Exhibit
      10.1

    


    SEPARATION
      AND RELEASE AGREEMENT

    


    


    This
      SEPARATION
      AND RELEASE AGREEMENT
      (this
“Agreement”) is made and entered into as of the date set forth below, by and
      between Bennet P. Tchaikovsky (“Tchaikovsky”) and Innovative Card Technologies,
      Inc. (“Company”). Tchaikovsky and the Company may be collectively referred to
      hereafter as the “Parties” or individually as the “Party.” 

    


    WHEREAS,
      Tchaikovsky has been employed by the Company since July 6, 2004;

    


    WHEREAS,
      Company
      and Tchaikovsky mutually desire to end Tchaikovsky ’s employment with Company;
      and

    


    WHEREAS,
      Tchaikovsky and Company further desire to settle fully and finally all
      differences between them, including, but in no way limited to, any difference
      arising out of Tchaikovsky ’s employment with Company and the termination
      thereof;

    


    NOW,
      THEREFORE,
      in
      consideration of the premises and mutual promises herein contained, the parties
      hereby agree as follows:

    


    1. Tchaikovsky
      acknowledges and agrees that his employment with the Company shall be terminated
      effective on the date of Tchaikovsky ‘s signature on this agreement (the
“Termination Date”). From the Termination Date, Tchaikovsky acknowledges he
      shall no longer be included as an insured person or as a Company employee under
      the Company’s insurance policies. 

     

    2. Tchaikovsky
      acknowledges and agrees that the following constitutes the entire amounts owed
      by Company to Tchaikovsky as of the Termination Date:

    


    Regular
      Pay: $4,401.04 gross amount, less amounts required to be withheld by law or
      authorized by Tchaikovsky to be withheld.

    


    Accrued
      Vacation: $2,626,34 gross amount, less amounts required to be withheld by law
      or
      authorized by Tchaikovsky to be withheld.

    


    3. In
      exchange for Tchaikovsky’s release of the Company from any past and future
      obligations (if any), whether monetary or otherwise, allegedly owed by the
      Company to Tchaikovsky
      based
      upon Tchaikovsky’s
      employment (as delineated in Section 7 below), Company
      has agreed to immediately vest Tchaikovsky in the remainder of Tchaikovsky’s
      60,000 unvested options. However, Tchaikovsky acknowledges and agrees that
      he
      may not trade any shares of common stock of the Company presently held by
      Tchaikovsky, including, but not limited to common stock underlying any and
      all
      options and warrants held by Tchaikovsky, for a period of 90 (ninety) days
      from
      the Termination Date. As further consideration for Tchaikovsky’s
      release, Tchaikovsky
      will be
      entitled to keep the computer and related accessories issued to him by the
      Company. Additionally, the 90-day termination provision for the 150,000 options
      previously granted to Tchaikovsky is hereby waived by the
      Company.


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    4. Subject
      to any other agreements
      with the
      Company, Tchaikovsky shall be entitled to such continuation of health care
      coverage as is required under, and subject to, applicable law, of which
      Tchaikovsky has been notified in writing, provided Tchaikovsky timely exercises
      Tchaikovsky ’s rights in accordance therewith. 

    


    5. Tchaikovsky
      must turn over to Company all files, memoranda, records, credit cards and other
      documents and physical or personal property that Tchaikovsky received from
      Company and that are the property of Company, unless expressly provided for
      or
      consented to otherwise by the Company. 

    


    6.
       Tchaikovsky
      understands and agrees that in the course of employment with Company,
      Tchaikovsky may have acquired and/or had access to confidential information,
      including trade secrets, proprietary data and/or non-public information
      concerning the business, professional and/or personal affairs, activities and
      operations of Company. Tchaikovsky will not divulge any such information. In
      addition, Tchaikovsky agrees to continue to honor all confidentiality
      commitments of Company known to him to any third parties.  The obligations
      of this paragraph not to disclose the Information shall not apply to the extent
      that Tchaikovsky is required by law to respond to any demand for the Information
      from any court, governmental entity or governmental agency.  If Tchaikovsky
      is required by law to so respond, Tchaikovsky agrees to provide Company with
      prompt notice thereof so that Company may seek a protective order or other
      appropriate remedy. 

    


    7. Complete
      Release by Tchaikovsky

    


    (a) Waiver
      of All Claims. Tchaikovsky
      agrees that he is not entitled to receive, will not claim and expressly waives
      any entitlement to rights, benefits or compensation from the Company arising
      out
      or related to his employment with the Company, other than as expressly set
      forth
      in this Agreement.

    


    (b) Release.
      Tchaikovsky irrevocably and unconditionally releases all of the claims described
      in subsection (c) of this Section 7 that Tchaikovsky may now have against the
      following persons or entities (the “Releasees”): the Company, all of its past
      and present employees, officers, directors, stockholders, owners,
      representatives, assigns, attorneys, agents, insurers, employee benefit programs
      (and the trustees, administrators, fiduciaries and insurers of such programs)
      and any other persons acting by, through, under or in concert with any of the
      persons or entities listed in this subsection.

    


    (c) Claims
      Released.
      The
      claims released include all claims, promises, debts, causes of action or similar
      rights of any type or nature Tchaikovsky has or had which in any way relate
      to
      (i) Tchaikovsky’s employment with the Company, or the termination of that
      employment, such as claims for compensation, bonuses, commissions, lost wages
      or
      unused accrued vacation or sick pay, (ii) the design or administration of any
      employee benefit program or Tchaikovsky’s entitlement to benefits under any such
      program, (iii) any claims to attorneys’ fees and/or other legal costs, and (iv)
      any other claims or demands Tchaikovsky may on any basis have. The claims
      released include, but are not limited to, claims arising under any of the
      following statutes or common law doctrines:


    
      
         

      

      
        2

        
          

        

      

      
         

      

    


    (1) Anti-Discrimination
      Statutes,
      such as
      the Age Discrimination in Employment Act, which prohibits age discrimination
      in
      employment; the Civil Rights Act of 1991, Title VII of the Civil Rights Act
      of
      1964, and §1981 of the Civil Rights Act of 1866, which prohibit discrimination
      based on race, color, national origin, religion or sex; the Equal Pay Act,
      which
      prohibits paying men and women unequal pay for equal work; the Americans With
      Disabilities Act, which prohibits discrimination against the disabled; the
      California Fair Employment and Housing Act, which prohibits discrimination
      in
      employment based upon race, color, national origin, ancestry, physical or mental
      disability, medical condition, martial status, sex, or age; and any other
      federal, state or local laws or regulations prohibiting employment
      discrimination.

    


    (2) Federal
      Employment Statutes,
      such as
      the Employee Retirement Income Security Act of 1974, which, among other things,
      protects pension or health plan benefits; and the Fair Labor Standards Act
      of
      1938, which regulates wage and hour matters.

    


    (3) Other
      Laws,
      such as
      any federal, state or local laws restricting an employer’s right to terminate
      employees or otherwise regulating employment; any federal, state or local law
      enforcing express or implied employment contracts or requiring an employer
      to
      deal with employees fairly or in good faith; and any other federal, state or
      local laws providing recourse for alleged wrongful discharge, physical or
      personal injury, emotional distress, fraud, negligent misrepresentation, libel,
      slander, defamation and similar or related claims. The laws referred to in
      this
      section include statutes, regulations, other administrative guidance and common
      law doctrines.

    


    (d) Release
      Extends to Both Known and Unknown Claims.
      This
      release covers both claims that Tchaikovsky knows about and those Tchaikovsky
      does not know about. Tchaikovsky understands the significance of his release
      of
      unknown claims and his waiver of any statutory protection against a release
      of
      unknown claims. Tchaikovsky expressly waives the protection of any such
      governmental statutes or regulations.

    


    More
      particularly, and without limitation, Tchaikovsky acknowledges that he has
      read
      and is familiar with and understands the provisions of Section 1542 of the
      California Civil Code, which provides:“A
      GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW
      OR
      SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH,
      IF
      KNOWN TO HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
      DEBTOR.”

    


    TCHAIKOVSKY
      EXPRESSLY WAIVES ANY RIGHT OR CLAIM OF RIGHT TCHAIKOVSKY MAY HAVE UNDER SECTION
      1542 OF THE CALIFORNIA CODE OF CIVIL PROCEDURE.


    
      
         

      

      
        3

        
          

        

      

      
         

      

    


    (e) Ownership
      of Claims.
      Tchaikovsky represents that he has not assigned or transferred, or purported
      to
      assign or transfer, all or any part of any claim released by this
      Agreement.

    


    8. Tchaikovsky’s
      Promises.
      In
      addition to the release of claims provided for in section 7, Tchaikovsky agrees
      to the following:

    


    (a) No
      Pursuit of Released Claims.
      Tchaikovsky promises never to file or prosecute a lawsuit, administrative
      complaint or charge, or other complaint or charge asserting any claims that
      are
      released by the Agreement. Tchaikovsky represents that Tchaikovsky has not
      filed
      or caused to be filed any lawsuit, complaint or charge with respect to any
      claim
      this Agreement releases. Tchaikovsky further agrees to request any government
      agency or other body assuming jurisdiction of any complaint or charge relating
      to a released claim to withdraw from the matter or dismiss the matter with
      prejudice.

    


    (b) Agreement
      to be Kept Confidential.
      Tchaikovsky agrees not to disclose the terms, amount or existence of this
      Agreement to anyone other than a member of Tchaikovsky’s immediate family or a
      professional representative of Tchaikovsky and, even as to such a person, only
      if such person is informed of and agrees to honor this confidentiality
      requirement. Such person’s violation of this confidentiality requirement shall
      be treated as a violation of this Agreement by Tchaikovsky. This subsection
      shall not prohibit disclosure of the terms, amount or existence of this
      Agreement to the extent necessary legally to enforce this Agreement or to the
      extent otherwise legally required.

    


    (c) Agreement
      to Not Seek Future Employment with the Company.
      Tchaikovsky further acknowledges and agrees that he shall not seek or apply
      for
      any positions with the Company in the future. Tchaikovsky acknowledges and
      agrees that any failure by the Company to hire or retain Tchaikovsky in the
      future shall give rise to no claims on his part.

    


    9. Consequences
      of Tchaikovsky’s Violation of Promises.
      If
      Tchaikovsky breaks any of the promises in this Agreement, such as, by way of
      example and not by way of limitation, by filing or prosecuting a lawsuit or
      charge based on claims that Tchaikovsky has released, or if any representation
      made by Tchaikovsky in this Agreement was false when made, Tchaikovsky will:
      (i)
      immediately return to the Company the consideration paid to him pursuant to
      section 3 above; and (ii) pay reasonable attorneys’ fees and all other costs
      incurred as a result of such breach or false representation, such as, by way
      of
      example and not by way of limitation, the Company’s cost of defending any suit
      brought with respect to a claim released by him.

    


    10. Period
      for Consideration of Agreement.
      Tchaikovsky
      acknowledges that he was given a period of 21 days to review and consider this
      Agreement before signing it. Tchaikovsky further acknowledges that: (i) he
      took
      advantage of this period to consider this Agreement before signing it; (ii)
      he
      carefully read this Agreement; and (iii) he fully understands this Agreement
      and
      is entering into it voluntarily and without coercion or duress.

    


    11. Consulting
      with Attorney.
      Tchaikovsky acknowledges that the Company strongly encouraged Tchaikovsky to
      discuss this Agreement with an attorney of Tchaikovsky’s own choosing (at
      Tchaikovsky’s own expense) before signing this Agreement. Tchaikovsky
      acknowledges that he has had ample opportunity to consult with an attorney.
      Tchaikovsky further acknowledges that he has met with an attorney or knowingly
      and willingly declined to do so.


    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    


    12. This
      Agreement shall be in lieu of and in full and final discharge of any and all
      obligations to Tchaikovsky for compensation, severance payments, or any other
      expectations of payment, remuneration, continued coverage of any nature or
      benefit on the part of Tchaikovsky arising out of or in connection with
      Tchaikovsky ’s employment with Company, or under any agreement, arrangement,
      commitment, plan, program, practice or policy of Company, or otherwise.


    


    13. This
      Agreement shall not in any way be construed as an admission by either party
      or
      by any of such party’s Releasees that he/she/it has acted wrongfully with
      respect to the other party or any person, or that such party has any rights
      whatsoever against the other party or the other party’s Releasees except as
      specifically set forth herein, and each of the party’s Releasees specifically
      disclaims any liability to or wrongful acts against the other party or any
      other
      person, on the part of himself/itself, its employees, or its or their agents.
      Tchaikovsky and Company each represent that such party has not filed any
      complaints or charges or lawsuits of any kind whatsoever against the other
      party
      or any of the other party’s Releasees with any governmental agency or any court
      and Company and Tchaikovsky each further represents and agrees that such party
      will not do so at any time hereafter with regard to any matter related to or
      arising out of Tchaikovsky ’s employment with Company (or with any of the
      Releasees, as applicable) or with the termination thereof.

    


    14. The
      Parties agree not to intentionally disclose, publish, or otherwise disseminate
      (or cause or permit to be disclosed, published or otherwise disseminated,
      whether themselves or through one or more third parties), either orally or
      in
      writing, to any third party, any information, thoughts, suppositions, opinions,
      or other statements or comments which may be derogatory, disparaging or
      defamatory to the other in any manner whatsoever. The Parties agree that damages
      from the violation of this provision would be difficult to ascertain and
      therefore that, among other relief, injunctive relief is appropriate to enforce
      the terms hereof, in addition to whatever other remedies the non-breaching
      party
      would be entitled to in the event of breach.

    


    15. In
      any
      claim or action between the Parties involving this Agreement, the prevailing
      party shall be entitled to recover from the other party, in addition to damages,
      injunctive or other relief, if any, all costs and expenses (whether or not
      allowable as “cost” items by law) reasonably incurred at, before and after trial
      or on appeal, or in any bankruptcy proceeding, including without limitation,
      attorneys’ fees, witness fees (expert or otherwise), deposition costs, copying
      charges and other expenses.

    


    16. It
      is the
      desire and intent of the parties hereto that the provisions of this Agreement
      be
      enforced to the fullest extent permissible under law. Should there be any
      conflict between any provision hereof and any present or future law, such law
      will prevail, but the provisions affected thereby will be curtailed and limited
      only to the extent necessary to bring them within the requirements of law,
      and
      the remaining provisions of this Agreement will remain in full force and effect
      and be fully valid and enforceable.


    
      
         

      

      
        5

        
          

        

      

      
         

      

    


    17. This
      Agreement shall be governed by, and construed in accordance with, the laws
      of
      the State of California without regard to conflicts of laws provisions. This
      Agreement is binding on the successors and assigns of, and sets forth the entire
      agreement between, the parties hereto; fully supersedes any and all prior
      agreements or understandings between the parties hereto pertaining to the
      subject matter hereof (except for those provisions of the Employment Agreement
      that expressly survive the expiration or earlier termination of said Employment
      Agreement); and may not be changed except by explicit written agreement to
      that
      effect subscribed by the parties hereto in writing. 

    


    18. The
      parties agree that the exclusive venue for any and all controversies or claims
      arising out of, in connection with, or relating to this Agreement, or a breach
      hereof, shall be in the County of Los Angeles in either: (i) the Superior Court
      of California, County of Los Angeles; or (ii) the United States District Court,
      Central District of California. The parties hereto expressly consent and submit
      to the jurisdiction of either such court, and agree to accept service of process
      inside or outside the State of California in any matter that is to be submitted
      to either such court pursuant hereto.

    


    19. All
      notices or other communications under this Agreement shall be in writing and
      sent by certified or registered air mail with postage prepaid, return receipt
      requested; by facsimile; or by hand delivery. Notices and other communications
      to Company shall be addressed to Innovative Card Technologies, Inc.,10880
      Wilshire Blvd. Suite 950 Los Angeles, CA 90024 (or to such other address as
      Company may designate in writing from time to time). Notices and other
      communications to Tchaikovsky shall be addressed to Tchaikovsky at the address
      set forth on the signature page hereto (or to such other addresses as the
      parties may designate in writing from time to time). Such notices and other
      communications shall be deemed given and received within five (5) days of
      mailing, if sent by certified or registered air mail; when receipt has been
      confirmed electronically by the sender’s fax machine, if sent by facsimile; or
      upon delivery, if hand delivered.

    


    PLEASE
      READ THIS AGREEMENT CAREFULLY. IT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN
      CLAIMS.

    
       

    

    
      
        	
                Bennet
                  P. Tchaikovsky:

              	 	
                Innovative
                  Card Technologies, Inc.: 

              
	 	 	 	 
	
                /s/
                  Bennet P. Tchaikovsky

              	 	
                By:

              	 
	 	 	 	
                Steve
                  Delcarson, CEO

              
	
                Date:
                  October 29, 2007

              	 	 	 
	 	 	
                Date:

              	 
	
                Address:

              	 	 	 


      

    

     

    
      
         

      

      
        6