Applied Digital Solutions, Inc. - Employment and Non-Compete Agreement - Zhou



Exhibit 10.19


EMPLOYMENT
AND NON-COMPETE AGREEMENT


         
This Employment and Non-Compete Agreement (“Employment Agreement”) is made
this 22nd day of December, 1999 by and between Applied Digital Solutions, Inc.,
a Missouri corporation, with its principal office located at 400 Royal Palm Way,
Suite 410, Palm Beach, Florida 33480 (the “Employer”) and Peter Y.
Zhou (the “Employee”). 


         
WHEREAS, Employer desires to retain the services of the Employee; and


         
WHEREAS, Employee is willing to be employed by Employer.


         
NOW, THEREFORE, in consideration of the premises, and the mutual covenants and
agreements contained herein and for other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged, the parties
hereby agree as follows: 


1.        Term of Employment.  Subject to the provisions of Section 4 of this Employment Agreement, Employer
hereby agrees to employ Employee for a period of three (3) years commencing January 17, 2000 (the "Employment
Term").


2.        
Office and Duties.


           (a)   
Office: During the Employment Term, Employee shall serve as both a Vice
President and Chief Scientist of Applied Digital Solutions, Inc.
(“ADS”) and as President and Chief Scientist of ADS’ wholly owned
subsidiary of Digital Angel.net, Inc. In such positions, Employee shall have
such duties and authority as shall be determined from time to time by the
Chairman of the Board and Chief Executive Officer of ADS. During the Employment
Term, Employee’s employment by Employer shall be Employee’s exclusive
full time employment. Such duties shall be provided at the Employer’s
offices located in New York the Long Island area, or any other location or
locations as reasonably required by the Employer from time to time. 


           (b)   
Duties: During the Employment Term, Employee shall devote his best
efforts to performance of his duties hereunder and shall not directly or
indirectly engage in any other business, profession or occupation for
compensation or otherwise which would conflict with the performance of such
duties without the prior written consent of the Board of Directors (the
“Board”), which consent shall not unreasonably be withheld, delayed or
conditioned. Employee’s specific Duties shall include but are not limited
to: drafting an implementation plan for the development of a prototype of the
Digital Angel . In each year thereafter the Employee and Employer shall
mutually agree upon a research plan for the continued development of the Digital
Angel and the underlying technology. 






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Agreement

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3.        Compensation and Benefits.


           (a)   
Base Compensation: As compensation for the services provided by Employee
under this Employment Agreement, Employer will pay Employee One Hundred Thirty
Five Thousand Dollars ($135,000.00) on an annualized basis, in accordance with
Employer’s usual payroll procedures. Nothing contained herein shall
prohibit the Board of Directors of the Employer in its sole discretion, from
increasing the compensation payable to the Employee pursuant to this Employment
Agreement, and/or including cost of living increases, and/or making available to
the Employee other benefits in addition to those to which the Employee is
entitled hereunder. 


           (b)   
Benefits: The Employee shall also be entitled to participate in any and
all employee benefit plans, medical insurance plans, life insurance plans,
disability income plans and other benefit plans, from time to time, that maybe
in effect for employees of Employer. Such participation shall be subject to the
terms and conditions of the applicable plan documents, generally applicable
Employer policies and the discretion of the Board or any administrative or other
committee provided for in, or contemplated by, such plan. 


           (c)   
Vacation; Holidays: The Employee shall be entitled on an annual basis to
ten (10) days of paid vacation in each year of this Employment Agreement.
Vacation shall be taken at a time that is mutually convenient to Employer and
Employee and may not be accumulated or carried over without the express written
consent of Employer. The Employee shall be entitled to the standard company
holidays. 


           (d)   
Business Expenses: In accordance with Employer’s policy, the
Employee will be reimbursed for all “out-of-pocket” and other direct
business expenses (exclusive of commuting costs), upon presentation of
appropriate receipts and documentation. 


           (e)   Car Allowance:  During the Employment Term, and provided Employee is actively employed, Employee
shall be eligible to receive a car allowance of Seven Hundred Fifty Dollars ($750.00) per month.


           (f)   
Stock Options: Upon the execution and delivery of this Employment
Agreement and Employee commences employment pursuant to the terms of this
Employment Agreement, Employer shall grant Employee the option to purchase fifty
thousand (50,000) shares of the common stock of Employer at eighty five percent
(85%) of the closing price of such stock as published in the Wall Street
Journal, Eastern Edition on December 31, 1999. 






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Agreement

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Such Options shall vest over a three (3) year period, one third the first year, the second
third on the anniversary of the second year of this Employment Agreement and finally Employee shall become
completely vested on the third anniversary of the Employment Agreement.


                  
Notwithstanding the above, such options are governed by the ADS Stock Option Plan documents, as
amended.


           (g)   
Relocation Expenses: In the event that Employee is relocated by Employer
at any time during the Employment Term and Employee’s moving expenses are
reimbursed or paid by Employer, and if Employee terminates employment, for any
reason, within one (1) year from the date of such relocation, Employee shall be
liable to Employer for the repayment of 100% of the total amount of the
Relocation Expenses paid on behalf of or reimbursed to Employee. 


4.        Termination.


           (a)   
For Cause by Employer: Notwithstanding any other provision of this
Employment Agreement, Employee’s employment hereunder may be terminated by
Employer at any time for Cause. For purposes of this Employment Agreement,
“Cause” shall be defined as (i) Employee’s willful and continued
failure to perform his duties hereunder (other than as a result of total or
partial incapacity due to physical or mental illness) for a period of ten (10)
days after a written cure notice delivered to Employee on behalf of Employer,
which specifically identifies the manner in which it is alleged that Employee
has not substantially performed his duties, (ii) Employee’s dishonesty in
the performance of his duties hereunder, (iii) an act or acts on Employee’s
part involving moral turpitude or constituting a felony under the laws of the
United States or any state thereof, (iv) any other act or omission which
materially injures the financial condition or business reputation of Employer or
any of its subsidiaries or affiliates, or (v) Employee’s material breach of
his obligations under Section 5 and 7 hereof. In the event that Employee fails
to cure such breach within the time period provided hereinabove, Employer may
terminate this Employment Agreement without further notice and its only
liability shall be to pay Employee’s Base Compensation through such date of
termination. 


           (b)   
Permanent Disability: For the purposes of this Employment Agreement, the
term “Permanent Disability” shall mean the Employee’s inability
to perform his duties as prescribed in this Employment Agreement, which,
following a written request by either Employer or the Employee, shall be
determined by agreement between the parties and, if they cannot agree, by a
panel of three (3) physicians, one of whom will be selected by Employer, one by
the Employee and the third by the first two so selected. Said panel shall also
fix the date of the occurrence of the Permanent Disability. Said panel’s
determination shall be conclusive. Notwithstanding anything to the contrary set
forth herein, the Employee shall be presumed to be permanently disabled thus
terminating this Employment Agreement, as of the date he is receiving payments
for Permanent Disability under any disability insurance policies that may be in
effect, or under the Social Security Act. 






Employment and Non-Compete

Agreement

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           (c)   
Temporary Disability: If, due to physical or mental illness, disability
or injury, the Employee is unable to perform substantially all of his duties and
responsibilities hereunder, the Employer may designate another person to act in
his place during the period of such disability. Notwithstanding any such
designation, the Employee shall continue to receive his full salary and benefits
under Section 3 of this Employment Agreement until he becomes eligible for
disability income under Employer disability income plan. In the absence of a
disability income plan at the time of such disability, Employer shall pay the
Employee benefits equal to those the Employee would have received if
Employer’s current disability income plan were in effect at such time;
provided however, that Employer’s obligations hereunder shall cease three
(3) months from the onset of such disability. 


           (d)   
Death: Employee’s employment hereunder shall terminate immediately
in the event of the Employee’s death. If Employee’s employment is
terminated by the death of Employee, Employer shall pay to Employee’s
estate, or his legal representative, Base Compensation due through the date of
Employee’s death. Employee’s rights to any other payments and/or
consideration shall terminate as of such date, except as to those other benefits
that Employee may be eligible in accordance with the plans, policies and
practices of Employer. 


           (e)   
Without Cause by Employer: The Employee’s employment hereunder may
be terminated by Employer at any time, without Cause as defined hereinabove. If
Employee’s employment is terminated by Employer without Cause (other than
by reason of disability or death), Employer shall continue to pay Employee the
Base Compensation to which he is entitled pursuant to Section 3 of this
Employment Agreement for the balance of the Employment Term as if such
termination had not occurred. The payment to Employee of any other benefits
following the termination of Employee’s employment pursuant to this Section
4(e) shall be determined by the Board in accordance with the plans, policies and
practices of Employer. 


           (f)   
Termination by Employee: Employee’s employment hereunder may be
terminated by Employee, at any time, upon not less than sixty (60) days prior
written notice from Employee to Employer. If Employee terminates his employment
with Employer pursuant to this Section 4(f), Employer shall only pay
Employee’s Base Compensation through the date of termination.
Employee’s rights to any other payments and/or consideration shall
terminate as of such date. 


           (g)   
Notice of Termination: Any purported termination of employment by
Employer or by Employee shall be communicated by written “Notice of
Termination” to the other party hereto in accordance with Section 13
hereof. For purposes of this Employment Agreement, a Notice of Termination shall
mean a notice which shall indicate the specific termination provision in this
Employment Agreement relied upon and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of employment
under the provision so indicated. 





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Agreement

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5.        Non-Competition.


           (a)   
Employee acknowledges and recognizes the highly competitive nature of the
businesses of Employer and its affiliates and accordingly agrees that during the
Employment Term and continuing until the later of (i) the date that Employee
ceases to receive payments pursuant to Section 4 of this Employment Agreement
and (ii) for one (1) year from the date of the termination of Employee’s
employment: 


                
   (i)   Employee will not engage in any activity which is competitive with any business now, or at any
time during the Employment Term, conducted by Employer, its subsidiaries or affiliates, including without
limitation becoming an employee, investor (except for passive investments of not more than five percent (5%) of
the outstanding shares of, or any other equity holdings of a competitor of Employer's that is traded on the New
York Stock Exchange, Nasdaq or any other over-the-counter securities market), officer, agent, partner or director
of, or other participant in, any firm, person or other entity in any geographic area that either directly or
indirectly competes with Employer, its subsidiaries or affiliates.  Notwithstanding any provision of this
Employment Agreement to the contrary, upon the occurrence of any breach of this Section 5(a)(i), and provided
that Employee is employed by Employer, Employer may immediately terminate the employment of Employee for Cause
pursuant to Section 4, and Employer's obligations to make any further payments to Employee under this Employment
Agreement shall terminate.


                
   (ii)   Employee will not directly or indirectly assist others in engaging in any of the activities
in which Employee is prohibited to engage by clause (i) above.


                
   (iii)   Employee will not directly or indirectly (A) induce any employee of Employer, its
subsidiaries or affiliates to engage in any activity that Employee is prohibited from engaging by clause (i)
above, or (B) to terminate his employment with Employer, its subsidiaries or affiliates, or (C) employ or offer
employment to any person who was employed by Employer, its subsidiaries or affiliates unless such person shall
have ceased to be employed by Employer, its subsidiaries or affiliates for a period of at least one (1) year.


           (b)   
It is expressly understood and agreed that (i) although Employee and Employer
consider the restrictions contained in this Section 5 to be reasonable, if a
final judicial determination is made by a court of competent jurisdiction that
the time or geographic restrictions or any other restriction contained in this
Employment Agreement is unenforceable, this Employment Agreement shall not be
rendered void but rather shall be deemed to be enforceable to such maximum
extent as such court may judicially determine or indicate to be enforceable, and
(ii) if any restriction contained in this Employment Agreement is determined to
be unenforceable and such restriction cannot be amended so as to make it
enforceable, such finding shall not affect the enforceability of any of the
other restrictions or provisions contained herein. 






Employment and Non-Compete

Agreement

Page 6


6.        Resignation as
Officer and/or Director. In the event that Employee’s employment is
terminated for any reason whatsoever or Employee voluntarily terminates his
employment, the Employee agrees to, as the case may be, and if applicable resign
immediately as an Officer and/or Director of Employer. 


7.        Confidentiality; Inventions.


           (a)   
Confidentiality: Employee will not at any time (whether during or after
his employment with Employer) disclose or use for his own benefit or purposes or
the benefit or purposes of any other person, firm, partnership, joint venture,
association, corporation or other organization, entity or enterprise other than
Employer and any of its subsidiaries or affiliates, any Confidential
Information. As used herein, the term “Confidential Information” shall
mean any trade secrets, information, data, or other confidential information
(excluding information which is not unique to Employer or which is generally
known to the industry) or development programs, costs, marketing, trading,
investment, sales activities, promotion, credit processes, formulas, data,
software, drawings, specifications, source and object code, financial and
pricing information, marketing information and business and development plans or
the business and affairs of Employer generally, or of any subsidiary or
affiliate of Employer. Employee agrees that upon termination of his employment
with Employer for any reason, he will return to Employer immediately all copies
of any Confidential Information, together with any memoranda, books, papers,
plans, information, letters and other data, and all copies thereof or therefrom,
in any way relating to the confidential information, except that he may retain
personal notes, notebooks and diaries. Employee further agrees that he will not
retain or use for his account at any time any trade name, trademark or other
proprietary business designation used or owned in connection with the business
of Employer, its subsidiaries or its affiliates. 


           (b)   
Disclosure of Inventions: Employee shall promptly disclose to the
Employer (or any persons designated by it) all discoveries, developments,
designs, improvements, inventions, blueprints, formulae, processes, techniques,
computer programs, strategies, and data, whether or not patentable or
registerable under copyright or similar statutes, made or conceived or reduced
to practice or learned by Employee, either along or jointly with others, during
the period of employment that are related to the business of the Employer,
result from tasks assigned to Employee by the Employer or result from the use of
premises or property (including computer systems and engineering facilities)
owned, leased or contracted for by the Employer (all such discoveries,
developments, designs, improvements, inventions, formulae, processes,
techniques, computer programs, strategies, blueprints, know-how and data are
hereinafter referred to as “Inventions”). Employee will also promptly
disclose to the Employer, and the Employer hereby agrees to receive all such
disclosures in confidence, all other discoveries, developments, designs,
improvements, inventions, formulae, processes, techniques, computer programs,
strategies, blueprints and data, whether or not patentable or registerable under
copyright or similar statutes, made or conceived or reduced to practice or
learned by Employee, either along or jointly with others, during the period of
employment for the purpose of determining whether they constitute
“Inventions”, as defined above. 






Employment and Non-Compete

Agreement

Page 7


           (c)   
Ownership of Inventions: All Inventions shall be the sole property of the
Employer and its assigns, and the Employer and its assigns shall be the sole
owner of all patents, copyrights, trademarks and other rights in connection
therewith. Employee does hereby assign to the Employer any rights Employee may
have or acquire in such Inventions. Employee shall assist the Employer in every
proper way as to all such Inventions (but at the Employer’s expense) to
obtain and, from time to time, enforce patents, copyrights, trademarks and other
rights and protections relating to said Inventions in any and all countries, and
to that end, Employee will execute all documents for use in applying for and
obtaining such patents, copyrights, trademarks and other rights and protections
on and enforcing such Inventions, as the Employer may desire, together with any
assignments thereof to the Employer or persons designated by it. Employee’s
obligation to assist the Employer in obtaining and enforcing patents,
copyrights, trademarks and other rights and protections relating to such
Inventions in any and all countries shall continue beyond the termination of
employment, but the Employer shall compensate Employee at a reasonable rate
after the termination for time actually spent by Employee at the Employer’s
request on such assistance. In the event the Employer is unable, after
reasonable effort, to secure Employee’s signature on any document or
documents needed to apply for or prosecute any patent, copyright or other right
or protection relating to an Invention, for any reason whatsoever, Employee does
hereby irrevocably designate and appoint the Employer and its duly authorized
officers and agents as my agent and attorney-in-fact, to act for and on his
behalf to execute and file any such application or applications and to do all
other lawfully permitted acts to further the prosecution and issuance of
patents, copyrights or similar protections thereon with the same legal force and
effect as if executed by Employee and Employee does ratify, affirm and approve
all such lawfully permitted acts accordingly. 


8.        Other Agreements.
Employee represents and warrants that the execution and delivery of this
Employment Agreement and the performance of all the terms of this Employment
Agreement does not and will not breach any agreement to keep in confidence
proprietary information acquired by Employee in confidence or trust. Employee
has not entered into and shall not enter into any agreement, either written or
oral, in conflict herewith. 


9.        Use of Confidential
Information of Other Persons. Employee represents that he has not brought
and will not bring with him to the Employer or use at the Employer any materials
or documents of an employer or a former employer that are not generally
available to the public, unless express written authorization from such employer
for their possession and use has been obtained. Employee also understands that
he may not breach any obligation of confidentiality that he has to any employer
or former employer and agree to fulfill all such obligations during the period
of his affiliation with the Employer. Employee shall indemnify and hold Employer
harmless for a breach of the representations made in sections 8 and 9. 






Employment and Non-Compete

Agreement

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10.         Specific
Performance. Employee acknowledges and agrees that Employer’s remedies
at law for a breach or threatened breach of any of the provisions of Section 5
or Section 7 would be inadequate and, in recognition of this fact, Employee
agrees that, in the event of such a breach or threatened breach, in addition to
any remedies at law, Employer, without posting any bond, shall be entitled to
obtain equitable relief in the form of specific performance, temporary
restraining orders, temporary or permanent injunctions or any other equitable
remedy which may then be available. 


11.        Restriction  on Authority of Employee.  Notwithstanding  anything set forth in this  Employment  Agreement
to the contrary,  the Employee,  in the  performance of his duties  hereunder,  shall not take any of the following
actions without the prior written consent of the Board:


              a.   
Enter into negotiations or execute documents that would materially affect the
existing debt and/or structure or alter, modify or change any banking relations. 


12.        Representations and
Warranties. The Employee hereby represents and warrants that he is free to
enter this Employment Agreement and to render his services pursuant hereto and
that neither the execution and delivery of this Employment Agreement, nor the
performance of his duties hereunder, violates the provisions of any other
agreement to which he is a party or by which he is bound. It is further provided
that Employee shall indemnify Employer for any and all damages and/or expenses
(including attorney’s fees) that may result from a breach of such
representations. 


13.        Notices. Any
notice, request, instruction or other document required or permitted under this
Employment Agreement shall be in writing and shall be deemed delivered when
delivered in person, by electronic facsimile transmission, by overnight courier,
or deposited in the United States mail, postage paid, addressed as follows: 


	 	Employer:	Applied Digital Solutions, Inc.

400 Royal Palm Way

Suite 410

Palm Beach, FL  33480

Attention Michael Krawitz, Esquire





Employment and Non-Compete

Agreement

Page 9


	 	Employee:	Dr. Peter Zhou

49 Grandview Lane

Smiththown, NY  11787



14.        Such addresses may be changed from time to time by either party by providing written notice in the
manner set forth above.


14.        Entire
Agreement. This Employment Agreement together with any attachments or
Exhibits hereto contains the entire agreement of the parties with respect to the
subject matter and there are no other promises or conditions in any other
agreement, whether oral or written. This Employment Agreement supersedes any
prior written or oral agreements between the parties. 


15.        Expenses.  Each party shall pay its own expenses incident to the performance or enforcement of this
Employment Agreement, including all fees and expenses of its counsel for all activities of such counsel
undertaken pursuant to this Employment Agreement, except as otherwise herein specifically provided.


16.         Waivers and Further
Agreements. Any waiver of any terms or conditions of this Employment
Agreement shall not operate as a waiver of any other breach of such terms or
conditions or any other term or condition, nor shall any failure to enforce any
provision hereof operate as a waiver of such provision or of any other provision
hereof; provided, however, that no such written waiver, unless it,
by its own terms, explicitly provides to the contrary, shall be construed to
effect a continuing waiver of the provision being waived and no such waiver in
any instance shall constitute a waiver in any other instance or for any other
purpose or impair the right of the party against whom such waiver is claimed in
all other instances or for all other purposes to require full compliance with
such provision. Each of the parties hereto agrees to execute all such further
instruments and documents and to take all such further action as the other party
may reasonably require in order to effectuate the terms and purposes of this
Employment Agreement. 


17.        Amendments.  This Employment Agreement may not be amended, nor shall any waiver, change, modification,
consent or discharge be effected except by an instrument in writing executed by or on behalf of the party against
whom enforcement of any waiver, change, modification, consent or discharge is sought.


18.        Severability. If
any provision of this Employment Agreement shall be held or deemed to be, or
shall in fact be, invalid, inoperative or unenforceable as applied to any
particular case in any jurisdiction or jurisdictions, or in all jurisdictions or
in all cases, because of the conflict of any provision with any constitution or
statute or rule of public policy or for any other reason, such circumstance
shall not have the effect of rendering the provision or provisions in question
invalid, inoperative or unenforceable in any other jurisdiction or in any other
case or circumstance or of rendering any other provision or provisions herein
contained invalid, inoperative or unenforceable to the extent that such other
provisions are not themselves actually in conflict with such constitution,
statute or rule of public policy, but this Employment Agreement shall be
reformed and construed in any such jurisdiction or case as if such invalid,
inoperative or unenforceable provision had never been contained herein and such
provision reformed so that it would be valid, operative and enforceable to the
maximum extent permitted in such jurisdiction or in such case. 






Employment and Non-Compete

Agreement

Page 10


19.        Counterparts.
This Employment Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument, and in pleading or proving any provision of this
Employment Agreement, it shall not be necessary to produce more than one of such
counterparts. 


20.        
Survival.  Section 5, 6, 7, 8, 9 and 10 shall survive the termination of this Employment Agreement.


21.        Section Headings.  The headings contained in this Employment Agreement are for reference purposes only
and shall not in any way affect the meaning or interpretation of this Employment Agreement.


22.        Gender.  Whenever used herein, the singular number shall include the plural, the plural shall include
the singular, and the use of any gender shall include all genders.


23.        Governing Law.  This Employment Agreement shall be governed by and construed and enforced in accordance
with the law (other than the law governing conflict of law questions) of the State of Florida.






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Agreement

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24.        Arbitration. Any
and all disputes and differences between or among the parties with respect to
the construction or performance of the terms of this Agreement which cannot be
resolved amicably shall be resolved by arbitration before the American
Arbitration Association in accordance with its rule then sitting in the State of
Florida. 


             The
parties have executed this Employment Agreement the day and year first above
written. 


	 	 	 	EMPLOYER:


	 	 	By:	/s/ Garrett A. Sullivan

	 	 	 	Garrett A. Sullivan
Its duly authorized President


	 	 	 	EMPLOYEE:


	/s/ Elizabeth A. Heyder
	 	By:	/s/ Dr. Peter Zhou

	Witness	 	 	Dr. Peter Zhou
	
Elizabeth A. Heyder
Notary Public, State of New York

No. 01 HE5063405
Qualified in Suffolk County
Commission Expires July 22, 2000