Document:

EX-10.1 Amendment to Letter Agreement

 

EXHIBIT
10.1

VeriChip Corporation

1690 South Congress Avenue, Suite 200

Delray Beach, Florida 33445

March 2, 2007

Daniel A. Gunther

263 Clemow Avenue

Ottawa, Ontario, Canada K1S 2B5

Re:      Amendment to Letter Agreement dated August 11, 2005

Dear Dan,

On behalf of VeriChip Corporation (the “Company”), I am pleased to make the following mutually
agreed changes to that certain letter agreement that you entered into with the Company on August
11, 2005 (the “Original Agreement” and the Original Agreement, as amended hereby, the “Letter
Agreement”). These changes will be made effective immediately upon your execution of this
amendment or as otherwise specified herein.

Role

You will be appointed as the President and Chief Executive Officer of the Company’s two
wholly-owned subsidiaries, VeriChip Corporation, a Canadian corporation (“VeriChip Canada”), and
VeriChip Holdings, Inc., a Canadian corporation, and resign the title and responsibilities of
President of the Company.

In these roles, you will be fully responsible for all aspects of these two corporations and charged
with their growth and future success. Specifically, you will have responsibility for:

	 	•	 	Organic growth and profitability;
	 
	 	•	 	Growth through complementary acquisitions that will be integrated with the
Canadian operations;
	 
	 	•	 	Direct responsibility for financial reporting for these two subsidiaries that meets
or exceeds the financial reporting standards of the Company and Applied Digital
Solutions, Inc; and
	 
	 	•	 	Supporting the Company in a number of activities such as investor relations and
public relations.

Specifically,
you will not have responsibility for:

	 	•	 	The Delray Beach, Florida operations or the activities of the implantable product
line.

 

 

Notwithstanding the foregoing, you shall continue to be considered an “executive officer” of the
Company within the meaning of Rule 3b-7 promulgated under the United States Securities Exchange Act
of 1934, as amended (the “Exchange Act”) and will continue to be subject to the requirements of
Section 16 of the Exchange Act.

Compensation

Your base salary will be increased to an annual rate equal to C$250,000 (less applicable taxes and
withholding). In addition to this annual base salary, you will also be eligible for an annual
incentive with a target compensation of C$500,000 that will be calculated based upon the
achievement and/or exceeding of corporate and personal objectives pursuant to annual senior
management incentive compensation plans to be approved annually by the Compensation Committee of
the Board of Directors of the Company. Both this base salary and your annual incentive
compensation plan will be reviewed on an annual basis by the Compensation Committee of the Board of
Directors of the Company. Your 2007 senior management compensation plan was approved by the
Compensation Committee of the Company’s Board of Directors on March 2, 2007 and has been provided
to you.

Termination by VeriChip Canada or VeriChip Holdings, Inc.

In the case of termination by VeriChip Canada or VeriChip Holdings, Inc. for any reason other than
for Cause (as defined below), including any material breach of this Letter Agreement, you shall be
entitled to a termination payment determined as hereinafter provided in lieu of notice. Such
termination payment shall be equal to two (2) multiplied by the sum of (a) your then current base
salary and (b) your average aggregate incentive compensation for the then previous three fiscal
years of the Company (or in the event your termination occurs in 2007, the average of your
aggregate incentive compensation with respect to each of 2005 and 2006). This payment shall be
made within 30 days of the date of termination. In the event of your resignation or termination for
cause, you will not be entitled to any compensation. For purposes herein, “Cause” shall mean a
conviction of a felony by you or your being prevented from providing services hereunder as a result
of your violation of any law, regulation and/or rule.

Change in Control of the Company

In the case of a Change in Control of the Company as defined in the March 2, 2007 Executive
Management Change in Control Plan approved by the Board of Directors of the Company (the “Plan”),
you shall be entitled to the Change in Control Compensation described in the Plan.

Restricted Stock

On March 2, 2007, the Company’s Board of Directors granted you 50,000 restricted shares of common
stock of the Company under the Company’s 2002 Flexible Stock Plan. These shares vest two years
from the date hereof and are otherwise subject to the terms

2

 

and conditions set forth in the restricted stock award agreement provided to you on the date
hereof.

The Original Agreement shall remain in full force and effect except as specifically amended herein.

Sincerely,

/s/ Scott R. Silverman

Scott R. Silverman

Chairman and Chief Executive Officer

Accepted and agreed with appreciation to as of

the date first above written:

Daniel A. Gunther                              

Daniel A. Gunther

3EX-10.2 2007 Senior Management Incentive Plan

 

EXHIBIT
10.2

VeriChip Corporation

Memorandum

	 	 	 	 	 
	To:
	 	Daniel A. Gunther

	 	March 2, 2007
	 
	 	 
	 	 
	From:
	 	Scott Silverman
	 	 
	 
	 	 
	 	 
	Re:
	 	2007 Senior Management Incentive Compensation Plan
	 	 

In addition to your base salary, we are pleased to offer you the following incentive compensation
for the fiscal year ended December 31, 2007. This Plan was approved by the Compensation Committee
of the Board of Directors of VeriChip Corporation, a Delaware corporation (the “Company”), on the
date hereof.

Your target incentive compensation is C$500,000 and is based upon the achievement of specific
revenue and EBITDA objectives. EBITDA is defined as the consolidated Earnings before Interest,
Taxes, Depreciation and Amortization of VeriChip Corporation, a Canadian corporation (“VeriChip
(Canada)”), and VeriChip Holdings, Inc., a Canadian corporation (“VeriChip Holdings”), prior to any
expense accrual associated with a management fee payable to VeriChip Corporation, the Delaware
corporation. These targets and the related incentive compensation are divided into the following
three components:

	 	•	 	Quarterly for achieving revenues objectives — C$200,000
	 
	 	•	 	Annual for achieving revenues and EBITDA objectives — C$200,000
	 
	 	•	 	Annual for exceeding revenues and EBITDA objectives — C$100,000

Quarterly Incentive Compensation for Achieving Revenue Objectives

Your quarterly incentive compensation is calculated based upon the achievement of year-to-date
revenue from VeriChip (Canada) and VeriChip Holdings relative to the budgeted revenues of
US$32,004,000. 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 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 US$32,004,000)
* (Target Quarterly Incentive Compensation of C$200,000) = Actual Quarterly Incentive Compensation

If year-to-date revenue to the end of any fiscal quarter does not exceed the following minimum
year-to-date revenue thresholds at the end of each quarter no additional incentive compensation
shall be paid with respect to such quarter.

	 	•	 	As of March 31, 2007 — US$7,019,000 (100% of US$7,019,000)

 

 

	 	•	 	As of June 30, 2007 — US$14,202,500 (95% of US$14,950,000)
	 
	 	•	 	As of September 30, 2007 — US$21,761,650 (95% of US$22,907,000)
	 
	 	•	 	As of December 31, 2007 — US$30,403,800 (95% of US$32,004,000)

Payments of quarterly incentive compensation in the 2nd, 3rd and
4th quarters will be reduced by the actual amount paid in respect of previous quarters.
The maximum amount that you can earn during 2007 from this quarterly incentive compensation is
C$200,000.

The determination of whether incentive compensation with respect to a quarter has been earned shall
be based on the Company’s financial statements with respect to such quarter (or year to date
period) as filed with the United States Securities and Exchange Commission (the “Commission”) and,
to the extent earned as provided above, will be paid as soon as practicable, but in no event later
than 5 business days, after such financial statements have been so filed with the Commission. You
will be entitled to incentive compensation with respect to a quarter only if you remain employed by
VeriChip (Canada) and VeriChip Holdings as of the last day of such quarter.

Annual Incentive Compensation for Achieving Revenue and EBITDA Objectives

This component of your annual incentive compensation of C$200,000 is based upon the achievement of
(i) the annual budgeted revenues from Canadian operations of US$32,004,000 and (ii) a minimum
EBITDA from Canadian operations of US$4,800,000. If both of these objectives are not achieved, no
annual incentive compensation shall be paid with respect to this component.

The determination of whether this annual incentive compensation component has been earned shall be
based on the Company’s audited financial statements for the year ending December 31, 2007 as filed
with the Commission and, to the extent earned as provided above, will be paid as soon as
practicable, but in no event later than 5 business days, after such financial statements have been
so filed with the Commission. You will be entitled to this annual incentive compensation component
only if you remain employed by VeriChip (Canada) and VeriChip Holdings as of the last day of
December 31, 2007. The maximum amount that you can earn during 2007 from this component of the
annual incentive compensation is C$200,000.

Annual Incentive Compensation for Exceeding Revenue and EBITDA Objectives

This component of your annual incentive compensation of C$100,000 is based upon exceeding both the
annual budgeted revenues and budgeted EBITDA from Canadian operations by 5%. Accordingly, this
component of your annual incentive compensation is based upon the achievement of (i) annual
revenues from Canadian operations of US$33,604,200 (US$32,004,000 * 1.05) and (ii) a minimum EBITDA
from Canadian operations of US$5,040,000 (US$4,800,000 * 1.05). If both of these objectives are
not achieved, no annual incentive compensation shall be paid with respect to this component.

The determination of whether this annual incentive compensation component has been

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earned shall be based on the Company’s audited financial statements for the year ending December
31, 2007 as filed with the Commission and, to the extent earned as provided above, will be paid as
soon as practicable, but in no event later than 5 business days, after such financial statements
have been so filed with the Commission. You will be entitled to this annual incentive compensation
component only if you remain employed by VeriChip (Canada) and VeriChip Holdings as of the last day
of December 31, 2007. The maximum amount that you can earn during 2007 from this component of the
annual incentive compensation is C$100,000.

Sincerely,

/s/ Scott R. Silverman

Scott R. Silverman

Chief Executive Officer

Accepted and agreed to as of the date first above written

/s/ Daniel A. Gunther                              

Daniel A. Gunther

3

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