NON-QUALIFIED STOCK OPTION AWARD AGREEMENT

Exhibit 4.2

APPLIED DIGITAL SOLUTIONS, INC.

NON-QUALIFIED STOCK OPTION AWARD AGREEMENT

      THIS AGREEMENT is made as of the Grant Date set forth above by and between Applied Digital Solutions, Inc., a Delaware corporation (the “Company”), and the Optionee named above, who provides services to the Company or an Affiliate of the Company as an Employee and as a member of the Board of Directors (the “Optionee”).

     The Company desires, by affording the Optionee an opportunity to purchase shares of its Common Stock, par value $0.01 per share (the “Common Stock”), as hereinafter provided, to carry out the purpose of the Applied Digital Solutions, Inc., 2003 Flexible Stock Plan (the “Plan”).

      The option granted herein is not being awarded pursuant to the Plan, however the rules and terms of the Plan shall be incorporated herein and apply to this option as if it were being granted under the Plan (except to the extent the Plan conflicts with this agreement, in which case this Agreement shall govern).

      NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth, and for other good and valuable consideration, the parties hereby agree as follows:

      1. Grant of Option. The Company hereby grants to the Optionee the right and option (the “Option”) to purchase all or any part of the aggregate number of shares of Common Stock set forth above (the “Option Shares”) (such number being subject to adjustment as provided in Section 9 hereof) on the terms and subject to the conditions set forth in this Agreement. This Option is not intended to be an “incentive stock option” within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).

      2. Purchase Price. The per share purchase price of the Option Shares shall be the Exercise Price Per Share set forth above (such Exercise Price Per Share being subject to adjustment as provided in Section 9 hereof).

      3. Term and Exercise of Option.

          (a) The term of this Option shall commence on the Grant Date set forth above and shall continue until the Expiration Date set forth above, unless earlier terminated as provided herein.

          (b) This Option will become exercisable as to 20% of the Option Shares on each of the first, second, third, fourth, and fifth annual annivaersary of the grant date set forth above, but only if the Optionee is an Employee or Director of the Company on each of such dates.

          (c) To exercise this Option, the Optionee shall give written notice to the Company, to the attention of its Chief Financial Officer or other designated agent, in substantially the form attached hereto as Exhibit A , and the Optionee shall deliver payment in full for the Option Shares with respect to which this Option is then being exercised, as provided in Section 4(a) below.

          (d) Neither the Optionee nor the Optionee’s legal representatives, legatees or distributees, as the case may be, will be, or will be deemed to be, a holder of any Option Shares for any purpose unless and until certificates for such Option Shares are issued to the Optionee or the Optionee’s legal representatives, legatees or distributees under the terms of the Option Plan.

      4. Limitations on Exercise of Option.

          (a) The exercise of this Option will be contingent upon receipt from the Optionee (or the purchaser acting under Section 7 below) of the full Exercise Price of such Option Shares. Payment of the Exercise Price shall be made in cash or by a certified or cashier’s check. No Option Shares will be issued until full payment therefore has been made and the Optionee has executed any and all agreements that the Company may require the Optionee to execute.

          (b) The issuance of Option Shares upon the exercise of this Option shall be subject to all applicable laws, rules, and regulations. If, in the opinion of the Committee, (i) the listing, registration, or qualification of the Option Shares upon any securities exchange or under any state or federal law, (ii) the consent or approval of any regulatory body, or (iii) an agreement of the Optionee with respect to the disposition of the Option Shares, is necessary or desirable as a condition to the issuance or sale of the Option Shares, this Option shall not be exercised and/or Option Shares shall not be sold unless and until such listing, registration, qualification, consent, approval or agreement is effected or obtained in form satisfactory to the Committee.

      5. Nontransferability of Option. This Option shall not be transferable by the Optionee other than by will or the laws of descent and distribution, and during the lifetime of the Optionee, this Option shall be exercisable only by the Optionee.

      6. Termination of Employment or Other Services. Unless otherwise determined in the sole discretion of the Committee and except as set forth below, upon termination of the Optionee’s employment or other relationship with the Company or with an Affiliate as a result of Disability, by the Optionee for Good Reason, or by the Company without Cause, all as defined and described in that certain Employment Agreement between Company and Optionee dated as of January 1, 2008, as such may be amended from time to time (the “Employment Agreement”), which termination of employment occurs at least six months after this Option Grant Date, the Option granted herein shall immediately vest and be fully exercisable for a p