DEBENTURE AND WARRANT PURCHASE AGREEMENT
 
This Debenture and Warrant Purchase Agreement (this “Agreement”), dated as of
September __, 2009, is made by and between Innovative Card Technologies, Inc., a
Delaware corporation (the “Company”), and the Purchasers signatory hereto
(collectively, the “Purchasers”).
 
For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:
 
1.           Issuance of Debenture and Warrant.  The Company hereby agrees to
issue to the Purchasers against payment therefor as described herein, a
debenture of the Company in the aggregate principal amount of up to $1,000,000
(the “Subscription Amount”) and common stock purchase warrants, which debentures
(a “Debenture”) and warrants (the “Warrants”) shall be in the form of the
debentures and warrants as restated pursuant to that certain Waiver, Amendment
and Exchange Agreement (“Amendment Agreement”), dated as of the date hereof, by
and among the Company and the Purchaser.  Subject to the terms and conditions
hereunder, at the closing, the Company shall deliver to the Purchaser the
Debenture and Warrant, and the Purchaser shall cancel certain obligation owed by
the Company to holder in the amount of the Subscription Amount.
 
2.           Documents.  The rights, obligations and covenants of the Purchaser
and of the Company with respect to the Debentures and Warrants and the shares of
Common Stock issuable under the Debenture and Warrants (the “Underlying Shares”)
shall be identical, as to the Debentures, Warrants and Underlying Shares, in all
respects to the rights, obligations and covenants of the Purchaser and the
Company with respect to the debentures, warrants and the underlying shares
issued pursuant to those certain Securities Purchase Agreements, dated January
8, 2008 and April 15, 2008 among the Company and the Purchasers signatory
thereto (the “Purchase Agreements”), as amended by the Amendment Agreement.
Defined terms not otherwise defined herein shall have the meanings set forth in
the Purchase Agreements.
 
3.           Representations and Warranties of the Company.  The Company hereby
makes the following representations and warranties set forth below to the
Purchasers as of the date of its execution of this Agreement:
 
(a)           Authorization; Enforcement.  The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and otherwise to carry out its obligations
hereunder in accordance with the terms hereof.  The execution and delivery of
this Agreement by the Company and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary action on the
part of the Company and no further action is required by the Company, the Board
of Directors or the Company’s stockholders in connection therewith.  This
Agreement has been duly executed by the Company and, when delivered in
accordance with the terms hereof, will constitute the valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms except (i) as limited by general equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors' rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable law.

 
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(b)            No Conflicts.  The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby, subject to the terms hereof and thereof, do not and will
not: (i) conflict with or violate any provision of the Company's or any
Subsidiary's certificate or articles of incorporation, bylaws or other
organizational or charter documents, or (ii) conflict with, or constitute a
default (or an event that with notice or lapse of time or both would become a
default) under, result in the creation of any Lien upon any of the properties or
assets of the Company or any Subsidiary, or give to others any rights of
termination, amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or by which any
property or asset of the Company or any Subsidiary is bound or affected, or
(iii) conflict with or result in a violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court or
governmental authority to which the Company or a Subsidiary is subject
(including federal and state securities laws and regulations), or by which any
property or asset of the Company or a Subsidiary is bound or affected; except in
the case of each of clauses (ii) and (iii), such as could not have or reasonably
be expected to result in a Material Adverse Effect.
 
(c)           Issuance of the Debentures and Warrants.  The Debentures and
Warrants are duly authorized and, upon the execution of this Agreement by the
Purchasers, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens imposed by the Company other than restrictions on
transfer provided for in the Debenture and Warrants.  The Underlying Shares,
when issued in accordance with the terms of the Debentures and Warrants, will be
validly issued, fully paid and nonassessable, free and clear of all Liens
imposed by the Company.  Subject to the receipt of the Authorized Share
Approval, the Company will have reserved from its duly authorized capital stock
a number of shares of Common Stock for issuance of the Underlying Shares.
 
(d)           Affirmation of Prior Representations and Warranties.  Except as
set forth in this Section and on Schedule 3(d) hereto, the Company hereby
represents and warrants to each Purchaser that the Company’s representations and
warranties listed in Section 3.1 of the Purchase Agreements, as supplemented by
the disclosures set forth in this Section and in the disclosure schedule to the
Purchase Agreements, are true and correct as of the date hereof.
 
4.           Representations and Warranties of the Purchaser.  Each Purchaser
hereby represents and warrants as of the date hereof to the Company as follows:

 
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(a)            Authority.  The execution, delivery and performance by such
Purchaser of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate or similar action on the part of such
Purchaser.  This Agreement has been duly executed by such Purchaser and, when
delivered by such Purchaser in accordance with the terms hereof, will constitute
the valid and legally binding obligation of such Purchaser, enforceable against
it in accordance with its terms, except (i) as limited by general equitable
principles and applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors’ rights
generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable law.
 
(b)           Own Account.  Such Purchaser (i) understands that the Debentures
and Warrants are “restricted securities” and have not been registered under the
Securities Act or any applicable state securities law, (ii) is acquiring the
Debentures and Warrants as principal for its own account and not with a view to
or for distributing or reselling such Debentures or Warrants or any part thereof
in violation of the Securities Act or any applicable state securities law, (iii)
has no present intention of distributing any of such securities in violation of
the Securities Act or any applicable state securities law and (iv) has no
arrangement or understanding with any other persons regarding the distribution
of such Debenture and Warrant (this representation and warranty not limiting
such Purchaser’s right to sell the Underlying Shares pursuant to a registration
statement or otherwise in compliance with applicable federal and state
securities laws) in violation of the Securities Act or any applicable state
securities law.  Such Purchaser is acquiring the Debenture and Warrant hereunder
in the ordinary course of its business.
 
(c)           Purchaser Status.  At the time such Purchaser was offered the
Debentures and Warrants, it was, and as of the date hereof it is, and on each
date on which it converts the Debenture and exercises the Warrants it will be an
“accredited investor” as defined in Rule 501 under the Securities Act.  Such
Purchaser is not required to be registered as a broker-dealer under Section 15
of the Exchange Act.
 
(d)           Experience of Purchasers.  Such Purchaser, either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Debenture and Warrant,
and has so evaluated the merits and risks of such investment.  Such Purchasers
is able to bear the economic risk of an investment in the Debenture and Warrant
and, at the present time, is able to afford a complete loss of such investment.
 
(e)           General Solicitation.  Such Purchaser is not purchasing the
Debentures and Warrants as a result of any advertisement, article, notice or
other communication regarding such securities published in any newspaper,
magazine or similar media or broadcast over television or radio or presented at
any seminar or any other general solicitation or general advertisement.
 
5.           Legal Opinion.  Concurrently herewith, the Company hereby agrees to
cause its legal counsel to issue a legal opinion to the undersigned Purchasers
regarding this Agreement and the issuance of the Debenture and Warrant, in form
and substance reasonably acceptable to the Purchasers.

 
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6.           Public Disclosure.  On or before 8:30 am (Eastern Time) on the
Trading Day immediately following the date hereof, the Company shall file a
Current Report on Form 8-K, reasonably acceptable to the Purchasers disclosing
the material terms of the transactions contemplated hereby and attaching this
Agreement as an exhibit thereto.  The Company shall consult with the Purchasers
in issuing any other press releases with respect to the transactions
contemplated hereby.
 
7.           Fees and Expenses.  At the closing, the Company agrees to reimburse
to TR Winston & Co., LLC (“TRW”) for any legal fees and expenses incurred in
connection herewith.  Except as expressly set forth herein, each party shall pay
the fees and expenses of its advisers, counsel, accountants and other experts,
if any, and all other expenses incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this Agreement.
 
8.           Use of Proceeds.  The Company shall use the net proceeds from the
sale of the Debentures and Warrants hereunder for general working capital needs.
 
9.           Entire Agreement.  This Agreement, together with the exhibits and
schedules hereto, contain the entire understanding of the parties with respect
to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.
 
10.         Notices.  Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
set forth on the signature pages attached hereto prior to 5:30 p.m. (New York
City time) on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number set forth on the signature pages attached hereto on a day that
is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading
Day, (c) the second Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service, or (d) upon actual receipt by
the party to whom such notice is required to be given.  The address for such
notices and communications shall be as set forth on the signature pages attached
hereto.
 
11.         Amendments and Waivers.  The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, unless the same shall be in writing and signed by the Company and the
Purchasers holding at least 70% of the principal amount of the Debentures then
outstanding or, in the case of a waiver, by the party against whom enforcement
of any such waived provision is sought.
 
12.         Headings.  The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
 
13.         Successors and Assigns.  This Agreement shall inure to the benefit
of and be binding upon the successors and permitted assigns of each of the
parties and shall inure to the benefit of each Purchaser. The Company may not
assign (except by merger) its rights or obligations hereunder without the prior
written consent of the Purchaser (except by merger).  The Purchaser may assign
their rights hereunder in the manner and to the persons as permitted under the
Debenture and Warrants.
 
 
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14.         No Third-Party Beneficiaries.  This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.10.
 
15.         Governing Law.  All questions concerning the construction, validity,
enforcement and interpretation of the transaction documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof.  Each
party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and
any other transaction documents (whether brought against a party hereto or its
respective affiliates, directors, officers, shareholders, employees or agents)
shall be commenced exclusively in the state and federal courts sitting in the
City of New York.  Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York,
borough of Manhattan for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein (including with respect to the enforcement of any of the transaction
documents), and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is improper
or is an inconvenient venue for such proceeding.  Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof.  Nothing contained herein shall be deemed to limit in any way any right
to serve process in any other manner permitted by law.   If either party shall
commence an action or proceeding to enforce any provisions of the transaction
documents, then the prevailing party in such action or proceeding shall be
reimbursed by the other party for its reasonable attorneys’ fees and other costs
and expenses incurred with the investigation, preparation and prosecution of
such action or proceeding.
 
16.         Execution and Counterparts.  This Agreement may be executed in two
or more counterparts, all of which when taken together shall be considered one
and the same agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party, it being understood that
both parties need not sign the same counterpart.  In the event that any
signature is delivered by facsimile transmission or by e-mail delivery of a
“.pdf” format data file, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof.

 
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17.         Severability.  If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
 
18.         Independent Nature of Purchasers' Obligations and Rights.  The
obligations of each Purchaser hereunder are several and not joint with the
obligations of any other Purchasers hereunder, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser hereunder. Nothing contained herein or in any other agreement or
document delivered at any closing, and no action taken by any Purchaser pursuant
hereto, shall be deemed to constitute the Purchasers as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert with respect to
such obligations or the transactions contemplated by this Agreement. Each
Purchaser shall be entitled to protect and enforce its rights, including without
limitation the rights arising out of this Agreement, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose. Each Purchaser has been represented by its own
separate legal counsel in their review and negotiation of the Transaction
Documents.  For reasons of administrative convenience only, Purchasers and their
respective counsel have chosen to communicate with the Company through Weinstein
Smith LLP (“WS”).  WS does not represent all of the Purchasers but only TRW. The
Company has elected to provide all Purchasers with the same terms and
Transaction Documents for the convenience of the Company and not because it was
required or requested to do so by the Purchasers.
 
19.         Construction. The parties agree that each of them and/or their
respective counsel has reviewed and had an opportunity to revise this Agreement
and the transaction documents and, therefore, the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of the transaction documents or any
amendments hereto. In addition, each and every reference to share prices in this
Agreement and the Debentures and the Warrants shall be subject to adjustment for
reverse and forward stock splits, stock dividends, stock combinations and other
similar transactions of the Common Stock that occur after the date of this
Agreement.
 
20.         Secured Obligation.  The parties acknowledge and agree that the
obligations of the Company under this Agreement and the Debenture, are subject
to the security interest granted by the Company and its Subsidiaries pursuant to
those certain Security Agreements and Subsidiary Guarantees entered into in
connection with the Purchase Agreements and that such obligations are
“Obligations” under such Security Agreements and are guaranteed by the
Subsidiaries pursuant to any Subsidiary Guarantees entered into in connection
therewith.  The Company and the Subsidiaries shall take any and all actions as
may be necessary or appropriate in order to grant the Purchasers a first
priority security interest in the assets of the Company and the Subsidiaries,
including all UCC-1 filing receipts if required.

 [SIGNATURE PAGE FOLLOWS]

 
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IN WITNESS WHEREOF, the parties hereto have caused this Debenture and Warrant
Purchase Agreements to be duly executed by their respective authorized
signatories as of the date first indicated above:
 
INNOVATIVE CARD TECHNOLOGIES, INC.
   
By:
  
 
Name:
 
Title:

********************

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR HOLDERS FOLLOW]
 
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[HOLDER'S SIGNATURE PAGE TO INVC DEBENTURE PURCHASE AGREEMENT]
 
IN WITNESS WHEREOF, the undersigned have caused this Amendment Agreement to be
duly executed by their respective authorized signatories as of the date first
indicated above.
 

Name of Purchaser: ________________________________________________________
 
Signature of Authorized Signatory of Purchaser:
__________________________________
 
Name of Authorized Signatory:
____________________________________________________
 
Title of Authorized Signatory:
_____________________________________________________
 
Email Address of Purchaser: ________________________________________________
 
Facsimile Number of Purchaser: ________________________________________________

Address for Notice of Purchaser:

Subscription Amount: _____________

Warrant

 
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