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**Incentive      and Recognition Policy**

| To:   | Executive                Management   |
|-------|---------------------------------------|
| From: | Compensation                Committee |
| Date: | March                10, 2006         |

| 1.  |   | Earnings                per share for the year                                                                                    |
|-----|--------|-----------------------------------------------------------------------------------------------------------------------------------|
| 2.  |   | EBITDA                for the year (i.e. earnings per share before interest, taxes, depreciation                and amortization) |
| 3.  |   | Improved                valuation in InfoTech during 2006                                                                         |
| 4.  |   | Realization                of profit from the pending USPS matter                                                                 |
| 5.  |   | Continued                404 clean opinion                                                                                        |
| 6.  |   | Increased                analyst coverage                                                                                         |
| 7.  |   | Audit                committee assessment                                                                                         |
| 8.  |   | Thermo                Life progress                                                                                               |
| 9.  |   | Improved                value in, or valuable sale of, the Company’s investment in Digital                Angel             |
| 10. |   | Valuable                VeriChip transaction or VeriChip license resulting in significant                revenue                  |

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**Summary      of Calculation of Bonus**

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Silverman | Krawitz | McKeown |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------|---------|---------|
| Positive                EPS (for the year)                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 5         | 3       | 3       |
| Positive                EBITDA (for the year)                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 4         | 1       | 2       |
| InfoTech                Valuation (20% of points listed for each 20% increase in stock price                from                12/31/05)                                                                                                                                                                                                                                                                                                                                                                                | 4         | 1       |    |
| Postal                Service (10% of points for each $500K of recovery)                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 3         | 2       |    |
| 404                clean opinion and audit clean opinion                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 1         | 0.5     | 1       |
| Audit                Committee discretion                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |      | 0       | 3       |
| Analyst                coverage (50% of points for coverage by new, credible analyst, additional                50% for second or more)                                                                                                                                                                                                                                                                                                                                                                                  | 2         | 0       | 1       |
| Thermo                Life significant technological development (50% of points), revenue                (10%                of points for each $100K of revenue)                                                                                                                                                                                                                                                                                                                                                        | 2         |    |    |
| DA                transaction: EITHER a transaction that yields $[omitted for                confidentiality] to Applied Digital OR improve stock price; if the                latter,                then 20% of points for each $[omitted for confidentiality in increased                stock price                                                                                                                                                                                                                  | 5         | 3       | 1       |
| (A)                VeriChip IPO (raise of $[omitted for confidentiality]) or similar                transaction, VeriChip sale or other VeriChip significant transaction                (e.g.                merger) OR (B) 50% of points for major license that on its own accounts                for $[omitted for confidentiality] in cash in 2005; 50% of points                for                >$[omitted for confidentiality] over 5 years in contracted commitments                with reputable company) | 5         | 3.5     | 1       |

**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).**

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| National                Market listing                                                                                                                                               | 3  |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----|
| Analyst                coverage (50% of points for coverage by new, credible analyst, additional                50% for second or more)                                              | 4  |
| 404                - No material weakness                                                                                                                                            | 3  |
| Implement                404 procedures                                                                                                                                              | 2  |
| Timely                SEC filings                                                                                                                                                    | 4  |
| Improve                quality of filings                                                                                                                                            | 2  |
| Audit                committee determination - discretionary                                                                                                                         | 10 |
| Acquisitions:100%                if any acquisitions                                                                                                                                 | 3  |
| DA                transaction:a                transaction that yields $[omitted for confidentiality] to Applied                Digital                                              | 4  |
| VeriChip                S-1 ready for effectiveness early (50% of points by [omitted for                confidentiality], other 50% by [omitted for                confidentiality]) | 10 |
| VeriChip                IPO or similar going public transaction                                                                                                                      | 12 |