Document:

EXHIBIT 4.1

                         APPLIED DIGITAL SOLUTIONS, INC.

                            2003 FLEXIBLE STOCK PLAN

                       (AS AMENDED THROUGH JULY 24, 2004)

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                         APPLIED DIGITAL SOLUTIONS, INC.

                            2003 FLEXIBLE STOCK PLAN

                                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................................................3
                  2.1.8. Company.............................................3
                  2.1.9. Committee...........................................3
                  2.1.10. Common Stock.......................................3
                  2.1.11. Effective Date.....................................3
                  2.1.12. Employee...........................................4
                  2.1.13. Employer...........................................4
                  2.1.14. Exchange Act.......................................4
                  2.1.15. Fair Market Value..................................4
                  2.1.16. Fiscal Year........................................4
                  2.1.17. ISO................................................4
                  2.1.18. NQSO...............................................4
                  2.1.19. Option.............................................4
                  2.1.20. Other Stock Based Award............................4
                  2.1.21. Parent.............................................4
                  2.1.22. Participant........................................4
                  2.1.23. Performance Based Compensation.....................5
                  2.1.24. Performance Share..................................5
                  2.1.25. Plan...............................................5
                  2.1.26. Reload Option......................................5
                  2.1.27. Restricted Stock...................................5
                  2.1.28. Rule 16b-3.........................................5
                  2.1.29. SEC................................................5
                  2.1.30. Share..............................................5
                  2.1.31. SAR................................................5
                  2.1.32. Subsidiary.........................................5
         2.2. Other Definitions..............................................6
         2.3. Conflicts......................................................6

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3. COMMON STOCK

         3.1. Number of Shares.................................................6
         3.2. Reusage..........................................................6
         3.3. Adjustments......................................................6

4. ELIGIBILITY

         4.1. Determined By Committee..........................................6

5. ADMINISTRATION

         5.1. Committee........................................................7
         5.2. Authority........................................................7
         5.3. Delegation.......................................................8
         5.4. Determination....................................................8

6. AMENDMENT

         6.1. Power of Board...................................................8
         6.2. Limitation.......................................................8

7. TERM AND TERMINATION

         7.1. Term.............................................................8
         7.2. Termination......................................................8

8. MODIFICATION OR TERMINATION OF BENEFITS

         8.1. General..........................................................8
         8.2. Committee's Right................................................9

9. CHANGE OF CONTROL

         9.1. Vesting and Payment..............................................9
         9.2. Other Action.....................................................9

10. AGREEMENTS AND CERTAIN BENEFITS

         10.1. Grant Evidenced by Agreement....................................9
         10.2. Provisions of Agreement........................................10
         10.3. Transferability................................................10

11. REPLACEMENT AND TANDEM AWARDS

         11.1. Replacement....................................................10
         11.2. Tandem Awards..................................................10

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12. PAYMENT, DIVIDENDS, DEFERRAL AND WITHHOLDING

         12.1. Payment........................................................10
         12.2. Dividend Equivalents...........................................11
         12.3. Deferral.......................................................11
         12.4. Withholding....................................................11

13. OPTIONS

         13.1. Types of Options...............................................11
         13.2. Grant of ISOs and Option Price.................................11
         13.3. Other Requirements for ISOs....................................12
         13.4. NQSOs..........................................................12
         13.5. Determination by Committee.....................................12
14. SARS

         14.1. Grant and Payment..............................................12
         14.2. Grant of Tandem Award..........................................12
         14.3. ISO Tandem Award...............................................12
         14.4. Payment of Award...............................................12

15. ANNUAL LIMITATIONS

         15.1. Limitation on Options and SARs.................................12
         15.2. Computations...................................................12

16. RESTRICTED STOCK AND PERFORMANCE SHARES

         16.1. Restricted Stock...............................................13
         16.2. Cost of Restricted Stock.......................................13
         16.3. Non-Transferability............................................13
         16.4. Performance Shares.............................................13
         16.5. Grant..........................................................13

17. CASH AWARDS

         17.1. Grant..........................................................13
         17.2. Rule 16b-3.....................................................14
         17.3. Restrictions...................................................14

18. OTHER STOCK BASED AWARDS AND OTHER BENEFITS

         18.1. Other Stock Based Awards.......................................14
         18.2. Other Benefits.................................................14

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19. MISCELLANEOUS PROVISIONS

         19.1. Underscored References.........................................14
         19.2. Number and Gender..............................................14
         19.3. Unfunded Status of Plan........................................14
         19.4. Termination of Employment......................................15
         19.5. Designation of Beneficiary.....................................15
         19.6. Governing Law..................................................15
         19.7. Purchase for Investment........................................15
         19.8. No Employment Contract.........................................15
         19.9. No Effect on Other Benefits....................................16

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                         APPLIED DIGITAL SOLUTIONS, INC.

                            2003 FLEXIBLE STOCK PLAN

1.       NAME AND PURPOSE

         1.1. Name.

                  The name of this Plan is the "Applied Digital Solutions,  Inc.
2003 Flexible Stock Plan."

         1.2. Purpose.

                  The Company  has  established  this Plan to  attract,  retain,
motivate and reward Employees and other individuals,  to encourage  ownership of
the Company's  common stock by Employees and other  individuals,  and to promote
and further the best interests of the Company by granting cash and other awards.
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. This Plan is intended to be "Broadly Based" (as
such term is used for purposes of rules promulgated by The National  Association
of Securities Dealers).

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.

                           The occurrence of any of the following:

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A.    An  acquisition  of any common  stock or other  voting  securities  of the
      Company  entitled to vote  generally  for the election of  directors  (the
      "Voting Securities") by any "Person" or "Group" (as each such term is used
      for purposes of Section 13(d) or 14(d) of the Exchange  Act),  immediately
      after  which such  Person or Group,  as the case may be,  has  "Beneficial
      Ownership"  (within  the  meaning  of Rule  13d-3  promulgated  under  the
      Exchange  Act) of more than 20% of the then  outstanding  shares of common
      stock or the  combined  voting  power of the  Company's  then  outstanding
      Voting Securities; provided, however, that in determining whether a Change
      of Control has occurred,  shares of common stock or Voting Securities that
      are acquired in a  Non-Control  Acquisition  (as defined  below) shall not
      constitute  an  acquisition  which  would  cause a Change  of  Control.  A
      "Non-Control  Acquisition"  shall mean an  acquisition by (i) the Company,
      (ii) any  Subsidiary or (ii) any employee  benefit plan  maintained by the
      Company or any Subsidiary, including a trust forming part of any such plan
      (an "Employee Benefit Plan");

B.    When,  during any 2-year period,  individuals who, at the beginning of the
      2-year period, constitute the Board (the "Incumbent Board"), cease for any
      reason to constitute  at least 50% of the members of the Board;  provided,
      however,  that (i) if the  election  or  nomination  for  election  by the
      Company's  shareholders  of any new  director was approved by a vote of at
      least  two-thirds of the Incumbent  Board,  such new director  shall,  for
      purposes hereof, be deemed to be a member of the Incumbent Board; and (ii)
      no  individual  shall be deemed to be a member of the  Incumbent  Board if
      such individual  initially  assumed office as a result of either an actual
      or threatened  "Election Contest" (as described in Rule 14a-11 promulgated
      under the Exchange  Act) or other  actual or  threatened  solicitation  of
      proxies or  consents  by or on behalf of a Person or Group  other than the
      Board (a "Proxy Contest") including by reason of any agreement intended to
      avoid or settle any Election Contest or Proxy Contest;

C.    The consummation of:

                           (i)  a  merger,   consolidation   or   reorganization
                  involving  the Company or any  Subsidiary,  unless the merger,
                  consolidation or reorganization is a Non-Control  Transaction.
                  A "Non-Control Transaction" shall mean a merger, consolidation
                  or reorganization of the Company or any Subsidiary where:

            (a)   the  shareholders  of the  Company  immediately  prior  to the
                  merger,  consolidation  or  reorganization  own,  directly  or
                  indirectly,  immediately following such merger,  consolidation
                  or  reorganization,  at least 50% of the combined voting power
                  of  the  outstanding  voting  securities  of  the  corporation
                  resulting from such merger,  consolidation  or  reorganization
                  (the  "Surviving   Corporation")  in  substantially  the  same
                  proportion  as their  ownership  of the common stock or Voting
                  Securities,  as the  case  may be,  immediately  prior  to the
                  merger, consolidation or reorganization,

            (b)   the  individuals  who  were  members  of the  Incumbent  Board
                  immediately prior to the execution of the agreement  providing
                  for the merger,  consolidation or reorganization constitute at
                  least  two-thirds  of the members of the board of directors of
                  the  Surviving  Corporation,  or  a  corporation  beneficially
                  owning,  directly  or  indirectly,  a  majority  of the voting
                  securities of the Surviving Corporation, and

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            (c)   no  Person  or  Group,  other  than (1) the  Company,  (2) any
                  Subsidiary,  (3) any  Employee  Benefit  Plan or (4) any other
                  Person  or  Group  who,   immediately  prior  to  the  merger,
                  consolidation or reorganization,  had Beneficial  Ownership of
                  not less than 20% of the then outstanding Voting Securities or
                  common stock,  has Beneficial  Ownership of 20% or more of the
                  combined  voting  power of the  Surviving  Corporation's  then
                  outstanding voting securities or common stock;

            (d)   A complete liquidation or dissolution of the Company; or

            (e)   The sale or other  disposition of all or substantially  all of
                  the assets of the Company to any Person (other than a transfer
                  to a Subsidiary).

                  Notwithstanding  the foregoing,  a Change of Control shall not
be deemed to have  occurred  solely  because  any Person or Group (the  "Subject
Person") acquired Beneficial  Ownership of more than the permitted amount of the
then outstanding Voting Securities or common stock of the Company as a result of
an  acquisition of Voting  Securities or common stock by the Company  which,  by
reducing  the  number  of  shares of Voting  Securities  or  common  stock  then
outstanding,  increases the proportional  number of shares beneficially owned by
the Subject Person;  provided,  however,  that if a Change of Control would have
occurred (but for the operation of this sentence) as a result of the acquisition
of Voting Securities or common stock by the Company,  and after such acquisition
by  the  Company,  the  Subject  Person  becomes  the  beneficial  owner  of any
additional  shares of Voting  Securities  or common stock,  which  increases the
percentage of the then outstanding  shares of Voting  Securities or common stock
beneficially  owned by the  Subject  Person,  then a Change of Control  shall be
deemed to have occurred.

                   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.

                           Applied Digital Solutions, Inc.

                   2.1.9. Committee.

                           The Committee described in Section 0.

                   2.1.10. Common Stock.

                           The Company's  common stock which presently has a par
         value of $.01 per Share.

                   2.1.11. Effective Date.

                           The  date   that  the   Plan  is   approved   by  the
         shareholders  of the Company which must occur within one year before or
         after  approval  by the  Board.  Any  grants of  Benefits  prior to the
         approval  by the  shareholders  of the  Company  shall  be void if such
         approval is not obtained.

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                   2.1.12. Employee.

                           Any person employed by the Employer.

                   2.1.13. Employer.

                           The Company and all Affiliates.

                   2.1.14. Exchange Act.

                           The Securities Exchange Act of 1934, as amended.

                   2.1.15. Fair Market Value.

                           The  closing  price of Shares on the Nasdaq  National
         Market on a given  date,  or, in the  absence of sales on a given date,
         the  closing  price on the  Nasdaq  National  Market on the last day on
         which a sale occurred prior to such date.

                   2.1.16. Fiscal Year.

                           The taxable year of the Company which is the calendar
         year.

                   2.1.17. ISO.

                           An  Incentive  Stock Option as defined in Section 422
         of the Code.

                   2.1.18. NQSO.

                           A non-qualified stock Option, which is an Option that
         does not qualify as an ISO.

                   2.1.19. Option.

                           An option to purchase Shares granted under the Plan.

                   2.1.20. Other Stock Based Award.

                           An award under  Section 18 that is valued in whole or
         in part by reference to, or otherwise based on, common stock.

                   2.1.21. 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.

                   2.1.22. 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

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         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.

                   2.1.23. Performance Based Compensation.
                           Compensation  which meets the requirements of Section
         162(m)(4)(C) of the Code.

                   2.1.24. Performance Share.
                           A Share awarded to a  Participant  under Section 0 of
         the Plan.

                   2.1.25. Plan.
                           The Applied Digital Solutions, Inc. 2003 Flexible
         Stock Plan and all amendments and supplements to it.

                   2.1.26. 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.

                   2.1.27. Restricted Stock.

                           Shares issued under Section 0 of the Plan.

                   2.1.28. Rule 16b-3.

                           Rule 16b-3 promulgated by the SEC, as amended, or any
         successor rule in effect from time to time.

                   2.1.29. SEC.

                           The Securities and Exchange Commission.

                   2.1.30. Share.

                           A share of common stock.

                   2.1.31. 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.

                   2.1.32. 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

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         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.       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
2,600,000 Shares. 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;  provided,  however,  that the  number of
Shares that may be issued under ISOs shall not exceed 1,300,000.

         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,
shall 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.

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5.       ADMINISTRATION

         5.1. Committee.

                  The Plan shall be administered by the Committee. The Committee
shall consist of the Board, unless the Board appoints a Committee of two or more
but less than all of the Board.  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, 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  described in Section 9.1 or permitted
            by Section 9.2(a), 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

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      (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 0 of 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 and binding
on all persons.

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; or

      (c)   in a manner which would violate applicable law.

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
terminated.

         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  0, 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.

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         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.

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 0 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;

      (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 may be evidenced by an
Agreement  which shall describe the specific  Benefit  granted and the terms and
conditions of the Benefit.  The granting of any Benefit shall be subject to, and
conditioned  upon, the  recipient's  execution of any Agreement  required by the

                                       9
<PAGE>

Committee.  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, DEFERRAL 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;

      (b)   by the surrender of all or part of a Benefit  (including the Benefit
            being  exercised)  including  by  means  of  a  so-called  "cashless
            exercise" of an option;

      (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;

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

                                       10
<PAGE>

                  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.

         12.2. Dividend Equivalents.

                  Grants of Benefits in Shares or Share  equivalents may include
dividend equivalent payments or dividend credit rights.

         12.3. Deferral.

                  The right to receive  any  Benefit  under the Plan may, at the
request of the  Participant,  be deferred for such period and upon such terms as
the  Committee  shall  determine,  which may  include  crediting  of interest on
deferrals of cash and crediting of dividends on deferrals denominated in Shares.

         12.4. Withholding.

                  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.

                                       11
<PAGE>

         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 85% 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 0 through  Section 0,
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 cash,  in Shares,  or in any
combination of cash and Shares, as the Committee shall determine.

         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 500,000.

         15.2. Computations.

                  For purposes of Section 0: 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

                                       12
<PAGE>

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 0 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.

         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 0) in such amounts as it deems appropriate.

                                       13
<PAGE>

         17.2. Rule 16b-3.

                  The  amount  of any  Cash  Award  in any  Fiscal  Year  to any
Participant who is subject to Section 0 of the Exchange Act shall not exceed the
greater of $100,000 or 100% of his cash  compensation  (excluding any Cash Award
under this Section 0) 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.

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, the grant of securities  convertible into Shares, and the grant of Shares
in lieu of the payment of cash compensation  pursuant to the mutual agreement of
the Participant and the Company.

         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.

                                       14
<PAGE>

         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.  These rules may provide,  as the Committee
may  deem  appropriate,  for  the  expiration,   forfeiture,   continuation,  or
acceleration of the vesting of all or part of the Benefits.

         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 Missouri.

         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.

                                       15
<PAGE>

         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.

                                       16EXHIBIT 4.2

                         APPLIED DIGITAL SOLUTIONS, INC.

                            1999 FLEXIBLE STOCK PLAN

                        (AS AMENDED THROUGH JUNE 8, 2002)

<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..................................................3
                  2.1.8. Company...............................................3
                  2.1.9. Committee.............................................3
                  2.1.10. Common Stock.........................................3
                  2.1.11. Effective Date.......................................3
                  2.1.12. Employee.............................................3
                  2.1.13. Employer.............................................4
                  2.1.14. Exchange Act.........................................4
                  2.1.15. Fair Market Value....................................4
                  2.1.16. Fiscal Year..........................................4
                  2.1.17. ISO..................................................4
                  2.1.18. NQSO.................................................4
                  2.1.19. Option...............................................4
                  2.1.20. Other Stock Based Award..............................4
                  2.1.21. Parent...............................................4
                  2.1.22. Participant..........................................4
                  2.1.23. Performance Based Compensation.......................4
                  2.1.24. Performance Share....................................5
                  2.1.25. Plan.................................................5
                  2.1.26. Reload Option........................................5
                  2.1.27. Restricted Stock.....................................5
                  2.1.28. Rule 16b-3...........................................5
                  2.1.29. SEC..................................................5
                  2.1.30. Share................................................5
                  2.1.31. SAR..................................................5
                  2.1.32. Subsidiary...........................................5
         2.2. Other Definitions................................................5
         2.3. Conflicts........................................................6

3. COMMON STOCK

         3.1. Number of Shares.................................................6
         3.2. Reusage..........................................................7
         3.3. Adjustments......................................................7

4. ELIGIBILITY

         4.1. Determined By Committee..........................................7

<PAGE>

5. ADMINISTRATION

         5.1. Committee........................................................7
         5.2. Authority........................................................7
         5.3. Delegation.......................................................8
         5.4. Determination....................................................8

6. AMENDMENT

         6.1. Power of Board...................................................8
         6.2. Limitation.......................................................9

7. TERM AND TERMINATION

         7.1. Term.............................................................9
         7.2. Termination......................................................9

8. MODIFICATION OR TERMINATION OF BENEFITS

         8.1. General..........................................................9
         8.2. Committee's Right................................................9

9. CHANGE OF CONTROL

         9.1. Vesting and Payment..............................................9
         9.2. Other Action....................................................10

10. AGREEMENTS AND CERTAIN BENEFITS

         10.1. Grant Evidenced by Agreement...................................10
         10.2. Provisions of Agreement........................................10
         10.3. Transferability................................................11

11. REPLACEMENT AND TANDEM AWARDS

         11.1. Replacement....................................................11
         11.2. Tandem Awards..................................................11

12. PAYMENT, DIVIDENDS, DEFERRAL AND WITHHOLDING

         12.1. Payment........................................................11
         12.2. Dividend Equivalents...........................................12
         12.3. Deferral.......................................................12
         12.4. Withholding....................................................12

13. OPTIONS

         13.1. Types of Options...............................................12
         13.2. Grant of ISOs and Option Price.................................12
         13.3. Other Requirements for ISOs....................................12
         13.4. NQSOs..........................................................12
         13.5. Determination by Committee.....................................12

<PAGE>

14. SARS

         14.1. Grant and Payment..............................................13
         14.2. Grant of Tandem Award..........................................13
         14.3. ISO Tandem Award...............................................13
         14.4. Payment of Award...............................................13

15. ANNUAL LIMITATIONS

         15.1. Limitation on Options and SARs.................................13
         15.2. Computations...................................................13

16. RESTRICTED STOCK AND PERFORMANCE SHARES

         16.1. Restricted Stock...............................................13
         16.2. Cost of Restricted Stock.......................................14
         16.3. Non-Transferability............................................14
         16.4. Performance Shares.............................................14
         16.5. Grant..........................................................14

17. CASH AWARDS

         17.1. Grant..........................................................14
         17.2. Rule 16b-3.....................................................14
         17.3. Restrictions...................................................14

18. OTHER STOCK BASED AWARDS AND OTHER BENEFITS

         18.1. Other Stock Based Awards.......................................14
         18.2. Other Benefits.................................................15

19. MISCELLANEOUS PROVISIONS

         19.1. Underscored References.........................................15
         19.2. Number and Gender..............................................15
         19.3. Unfunded Status of Plan........................................15
         19.4. Termination of Employment......................................15
         19.5. Designation of Beneficiary.....................................15
         19.6. Governing Law..................................................16
         19.7. Purchase for Investment........................................16
         19.8. No Employment Contract.........................................16
         19.9. No Effect on Other Benefits....................................16

<PAGE>

                         APPLIED DIGITAL SOLUTIONS, INC.
                            1999 FLEXIBLE STOCK PLAN

1. NAME AND PURPOSE

         1.1. Name.

                  The name of this Plan is the "Applied Digital Solutions, Inc.
1999 Flexible Stock Plan."

         1.2. Purpose.

                  The Company  has  established  this Plan to  attract,  retain,
motivate and reward Employees and other individuals,  to encourage  ownership of
the Company's  Common Stock by Employees and other  individuals,  and to promote
and further the best interests of the Company by granting cash and other awards.
This Plan is intended to be "Broadly  Based" (as such term is used for  purposes
of rules promulgated by The National Association of Securities Dealers).

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.

                           The occurrence of any of the following:

                  (a)   An  acquisition  of any  Common  Stock or  other  voting
                        securities of the Company entitled to vote generally for
                        the election of directors (the "Voting  Securities")  by
                        any  "Person"  or "Group" (as each such term is used for
                        purposes of Section 13(d) or 14(d) of the Exchange Act),
                        immediately  after  which such  Person or Group,  as the
                        case may be,  has  "Beneficial  Ownership"  (within  the

                                       1
<PAGE>

                        meaning of Rule  13d-3  promulgated  under the  Exchange
                        Act) of more than 20% of the then outstanding  shares of
                        Common  Stock  or  the  combined  voting  power  of  the
                        Company's then outstanding Voting Securities;  provided,
                        however, that in determining whether a Change of Control
                        has   occurred,   shares  of  Common   Stock  or  Voting
                        Securities   that   are   acquired   in  a   Non-Control
                        Acquisition  (as defined  below) shall not constitute an
                        acquisition  which would  cause a Change of  Control.  A
                        "Non-Control  Acquisition"  shall mean an acquisition by
                        (i)  the  Company,  (ii)  any  Subsidiary  or  (ii)  any
                        employee  benefit plan  maintained by the Company or any
                        Subsidiary,  including a trust  forming part of any such
                        plan (an "Employee Benefit Plan");

                  (b)   When, during any 2-year period,  individuals who, at the
                        beginning  of the 2-year  period,  constitute  the Board
                        (the  "Incumbent  Board"),   cease  for  any  reason  to
                        constitute  at least 50% of the  members  of the  Board;
                        provided,   however,   that  (i)  if  the   election  or
                        nomination for election by the Company's shareholders of
                        any new  director  was  approved  by a vote of at  least
                        two-thirds  of the  Incumbent  Board,  such new director
                        shall, for purposes hereof,  be deemed to be a member of
                        the Incumbent  Board;  and (ii) no  individual  shall be
                        deemed  to be a member  of the  Incumbent  Board if such
                        individual  initially  assumed  office  as a  result  of
                        either an actual or  threatened  "Election  Contest" (as
                        described in Rule 14a-11  promulgated under the Exchange
                        Act) or  other  actual  or  threatened  solicitation  of
                        proxies or consents by or on behalf of a Person or Group
                        other than the Board (a "Proxy  Contest")  including  by
                        reason of any agreement  intended to avoid or settle any
                        Election Contest or Proxy Contest;

                  (c)   The consummation of:

                        (i)   a   merger,    consolidation   or   reorganization
                  involving  the Company or any  Subsidiary,  unless the merger,
                  consolidation or reorganization is a Non-Control  Transaction.
                  A "Non-Control Transaction" shall mean a merger, consolidation
                  or reorganization of the Company or any Subsidiary where:

                                    (A)   the   shareholders   of  the   Company
                           immediately  prior to the  merger,  consolidation  or
                           reorganization    own,    directly   or   indirectly,
                           immediately  following such merger,  consolidation or
                           reorganization,  at least 50% of the combined  voting
                           power of the  outstanding  voting  securities  of the
                           corporation resulting from such merger, consolidation
                           or  reorganization  (the "Surviving  Corporation") in
                           substantially  the same proportion as their ownership
                           of the Common Stock or Voting Securities, as the case
                           may   be,    immediately   prior   to   the   merger,
                           consolidation or reorganization,

                                    (B) the  individuals who were members of the
                           Incumbent Board immediately prior to the execution of
                           the agreement providing for the merger, consolidation
                           or  reorganization  constitute at least two-thirds of
                           the  members  of  the  board  of   directors  of  the
                           Surviving Corporation,  or a corporation beneficially
                           owning,  directly  or  indirectly,  a majority of the
                           voting securities of the Surviving Corporation, and

                                    (C) no Person or Group,  other  than (1) the
                           Company, (2) any Subsidiary, (3) any Employee Benefit
                           Plan  or  (4)  any  other   Person   or  Group   who,

                                       2
<PAGE>

                           immediately  prior to the  merger,  consolidation  or
                           reorganization,  had Beneficial Ownership of not less
                           than 20% of the then outstanding Voting Securities or
                           Common Stock, has Beneficial Ownership of 20% or more
                           of  the  combined   voting  power  of  the  Surviving
                           Corporation's  then outstanding  voting securities or
                           common stock;

                  (d)   A complete liquidation or dissolution of the Company; or

                  (e)   The sale or other  disposition  of all or  substantially
                        all of the assets of the  Company  to any Person  (other
                        than a transfer to a Subsidiary).

                  Notwithstanding  the foregoing,  a Change of Control shall not
be deemed to have  occurred  solely  because  any Person or Group (the  "Subject
Person") acquired Beneficial  Ownership of more than the permitted amount of the
then outstanding Voting Securities or Common Stock of the Company as a result of
an  acquisition of Voting  Securities or Common Stock by the Company  which,  by
reducing  the  number  of  shares of Voting  Securities  or  Common  Stock  then
outstanding,  increases the proportional  number of shares beneficially owned by
the Subject Person;  provided,  however,  that if a Change of Control would have
occurred (but for the operation of this sentence) as a result of the acquisition
of Voting Securities or Common Stock by the Company,  and after such acquisition
by  the  Company,  the  Subject  Person  becomes  the  beneficial  owner  of any
additional  shares of Voting  Securities  or Common Stock,  which  increases the
percentage of the then outstanding  shares of Voting  Securities or Common Stock
beneficially  owned by the  Subject  Person,  then a Change of Control  shall be
deemed to have occurred.

                   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.

                           Applied Digital Solutions, Inc.

                   2.1.9. Committee.

                           The Committee described in Section y5.1.

                   2.1.10. Common Stock.

                           The Company's  common stock which presently has a par
         value of $.01 per Share.

                   2.1.11. Effective Date.

                           The  date   that  the   Plan  is   approved   by  the
         shareholders  of the Company which must occur within one year before or
         after  approval  by the  Board.  Any  grants of  Benefits  prior to the
         approval  by the  shareholders  of the  Company  shall  be void if such
         approval is not obtained.

                   2.1.12. Employee.

                           Any person employed by the Employer.

                                       3
<PAGE>

                   2.1.13. Employer.

                           The Company and all Affiliates.

                   2.1.14. Exchange Act.
                           The Securities Exchange Act of 1934, as amended.

                   2.1.15. Fair Market Value.

                           The  closing  price of Shares on the Nasdaq  National
         Market on a given  date,  or, in the  absence of sales on a given date,
         the  closing  price on the  Nasdaq  National  Market on the last day on
         which a sale occurred prior to such date.

                   2.1.16. Fiscal Year.

                           The taxable year of the Company which is the calendar
         year.

                   2.1.17. ISO.

                           An  Incentive  Stock Option as defined in Section 422
         of the Code.

                   2.1.18. NQSO.

                           A non-qualified stock Option, which is an Option that
         does not qualify as an ISO.

                   2.1.19. Option.

                           An option to purchase Shares granted under the Plan.

                   2.1.20. Other Stock Based Award.

                           An award under  Section 18 that is valued in whole or
         in part by reference to, or otherwise based on, Common Stock.

                   2.1.21. 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.

                   2.1.22. Participant.

                           An  individual  who is  granted a  Benefit  under the
         Plan. Benefits may be granted only to Employees,  members of the Board,
         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.

                   2.1.23. Performance Based Compensation.

                           Compensation  which meets the requirements of Section
         162(m)(4)(C) of the Code.

                                       4
<PAGE>

                   2.1.24. Performance Share.

                           A Share awarded to a Participant under Section y16 of
         the Plan.

                   2.1.25. Plan.

                           The Applied Digital Solutions, Inc. 1999 Flexible
         Stock Plan and all amendments and supplements to it.

                   2.1.26. 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.

                   2.1.27. Restricted Stock.

                           Shares issued under Section y15 of the Plan.

                   2.1.28. Rule 16b-3.

                           Rule 16b-3 promulgated by the SEC, as amended, or any
         successor rule in effect from time to time.

                   2.1.29. SEC.

                           The Securities and Exchange Commission.

                   2.1.30. Share.

                           A share of Common Stock.

                   2.1.31. 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.

                   2.1.32. 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.

                                       5
<PAGE>

         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.       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
3,600,000 Shares. 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;  provided,  however,  that the  number of
Shares that may be issued under ISOs shall not exceed 1,500,000.

                                       6
<PAGE>

         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,
shall 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 the Board, unless the Board appoints a Committee of two or more
but less than all of the Board.  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, 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:

                                       7
<PAGE>

      (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  described in Section 9.1 or permitted
            by Section 9.2(a), 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 y16 of 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.

                                       8
<PAGE>

         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; or

      (c)   in a manner which would violate applicable law.

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
terminated.

         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  y8.2,  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.

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;

                                       9
<PAGE>

            (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 y9.1 above and to
the extent not inconsistent therewith:

            (a)   (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;

            (b)   (b) make such  adjustment to the Benefits then  outstanding as
                  the Committee deems appropriate to reflect such transaction or
                  change; and/or

            (c)   (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 may be evidenced by an
Agreement  which shall describe the specific  Benefit  granted and the terms and
conditions of the Benefit.  The granting of any Benefit shall be subject to, and
conditioned  upon, the  recipient's  execution of any Agreement  required by the
Committee.  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
<PAGE>

         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, DEFERRAL 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;

            (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.

                                       11
<PAGE>

         12.2. Dividend Equivalents.

                  Grants of Benefits in Shares or Share  equivalents may include
dividend equivalent payments or dividend credit rights.

         12.3. Deferral.

                  The right to receive  any  Benefit  under the Plan may, at the
request of the  Participant,  be deferred for such period and upon such terms as
the  Committee  shall  determine,  which may  include  crediting  of interest on
deferrals of cash and crediting of dividends on deferrals denominated in Shares.

         12.4. Withholding.

                  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 85% 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 y13.2 through Section
13.4, the terms of all Options shall be determined by the Committee.

                                       12
<PAGE>

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 cash,  in Shares,  or in any
combination of cash and Shares, as the Committee shall determine.

         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 5,000,000.

         15.2. Computations.

                  For  purposes of Section  y15.1:  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 y3 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.

                                       13
<PAGE>

         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.

         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 y17.2) in such amounts as it deems appropriate.

         17.2. Rule 16b-3.

                  The  amount  of any  Cash  Award  in any  Fiscal  Year  to any
Participant  who is subject to Section y16 of the  Exchange Act shall not exceed
the  greater of $100,000 or 100% of his cash  compensation  (excluding  any Cash
Award under this Section y17) 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.

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.

                                       14
<PAGE>

         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.  These rules may provide,  as the Committee
may  deem  appropriate,  for  the  expiration,   forfeiture,   continuation,  or
acceleration of the vesting of all or part of the Benefits.

         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.

                                       15
<PAGE>

         19.6. Governing Law.

                  This Plan shall be construed  and  administered  in accordance
with the laws of the State of Missouri.

         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.

                                       16

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