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Unassociated Document

    EXECUTIVE
      EMPLOYMENT AGREEMENT

    

    This
      EMPLOYMENT AGREEMENT (this “Agreement”)
      is
      made as of September
      21, 2007
      (“Effective
      Date”)
      by and
      between INNOVATIVE CARD TECHNOLOGIES, INC., a Delaware corporation (the
“Company”),
      and
      STEVEN R. DELCARSON (“Executive”),
      with
      reference to the following facts:

    

    A. Innovative
      Card Technologies, Inc., a Delaware corporation (the “Company”),
      is a
      public company that develops and markets secure powered cards for payment,
      identification, physical and logical access applications. 

    

    B. The
      Company desires to employ the Executive, and the Executive desires to be
      employed by the Company. 

    

    NOW,
      THEREFORE, in consideration of the mutual covenants and promises contained
      herein, and other good and valuable consideration, the receipt and sufficiency
      of which are hereby acknowledged by the parties hereto, the parties agree as
      follows:

     

    1.  Employment.
      The
      Company hereby employs Executive and Executive hereby accepts such employment
      upon the terms and conditions hereinafter set forth. Irrespective of the date
      on
      which this Agreement is executed, Executive’s date of employment with the
      Company is September 21, 2007.

     

    2.  Duties.
      Subject
      to the terms and provisions of this Agreement, Executive is hereby employed
      by
      the Company as Chief Executive Officer and President of the Company. Executive
      shall have full responsibility and authority for such duties as customarily
      are
      associated with service as Chief Executive Officer and President of the Company
      at the direction of the Board of Directors of the Company (the “Board”).
      Executive shall faithfully and diligently perform such duties assigned to
      Executive and shall report directly to the Board. 

     

    3.  Scope
      of Services.
      Executive shall devote substantially all of his business time, attention,
      energies, skills, learning and efforts to the Company’s business.

     

    4.  Term.
      Subject
      to prior termination of this Agreement as hereinafter provided, the term of
      this
      Agreement shall commence on the Effective Date and shall continue for one (1)
      year thereafter, unless earlier terminated as provided in this Agreement;
      provided, however that the Term may be extended only upon mutual written consent
      of the parties for additional one-year terms.

     

    5.  Compensation.

     

    5.1  Salary.
      Executive’s annual compensation (“Base
      Compensation”)
      under
      this Agreement shall be $300,000 per year, prorated for any partial year,
      commencing upon the Effective Date. The Base Compensation shall be payable
      in
      equal bi-monthly installments on the fifteenth and end of each month. On March
      1, 2008, the Base Compensation shall increase to $335,000 per year and be
      retroactive to January 1, 2008 with lump sum catch-up of the difference between
      $300,000 (annually) and the new base compensation.  The base compensation
      shall be increased to $350,000 per year upon completion of the Company's raising
      of additional capital in the sum of no less than $5 million (US$5,000,000)
      gross
      proceeds in any transaction or series of transactions, public or private and
      shall be further increased to $375,000 per year upon completion of the Company's
      raising of additional capital in the sum of no less than $8 million
      (US$8,000,000) gross proceeds in any transaction or series of transactions,
      public or private. In all cases, the raises (depending on the amount raised)
      shall be retroactive to January 1, 2008 with lump sum catch-up provision.

    
      

      
        
          
          

        

        
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    5.2
       Bonus.
      No
      later than the end of the initial one-year term, (and irrespective of whether
      the Agreement is or is not renewed for an additional one year term), Executive
      shall be paid a bonus in an amount not to exceed one hundred percent (100%)
      of
      Executive’s Base Compensation then in effect based on the Executive’s
      achievement of appropriate performance criteria. The determination of the total
      bonus amount shall be split into two sets of performance criteria. Half of
      the
      bonus (50%) shall be based upon objective criteria based on the achievement
      by
      Executive of the criteria set forth in Section 5.4 below for stock option
      milestones. The remainder of the bonus shall be awarded based upon Executive’s
      achievement of certain subjective performance criteria. With regard to the
      objective portion of the bonus, the Executive shall be entitled to receive
      the
      bonus amount on milestones (a), (b), and (c) once such option milestones are
      achieved. Executive shall be paid the bonus without further action on the part
      of Executive or the Company. The remaining balance of the bonus will be based
      on
      performance criteria (d) and (e) in Section 5.4 below for stock option
      milestones. Executive will be paid this portion of bonus after the Board makes
      a
      good faith determination that Executive has met the agreed upon performance
      criteria. Such evaluation shall be conducted any time after the performance
      criteria have been met but not later than the end of the one year term of this
      Agreement. Executive shall be given the opportunity to meet with the Board
      to
      discuss the evaluation and provide input. If Executive believes that the Board
      did not evaluate Executive’s performance in good faith, Executive shall have the
      right to submit the matter for arbitration under Section 13.3 below. Payment
      of
      the bonus, if any, shall be subject to all appropriate federal and state income
      and employment taxes. Any bonus due shall be paid to Executive in a lump sum
      within 30 days of the date performance criteria are met, but not later than
      30
      days of the one year term of this Agreement. Notwithstanding the foregoing,
      the
      bonus for the “Money Raise” milestone will be prorated and paid on March 31,
      2008, based on the amount raised divided by $8 Million. If additional monies
      are
      raised, the bonus will be prorated and paid within 30 days of the raise, up
      to
      100% of the milestone, less any amounts previously paid.

     

    5.3 Expenses.
      The
      Company shall reimburse Executive for all reasonable business, entertainment
      and
      travel expenses actually incurred or paid by Executive in the performance of
      his
      services on behalf of the Company, in accordance with the Company’s expense
      reimbursement policy as from time to time in effect. 

     

    5.4 Options.
      The
      Executive shall be eligible to participate in the Company’s Stock Incentive
      Plan, and receive option grant(s) there under for the purchase of common stock
      of the Company (“Options”
or
      “Option”)
      at the
      discretion of the Board of Directors. The Executive shall receive an initial
      issuance of one million (1,000,000) Options to be issued and priced at the
      closing price on March 27, 2008, subject to formal approval of the option grants
      by the Company’s Board of Directors. Vesting of the Options granted to the
      Executive pursuant to this Section 5.4 shall be triggered on the achievement
      by
      the Executive or the Company, as appropriate, of the following business
      milestones within one year from the Effective Date of this Agreement:

    
      

      
        
          
          

        

        
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    (a)
      the
      Company raises additional capital in the sum of no less than $8 million
      (US$8,000,000.00) gross proceeds in any capital raise transaction or series
      of
      capital raising transactions, public or private - Objective Bonus criteria
      potential = 16.7% of total annualized bonus potential; 

    

    (b)
      Sales
      - Quarterly and annual sales targets, and associated bonus calculation. Bonuses
      will be paid quarterly upon achieving the minimum 90% target. If the bonus
      calculated on an annual basis (up to 100% of bonus target) exceeds the sum
      of
      the quarterly bonuses, Executive will be paid the difference as an additional
      bonus. Objective bonus potential = 16.7% of total annualized bonus potential.
      Option milestone is based on achieving annual sales target.

    

    (c)
      Production - Quarterly and annual Delivery targets, and associated
      bonus

    calculation.
      Bonuses will be paid quarterly upon achieving the minimum 90% target. If the
      bonus calculated on an annual basis (up to 100% of bonus target) exceeds the
      sum
      of the quarterly bonuses, Executive will be paid the difference as an additional
      bonus. Objective bonus potential = 16.7% of total annualized bonus potential.
      Option milestone is based on achieving annual delivery target.

    

    (d)
      Research & Development. Subjective bonus potential = 25% of total annualized
      bonus potential; 

     

    (e)
      Corporate Governance, development of supplier and channel partner relationships,
      and achievement of company vision. Subjective bonus potential = 25% of total
      annualized bonus potential. 

     

    The
      specific performance criteria under clauses (a) through (e) will be determined
      by the Company’s Board and shall be negotiated with Executive within one month
      of the execution of this Agreement. The Company’s Board will determine in good
      faith when Executive has met the agreed upon performance criteria. Such
      evaluation shall be conducted when the milestone is achieved but no later that
      at the end of the one year term of this Agreement and Executive shall be given
      the opportunity to meet with the Board to discuss the evaluation and provide
      input. If Executive believes that the Board did not evaluate Executive’s
      performance in good faith, Executive shall have the right to submit the matter
      for arbitration under Section 13.3 below. Upon achievement of each of the
      aforementioned five milestones, 20% of the Options (200,000 options per
      milestone) shall vest pursuant to the following schedule: 50% at achievement
      of
      the milestone (i.e. 100,000 options); 25% at the expiration of twelve (12)
      months following achievement of the milestone (i.e. 50,000 options); and 25%
      at
      the expiration of twenty-four (24) months following achievement of milestones
      (i.e. the remaining 50,000 options). Notwithstanding the foregoing, all Options
      will vest 100% in the event of a termination of Executive by the Company without
      cause. In addition and notwithstanding the foregoing, 200,000 Options will
      vest
      pursuant to the vesting schedule above no later than March 31, 2008 for
      achievement of milestone (a) - Money Raise. 

    
      

      
        
          
          

        

        
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    5.5 Vacation.
      Executive shall be entitled to four (4) weeks paid vacation per year, to be
      taken at such times as may be approved by the Company’s Board of Directors or
      its designee. The Executive shall be entitled to carry forward from year to
      year
      unused vacation days and shall be entitled to compensation therefore upon
      termination of employment.

     

    5.6 Other
      Rights and Benefits.
      Executive and his dependents (identified as Patricia P. Delcarson (spouse),
      Jacqueline P. Delcarson (daughter), Julia P. Delcarson (daughter), Natalie
      P.
      Delcarson (daughter), Marie P. Delcarson (daughter), and Steven L. Delcarson
      (son)) shall receive all medical, dental, vision, short/long term disability
      and
      drug prescription insurance through the Company’s group plan of insurance or
      reimbursement for private insurance, including any COBRA coverage available
      to
      Executive, or private insurance if such COBRA coverage ceases to be available,
      at Executive’s option.  

     

    6.  Taxation
      of Payments and Benefits.
      The
      Company shall undertake to make deductions, withholdings and tax reports with
      respect to payments and benefits under this Agreement to the extent that it
      reasonably and in good faith believes that it is required to make such
      deductions, withholdings and tax reports. Payments under this Agreement shall
      be
      in amounts net of any such deductions or withholdings. Nothing in this Agreement
      shall be construed to require the Company to make any payments to compensate
      the
      Executive for any adverse tax effect associated with any payments or benefits
      or
      for any deduction or withholding from any payment or benefit. 

     

    7.  Termination.
      Executive’s employment may be terminated as follows:

     

    7.1  Termination
      for Death.
      Executive’s employment shall terminate immediately upon Executive’s
      death.

     

    7.2  Termination
      Upon Disability.
      Executive’s employment shall terminate if Executive should become totally and
      permanently disabled. For purposes of this Agreement, Executive shall be
      considered “totally and permanently disabled” if Executive is treated as
      permanently “disabled” under any permanent disability insurance policy
      maintained by the Company and is entitled to full benefits payable under such
      policy upon a total and permanent disability. In the event any such policy
      is
      either not in force or the benefits are not available under such policy, then
      “total and permanent disability” shall mean the inability of Executive, as a
      result of substance abuse, any mental, nervous or psychiatric disorder, or
      physical condition, injury or illness to perform substantially all of his
      current duties on a full-time basis for a period of six (6) consecutive months,
      as determined by a licensed physician selected by the Board.

     

    7.3  Termination
      by Company for “Cause”.
      The
      Company may terminate this Agreement for “Cause” upon three days written notice
      so long as the Company has given Executive written notice describing the Cause
      pursuant to subsections (c) and/or (e) and Executive has not cured such Cause
      within a reasonable time, but no less than 20 days. For purposes of this
      Agreement, “Cause” shall mean the existence or occurrence of any of the
      following:

     

    (a)  Executive’s
      conviction for or pleading of nolo contendre to any felony involving the Company
      or moral turpitude.

    
      

      
        
          
          

        

        
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    (b)  Executive’s
      misappropriation of Company assets.

     

    (c)  Executive’s
      willful violation of a Company policy or a directive of the Board previously
      delivered to him in writing.

     

    (d)  Executive’s
      material breach of his obligations, warranties or representations set forth
      in
      this Agreement.

     

    (e)  Any
      willful neglect or material breach of duty by Executive under this Agreement,
      or
      any material failure by Executive to perform under this Agreement. 

     

    8.  Change
      in Control.
      For
      purposes of this Agreement, a “Change
      in Control” means
      a
      change in ownership or control of the Company after the Effective Date effected
      through any of the following: 

     

    (a)  the
      acquisition, directly or indirectly, by any person or related group of persons
      (other than the Company or a person that directly or indirectly controls, is
      controlled by, or is under common control with, the Company) of beneficial
      ownership of securities possessing more than fifty percent (50%) of the total
      combined voting power of the Company's outstanding securities pursuant to a
      tender or exchange offer made directly to the Company's stockholders;

     

    (b)
      a
      change in the composition of the Board over a period of thirty-six 

    (36)
      consecutive months or less such that a majority of the Board members ceases
      by
      reason of one or more contested elections for Board membership, to be comprised
      of individuals who either (A) have been Board members continuously since the
      beginning of such period, or (B) have been elected or nominated for election
      as
      Board members during such period by at least a majority of the Board members
      described in clause (A) who were still in office at the time such election
      or
      nomination was approved by the Board, or

    

    (c)
      a
      merger or consolidation in which securities possessing at least fifty percent
      (50%) of the total combined voting power of the Company's outstanding securities
      are transferred to a person or persons different from the persons holding those
      securities immediately prior to such transaction, or the sale, transfer or
      other
      disposition of all or substantially all of the Corporation's assets or a
      complete liquidation or dissolution of the Corporation.

     

    If
      this
      Agreement is not assumed and a new agreement with the same role, title and
      responsibilities is not secured for a minimum new period of one year, within
      90
      days upon a Change in Control, Company shall provide Executive with a lump
      sum
      payment equal to twelve (12) months of Base Compensation as in effect on the
      date of the Change in Control, less all appropriate federal and state income
      and
      employment taxes, promptly upon such Change in Control. In addition, all Options
      issued to Executive prior to the Change of Control shall vest immediately and
      become exercisable.

     

    9.  Effect
      of Termination.
      If the
      Executive’s employment is terminated by Executive without Cause or terminated by
      the Company for Cause, death or a disability of Executive that was caused by
      Executive’s wrongful conduct, Executive shall not be entitled to any severance
      pay or other benefits, except as mandated by law. In the event the Company
      terminates Executive’s employment without “Cause,” Executive shall be entitled
      to receive a lump sum payment equal to 50% of Executive’s Base Compensation then
      in effect within five (5) business days following written notification of such
      termination, less all appropriate federal and state income and employment taxes.
      In addition, if Executive is terminated by the Company without “Cause,” (i) all
      Options issued to Executive prior to the termination without “Cause” shall vest
      immediately and become exercisable; and (ii) Executive shall be paid fifty
      percent (50%) of the bonus not already received specified in Section 5.2
      above.

    
      

      
        
          
          

        

        
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    10.  Representations
      and Warranties.
      Executive hereby represents and warrants to Company that as of the date of
      execution of this Agreement: (i) this Agreement will not cause or require
      Executive to breach any obligation to, or agreement or confidence with, any
      other person; (ii) Executive is not representing, or otherwise affiliated in
      any
      capacity with, any other lines of products, manufacturers, vendors or customers
      of the Company; and (iii) Executive has not been induced to enter into this
      Agreement by any promise or representation other than as expressly set forth
      in
      this Agreement.

     

    11.  Non-Solicitation
      and Non-Competition.

     

    11.1  Non-Solicitation
      of Employees.
      Executive agrees that he will not, while employed by the Company and for a
      period of two (2) years following termination of such employment:

     

    (a)  directly
      solicit, encourage, or take any other action which is intended to induce any
      other employee of the Company to terminate his or her employment with the
      Company; or 

     

    (b)  directly
      interfere in any manner with the contractual or employment relationship between
      the Company and any such employee of the Company.

     

    The
      foregoing shall not prohibit Executive or any entity with which Executive may
      later be affiliated from hiring a former or existing employee of the Company
      or
      any of its subsidiaries, provided that such hiring does not result from the
      direct actions of Executive. For purposes of this Section, any reference to
      the
      Company shall include all of the Company’s Affiliates. As used herein,
“Affiliate” means any person or entity controlling, controlled by or under
      common control with another person or entity. 

     

    11.2  Non-Solicitation
      of Customers with respect to Competitive Business Activity.
      Executive agrees that he will not, while employed by the Company, directly
      or
      indirectly, whether for his own account or for the account of any other
      individual or entity, solicit the business or patronage of any customers of
      the
      Company with respect to products and/or services directly related to a
      Competitive Business Activity. “Competitive
      Business Activity”
shall
      mean engaging in, whether independently or as an employee, agent, consultant,
      advisor, independent contractor, partner, stockholder, officer, director or
      otherwise, any business which is materially competitive with the business of
      the
      Company as conducted or actively planned to be conducted by the Company during
      his employment by it, provided that Executive shall not be deemed to engage
      in a
      Competitive Business Activity solely by reason of (i) owning 5% or less of
      the
      outstanding common stock of any corporation if such class of common stock is
      registered under Section 12 of the Securities Exchange Act of 1934, or (ii)
      after the termination of his employment by the Company, being employed by or
      otherwise providing services to a corporation having total revenue of at least
      $500 million (or such lower number as may be agreed by the Board) so long as
      such services are provided solely to a division or other business unit of such
      corporation which does not engage in a business which is then competitive with
      the business of the Company. 

    
      

      
        
          
          

        

        
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    11.3  Non-Competition.
      Without
      the prior written consent of the Board of Directors, during the period of
      employment with the Company, Executive will not, directly or indirectly, engage
      in any employment, occupation, consulting or other business activity in
      competition with the Company. Executive acknowledges and agrees that such
      conduct would violate the duty of loyalty owed by Executive to the Company.
      Employee agrees to promptly disclose to the Board of Directors, in writing,
      any
      business opportunities that are presented to him or her in his or her capacity
      as an employee of the Company which are of a similar nature to the Company’s
      current business or business which, to Executive’s knowledge, the Company
      proposes to engage in. 

    

    Executive
      further acknowledges and agrees that, during the course of performing services
      for the Company, the Company will furnish, disclose or make available to
      Executive confidential and proprietary information related to the Company’s
      business and that such confidential information has been developed and will
      be
      developed by the Company through the expenditure by the Company of substantial
      time, effort and money and that all such confidential information could be
      used
      by Executive to harm the Company or adversely impact its operations.
      Accordingly, the Executive hereby agrees, in consideration of the Company’s
      agreement to hire Executive and to pay the Employee’s compensation for services
      rendered to the Company and in view of the position of trust to be held by
      Executive and the confidential nature and proprietary value of the information
      which the Company may share with Executive, and for other good and valuable
      consideration, the receipt and sufficiency of which are hereby acknowledged,
      as
      follows:

    

    For
      a
      period of one (1) year following the expiration or termination of the Agreement
      (the “Restricted Term”), whether such termination is voluntary, involuntary or
      with or without cause, Executive shall not, without the prior written consent
      of
      the Company, for the Executive for his own account or on behalf of any other,
      directly or indirectly, either as principal, agent, stockholder, employee,
      consultant, representative or in any other capacity, solicit, divert or
      appropriate or attempt to solicit, divert or appropriate, for the purpose of
      providing services, any customers or patrons of the Company, or any prospective
      customers or patrons with respect to which the Company has targeted or developed
      during the Term.

    

    Executive
      further recognizes and acknowledges that the specified restrictions in this
      paragraph are reasonable, legitimate and fair to Executive in light of the
      Company’s need to market its services in a large geographic area in order to
      have a sufficient customer base to make the Company’s business
      profitable.

     

    If
      any
      part of this section should be determined by a court of competent jurisdiction
      to be unreasonable in duration or scope, then this section is intended to and
      shall extend only for such period of time, in such area and with respect to
      such
      activity as is determined to be reasonable.

    
      

      
        
          
          

        

        
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    12.  Confidentiality
      and Invention Assignment.
      In
      connection with this Agreement, Executive agrees to execute and acknowledges
      his
      employment shall be bound by the Company’s
      Confidentiality and Invention Assignment Agreement.
      The
      terms of such Confidentiality and Invention Assignment Agreement are
      incorporated herein by this reference and Executive acknowledges and agrees
      that
      its terms and conditions constitute materials terms of this Agreement.

     

    13.  Miscellaneous.

     

    13.1  Section
      Headings.
      The
      section headings or captions in this Agreement are for convenience of reference
      only and do not form a part hereof, and do not in any way modify, interpret
      or
      construe the intent of the parties or affect any of the provisions of this
      Agreement.

     

    13.2  Survival.
      The
      obligations and rights imposed upon the parties hereto by the provisions of
      this
      Agreement which relate to acts or events subsequent to the termination of this
      Agreement shall survive the termination of this Agreement and shall remain
      fully
      effective thereafter, including without limitation the obligations of Executive
      with to any Confidentiality or Invention Assignment obligations under Section
      12.

     

    13.3  Arbitration.
      

     

    (a)  Any
      claim, dispute or other controversy (a “Controversy”)
      relating to this Agreement shall be settled and resolved by binding arbitration
      in Los Angeles County, California before a single arbitrator under the
      Employment Rules of the American Arbitration Association (“AAA”)
      in
      effect at the time a demand for arbitration is made. If there is any conflict
      between the AAA rules and this arbitration clause, this arbitration clause
      will
      govern and determine the rights of the parties. The Parties to this Agreement
      (the “Parties”)
      shall
      be entitled to full discovery regarding the Controversy as permitted by the
      California Code of Civil Procedure. The arbitrator’s decision on the Controversy
      shall be a final and binding determination of the Controversy and shall be
      fully
      enforceable as an arbitration award in any court having jurisdiction and venue
      over the Parties. The arbitrator shall also award the prevailing Party any
      reasonable attorneys’ fees and reasonable expenses the prevailing Party incurs
      in connection with the arbitration, and the non-prevailing Party shall pay
      the
      arbitrator’s fees and expenses. The arbitrator shall determine who is the
      prevailing Party. Each Party also agrees to accept service of process for all
      arbitration proceedings in accordance with AAA’s rules. 

     

    (b)  The
      obligation to arbitrate shall not be binding upon either party with respect
      to
      requests for temporary restraining orders, preliminary injunctions or other
      procedures in a court of competent jurisdiction to obtain interim relief when
      deemed necessary by such court to preserve the status quo or prevent irreparable
      injury pending resolution by arbitration of the actual dispute between the
      Parties.

     

    (c)  The
      provisions of this Section shall be construed as independent of any other
      covenant or provision of this Agreement; provided that, if a court of competent
      jurisdiction determines that any such provisions are unlawful in any way, such
      court shall modify or interpret such provisions to the minimum extent necessary
      to have them comply with the law.

     

    
      
        
        

      

      
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    (d)  This
      arbitration provision shall be deemed to be self-executing and shall remain
      in
      full force and effect after expiration or termination of this Agreement. In
      the
      event either party fails to appear at any properly noticed arbitration
      proceeding, an award may be entered against such party by default or otherwise
      notwithstanding said failure to appear.

     

    13.4  Severability.
      Should
      any one or more of the provisions of this Agreement be determined to be illegal
      or unenforceable in any relevant jurisdiction, then such illegal or
      unenforceable provision shall be modified by the proper court, if possible,
      but
      only to the extent necessary to make such provision enforceable, and such
      modified provision and all other provisions of this Agreement shall be given
      effect separately from the provision or portion thereof determined to be illegal
      or unenforceable and shall not be affected thereby; provided
      that,
      any such modification shall apply only with respect to the operation of this
      Agreement in the particular jurisdiction in which such determination of
      illegality or unenforceability is made.

     

    13.5  Waiver.
      The
      failure of either party to enforce any provision of this Agreement shall not
      be
      construed as a waiver of any such provision, nor prevent such party thereafter
      from enforcing such provision or any other provision of this Agreement. The
      rights granted both parties herein are cumulative and the election of one shall
      not constitute a waiver of such party’s right to assert all other legal remedies
      available under the circumstances.

     

    13.6  Parties
      in Interest.
      Nothing
      in this Agreement, except as expressly set forth herein, is intended to confer
      any rights or remedies under or by reason of this Agreement on any persons
      other
      than the parties to this Agreement and the successors, assigns and affiliates
      of
      the Company, nor is anything in this Agreement intended to relieve or discharge
      the obligation or liability of any third person to any party to this Agreement,
      nor shall any provision give any third person any right of action over or
      against any party to this Agreement.

     

    13.7  Assignment.
      The
      rights and obligations under this Agreement shall be binding upon, and inure
      to
      the benefit of, the heirs, executors, successors and assigns of Executive and
      the Company. Except as specifically provided in this Section 13, neither the
      Company nor Executive may assign this Agreement or delegate their respective
      responsibilities under this Agreement without the consent of the other party
      hereto. Upon the sale, exchange or other transfer of substantially all of the
      assets of the Company, the Company shall assign this Agreement to the transferee
      of such assets. No assignment of this Agreement by the Company shall relieve
      the
      Company of, and the Company shall remain obligated to perform, its duties and
      obligations under this Agreement, including, without limitation, payment of
      the
      Base Compensation set forth in Section 5, above.

     

    13.8  Attorneys’
      Fees.
      In the
      event of any Controversy, suit, action or arbitration to enforce any of the
      terms or provisions of this Agreement, the prevailing party shall be entitled
      to
      its reasonable attorneys’ fees and costs. The foregoing entitlement shall also
      include attorneys’ fees and costs of the prevailing party on any appeal of a
      judgment and for any action to enforce a judgment.

    
      

      
        
          
          

        

        
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    13.9  Modification.
      This
      Agreement may be modified only by a contract in writing executed by the parties
      to this Agreement against whom enforcement of such modification is
      sought.

     

    13.10  Prior
      Understandings.
      This
      Agreement contains the entire agreement between the parties to this Agreement
      with respect to the subject matter of this Agreement, is intended as a final
      expression of such parties’ agreement with respect to such terms as are included
      in this Agreement, is intended as a complete and exclusive statement of the
      terms of such agreement, and supersedes all negotiations, stipulations,
      understandings, agreements, representations and warranties, if any, with respect
      to such subject matter, which precede or accompany the execution of this
      Agreement.

     

    13.11  Interpretation.
      Whenever the context so requires in this Agreement, all words used in the
      singular shall be construed to have been used in the plural (and vice versa),
      each gender shall be construed to include any other genders, and the word
“person” shall be construed to include a natural person, a corporation, a firm,
      a partnership, a joint venture, a trust, an estate or any other
      entity.

     

    13.12  Counterparts.
      This
      Agreement may be executed in one or more counterparts, each of which shall
      be
      deemed an original, but all of which together shall constitute one and the
      same
      instrument.

     

    13.13  Applicable
      Law.
      This
      Agreement and the rights and obligations of the parties hereunder shall be
      construed under, and governed by, the laws of the State of California without
      giving effect to conflict of laws provisions.

     

    13.14  Drafting
      Ambiguities.
      Each
      party to this Agreement has reviewed and revised this Agreement. Each party
      to
      this Agreement has had the opportunity to have such party’s legal counsel review
      and revise this Agreement. The rule of construction that any ambiguities are
      to
      be resolved against the drafting party shall not be employed in the
      interpretation of this Agreement or of any amendments or exhibits to this
      Agreement.

     

    [Signature
      Page Follows]

    

    
      
        
        

      

      
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    IN
      WITNESS WHEREOF, the Parties have executed this Agreement as of the dates
      indicated below. 

    

    

    
      	 	 	 
	 	
              THE
                COMPANY:

               

              
                INNOVATIVE
                  CARD TECHNOLOGIES, INC.

                a
                  Delaware corporation

              

            
	 
 	 
 	 
 
	
              Dated:
                March 27, 2008

            	By:  	/s/ Donald Joyce                                                                        
	 	 	 
	 	Name	Donald
              Joyce                                                       
	 	 	 
	 	Title:  	Director                                                                                 
               
	 	 	 
	 	 	 
	 	EXECUTIVE:
	 	 	 
	Dated: March 27, 2008	/s/ Steven R.
              Delcarson                                                                  
              
	 	STEVEN R.
              DELCARSON

    
      

      
        
          
          

        

        
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            Employment
              Agreement - Steven R. DelcarsonUnassociated Document

    EXECUTIVE
      EMPLOYMENT AGREEMENT

    

    This
      EMPLOYMENT AGREEMENT (this “Agreement”)
      is
      made as of October
      29, 2007
      (“Effective
      Date”)
      by and
      between INNOVATIVE CARD TECHNOLOGIES, INC., a Delaware corporation (the
“Company”),
      and
      CHARLES M. CAPORALE (“Executive”),
      with
      reference to the following facts:

    

    A. Innovative
      Card Technologies, Inc., a Delaware corporation (the “Company”),
      is a
      public company that develops and markets secure powered cards for payment,
      identification, physical and logical access applications. 

    

    B. The
      Company desires to employ the Executive, and the Executive desires to be
      employed by the Company. 

    

    NOW,
      THEREFORE, in consideration of the mutual covenants and promises contained
      herein, and other good and valuable consideration, the receipt and sufficiency
      of which are hereby acknowledged by the parties hereto, the parties agree as
      follows:

     

    1.  Employment.
      The
      Company hereby employs Executive and Executive hereby accepts such employment
      upon the terms and conditions hereinafter set forth. Irrespective of the date
      on
      which this Agreement is executed, Executive’s date of employment with the
      Company is October 29, 2007.

     

    2.  Duties.
      Subject
      to the terms and provisions of this Agreement, Executive is hereby employed
      by
      the Company as Chief Financial Officer of the Company. Executive shall have
      full
      responsibility and authority for such duties as customarily are associated
      with
      service as Chief Financial Officer of the Company at the direction of the Chief
      Executive Officer of the Company (the “CEO”).
      Executive shall faithfully and diligently perform such duties assigned to
      Executive and shall report directly to the CEO. 

     

    3.  Scope
      of Services.
      Executive shall devote substantially all of his business time, attention,
      energies, skills, learning and efforts to the Company’s business.

     

    4.  Term.
      Subject
      to prior termination of this Agreement as hereinafter provided, the term of
      this
      Agreement shall commence on the Effective Date and shall continue for one (1)
      year thereafter, unless earlier terminated as provided in this Agreement;
      provided, however that the Term may be extended only upon mutual written consent
      of the parties for additional one-year terms.

     

    5.  Compensation.

     

    5.1  Salary.
      Executive's annual compensation ("Base
      Compensation")
      under
      this Agreement shall be $180,000 per year, prorated for any partial year,
      commencing upon the Effective Date.  The Base Compensation shall be payable
      in equal bi-monthly installments on the fifteenth and end of each month. 
Notwithstanding the foregoing, the base compensation shall be increased to
      $200,000 per year starting on March 1, 2008 and be retroactive to January 1,
      2008.  Executive shall be entitled to receive a lump sum "catch up" payment
      (equal to the monthly difference between $180,000 and $200,000
      (annually) of $1,666.67.) for any pay periods from January 1, 2008 to March
      1, 2008.

     

    
      
        
        

      

      
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    5.2  Bonus.
      No
      later than the end of the one year term of this Agreement (and irrespective
      of
      whether the Agreement is or is not renewed for an additional one year term),
      Executive shall be paid a bonus in an amount not to exceed one hundred percent
      (100%) of Executive’s Base Compensation then in effect based on the Executive’s
      achievement of appropriate performance criteria. The determination of the total
      bonus amount shall be split into two sets of performance criteria. First, fifty
      percent (50%) of the bonus amount will be based on the achievement by Executive
      of the criteria set forth in Section 5.4 below for stock option milestones.
      The
      Executive shall be entitled to receive this portion of the bonus amount once
      such option milestones are achieved. Executive shall be paid the bonus without
      further action on the part of Executive or the Company. The remaining balance
      of
      the bonus will be based on performance criteria, which will be determined by
      the
      Company’s Chief Executive Officer and shall be negotiated with Executive within
      one month of the execution of this Agreement. Executive will be paid the second
      half of the bonus after the Company’s Chief Executive Officer makes a good faith
      determination that Executive has met the agreed upon performance criteria.
      Such
      evaluation shall be conducted any time after the performance criteria have
      been
      met but not later than the end of the one year term of this Agreement. Executive
      shall be given the opportunity to meet with the Board and Chief Executive
      Officer to discuss the evaluation and provide input. If Executive believes
      that
      the Board and Chief Executive Officer did not evaluate Executive’s performance
      in good faith, Executive shall have the right to submit the matter for
      arbitration under Section 13.3 below. Payment of the bonus, if any, shall be
      subject to all appropriate federal and state income and employment taxes. Any
      bonus due shall be paid to Executive in a lump sum within 30 days of the date
      performance criteria are met, but not later than 30 days of the one year term
      of
      this Agreement. Notwithstanding the foregoing, the bonus for Milestone A defined
      below (the “Money Raise” milestone) will be prorated and paid on March 31, 2008,
      based on the amount raised divided by $8 Million. If additional monies are
      raised, the bonus will be prorated and paid within 30 days of the raise, up
      to
      100% of the milestone, less any amounts previously paid

     

    5.3  Expenses.
      The
      Company shall reimburse Executive for all reasonable business, entertainment
      and
      travel expenses actually incurred or paid by Executive in the performance of
      his
      services on behalf of the Company, in accordance with the Company’s expense
      reimbursement policy as from time to time in effect. Executive shall receive
      a
      $400 monthly allowance for commuting expenses for a period of nine (9) months
      commencing on the date of Executive’s employment. 

     

    5.4  Options.
      The
      Executive shall be eligible to participate in the Company’s Stock Incentive
      Plan, and receive option grant(s) thereunder for the purchase of common stock
      of
      the Company (“Options”
or
      “Option”)
      at the
      discretion of the Board of Directors. The Executive shall receive an initial
      issuance of two hundred thousand (200,000) Options to be issued and priced
      at
      the closing price on March 27, 2008 subject to formal approval of the option
      grants by the Company’s Board of Directors. Vesting of the Options granted to
      the Executive pursuant to this Section 5.4 shall be triggered on the achievement
      by the Executive or the Company, as appropriate,, of the following business
      milestones within one year from the Effective Date of this Agreement: (a) the
      Company raises additional capital in the sum of no less than $8.0 million
      (US$8,000,000.00) gross proceeds in any capital raising transaction or series
      of
      capital raising transactions, public or private; (b) timely submission
      by the Company with the Securities Exchange Commission (“SEC”) during the
      initial one year term of this Agreement of
      all
      periodic reports under the 1934 Exchange Act and all filings under the 1933
      Act
      (unless the failure to make any such filing on time is due to factors or reasons
      outside of Executive’s control, for example, failure of the Company’s outside
      auditors to complete their work on time) and compliance with the rules and
      regulations of the Nasdaq Stock Market as regards financial reporting and other
      matters within the purview of the Company’s CFO;
      (c) the
      achievement of specific performance criteria related to Executive’s management
      of the Company’s financial affairs which are within the purview of Executive’s
      position as the Company’s Chief Financial Officer; and (d) [corporate governance
      to be determined]. The specific performance criteria under clauses (c) and
      (d)
      will be determined by the Company’s Chief Executive Officer and shall be
      negotiated with Executive within one month of the execution of this Agreement.
      The Company’s Chief Executive Officer will determine in good faith when
      Executive has met the agreed upon performance criteria. Such evaluation shall
      be
      conducted when
      the milestone is achieved but
      no later
      than at the end of the one year term of this Agreement and Executive shall
      be
      given the opportunity to meet with the Board and Chief Executive Officer to
      discuss the evaluation and provide input. If Executive believes that the Board
      and Chief Executive Officer did not evaluate Executive’s performance in good
      faith, Executive shall have the right to submit the matter for arbitration
      under
      Section 13.3 below. Upon achievement of each of the aforementioned four
      milestones, 25% of the Options (50,000 options per milestone) shall vest
      pursuant to the following schedule: 50% at achievement of the milestone (i.e.
      25,000 options); 25% at the expiration of twelve (12) months following
      achievement of the milestone (i.e. 12,500 options); and 25% at the expiration
      of
      twenty-four (24) months following achievement of milestones (i.e. the remaining
      12,500 options). Notwithstanding the foregoing, all Options will vest 100%
      in
      the event of a termination of Executive by the Company without cause. In
      addition and notwithstanding the foregoing, 50,000 Options will vest pursuant
      to
      the vesting schedule above no later than March 31, 2008 for achievement of
      milestone (a) - Money Raise.”

    
       

      
        
          
          

        

        
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    5.5  Vacation.
      Executive shall be entitled to four (4) weeks paid vacation per year, to be
      taken at such times as may be approved by the Company’s CEO or its designee. The
      Executive shall be entitled to carry forward from year to year unused vacation
      days and shall be entitled to compensation therefore upon termination of
      employment.

     

    5.6  Other
      Rights and Benefits.
      Executive and his dependents (identified as Katherine Caporale (spouse)) shall
      receive all medical, dental, vision, short/long term disability and drug
      prescription insurance through the Company’s group plan of insurance or
      reimbursement for private insurance, including any COBRA coverage available
      to
      Executive, or private insurance if such COBRA coverage ceases to be available,
      at Executive’s option.  

     

    6.  Taxation
      of Payments and Benefits.
      The
      Company shall undertake to make deductions, withholdings and tax reports with
      respect to payments and benefits under this Agreement to the extent that it
      reasonably and in good faith believes that it is required to make such
      deductions, withholdings and tax reports. Payments under this Agreement shall
      be
      in amounts net of any such deductions or withholdings. Nothing in this Agreement
      shall be construed to require the Company to make any payments to compensate
      the
      Executive for any adverse tax effect associated with any payments or benefits
      or
      for any deduction or withholding from any payment or benefit. 

     

    
       

      
        
          
          

        

        
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    7.  Termination.
      Executive’s employment may be terminated as follows:

     

    7.1  Termination
      for Death.
      Executive’s employment shall terminate immediately upon Executive’s
      death.

     

    7.2  Termination
      Upon Disability.
      Executive’s employment shall terminate if Executive should become totally and
      permanently disabled. For purposes of this Agreement, Executive shall be
      considered “totally and permanently disabled” if Executive is treated as
      permanently “disabled” under any permanent disability insurance policy
      maintained by the Company and is entitled to full benefits payable under such
      policy upon a total and permanent disability. In the event any such policy
      is
      either not in force or the benefits are not available under such policy, then
      “total and permanent disability” shall mean the inability of Executive, as a
      result of substance abuse, any mental, nervous or psychiatric disorder, or
      physical condition, injury or illness to perform substantially all of his
      current duties on a full-time basis for a period of six (6) consecutive months,
      as determined by a licensed physician selected by the Board.

     

    7.3  Termination
      by Company for “Cause”.
      The
      Company may terminate this Agreement for “Cause” upon three days written notice
      so long as the Company has given Executive written notice describing the Cause
      pursuant to subsections (c) and/or (e) and Executive has not cured such Cause
      within a reasonable time, but no less than 20 days. For purposes of this
      Agreement, “Cause” shall mean the existence or occurrence of any of the
      following:

     

    (a)  Executive’s
      conviction for or pleading of nolo contendre to any felony involving the Company
      or moral turpitude.

     

    (b)  Executive’s
      misappropriation of Company assets.

     

    (c)  Executive’s
      willful violation of a Company policy or a directive of the Board previously
      delivered to him in writing.

     

    (d)  Executive’s
      material breach of his obligations, warranties or representations set forth
      in
      this Agreement.

     

    (e)  Any
      willful neglect or material breach of duty by Executive under this Agreement,
      or
      any material failure by Executive to perform under this Agreement. 

     

    8.  Change
      in Control.
      For
      purposes of this Agreement, a “Change
      in Control” means
      a
      change in ownership or control of the Company after the Effective Date effected
      through any of the following: 

     

    (a)  the
      acquisition, directly or indirectly, by any person or related group of persons
      (other than the Company or a person that directly or indirectly controls, is
      controlled by, or is under common control with, the Company) of beneficial
      ownership of securities possessing more than fifty percent (50%) of the total
      combined voting power of the Company's outstanding securities pursuant to a
      tender or exchange offer made directly to the Company's stockholders;

    
       

      
        
          
          

        

        
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    (b)
      a
      change in the composition of the Board over a period of thirty-six 

    (36)
      consecutive months or less such that a majority of the Board members ceases
      by
      reason of one or more contested elections for Board membership, to be comprised
      of individuals who either (A) have been Board members continuously since the
      beginning of such period, or (B) have been elected or nominated for election
      as
      Board members during such period by at least a majority of the Board members
      described in clause (A) who were still in office at the time such election
      or
      nomination was approved by the Board, or

    

    (c)
      a
      merger or consolidation in which securities possessing at least fifty percent
      (50%) of the total combined voting power of the Company's outstanding securities
      are transferred to a person or persons different from the persons holding those
      securities immediately prior to such transaction, or the sale, transfer or
      other
      disposition of all or substantially all of the Corporation's assets or a
      complete liquidation or dissolution of the Corporation.

     

    If
      this
      Agreement is not assumed and a new agreement with the same role, title and
      responsibilities is not secured for a minimum new period of one year, within
      90
      days upon a Change in Control, Company shall provide Executive with a lump
      sum
      payment equal to six (6) months of Base Compensation as in effect on the date
      of
      the Change in Control, less all appropriate federal and state income and
      employment taxes, promptly upon such Change in Control. In addition, all Options
      issued to Executive prior to the Change of Control shall vest immediately and
      become exercisable.

     

    9.  Effect
      of Termination.
      If the
      Executive’s employment is terminated by Executive without Cause or terminated by
      the Company for Cause, death or a disability of Executive, Executive shall
      not
      be entitled to any severance pay or other benefits, except as mandated by law.
      In the event the Company terminates Executive’s employment without “Cause,”
Executive shall be entitled to receive a lump sum payment equal to 50% of
      Executive’s salary then in effect within five (5) business days following
      written notification of such termination, less all appropriate federal and
      state
      income and employment taxes. In addition, if Executive is terminated by the
      Company without “Cause,” (i) all Options issued to Executive prior to the
      termination without “Cause” shall vest immediately and become exercisable; and
      (ii) Executive shall be paid fifty percent (50%) of the bonus not already
      received specified in Section 5.2 above.

     

    10.  Representations
      and Warranties.
      Executive hereby represents and warrants to Company that as of the date of
      execution of this Agreement: (i) this Agreement will not cause or require
      Executive to breach any obligation to, or agreement or confidence with, any
      other person; (ii) Executive is not representing, or otherwise affiliated in
      any
      capacity with, any other lines of products, manufacturers, vendors or customers
      of the Company; and (iii) Executive has not been induced to enter into this
      Agreement by any promise or representation other than as expressly set forth
      in
      this Agreement.

     

    11.  Non-Solicitation
      and Non-Competition.

    
       

      
        
          
          

        

        
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    11.1  Non-Solicitation
      of Employees.
      Executive agrees that he will not, while employed by the Company and for a
      period of two (2) years following termination of such employment:

     

    (a)  directly
      solicit, encourage, or take any other action which is intended to induce any
      other employee of the Company to terminate his or her employment with the
      Company; or 

     

    (b)  directly
      interfere in any manner with the contractual or employment relationship between
      the Company and any such employee of the Company.

     

    The
      foregoing shall not prohibit Executive or any entity with which Executive may
      later be affiliated from hiring a former or existing employee of the Company
      or
      any of its subsidiaries, provided that such hiring does not result from the
      direct actions of Executive. For purposes of this Section, any reference to
      the
      Company shall include all of the Company’s Affiliates. As used herein,
“Affiliate” means any person or entity controlling, controlled by or under
      common control with another person or entity. 

     

    11.2  Non-Solicitation
      of Customers with respect to Competitive Business Activity.
      Executive agrees that he will not, while employed by the Company, directly
      or
      indirectly, whether for his own account or for the account of any other
      individual or entity, solicit the business or patronage of any customers of
      the
      Company with respect to products and/or services directly related to a
      Competitive Business Activity. “Competitive
      Business Activity”
shall
      mean engaging in, whether independently or as an employee, agent, consultant,
      advisor, independent contractor, partner, stockholder, officer, director or
      otherwise, any business which is materially competitive with the business of
      the
      Company as conducted or actively planned to be conducted by the Company during
      his employment by it, provided that Executive shall not be deemed to engage
      in a
      Competitive Business Activity solely by reason of (i) owning 5% or less of
      the
      outstanding common stock of any corporation if such class of common stock is
      registered under Section 12 of the Securities Exchange Act of 1934, or (ii)
      after the termination of his employment by the Company, being employed by or
      otherwise providing services to a corporation having total revenue of at least
      $500 million (or such lower number as may be agreed by the Board) so long as
      such services are provided solely to a division or other business unit of such
      corporation which does not engage in a business which is then competitive with
      the business of the Company. 

     

    11.3  Non-Competition.
      Without
      the prior written consent of the CEO, during the period of employment with
      the
      Company, Executive will not, directly or indirectly, engage in any employment,
      occupation, consulting or other business activity in competition with the
      Company. Executive acknowledges and agrees that such conduct would violate
      the
      duty of loyalty owed by Executive to the Company. Employee agrees to promptly
      disclose to the CEO, in writing, any business opportunities that are presented
      to him or her in his or her capacity as an employee of the Company which are
      of
      a similar nature to the Company’s current business or business which, to
      Executive’s knowledge, the Company proposes to engage in. 

    

    Executive
      further acknowledges and agrees that, during the course of performing services
      for the Company, the Company will furnish, disclose or make available to
      Executive confidential and proprietary information related to the Company’s
      business and that such confidential information has been developed and will
      be
      developed by the Company through the expenditure by the Company of substantial
      time, effort and money and that all such confidential information could be
      used
      by Executive to harm the Company or adversely impact its operations.
      Accordingly, the Executive hereby agrees, in consideration of the Company’s
      agreement to hire Executive and to pay the Employee’s compensation for services
      rendered to the Company and in view of the position of trust to be held by
      Executive and the confidential nature and proprietary value of the information
      which the Company may share with Executive, and for other good and valuable
      consideration, the receipt and sufficiency of which are hereby acknowledged,
      as
      follows:

    
       

      
        
          
          

        

        
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    For
      a
      period of one (1) year following the expiration or termination of the Agreement
      (the “Restricted Term”), whether such termination is voluntary, involuntary or
      with or without cause, Executive shall not, without the prior written consent
      of
      the Company, for the Executive for his own account or on behalf of any other,
      directly or indirectly, either as principal, agent, stockholder, employee,
      consultant, representative or in any other capacity, solicit, divert or
      appropriate or attempt to solicit, divert or appropriate, for the purpose of
      providing services, any customers or patrons of the Company, or any prospective
      customers or patrons with respect to which the Company has targeted or developed
      during the Term.

    

    Executive
      further recognizes and acknowledges that the specified restrictions in this
      paragraph are reasonable, legitimate and fair to Executive in light of the
      Company’s need to market its services in a large geographic area in order to
      have a sufficient customer base to make the Company’s business
      profitable.

     

    If
      any
      part of this section should be determined by a court of competent jurisdiction
      to be unreasonable in duration or scope, then this section is intended to and
      shall extend only for such period of time, in such area and with respect to
      such
      activity as is determined to be reasonable.

    

    12.  Confidentiality
      and Invention Assignment.
      In
      connection with this Agreement, Executive agrees to execute and acknowledges
      his
      employment shall be bound by the Company’s
      Confidentiality and Invention Assignment Agreement.
      The
      terms of such Confidentiality and Invention Assignment Agreement are
      incorporated herein by this reference and Executive acknowledges and agrees
      that
      its terms and conditions constitute materials terms of this Agreement.

     

    13.  Miscellaneous.

     

    13.1  Section
      Headings.
      The
      section headings or captions in this Agreement are for convenience of reference
      only and do not form a part hereof, and do not in any way modify, interpret
      or
      construe the intent of the parties or affect any of the provisions of this
      Agreement.

     

    13.2  Survival.
      The
      obligations and rights imposed upon the parties hereto by the provisions of
      this
      Agreement which relate to acts or events subsequent to the termination of this
      Agreement shall survive the termination of this Agreement and shall remain
      fully
      effective thereafter, including without limitation the obligations of Executive
      with to any Confidentiality or Invention Assignment obligations under Section
      12.

    
       

      
        
          
          

        

        
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    13.3  Arbitration.
      

     

    (a)  Any
      claim, dispute or other controversy (a “Controversy”)
      relating to this Agreement shall be settled and resolved by binding arbitration
      in Los Angeles County, California before a single arbitrator under the
      Employment Rules of the American Arbitration Association (“AAA”)
      in
      effect at the time a demand for arbitration is made. If there is any conflict
      between the AAA rules and this arbitration clause, this arbitration clause
      will
      govern and determine the rights of the parties. The Parties to this Agreement
      (the “Parties”)
      shall
      be entitled to full discovery regarding the Controversy as permitted by the
      California Code of Civil Procedure. The arbitrator’s decision on the Controversy
      shall be a final and binding determination of the Controversy and shall be
      fully
      enforceable as an arbitration award in any court having jurisdiction and venue
      over the Parties. The arbitrator shall also award the prevailing Party any
      reasonable attorneys’ fees and reasonable expenses the prevailing Party incurs
      in connection with the arbitration, and the non-prevailing Party shall pay
      the
      arbitrator’s fees and expenses. The arbitrator shall determine who is the
      prevailing Party. Each Party also agrees to accept service of process for all
      arbitration proceedings in accordance with AAA’s rules. 

     

    (b)  The
      obligation to arbitrate shall not be binding upon either party with respect
      to
      requests for temporary restraining orders, preliminary injunctions or other
      procedures in a court of competent jurisdiction to obtain interim relief when
      deemed necessary by such court to preserve the status quo or prevent irreparable
      injury pending resolution by arbitration of the actual dispute between the
      Parties.

     

    (c)  The
      provisions of this Section shall be construed as independent of any other
      covenant or provision of this Agreement; provided that, if a court of competent
      jurisdiction determines that any such provisions are unlawful in any way, such
      court shall modify or interpret such provisions to the minimum extent necessary
      to have them comply with the law.

     

    (d)  This
      arbitration provision shall be deemed to be self-executing and shall remain
      in
      full force and effect after expiration or termination of this Agreement. In
      the
      event either party fails to appear at any properly noticed arbitration
      proceeding, an award may be entered against such party by default or otherwise
      notwithstanding said failure to appear.

     

    13.4  Severability.
      Should
      any one or more of the provisions of this Agreement be determined to be illegal
      or unenforceable in any relevant jurisdiction, then such illegal or
      unenforceable provision shall be modified by the proper court, if possible,
      but
      only to the extent necessary to make such provision enforceable, and such
      modified provision and all other provisions of this Agreement shall be given
      effect separately from the provision or portion thereof determined to be illegal
      or unenforceable and shall not be affected thereby; provided
      that,
      any such modification shall apply only with respect to the operation of this
      Agreement in the particular jurisdiction in which such determination of
      illegality or unenforceability is made.

     

    13.5  Waiver.
      The
      failure of either party to enforce any provision of this Agreement shall not
      be
      construed as a waiver of any such provision, nor prevent such party thereafter
      from enforcing such provision or any other provision of this Agreement. The
      rights granted both parties herein are cumulative and the election of one shall
      not constitute a waiver of such party’s right to assert all other legal remedies
      available under the circumstances.

    
       

      
        
          
          

        

        
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    13.6  Parties
      in Interest.
      Nothing
      in this Agreement, except as expressly set forth herein, is intended to confer
      any rights or remedies under or by reason of this Agreement on any persons
      other
      than the parties to this Agreement and the successors, assigns and affiliates
      of
      the Company, nor is anything in this Agreement intended to relieve or discharge
      the obligation or liability of any third person to any party to this Agreement,
      nor shall any provision give any third person any right of action over or
      against any party to this Agreement.

     

    13.7  Assignment.
      The
      rights and obligations under this Agreement shall be binding upon, and inure
      to
      the benefit of, the heirs, executors, successors and assigns of Executive and
      the Company. Except as specifically provided in this Section 13, neither the
      Company nor Executive may assign this Agreement or delegate their respective
      responsibilities under this Agreement without the consent of the other party
      hereto. Upon the sale, exchange or other transfer of substantially all of the
      assets of the Company, the Company shall assign this Agreement to the transferee
      of such assets. No assignment of this Agreement by the Company shall relieve
      the
      Company of, and the Company shall remain obligated to perform, its duties and
      obligations under this Agreement, including, without limitation, payment of
      the
      Base Compensation set forth in Section 5, above.

     

    13.8  Attorneys’
      Fees.
      In the
      event of any Controversy, suit, action or arbitration to enforce any of the
      terms or provisions of this Agreement, the prevailing party shall be entitled
      to
      its reasonable attorneys’ fees and costs. The foregoing entitlement shall also
      include attorneys’ fees and costs of the prevailing party on any appeal of a
      judgment and for any action to enforce a judgment.

     

    13.9  Modification.
      This
      Agreement may be modified only by a contract in writing executed by the parties
      to this Agreement against whom enforcement of such modification is
      sought.

     

    13.10  Prior
      Understandings.
      This
      Agreement contains the entire agreement between the parties to this Agreement
      with respect to the subject matter of this Agreement, is intended as a final
      expression of such parties’ agreement with respect to such terms as are included
      in this Agreement, is intended as a complete and exclusive statement of the
      terms of such agreement, and supersedes all negotiations, stipulations,
      understandings, agreements, representations and warranties, if any, with respect
      to such subject matter, which precede or accompany the execution of this
      Agreement.

     

    13.11  Interpretation.
      Whenever the context so requires in this Agreement, all words used in the
      singular shall be construed to have been used in the plural (and vice versa),
      each gender shall be construed to include any other genders, and the word
“person” shall be construed to include a natural person, a corporation, a firm,
      a partnership, a joint venture, a trust, an estate or any other
      entity.

    
       

      
        
          
          

        

        
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    13.12  Counterparts.
      This
      Agreement may be executed in one or more counterparts, each of which shall
      be
      deemed an original, but all of which together shall constitute one and the
      same
      instrument.

     

    13.13  Applicable
      Law.
      This
      Agreement and the rights and obligations of the parties hereunder shall be
      construed under, and governed by, the laws of the State of California without
      giving effect to conflict of laws provisions.

     

    13.14  Drafting
      Ambiguities.
      Each
      party to this Agreement has reviewed and revised this Agreement. Each party
      to
      this Agreement has had the opportunity to have such party’s legal counsel review
      and revise this Agreement. The rule of construction that any ambiguities are
      to
      be resolved against the drafting party shall not be employed in the
      interpretation of this Agreement or of any amendments or exhibits to this
      Agreement.

     

    

     

    [Signature
      Page Follows]

    
       

      
        
          
          

        

        
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    IN
      WITNESS WHEREOF, the Parties have executed this Agreement as of the dates
      indicated below. 

    

    
      	 	 	 
	 	
              THE
                COMPANY:

              

              INNOVATIVE
                CARD TECHNOLOGIES, INC.

              a
                Delaware corporation

            
	 
 	 
 	 
 
	
              Dated:
                March 27, 2008

            	By:  	/s/ Steve
              Delcarson
	 	
              
Steve
              Delcarson, CEO
	 	 

    

      	 	 	 
	 	EXECUTIVE:
	 
 	        
              
 	 
 
	Dated:
              March 27, 2008	/s/
              Charles
              Caporale                                                                           
	 	CHARLES
              CAPORALE
	 	 	 
	 	
            
	 	 

    

    
      
        
          
          

        

        
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            Agreement - Charles Caporale

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