Document:

Applied Digital Solutions, Inc. - Letter of Agreement - McLaughlin

Exhibit 10.13

December 30, 2001

Mr. Garrett Sullivan

c/o Applied Digital Solutions, Inc.

400 Royal Palm Way, Ste. 410

Palm Beach, FL 33480

Dear Garrett:

        Reference
is made to your Employment Agreement, dated March 23, 1999, between you and
Applied Digital Solutions, Inc. (f/k/a Applied Cellular Technology, Inc.)
(“ADS”), as modified from time to time, including by the letter
agreement, dated December 31, 2001 (the “Employment Agreement”). 

		1.	
Your retirement as an officer and director of ADS and all of its subsidiaries is accepted,
effective December 31, 2001.
		2.	
All of your outstanding options to acquire common stock of ADS or any of its
subsidiaries shall vest on the date hereof and shall remain outstanding for the
term of the respective options. All of such options and the shares underlying
them, shall be included in registration statements at the same time and to the
same extent as then current officers of ADS.
		3.	
ADS shall have no further payment obligations under the Employment Agreement
except as set forth herein. Without limiting the generality of the foregoing,
after December 21, 2001 (the final payday of the year), ADS shall not be
required to make the remainder of the four years’ of payments as provided
in the Employment Agreement. Notwithstanding the foregoing, you shall be issued
the stock certificate representing the shares of stock earned during the fourth
quarter of 2001 and the first payroll of 2002 in accordance with the letter
agreement between ADS and you dated July 5, 2001.
		4.	
Until December 31, 2005, Paragraph 24 of Employment Agreement (regarding Change of Control)
shall remain in effect.
		5.	
Until December 31, 2005, ADS shall provide to you family medical and dental
coverage comparable to the coverage that is provided to senior executives of
ADS.
		6.	
Within 3 weeks of the date hereof, ADS will issue to you 2,500,000 shares of
ADS’s common stock (the “Shares”), which Shares are unvested and,
until vested, subject to forfeiture as set forth herein. The shares shall become
vested on the Effective Date (as defined below). Once vested, the Shares are not
subject to forfeiture. You agree to deposit the Shares in a new brokerage
account formed by you and agree to cause the broker to provide ADS with copies
of the monthly statements for such account.

		7.	
It is the intention of the parties that you assist in the transition of your
work duties by being available to answer questions regarding your ADS work
duties. The questions regarding your work duties shall include, but not he
limited to, questions that will assist ADS in preparing and filing its
securities filings. If, until the Effective Date, you do not make yourself
available, at no cost to ADS (other than out-of-pocket expense reimbursement),
at least 20 hours per week, to answer questions related to the transition of
your ADS work duties, then ADS may demand (by written notice to you) a cure. You
shall have 21 days to cure and make yourself available for at least 20 hours per
week to answer questions related to your ADS work duties. If you fail to cure as
provided, your Shares will be forfeited and you agree to return any certificates
representing the Shares to ADS. Upon your return of the Shares, this Agreement
shall be voided as if it were never entered into and the prior agreement between
you and ADS shall revert as of such date (without any back payments).
		8.	
The provisions of Paragraph 13 (nondisclosure; return of records) of your Employment Agreement
shall remain in full force and effect.
		9.	
As used herein the “Effective Date” shall mean the later of: February
28, 2002 or the date on which the registration statement on Form S-1 (filed by
ADS in December, 2001) is declared effective by the Securities and Exchange
Commission.
		10.	
Within 60 days of December 31, 2002, you may send ADS a notice (the “Price
Protection Notice”) setting forth the number of shares sold and the gross
sales proceeds for such shares (the “Sold Share Proceeds”). If the
Sold Share Proceeds for such shares is less than the Target Amount (as defined
below) then ADS shall issue you shares having a value (based on the average
closing price for the last 10 trading days of 2002) equal to the shortfall
between the Sold Share Proceeds and the Target Amount. Such issuance will be
promptly following receipt of the Price Protection Notice, and such shares will
be included in an appropriate registration statement, filed with the SEC within
90 days of the Price Protection Notice. ADS will use its best efforts to have
such registration statement declared effective and remain effective for at least
one year. The “Target Amount” shall equal $1,250,192 multiplied by the
percentage of Shares sold. By way of example only, if you were to sell 75% of
the Shares, and the gross proceeds for such sold shares was $900,000, then your
notice would request, and ADS would be obliged to issue to you, shares having a
value of $37,644.
		11.	YOU ACKNOWLEDGE THAT BY AGREEING TO THIS YOU ARE EXCHANGING APPROXIMATELY FOUR YEARS' OF CASH
SALARY AND OTHER PAYMENTS IN EXCHANGE FOR THE CONSIDERATION SET FORTH HEREIN.  YOU HAVE BEEN
GIVEN THE OPPORTUNITY TO SEEK LEGAL AND OTHER COUNSEL.

		12.	
ADS agrees to register the Shares with the Securities and Exchange Commission in
the next appropriate registration statement filed by it, which filing will in no
event be more than 90 days following the date hereof. ADS will use its best
efforts to have the registration statement declared effective and remain
effective for at least one year.
		13.	You represent:

	 	 	(1)	
The Shares to be received by you hereunder will be acquired for your own
account, not as nominee or agent, for investment purposes and not with a view
to, or for offer or sale in connection with directly or indirectly, any
distribution in violation of the Securities Act of 1933, as amended, or any
other applicable securities law (“Securities Act”).
	 	 	(2)	
You are not a registered broker dealer or engaged in the business of being a broker
dealer.
	 	 	(3)	
You acknowledge (i) that you can bear the economic risk and complete loss of
your investment in the Shares and have such knowledge and experience in
financial or business matters that you are capable of evaluating the merits and
risks of the investment contemplated hereby, and (ii) that there may be material
adverse nonpublic information regarding the ADS that could affect the value of
the Shares.
	 	 	(4)	
You are an accredited investor as defined in Rule 501(a) of Regulation D, as amended,
under the Securities Act.

If the foregoing accurately
reflects your understanding of the agreement between ADS and you, please sign
this letter and return it to the undersigned, whereupon it will become a binding
agreement between ADS and you. 

	 	Very truly yours,

APPLIED DIGITAL SOLUTIONS, INC.

	 	By:	/s/ Richard J. Sullivan

	 	 	Richard J. Sullivan

Chairman and CEO
	Agreed to and accepted:

	 	 
	/s/ Garrett A. Sullivan
	 	 
	Garrett A. SullivanApplied Digital Solutions, Inc. - Non-Compete and Employment Agreement - McLaughlin

Exhibit 10.18

EMPLOYMENT
AND NON-COMPETE AGREEMENT

        AGREEMENT, effective as of the 7th day of June 2000, between Applied Digital Solutions, Inc. a Missouri
corporation (the "Company"), and Kevin H. McLaughlin, a resident of the state of Georgia (the "Executive");

RECITALS

        A.   
Company desires to retain the services of the Executive.

        B.   
Company and Executive desire a speedy, economical and impartial dispute resolution procedure.

        C.   
Executive is willing to be employed by Company.

        D.   
The parties hereto desire to enter into this Agreement in order to set forth the
respective rights, limitations and obligations of both the Company and Executive
with respect to Executive’s employment with the Company, the Confidential
Information, the Discoveries, arbitration and the other matters set forth
herein. 

        NOW
THEREFORE, in consideration of the employment of Executive by the Company, the
compensation paid to Executive, and the Company continuing to provide
Confidential Information to Executive, as well as the other mutual promises
hereinafter contained, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows: 

1.     Term.

        Subject
to the provisions for termination hereinafter provided, the Executive’s
employment hereunder shall be for a term (the “Employment Term”)
commencing on June 12, 2000 (the “Employment Date”) and ending on June
11, 2002 (the “Contract Termination Date”). 

2.     Position
and Duties.

        During
the Employment Term the Executive shall serve as a Vice President of Sales for
the Company. The Executive will report to the President and perform such
employment duties, consistent with his positions, as specified by President,
Executive shall devote his full productive time, energy and ability to the
proper and efficient conduct of the Company’s business. Further, Executive
agrees to immediately relocate to the corporate offices in Palm Beach, Florida,
and unless otherwise directed by the Company, perform his employment duties at
such corporate location. The Executive may also devote reasonable periods of
time to service as a Director of other businesses, with the prior written
approval of President to the extent that such service does not interfere with
the performance of his obligations hereunder. Similarly, the Executive may
engage in such charitable or community activities as shall not interfere with
the performance of his obligations hereunder. Executive shall observe and comply
with all lawful and reasonable rules of conduct set by President for Executives
of the Company, and shall endeavor to promote the business, reputation and
interests of the Company. 

3.     Compensation.

        
(a)     
Base Compensation. As defined in further detail below, during the
Employment Term the Company shall pay the Executive a Base Compensation. The
Base Compensation shall be paid in U.S. Dollars in accordance with the
Company’s normal payroll practices. The Base Compensation paid to the
Executive shall be Twelve Thousand Five Hundred Dollars ($12,500.00), per month. 

        
(b)     
Expenses. Executive shall be entitled to receive prompt reimbursement for
all reasonable business expenses (exclusive of any commuting expenses) incurred
by him in the course of his employment by the Company hereunder, as per Company
policies currently in effect, provided that the Executive properly accounts
therefor. In addition, Executive shall receive, while actively employed, a car
allowance of Seven Hundred Fifty Dollars ($750.00) per month. Executive agrees
that he shall accept any tax consequences that may result from such payment. 

        
(c)     Other Benefits.

	 	        
(i)     
The Executive shall be entitled to participate in or receive benefits on the
same basis as other Executive officers of the Company under the Company’s
Executive benefit plans and arrangements applicable to senior management
including life insurance plans, pension and profit-sharing plans, medical and
health plans or other Executive welfare benefit plans, annual paid vacation,
sick leave, sick pay and short-term and long-term disability benefits and
holidays, as in effect from time to time. 

        (ii)     
The Executive shall be entitled to receive ten (10) days of paid vacation per
calendar year that shall accrue and become vested on the first day of each year
of the Employment Term. This benefit shall be reviewed by the Board of Directors
(the “Board”) and the Executive from time to time and increased when
appropriate. 

        (iii)     
The Executive shall be entitled to the designated company holidays.

        
(d)     Bonus.  The Executive shall also be eligible to receive an annual bonus of
up to forty percent (40%) of Executive’s Base Compensation. The amount of
such Bonus shall be determined each year by the compensation committee of the
Board and shall be based upon the Board’s evaluation of Executive’s
performance and the Company’s financial performance. Executive shall be
eligible for such Bonus only if Executive is actively employed by the Company at
the time such Bonus is distributed to all other eligible employees. In the event
that Executive voluntarily terminates his employment prior to the time of such
payment such Bonus shall be pro rated accordingly. 

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(e)     Stock Options.  Upon the execution and delivery of this Agreement and
Executive commences employment pursuant to the terms of this Agreement, Employer
shall grant Executive the option to purchase one hundred thousand (100,000)
shares of the common stock of Employer at eighty five percent (85%) of the
closing price of such stock as published in The Wall Street
Journal, Eastern Edition on June 12, 2000. Such options shall be
governed by the Executive Stock Option Plan documents and shall vest over a
three (3) year period. 

        
(f)     Relocation Expenses.  The Executive shall receive a moving allowance of
Thirty Thousand Dollars ($30,000.00), plus an allowance to cover the real estate
commission for the sale of the Executive’s home in Big Canoe, Georgia.
Executive shall also receive a housing allowance for up to four (4) months of
Five Thousand Dollars ($5,000.00) per month (that together with the above such
be hereinafter referred to as “Relocation Costs”) pursuant to the
Company’s relocation policies. If Executive terminates employment, for any
reason, within one (1) year from the date of such relocation, Executive shall be
liable to Employer for the repayment of one hundred percent (100%) of the total
amount of the Relocation Expenses paid on behalf of or reimbursed to Executive.
Executive shall remain liable for any tax consequences associated with such
reimbursement. 

4.        Termination.

        The Executive's employment by the Company pursuant hereto is subject to termination during the
Employment Term as follows:

        
(a)     Death. Executive’s employment hereunder shall terminate upon his
death. In such event, the Executive’s Base Compensation shall be paid
through the date of Executive’s death. Eligibility for all other benefits
shall be determined by the terms of any applicable plan or program. 

        
(b)     Disability. The Company may, by written notice to the Executive,
terminate the Executive’s employment if, as a result of the
Executive’s incapacity due to physical or mental illness, the Executive
shall have been absent from his duties hereunder for ninety (90) consecutive
days or for a total of one hundred eighty (180) days in any three hundred sixty
five (365) day period (the “Disability Period”). In the event of such
termination, the Executive shall receive the same benefits payable in the event
of death; provided however that if any time during the Employment Term the
Company should adopt a disability policy, the terms of such policy shall govern. 

        
(c)     Termination by the Company for Cause or Executive’s Voluntary
Termination. The Company shall be entitled to terminate the Executive’s
employment at any time, by written notice to the Executive delivered pursuant to
Section 10, if it has “Cause”, which shall mean: 

	 	        
(i)     deliberate dishonesty of the Executive with respect to the Company;

3

	 	        
(ii)     fraud or embezzlement on the part of the Executive;

        (iii)     
conviction of or the entry of a plea of nolo contendere by the Executive to any felony
or other crime of fraud or moral turpitude;

        (iv)     
any act of willful misconduct by the Executive which (A) is intended to result
in substantial personal enrichment of the Executive at the expense of the
Company or any of its subsidiaries or affiliates or (B) has a material adverse
impact on the business or reputation of the Company or any of its subsidiaries
or affiliates (such determination to be made by the Company’s Board of
Directors in the good faith exercise of its reasonable judgment); provided that
the provisions of this paragraph may only be applied by the Company where the
alleged act of misconduct is not corrected within ten (10) days following
written notice from the Company, such notice to state with specificity the
nature of the alleged misconduct. 

        (v)     
gross and willful failure to perform a substantial portion of his duties and
responsibilities hereunder or Executive abandons his duties hereunder for a
period of more than thirty (30) days. Abandonment by the Executive of duties
hereunder shall be deemed to have occurred if: the Executive ceases to function
and perform duties hereunder, leaves the geographic area in which the Company
engages in its business, or conducts himself/herself with intentional disregard
of the Company’s interests and its business. 

        
In the event of termination for Cause, the Executive’s Base Compensation and
other benefits shall be paid through the Date of Termination (as hereafter
defined), and the Executive shall have no further rights to compensation or
benefits other than as determined by the terms of any applicable plan or
program. 

        
The Executive may terminate his employment hereunder voluntarily at any time with
ninety (90) written notice to the Board. In the event of the Executive’s
voluntary termination, the Executive shall be entitled to receive his Base
Compensation and benefits through the Date of Termination. 

        
(d)     Without Cause.  The Company may terminate the Executive's employment at any time by giving
written notice to the Executive of its intent to terminate this Agreement without Cause.  In such event:

	 	        
(i)     the Executive shall be paid his Base Compensation and other benefits to which the Executive
is entitled for the remainder of the Employment Term;

        
(ii)     the Executive shall have such other rights in respect of any benefit plan or program as
may be set forth in such plan or program.

4

        (e)     
Date of Termination. The date on which a termination pursuant to Sections
4(c) or 4(d) hereof, becomes effective (the “Date of Termination” or
“Termination Date”) shall be the date on which the party terminating
this Agreement gives the other party written notice thereof in accordance with
Section 10 hereof; 

5.        Confidential Information.

        (a)     
Executive recognizes that the services to be performed by him hereunder are
special, unique and extraordinary and that, by reason of his employment with the
Company, he may acquire Confidential Information (as hereinafter defined)
concerning the operation of the Company, the use or disclosure of which would
cause the Company substantial loss and damage which could not be readily
calculated and for which no remedy at law would be adequate. Accordingly,
Executive agrees that he will not (directly or indirectly) at any time, whether
during or after the Employment Term: 

	 	        
(i)     knowingly use for an improper personal benefit any Confidential Information that he may
learn or has learned by reason of his employment with the Company or

        (ii)     
disclose any such Confidential Information to any person except (A) in the
performance of his obligations to the Company hereunder, (B) as required by a
court of competent jurisdiction, (C) in connection with the enforcement of his
rights under this Employment Agreement or (D) with the prior consent of the
Board. 

        As
used herein “Confidential Information” includes information with
respect to the Company’s facilities and methods, trade secrets and other
intellectual property, systems, patents and patent applications, procedures,
manuals, confidential reports, financial information, business plans, prospects
or opportunities, personnel information or lists of customers and suppliers;
provided, however, that such term shall not include any information that
is or becomes generally known or available publicly other than as a result of
disclosure by Executive which is not permitted as described in clause (ii)
above, or the Company discloses to others without obtaining an agreement of
confidentiality. 

        (b)     
Executive confirms that all Confidential Information is the exclusive property
of the Company. All business records, papers and documents and electronic
materials kept or made by Executive relating to the business of the Company
which comprise Confidential Information shall be and remain the property of the
Company during the Employment Term and all times thereafter. Upon the
termination of his employment with the Company or upon the request of the
Company at any time, Executive shall promptly deliver to the Company, and,
without the express consent of the Board, shall retain no copies of, any written
or electronic materials, records and documents made by Executive or coming into
his possession concerning the business or affairs of the Company and which
comprise Confidential Information. 

5

        (c)     Executive shall keep the terms of this Agreement strictly confidential, other than as may be
necessary to enforce his rights hereunder or as otherwise required by law and except for estate planning or
personal financial reasons.

6.     
Non-Competition.

        (a)     
During the term of his employment and for a period of twelve (12) months after
the Termination Date (the “Restricted Period”), the Executive shall
not directly or indirectly, for his own account or for the account of others, as
an officer, director, stockholder, owner, partner, Executive, promoter,
consultant, manager or otherwise participate in the promotion, financing,
ownership, operation, or management of, or assist in or carry on through a
proprietorship, corporation, partnership or other form of business entity or
otherwise within any geographic region in which the Company is conducting or is
actively planning to conduct business as of the date of such termination. 

        Nothing
in this Section 6 shall prohibit Executive from acquiring or holding any issue
of stock or securities of any Person that has any securities registered under
Section 12 of the Exchange Act, listed on a national securities exchange or
quoted on the automated quotation system of the National Association of
Securities Dealers, Inc. so long as the Executive is not deemed to be an
“affiliate” of such Person as such term is used in paragraphs (c) and
(d) of Rule 145 under the Securities Act of 1933, as amended, and the Executive,
members of his immediate family or persons under his control do not own or hold
more than five percent (5%) of any voting securities of any such person. 

        (b)     
During the Restricted Period, the Executive shall not, whether for his own
account or for the account of any other person (excluding the Company): 

	 	        (i)     
solicit or contact in an effort to conduct business with any person who was a
customer of the Company during the term of this Agreement, or any affiliate of
any such person, if such solicitation or contact is for the purpose of
competition with the Company;

        (ii)     
solicit or induce any of the Company’s Executives to leave their employment
with the Company or accept employment with anyone except the Company.

        (iii)     interfere in a similar manner with the business of the Company.

        Nothing
herein shall prohibit or preclude the Executive from performing any other types
of services that are not precluded by Section 6 (a) for any other person. (c)
Executive has carefully read and considered the provisions of this Section 6
and, having done so, agrees that the restrictions set forth in this Section 6
(including the Restricted Period, scope of activity to be restrained and the
geographical scope) are fair and reasonable and are reasonably required for the
protection of the interests of the Company, its officers, directors, Executives,
creditors and shareholders. Executive understands that the restrictions
contained in this Section 6 may limit his ability to engage in a business
similar to the Company’s business, but acknowledges that he will receive
sufficiently high remuneration and other benefits from the Company hereunder to
justify such restrictions. 

6

7.     Specific
Performance.

        Executive
acknowledges that a breach of any of the covenants contained in Sections 5 and 6
hereof may result in material, irreparable injury to the Company for which there
is no adequate remedy at law, that it will not be possible to measure damages
for such injuries precisely and that, in the event of such a breach, any
payments remaining under the terms of this Agreement shall cease and the Company
without posting any bond shall be entitled to obtain a temporary restraining
order and a preliminary or permanent injunction restraining Executive from
engaging in activities prohibited by Sections 5, 6 and 7 hereof or such other
relief as may be required to enforce any of the covenants contained in Sections
5, 6 and 7 hereof. 

8.     Restriction on Authority of Executive.

        Notwithstanding
anything set forth in this Agreement to the contrary, the Executive, in the
performance of his duties hereunder, shall not take any of the following actions
without the prior written consent of the Board: 

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

9.     Successors; Binding Agreement.

        (a)     
The Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
or assets of the Company to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. Failure of the Company to
obtain such assumption and agreement prior to the effectiveness of any such
succession shall be a material breach of this Agreement. As used in this
Employment Agreement, “Company” shall mean the Company as defined in
this Agreement and any successor to its business or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law, or otherwise. 

        (b)     
This Agreement shall inure to the benefit of and be enforceable by the
Executive’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amount would still be payable to him hereunder if he had continued
to live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the Executive’s spouse or,
if there is no such spouse, to the Executive’s estate. This Agreement is
personal to the Executive and may not be assigned by him. 

7

10.     Notice.

        For
the purposes of this Agreement, notices and all other communications provided
for in this Agreement shall be in writing and shall be deemed to have been duly
given when delivered by hand or mailed by United States overnight express mail,
or nationally recognized private delivery service on an overnight basis, return
receipt requested, postage prepaid, addressed as follows: 

	If to the Executive,	Kevin H. McLaughlin

10555 Big Canoe

Big Canoe, Georgia  30143

	If to the Company: 	
Applied Digital Solutions, Inc.

400 Royal Palm Way, Suite 410

Palm Beach, Florida  33480

Attn:  David I. Beckett, Esquire

Telephone (561) 366-4800

Facsimile (561) 366-0002

        Notices
may also be sent to such other address as either party may have furnished to the
other in writing in accordance herewith, except that notice of change of address
shall be effective only upon receipt. 

11.     Mutual
Agreement to Arbitrate.

        COMPANY  AND  EXECUTIVE   RECOGNIZE  THAT  DIFFERENCES  MAY  ARISE  BETWEEN  THEM.  THROUGH  THIS
AGREEMENT,  BOTH  PARTIES  EXPECT  TO GAIN THE  BENEFITS  OF A  SPEEDY,  ECONOMICAL,  IMPARTIAL  DISPUTE-RESOLUTION
PROCEDURE.  THEREFORE, THE PARTIES AGREE AS FOLLOWS:

	 	        (a)
     
THIS AGREEMENT SHALL APPLY TO ALL DISPUTES OR CONTROVERSIES, WHETHER OR NOT
ARISING OUT OF EXECUTIVE’S EMPLOYMENT (OR TERMINATION OF THAT EMPLOYMENT),
THAT COMPANY MAY HAVE AGAINST EXECUTIVE, OR THAT EXECUTIVE MAY HAVE AGAINST
COMPANY OR AGAINST (AS APPLICABLE) ITS PAST OR PRESENT OFFICERS, DIRECTORS,
SHAREHOLDERS, PARTNERS, EXECUTIVES, ADVISORS OR AGENTS (COLLECTIVELY,
“CLAIMS”), EXCEPT FOR INJUNCTIVE RELIEF TO BE PURSUED BY COMPANY
PURSUANT TO SECTION b BELOW. THE CLAIMS INCLUDE, BUT ARE NOT LIMITED TO,
CONTROVERSIES RELATING TO: COMPENSATION OR BENEFITS, BREACH OF ANY CONTRACT,
TORTS, DISCRIMINATION UNDER STATE, FEDERAL OR LOCAL LAW, AND VIOLATION OF ANY
FEDERAL, STATE, OR OTHER GOVERNMENTAL LAW, STATUTE, REGULATION, OR ORDINANCE.
HOWEVER, THIS AGREEMENT SHALL NOT APPLY TO ANY CLAIM: (I) FOR WORKERS’
COMPENSATION OR UNEMPLOYMENT BENEFITS; OR (II) BY COMPANY FOR INJUNCTIVE AND/OR
OTHER EQUITABLE RELIEF FOR UNFAIR COMPETITION AND/OR THE USE AND/OR UNAUTHORIZED
DISCLOSURE OF TRADE SECRETS OR CONFIDENTIAL INFORMATION, INCLUDING BUT NOT
LIMITED TO, MATTERS DESCRIBED IN SECTIONS 5 AND 6 ABOVE. WITH RESPECT TO MATTERS
REFERRED TO IN THE FOREGOING SUB-PARAGRAPH (II), COMPANY MAY SEEK AND OBTAIN
INJUNCTIVE RELIEF IN COURT, AND THEN PROCEED WITH ARBITRATION UNDER THIS
AGREEMENT. 

8

	 	        (b)
     THE SOLE AND EXCLUSIVE METHOD TO RESOLVE ANY CLAIM IS ARBITRATION AS PROVIDED IN
THIS AGREEMENT. THE PARTIES EACH WAIVE THEIR RIGHT TO COMMENCE AN ACTION IN ANY
COURT TO RESOLVE A CLAIM. EXCEPT WITH RESPECT TO INJUNCTIVE RELIEF SPECIFICALLY
PROVIDED FOR IN SECTION 7 OF THIS AGREEMENT, NEITHER PARTY SHALL INITIATE OR
PROSECUTE ANY LAWSUIT IN ANY WAY RELATED TO ANY CLAIM COVERED BY THIS AGREEMENT.

        (c)     
A CLAIM MUST BE PROCESSED IN THE MANNER SET FORTH BELOW, OTHERWISE THE CLAIM
SHALL BE VOID AND DEEMED WAIVED EVEN IF THERE IS A FEDERAL OR STATE STATUTE OF
LIMITATIONS WHICH WOULD ALLOW MORE TIME TO PURSUE THE CLAIM. 

	 	(i)	
THE CLAIM MUST INITIALLY BE RAISED VERBALLY BY EXECUTIVE TO THE PERSON OR
PERSONS INVOLVED. IF THE ISSUE CANNOT BE RESOLVED, THE MATTER MUST BE PRESENTED
TO THE PRESIDENT IN WRITING WITHIN SIXTY (60) DAYS AFTER THE EXECUTIVE INITIALLY
KNEW OR SHOULD HAVE KNOWN OF THE FACTS THAT GAVE RISE TO THE CLAIM. IF EXECUTIVE
DOES NOT PRESENT THE CLAIM IN WRITING TO THE PRESIDENT WITHIN THE SIXTY (60) DAY
PERIOD, EXECUTIVE WILL BE DEEMED TO HAVE ACCEPTED COMPANY’S LAST STATED
POSITION ON THE CLAIM AND WAIVES THE RIGHT TO FURTHER CONTEST THE CLAIM.

	 	(ii)	
THE PRESIDENT WILL CONSIDER EXECUTIVE’S WRITTEN PRESENTATION, AND ANY OTHER
INFORMATION THAT THE PRESIDENT DEEMS RELEVANT. THE PRESIDENT WILL RENDER A
WRITTEN DECISION WITHIN FIFTEEN (15) WORKING DAYS. THE DECISION WILL BE MAILED
TO EXECUTIVE’S ADDRESS AS IT APPEARS IN COMPANY’S RECORDS. IF COMPANY
FAILS TO RESPOND WITHIN FIFTEEN (15) WORKING DAYS, IT WILL BE DEEMED A DENIAL OF
THE EXECUTIVE’S CLAIM.

9

	 	(iii)	
IF EXECUTIVE IS NOT SATISFIED WITH THE PRESIDENT DECISION, EXECUTIVE MAY PRESENT
THE CLAIM FOR RESOLUTION BY FINAL AND BINDING ARBITRATION. IF EXECUTIVE DESIRES
TO PROCEED TO ARBITRATION, EXECUTIVE MUST GIVE WRITTEN NOTICE TO COMPANY OF
EXECUTIVE’S INTENTION TO ARBITRATE WITHIN NINETY (90) DAYS FROM THE DATE OF
MAILING OF THE PRESIDENT’S FINAL DECISION.

	 	(iv)	
IF COMPANY DESIRES TO INITIATE ARBITRATION, IT MUST GIVE WRITTEN NOTICE TO
EXECUTIVE WITHIN SIXTY (60) DAYS AFTER IT INITIALLY KNEW OR SHOULD HAVE KNOWN OF
THE FACTS THAT GAVE RISE TO ITS CLAIM.

	 	(v)	
THE WRITTEN NOTICE OF DESIRE TO ARBITRATE SHALL DESCRIBE THE FACTUAL BASIS OF
ALL CLAIMS ASSERTED, AND SHALL BE SENT TO THE OTHER PARTY BY CERTIFIED OR
REGISTERED MAIL, RETURN RECEIPT REQUESTED. WRITTEN NOTICE TO EXECUTIVE WILL BE
MAILED TO EXECUTIVE’S ADDRESS AS IT APPEARS IN COMPANY’S RECORDS.
WRITTEN NOTICE TO COMPANY, OR ITS OFFICERS, DIRECTORS, EXECUTIVES OR AGENTS
SHALL BE SENT TO THE PRESIDENT AT COMPANY’S PRINCIPAL OFFICE. IF WRITTEN
NOTICE OF INTENTION TO ARBITRATE IS NOT GIVEN WITHIN THE APPLICABLE TIME PERIOD,
THE PARTY WHO FAILED TO GIVE NOTICE WILL BE DEEMED TO HAVE WAIVED THE RIGHT TO
FURTHER CONTEST THE MATTER, AND WILL BE DEEMED TO HAVE ACCEPTED THE OTHER
PARTY’S LAST STATED POSITION ON THE CLAIM.

	 	(vi)	
THE ARBITRATION SHALL BE CONDUCTED IN ACCORDANCE WITH THE THEN-CURRENT MODEL
EMPLOYMENT ARBITRATION PROCEDURES OF THE AMERICAN ARBITRATION ASSOCIATION
(“AAA”) BEFORE A SINGLE ARBITRATOR. THE ARBITRATION SHALL TAKE PLACE
IN OR NEAR THE CITY IN WHICH EXECUTIVE IS OR WAS LAST WORKING WITH COMPANY.

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	 	(A)	
THE ARBITRATOR SHALL BE SELECTED IN THE FOLLOWING MANNER. THE AAA SHALL GIVE
EACH PARTY A LIST OF AT LEAST SIX (6) ARBITRATORS DRAWN FROM ITS PANEL OF LABOR
AND EMPLOYMENT ARBITRATORS. EACH SIDE MAY STRIKE ALL NAMES ON THE LIST IT DEEMS
UNACCEPTABLE. IF ONLY ONE COMMON NAME REMAINS ON THE LISTS OF ALL PARTIES, THAT
INDIVIDUAL SHALL BE THE ARBITRATOR. IF MORE THAN ONE COMMON NAME REMAINS ON THE
LISTS OF ALL PARTIES, THE PARTIES SHALL STRIKE NAMES ALTERNATELY UNTIL ONLY ONE
REMAINS. IF NO COMMON NAME REMAINS ON THE LISTS OF ALL PARTIES, THE AAA SHALL
FURNISH ONE ADDITIONAL LIST, AND THE ABOVE PROCEDURE WILL BE UTILIZED. IF NO
ARBITRATOR IS DESIGNATED FROM THE SECOND LIST, THE PROCEDURE OF THE AAA RULES
WILL BE UTILIZED TO SELECT THE ARBITRATOR. IN NO EVENT WILL THE ARBITRATOR BE
THEN AFFILIATED IN ANY MANNER WITH A COMPETITOR OF THE COMPANY.

	 	(B)	
ANY PARTY MAY BE REPRESENTED BY AN ATTORNEY OR OTHER REPRESENTATIVE SELECTED BY
THE PARTY.

	 	(C)	
EACH PARTY SHALL HAVE THE RIGHT TO TAKE THE DEPOSITION OF ONE INDIVIDUAL AND ANY
EXPERT WITNESS DESIGNATED BY ANOTHER PARTY. EACH PARTY ALSO SHALL HAVE THE RIGHT
TO MAKE REQUESTS FOR PRODUCTION OF DOCUMENTS TO ANY PARTY. ADDITIONAL DISCOVERY
MAY BE HAD ONLY WHERE THE ARBITRATOR SO ORDERS, UPON A SHOWING OF SUBSTANTIAL
NEED. THE ARBITRATOR WILL RESOLVE ALL ISSUES RELATED TO DISCOVERY.

	 	(D)	
AT LEAST FOURTEEN (14) DAYS BEFORE THE ARBITRATION, THE PARTIES MUST EXCHANGE
LISTS OF WITNESSES, INCLUDING ANY EXPERT, AND COPIES OF ALL EXHIBITS INTENDED TO
BE USED AT THE ARBITRATION.

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	 	(vii)	
THE ARBITRATOR WILL HAVE NO AUTHORITY TO: ADOPT NEW COMPANY POLICIES OR
PROCEDURES, MODIFY THIS AGREEMENT OR EXISTING COMPANY POLICIES, PROCEDURES,
WAGES OR BENEFITS, OR IN THE ABSENCE OF A WRITTEN WAIVER PURSUANT TO PARAGRAPH
(ix) BELOW, HEAR OR DECIDE ANY MATTER THAT WAS NOT PROCESSED IN ACCORDANCE WITH
THIS AGREEMENT. THE ARBITRATOR SHALL HAVE EXCLUSIVE AUTHORITY TO RESOLVE ANY
CLAIM, INCLUDING, BUT NOT LIMITED TO, A DISPUTE RELATING TO THE INTERPRETATION,
APPLICABILITY, ENFORCEABILITY OR FORMATION OF THIS AGREEMENT, OR ANY CONTENTION
THAT ALL OR ANY PART OF THIS AGREEMENT IS VOID OR VOIDABLE. THE ARBITRATOR WILL
HAVE THE AUTHORITY TO AWARD ANY FORM OF REMEDY OR DAMAGES THAT WOULD BE
AVAILABLE IN A COURT.

	 	(viii)	
SUBJECT TO SECTION 12 HEREOF, THE COMPANY SHALL PAY REASONABLE AND NECESSARY
FEES OF THE AAA AND THE ARBITRATOR. THE PARTIES WILL PAY THEIR OWN
ATTORNEYS’ FEES AND EXPENSES ASSOCIATED WITH THE ARBITRATION.

	 	(ix)	
EITHER PARTY, IN ITS SOLE DISCRETION, MAY, IN WRITING, WAIVE, IN WHOLE OR IN
PART, THE OTHER’S FAILURE TO FOLLOW ANY TIME LIMIT OR OTHER REQUIREMENT SET
FORTH IN THIS AGREEMENT.

	 	(x)	
TO THE EXTENT PERMITTED BY LAW, EXECUTIVE AGREES NOT TO INITIATE OR PROSECUTE
AGAINST COMPANY ANY ADMINISTRATIVE ACTION (OTHER THAN AN ADMINISTRATIVE CHARGE
OF DISCRIMINATION) IN ANY WAY RELATED TO ANY CLAIM COVERED BY THIS AGREEMENT.

	 	(xi)	
THE ARBITRATION WILL BE CONDUCTED IN PRIVATE, AND WILL NOT BE OPEN TO THE PUBLIC
OR THE MEDIA. THE TESTIMONY AND OTHER EVIDENCE PRESENTED, AND THE RESULTS OF THE
ARBITRATION, UNLESS OTHERWISE AGREED TO BY BOTH PARTIES, ARE CONFIDENTIAL AND
MAY NOT BE MADE PUBLIC OR REPORTED BY ANY NEWS AGENCY OR LEGAL PUBLISHER OR
SERVICE.

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	 	(xii)	
THE ARBITRATOR SHALL RENDER A WRITTEN DECISION AND AWARD (THE
“AWARD”), WHICH SHALL SET FORTH THE FACTS AND REASONS THAT SUPPORT THE
AWARD. THE AWARD SHALL BE FINAL AND BINDING ON COMPANY AND EXECUTIVE.

12.     
Attorneys’ Fees.

        
The
prevailing party in any legal or arbitration proceedings brought by or against
the other party to enforce any provision of this Agreement shall be entitled to
recover against the non-prevailing party the reasonable attorneys’ fees,
court costs, arbitration fees and other expenses incurred by the prevailing
party. 

13.     
Representations and Warranties.

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

14.     
Expenses.

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

15.     
Waivers and Further Agreements.

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

13

16.     Amendments.

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

17.     Severability.

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

18.     Counterparts.

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

19.     Survival.

        Section
4, 5, 6, 7, 11, 12 and 19 shall survive the termination of this Agreement. 

20.     Section Headings.

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

21.     Gender.

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

14

22.     Entire Agreement.

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

23.     Governing Law.

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

        IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date and
year first above written. 

	 	 	 	APPLIED DIGITAL SOLUTIONS, INC.

	 	 	 	/s/ Garrett A. Sullivan

	 	 	 	By:  Garrett A. Sullivan,
Its duly authorized President

	 	 	 	EXECUTIVE

	 	 		/s/ Kevin H. McLaughlin

	 	 	 	Kevin H. McLaughlin

15

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