Document:

Unassociated Document

    Exhibit
      10.53

    

    WAIVER
      AND AMENDMENT TO 

    CONVERTIBLE
      SECURED PROMISSORY NOTE

     

    This
      Amendment to Convertible Secured Promissory Note (this “Amendment”)
      is
      entered into as of February 28, 2008 by and between Catcher Holdings, Inc.,
      a
      Delaware corporation (the “Company”),
      and
      the Purchasers (as defined below). This Amendment amends the Convertible Secured
      Promissory Notes (the “Notes”)
      issued
      pursuant to the each of the Note and Restricted Stock Purchase Agreements,
      dated
      as of April 4, 2007 and June 20, 2007 by and among the Company and the persons
      and entities listed on Exhibit
      A
      thereto
      (each a “Purchaser”
and
      collectively, the “Purchasers”)
      (together the “Agreements”).
      Capitalized terms not otherwise defined herein shall have the meanings given
      in
      the Notes.

     

    Recitals

     

    Whereas,
      the
      Company and the Purchasers are parties to the Notes;

     

    Whereas,
      Section
      11 of the Notes provide that all outstanding Notes may be amended with the
      written consent of the Company and Purchasers holding more than 50% of the
      aggregate Loan Amount outstanding under all Notes issued pursuant to the
      Agreements; and

     

    Whereas,
      the
      Company and the holders of a
      majority of the aggregate
      Loan Amount outstanding under all Notes issued pursuant to the
      Agreements desire
      to
      amend the Notes as set forth herein.

     

    Now,
      Therefore, in
      consideration of the foregoing and of the mutual promises and covenants set
      forth herein, the parties agree as follows:

     

    
      	1.  	
              Amendment
                to Note. 
                Section 3 of each Note is hereby deleted and replaced by the
                following:

            

    

     

    “Maturity.
      Unless
      sooner paid or converted in accordance with the terms hereof, the entire unpaid
      principal amount and all unpaid accrued interest shall become fully due and
      payable on the earlier of (a) unless extended pursuant to Section
      7(a)(i)
      below,
      the date that is three hundred sixty (360) days after the date hereof,
      (b) the closing of a Next Financing (as defined below), or (c) the
      acceleration of the maturity of this Note by the Holder upon the occurrence
      of
      an Event of Default (such earlier date, the “Maturity
      Date”).”
      

     

    
      	2.  	
              Amendment
                to Note. 
                Section 5(a) of each Note is hereby deleted and replaced by the
                following:

            

    

     

    “(a)
      Conversion
      upon sale of Next Securities.
      In the
      event that the Company, at any time after the date of issuance of this Note
      and
      prior to the payment in full of this Note, shall issue and sell securities
      (the
“Next
      Securities”)
      to
      investors for aggregate proceeds of at least $3,000,000 to the Company and
      at a
      price not less than $0.15 per share (a “$3M
      Financing”),
      then
      the outstanding face amount in excess of consideration paid (“Premium Amount”)
      of this Note and all accrued but unpaid interest thereon shall automatically
      be
      converted at the closing of the Next Securities, into Common Stock at a
      conversion price equal to the conversion price defined in Section
      6(a)(i).
      In the
      event that the Company, at any time after the date of issuance of this Note
      and
      prior to the payment in full of this Note, shall issue and sell securities
      Next
      Securities
      to
      investors for aggregate proceeds of at least $6,000,000 to the Company and
      at a
      price not less than $0.15 per share (a “$6M
      Financing”),
      then
      the principal amount and all accrued but unpaid interest thereon shall
      automatically be converted at the closing of the Next Securities, into Common
      Stock at a conversion price equal to the conversion price defined in
Section
      6(a)(i).
      Each of
      a $3M financing and a $6M financing is defined a “Next
      Financing.” In
      connection with such conversion, Holder agrees to execute and deliver to the
      Company any documents reasonably requested by the Company. As soon as is
      reasonably practicable after a conversion has been effected, the Company shall
      deliver to Holder a certificate or certificates representing the number of
      shares of Common Stock issuable by reason of such conversion pursuant to this
      Section
      5
      in such
      name or names and such denomination or denominations as Holder has
      specified.”

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	3.  	
              Amendment
                to Note. 
                Section 6(a)(i) of each Note is hereby deleted and replaced by the
                following:

            

    

     

    “(i) In
      the
      event that (i) the Company elects to prepay this Note pursuant to Section 4(c)
      or (ii) the Holder elects to convert this Note, in each case, in whole or in
      part, at any time prior to the closing of a Next Financing, notice of such
      intention shall be delivered to the other party by registered mail at least
      ten
      (10) Business Days prior to such prepayment or conversion. Holder shall then
      have the right to convert all or any portion of the then outstanding principal
      amount of, and all accrued but unpaid interest on, this Note into shares of
      Common Stock at a conversion price per share equal to $0.25 per share as
      adjusted for any stock split, dividend or other distribution, recapitalization
      or similar event., upon Holder’s surrender to the Company of this Note at the
      principal office of the Company within three (3) Business Days of such notice.
      In the event that only a portion of this Note is being converted, the Company
      shall issue a replacement Note representing the remaining Principal Amount
      of
      the Note that has not been converted.”

     

    
      	4.  	
              Increase
                in Principal. The
                Company and the Purchasers acknowledge and agree that the extension
                of the
                Maturity Date pursuant to this Amendment shall be deemed an extension
                granted pursuant to Section 7(a)(i) of the Note and therefore the
                principal amount of each Note shall increase by
                7.143%.

            

    

     

    
      	5.  	
              Waiver.
                 The
                Purchasers hereby waive any and all Events of Default under any of
                the
                Note, the Agreements, or the certain Security, Collateral Agency
                and
                Collateral Sharing Agreement, dated as of August 21, 2007, by and
                among
                the Company and the Purchasers that may have occurred through the
                date
                hereof; provided, however, that that in no event shall such waiver
                apply
                to any future Events of Default.

            

    

     

    
      	6.  	
              No
                Other Amendment.
                Except as specifically amended by this Amendment, the Note shall
                continue
                in full force and effect. In the event of any conflict between the
                terms
                of this Amendment and the Note, the terms of this Amendment shall
                govern
                and control.

            

    

     

    
      	7.  	
              Governing
                Law. This
                Amendment shall be governed by and construed under the laws of the
                State
                of Virginia as applied to agreements among Virginia residents entered
                into
                and to be performed entirely within Virginia.

            

    

     

    
      	8.  	
              Counterparts.
                This Amendment may be executed in any number of counterparts, each
                of
                which shall be deemed an original, but all of which together shall
                constitute one and the same instrument.

            

    

     

    
      	9.  	
              Severability.
                If one or more provisions of this Amendment are held to be unenforceable
                under applicable law, such provision shall be excluded from this
                Amendment
                and the balance of the Amendment shall be interpreted as if such
                provision
                were so excluded and shall be enforceable in accordance with its
                terms.

            

    

     

    
      	10.  	
              Entire
                Agreement.
                This
                Amendment, together with the Notes, the Agreements and the agreements
                executed pursuant hereto and thereto, constitutes the full and entire
                understanding and agreement between the parties with regard to the
                subjects hereof and thereof.

            

    

     

     

    [Signature
      Page Follows]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    In
      Witness Whereof,
      the
      parties hereto have executed this Amendment as of the date first above
      written.

     

    
      	COMPANY:	 	 	 
	 	 	 	 	 
	CATCHER HOLDINGS,
              INC. 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	By:   	
            	 	 	
            
	 	
              
Denis
              McCarthy	 	 	
            
	 	
              Chief
                Financial Officer

            	 	 	
            

    

    
       

      
        	PURCHASER:	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	By:   	
              	 	 	
              
	 	
                

              	 	 	
              
	Its: 	
              	 	 	
              
	 	
                
  	 	 	 

      

       

    

    

    

    [Signature
      Page to Amendment to Convertible Secured Promissory Note]

    

    _______________________________________________Unassociated Document

    
       

      INNOVATIVE
        CARD TECHNOLOGIES, INC.

      

      2004
        Stock Incentive Plan

      (as
        amended December 21, 2007)

      

      ARTICLE
        ONE

      

      GENERAL
        PROVISIONS

      

      I.
        PURPOSE OF THE PLAN

      

      This
        2004
        Stock Incentive Plan is intended to promote the interests of Innovative Card
        Technologies, Inc. (the “Corporation”) by providing eligible persons with the
        opportunity to acquire a proprietary interest, or otherwise increase their
        proprietary interest, in the Corporation as an incentive for them to remain
        in
        the Service of the Corporation. Capitalized terms shall have the meanings
        assigned to them in the attached Appendix.

      

      II.
        STRUCTURE OF THE PLAN

      

      A.
        The
        Plan shall be divided into two separate equity programs: 

       

      
        
          	 	
                  -

                	
                  the
                    Discretionary Option Grant Program under which eligible persons
                    may, at
                    the discretion of the Plan Administrator, be granted options
                    to purchase
                    shares of Common Stock and stock appreciation rights;
                    and

                

        

        

        
          	 	
                  -

                	
                  the
                    Stock Issuance Program under which eligible persons may, at the
                    discretion
                    of the Plan Administrator, be issued shares of Common Stock directly,
                    either through the immediate purchase of such shares or as a
                    bonus for
                    services rendered the Corporation (or any Parent or
                    Subsidiary).

                

        

         

      

      B.
        The
        provisions of Articles One and Four shall apply to all equity programs under
        the
        Plan and shall govern the interests of all persons under the Plan.

      

      III.
        ADMINISTRATION OF THE PLAN

      

      A.
        The
        Plan shall be administered by the Board or one or more committees appointed
        by
        the Board, provided that (1) beginning with the Section 12 Registration Date,
        the Primary Committee shall have sole and exclusive authority to administer
        the
        Plan with respect to Section 16 Insiders, and (2) administration of the Plan
        may
        otherwise, at the Board’s discretion, be vested in the Primary Committee or a
        Secondary Committee. Beginning with the Section 12 Registration Date, any
        discretionary option grants or stock issuances to members of the Primary
        Committee must be authorized and approved by a disinterested majority of
        the
        Board.

      

      B.
        Members of the Primary Committee or any Secondary Committee shall serve for
        such
        period of time as the Board may determine and may be removed by the Board
        at any
        time. The Board may also at any time terminate the functions of any Secondary
        Committee and reassume all powers and authority previously delegated to such
        committee.

      

      C.
        Each
        Plan Administrator shall, within the scope of its administrative functions
        under
        the Plan, have full power and authority (subject to the provisions of the
        Plan)
        to establish such rules and regulations as it may deem appropriate for proper
        administration of the Discretionary Option Grant and Stock Issuance Programs
        and
        to make such determinations under, and issue such interpretations of, the
        provisions of such programs and any outstanding options or stock issuances
        thereunder as it may deem necessary or advisable. Decisions of the Plan
        Administrator within the scope of its administrative functions under the
        Plan
        shall be final and binding on all parties who have an interest in the
        Discretionary Option Grant and Stock Issuance Programs under its jurisdiction
        or
        any option or stock issuance thereunder.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      D.
        Service on the Primary Committee or the Secondary Committee shall constitute
        service as a Board member, and members of each such committee shall accordingly
        be entitled to full indemnification and reimbursement as Board members for
        their
        service on such committee. No member of the Primary Committee or the Secondary
        Committee shall be liable for any act or omission made in good faith with
        respect to the Plan or any option grants or stock issuances under the
        Plan.

      

      IV.
        ELIGIBILITY

      

      A.
        The
        persons eligible to participate in the Discretionary Option Grant and Stock
        Issuance Programs are as follows:

      

      (i)
        Employees,

      

      (ii)
        non-employee members of the Board or the board of directors of any Parent
        or
        Subsidiary, and

      

      (iii)
        consultants and other independent advisors who provide services to the
        Corporation (or any Parent or Subsidiary).

      

      B.
        Each
        Plan Administrator shall, within the scope of its administrative jurisdiction
        under the Plan, have full authority to determine: (i) with respect to the
        option
        grants or stock appreciation rights under the Discretionary Option Grant
        Program, which eligible persons are to receive grants, the time or times
        when
        such grants are to be made, the number of shares to be covered by each such
        grant, the status of a granted option as either an Incentive Option or a
        Non-Statutory Option, the time or times when each option is to become
        exercisable, the vesting schedule (if any) applicable to the option shares
        and
        the maximum term for which the option is to remain outstanding; and (ii)
        with
        respect to stock issuances under the Stock Issuance Program, which eligible
        persons are to receive stock issuances, the time or times when such issuances
        are to be made, the number of shares to be issued to each Participant, the
        vesting schedule (if any) applicable to the issued shares and the consideration
        for such shares.

      

      C.
        The
        Plan Administrator shall have the absolute discretion either to grant options
        or
        stock appreciation rights in accordance with the Discretionary Option Grant
        Program or to effect stock issuances in accordance with the Stock Issuance
        Program.

      

      V.
        STOCK
        SUBJECT TO THE PLAN

      

      A.
        The
        stock issuable under the Plan shall be shares of authorized but unissued
        or
        reacquired Common Stock, including shares repurchased by the Corporation
        on the
        open market. The maximum number of shares of Common Stock initially reserved
        for
        issuance over the term of the Plan shall not exceed 2,229,500
        shares.

      

      B.
        Shares
        of Common Stock subject to outstanding options shall be available for subsequent
        issuance under the Plan to the extent (i) those options expire or terminate
        for
        any reason prior to exercise in full or (ii) the options are cancelled in
        accordance with the cancellation-regrant provisions of Article Two. Unvested
        shares issued under the Plan and subsequently cancelled or repurchased by
        the
        Corporation at the original exercise or issue price paid per share, pursuant
        to
        the Corporation’s repurchase rights under the Plan, shall be added back to the
        number of shares of Common Stock reserved for issuance under the Plan and
        shall
        accordingly be available for reissuance through one or more subsequent option
        grants or direct stock issuances under the Plan. In addition, should the
        exercise price of an option under the Plan be paid with shares of Common
        Stock
        or should shares of Common Stock otherwise issuable under the Plan be withheld
        by the Corporation in satisfaction of the withholding taxes incurred in
        connection with the exercise of an option or the vesting of a stock issuance
        under the Plan, then the number of shares of Common Stock available for issuance
        under the Plan shall be reduced only by the net number of shares of Common
        Stock
        issued to the holder of such option or stock issuance, and not by the gross
        number of shares for which the option is exercised or which vest under the
        stock
        issuance. However, shares of Common Stock underlying one or more stock
        appreciation rights exercised under Section V of Article Two of the Plan
        shall
        not be available for subsequent issuance under the Plan.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      

      C.
        If any
        change is made to the Common Stock by reason of any stock split, stock dividend,
        recapitalization, combination of shares, exchange of shares or other change
        affecting the outstanding Common Stock as a class without the Corporation’s
        receipt of consideration, appropriate adjustments shall be made to: (i) the
        maximum number and/or class of securities issuable under the Plan; (ii) the
        number and/or class of securities for which any one person may be granted
        stock
        options and direct stock issuances under this Plan per calendar year; and
        (iii)
        the number and/or class of securities and the exercise price per share in
        effect
        under each outstanding option under the Plan. Such adjustments to the
        outstanding options are to be effected in a manner which shall preclude the
        enlargement or dilution of rights and benefits under such options. The
        adjustments determined by the Plan Administrator shall be final, binding
        and
        conclusive.

      

      ARTICLE
        TWO

      

      DISCRETIONARY
        OPTION GRANT PROGRAM

      

      I.
        OPTION
        TERMS

      

      Each
        option shall be evidenced by one or more documents in the form approved by
        the
        Plan Administrator; provided, however, that each such document shall comply
        with
        the terms specified below. Each document evidencing an Incentive Option shall,
        in addition, be subject to the provisions of the Plan applicable to such
        option.

      

      A.
        EXERCISE PRICE.

      

      1.
        The
        exercise price per share shall be fixed by the Plan Administrator but shall
        not
        be less than eighty-five percent (85%) of the Fair Market Value per share
        of
        Common Stock on the option grant date, except that the exercise price shall
        not
        be less than one hundred ten percent (110%) of the Fair Market Value per
        share
        of Common Stock on the option grant date in the case of any person who owns
        stock possessing more than ten percent (10%) of the total combined voting
        power
        of all classes of stock of the Corporation or its parent or subsidiary
        corporations.

      

      2.
        The
        exercise price shall become immediately due upon exercise of the option and
        may,
        subject to the provisions of Section I of Article Four and the documents
        evidencing the option, be payable in one or more of the forms specified
        below:

      

      (i)
        cash
        or check made payable to the Corporation, 

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      

      (ii)
        with
        respect to the exercise of options after the Section 12 Registration Date,
        shares of Common Stock held for the requisite period necessary to avoid a
        charge
        to the Corporation’s earnings for financial reporting purposes and valued at
        Fair Market Value on the Exercise Date, or 

       

      (iii)
        with respect to the exercise of options for vested shares after the Section
        12
        Registration Date and to the extent the sale complies with all applicable
        laws
        relating to the regulation and sale of securities, through a special sale
        and
        remittance procedure pursuant to which the Optionee shall concurrently provide
        irrevocable written instructions to: (a) a Corporation-designated brokerage
        firm
        to effect the immediate sale of the purchased shares and remit to the
        Corporation, out of the sale proceeds available on the settlement date,
        sufficient funds to cover the aggregate exercise price payable for the purchased
        shares plus all applicable Federal, state and local income and employment
        taxes
        required to be withheld by the Corporation by reason of such exercise; and
        (b)
        the Corporation to deliver the certificates for the purchased shares directly
        to
        such brokerage firm in order to complete the sale.

      

      Except
        to
        the extent such sale and remittance procedure is utilized, payment of the
        exercise price for the purchased shares must be made on the Exercise
        Date.

      

      B.
        EXERCISE AND TERM OF OPTIONS. Each option shall be exercisable at such time
        or
        times, during such period and for such number of shares as shall be determined
        by the Plan Administrator and set forth in the documents evidencing the option.
        However, no option shall have a term in excess of ten (10) years measured
        from
        the option grant date.

      

      C.
        EFFECT
        OF TERMINATION OF SERVICE.

      

      1.
        The
        following provisions shall govern the exercise of any options held by the
        Optionee at the time of cessation of Service or death: 

       

      (i)
        Any
        option outstanding at the time of the Optionee’s cessation of Service for any
        reason shall remain exercisable for such period of time thereafter as shall
        be
        determined by the Plan Administrator and set forth in the documents evidencing
        the option.

      

      (ii)
        Any
        option held by the Optionee at the time of death and exercisable in whole
        or in
        part at that time may be subsequently exercised by the personal representative
        of the Optionee’s estate or by the person or persons to whom the option is
        transferred pursuant to the Optionee’s will or in accordance with the laws of
        descent and distribution of by the Optionee’s designated beneficiary or
        beneficiaries of that option.

      

      (iii)
        Should the Optionee’s Service be terminated for Misconduct or should the
        Optionee otherwise engage in Misconduct while holding one or more outstanding
        options under this Article Two, then all those options shall terminate
        immediately and cease to be outstanding.

      

      (iv)
        During the applicable post-Service exercise period, the option may not be
        exercised in the aggregate for more than the number of vested shares for
        which
        the option is exercisable on the date of the Optionee’s cessation of Service.
        Upon the expiration of the applicable exercise period or (if earlier) upon
        the
        expiration of the option term, the option shall terminate and cease to be
        outstanding for any vested shares for which the option has not been exercised.
        However, the option shall, immediately upon the Optionee’s cessation of Service,
        terminate and cease to be outstanding to the extent the option is not otherwise
        at that time exercisable for vested shares.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      

      2.
        The
        Plan Administrator shall have complete discretion, either at the time an
        option
        is granted or at any time while the option remains outstanding, to:

      

      (i)
        extend the period of time for which the option is to remain exercisable
        following the Optionee’s cessation of Service from the limited exercise period
        otherwise in effect for that option to such greater period of time as the
        Plan
        Administrator shall deem appropriate, but in no event beyond the expiration
        of
        the option term, and/or

      

      (ii)
        permit the option to be exercised, during the applicable post-Service exercise
        period, not only with respect to the number of vested shares of Common Stock
        for
        which such option is exercisable at the time of the Optionee’s cessation of
        Service but also with respect to one or more additional installments in which
        the Optionee would have vested had the Optionee continued in
        Service.

      

      D.
        NO
        STOCKHOLDER RIGHTS. The holder of an option shall have no stockholder rights
        with respect to the shares subject to the option until such person shall
        have
        exercised the option, paid the exercise price and become a holder of record
        of
        the purchased shares.

      

      E.
        REPURCHASE RIGHTS. The Plan Administrator shall have the discretion to grant
        options which are exercisable for unvested shares of Common Stock. Should
        the
        Optionee cease Service while holding such unvested shares, the Corporation
        shall
        have the right to repurchase, at the exercise price paid per share, any or
        all
        of those unvested shares. The terms upon which such repurchase right shall
        be
        exercisable (including the period and procedure for exercise and the appropriate
        vesting schedule for the purchased shares) shall be established by the Plan
        Administrator and set forth in the document evidencing such repurchase
        right.

      

      F.
        LIMITED TRANSFERABILITY OF OPTIONS. During the lifetime of the Optionee,
        Incentive Options shall be exercisable only by the Optionee and shall not
        be
        assignable or transferable other than by will or by the laws of descent and
        distribution following the Optionee’s death. Non-Statutory Options shall be
        subject to the same limitation, except that a Non-Statutory Option may be
        assigned in whole or in part during Optionee’s lifetime to one or more members
        of the Optionee’s Immediate Family or to a trust established for the exclusive
        benefit of one or more family members or the Optionee’s former spouse, to the
        extent such assignment is in connection with Optionee’s estate plan or pursuant
        to a domestic relations order. The assigned portion shall be exercisable
        only by
        the person or persons who acquire a proprietary interest in the option pursuant
        to such assignment. The terms applicable to the assigned portion shall be
        the
        same as those in effect for this option immediately prior to such assignment
        and
        shall be set forth in such documents issued to the assignee as the Plan
        Administrator may deem appropriate. Notwithstanding the foregoing, the Optionee
        may also designate one or more persons as the beneficiary or beneficiaries
        of
        his or her outstanding options under this Article Two, and those options
        shall,
        in accordance with such designation, automatically be transferred to such
        beneficiary or beneficiaries upon the Optionee’s death while holding those
        options. Such beneficiary or beneficiaries shall take the transferred option
        subject to all the terms and conditions of this Agreement, including (without
        limitation) the limited time period during which the option may be exercised
        following the Optionee’s death.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      

      II.
        INCENTIVE OPTIONS

      

      The
        terms
        specified below shall be applicable to all Incentive Options. Except as modified
        by the provisions of this Section II, all the provisions of Articles One,
        Two
        and Four shall be applicable to Incentive Options. Options which are
        specifically designated as Non-Statutory Options when issued under the Plan
        shall NOT be subject to the terms of this Section II. 

      

      A.
        ELIGIBILITY. Incentive Options may only be granted to Employees. 

      

      B.
        EXERCISE PRICE. The exercise price per share shall not be less than one hundred
        percent (100%) of the Fair Market Value per share of Common Stock on the
        option
        grant date.

      

      C.
        DOLLAR
        LIMITATION. The aggregate Fair Market Value of the shares of Common Stock
        (determined as of the respective date or dates of grant) for which one or
        more
        options granted to any Employee under the Plan (or any other option plan
        of the
        Corporation or any Parent or Subsidiary) may for the first time become
        exercisable as Incentive Options during any one calendar year shall not exceed
        the sum of One Hundred Thousand Dollars ($100,000). To the extent the Employee
        holds two (2) or more such options which become exercisable for the first
        time
        in the same calendar year, the foregoing limitation on the exercisability
        of
        such options as Incentive Options shall be applied on the basis of the order
        in
        which such options are granted.

      

      D.
        FAILURE TO QUALIFY AS INCENTIVE OPTION. To the extent that any option governed
        by this Plan does not qualify as an Incentive Option by reason of the dollar
        limitation described in Section II.C of Article Two or for any other reason,
        such option shall be exercisable as a Non-Statutory Option under the Federal
        tax
        laws.

      

      E.
        10%
        STOCKHOLDER. If any Employee to whom an Incentive Option is granted is a
        10%
        Stockholder, then the exercise price per share shall not be less than one
        hundred ten percent (110%) of the Fair Market Value per share of Common Stock
        on
        the option grant date, and the option term shall not exceed five (5) years
        measured from the option grant date.

      

      III.
        CANCELLATION AND REGRANT OF OPTIONS

      

      The
        Plan
        Administrator shall have the authority to effect, at any time and from time
        to
        time, with the consent of the affected option holders, the cancellation of
        any
        or all outstanding options under the Discretionary Option Grant Program and
        to
        grant in substitution new options covering the same or different number of
        shares of Common Stock but with an exercise price per share based on the
        Fair
        Market Value per share of Common Stock on the new grant date. 

      

      IV.
        CHANGE IN CONTROL/HOSTILE TAKE-OVER

      

      A.
        No
        option outstanding at the time of a Change in Control shall become exercisable
        on an accelerated basis if and to the extent: (i) that option is, in connection
        with the Change in Control, assumed by the successor corporation (or parent
        thereof) or otherwise continued in full force and effect pursuant to the
        terms
        of the Change in Control transaction, (ii) such option is replaced with a
        cash
        incentive program of the successor corporation which preserves the spread
        existing at the time of the Change in Control on the shares of Common Stock
        for
        which the option is not otherwise at that time exercisable and provides for
        subsequent payout in accordance with the same exercise/vesting schedule
        applicable to those option shares or (iii) the acceleration of such option
        is
        subject to other limitations imposed by the Plan Administrator at the time
        of
        the option grant. However, if none of the foregoing conditions are satisfied,
        then each option outstanding at the time of the Change in Control but not
        otherwise exercisable for all the shares of Common Stock at that time subject
        to
        such option shall automatically accelerate so that each such option shall,
        immediately prior to the effective date of the Change in Control, become
        exercisable for all the shares of Common Stock at the time subject to such
        option and may be exercised for any or all of those shares as fully vested
        shares of Common Stock.

       

      
        
          
          

        

        
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      B.
        All of
        the Corporation’s outstanding repurchase rights under the Discretionary Option
        Grant Program shall also terminate automatically, and the shares of Common
        Stock
        subject to those terminated rights shall immediately vest in full, in the
        event
        of any Change in Control, except to the extent: (i) those repurchase rights
        are
        assigned to the successor corporation (or parent thereof) or otherwise continued
        in full force and effect pursuant to the terms of the Change in Control
        transaction or (ii) such accelerated vesting is precluded by other limitations
        imposed by the Plan Administrator at the time the repurchase right is
        issued.

      

      C.
        Immediately following the consummation of the Change in Control, all outstanding
        options shall terminate and cease to be outstanding, except to the extent
        assumed by the successor corporation (or parent thereof) or otherwise expressly
        continued in full force and effect pursuant to the terms of the Change in
        Control transaction.

      

      D.
        Each
        option which is assumed in connection with a Change in Control or otherwise
        continued in effect shall be appropriately adjusted, immediately after such
        Change in Control, to apply to the number and class of securities which would
        have been issuable to the Optionee in consummation of such Change in Control
        had
        the option been exercised immediately prior to such Change in Control.
        Appropriate adjustments to reflect such Change in Control shall also be made
        to:
        (i) the exercise price payable per share under each outstanding option, provided
        the aggregate exercise price payable for such securities shall remain the
        same;
        (ii) the maximum number and/or class of securities available for issuance
        over
        the remaining term of the Plan; and (iii) the maximum number and/or class
        of
        securities for which any one person may be granted options, separately
        exercisable stock appreciation rights and direct stock issuances or share
        right
        awards under the Plan per calendar year. To the extent the actual holders
        of the
        Corporation’s outstanding Common Stock receive cash consideration for their
        Common Stock in consummation of the Change in Control transaction, the successor
        corporation may, in connection with the assumption of the outstanding options
        under the Discretionary Option Grant Program, substitute one or more shares
        of
        its own common stock with a fair market value equivalent to the cash
        consideration paid per share of Common Stock in such Change in Control
        transaction.

      

      E.
        The
        Plan Administrator shall have the discretionary authority to structure one
        or
        more outstanding options under the Discretionary Option Grant Program so
        that
        those options shall, immediately prior to the effective date of a Change
        in
        Control, become exercisable for all the shares of Common Stock at that time
        subject to such options on an accelerated basis and may be exercised for
        any or
        all of such shares as fully vested shares of Common Stock, whether or not
        those
        options are to be assumed or otherwise continued in full force and effect
        pursuant to the express terms of the Change in Control transaction. In addition,
        the Plan Administrator shall have the discretionary authority to structure
        one
        or more of the Corporation’s repurchase rights under the Discretionary Option
        Grant Program so that those rights shall immediately terminate at the time
        of
        such Change in Control and shall not be assignable to the successor corporation
        (or parent thereof), and the shares subject to those terminated rights shall
        accordingly vest in full at the time of such Change in Control.

      

      F.
        The
        Plan Administrator shall have full power and authority to structure one or
        more
        outstanding options under the Discretionary Option Grant Program so that
        those
        options shall vest and become exercisable for all the shares of Common Stock
        at
        that time subject to such options on an accelerated basis in the event the
        Optionee’s Service is subsequently terminated by reason of an Involuntary
        Termination within a designated period (not to exceed eighteen (18) months)
        following the effective date of any Change in Control in which those options
        do
        not otherwise accelerate. Any options so accelerated shall remain exercisable
        for fully vested shares of Common Stock until the expiration or sooner
        termination of the option term. In addition, the Plan Administrator may
        structure one or more of the Corporation’s repurchase rights under the
        Discretionary Option Grant Program so that those rights shall immediately
        terminate with respect to any shares of Common Stock held by the Optionee
        at the
        time of his or her Involuntary Termination, and the shares subject to those
        terminated repurchase rights shall accordingly vest in full at that time.
        

       

      
        
          
          

        

        
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      G.
        The
        Plan Administrator shall have the discretionary authority to structure one
        or
        more outstanding options under the Discretionary Option Grant Program so
        that
        those options shall, immediately prior to the effective date of a Hostile
        Take-Over, vest and become exercisable for all the shares of Common Stock
        at
        that time subject to such options on an accelerated basis and may be exercised
        for any or all of such shares as fully vested shares of Common Stock. In
        addition, the Plan Administrator shall have the discretionary authority to
        structure one or more of the Corporation’s repurchase rights under the
        Discretionary Option Grant Program so that those rights shall terminate
        automatically upon the consummation of such Hostile Take-Over, and the shares
        subject to those terminated rights shall thereupon immediately vest in full.
        Alternatively, the Plan Administrator may condition the automatic acceleration
        of one or more outstanding options under the Discretionary Option Grant Program
        and the termination of one or more of the Corporation’s outstanding repurchase
        rights under such program upon the Involuntary Termination of the Optionee’s
        Service within a designated period (not to exceed eighteen (18) months)
        following the effective date of such Hostile Take-Over. Each option so
        accelerated shall remain exercisable for fully vested shares of Common Stock
        until the expiration or sooner termination of the option term. 

      

      H.
        The
        portion of any Incentive Option accelerated in connection with a Change in
        Control or Hostile Take-Over shall remain exercisable as an Incentive Option
        only to the extent the applicable One Hundred Thousand Dollar ($100,000)
        limitation is not exceeded. To the extent such dollar limitation is exceeded,
        the accelerated portion of such option shall be exercisable as a Non-Statutory
        Option under the Federal tax laws.

      

      I.
        The
        grant of options under the Discretionary Option Grant Program shall in no
        way
        affect the right of the Corporation to adjust, reclassify, reorganize or
        otherwise change its capital or business structure or to merge, consolidate,
        dissolve, liquidate or sell or transfer all or any part of its business or
        assets.

      

      V.
        STOCK
        APPRECIATION RIGHTS

      

      The
        Plan
        Administrator may, subject to such conditions as it may determine, grant
        to
        selected Optionee’s stock appreciation rights which will allow the holders of
        those rights to elect between the exercise of the underlying option for shares
        of Common Stock and the surrender of that option in exchange for a distribution
        from the Corporation in an amount equal to the excess of: (A) the Option
        Surrender Value of the number of shares for which the option is surrendered;
        over (B) the aggregate exercise price payable for such shares. The distribution
        may be made in shares of Common Stock valued at Fair Market Value on the
        option
        surrender date, in cash, or partly in shares and partly in cash, as the Plan
        Administrator shall in its sole discretion deem appropriate.

       

      
        
          
          

        

        
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      ARTICLE
        THREE

      

      STOCK
        ISSUANCE PROGRAM

      

      I.
        STOCK
        ISSUANCES

      

      Shares
        of
        Common Stock may be issued under the Stock Issuance Program through direct
        and
        immediate issuances without any intervening option grants. Each such stock
        issuance shall be evidenced by a Stock Issuance Agreement which complies
        with
        the terms specified below.

      

      II.
        STOCK
        ISSUANCE TERMS

      

      A.
        PURCHASE PRICE.

      

      1.
        The
        purchase price per share shall be fixed by the Plan Administrator, but shall
        not
        be less than eighty-five percent (85%) of the Fair Market Value per share
        of
        Common Stock on the issuance date, except that the exercise price shall not
        be
        less than one hundred percent (100%) of the Fair Market Value per share of
        Common Stock on the issuance date in the case of any person who owns stock
        possessing more than ten percent (10%) of the total combined voting power
        of all
        classes of stock of the Corporation or its parent or subsidiary
        corporations.

      

      2.
        Subject to the provisions of Section I of Article Four, shares of Common
        Stock
        may be issued under the Stock Issuance Program for any of the following items
        of
        consideration which the Plan Administrator may deem appropriate in each
        individual instance:

      

        (i)
          cash
          or check made payable to the Corporation, or 

        

        (ii)
          past
          services rendered to the Corporation (or any Parent or
          Subsidiary).

      

       

      B.
        VESTING PROVISIONS.

      

      1.
        Shares
        of Common Stock issued under the Stock Issuance Program may, in the discretion
        of the Plan Administrator, be fully and immediately vested upon issuance
        or may
        vest in one or more installments over the Participant’s period of Service or
        upon attainment of specified performance objectives. The elements of the
        vesting
        schedule applicable to any unvested shares of Common Stock issued under the
        Stock Issuance Program shall be determined by the Plan Administrator and
        incorporated into the Stock Issuance Agreement. Shares of Common Stock may
        also
        be issued under the Stock Issuance Program pursuant to share right awards
        which
        entitle the recipients to receive those shares upon the attainment of designated
        performance goals. Upon the attainment of such performance goals, fully vested
        shares of Common Stock shall be issued upon satisfaction of those share right
        awards.

      

      2.
        Any
        new, substituted or additional securities or other property (including money
        paid other than as a regular cash dividend) which the Participant may have
        the
        right to receive with respect to the Participant’s unvested shares of Common
        Stock by reason of any stock dividend, stock split, recapitalization,
        combination of shares, exchange of shares or other change affecting the
        outstanding Common Stock as a class without the Corporation’s receipt of
        consideration shall be issued subject to: (i) the same vesting requirements
        applicable to the Participant’s unvested shares of Common Stock; and (ii) such
        escrow arrangements as the Plan Administrator shall deem
        appropriate.

      

      3.
        The
        Participant shall have full stockholder rights with respect to any shares
        of
        Common Stock issued to the Participant under the Stock Issuance Program,
        whether
        or not the Participant’s interest in those shares is vested. Accordingly, the
        Participant shall have the right to vote such shares and to receive any regular
        cash dividends paid on such shares.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      

      4.
        Should
        the Participant cease to remain in Service while holding one or more unvested
        shares of Common Stock issued under the Stock Issuance Program or should
        the
        performance objectives not be attained with respect to one or more such unvested
        shares of Common Stock, then those shares shall be immediately surrendered
        to
        the Corporation for cancellation, and the Participant shall have no further
        stockholder rights with respect to those shares. To the extent the surrendered
        shares were previously issued to the Participant for consideration paid in
        cash
        or cash equivalent (including the Participant’s purchase-money indebtedness),
        the Corporation shall repay to the Participant the cash consideration paid
        for
        the surrendered shares and shall cancel the unpaid principal balance of any
        outstanding purchase-money note of the Participant attributable to the
        surrendered shares.

      

      5.
        The
        Plan Administrator may in its discretion waive the surrender and cancellation
        of
        one or more unvested shares of Common Stock which would otherwise occur upon
        the
        cessation of the Participant’s Service or the non-attainment of the performance
        objectives applicable to those shares. Such waiver shall result in the immediate
        vesting of the Participant’s interest in the shares as to which the waiver
        applies. Such waiver may be effected at any time, whether before or after
        the
        Participant’s cessation of Service or the attainment or non-attainment of the
        applicable performance objectives. 

      

      6.
        Outstanding share right awards under the Stock Issuance Program shall
        automatically terminate, and no shares of Common Stock shall actually be
        issued
        in satisfaction of those awards, if the performance goals or Service
        requirements established for such awards are not attained. The Plan
        Administrator, however, shall have the discretionary authority to issue shares
        of Common Stock under one or more outstanding share right awards as to which
        the
        designated performance goals or Service requirements have not been attained.
        

      

      III.
        CHANGE IN CONTROL/HOSTILE TAKE-OVER

      

      A.
        All of
        the Corporation’s outstanding repurchase rights under the Stock Issuance Program
        shall terminate automatically, and all the shares of Common Stock subject
        to
        those terminated rights shall immediately vest in full, in the event of any
        Change in Control, except to the extent (i) those repurchase rights are assigned
        to the successor corporation (or parent thereof) or otherwise continued in
        full
        force and effect pursuant to the express terms of the Change in Control
        transaction or (ii) such accelerated vesting is precluded by other limitations
        imposed in the Stock Issuance Agreement.

      

      B.
        The
        Plan Administrator shall have the discretionary authority to structure one
        or
        more of the Corporation’s repurchase rights under the Stock Issuance Program so
        that those rights shall automatically terminate in whole or in part upon
        the
        occurrence of a Change in Control and shall not be assignable to the successor
        corporation (or parent thereof), and the shares of Common Stock subject to
        those
        terminated rights shall immediately vest in full at the time of such Change
        in
        Control.

      

      C.
        The
        Plan Administrator shall also have the discretionary authority to structure
        one
        or more of the Corporation’s repurchase rights under the Stock Issuance Program
        so that those rights shall automatically terminate in whole or in part, and
        the
        shares of Common Stock subject to those terminated rights shall immediately
        vest
        in full, upon the Involuntary Termination of the Participant’s Service within a
        designated period (not to exceed eighteen (18) months) following the effective
        date of any Change in Control in which those repurchase rights do not otherwise
        terminate.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      

      D.
        The
        Plan Administrator shall also have the discretionary authority to structure
        one
        or more of the Corporation’s repurchase rights under the Stock Issuance Program
        so that those rights shall automatically terminate in whole or in part upon
        the
        occurrence of a Hostile Take-Over, and the shares of Common Stock subject
        to
        those terminated rights shall immediately vest in full at the time of such
        Hostile Take-Over.

      

      ARTICLE
        FOUR

      

      MISCELLANEOUS

      

      I.
        FINANCING

      

      The
        Plan
        Administrator may permit any Optionee or Participant to pay the option exercise
        price under the Discretionary Option Grant Program or the purchase price
        of
        shares issued under the Stock Issuance Program by delivering a full-recourse,
        interest bearing promissory note payable in one or more installments. The
        terms
        of any such promissory note (including the interest rate and the terms of
        repayment) shall be established by the Plan Administrator in its sole
        discretion. In no event may the maximum credit available to the Optionee
        or
        Participant exceed the sum of (i) the aggregate option exercise price or
        purchase price payable for the purchased shares plus (ii) any Federal, state
        and
        local income and employment tax liability incurred by the Optionee or the
        Participant in connection with the option exercise or share purchase.

      

      II.
        SHARE
        ESCROW/LEGENDS

      

      Unvested
        shares issued under the Plan may, in the Plan Administrator’s discretion, be
        held in escrow by the Corporation until the Participant’s interest in such
        shares vests or may be issued directly to the Participant with restrictive
        legends on the certificates evidencing those unvested shares. 

       

      III.
        VESTING

      

      Notwithstanding
        any other provision of this Plan, the vesting schedule imposed with respect
        to
        any option grant, share issuance or the lapse of any repurchase right shall
        not
        result in the Optionee or Participant vesting or a repurchase right lapsing
        at a
        rate of less than 20% per year for five years from the date of the option
        grant
        or share issuance.

      

      IV.
        TAX
        WITHHOLDING

      

      A.
        The
        Corporation’s obligation to deliver shares of Common Stock upon the exercise of
        options or the issuance or vesting of such shares under the Plan shall be
        subject to the satisfaction of all applicable Federal, state and local income
        and employment tax withholding requirements.

      

      B.
        The
        Plan Administrator may, in its discretion, provide any or all holders of
        Non-Statutory Options or unvested shares of Common Stock under the Plan with
        the
        right to use shares of Common Stock in satisfaction of all or part of the
        Taxes
        incurred by such holders in connection with the exercise of their options
        or the
        vesting of their shares. Such right may be provided to any such holder in
        either
        or both of the following formats:

      

      1.
        Stock
        Withholding: The election to have the Corporation withhold, from the shares
        of
        Common Stock otherwise issuable upon the exercise of such Non-Statutory Option
        or the vesting of such shares, a portion of those shares with an aggregate
        Fair
        Market Value equal to the amount of the Taxes (not to exceed one hundred
        percent
        (100%) of such Taxes) to be satisfied in such manner as designated by the
        holder
        in writing; or

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

      

      2.
        Stock
        Delivery: The election to deliver to the Corporation, at the time the
        Non-Statutory Option is exercised or the shares vest, one or more shares
        of
        Common Stock previously acquired by such holder (other than in connection
        with
        the option exercise or share vesting triggering the Taxes) with an aggregate
        Fair Market Value equal to the amount of the Taxes (not to exceed one hundred
        percent (100%) of such Taxes) to be satisfied in such manner as designated
        by
        the holder in writing.

      

      V.
        EFFECTIVE DATE AND TERM OF THE PLAN

      

      A.
        The
        Plan shall become effective immediately upon the Plan Effective Date. Options
        may be granted under the Discretionary Option Grant at any time on or after
        the
        Plan Effective Date. However, no options granted under the Plan may be
        exercised, and no shares shall be issued under the Plan, until the Plan is
        approved by the Corporation’s stockholders. If such stockholder approval is not
        obtained within twelve (12) months after the Plan Effective Date, then all
        options previously granted under this Plan shall terminate and cease to be
        outstanding, and no further options shall be granted and no shares shall
        be
        issued under the Plan.

      

      B.
        The
        Plan shall terminate upon the EARLIEST of (i) the tenth anniversary of the
        Plan
        Effective Date, (ii) the date on which all shares available for issuance
        under
        the Plan shall have been issued as fully-vested shares or (iii) the termination
        of all outstanding options in connection with a Change in Control. Upon such
        plan termination, all outstanding option grants and unvested stock issuances
        shall thereafter continue to have force and effect in accordance with the
        provisions of the documents evidencing such grants or issuances. 

      

      VI.
        AMENDMENT OF THE PLAN

      

      A.
        The
        Board shall have complete and exclusive power and authority to amend or modify
        the Plan in any or all respects. However, no such amendment or modification
        shall adversely affect the rights and obligations with respect to stock options
        or unvested stock issuances at the time outstanding under the Plan unless
        the
        Optionee or the Participant consents to such amendment or modification. In
        addition, certain amendments may require stockholder approval pursuant to
        applicable laws or regulations.

      

      B.
        Options to purchase shares of Common Stock may be granted under the
        Discretionary Option Grant Program and shares of Common Stock may be issued
        under the Stock Issuance Program that are in each instance in excess of the
        number of shares then available for issuance under the Plan, provided any
        excess
        shares actually issued under those programs shall be held in escrow until
        there
        is obtained any required approval of an amendment sufficiently increasing
        the
        number of shares of Common Stock available for issuance under the Plan. If
        such
        approval is not obtained within twelve (12) months after the date the first
        such
        excess issuances are made, then (i) any unexercised options granted on the
        basis
        of such excess shares shall terminate and cease to be outstanding and (ii)
        the
        Corporation shall promptly refund to the Optionees and the Participants the
        exercise or purchase price paid for any excess shares issued under the Plan
        and
        held in escrow, together with interest (at the applicable Short Term Federal
        Rate) for the period the shares were held in escrow, and such shares shall
        thereupon be automatically cancelled and cease to be outstanding. 

      

      VII.
        USE
        OF PROCEEDS

      

      Any
        cash
        proceeds received by the Corporation from the sale of shares of Common Stock
        under the Plan shall be used for general corporate purposes. 

       

      
        
          
          

        

        
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      VIII.
        REGULATORY APPROVALS

      

      A.
        The
        implementation of the Plan, the granting of any stock option under the Plan
        and
        the issuance of any shares of Common Stock (i) upon the exercise of any granted
        option or (ii) under the Stock Issuance Program shall be subject to the
        Corporation’s procurement of all approvals and permits required by regulatory
        authorities having jurisdiction over the Plan, the stock options granted
        under
        it and the shares of Common Stock issued pursuant to it. 

      

      B.
        No
        shares of Common Stock or other assets shall be issued or delivered under
        the
        Plan unless and until there shall have been compliance with all applicable
        requirements of Federal and state securities laws, including the filing and
        effectiveness of the Form S-8 registration statement for the shares of Common
        Stock issuable under the Plan, and all applicable listing requirements of
        any
        Stock Exchange (or a Nasdaq market or the Over-the-Counter Bulletin Board,
        as
        applicable) on which Common Stock is then listed for trading. 

      

      IX.
        NO
        EMPLOYMENT/SERVICE RIGHTS

      

      Nothing
        in the Plan shall confer upon the Optionee or the Participant any right to
        continue in Service for any period of specific duration or interfere with
        or
        otherwise restrict in any way the rights of the Corporation (or any Parent
        or
        Subsidiary employing or retaining such person) or of the Optionee or the
        Participant, which rights are hereby expressly reserved by each, to terminate
        such person’s Service at any time for any reason, with or without
        cause.

      

      X.
        FINANCIAL REPORTS

      

      The
        Corporation shall deliver a balance and an income statement at least annually
        to
        each individual holding an outstanding option under the Plan, unless such
        individual is a key Employee whose duties in connection with the Corporation
        (or
        any Parent or Subsidiary) assure such individual access to equivalent
        information.

      

      

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      APPENDIX

      

      The
        following definitions shall be in effect under the Plan: 

      

      A.
        BOARD
        shall mean the Corporation’s Board of Directors. 

      

      B.
        CHANGE
        IN CONTROL shall mean a change in ownership or control of the Corporation
        effected through any of the following transactions: 

      

      (i)
        a
        stockholder-approved merger or consolidation in which securities possessing
        more
        than fifty percent (50%) of the total combined voting power of the Corporation’s
        outstanding securities are transferred to a person or persons different from
        the
        persons holding those securities immediately prior to such
        transaction;

      

      (ii)
        a
        sale, transfer or other disposition of all or substantially all of the
        Corporation’s assets; or

      

      (iii)
        the
        acquisition, directly or indirectly by any person or related group of persons
        (other than the Corporation or a person that directly or indirectly controls,
        is
        controlled by, or is under common control with, the Corporation), of beneficial
        ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities
        possessing more than fifty percent (50%) of the total combined voting power
        of
        the Corporation’s outstanding securities pursuant to a tender or exchange offer
        made directly to the Corporation’s stockholders which the Board recommends such
        stockholders accept.

      

      C.
        CODE
        shall mean the Internal Revenue Code of 1986, as amended. 

      

      D.
        COMMON
        STOCK shall mean the Corporation’s common stock. 

      

      E.
        CORPORATION shall mean Innovative Card Technologies, Inc., a Delaware
        corporation, and its successors.

      

      F.
        DISCRETIONARY OPTION GRANT PROGRAM shall mean the discretionary option grant
        program in effect under the Plan.

      

      G.
        EMPLOYEE shall mean an individual who is in the employ of the Corporation
        (or
        any Parent or Subsidiary), subject to the control and direction of the employer
        entity as to both the work to be performed and the manner and method of
        performance.

      

      H.
        EXERCISE DATE shall mean the date on which the Corporation shall have received
        written notice of the option exercise.

      

      I.
        FAIR
        MARKET VALUE per share of Common Stock on any relevant date shall be determined
        in accordance with the following provisions:

      

      (i)
        If
        the Common Stock is at the time traded on any Nasdaq market, national quotation
        system, or bulletin board, then the Fair Market Value shall be deemed equal
        to
        the closing selling price per share of Common Stock on the date in question,
        as
        such price is reported on thereon. If there is no closing selling price for
        the
        Common Stock on the date in question, then the Fair Market Value shall be
        the
        closing selling price on the last preceding date for which such quotation
        exists.

       

      
        
          
          

        

        
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      (ii)
        If
        the Common Stock is at the time listed on any Stock Exchange, then the Fair
        Market Value shall be deemed equal to the closing selling price per share
        of
        Common Stock on the date in question on the Stock Exchange determined by
        the
        Plan Administrator to be the primary market for the Common Stock, as such
        price
        is officially quoted in the composite tape of transactions on such exchange.
        If
        there is no closing selling price for the Common Stock on the date in question,
        then the Fair Market Value shall be the closing selling price on the last
        preceding date for which such quotation exists.

      

      (iii)
        If
        the Common Stock can not be determined pursuant to the foregoing sections,
        then
        the Fair Market Value shall be determined by the Plan Administrator after
        taking
        into account such factors as the Plan Administrator shall deem
        appropriate.

      

      J.
        HOSTILE TAKE-OVER shall mean:

      

      (i)
        the
        acquisition, directly or indirectly, by any person or related group of persons
        (other than the Corporation or a person that directly or indirectly controls,
        is
        controlled by, or is under common control with, the Corporation) of beneficial
        ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities
        possessing more than fifty percent (50%) of the total combined voting power
        of
        the Corporation’s outstanding securities pursuant to a tender or exchange offer
        made directly to the Corporation’s stockholders which the Board does not
        recommend such stockholders to accept; or 

      

      (ii)
        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 the Board approved
        such election or nomination. 

      

      K.
        IMMEDIATE FAMILY shall mean any child, stepchild, grandchild, parent,
        stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
        son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and shall
        include
        adoptive relationships.

      

      L.
        INCENTIVE OPTION shall mean an option which satisfies the requirements of
        Code
        Section 422.

      

      M.
        INVOLUNTARY TERMINATION shall mean the termination of the Service of any
        individual which occurs by reason of:

      

      (i)
        such
        individual’s involuntary dismissal or discharge by the Corporation for reasons
        other than Misconduct, or

      

      (ii)
        such
        individual’s voluntary resignation following (A) a change in his or her position
        with the Corporation which materially reduces his or her level of
        responsibility, (B) a reduction in his or her level of compensation (including
        base salary, fringe benefits and participation in any corporate-performance
        based bonus or incentive programs) by more than fifteen percent (15%) or
        (C) a
        relocation of such individual’s place of employment by more than fifty (50)
        miles, provided and only if such change, reduction or relocation is effected
        by
        the Corporation without the individual’s consent. 

      

      N.
        MISCONDUCT shall mean the commission of any act of fraud, embezzlement or
        dishonesty by the Optionee or Participant, any unauthorized use or disclosure
        by
        such person of confidential information or trade secrets of the Corporation
        (or
        any Parent or Subsidiary), or any other intentional misconduct by such person
        adversely affecting the business or affairs of the Corporation (or any Parent
        or
        Subsidiary) in a material manner. The foregoing definition shall not be deemed
        to be inclusive of all the acts or omissions which the Corporation (or any
        Parent or Subsidiary) may consider as grounds for the dismissal or discharge
        of
        any Optionee, Participant or other person in the Service of the Corporation
        (or
        any Parent or Subsidiary).

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

      

      O.
        1934
        ACT shall mean the Securities Exchange Act of 1934, as amended. 

      

      P.
        NON-STATUTORY OPTION shall mean an option not intended to satisfy the
        requirements of Code Section 422.

      

      Q.
        OPTIONEE shall mean any person to whom an option is granted under the
        Discretionary Option Grant Program.

      

      R.
        OPTION
        SURRENDER VALUE shall mean the Fair Market Value per share of Common Stock
        on
        the date the option is surrendered to the Corporation or, in the event of
        a
        Hostile Take-Over, effected through a tender offer, the highest reported
        price
        per share of Common Stock paid by the tender offer or in effecting such Hostile
        Take-Over, if greater. However, if the surrendered option is an Incentive
        Option, the Option Surrender Value shall not exceed the Fair Market Value
        per
        share.

      

      S.
        PARENT
        shall mean any corporation (other than the Corporation) in an unbroken chain
        of
        corporations ending with the Corporation, provided each corporation in the
        unbroken chain (other than the Corporation) owns, at the time of the
        determination, stock possessing fifty percent (50%) or more of the total
        combined voting power of all classes of stock in one of the other corporations
        in such chain.

      

      T.
        PARTICIPANT shall mean any person who is issued shares of Common Stock under
        the
        Stock Issuance Program.

      

      U.
        PERMANENT DISABILITY OR PERMANENTLY DISABLED shall mean the inability of
        the
        Optionee or the Participant to engage in any substantial gainful activity
        by
        reason of any medically determinable physical or mental impairment which
        can be
        expected to result in death or has lasted or can be expected to last for
        a
        continuous period of twelve (12) months or more.

      

      V.
        PLAN
        shall mean the Corporation’s 2004 Stock Incentive Plan, as set forth in this
        document.

      

      W.
        PLAN
        ADMINISTRATOR shall mean the particular entity, whether the Primary Committee,
        the Board or the Secondary Committee, which is authorized to administer the
        Discretionary Option Grant and Stock Issuance Programs with respect to one
        or
        more classes of eligible persons, to the extent such entity is carrying out
        its
        administrative functions under those programs with respect to the persons
        under
        its jurisdiction.

      

      X.
        PLAN
        EFFECTIVE DATE shall mean the date on which the Plan was adopted by the
        Board.

      

      Y.
        PRIMARY COMMITTEE shall mean the committee of two (2) or more non-employee
        Board
        members appointed by the Board to administer the Discretionary Option Grant
        and
        Stock Issuance Programs with respect to Section 16 Insiders following the
        Section 12 Registration Date.

      

      Z.
        SECONDARY COMMITTEE shall mean a committee of two (2) or more Board members
        appointed by the Board to administer any aspect of Plan not required hereunder
        to be administered by the Primary Committee. The members of the Secondary
        Committee may be Board members who are Employees eligible to receive
        discretionary option grants or direct stock issuances under the Plan or any
        other stock option, stock appreciation, stock bonus or other stock plan of
        the
        Corporation (or any Parent or Subsidiary).

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

      

      AA.
        SECTION 12 REGISTRATION DATE shall mean the date on which the Common Stock
        is
        first registered under Section 12(g) or Section 15 of the 1934 Act.

      

      BB.
        SECTION 16 INSIDER shall mean an officer or director of the Corporation subject
        to the short-swing profit liabilities of Section 16 of the 1934
        Act.

      

      CC.
        SERVICE shall mean the performance of services for the Corporation (or any
        Parent or Subsidiary) by a person in the capacity of an Employee, a non-employee
        member of the board of directors or a consultant or independent advisor,
        except
        to the extent otherwise specifically provided in the documents evidencing
        the
        option grant or stock issuance.

      

      DD.
        SHORT
        TERM FEDERAL RATE shall mean the federal short-term rate in effect under
        Section
        1274(d) of the Code for the period the shares were held in escrow.

      

      EE.
        STOCK
        EXCHANGE shall mean either the American Stock Exchange or the New York Stock
        Exchange.

      

      FF.
        STOCK
        ISSUANCE AGREEMENT shall mean the agreement entered into by the Corporation
        and
        the Participant at the time of issuance of shares of Common Stock under the
        Stock Issuance Program.

      

      GG.
        STOCK
        ISSUANCE PROGRAM shall mean the stock issuance program in effect under the
        Plan.

      

      HH.
        SUBSIDIARY shall mean any corporation (other than the Corporation) in an
        unbroken chain of corporations beginning with the Corporation, provided each
        corporation (other than the last corporation) in the unbroken chain owns,
        at the
        time of the determination, stock possessing fifty percent (50%) or more of
        the
        total combined voting power of all classes of stock in one of the other
        corporations in such chain.

      

      II.
        TAXES
        shall mean the Federal, state and local income and employment tax liabilities
        incurred by the holder of Non-Statutory Options or unvested shares of Common
        Stock in connection with the exercise of those options or the vesting of
        those
        shares.

      

      JJ.
        10%
        STOCKHOLDER shall mean the owner of stock (as determined under Code Section
        424(d)) possessing more than ten percent (10%) of the total combined voting
        power of all classes of stock of the Corporation (or any Parent or
        Subsidiary).

       

      
        
          
          

        

        
          17

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