charges for the Transition Services and Additional Services shall be invoiced by ADSX, on or about the tenth day of the calendar month next following the calendar month in which the Transition Services or
Additional Services have been performed, and such invoice shall be accompanied with reasonable documentation supporting each of the invoiced amounts. Unless VeriChip disagrees as to the amounts (or any amount) invoiced, including, without
limitation, whether the Transition Services and/or Additional Services or costs thereof covered by the invoice are properly allocable to VeriChip, such invoice shall be payable by VeriChip within 30 days following receipt thereof. In the event of
any such disagreement between ADSX and VeriChip, VeriChip shall pay the amount of the invoice not in dispute and the parties hereto agree to negotiate in good faith to resolve such dispute. ADSX shall maintain accurate and complete books of account
in accordance with generally accepted accounting principles and practices necessary to support the amounts set forth on all invoices. 
 (c)
ADSX shall use commercially reasonable efforts to (i) utilize resources and otherwise provide the Transition Services and Additional Services in a cost-effective manner and to otherwise minimize expenses, and (ii) minimize any costs
allocated to VeriChip. Without limiting the foregoing, if, upon the request of VeriChip or for any other reason, the volume of any Transition Services or Additional Services is reduced or terminated, ADSX shall use commercially reasonable efforts to
reduce the costs associated with providing the remaining Transition Services or Additional Services, to the extent and as soon as reasonably practicable. 
  

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 (d) VeriChip, its agents and accountants will have the right during normal business hours to inspect
ADSX’s books and records pertaining to ADSX’s costs and expenses, and the determinations and allocations relating thereto, with respect to the Transition Services and Additional Services. In connection with the audit of the annual
financial statements of VeriChip, ADSX shall permit the accountants retained by VeriChip to audit and verify the amounts paid or payable by VeriChip in respect of the immediately preceding fiscal year as said accountants may deem appropriate.
VeriChip shall provide ADSX with reasonable advance notice of such inspection, audit or verification. In the event of any disagreement between VeriChip and ADSX as to the amounts paid or payable in respect of the Transition Services and/or
Additional Services following such inspection, audit or verification, the parties hereto agree to negotiate in good faith to resolve such dispute. VeriChip shall bear all out-of-pocket costs and expenses associated with such inspection, audit or
verification. This Section 1.3(d) shall survive the termination or expiration of this Agreement. 
 1.4 Cooperation. VeriChip and
ADSX agree to use commercially reasonable efforts to cooperate with and provide the other with any information necessary to facilitate ADSX’s ability to provide the Transition Services and the Additional Services and to obtain any consents or
approvals from third parties necessary to facilitate the ability of ADSX to provide the Transaction Services and the Additional Services. 
 2. Term and Termination. 
 2.1 Term. The term of this Agreement (the “Term”) shall commence on the
Effective Date and shall continue in effect with respect to any Transition Service or Additional Service until such time as VeriChip shall request ADSX to cease performing such services; provided that ADSX shall not be obligated, except as provided
in Section 2.2, to continue to provide the Transition Services or any Additional Services after the second anniversary of the Effective Date unless the parties otherwise agree to do so. Notwithstanding the provisions of this Section 2.1 or
Section 1.3(c), in no event may VeriChip request that ADSX reduce or terminate, as applicable (i) insurance oversight services or any insurance coverage with respect to VeriChip other than during the 60-day period prior to the expiration
of the applicable insurance policy, or (ii) the amount of office space leased by VeriChip from ADSX, except upon 120 days prior written notice. 
 2.2 Termination. Except as provided in Section 2.1, this Agreement may not be terminated by either party for any reason other than upon thirty days’ prior written notice to the other party of a
material default in the delivery of Transition Services or Additional Services by ADSX or in payment therefor by VeriChip. Unless otherwise extended by agreement of the parties in writing, this Agreement shall terminate on the second anniversary of
the Effective Date, except for any Transition Services or Additional Services not then completed, as to which this Agreement shall expire upon completion of those Transition Services or Additional Services, but in no event more than thirty days
after the second anniversary of the Effective Date. 
  

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 2.3 Transition. Upon the expiration or termination of this Agreement or upon VeriChip’s
request, ADSX shall provide all other services necessary for an orderly transition of the Transition Services and Additional Services, in whole or in part, to another provider and/or to VeriChip itself, including, without limitation, the transfer of
all employee records, financial or tax records and other data in the possession, custody or control of ADSX; provided, however, that VeriChip agrees that ADSX shall retain copies of all records and other data transferred to VeriChip under
this provision, including, without limitation, workpapers and other documents that form the basis of the ADSX audit or review of its financial statements, and memoranda, correspondence, communications, other documents, and records (including
electronic records), which are created, sent or received in connection with the audit or review, or as otherwise required by federal securities statutes and regulations, ADSX corporate document retention policies and other applicable law. The
provisions of this Section 2.3 shall survive the expiration or termination of this Agreement. 
 3. Cooperation of the Parties.

 3.1 Access to Personnel and Records. ADSX and VeriChip shall cooperate with each other in providing reasonable access to
personnel and records needed to perform or document the Transition Services and the Additional Services and their cost. 
 3.2 Further
Assurances. ADSX and VeriChip shall take all other actions reasonably necessary for the Transition Services and Additional Services to be performed on a timely basis and in a manner consistent with past standards and practice unless otherwise
specifically agreed in writing. 
 3.3 Information Technology Security and other IT Related Matters. 
 (a) Neither ADSX nor VeriChip shall, nor shall ADSX nor VeriChip permit its affiliates or its and their applicable vendors to, access or use the
information systems of any other party made available under in connection with this Agreement, except as expressly permitted and required for receipt or provision of the Transition Services or Additional Services, as applicable, and as contemplated
to otherwise perform its obligations or exercise its rights under this Agreement. 
 (b) No one shall tamper with, compromise or attempt to
circumvent, any physical or electronic security or audit measures employed by any other party (or its affiliates and their respective third party vendors). ADSX and VeriChip shall not, without the express written consent of the other party or as
otherwise provided in this Agreement, and without complying with such party’s security policies and procedures, access any computer system of such other party or remove from such party’s premises any of such party’s confidential
information or any other property of party, its affiliates, employees, franchisees, members, or customers. 
 (c) ADSX and VeriChip shall
comply with (i) any and all applicable privacy and information security laws, regulations, statutes, and guidelines, and (ii) the policies, standards, and guidelines for privacy, information protection, and information and system security
in effect as of the Effective Date, as such may be modified by mutual agreement to address security exposures and risks that may be discovered, such agreement not to be unreasonably withheld or 
  

 4 

 delayed. Each party shall maintain security controls over resources it provides hereunder or personnel who may access the
other party’s (or such other party’s affiliates’) electronic mail, Web site, systems, or confidential information, which controls shall protect the confidentiality, privacy, integrity and availability of information. 
 (d) Neither ADSX nor VeriChip shall knowingly or willfully introduce into any computer systems, databases, or software of the other party or its
affiliates, or of any third party to which access is provided, any viruses or any other contaminants (including, but not limited to, codes, commands, instructions, devices, techniques, bugs, web bugs, or design flaws) that may be used to access,
alter, delete, threaten, infect, assault, vandalize, defraud, disrupt, damage, disable, inhibit, or shut down the other party’s or its affiliates’ or applicable third parties’ computer systems, databases, software, or other
information or property. To the extent that ADSX will (i) perform services or tasks via any electronic means (including, but not limited to, electronic mail, Web site, and/or the Internet), and/or (ii) provide or cause to be provided to
another party or its affiliates access to its electronic mail systems, Web sites, computer systems, and/or other Internet systems, ADSX shall implement or cause to be implemented industry-standard security to protect the VeriChip’s and any
applicable third parties’ computer systems, network devices and/or the data processed thereon against the risk of penetration by, or exposure to, a third party. Unless otherwise agreed to, any hardware or software accessed by any party or
provided to a party in connection with the Transition Services or Additional Services shall remain the original party’s property (as the case may be) and must be surrendered upon the original party’s request and/or when this Agreement
terminates. 
 4. Standard of Care; Taxes, Limitations on Liability; Intellectual Property 
 4.1 Standard of Care. In the performance of the Transition Services and Additional Services, ADSX shall provide the Transition Services and
Additional Services promptly and in a professional manner, and shall exercise the degree of care normally exercised by it in connection with its own affairs, but in no event less than the standard of care exercised by it in delivering services to
VeriChip prior to the Effective Date. Except in cases of gross negligence or willful misconduct, ADSX shall have no liability to VeriChip with regard to the breach of any duty or obligation to VeriChip herein set forth. 
 4.2 Taxes. VeriChip shall pay or cause to be paid all sales, service, valued added, use, excise, occupation, and other similar taxes and duties
(together in each case with all interest, penalties, fines and additions thereto) that are assessed against it in connection the provision of the Transition Services and Additional Services pursuant to Agreement. 
 4.3 Limitation on Damages. In no event shall ADSX be liable to VeriChip for any special, indirect, incidental, consequential, punitive or similar
damages, including but not limited to lost profits, loss of data or business interruption losses. This limitation shall apply even if ADSX has been notified of the possibility or likelihood of such damages occurring and regardless of the form of
action, whether in contract, negligence, strict liability, tort, products liability or otherwise. 
  

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 4.4 Intellectual Property and Data. 
 (a) Unless otherwise expressly agreed to by the parties, any and all intellectual property and data that are created, generated or collected by ADSX
specifically for VeriChip in the course of rendering the Transition Services or Additional Services, but excluding any of the foregoing either created by ADSX in the ordinary course of maintaining its information technology infrastructure to provide
services to VeriChip or generated in providing the Transition Services or Additional Services that relate to the operation of ADSX’s information technology infrastructure (collectively, “Work Product”), shall be owned
exclusively by VeriChip, and ADSX expressly disclaims any and all right, title, or interest in and to such Work Product. In addition, in the event and to the extent that any Work Product contains any pre-existing ADSX technology or other non-Work
Product intellectual property and data, then ADSX (or its licensors or subcontractors, if applicable) shall be deemed to have granted to VeriChip a nonexclusive, perpetual and royalty-free license to use such pre-existing ADSX technology or other
non-Work Product intellectual property and data (subject to any restrictions set forth elsewhere in this Agreement) only in connection with VeriChip’s use of such Work Product. 
 (b) Subject to the terms and conditions of this Agreement and any applicable third party agreements under which VeriChip obtains rights to intellectual
property and data, VeriChip grants ADSX, a limited, non-exclusive, royalty-free license to copy, display, perform, transmit, create derivative works from and otherwise modify, make, use and otherwise exploit, during the Term, such intellectual
property and data that is provided or otherwise made available by VeriChip to ADSX for performance of ADSX’s obligations under this Agreement. The foregoing license grant is limited to use or other exploitation solely as reasonably necessary in
connection with the performance of Transition Services and Additional Services. 
 (c) Subject to the terms and conditions of this Agreement
and any applicable third party agreements pursuant to which ADSX obtains rights to intellectual property and data, ADSX grants to VeriChip a limited, non-exclusive, royalty-free license to copy, display, perform, transmit, create derivative works
from and otherwise modify, make, use and otherwise exploit, during the Term, such intellectual property and data that is provided or otherwise made available by ADSX to VeriChip for receipt and use of the Transition Services or Additional Services
or for performance by VeriChip under this Agreement. The foregoing license grant is limited to use or other exploitation solely as reasonably necessary in connection with the receipt and use of the Transition Services and Additional Services.

 (d) Except for the ownership of Work Product and the licenses granted herein, each party will retain all right, title and interest in and
to its technology, other intellectual property and data used in connection with the Transition Services and Additional Services, including ownership of any technology, other intellectual property and data created by such party or its affiliates in
providing or using, as applicable, the Transition Services or Additional Services. Each party and its affiliates may independently create or acquire any technology, other intellectual property or data that is deemed by this Agreement to be owned by
the other party and its affiliates hereunder; provided, that such independent creation or acquisition does not include or use the technology, other intellectual property or data of the other party and its affiliates, and such independent
creation or acquisition does not breach any other obligations under this Agreement, including, without limitation, the obligations of confidentiality. 
  

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 (e) To the extent that any right, title or interest in or to any intellectual property or data vests in a
party or an affiliate thereof, by operation of law or otherwise, in a manner contrary to the agreed upon ownership as set forth in this Agreement, such party shall or cause its affiliates to, and hereby does, perpetually and irrevocably assign to
the appropriate party designated by the owner thereof under this Section 4.4 any and all such right, title and interest throughout the world in and to such intellectual property and data, free and clear of all liens and encumbrances.

 (f) Notwithstanding anything to the contrary in this Section 4.4, nothing in this Agreement shall preclude ADSX from using any
general information, ideas, concepts, know-how, techniques, programming routines and subroutines, methodologies, processes, skills, or expertise (collectively, “Residual Information”) which ADSX employees or contractors retain in
their unaided memory and derive from the provision of the Transition Services or Additional Services, and which are no more than skillful variations of general processes known to the computer data processing and/or information technology industries
(and, as such, are neither proprietary, confidential, nor trade secret information); provided, however, that ADSX does not breach its other obligations under this Agreement including, without limitation, the obligations of
confidentiality. 
 (g) ADSX will promptly provide to VeriChip (and shall not withhold for any reason) copies of Work Product and data owned
by VeriChip or to which it has a perpetual license in accordance with this Section 4.4. Such data shall be delivered in a mutually agreed to format (but in no event other than a generally available commercial format if the parties are unable to
agree on format). VeriChip shall be responsible for the incremental actual costs of such deliveries, to the extent such costs are not already included in the cost for Transition Services or Additional Services. 
 (h) Except as set forth in the preceding subsections of this Section 4.4, ADSX and VeriChip retain all right, title and interest in and to their
respective technology, other intellectual property and data, and no other license or other right, express or implied, is granted to any other third party or its affiliates under this Agreement with respect to either party’s or its
affiliates’ technology, other intellectual property or data. 
 5. Miscellaneous. 
 5.1 Entire Agreement . This Agreement constitutes the entire agreement of the parties hereto and supersedes all prior and contemporaneous
agreements and understandings (including term sheets), both written and oral, between the parties hereto, or either of them, with respect to the subject matter hereof. 
 5.2 Certain Audit Rights. 
 (a) ADSX and VeriChip acknowledge and agree that VeriChip may require ADSX
perform an audit or such other review, with respect to the Transition Services or Additional 
  

 7 

 Services that is sufficient to allow VeriChip to demonstrate compliance with the requirements set forth in
Section 404 of the Sarbanes-Oxley Act of 2002, as amended (“Section 404”), if required. VeriChip shall provide ADSX with reasonable advance notice of such Section 404 audit (if required). ADSX and VeriChip shall then
promptly meet to discuss the scope of review required. VeriChip shall have final decision-making authority regarding the scope of review (if required), provided that VeriChip and ADSX will cooperate and act reasonably to minimize disruption to, and
effort by, ADSX, as well as to minimize the costs and expenses of such Section 404 audit; and (ii) the parties shall cooperate to consolidate, to the extent applicable, Section 404 audits whenever reasonably practicable. 

(b) VeriChip shall bear all out-of-pocket costs and expenses associated with such Section 404 audit. If the Section 404 audit reveals
non-compliance with any applicable law, rule, regulation or requirement of the Section 404 audit, ADSX shall promptly remedy such non-compliance. ADSX and VeriChip shall bear all out-of-pocket costs and expenses associated with such remediation
equally. 
 (c ) This Section 5.2 shall survive the expiration or termination of this Agreement for purposes of allowing VeriChip to
comply with its obligations under Section 404 with respect to the year in which this Agreement expires or is terminated. 
 5.3
Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Florida. NO ACTION, SUIT OR PROCEEDING MAY BE BROUGHT OR MAINTAINED CONCERNING MATTERS COVERED BY THIS AGREEMENT EXCEPT IN A COURT
OF THE STATE OF FLORIDA OR COURTS OF THE UNITED STATES OF AMERICA SITTING IN THE COUNTY OF PALM BEACH, STATE OF FLORIDA. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES TO BE SUBJECT TO, AND HEREBY CONSENTS AND
SUBMITS TO, THE JURISDICTION OF THE COURTS OF THE STATE OF FLORIDA AND OF THE FEDERAL COURTS SITTING IN THE COUNTY OF PALM BEACH, STATE OF FLORIDA. 
 5.4 Amendment and Modification. This Agreement may be amended, modified or supplemented only by a written agreement signed by each of ADSX and VeriChip. 
 5.5 Assignment; Binding Effect. Neither this Agreement nor any of the rights, benefits or obligations hereunder may be assigned by ADSX or VeriChip (whether by operation of law or otherwise) without the prior
written consent of the other party. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of and be enforceable by ADSX and VeriChip and their respective successors and permitted assigns. 
 5.6 No Third Party Beneficiaries. Nothing in this Agreement, express or implied, is intended to or shall confer upon any person (other than
VeriChip, its subsidiaries, ADSX and their respective successors or permitted assigns) any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement and no person (other than as so specified) shall be
deemed a third party beneficiary under or by reason of this Agreement. 
  

 8 

 5.7 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall
be deemed to be an original, but all of which together shall constitute one agreement binding on ADSX and VeriChip, notwithstanding that not all parties are signatories to the same counterpart. 
 5.8 Confidentiality. ADSX and VeriChip shall preserve in strict confidence any confidential information obtained from the other party and
identified as such by such other party, and shall refrain from: (i) disclosing any such information without the prior written consent of the other party, except as otherwise required by law, including without limitation, the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder, the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, the Internal Revenue Code of 1986, as amended, and the Canadian Income Tax
Act, or (ii) using such information other than in the performance of Transition Services and Additional Services under this Agreement, unless such information (a) is in the public domain through no fault of such party, (b) is or
hereafter becomes known to the public through no fault of the receiving party or (c) is provided to the receiving party by a third party having no confidential obligation to the other party to this Agreement with regard to such information.

 5.9 Independent Contractor. The relationship of the parties to each other under this Agreement shall be that of independent
contractor. 
 5.10 Personnel. Both parties hereto agree that they shall take appropriate action by instruction of or agreement with
their respective personnel to ensure that all personnel performing or otherwise involved with Transition Services and Additional Services under this Agreement shall be bound by and comply with all of the terms and conditions of this Agreement,
including, but not limited to, the terms and conditions of Section 5.7 hereof. 
 5.11. Negotiation and Mediation. Any disputes
arising under this Agreement shall be resolved by negotiation between the Chief Financial Officers ADSX and VeriChip. In the event that they cannot agree, then the Chief Executive Officers shall negotiate in good faith to resolve the dispute. In the
event of any such dispute, VeriChip shall continue to pay for the Transition Services and Additional Services in accordance with this Agreement, and the Service Provider shall continue to provide the Transition Services and Additional Services in
accordance with the terms and conditions of this Agreement, pending resolution of such dispute. The obligations of the parties pursuant to this Section 5.11 shall survive any termination of this Agreement 
 5.12 Notices. All notices, requests, consents and other communications hereunder must be in writing and will be deemed to have been duly given:
(i) when received if personally delivered or sent by facsimile, (ii) one business day after being sent by nationally recognized overnight delivery service, or (iii) five business days after being sent by nationally registered or
certified mail, return receipt requested, postage prepaid, and in each case addressed as follows (any party by written notice to the other party in the manner prescribed by this Section 5.10 may change the address or the persons to whom notices
thereof shall be directed): 
  

 9 

			
	To ADSX at:	 	Applied Digital Solutions, Inc.
		 	1690 South Congress Avenue, Suite 200
		 	Delray Beach, Florida 33445
		 	Attention: Michael E. Krawitz, Esq.
		 	Fax Number: 561-805-8001
		
	with a copy to:	 	Holland & Knight LLP
		 	701 Brickell Avenue
		 	Suite 3000
		 	Miami, Florida 33131
		 	Attention: Harvey A. Goldman, Esq.
		 	Fax Number: 305-789-7799
		
	To VeriChip at:	 	VeriChip Corporation
		 	1690 South Congress Avenue, Suite 200
		 	Delray Beach, Florida 33445
		 	Attention: William Caragol
		 	Fax Number: 561-805-8001
		
	with a copy to:	 	Steptoe & Johnson LLP
		 	1330 Connecticut Avenue, N.W.
		 	Washington, D.C. 20036
		 	Attention: Donald H. Meiers, Esq.
		 	Fax Number: 202-261-0575

  

 10 

 IN WITNESS WHEREOF, the parties hereto have duly caused the execution of this Agreement by their duly
authorized representative or officer, as of the day and year first above written. 
  

			
	APPLIED DIGITAL SOLUTIONS, INC.
		
	By:	 	 /s/ Evan McKeown

	Name:	 	Evan McKeown
	Title:	 	Chief Financial Officer
	
	VERICHIP CORPORATION
		
	By:	 	 /s/ William Caragol

	Name:	 	William Caragol
	Title:	 	Chief Financial Officer

  

 11 

 Schedule 1-A 
 Transition Services 
  

	1.	Payroll services (including payment for a portion of ADSX payroll administrator’s salary and benefits – estimated 50% of Payroll Administrator’s total time related to
VeriChip matters) 

  

	2.	Legal services (including payment for a portion of a general counsel’s salary and benefits and a portion of a paralegal’s salary and benefits - estimated at 10% of general
counsel’s total time and 30% of paralegal’s total time related to VeriChip matters) 

  

	3.	Finance services (including payment for a portion of ADSX Finance Staff salary and benefits (based on 6 staff members)—estimated 20% of finance staff’s total time related
to VeriChip matters) 

  

	4.	Accounting Services (including payment for a portion of ADSX accounting fees – estimated 15% of total ADSX accounting fees related to VeriChip matters)

  

	5.	IT Services – frame relay 

  

	6.	Banking oversight and controls 

  

	7.	Cash management system 

  

	8.	Insurance oversight 

  

	9.	Administration of stock option plans and warrants 

  

	10.	Compliance services for Section 404 of Sarbanes-Oxley Act of 2002 

  

	11.	Press releases and investor relations 

  

	12.	Tax matters 

  

	13.	Offering services including, without limitation, Form S-1 Registration 

  

	14.	Leasing of office space 

  

 Schedule 1-B 
 Transition Expenses 
  

	1.	IT expenses 

  

	2.	Telephone expenses 

  

	3.	Office supply and building and office expense 

  

	4.	Postage, freight and delivery expenses 

  

	5.	Rent expense 

  

	6.	Insurance policy expense (excluding products liability) 

  

	7.	Tax return preparation 

  

	8.	Federal and state securities laws registration and reporting expenses 

 Schedule 1-C 
 Estimated Monthly Costs Allocated to VeriChip 
  

						
	1.	  	Payroll	  	$  6,500	 
			
	2.	  	Legal	  	$  3,465	 
			
	3.	  	Finance	  	$11,982	 
			
	4.	  	Accounting	  	$  9,250	 
			
	5.	  	IT	  	$  5,426	 
			
	6.	  	Telephone (included in IT)	  	$     —  	 
			
	7.	  	Office supply and building and office expense	  	$  2,360	 
			
	8.	  	Postal, freight and delivery	  	$     142	 
			
	9.	  	Rent expense	  	$  9,850	 
			
	10.	  	Banking oversight and controls	  	(Included in Finance cost	)
			
	11.	  	Cash management system	  	As charged	 
			
	12.	  	Insurance policies (excluding products liability)	  	$16,808	 
			
	13.	  	Insurance oversight (included with insurance policies)	  	$     —  	 
			
	14.	  	Administration of stock option plans and warrants	  	(Included in Payroll cost	)
			
	15.	  	Compliance Services for Section 404	  	(Included in Finance cost	)
			
	16.	  	Press Releases and Investor Relations	  	$  6,000	 
		  		  	 	 
	Estimated Monthly Charges:	  	$71,783

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