Document:

Exhibit 10.74

Exhibit
10.74

 

 

Incentive
and Recognition Policy

To: Executive
Management

From: Compensation
Committee

Date:
 March 7,
2005

Re: 2005
Incentive and Recognition Policy

The
Compensation Committee recognizes the significantly improved condition of the
Company achieved by this management team over the past 12 months, both in terms
of financial health and in terms of prospects for the future. 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 long-term success of the
Company. The intent is to motivate the executive team reach for the best
performance and result for the Company and its shareholders. 

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

	 	
      1.
	
      Earnings
      per share for the year

	 	
      2.
	
      EBITDA
      for the year (i.e. earnings per share before interest, taxes, depreciation
      and amortization)

	 	
      3.
	
      NASDAQ
      national market listing

	 	
      4.
	
      Improved
      value in or transaction regarding the Company’s investment in Digital
      Angel

	 	
      5.
	
      Valuable
      VeriChip transaction or VeriChip license

	 	
      6.
	
      Revenue
      from VeriChip 

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). 

 

2                                            March 7,
2005

Summary
of Calculation of Bonus

 

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

Executive
Management: Scott Silverman, Kevin McLaughlin Michael Krawitz, Evan
McKeown

 

	 	
      Silverman
	
      McLaughlin
	
      Krawitz
	
      McKeown

	
      
	
      
	
      
	
      
	
      

	
      Positive
      EPS (for the year)
	
      5
	
      2
	
      1
	
      3

	
      Positive
      EBITDA (for the year)
	
      5
	
      1.5
	
      1
	
      2

	
      Nasdaq
      national market listing
	
      5
	
      0.5
	
      3
	
      1

	
      DA
      transaction: EITHER a transaction that yields [omitted for
      confidentiality] to Applied Digital OR maintain/improve

      stock
      price; 
	
      5
	
      1
	
      4
	
      3

	
      (A)
      VeriChip transaction [omitted for confidentiality] OR (B) 50% of points
      for major license [omitted for confidentiality] 
	
      5
	
      2
	
      4
	
      2

	
      VeriChip
      Corp. revenue (including eXI): 20% of points for each $2.5MM above $7.5MM
      (i.e. bonus would start at $10MM)
	
      5
	
      5
	
      1
	
      1

	 	
       
	
       
	
       
	
       

					
	 	
      30
	
      12
	
      14
	
      12

	
      Point
      Value
	 	 	 	 
	
      $50,000
      
	 	 	 	 
	 	 	 	 	 
	
      Notes:
	 	 	 	 
	
      No
      officer can earn more than 100% of points listed for that
    item
	 	 	 
	
      EPS
      and EBITDA are determined after giving effect to any bonuses (i.e. EPS
      will only be considered

      positive
      if, after payment of any bonuses or expected payment of bonuses, EPS is
      positive).

	
      Kevin
      McLaughlin's plan may be modified in whole or in part at discretion of
      comp committee if

      he
      becomes full-time CEO of VeriChip 

	
      DA
      Value is determined by the Compensation Committee based on the ten trading
      days preceding 

      the
      date hereof and the ten trading days preceding the date the bonus is
      determined, with any

      adjustments
      the compensation committee reasonably deems
appropriate.

2

3                                             March 7,
2005

Senior
Management: Lorraine Breece

	 	
      Breece

		
	
      National
      Market listing
	
      3

	
      404
      - No material weakness
	
      4

	
      Implement
      404 procedures
	
      4

	
      Timely
      SEC filings
	
      4

	
      Improve
      quality of filings
	
      2

	
      Acquisitions:

      100%
      if any acquisitions (excl. eXI)
	
      1

	
      DA
      transaction:

      EITHER

      a
      transaction that yields [omitted for confidentiality] to Applied
      Digital

      OR

      maintain/improve
      stock price;
	
      1

	
      VeriChip
      transaction
	
      4

	 	
      23

	 	 
	
      Point
      Value
	 
	
      $3,000
      
	 
	 	 
	
      NOTES:
	 
	
      Bonus
      may be increased or decreased by 20% for other factors, as determined by
      executive management
	 
	
      Bonus
      may be increased or decreased by 20% for overall financial
      performance
	 
	
      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. 

 

 

3Exhibit 10.75

 

Exhibit
10.75

 

Executive
Management Change in Control Plan

This
Executive Management Change in Control Plan (the “Plan”) is an employee benefit
provided to the following three individuals: Kevin McLaughlin, Michael Krawitz
and Evan McKeown (each, an “Executive,” and collectively, the “Executives”). The
Plan was approved by the Board of Directors on May 8, 2004 and is being put into
place in consideration for the continued efforts, after the date hereof, of the
foregoing individuals. The Plan is designed to mirror (although to a lesser
extent) the change in control provision applicable to Scott Silverman pursuant
to his current employment agreement, and any questions that arise as to
construction of the provisions hereof shall be guided by the application to Mr.
Silverman of the change in control provisions of such agreement.

The Plan
provisions are as follows:

(i)     
Upon a
Change in Control, each Executive shall be entitled to receive the Change in
Control Compensation, as hereafter defined.

(ii)     For all
purposes of this Plan, a Change in Control shall be deemed to occur if any
person or entity (or persons or entities acting as a group) acquires stock of
Applied Digital Solutions, Inc. (“Applied Digital”) that, together with stock
then held by such person, entity or group, results in such person, entity or
group holding more than fifty (50%) percent of the fair market value or total
voting power of Applied Digital.

(iii)    For all
purposes of this Agreement, the Term Change in Control Compensation shall mean
the sum of (A) any and all earned but unpaid base salary and earned but unpaid
bonus compensation as of the date of the Change in Control; (B) the Multiplier
(as defined below) times the base salary; and (C) the Multiplier times the
Average Bonus (as defined below). The Change in Control Compensation shall be
paid to Executive within ten (10) days of the Change in Control. In addition,
any outstanding stock options held by Executive as of the Change in Control
shall become vested and exercisable as of such date, and shall remain
exercisable as of the life of the option (or, in the case of an acquisition of
all of the common stock of Applied Digital, such options shall vest prior to
such closing so that the shares issuable upon such exercise may be sold in the
Change of Control transaction). Further, Applied Digital shall continue to pay
any lease payments on the vehicle then used by Executive, which vehicle is being
leased by Applied Digital for use by Executive.

“Average
Bonus” shall mean the average bonus paid by Applied Digital to Executive for the
three (3) full calendar years immediately prior to the Change in Control,
provided, however, that if the Change in Control occurs in 2004, then the
“Average Bonus shall mean the bonus paid in 2003, and if the Change in Control
occurs in 2005, then the “Average Bonus” shall mean the average of the bonuses
paid in 2003 and 2004. In all cases, if any bonus is paid in January or February
(or if the Change in Control occurs in January or February prior to payment) and
has been accrued in the prior year, such bonus shall be treated for purposes of
calculating “Average Bonus” as being paid in the prior year.

 

In the
case of Messrs. McLaughlin and McKeown, “Multiplier” shall mean one (1), but
shall increase by 0.5 on May 7, 2005 and by an additional 0.5 on each May 7
after May 7, 2005 until the Multiplier reaches a cap of 3. In the case of Mr.
Krawitz, “Multiplier” shall mean three (3), and shall not increase.

The Plan
shall not apply to an Executive that terminates his employment for any reason
other than resignation with Good Reason. Good Reason shall mean:
(i) assignment of duties inconsistent with Executive’s position (including
status, title and reporting requirements) or reduction of the Executive’s
position (including status, title and reporting requirements), authority, duties
or responsibilities or (ii) relocation of the Employer’s principle place of
business or relocation of Employee’s workplace outside of Palm Beach County or
Broward Counties.

APPLIED
DIGITAL SOLUTIONS, INC.

By:           
/s/ Scott
Silverman                  

      Name:
Scott Silverman

      Title:
Chairman and CEO

 

 

          /s/ Kevin
McLaughlin                              

Kevin
McLaughlin

 

          /s/
Michael
Krawitz                               

Michael
Krawitz

 

         /s/ Evan
McKeown                                   

Evan
McKeown

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