Document:

EXHIBIT
      B 

    

    REGISTRATION
      RIGHTS AGREEMENT

    

    This
      Registration Rights Agreement (this “Agreement”)
      is
      made and entered into as of April 15, 2008, between Innovative Card
      Technologies, Inc., a Delaware corporation (the “Company”)
      and
      each of the several purchasers signatory hereto (each such purchaser, a
“Purchaser”
and,
      collectively, the “Purchasers”).

    

    This
      Agreement is made pursuant to the Securities Purchase Agreement, dated as of
      the
      date hereof, between the Company and each Purchaser (the “Purchase
      Agreement”).

    

    The
      Company and each Purchaser hereby agrees as follows:

    

    1.
       Definitions

    

     Capitalized
      terms used and not otherwise defined herein that are defined in the Purchase
      Agreement shall have the meanings given such terms in the Purchase
      Agreement.
      As used
      in this Agreement, the following terms shall have the following
      meanings:

    

    “Advice”
shall
      have the meaning set forth in Section 6(d).

    

    “Effectiveness
      Date”
means,
      with respect to the Initial Registration Statement required to be filed
      hereunder, August 7, 2008 and with respect to any additional Registration
      Statements which may be required pursuant to Section 3(c), the 90th
      calendar
      day following the date on which an additional Registration Statement is required
      to be filed hereunder; provided,
      however,
      that in
      the event the Company is notified by the Commission that one or more of the
      above Registration Statements will not be reviewed or is no longer subject
      to
      further review and comments, the Effectiveness Date as to such Registration
      Statement shall be the fifth Trading Day following the date on which the Company
      is so notified if such date precedes the dates otherwise required
      above.

    

    “Effectiveness
      Period”
shall
      have the meaning set forth in Section 2(a).

    

    “Event”
shall
      have the meaning set forth in Section 2(b).

    

    “Event
      Date”
shall
      have the meaning set forth in Section 2(b).

    

    “Filing
      Date”
means,
      with respect to the Initial Registration Statement required hereunder, June
      7,
      2008 and, with respect to any additional Registration Statements which may
      be
      required pursuant to Section 3(c), the earliest practical date on which the
      Company is permitted by SEC Guidance to file such additional Registration
      Statement related to the Registrable Securities.

    

    “Holder”
or
      “Holders”
means
      the holder or holders, as the case may be, from time to time of Registrable
      Securities.

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    

    “Indemnified
      Party”
shall
      have the meaning set forth in Section 5(c).

    

    “Indemnifying
      Party”
shall
      have the meaning set forth in Section 5(c).

    

    “Initial
      Registration Statement”
means
      the initial Registration Statement filed pursuant to this Agreement containing
      the Initial Shares.

    

    “Initial
      Shares”
means
      a
      number of Registrable Securities equal to the lesser of (i) the total number
      of
      Registrable Securities and (ii) one-third of the number of issued and
      outstanding shares of Common Stock that are held by non-affiliates of the
      Company on the day immediately prior to the filing date of the Initial
      Registration Statement.

    

    “January
      2008 Registrable Securities”
means
      the registrable securities set forth in the Registration Rights Agreement dated
      as of January 8, 2008 by and among the Company and the purchasers signatory
      thereto.

    

    “Losses”
shall
      have the meaning set forth in Section 5(a).

    

    “Plan
      of Distribution”
shall
      have the meaning set forth in Section 2(a). 

    

    “Prospectus”
means
      the prospectus included in a Registration Statement (including, without
      limitation, a prospectus that includes any information previously omitted from
      a
      prospectus filed as part of an effective registration statement in reliance
      upon
      Rule 430A promulgated by the Commission pursuant to the Securities Act), as
      amended or supplemented by any prospectus supplement, with respect to the terms
      of the offering of any portion of the Registrable Securities covered by a
      Registration Statement, and all other amendments and supplements to the
      Prospectus, including post-effective amendments, and all material incorporated
      by reference or deemed to be incorporated by reference in such
      Prospectus.

    

    “Registrable
      Securities”
means
      (i) all of the shares of Common Stock issuable upon conversion in full of the
      Debentures held by the Purchasers (assuming on the date of determination the
      Debentures held by the Purchasers are converted in full without regard to any
      conversion limitations therein), (ii) all shares of Common Stock issuable as
      interest or principal on the Debentures held by the Purchasers assuming all
      permissible interest and principal payments are made in shares of Common Stock
      and the Debentures held by the Purchasers are held until maturity, (iii) all
      Warrant Shares (assuming on the date of determination the Warrants are exercised
      in full without regard to any exercise limitations therein), (iv) any additional
      shares of Common Stock issuable in connection with any anti-dilution provisions
      in the Debentures held by the Purchasers or the Warrants held by the Purchasers
      (in each case, without giving effect to any limitations on conversion set forth
      in the Debentures held by the Purchasers or limitations on exercise set forth
      in
      the Warrants held by the Purchasers) and (v) any securities issued or issuable
      upon any stock split, dividend or other distribution, recapitalization or
      similar event with respect to the foregoing; provided, however, that the Company
      shall not be required to maintain the effectiveness, or file another
      Registration Statement hereunder with respect to any Registrable Securities
      that
      are not subject to the current public information requirement under Rule 144
      and
      that are eligible for resale without volume or manner-of-sale restrictions
      and
      without current public information pursuant to Rule 144 promulgated by the
      Commission pursuant to a written opinion letter to such effect, addressed,
      delivered and acceptable to the Transfer Agent and the affected
      Holders.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

    “Registration
      Statement”
means
      the registration statement required to be filed hereunder and any additional
      registration statements contemplated by Section 3(c), including (in each case)
      the Prospectus, amendments and supplements to such registration statement or
      Prospectus, including pre- and post-effective amendments, all exhibits thereto,
      and all material incorporated by reference or deemed to be incorporated by
      reference in such registration statement.

    

    “Rule
      415”
means
      Rule 415 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended or interpreted from time to time, or any similar rule or
      regulation hereafter adopted by the Commission having substantially the same
      purpose and effect as such Rule.

    

    “Rule
      424”
means
      Rule 424 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended or interpreted from time to time, or any similar rule or
      regulation hereafter adopted by the Commission having substantially the same
      purpose and effect as such Rule.

    

    “Selling
      Shareholder Questionnaire”
shall
      have the meaning set forth in Section 3(a).

    

    “SEC
      Guidance”
means
      (i) any publicly-available written or oral guidance, comments, requirements
      or
      requests of the Commission staff and (ii) the Securities Act.

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    2.
       Shelf
      Registration

    

    (a)  On
      or
      prior to each Filing Date, the Company shall prepare and file with the
      Commission a Registration Statement covering the resale of all or such maximum
      portion of the Registrable Securities as permitted by SEC Guidance (provided
      that, the Company shall use diligent efforts to advocate with the Commission
      for
      the registration of all of the Registrable Securities in accordance with the
      SEC
      Guidance, including without limitation, the Manual of Publicly Available
      Telephone Interpretations D.29) that are not then registered on an effective
      Registration Statement for an offering to be made on a continuous basis pursuant
      to Rule 415. The Registration Statement shall be on Form S-3 (except if the
      Company is not then eligible to register for resale the Registrable Securities
      on Form S-3, in which case such registration shall be on another appropriate
      form in accordance herewith) and shall contain (unless otherwise directed by
      at
      least an 85% majority in interest of the Holders) substantially the
“Plan
      of Distribution”
      attached hereto as Annex
      A.
      Subject
      to the terms of this Agreement, the Company shall use its best efforts to cause
      a Registration Statement to be declared effective under the Securities Act
      as
      promptly as possible after the filing thereof, but in any event prior to the
      applicable Effectiveness Date, and shall use its best efforts to keep such
      Registration Statement continuously effective under the Securities Act until
      all
      Registrable Securities covered by such Registration Statement have been sold,
      or
      may be sold without volume or manner-of-sale restrictions pursuant to Rule
      144,
      and without the requirement for the Company to be in compliance with the current
      public information requirement under Rule 144, as determined by the counsel
      to
      the Company pursuant to a written opinion letter to such effect, addressed
      and
      acceptable to the Transfer Agent and the affected Holders (the “Effectiveness
      Period”).
      The
      Company shall telephonically request effectiveness of a Registration Statement
      as of 5:00 p.m. New York City time on a Trading Day. The Company shall
      immediately notify the Holders via facsimile or by e-mail of the effectiveness
      of a Registration Statement on the same Trading Day that the Company
      telephonically confirms effectiveness with the Commission, which shall be the
      date requested for effectiveness of such Registration Statement. The Company
      shall, by 9:30 a.m. New York City time on the Trading Day after the effective
      date of such Registration Statement, file a final Prospectus with the Commission
      as required by Rule 424. Failure to so notify the Holder within 1 Trading Day
      of
      such notification of effectiveness or failure to file a final Prospectus as
      foresaid shall be deemed an Event under Section 2(b). Notwithstanding
      any other provision of this Agreement and subject to the payment of liquidated
      damages pursuant to Section 2(b), if any SEC Guidance sets forth a limitation
      on
      the number of Registrable Securities permitted to be registered on a particular
      Registration Statement (and notwithstanding that the Company used diligent
      efforts to advocate with the Commission for the registration of all or a greater
      portion of Registrable Securities), unless otherwise directed in writing by
      a
      Holder as to its Registrable Securities, the number of Registrable Securities
      to
      be registered on such Registration Statement will first be reduced by
      Registrable Securities represented by Warrant Shares (applied, in the case
      that
      some Warrant Shares may be registered, to the Holders on a pro rata basis based
      on the total number of unregistered Warrant Shares held by such Holders), and
      second by Registrable Securities represented by Conversion Shares (applied,
      in
      the case that some Conversion Shares may be registered, to the Holders on a
      pro
      rata basis based on the total number of unregistered Conversion Shares held
      by
      such Holders).

     

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    (b)  If:
      (i)
      the Initial Registration Statement is not filed on or prior to its Filing Date
      (if the Company files the Initial Registration Statement without affording
      the
      Holders the opportunity to review and comment on the same as required by Section
      3(a) herein, the Company shall be deemed to have not satisfied this clause
      (i)),
      or (ii) the Company fails to file with the Commission a request for acceleration
      of a Registration Statement in accordance with Rule 461 promulgated by the
      Commission pursuant to the Securities Act, within five Trading Days of the
      date
      that the Company is notified (orally or in writing, whichever is earlier) by
      the
      Commission that such Registration Statement will not be “reviewed” or will not
      be subject to further review, or (iii) prior to the effective date of a
      Registration Statement, the Company fails to file a pre-effective amendment
      and
      otherwise respond in writing to comments made by the Commission in respect
      of
      such Registration Statement within 15 calendar days after the receipt of
      comments by or notice from the Commission that such amendment is required in
      order for such Registration Statement to be declared effective, or (iv) as
      to,
      in the aggregate among all Holders on a pro-rata basis based on their purchase
      of the Securities pursuant to the Purchase Agreement, a Registration Statement
      registering for resale all of the Initial Shares is not declared effective
      by
      the Commission by the Effectiveness Date of the Initial Registration Statement,
      or (v) all of the Registrable Securities are not registered for resale pursuant
      to one or more effective Registration Statements on or before November 30,
      2008,
      or (vi) after the effective date of a Registration Statement, such Registration
      Statement ceases for any reason to remain continuously effective as to all
      Registrable Securities included in such Registration Statement, or the Holders
      are otherwise not permitted to utilize the Prospectus therein to resell such
      Registrable Securities, for more than 20 consecutive calendar days or more
      than
      an aggregate of 30 calendar days (which need not be consecutive calendar days)
      during any 12-month period, or (vii) the Company shall fail for any reason
      to
      satisfy the current public information requirement under Rule 144 as to the
      applicable Registrable Securities (any such failure or breach being referred
      to
      as an “Event”,
      and
      for purposes of clause (i), (iv), (v) and (vii) the date on which such Event
      occurs, and for purpose of clause (ii) the date on which such five Trading
      Day
      period is exceeded, and for purpose of clause (iii) the date which such 15
      calendar day period is exceeded, and for purpose of clause (vi) the date on
      which such 20 or 30 calendar day period, as applicable, is exceeded being
      referred to as “Event
      Date”),
      then,
      in addition to any other rights the Holders may have hereunder or under
      applicable law, on each such Event Date and on each monthly anniversary of
      each
      such Event Date (if the applicable Event shall not have been cured by such
      date)
      until the applicable Event is cured, the Company shall pay to each Holder an
      amount in cash, as partial liquidated damages and not as a penalty, equal to
      1.5% of the aggregate purchase price paid by such Holder pursuant to the
      Purchase Agreement for any unregistered Registrable Securities then held by
      such
      Holder. The parties agree that the Company shall not be liable for liquidated
      damages under this Agreement with respect to any Warrants or Warrant Shares.
      If
      the Company fails to pay any partial liquidated damages pursuant to this Section
      in full within seven days after the date payable, the Company will pay interest
      thereon at a rate of 18% per annum (or such lesser maximum amount that is
      permitted to be paid by applicable law) to the Holder, accruing daily from
      the
      date such partial liquidated damages are due until such amounts, plus all such
      interest thereon, are paid in full. The partial liquidated damages pursuant
      to
      the terms hereof shall apply on a daily pro rata basis for any portion of a
      month prior to the cure of an Event.

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    3.
       Registration
      Procedures.

    

    In
      connection with the Company’s registration obligations hereunder, the Company
      shall:

    

    (a)  Not
      less
      than five (5) Trading Days prior to the filing of each Registration Statement
      and not less than one (1) Trading Day prior to the filing of any related
      Prospectus or any amendment or supplement thereto (including any document that
      would be incorporated or deemed to be incorporated therein by reference), the
      Company shall (i) furnish to each Holder copies of all such documents proposed
      to be filed, which documents (other than those incorporated or deemed to be
      incorporated by reference) will be subject to the review of such Holders, and
      (ii) cause its officers and directors, counsel and independent certified public
      accountants to respond to such inquiries as shall be necessary, in the
      reasonable opinion of respective counsel to each Holder, to conduct a reasonable
      investigation within the meaning of the Securities Act. The Company shall not
      file a Registration Statement or any such Prospectus or any amendments or
      supplements thereto to which the Holders of a majority of the Registrable
      Securities shall reasonably object in good faith, provided that, the Company
      is
      notified of such objection in writing no later than five (5) Trading Days after
      the Holders have been so furnished copies of a Registration Statement or one
      (1)
      Trading Day after the Holders have been so furnished copies of any related
      Prospectus or amendments or supplements thereto. Each Holder agrees to furnish
      to the Company a completed questionnaire in the form attached to this Agreement
      as Annex
      B
      (a
“Selling
      Shareholder Questionnaire”)
      not
      less than two (2) Trading Days prior to the Filing Date or by the end of the
      fourth (4th)
      Trading
      Day following the date on which such Holder receives draft materials in
      accordance with this Section. Notwithstanding the forgoing, the Company may
      exclude any Holder who has not provided a Selling Shareholder Questionnaire
      as
      provided for herein from inclusion in the Registration Statement without
      incurring any penalties provided,
      however,
      upon
      receipt by the Company of such information, the Company shall use commercially
      reasonable efforts to include such Registrable Securities on a Registration
      Statement as soon as possible thereafter. 

    

    (b)  (i)
      Prepare and file with the Commission such amendments, including post-effective
      amendments, to a Registration Statement and the Prospectus used in connection
      therewith as may be necessary to keep a Registration Statement continuously
      effective as to the applicable Registrable Securities for the Effectiveness
      Period and prepare and file with the Commission such additional Registration
      Statements in order to register for resale under the Securities Act all of
      the
      Registrable Securities; (ii) cause the related Prospectus to be amended or
      supplemented by any required Prospectus supplement (subject to the terms of
      this
      Agreement), and, as so supplemented or amended, to be filed pursuant to Rule
      424; (iii) respond as promptly as reasonably possible to any comments received
      from the Commission with respect to a Registration Statement or any amendment
      thereto and provide as promptly as reasonably possible to the Holders true
      and
      complete copies of all correspondence from and to the Commission relating to
      a
      Registration Statement (provided that, the Company may excise any information
      contained therein which would constitute material non-public information as
      to
      any Holder which has not executed a confidentiality agreement with the Company);
      and (iv) comply in all material respects with the provisions of the Securities
      Act and the Exchange Act with respect to the disposition of all Registrable
      Securities covered by a Registration Statement during the applicable period
      in
      accordance (subject to the terms of this Agreement) with the intended methods
      of
      disposition by the Holders thereof set forth in such Registration Statement
      as
      so amended or in such Prospectus as so supplemented.

    

    (c)  If
      during
      the Effectiveness Period, the number of Registrable Securities at any time
      exceeds 100% of the number of shares of Common Stock then registered in a
      Registration Statement, then the Company shall file as soon as reasonably
      practicable, but in any case prior to the applicable Filing Date, an additional
      Registration Statement covering the resale by the Holders of not less than
      the
      number of such Registrable Securities. 

    

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    (d)  Notify
      the Holders of Registrable Securities to be sold (which notice shall, pursuant
      to clauses (iii) through (vi) hereof, be accompanied by an instruction to
      suspend the use of the Prospectus until the requisite changes have been made)
      as
      promptly as reasonably possible (and, in the case of (i)(A) below, not less
      than
      one Trading Day prior to such filing) and (if requested by any such Person)
      confirm such notice in writing no later than one Trading Day following the
      day
      (i)(A) when a Prospectus or any Prospectus supplement or post-effective
      amendment to a Registration Statement is proposed to be filed; (B) when the
      Commission notifies the Company whether there will be a “review” of such
      Registration Statement and whenever the Commission comments in writing on such
      Registration Statement; and (C) with respect to a Registration Statement or
      any
      post-effective amendment, when the same has become effective; (ii) of any
      request by the Commission or any other federal or state governmental authority
      for amendments or supplements to a Registration Statement or Prospectus or
      for
      additional information; (iii) of the issuance by the Commission or any other
      federal or state governmental authority of any stop order suspending the
      effectiveness of a Registration Statement covering any or all of the Registrable
      Securities or the initiation of any Proceedings for that purpose; (iv) of the
      receipt by the Company of any notification with respect to the suspension of
      the
      qualification or exemption from qualification of any of the Registrable
      Securities for sale in any jurisdiction, or the initiation or threatening of
      any
      Proceeding for such purpose; (v) of the occurrence of any event or passage
      of
      time that makes the financial statements included in a Registration Statement
      ineligible for inclusion therein or any statement made in a Registration
      Statement or Prospectus or any document incorporated or deemed to be
      incorporated therein by reference untrue in any material respect or that
      requires any revisions to a Registration Statement, Prospectus or other
      documents so that, in the case of a Registration Statement or the Prospectus,
      as
      the case may be, it will not contain any untrue statement of a material fact
      or
      omit to state any material fact required to be stated therein or necessary
      to
      make the statements therein, in light of the circumstances under which they
      were
      made, not misleading; and (vi) of the occurrence or existence of any pending
      corporate development with respect to the Company that the Company believes
      may
      be material and that, in the determination of the Company, makes it not in
      the
      best interest of the Company to allow continued availability of a Registration
      Statement or Prospectus, provided that, any and all of such information shall
      remain confidential to each Holder until such information otherwise becomes
      public, unless disclosure by a Holder is required by law; provided,
      further,
      that
      notwithstanding each Holder’s agreement to keep such information confidential,
      each such Holder makes no acknowledgement that any such information is material,
      non-public information.

    

    (e)  Use
      its
      best efforts to avoid the issuance of, or, if issued, obtain the withdrawal
      of
      (i) any order stopping or suspending the effectiveness of a Registration
      Statement, or (ii) any suspension of the qualification (or exemption from
      qualification) of any of the Registrable Securities for sale in any
      jurisdiction, at the earliest practicable moment.

    

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    (f)  Furnish
      to each Holder, without charge, at least one conformed copy of each such
      Registration Statement and each amendment thereto, including financial
      statements and schedules, all documents incorporated or deemed to be
      incorporated therein by reference to the extent requested by such Person, and
      all exhibits to the extent requested by such Person (including those previously
      furnished or incorporated by reference) promptly after the filing of such
      documents with the Commission; provided, that any such item which is available
      on the EDGAR system need not be furnished in physical form.

    

    (g)  Subject
      to the terms of this Agreement, the Company hereby consents to the use of such
      Prospectus and each amendment or supplement thereto by each of the selling
      Holders in connection with the offering and sale of the Registrable Securities
      covered by such Prospectus and any amendment or supplement thereto, except
      after
      the giving of any notice pursuant to Section 3(d).

    

    (h)  
      The
      Company shall cooperate with any broker-dealer through which a Holder proposes
      to resell its Registrable Securities in effecting a filing with the FINRA
      Corporate Financing Department pursuant to NASD Rule 2710, as requested by
      any
      such Holder, and the Company shall pay the filing fee required by such filing
      within two (2) Business Days of request therefor.

    

    (i)  Prior
      to
      any resale of Registrable Securities by a Holder, use its commercially
      reasonable efforts to register or qualify or cooperate with the selling Holders
      in connection with the registration or qualification (or exemption from the
      Registration or qualification) of such Registrable Securities for the resale
      by
      the Holder under the securities or Blue Sky laws of such jurisdictions within
      the United States as any Holder reasonably requests in writing, to keep each
      registration or qualification (or exemption therefrom) effective during the
      Effectiveness Period and to do any and all other acts or things reasonably
      necessary to enable the disposition in such jurisdictions of the Registrable
      Securities covered by each Registration Statement; provided, that, the Company
      shall not be required to qualify generally to do business in any jurisdiction
      where it is not then so qualified, subject the Company to any material tax
      in
      any such jurisdiction where it is not then so subject or file a general consent
      to service of process in any such jurisdiction.

    

    (j)  If
      requested by a Holder, cooperate with such Holders to facilitate the timely
      preparation and delivery of certificates representing Registrable Securities
      to
      be delivered to a transferee pursuant to a Registration Statement, which
      certificates shall be free, to the extent permitted by the Purchase Agreement,
      of all restrictive legends, and to enable such Registrable Securities to be
      in
      such denominations and registered in such names as any such Holder may
      request.

    

    (k)  Upon
      the
      occurrence of any event contemplated by Section 3(d), as promptly as reasonably
      possible under the circumstances taking into account the Company’s good faith
      assessment of any adverse consequences to the Company and its stockholders
      of
      the premature disclosure of such event, prepare a supplement or amendment,
      including a post-effective amendment, to a Registration Statement or a
      supplement to the related Prospectus or any document incorporated or deemed
      to
      be incorporated therein by reference, and file any other required document
      so
      that, as thereafter delivered, neither a Registration Statement nor such
      Prospectus will contain an untrue statement of a material fact or omit to state
      a material fact required to be stated therein or necessary to make the
      statements therein, in light of the circumstances under which they were made,
      not misleading. If
      the
      Company notifies the Holders in accordance with clauses (iii) through (vi)
      of
      Section 3(d) above to suspend the use of any Prospectus until the requisite
      changes to such Prospectus have been made, then the Holders shall suspend use
      of
      such Prospectus. The Company will use its best efforts to ensure that the use
      of
      the Prospectus may be resumed as promptly as is practicable. The Company shall
      be entitled to exercise its right under this Section 3(k) to suspend the
      availability of a Registration Statement and Prospectus, subject to the payment
      of partial liquidated damages otherwise required pursuant to Section 2(b),
      for a
      period not to exceed 60 calendar days (which need not be consecutive days)
      in
      any 12 month period.

    

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    (l)  Comply
      with all applicable rules and regulations of the Commission.

    

    (m)  The
      Company may require each selling Holder to furnish to the Company a certified
      statement as to the number of shares of Common Stock beneficially owned by
      such
      Holder and, if required by the Commission, the natural persons thereof that
      have
      voting and dispositive control over the shares. During any periods that the
      Company is unable to meet its obligations hereunder with respect to the
      registration of the Registrable Securities solely because any Holder fails
      to
      furnish such information within three Trading Days of the Company’s request, any
      liquidated damages that are accruing at such time as to such Holder only shall
      be tolled and any Event that may otherwise occur solely because of such delay
      shall be suspended as to such Holder only, until such information is delivered
      to the Company.

    

    4.     Registration
      Expenses.
      All
      fees and expenses incident to the performance of or compliance with this
      Agreement by the Company shall be borne by the Company whether or not any
      Registrable Securities are sold pursuant to a Registration Statement. The fees
      and expenses referred to in the foregoing sentence shall include, without
      limitation, (i) all registration and filing fees (including, without limitation,
      fees and expenses of the Company’s counsel and auditors) (A) with respect to
      filings made with the Commission, (B) with respect to filings required to be
      made with any Trading Market on which the Common Stock is then listed for
      trading, (C) in compliance with applicable state securities or Blue Sky laws
      reasonably agreed to by the Company in writing (including, without limitation,
      fees and disbursements of counsel for the Company in connection with Blue Sky
      qualifications or exemptions of the Registrable Securities) and (D) if not
      previously paid by the Company in connection with an Issuer Filing, with respect
      to any filing that may be required to be made by any broker through which a
      Holder intends to make sales of Registrable Securities with the FINRA pursuant
      to NASD Rule 2710, so long as the broker is receiving no more than a customary
      brokerage commission in connection with such sale, (ii) printing expenses
      (including, without limitation, expenses of printing certificates for
      Registrable Securities), (iii) messenger, telephone and delivery expenses,
      (iv)
      fees and disbursements of counsel for the Company, (v) Securities Act liability
      insurance, if the Company so desires such insurance, and (vi) fees and expenses
      of all other Persons retained by the Company in connection with the consummation
      of the transactions contemplated by this Agreement. In addition, the Company
      shall be responsible for all of its internal expenses incurred in connection
      with the consummation of the transactions contemplated by this Agreement
      (including, without limitation, all salaries and expenses of its officers and
      employees performing legal or accounting duties), the expense of any annual
      audit and the fees and expenses incurred in connection with the listing of
      the
      Registrable Securities on any securities exchange as required hereunder. In
      no
      event shall the Company be responsible for any broker or similar commissions
      of
      any Holder or, except to the extent provided for in the Transaction Documents,
      any legal fees or other costs of the Holders.

    

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    5.
          Indemnification.

    

    (a)  Indemnification
      by the Company.
      The
      Company shall, notwithstanding any termination of this Agreement, indemnify
      and
      hold harmless each Holder, the officers, directors, members, partners, agents,
      brokers (including brokers who offer and sell Registrable Securities as
      principal as a result of a pledge or any failure to perform under a margin
      call
      of Common Stock), investment advisors and employees (and any other Persons
      with
      a functionally equivalent role of a Person holding such titles, notwithstanding
      a lack of such title or any other title) of each of them, each Person who
      controls any such Holder (within the meaning of Section 15 of the Securities
      Act
      or Section 20 of the Exchange Act) and the officers, directors, members,
      shareholders, partners, agents and employees (and any other Persons with a
      functionally equivalent role of a Person holding such titles, notwithstanding
      a
      lack of such title or any other title) of each such controlling Person, to
      the
      fullest extent permitted by applicable law, from and against any and all losses,
      claims, damages, liabilities, costs (including, without limitation, reasonable
      attorneys’ fees) and expenses (collectively, “Losses”),
      as
      incurred, arising out of or relating to (1) any untrue or alleged untrue
      statement of a material fact contained in a Registration Statement, any
      Prospectus or any form of prospectus or in any amendment or supplement thereto
      or in any preliminary prospectus, or arising out of or relating to any omission
      or alleged omission of a material fact required to be stated therein or
      necessary to make the statements therein (in the case of any Prospectus or
      supplement thereto, in light of the circumstances under which they were made)
      not misleading or (2) any violation or alleged violation by the Company of
      the
      Securities Act, the Exchange Act or any state securities law, or any rule or
      regulation thereunder, in connection with the performance of its obligations
      under this Agreement, except to the extent, but only to the extent, that (i)
      such untrue statements or omissions are based solely upon information regarding
      such Holder furnished in writing to the Company by such Holder expressly for
      use
      therein, or to the extent that such information relates to such Holder or such
      Holder’s proposed method of distribution of Registrable Securities and was
      reviewed and expressly approved in writing by such Holder expressly for use
      in a
      Registration Statement, such Prospectus or in any amendment or supplement
      thereto (it being understood that the Holder has approved Annex A hereto for
      this purpose) or (ii) in the case of an occurrence of an event of the type
      specified in Section 3(d)(iii)-(vi), the use by such Holder of an outdated
      or
      defective Prospectus after the Company has notified such Holder in writing
      that
      the Prospectus is outdated or defective and prior to the receipt by such Holder
      of the Advice contemplated in Section 6(d). The Company shall notify the Holders
      promptly of the institution, threat or assertion of any Proceeding arising
      from
      or in connection with the transactions contemplated by this Agreement of which
      the Company is aware.

    

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    (b)  Indemnification
      by Holders.
      Each
      Holder shall, severally and not jointly, indemnify and hold harmless the
      Company, its directors, officers, agents and employees, each Person who controls
      the Company (within the meaning of Section 15 of the Securities Act and Section
      20 of the Exchange Act), and the directors, officers, agents or employees of
      such controlling Persons, to the fullest extent permitted by applicable law,
      from and against all Losses, as incurred, to the extent arising out of or based
      solely upon: (x) such Holder’s failure to comply with the prospectus delivery
      requirements of the Securities Act or (y) any untrue or alleged untrue statement
      of a material fact contained in any Registration Statement, any Prospectus,
      or
      in any amendment or supplement thereto or in any preliminary prospectus, or
      arising out of or relating to any omission or alleged omission of a material
      fact required to be stated therein or necessary to make the statements therein
      not misleading (i) to the extent, but only to the extent, that such untrue
      statement or omission is contained in any information so furnished in writing
      by
      such Holder to the Company specifically for inclusion in such Registration
      Statement or such Prospectus or (ii) to the extent that such information relates
      to such Holder’s proposed method of distribution of Registrable Securities and
      was reviewed and expressly approved in writing by such Holder expressly for
      use
      in a Registration Statement (it being understood that the Holder has approved
      Annex A hereto for this purpose), such Prospectus or in any amendment or
      supplement thereto or (ii) in the case of an occurrence of an event of the
      type
      specified in Section 3(d)(iii)-(vi), the use by such Holder of an outdated
      or
      defective Prospectus after the Company has notified such Holder in writing
      that
      the Prospectus is outdated or defective and prior to the receipt by such Holder
      of the Advice contemplated in Section 6(d). In no event shall the liability
      of
      any selling Holder hereunder be greater in amount than the dollar amount of
      the
      net proceeds received by such Holder upon the sale of the Registrable Securities
      giving rise to such indemnification obligation.

    

    (c)  Conduct
      of Indemnification Proceedings.
      If any
      Proceeding shall be brought or asserted against any Person entitled to indemnity
      hereunder (an “Indemnified
      Party”),
      such
      Indemnified Party shall promptly notify the Person from whom indemnity is sought
      (the “Indemnifying
      Party”)
      in
      writing, and the Indemnifying Party shall have the right to assume the defense
      thereof, including the employment of counsel reasonably satisfactory to the
      Indemnified Party and the payment of all fees and expenses incurred in
      connection with defense thereof; provided, that, the failure of any Indemnified
      Party to give such notice shall not relieve the Indemnifying Party of its
      obligations or liabilities pursuant to this Agreement, except (and only) to
      the
      extent that it shall be finally determined by a court of competent jurisdiction
      (which determination is not subject to appeal or further review) that such
      failure shall have prejudiced the Indemnifying Party.

    

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    An
      Indemnified Party shall have the right to employ separate counsel in any such
      Proceeding and to participate in the defense thereof, but the fees and expenses
      of such counsel shall be at the expense of such Indemnified Party or Parties
      unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
      expenses; (2) the Indemnifying Party shall have failed promptly to assume the
      defense of such Proceeding and to employ counsel reasonably satisfactory to
      such
      Indemnified Party in any such Proceeding; or (3) the named parties to any such
      Proceeding (including any impleaded parties) include both such Indemnified
      Party
      and the Indemnifying Party, and counsel to the Indemnified Party shall
      reasonably believe that a material conflict of interest is likely to exist
      if
      the same counsel were to represent such Indemnified Party and the Indemnifying
      Party (in which case, if such Indemnified Party notifies the Indemnifying Party
      in writing that it elects to employ separate counsel at the expense of the
      Indemnifying Party, the Indemnifying Party shall not have the right to assume
      the defense thereof and the reasonable fees and expenses of no more than one
      separate counsel shall be at the expense of the Indemnifying Party). The
      Indemnifying Party shall not be liable for any settlement of any such Proceeding
      effected without its written consent, which consent shall not be unreasonably
      withheld or delayed. No Indemnifying Party shall, without the prior written
      consent of the Indemnified Party, effect any settlement of any pending
      Proceeding in respect of which any Indemnified Party is a party, unless such
      settlement includes an unconditional release of such Indemnified Party from
      all
      liability on claims that are the subject matter of such Proceeding.

    

    Subject
      to the terms of this Agreement, all reasonable fees and expenses of the
      Indemnified Party (including reasonable fees and expenses to the extent incurred
      in connection with investigating or preparing to defend such Proceeding in
      a
      manner not inconsistent with this Section) shall be paid to the Indemnified
      Party, as incurred, within ten Trading Days of written notice thereof to the
      Indemnifying Party; provided, that, the Indemnified Party shall promptly
      reimburse the Indemnifying Party for that portion of such fees and expenses
      applicable to such actions for which such Indemnified Party is judicially
      determined not to be entitled to indemnification hereunder.

    

    (d)  Contribution.
      If the
      indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified
      Party or insufficient to hold an Indemnified Party harmless for any Losses,
      then
      each Indemnifying Party shall contribute to the amount paid or payable by such
      Indemnified Party, in such proportion as is appropriate to reflect the relative
      fault of the Indemnifying Party and Indemnified Party in connection with the
      actions, statements or omissions that resulted in such Losses as well as any
      other relevant equitable considerations. The relative fault of such Indemnifying
      Party and Indemnified Party shall be determined by reference to, among other
      things, whether any action in question, including any untrue or alleged untrue
      statement of a material fact or omission or alleged omission of a material
      fact,
      has been taken or made by, or relates to information supplied by, such
      Indemnifying Party or Indemnified Party, and the parties’ relative intent,
      knowledge, access to information and opportunity to correct or prevent such
      action, statement or omission. The amount paid or payable by a party as a result
      of any Losses shall be deemed to include, subject to the limitations set forth
      in this Agreement, any reasonable attorneys’ or other fees or expenses incurred
      by such party in connection with any Proceeding to the extent such party would
      have been indemnified for such fees or expenses if the indemnification provided
      for in this Section was available to such party in accordance with its
      terms.

    

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

     The
      parties hereto agree that it would not be just and equitable if contribution
      pursuant to this Section 5(d) were determined by pro rata allocation or by
      any
      other method of allocation that does not take into account the equitable
      considerations referred to in the immediately preceding paragraph.
      Notwithstanding the provisions of this Section 5(d), no Holder shall be required
      to contribute, in the aggregate, any amount in excess of the amount by which
      the
      net proceeds actually received by such Holder from the sale of the Registrable
      Securities subject to the Proceeding exceeds the amount of any damages that
      such
      Holder has otherwise been required to pay by reason of such untrue or alleged
      untrue statement or omission or alleged omission.

    

    The
      indemnity and contribution agreements contained in this Section are in addition
      to any liability that the Indemnifying Parties may have to the Indemnified
      Parties.

    

    6.
       Miscellaneous.

    

    (a)  Remedies.
      In the
      event of a breach by the Company or by a Holder of any of their respective
      obligations under this Agreement, each Holder or the Company, as the case may
      be, in addition to being entitled to exercise all rights granted by law and
      under this Agreement, including recovery of damages, shall be entitled to
      specific performance of its rights under this Agreement. The Company and each
      Holder agree that monetary damages would not provide adequate compensation
      for
      any losses incurred by reason of a breach by it of any of the provisions of
      this
      Agreement and hereby further agrees that, in the event of any action for
      specific performance in respect of such breach, it shall not assert or shall
      waive the defense that a remedy at law would be adequate.

    

    (b)  Piggyback
      on Registrations; Prohibition on Filing Other Registration
      Statements.
      Except
      for the January 2008 Registrable Securities, the Company may not include
      securities of the Company in any Registration Statements other than the
      Registrable Securities; provided,
      however,
      to the
      extent that the Company is required to reduce the number of shares included
      on a
      registration statement for any reason, including SEC Guidance, shares included
      for the benefit of shareholders other than the Holders shall be reduced first
      before any Registrable Securities are removed from such Registration Statement.
      The Company shall not file any other registration statements until all
      Registrable Securities are registered pursuant to a Registration Statement
      that
      is declared effective by the Commission, provided that this Section 6(b) shall
      not prohibit the Company from filing amendments to registration statements
      filed
      prior to the date of this Agreement.

    

    (c)  Compliance.
      Each
      Holder covenants and agrees that it will comply with the prospectus delivery
      requirements of the Securities Act as applicable to it in connection with sales
      of Registrable Securities pursuant to a Registration Statement.

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    

    (d)  Discontinued
      Disposition.
      By its
      acquisition of Registrable Securities, each Holder agrees that, upon receipt
      of
      a notice from the Company of the occurrence of any event of the kind described
      in Section 3(d)(iii) through (vi), such Holder will forthwith discontinue
      disposition of such Registrable Securities under a Registration Statement until
      it is advised in writing (the “Advice”)
      by the
      Company that the use of the applicable Prospectus (as it may have been
      supplemented or amended) may be resumed. The Company will use its best efforts
      to ensure that the use of the Prospectus may be resumed as promptly as is
      practicable. The Company agrees and acknowledges that any periods during which
      the Holder is required to discontinue the disposition of the Registrable
      Securities hereunder shall be subject to the provisions of Section
      2(b).

    

    (e)  Piggy-Back
      Registrations.
      If, at
      any time during the Effectiveness Period, there is not an effective Registration
      Statement covering all of the Registrable Securities and the Company shall
      determine to prepare and file with the Commission a registration statement
      relating to an offering for its own account or the account of others under
      the
      Securities Act of any of its equity securities, other than on Form S-4 or Form
      S-8 (each as promulgated under the Securities Act) or their then equivalents
      relating to equity securities to be issued solely in connection with any
      acquisition of any entity or business or equity securities issuable in
      connection with the Company’s stock option or other employee benefit plans, then
      the Company shall deliver to each Holder a written notice of such determination
      and, if within fifteen days after the date of the delivery of such notice,
      any
      such Holder shall so request in writing, the Company shall include in such
      registration statement all or any part of such Registrable Securities such
      Holder requests to be registered; provided,
      however,
      that
      the Company shall not be required to register any Registrable Securities
      pursuant to this Section 6(e) that are eligible for resale pursuant to Rule
      144
      promulgated by the Commission pursuant to the Securities Act without volume
      or
      manner restrictions or that are the subject of a then effective Registration
      Statement.

    

    (f)  Amendments
      and Waivers.
      The
      provisions of this Agreement, including the provisions of this sentence, may
      not
      be amended, modified or supplemented, and waivers or consents to departures
      from
      the provisions hereof may not be given, unless the same shall be in writing
      and
      signed by the Company and the Holders of at least 60% of the then outstanding
      Registrable Securities (including, for this purpose any Registrable Securities
      issuable upon exercise or conversion of any Security). If a Registration
      Statement does not register all of the Registrable Securities pursuant to a
      waiver or amendment done in compliance with the previous sentence, then the
      number of Registrable Securities to be registered for each Holder shall be
      reduced pro rata among all Holders and each Holder shall have the right to
      designate which of its Registrable Securities shall be omitted from such
      Registration Statement. Notwithstanding the foregoing, a waiver or consent
      to
      depart from the provisions hereof with respect to a matter that relates
      exclusively to the rights of a Holder or some Holders and that does not directly
      or indirectly affect the rights of other Holders may be given by such Holder
      or
      Holders of all of the Registrable Securities to which such waiver or consent
      relates; provided,
      however,
      that
      the provisions of this sentence may not be amended, modified, or supplemented
      except in accordance with the provisions of the first sentence of this Section
      6(f). 

    

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    (g)  Notices.
      Any and
      all notices or other communications or deliveries required or permitted to
      be
      provided hereunder shall be delivered as set forth in the Purchase Agreement.
      

    

    (h)  Successors
      and Assigns.
      This
      Agreement shall inure to the benefit of and be binding upon the successors
      and
      permitted assigns of each of the parties and shall inure to the benefit of
      each
      Holder. The Company may not assign (except by merger) its rights or obligations
      hereunder without the prior written consent of all of the Holders of the then
      outstanding Registrable Securities. Each Holder may assign their respective
      rights hereunder in the manner and to the Persons as permitted under the
      Purchase Agreement.

    

    (i)  No
      Inconsistent Agreements.
      Neither
      the Company nor any of its Subsidiaries has entered, as of the date hereof,
      nor
      shall the Company or any of its Subsidiaries, on or after the date of this
      Agreement, enter into any agreement with respect to its securities, that would
      have the effect of impairing the rights granted to the Holders in this Agreement
      or otherwise conflicts with the provisions hereof. Except as set forth on
Schedule
      6(i),
      neither
      the Company nor any of its Subsidiaries has previously entered into any
      agreement granting any registration rights with respect to any of its securities
      to any Person that have not been satisfied in full.

    

    (j)  Execution
      and Counterparts.
      This
      Agreement may be executed in two or more counterparts, all of which when taken
      together shall be considered one and the same agreement and shall become
      effective when counterparts have been signed by each party and delivered to
      the
      other party, it being understood that both parties need not sign the same
      counterpart. In the event that any signature is delivered by facsimile
      transmission or by e-mail delivery of a “.pdf” format data file, such signature
      shall create a valid and binding obligation of the party executing (or on whose
      behalf such signature is executed) with the same force and effect as if such
      facsimile or “.pdf” signature page were an original thereof.

    

    (k)  Governing
      Law.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Agreement shall be determined in accordance with the provisions of
      the
      Purchase Agreement.

    

    (l)  Cumulative
      Remedies.
      The
      remedies provided herein are cumulative and not exclusive of any other remedies
      provided by law.

    

    (m)  Severability.
      If any
      term, provision, covenant or restriction of this Agreement is held by a court
      of
      competent jurisdiction to be invalid, illegal, void or unenforceable, the
      remainder of the terms, provisions, covenants and restrictions set forth herein
      shall remain in full force and effect and shall in no way be affected, impaired
      or invalidated, and the parties hereto shall use their commercially reasonable
      efforts to find and employ an alternative means to achieve the same or
      substantially the same result as that contemplated by such term, provision,
      covenant or restriction. It is hereby stipulated and declared to be the
      intention of the parties that they would have executed the remaining terms,
      provisions, covenants and restrictions without including any of such that may
      be
      hereafter declared invalid, illegal, void or unenforceable.

    

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    (n)  Headings.
      The
      headings in this Agreement are for convenience only, do not constitute a part
      of
      the Agreement and shall not be deemed to limit or affect any of the provisions
      hereof.

    

    (o)  Independent
      Nature of Holders’ Obligations and Rights.
      The
      obligations of each Holder hereunder are several and not joint with the
      obligations of any other Holder hereunder, and no Holder shall be responsible
      in
      any way for the performance of the obligations of any other Holder hereunder.
      Nothing contained herein or in any other agreement or document delivered at
      any
      closing, and no action taken by any Holder pursuant hereto or thereto, shall
      be
      deemed to constitute the Holders as a partnership, an association, a joint
      venture or any other kind of entity, or create a presumption that the Holders
      are in any way acting in concert with respect to such obligations or the
      transactions contemplated by this Agreement. Each Holder shall be entitled
      to
      protect and enforce its rights, including without limitation the rights arising
      out of this Agreement, and it shall not be necessary for any other Holder to
      be
      joined as an additional party in any proceeding for such purpose.

    

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

    
      
        1

        

         

      

      
        16

        
          

        

      

      
         

      

    

    

    IN
      WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
      as
      of the date first written above.

    

    
      	
              INNOVATIVE
                CARD TECHNOLOGIES, INC.

               

            
	
              By:__________________________________________

              Name:

              Title:

            

    

         

    

    [SIGNATURE
      PAGE OF HOLDERS FOLLOWS]

    

    
      
        1

        

         

      

      
        17

        
          

        

      

      
         

      

    

    [SIGNATURE
      PAGE OF HOLDERS TO INVC RRA]

    

     

    Name
      of
      Holder: __________________________

    

    Signature
      of Authorized Signatory of Holder:
      __________________________

    

    Name
      of
      Authorized Signatory: _________________________

    

    Title
      of
      Authorized Signatory: __________________________

     

    

    

    [SIGNATURE
      PAGES CONTINUE]

    

    
      
        1

        

         

      

      
        18

        
          

        

      

      
         

      

    

    Annex
      A

    

    Plan
      of Distribution

    

    Each
      Selling Stockholder (the “Selling
      Stockholders”)
      of the
      common stock and any of their pledgees, assignees and successors-in-interest
      may, from time to time, sell any or all of their shares of common stock on
      the
      [principal Trading Market] or any other stock exchange, market or trading
      facility on which the shares are traded or in private transactions. These sales
      may be at fixed or negotiated prices. A Selling Stockholder may use any one
      or
      more of the following methods when selling shares:

     

    	·  	
            ordinary
              brokerage transactions and transactions in which the broker-dealer
              solicits purchasers;

          

     

    	·  	
            block
              trades in which the broker-dealer will attempt to sell the shares as
              agent
              but may position and resell a portion of the block as principal to
              facilitate the transaction;

          

     

    	·  	
            purchases
              by a broker-dealer as principal and resale by the broker-dealer for
              its
              account;

          

     

    	·  	
            an
              exchange distribution in accordance with the rules of the applicable
              exchange;

          

     

    	·  	
            privately
              negotiated transactions;

          

     

    	·  	
            settlement
              of short sales entered into after the effective date of the registration
              statement of which this prospectus is a part;

          

     

    	·  	
            broker-dealers
              may agree with the Selling Stockholders to sell a specified number
              of such
              shares at a stipulated price per share;

          

     

    	·  	
            through
              the writing or settlement of options or other hedging transactions,
              whether through an options exchange or
              otherwise;

          

     

    	·  	
            a
              combination of any such methods of sale;
              or

          

     

    	·  	
            any
              other method permitted pursuant to applicable
              law.

          

     

    The
      Selling Stockholders may also sell shares under Rule 144 under the Securities
      Act of 1933, as amended (the “Securities
      Act”),
      if
      available, rather than under this prospectus.

     

    Broker-dealers
      engaged by the Selling Stockholders may arrange for other brokers-dealers to
      participate in sales. Broker-dealers may receive commissions or discounts from
      the Selling Stockholders (or, if any broker-dealer acts as agent for the
      purchaser of shares, from the purchaser) in amounts to be negotiated, but,
      except as set forth in a supplement to this Prospectus, in the case of an agency
      transaction not in excess of a customary brokerage commission in compliance
      with
      FINRA NASD Rule 2440; and in the case of a principal transaction a markup or
      markdown in compliance with NASD IM-2440. 

     

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    In
      connection with the sale of the common stock or interests therein, the Selling
      Stockholders may enter into hedging transactions with broker-dealers or other
      financial institutions, which may in turn engage in short sales of the common
      stock in the course of hedging the positions they assume. The Selling
      Stockholders may also sell shares of the common stock short and deliver these
      securities to close out their short positions, or loan or pledge the common
      stock to broker-dealers that in turn may sell these securities. The Selling
      Stockholders may also enter into option or other transactions with
      broker-dealers or other financial institutions or the creation of one or more
      derivative securities which require the delivery to such broker-dealer or other
      financial institution of shares offered by this prospectus, which shares such
      broker-dealer or other financial institution may resell pursuant to this
      prospectus (as supplemented or amended to reflect such
      transaction).

     

    The
      Selling Stockholders and any broker-dealers or agents that are involved in
      selling the shares may be deemed to be “underwriters” within the meaning of the
      Securities Act in connection with such sales. In such event, any commissions
      received by such broker-dealers or agents and any profit on the resale of the
      shares purchased by them may be deemed to be underwriting commissions or
      discounts under the Securities Act. Each Selling Stockholder has informed the
      Company that it does not have any written or oral agreement or understanding,
      directly or indirectly, with any person to distribute the Common Stock. In
      no
      event shall any broker-dealer receive fees, commissions and markups which,
      in
      the aggregate, would exceed eight percent (8%).

     

    The
      Company is required to pay certain fees and expenses incurred by the Company
      incident to the registration of the shares. The Company has agreed to indemnify
      the Selling Stockholders against certain losses, claims, damages and
      liabilities, including liabilities under the Securities Act. 

     

    Because
      Selling Stockholders may be deemed to be “underwriters” within the meaning of
      the Securities Act, they will be subject to the prospectus delivery requirements
      of the Securities Act including Rule 172 thereunder. In addition, any securities
      covered by this prospectus which qualify for sale pursuant to Rule 144 under
      the
      Securities Act may be sold under Rule 144 rather than under this prospectus.
      There is no underwriter or coordinating broker acting in connection with the
      proposed sale of the resale shares by the Selling Stockholders.

     

    We
      agreed
      to keep this prospectus effective until the earlier of (i) the date on which
      the
      shares may be resold by the Selling Stockholders without registration and
      without regard to any volume limitations by reason of Rule 144(k) under the
      Securities Act or any other rule of similar effect or (ii) all of the shares
      have been sold pursuant to this prospectus or Rule 144 under the Securities
      Act
      or any other rule of similar effect. The resale shares will be sold only through
      registered or licensed brokers or dealers if required under applicable state
      securities laws. In addition, in certain states, the resale shares may not
      be
      sold unless they have been registered or qualified for sale in the applicable
      state or an exemption from the registration or qualification requirement is
      available and is complied with.

     

    Under
      applicable rules and regulations under the Exchange Act, any person engaged
      in
      the distribution of the resale shares may not simultaneously engage in market
      making activities with respect to the common stock for the applicable restricted
      period, as defined in Regulation M, prior to the commencement of the
      distribution. In addition, the Selling Stockholders will be subject to
      applicable provisions of the Exchange Act and the rules and regulations
      thereunder, including Regulation M, which may limit the timing of purchases
      and
      sales of shares of the common stock by the Selling Stockholders or any other
      person. We will make copies of this prospectus available to the Selling
      Stockholders and have informed them of the need to deliver a copy of this
      prospectus to each purchaser at or prior to the time of the sale (including
      by
      compliance with Rule 172 under the Securities Act).

     

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    Annex
      B

     

    Innovative
      Card Technologies, Inc.

     

    Selling
      Securityholder Notice and Questionnaire

     

    The
      undersigned beneficial owner of common stock (the “Registrable
      Securities”)
      of
      Innovative Card Technologies, Inc., a Delaware corporation (the “Company”),
      understands that the Company has filed or intends to file with the Securities
      and Exchange Commission (the “Commission”)
      a
      registration statement (the “Registration
      Statement”)
      for
      the registration and resale under Rule 415 of the Securities Act of 1933, as
      amended (the “Securities
      Act”),
      of
      the Registrable Securities, in accordance with the terms of the Registration
      Rights Agreement (the “Registration
      Rights Agreement”)
      to
      which this document is annexed. A copy of the Registration Rights Agreement
      is
      available from the Company upon request at the address set forth below. All
      capitalized terms not otherwise defined herein shall have the meanings ascribed
      thereto in the Registration Rights Agreement.

     

    Certain
      legal consequences arise from being named as a selling securityholder in the
      Registration Statement and the related prospectus. Accordingly, holders and
      beneficial owners of Registrable Securities are advised to consult their own
      securities law counsel regarding the consequences of being named or not being
      named as a selling securityholder in the Registration Statement and the related
      prospectus.

     

    NOTICE

     

    The
      undersigned beneficial owner (the “Selling
      Securityholder”)
      of
      Registrable Securities hereby elects to include the Registrable Securities
      owned
      by it in the Registration Statement.

     

    
      
        1

        

         

      

      
        21

        
          

        

      

      
         

      

    

    The
      undersigned hereby provides the following information to the Company and
      represents and warrants that such information is accurate:

     

    QUESTIONNAIRE

     

    1. Name.

     

    
      	 	
              (a)

            	
              Full
                Legal Name of Selling
                Securityholder

            

    

     

    
      	 
	 

    

    

    
      	 	
              (b)

            	
              Full
                Legal Name of Registered Holder (if not the same as (a) above) through
                which Registrable Securities are
                held:

            

    

     

    
      	 
	 

    

    

    
      	 	
              (c)

            	
              Full
                Legal Name of Natural Control Person (which means a natural person
                who
                directly or indirectly alone or with others has power to vote or
                dispose
                of the securities covered by this
                Questionnaire):

            

    

     

    
      	 
	 

    

    

     

    2.
      Address for Notices to Selling Securityholder:

     

    
      	 
	 
	 
	
              Telephone: 

            
	
              Fax: 

            
	
              Contact
                Person: 

            

    

    

    3.
      Broker-Dealer Status:

     

    
      	 	
              (a)

            	
              Are
                you a broker-dealer?

            

    

     

    Yes
o No
o 

     

    
      	 	
              (b)

            	
              If
                “yes” to Section 3(a), did you receive your Registrable Securities as
                compensation for investment banking services to the
                Company?

            

    

     

    Yes
o  No
o 

     

    
      	 	
              Note:

            	
              If
                “no” to Section 3(b), the Commission’s staff has indicated that you should
                be identified as an underwriter in the Registration
                Statement.

            

    

     

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

    
      	 	
              (c)

            	
              Are
                you an affiliate of a
                broker-dealer?

            

    

     

    Yes
o  No
o 

     

    
      	 	
              (d)

            	
              If
                you are an affiliate of a broker-dealer, do you certify that you
                purchased
                the Registrable Securities in the ordinary course of business, and
                at the
                time of the purchase of the Registrable Securities to be resold,
                you had
                no agreements or understandings, directly or indirectly, with any
                person
                to distribute the Registrable
                Securities?

            

    

     

    Yes
o  No
o 

     

    
      	 	
              Note:

            	
              If
                “no” to Section 3(d), the Commission’s staff has indicated that you should
                be identified as an underwriter in the Registration
                Statement.

            

    

     

    4.
      Beneficial Ownership of Securities of the Company Owned by the Selling
      Securityholder.

     

    Except
      as set forth below in this Item 4, the undersigned is not the beneficial or
      registered owner of any securities of the Company other than the securities
      issuable pursuant to the Purchase Agreement.

     

    
      	 	
              (a)

            	
              Type
                and Amount of other securities beneficially owned by the Selling
                Securityholder:

            

    

     

    
      	 
	 
	 

    

    

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

    5.
      Relationships with the Company:

     

    Except
      as set forth below, neither the undersigned nor any of its affiliates, officers,
      directors or principal equity holders (owners of 5% of more of the equity
      securities of the undersigned) has held any position or office or has had any
      other material relationship with the Company (or its predecessors or affiliates)
      during the past three years.

     

    State
      any
      exceptions here:

     

    
      	 
	 
	 

    

    

     

    The
      undersigned agrees to promptly notify the Company of any inaccuracies or changes
      in the information provided herein that may occur subsequent to the date hereof
      at any time while the Registration Statement remains effective.

     

    By
      signing below, the undersigned consents to the disclosure of the information
      contained herein in its answers to Items 1 through 5 and the inclusion of such
      information in the Registration Statement and the related prospectus
and
      any
      amendments or supplements thereto.
      The
      undersigned understands that such information will be relied upon by the Company
      in connection with the preparation or amendment of the Registration Statement
      and the related prospectus.

     

    IN
      WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice
      and Questionnaire to be executed and delivered either in person or by its duly
      authorized agent.

     

    
      
        	 Date:  	 
	
                  Beneficial
                  Owner:  

              	 
	
                  By:  

              	 
	 	 
	 	 Name:
	 	 Title: 

      

    

     

    

    PLEASE
      FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN
      THE ORIGINAL BY OVERNIGHT MAIL, TO:

    

    

     

    
      
         

      

      24EXHIBIT
      E

    

    SECURITY
      AGREEMENT

    

      This
        SECURITY AGREEMENT, dated as of April 15, 2008 (this “Agreement”),
        is
        among Innovative
        Card Technologies, Inc., a Delaware corporation (the
        “Company”),
        all
        of the Subsidiaries of the Company
        (such
        subsidiaries,
        the
“Guarantors”
        and
        together with the Company,
        the
“Debtors”)
        and
        the holder of the Company’s 8% Senior Secured Convertible Debenture due April
        15, 2011 and issued on April 15, 2008 in the original aggregate principal
        amount
        of $5,000,000 (the “Debenture”)
        signatory hereto, their endorsees, transferees and assigns (collectively,
        the
“Secured
        Parties”).

    

    W
      I T N E S S E T H:

    

    WHEREAS,
      pursuant to the Purchase Agreement (as defined in the Debenture), the Secured
      Parties have severally agreed to extend the loan to the Company evidenced by
      the
      Debenture; 

    

      WHEREAS,
        pursuant to a certain Subsidiary Guarantee, dated as of the date hereof (the
        “Guarantee”),
        the
        Guarantors
        have
        jointly and severally agreed to guarantee and act as surety for payment of
        such
        Debenture; and

    

    WHEREAS,
      in order to induce the Secured Parties to extend the loan evidenced by the
      Debenture, each Debtor has agreed to execute and deliver to the Secured Parties
      this Agreement and to grant the Secured Parties, pari passu
      with
      each other Secured Party and through the Agent, a security interest in certain
      property of such Debtor to secure the prompt payment, performance and discharge
      in full of all of the Company’s obligations under the Debenture and the
      Guarantors’ obligations under the Guarantee.

    

    NOW,
      THEREFORE, in consideration of the agreements herein contained and for other
      good and valuable consideration, the receipt and sufficiency of which is hereby
      acknowledged, the parties hereto hereby agree as follows:

    

    1.
       Certain
      Definitions.
      As used
      in this Agreement, the following terms shall have the meanings set forth in
      this
      Section 1. Terms used but not otherwise defined in this Agreement that are
      defined in Article 9 of the UCC (such as “account”, “chattel paper”, “commercial
      tort claim”, “deposit account”, “document”, “equipment”, “fixtures”, “general
      intangibles”, “goods”, “instruments”, “inventory”, “investment property”,
“letter-of-credit rights”, “proceeds” and “supporting obligations”) shall have
      the respective meanings given such terms in Article 9 of the UCC.

    

      (a)
         “Collateral”
means
        the collateral in which the Secured Parties are granted a security interest
        by
        this Agreement and which shall include the following personal property of
        the
        Debtors, whether presently owned or existing or hereafter acquired or coming
        into existence, wherever situated, and all additions and accessions thereto
        and
        all substitutions and replacements thereof, and all proceeds, products and
        accounts thereof, including, without limitation, all proceeds from the sale
        or
        transfer of the Collateral and of insurance covering the same and of any
        tort
        claims in connection therewith,
        and all
        dividends, interest, cash, notes, securities, equity interest or other property
        at any time and from time to time acquired, receivable or otherwise distributed
        in respect of, or in exchange for, any or all of the Pledged Securities (as
        defined below):

    

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    (i)
      All
      goods, including, without limitation, (A) all machinery, equipment, computers,
      motor vehicles, trucks, tanks, boats, ships, appliances, furniture, special
      and
      general tools, fixtures, test and quality control devices and other equipment
      of
      every kind and nature and wherever situated, together with all documents of
      title and documents representing the same, all additions and accessions thereto,
      replacements therefor, all parts therefor, and all substitutes for any of the
      foregoing and all other items used and useful in connection with any Debtor’s
      businesses and all improvements thereto; and (B) all inventory;

    

      (ii)
         All
        contract rights and other general intangibles, including, without limitation,
        all partnership interests, membership interests, stock or other securities,
        rights
        under any of the Organizational Documents, agreements related to the Pledged
        Securities, licenses,
        distribution and other agreements, computer software (whether “off-the-shelf”,
        licensed from any third party or developed by any Debtor), computer software
        development rights, leases, franchises, customer lists, quality control
        procedures, grants and rights, goodwill, trademarks, service marks, trade
        styles, trade names, patents, patent applications, copyrights, and income
        tax
        refunds; 

     

    (iii)
       All
      accounts, together with all instruments, all documents of title representing
      any
      of the foregoing, all rights in any merchandising, goods, equipment, motor
      vehicles and trucks which any of the same may represent, and all right, title,
      security and guaranties with respect to each account, including any right of
      stoppage in transit; 

    

    (iv)
       All
      documents, letter-of-credit rights, instruments and chattel paper;

    

    (v) All
      commercial tort claims;

    

    (vi) All
      deposit accounts and all cash (whether or not deposited in such deposit
      accounts);

    

    (vii) All
      investment property;

    

     (viii) All
      supporting obligations; and

    

    (ix) All
      files, records, books of account, business papers, and computer programs;
      and

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    (x) the
      products and proceeds of all of the foregoing Collateral set forth in clauses
      (i)-(ix) above.

    

      Without
        limiting the generality of the foregoing, the “Collateral”
shall
        include all investment property and general intangibles respecting ownership
        and/or other equity interests in each Guarantor, including, without limitation,
        the shares of capital stock and the other equity interests listed on
Schedule
        H
        hereto
        (as the same may be modified from time to time pursuant to the terms hereof),
        and any other shares of capital stock and/or other equity interests of any
        other
        direct or indirect subsidiary of any Debtor obtained in the future, and,
        in each
        case, all certificates representing such shares and/or equity interests and,
        in
        each case, all rights, options, warrants, stock, other securities and/or
        equity
        interests that may hereafter be received, receivable or distributed in respect
        of, or exchanged for, any of the foregoing and all rights arising under or
        in
        connection with the Pledged Securities, including, but not limited to, all
        dividends, interest and cash.

     

    Notwithstanding
      the foregoing, nothing herein shall be deemed to constitute an assignment of
      any
      asset which, in the event of an assignment, becomes void by operation of
      applicable law or the assignment of which is otherwise prohibited by applicable
      law (in each case to the extent that such applicable law is not overridden
      by
      Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar applicable law);
      provided,
      however,
      that to
      the extent permitted by applicable law, this Agreement shall create a valid
      security interest in such asset and, to the extent permitted by applicable
      law,
      this Agreement shall create a valid security interest in the proceeds of such
      asset.

    

    (b)
       “Intellectual
      Property”
means
      the collective reference to all rights, priorities and privileges relating
      to
      intellectual property, whether arising under United States, multinational or
      foreign laws or otherwise, including, without limitation, (i) all copyrights
      arising under the laws of the United States, any other country or any political
      subdivision thereof, whether registered or unregistered and whether published
      or
      unpublished, all registrations and recordings thereof, and all applications
      in
      connection therewith, including, without limitation, all registrations,
      recordings and applications in the United States Copyright Office, (ii) all
      letters patent of the United States, any other country or any political
      subdivision thereof, all reissues and extensions thereof, and all applications
      for letters patent of the United States or any other country and all divisions,
      continuations and continuations-in-part thereof, (iii) all trademarks, trade
      names, corporate names, company names, business names, fictitious business
      names, trade dress, service marks, logos, domain names and other source or
      business identifiers, and all goodwill associated therewith, now existing or
      hereafter adopted or acquired, all registrations and recordings thereof, and
      all
      applications in connection therewith, whether in the United States Patent and
      Trademark Office or in any similar office or agency of the United States, any
      State thereof or any other country or any political subdivision thereof, or
      otherwise, and all common law rights related thereto, (iv) all trade secrets
      arising under the laws of the United States, any other country or any political
      subdivision thereof, (v) all rights to obtain any reissues, renewals or
      extensions of the foregoing, (vi) all licenses for any of the foregoing, and
      (vii) all causes of action for infringement of the foregoing.

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

      (c) “Majority
        in Interest”
means,
        at any time of determination, the majority in interest (based on
        then-outstanding principal amounts of Debenture at the time of such
        determination) of the Secured Parties.

    

      (d) “Necessary
        Endorsement”
means
        undated stock powers endorsed in blank or other proper instruments of assignment
        duly executed and such other instruments or documents as the Agent (as that
        term
        is defined below) may reasonably request.

    

      (e)
         “Obligations”
means
        all of the liabilities
        and obligations (primary, secondary, direct, contingent, sole, joint or several)
        due or to become due, or that are now or may be hereafter contracted or
        acquired, or owing to, of any Debtor to the Secured Parties, including, without
        limitation, all
        obligations under this Agreement, the Debenture, the Guarantee and any other
        instruments, agreements or other documents executed and/or delivered in
        connection herewith or therewith, in each case, whether now or hereafter
        existing, voluntary or involuntary, direct or indirect, absolute or contingent,
        liquidated or unliquidated, whether or not jointly owed with others, and
        whether
        or not from time to time decreased or extinguished and later increased, created
        or incurred, and all or any portion of such obligations or liabilities that
        are
        paid, to the extent all or any part of such payment is avoided or recovered
        directly or indirectly from any of the Secured Parties as a preference,
        fraudulent transfer or otherwise as such obligations may be amended,
        supplemented, converted, extended or modified from time to time. Without
        limiting the generality of the foregoing, the term “Obligations” shall include,
        without limitation: (i) principal of, and interest on the Debenture and the
        loan
        extended pursuant thereto; (ii) any and all other fees, indemnities, costs,
        obligations and liabilities of the Debtors from time to time under or in
        connection with this Agreement, the Debenture, the Guarantee and any other
        instruments, agreements or other documents executed and/or delivered in
        connection herewith or therewith; and (iii) all amounts (including but not
        limited to post-petition interest) in respect of the foregoing that would
        be
        payable but for the fact that the obligations to pay such amounts are
        unenforceable or not allowable due to the existence of a bankruptcy,
        reorganization or similar proceeding involving any Debtor.

    

      (f)
         “Organizational
        Documents”
means
        with respect to any Debtor, the documents by which such Debtor was organized
        (such as a certificate of incorporation, certificate of limited partnership
        or
        articles of organization, and including, without limitation, any certificates
        of
        designation for preferred stock or other forms of preferred equity) and which
        relate to the internal governance of such Debtor (such as bylaws, a partnership
        agreement or an operating, limited liability or members
        agreement).

    

    (g)
       “Pledged
      Interests”
shall
      have the meaning ascribed to such term in Section 4(j).

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    (h)
       “Pledged
      Securities”
shall
      have the meaning ascribed to such term in Section 4(i).

    

    (i) “UCC”
means
      the Uniform Commercial Code of the State of New York and or any other applicable
      law of any state or states which has jurisdiction with respect to all, or any
      portion of, the Collateral or this Agreement, from time to time. It is the
      intent of the parties that defined terms in the UCC should be construed in
      their
      broadest sense so that the term “Collateral” will be construed in its broadest
      sense. Accordingly if there are, from time to time, changes to defined terms
      in
      the UCC that broaden the definitions, they are incorporated herein and if
      existing definitions in the UCC are broader than the amended definitions, the
      existing ones shall be controlling. 

    

    2.
       Grant
      of Security Interest in Collateral.
      As an
      inducement for the Secured Parties to extend the loan as evidenced by the
      Debenture and to secure the complete and timely payment, performance and
      discharge in full, as the case may be, of all of the Obligations, each Debtor
      hereby unconditionally and irrevocably pledges, grants and hypothecates to
      the
      Secured Parties a security interest in and to, a lien upon and a right of
      set-off against all of their respective right, title and interest of whatsoever
      kind and nature in and to, the Collateral (a “Security
      Interest”
and,
      collectively, the “Security
      Interests”).

    

      3. Delivery
        of Certain Collateral.
        Contemporaneously or prior to the execution of this Agreement, each Debtor
        shall
        deliver or cause to be delivered to the Agent (a) any and all certificates
        and
        other instruments representing or evidencing the Pledged Securities, and
        (b) any
        and all certificates and other instruments or documents representing any
        of the
        other Collateral, in each case, together with all Necessary Endorsements.
        The
        Debtors are, contemporaneously with the execution hereof, delivering to Agent,
        or have previously delivered to Agent, a true and correct copy of each
        Organizational Document governing any of the Pledged
        Securities.

    

       4.  Representations,
        Warranties, Covenants and Agreements of the Debtors.
        Except
        as set forth under the corresponding section of the disclosure schedules
        delivered to the Secured Parties concurrently herewith (the “Disclosure
        Schedules”),
        which
        Disclosure Schedules shall be deemed a part hereof, each Debtor represents
        and
        warrants to, and covenants and agrees with, the Secured Parties as
        follows:

    

    (a)
      Each
      Debtor has the requisite corporate, partnership, limited liability company
      or
      other power and authority to enter into this Agreement and otherwise to carry
      out its obligations hereunder. The execution, delivery and performance by each
      Debtor of this Agreement and the filings contemplated therein have been duly
      authorized by all necessary action on the part of such Debtor and no further
      action is required by such Debtor. This Agreement has been duly executed by
      each
      Debtor. This Agreement constitutes the legal, valid and binding obligation
      of
      each Debtor, enforceable against each Debtor in accordance with its terms except
      as such enforceability may be limited by applicable bankruptcy, insolvency,
      reorganization and similar laws of general application relating to or affecting
      the rights and remedies of creditors and by general principles of
      equity.

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    (b)
       The
      Debtors have no place of business or offices where their respective books of
      account and records are kept (other than temporarily at the offices of its
      attorneys or accountants) or places where Collateral is stored or located,
      except as set forth on Schedule
      A
      attached
      hereto. Except as specifically set forth on Schedule
      A,
      each
      Debtor is the record owner of the real property where such Collateral is
      located, and there exist no mortgages or other liens on any such real property
      except for Permitted Liens (as defined in the Debenture). Except as disclosed
      on
Schedule
      A,
      none of
      such Collateral is in the possession of any consignee, bailee, warehouseman,
      agent or processor.

    

    (c)
       Except
      for Permitted Liens (as defined in the Debenture) and except as set forth on
      Schedule
      B
      attached
      hereto, the Debtors are the sole owner of the Collateral (except for
      non-exclusive licenses granted by any Debtor in the ordinary course of
      business), free and clear of any liens, security interests, encumbrances, rights
      or claims, and are fully authorized to grant the Security Interests. Except
      as
      set forth on Schedule
      B
      attached
      hereto, there is not on file in any governmental or regulatory authority, agency
      or recording office an effective financing statement, security agreement,
      license or transfer or any notice of any of the foregoing (other than those
      that
      will be filed in favor of the Secured Parties pursuant to this Agreement)
      covering or affecting any of the Collateral. Except as set forth on Schedule
      B
      attached
      hereto and except pursuant to this Agreement, as long as this Agreement shall
      be
      in effect, the Debtors shall not execute and shall not knowingly permit to
      be on
      file in any such office or agency any other financing statement or other
      document or instrument (except to the extent filed or recorded in favor of
      the
      Secured Parties pursuant to the terms of this Agreement).

    

    (d)
       No
      written claim has been received that any Collateral or any Debtor's use of
      any
      Collateral violates the rights of any third party. There has been no adverse
      decision to any Debtor's claim of ownership rights in or exclusive rights to
      use
      the Collateral in any jurisdiction or to any Debtor's right to keep and maintain
      such Collateral in full force and effect, and there is no proceeding involving
      said rights pending or, to the best knowledge of any Debtor, threatened before
      any court, judicial body, administrative or regulatory agency, arbitrator or
      other governmental authority.

    

    (e)
       Each
      Debtor shall at all times maintain its books of account and records relating
      to
      the Collateral at its principal place of business and its Collateral at the
      locations set forth on Schedule
      A
      attached
      hereto and may not relocate such books of account and records or tangible
      Collateral unless it delivers to the Secured Parties at least 30 days prior
      to
      such relocation (i) written notice of such relocation and the new location
      thereof (which must be within the United States) and (ii) evidence that
      appropriate financing statements under the UCC and other necessary documents
      have been filed and recorded and other steps have been taken to perfect the
      Security Interests to create in favor of the Secured Parties a valid, perfected
      and continuing perfected first priority lien in the Collateral.

    

      (f)
         This
        Agreement creates in favor of the Secured Parties a valid security interest
        in
        the Collateral, subject only to Permitted Liens (as defined in the Debenture)
        securing the payment and performance of the Obligations. Upon making the
        filings
        described in the immediately following paragraph, all security interests
        created
        hereunder in any Collateral which may be perfected by filing Uniform Commercial
        Code financing statements shall have been duly perfected. Except for the
        filing
        of the Uniform Commercial Code financing statements referred to in the
        immediately following paragraph, the recordation of the Intellectual Property
        Security Agreement (as defined below) with respect to copyrights and copyright
        applications in the United States Copyright Office referred to in paragraph
        (m),
the
        execution and delivery of deposit account control agreements satisfying the
        requirements of Section 9-104(a)(2) of the UCC with respect to each deposit
        account of the Debtors,
        and the
        delivery of the certificates and other instruments provided in Section
        3,
        no
        action is necessary to create, perfect or protect the security interests
        created
        hereunder. Without limiting the generality of the foregoing, except for the
        filing of said financing statements, the recordation of said Intellectual
        Property Security Agreement, and the execution and delivery of said deposit
        account control agreements, no consent of any third parties and no
        authorization, approval or other action by, and no notice to or filing with,
        any
        governmental authority or regulatory body is required for (i) the execution,
        delivery and performance of this Agreement, (ii) the creation or perfection
        of
        the Security Interests created hereunder in the Collateral or (iii) the
        enforcement of the rights of the Agent and the Secured Parties
        hereunder.

    

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    (g)
       Each
      Debtor hereby authorizes the Agent to file one or more financing statements
      under the UCC, with respect to the Security Interests, with the proper filing
      and recording agencies in any jurisdiction deemed proper by it.

    

     (h)
       The
      execution, delivery and performance of this Agreement by the Debtors does not
      (i) violate any of the provisions of any Organizational Documents of any Debtor
      or any judgment, decree, order or award of any court, governmental body or
      arbitrator or any applicable law, rule or regulation applicable to any Debtor
      or
      (ii) conflict with, or constitute a default (or an event that with notice or
      lapse of time or both would become a default) under, or give to others any
      rights of termination, amendment, acceleration or cancellation (with or without
      notice, lapse of time or both) of, any agreement, credit facility, debt or
      other
      instrument (evidencing any Debtor's debt or otherwise) or other understanding
      to
      which any Debtor is a party or by which any property or asset of any Debtor
      is
      bound or affected. If any, all required consents (including, without limitation,
      from stockholders or creditors of any Debtor) necessary for any Debtor to enter
      into and perform its obligations hereunder have been obtained.

    

       (i)
         The
        capital stock and other equity interests listed on Schedule
        H
        hereto
        (the “Pledged
        Securities”)
        represent all of the capital stock and other equity interests of the Guarantors,
        and represent all capital stock and other equity interests owned, directly
        or
        indirectly, by the Company. All of the Pledged Securities are validly issued,
        fully paid and nonassessable, and the Company is the legal and beneficial
        owner
        of the Pledged Securities, free and clear of any lien, security interest
        or
        other encumbrance except for the security interests created by this Agreement
        and other Permitted Liens (as defined in the Debenture). 

    

      (j)
         The
        ownership and other equity interests in partnerships and limited liability
        companies (if any)
        included
        in the Collateral
        (the
“Pledged
        Interests”)
        by
        their express terms do not provide that they are securities governed by Article
        8 of the UCC and are not held in a securities account or by any financial
        intermediary.

    

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

      (k)
         Except
        for Permitted Liens (as defined in the Debenture), each Debtor shall at all
        times maintain the liens and Security Interests provided for hereunder as
        valid
        and perfected first priority liens and security interests in the Collateral
        in
        favor of the Secured Parties until this Agreement and the Security Interest
        hereunder shall be terminated pursuant to Section 14 hereof. Each Debtor
        hereby
        agrees to defend the same against the claims of any and all persons and
        entities. Each Debtor shall safeguard and protect all Collateral for the
        account
        of the Secured Parties. At the request of the Agent, each Debtor will sign
        and
        deliver to the Agent on behalf of the Secured Parties at any time or from
        time
        to time one or more financing statements pursuant to the UCC in form reasonably
        satisfactory to the Agent and will pay the cost of filing the same in all
        public
        offices wherever filing is, or is deemed by the Agent to be, necessary or
        desirable to effect the rights and obligations provided for herein. Without
        limiting the generality of the foregoing, each Debtor shall pay all fees,
        taxes
        and other amounts necessary to maintain the Collateral and the Security
        Interests hereunder, and each Debtor shall obtain and furnish to the Agent
        from
        time to time, upon demand, such releases and/or subordinations of claims
        and
        liens which may be required to maintain the priority of the Security Interests
        hereunder.

    

      (l)
         No
        Debtor
        will transfer, pledge, hypothecate, encumber, license, sell or otherwise
        dispose
        of any of the Collateral (except for non-exclusive licenses granted by a
        Debtor
        in its ordinary course of business and sales of inventory by a Debtor in
        its
        ordinary course of business) without the prior written consent of a Majority
        in Interest.

    

      (m) Each
        Debtor shall keep and preserve its equipment, inventory and other tangible
        Collateral in good condition, repair and order and shall not operate or locate
        any such Collateral (or cause to be operated or located) in any area excluded
        from insurance coverage.

    

      (n) Each
        Debtor shall maintain with financially sound and reputable insurers, insurance
        with respect to the Collateral, including Collateral hereafter acquired,
        against
        loss or damage of the kinds and in the amounts customarily insured against
        by
        entities of established reputation having similar properties similarly situated
        and in such amounts as are customarily carried under similar circumstances
        by
        other such entities and otherwise as is prudent for entities engaged in similar
        businesses but in any event sufficient to cover the full replacement cost
        thereof. Each Debtor shall cause each insurance policy issued in connection
        herewith to provide, and the insurer issuing such policy to certify to the
        Agent, that (a) the Agent will be named as lender loss payee and additional
        insured under each such insurance policy; (b) if such insurance be proposed
        to
        be cancelled or materially changed for any reason whatsoever, such insurer
        will
        promptly notify the Agent and such cancellation or change shall not be effective
        as to the Agent for at least thirty (30) days after receipt by the Agent
        of such
        notice, unless the effect of such change is to extend or increase coverage
        under
        the policy; and (c) the Agent will have the right (but no obligation) at
        its
        election to remedy any default in the payment of premiums within thirty (30)
        days of notice from the insurer of such default. If no Event of Default (as
        defined in the Debenture) exists and if the proceeds arising out of any claim
        or
        series of related claims do not exceed $100,000, loss payments in each instance
        will be applied by the applicable Debtor to the repair and/or replacement
        of
        property with respect to which the loss was incurred to the extent reasonably
        feasible, and any loss payments or the balance thereof remaining, to the
        extent
        not so applied, shall be payable to the applicable Debtor; provided,
        however,
        that
        payments received by any Debtor after an Event of Default occurs and is
        continuing or in excess of $100,000 for any occurrence or series of related
        occurrences shall be paid to the Agent on behalf of the Secured Parties and,
        if
        received by such Debtor, shall be held in trust for the Secured Parties and
        immediately paid over to the Agent unless otherwise directed in writing by
        the
        Agent. Copies of such policies or the related certificates, in each case,
        naming
        the Agent as lender loss payee and additional insured shall be delivered
        to the
        Agent at least annually and at the time any new policy of insurance is
        issued.

    

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

      (o)
         Each
        Debtor shall, within ten (10) days of obtaining knowledge thereof, advise
        the
        Secured Parties promptly, in sufficient detail, of any material adverse change
        in the Collateral, and of the occurrence of any event which would have a
        material adverse effect on the value of the Collateral or on the Secured
        Parties’ security interest, through the Agent, therein.

    

      (p)
         Each
        Debtor shall promptly execute and deliver to the Agent such further deeds,
        mortgages, assignments, security agreements, financing statements or other
        instruments, documents, certificates and assurances and take such further
        action
        as the Agent may from time to time request and may in its sole discretion
        deem
        necessary to perfect, protect or enforce the Secured Parties’ security interest
        in the Collateral including, without limitation, if applicable, the execution
        and delivery of a separate security agreement with respect to each Debtor’s
        Intellectual Property (“Intellectual
        Property Security Agreement”)
        in
        which the Secured Parties have been granted a security interest hereunder,
        substantially in a form reasonably acceptable to the Agent, which Intellectual
        Property Security Agreement, other than as stated therein, shall be subject
        to
        all of the terms and conditions hereof.

    

      (q)
         Each
        Debtor shall permit the Agent and its representatives and agents to inspect
        the
        Collateral during normal business hours and upon reasonable prior notice,
        and to
        make copies of records pertaining to the Collateral as may be reasonably
        requested by the Agent from time to time.

    

      (r)
         Each
        Debtor shall take all steps reasonably necessary to diligently pursue and
        seek
        to preserve, enforce and collect any rights, claims, causes of action and
        accounts receivable in respect of the Collateral.

    

      (s)
         Each
        Debtor shall promptly notify the Secured Parties in sufficient detail upon
        becoming aware of any attachment, garnishment, execution or other legal process
        levied against any Collateral and of any other information received by such
        Debtor that may materially affect the value of the Collateral, the Security
        Interest or the rights and remedies of the Secured Parties
        hereunder.

    

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

      (t)
         All
        information heretofore, herein or hereafter supplied to the Secured Parties
        by
        or on behalf of any Debtor with respect to the Collateral is accurate and
        complete in all material respects as of the date furnished.

    

      (u)
         The
        Debtors shall at all times preserve and keep in full force and effect their
        respective valid existence and good standing and any rights and franchises
        material to its business.

    

      (v)
         No
        Debtor
        will change its name, type of organization, jurisdiction of organization,
        organizational identification number (if it has one), legal or corporate
        structure, or identity, or add any new fictitious name unless it provides
        at
        least 30 days prior written notice to the Secured Parties of such change
        and, at
        the time of such written notification, such Debtor provides any financing
        statements or fixture filings necessary to perfect and continue the perfection
        of the Security Interests granted and evidenced by this
        Agreement.

    

      (w) Except
        in
        the ordinary course of business, no Debtor may consign any of its inventory
        or
        sell any of its inventory on bill and hold, sale or return, sale on approval,
        or
        other conditional terms of sale without the consent of the
        Agent
        which shall not be unreasonably withheld.

    

      (x)
         No
        Debtor
        may relocate its chief executive office to a new location without providing
        30
        days prior written notification thereof to the Secured Parties and so long
        as,
        at the time of such written notification, such Debtor provides any financing
        statements or fixture filings necessary to perfect and continue the perfection
        of the Security Interests granted and evidenced by this
        Agreement.

    

      (y) Each
        Debtor was organized and remains organized solely under the laws of the state
        set forth next to such Debtor’s name in Schedule
        D
        attached
        hereto, which Schedule
        D
        sets
        forth each Debtor’s organizational identification number or, if any Debtor does
        not have one, states that one does not exist.

    

      (z) 
        (i) The
        actual name of each Debtor is the name set forth in Schedule
        D
        attached
        hereto; (ii) no Debtor has any trade names except as set forth on Schedule
        E
        attached
        hereto; (iii) no Debtor has used any name other than that stated in the preamble
        hereto or as set forth on Schedule
        E
        for the
        preceding five years; and (iv) no entity has merged into any Debtor or been
        acquired by any Debtor within the past five years except as set forth on
        Schedule
        E.

    

      (aa) At
        any
        time and from time to time that any Collateral consists of instruments,
        certificated securities or other items that require or permit possession
        by the
        secured party to perfect the security interest created hereby, the applicable
        Debtor shall deliver such Collateral to the Agent.

    

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

      (bb)
         Each
        Debtor, in its capacity as issuer, hereby agrees to comply with any and all
        orders and instructions of Agent regarding the Pledged Interests consistent
        with
        the terms of this Agreement without the further consent of any Debtor as
        contemplated by Section 8-106 (or any successor section) of the UCC. Further,
        each Debtor agrees that it shall not enter into a similar agreement (or one
        that
        would confer “control” within the meaning of Article 8 of the UCC) with any
        other person or entity.

     

      (cc) Each
        Debtor shall cause all tangible chattel paper constituting Collateral to
        be
        delivered to the Agent, or, if such delivery is not possible, then to cause
        such
        tangible chattel paper to contain a legend noting that it is subject to the
        security interest created by this Agreement. To the extent that any Collateral
        consists of electronic chattel paper, the applicable Debtor shall cause the
        underlying chattel paper to be “marked” within the meaning of Section 9-105 of
        the UCC (or successor section thereto).

    

      (dd) If
        there
        is any investment property or deposit account included as Collateral that
        can be
        perfected by “control” through an account control agreement, the applicable
        Debtor shall cause such an account control agreement, in form and substance
        in
        each case satisfactory to the Agent, to be entered into and delivered to
        the
        Agent for the benefit of the Secured Parties.

    

      (ee)
         To
        the
        extent that any Collateral consists of letter-of-credit rights, the applicable
        Debtor shall cause the issuer of each underlying letter of credit to consent
        to
        an assignment of the proceeds thereof to the Secured Parties.

    

      (ff)
         To
        the
        extent that any Collateral is in the possession of any third party, the
        applicable Debtor shall join with the Agent in notifying such third party
        of the
        Secured Parties’ security interest in such Collateral and shall use its best
        efforts to obtain an acknowledgement and agreement from such third party
        with
        respect to the Collateral, in form and substance reasonably satisfactory
        to the
        Agent.

    

      (gg) If
        any
        Debtor shall at any time hold or acquire a commercial tort claim, such Debtor
        shall promptly notify the Secured Parties in a writing signed by such Debtor
        of
        the particulars thereof and grant to the Secured Parties in such writing
        a
        security interest therein and in the proceeds thereof, all upon the terms
        of
        this Agreement, with such writing to be in form and substance satisfactory
        to
        the Agent.

    

      (hh) Each
        Debtor shall immediately provide written notice to the Secured Parties of
        any
        and all accounts which arise out of contracts with any governmental authority
        and, to the extent necessary to perfect or continue the perfected status
        of the
        Security Interests in such accounts and proceeds thereof, shall execute and
        deliver to the Agent an assignment of claims for such accounts and cooperate
        with the Agent in taking any other steps required, in its judgment, under
        the
        Federal Assignment of Claims Act or any similar federal, state or local statute
        or rule to perfect or continue the perfected status of the Security Interests
        in
        such accounts and proceeds thereof.

    

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

      (ii) Each
        Debtor shall cause each subsidiary
        of such
        Debtor to immediately become a party hereto (an “Additional
        Debtor”),
        by
        executing and delivering an Additional Debtor Joinder in substantially the
        form
        of Annex
        A
        attached
        hereto and comply with the provisions hereof applicable to the Debtors.
        Concurrent therewith, the Additional Debtor shall deliver replacement schedules
        for, or supplements to all other Schedules to (or referred to in) this
        Agreement, as applicable, which replacement schedules shall supersede, or
        supplements shall modify, the Schedules then in effect. The Additional Debtor
        shall also deliver such opinions of counsel, authorizing resolutions, good
        standing certificates, incumbency certificates, organizational documents,
        financing statements and other information and documentation as the Agent
        may
        reasonably request. Upon delivery of the foregoing to the Agent, the Additional
        Debtor shall be and become a party to this Agreement with the same rights
        and
        obligations as the Debtors, for all purposes hereof as fully and to the same
        extent as if it were an original signatory hereto and shall be deemed to
        have
        made the representations, warranties and covenants set forth herein as of
        the
        date of execution and delivery of such Additional Debtor Joinder, and all
        references herein to the “Debtors” shall be deemed to include each Additional
        Debtor.

    

      (jj)
         Each
        Debtor shall vote the Pledged Securities to comply with the covenants and
        agreements set forth herein and in the Debenture.

    

      (kk) Each
        Debtor shall register the pledge of the applicable Pledged Securities on
        the
        books of such Debtor. Each Debtor shall notify each issuer of Pledged Securities
        to register the pledge of the applicable Pledged Securities in the name of
        the
        Secured Parties on the books of such issuer. Further, except with respect
        to
        certificated securities delivered to the Agent, the applicable Debtor shall
        deliver to Agent an acknowledgement of pledge (which, where appropriate,
        shall
        comply with the requirements of the relevant UCC with respect to perfection
        by
        registration) signed by the issuer of the applicable Pledged Securities,
        which
        acknowledgement shall confirm that: (a) it has registered the pledge on its
        books and records; and (b) at any time directed by Agent during the continuation
        of an Event of Default, such issuer will transfer the record ownership of
        such
        Pledged Securities into the name of any designee of Agent, will take such
        steps
        as may be necessary to effect the transfer, and will comply with all other
        instructions of Agent regarding such Pledged Securities without the further
        consent of the applicable Debtor.

    

      (ll)
        In
        the
        event that, upon an occurrence of an Event of Default, Agent shall sell all
        or
        any of the Pledged Securities to another party or parties (herein called
        the
“Transferee”)
        or
        shall purchase or retain all or any of the Pledged Securities, each Debtor
        shall, to the extent applicable: (i) deliver to Agent or the Transferee,
        as the
        case may be, the articles of incorporation, bylaws, minute books, stock
        certificate books, corporate seals, deeds, leases, indentures, agreements,
        evidences of indebtedness, books of account, financial records and all other
        Organizational Documents and records of the Debtors and their direct and
        indirect subsidiaries; (ii) use its best efforts to obtain resignations of
        the
        persons then serving as officers and directors of the Debtors and their direct
        and indirect subsidiaries, if so requested; and (iii) use its best efforts
        to
        obtain any approvals that are required by any governmental or regulatory
        body in
        order to permit the sale of the Pledged Securities to the Transferee or the
        purchase or retention of the Pledged Securities by Agent and allow the
        Transferee or Agent to continue the business of the Debtors and their direct
        and
        indirect subsidiaries.

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

      (mm) Without
        limiting the generality of the other obligations of the Debtors hereunder,
        each
        Debtor shall promptly (i) cause to be registered at the United States Copyright
        Office all of its material copyrights, (ii) cause the security interest
        contemplated hereby with respect to all Intellectual Property registered
        at the
        United States Copyright Office or United States Patent and Trademark Office
        to
        be duly recorded at the applicable office, and (iii) give the Agent notice
        whenever it acquires (whether absolutely or by license) or creates any
        additional material Intellectual Property.

    

      (nn) Each
        Debtor will from time to time, at the joint and several expense of the Debtors,
        promptly execute and deliver all such further instruments and documents,
        and
        take all such further action as may be necessary or desirable, or as the
        Agent
        may reasonably request, in order to perfect and protect any security interest
        granted or purported to be granted hereby or to enable the Secured Parties
        to
        exercise and enforce their rights and remedies hereunder and with respect
        to any
        Collateral or to otherwise carry out the purposes of this
        Agreement.

    

      (oo) Schedule
        F
        attached
        hereto lists all of the patents, patent applications, trademarks, trademark
        applications, registered copyrights, and domain names owned by any of the
        Debtors as of the date hereof. Schedule
        F
        lists
        all material licenses in favor of any Debtor for the use of any patents,
        trademarks, copyrights and domain names as of the date hereof. All material
        patents and trademarks of the Debtors have been duly recorded at the United
        States Patent and Trademark Office and all material copyrights of the Debtors
        have been duly recorded at the United States Copyright
        Office.

    

      (pp) Except
        as
        set forth on Schedule
        G
        attached
        hereto, none of the account debtors or other persons or entities obligated
        on
        any of the Collateral is a governmental authority covered by the Federal
        Assignment of Claims Act or any similar federal, state or local statute or
        rule
        in respect of such Collateral.

    

      5. Effect
        of Pledge on Certain Rights. If
        any of
        the Collateral subject to this Agreement consists of nonvoting equity or
        ownership interests (regardless of class, designation, preference or rights)
        that may be converted into voting equity or ownership interests upon the
        occurrence of certain events (including, without limitation, upon the transfer
        of all or any of the other stock or assets of the issuer), it is agreed that
        the
        pledge of such equity or ownership interests pursuant to this Agreement or
        the
        enforcement of any of Agent’s rights hereunder shall not be deemed to be the
        type of event which would trigger such conversion rights notwithstanding
        any
        provisions in the Organizational Documents or agreements to which any Debtor
        is
        subject or to which any Debtor is party.

    

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

      6.
         Defaults.
        The
        following events shall be “Events
        of Default”:

    

    (a)
      The
      occurrence of an Event of Default (as defined in the Debenture) under the
      Debenture;

    

    (b)
      Any
      representation or warranty of any Debtor in this Agreement shall prove to have
      been incorrect in any material respect when made;

    

    (c)
      The
      failure by any Debtor to materially observe or perform any of its obligations
      hereunder for fifteen (15) days after delivery to such Debtor of notice of
      such
      failure by or on behalf of a Secured Party unless such default is capable of
      cure but cannot be cured within such time frame and such Debtor is using best
      efforts to cure same in a timely fashion; or

    

    (d)
      If
      any provision of this Agreement shall at any time for any reason be declared
      to
      be null and void, or the validity or enforceability thereof shall be contested
      by any Debtor, or a proceeding shall be commenced by any Debtor, or by any
      governmental authority having jurisdiction over any Debtor, seeking to establish
      the invalidity or unenforceability thereof, or any Debtor shall deny that any
      Debtor has any liability or obligation purported to be created under this
      Agreement.

    

       7.  Duty
        To Hold In Trust.
        

    

      (a) Upon
        the
        occurrence of any Event of Default and at any time thereafter, each Debtor
        shall, upon receipt of any revenue, income,
        dividend, interest
        or other
        sums subject to the Security Interests, whether payable pursuant to the
        Debenture or otherwise, or of any check, draft, note, trade acceptance or
        other
        instrument evidencing an obligation to pay any such sum, hold the same in
        trust
        for the Secured Parties and shall forthwith endorse and transfer any such
        sums
        or instruments, or both, to the Secured Parties for application to the
        satisfaction of the Obligations.

    

      (b) If
        any
        Debtor shall become entitled to receive or shall receive any securities or
        other
        property (including, without limitation, shares of Pledged Securities or
        instruments representing Pledged Securities acquired after the date hereof,
        or
        any options, warrants, rights or other similar property or certificates
        representing a dividend, or any distribution in connection with any
        recapitalization, reclassification or increase or reduction of capital, or
        issued in connection with any reorganization of such Debtor or any of its
        direct
        or indirect subsidiaries) in respect of the Pledged Securities (whether as
        an
        addition to, in substitution of, or in exchange for, such Pledged Securities
        or
        otherwise), such Debtor agrees to (i) accept the same as the agent of the
        Secured Parties; (ii) hold the same in trust on behalf of and for the benefit
        of
        the Secured Parties; and (iii) to deliver any and all certificates or
        instruments evidencing the same to Agent on or before the close of business
        on
        the fifth business day following the receipt thereof by such Debtor, in the
        exact form received together with the Necessary Endorsements, to be held
        by
        Agent subject to the terms of this Agreement as Collateral.

    

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

       8.  Rights
        and Remedies Upon Default.
        

    

      (a) Upon
        the
        occurrence of any Event of Default and at any time thereafter, the Secured
        Parties, acting through the Agent, shall have the right to exercise all of
        the
        remedies conferred hereunder and under the Debenture, and the Secured Parties
        shall have all the rights and remedies of a secured party under the UCC.
        Without
        limitation, the Agent, for the benefit of the Secured Parties, shall have
        the
        following rights and powers:

    

      (i)
        The
        Agent shall have the right to take possession of the Collateral and, for
        that
        purpose, enter, with the aid and assistance of any person, any premises where
        the Collateral, or any part thereof, is or may be placed and remove the same,
        and each Debtor shall assemble the Collateral and make it available to the
        Agent
        at places which the Agent shall reasonably select, whether at such Debtor's
        premises or elsewhere, and make available to the Agent, without rent, all
        of
        such Debtor’s respective premises and facilities for the purpose of the Agent
        taking possession of, removing or putting the Collateral in saleable or
        disposable form.

    

      (ii) Upon
        notice to the Debtors by Agent, all rights of each Debtor to exercise the
        voting
        and other consensual rights which it would otherwise be entitled to exercise
        and
        all rights of each Debtor to receive the dividends and interest which it
        would
        otherwise be authorized to receive and retain, shall cease. Upon such notice,
        Agent shall have the right to receive, for the benefit of the Secured Parties,
        any interest, cash dividends or other payments on the Collateral and, at
        the
        option of Agent, to exercise in such Agent’s discretion all voting rights
        pertaining thereto. Without limiting the generality of the foregoing, Agent
        shall have the right (but not the obligation) to exercise all rights with
        respect to the Collateral as if it were the sole and absolute owner thereof,
        including, without limitation, to vote and/or to exchange, at its sole
        discretion, any or all of the Collateral in connection with a merger,
        reorganization, consolidation, recapitalization or other readjustment concerning
        or involving the Collateral or any Debtor or any of its direct or indirect
        subsidiaries.

    

      (iii)
        The
        Agent shall have the right to operate the business of each Debtor using the
        Collateral and shall have the right to assign, sell, lease or otherwise dispose
        of and deliver all or any part of the Collateral, at public or private sale
        or
        otherwise, either with or without special conditions or stipulations, for
        cash
        or on credit or for future delivery, in such parcel or parcels and at such
        time
        or times and at such place or places, and upon such terms and conditions
        as the
        Agent may deem commercially reasonable, all without (except as shall be required
        by applicable statute and cannot be waived) advertisement or demand upon
        or
        notice to any Debtor or right of redemption of a Debtor, which are hereby
        expressly waived. Upon each such sale, lease, assignment or other transfer
        of
        Collateral, the Agent, for the benefit of the Secured Parties, may, unless
        prohibited by applicable law which cannot be waived, purchase all or any
        part of
        the Collateral being sold, free from and discharged of all trusts, claims,
        right
        of redemption and equities of any Debtor, which are hereby waived and
        released.

    

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

      (iv) The
        Agent
        shall have the right (but not the obligation) to notify any account debtors
        and
        any obligors under instruments or accounts to make payments directly to the
        Agent, on behalf of the Secured Parties, and to enforce the Debtors’ rights
        against such account debtors and obligors.

    

      (v) The
        Agent, for the benefit of the Secured Parties, may (but is not obligated
        to)
        direct any financial intermediary or any other person or entity holding any
        investment property to transfer the same to the Agent, on behalf of the Secured
        Parties, or its designee.

    

      (vi) The
        Agent
        may (but is not obligated to) transfer any or all Intellectual Property
        registered in the name of any Debtor at the United States Patent and Trademark
        Office and/or Copyright Office into the name of the Secured Parties or any
        designee or any purchaser of any Collateral.

    

      (b) The
        Agent
        shall comply with any applicable law in connection with a disposition of
        Collateral and such compliance will not be considered adversely to affect
        the
        commercial reasonableness of any sale of the Collateral. The Agent may sell
        the
        Collateral without giving any warranties and may specifically disclaim such
        warranties. If the Agent sells any of the Collateral on credit, the Debtors
        will
        be credited with payments upon the sale. In addition, each Debtor waives
        any and
        all rights that it may have to a judicial hearing in advance of the enforcement
        of any of the Agent’s rights and remedies hereunder, including, without
        limitation, its right following an Event of Default to take immediate possession
        of the Collateral and to exercise its rights and remedies with respect
        thereto.

     

      (c) For
        the
        purpose of enabling the Agent to further exercise rights and remedies under
        this
        Section 8 or elsewhere provided by agreement or applicable law, each Debtor
        hereby grants to the Agent, for the benefit of the Agent and the Secured
        Parties, an irrevocable, nonexclusive license (exercisable without payment
        of
        royalty or other compensation to such Debtor) to use, license or sublicense
        following an Event of Default, any Intellectual Property now owned or hereafter
        acquired by such Debtor, and wherever the same may be located, and including
        in
        such license access to all media in which any of the licensed items may be
        recorded or stored and to all computer software and programs used for the
        compilation or printout thereof.

    

                       
        9.  Applications
        of Proceeds.
        The
        proceeds of any such sale, lease or other disposition of the Collateral
        hereunder or from payments made on account of any insurance policy insuring
        any
        portion of the Collateral shall be applied first, to the expenses of retaking,
        holding, storing, processing and preparing for sale, selling, and the like
        (including, without limitation, any taxes, fees and other costs incurred
        in
        connection therewith) of the Collateral, to the reasonable attorneys’ fees and
        expenses incurred by the Agent in enforcing the Secured Parties’ rights
        hereunder and in connection with collecting, storing and disposing of the
        Collateral, and then to satisfaction of the Obligations pro rata among the
        Secured Parties (based on then-outstanding principal amounts of Debenture
        at the
        time of any such determination), and to the payment of any other amounts
        required by applicable law, after which the Secured Parties shall pay to
        the
        applicable Debtor any surplus proceeds. If, upon the sale, license or other
        disposition of the Collateral, the proceeds thereof are insufficient to pay
        all
        amounts to which the Secured Parties are legally entitled, the Debtors will
        be
        liable for the deficiency, together with interest thereon, at the rate of
        18%
        per annum or the lesser amount permitted by applicable law (the “Default Rate”),
        and the reasonable fees of any attorneys employed by the Secured Parties
        to
        collect such deficiency. To the extent permitted by applicable law, each
        Debtor
        waives all claims, damages and demands against the Secured Parties arising
        out
        of the repossession, removal, retention or sale of the Collateral, unless
        due
        solely to the gross negligence or willful misconduct of the Secured Parties
        as
        determined by a final judgment (not subject to further appeal) of a court
        of
        competent jurisdiction.

    

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

      10. Securities
        Law Provision.
        Each
        Debtor recognizes that Agent may be limited in its ability to effect a sale
        to
        the public of all or part of the Pledged Securities by reason of certain
        prohibitions in the Securities Act of 1933, as amended, or other federal
        or
        state securities laws (collectively, the “Securities
        Laws”),
        and
        may be compelled to resort to one or more sales to a restricted group of
        purchasers who may be required to agree to acquire the Pledged Securities
        for
        their own account, for investment and not with a view to the distribution
        or
        resale thereof. Each Debtor agrees that sales so made may be at prices and
        on
        terms less favorable than if the Pledged Securities were sold to the public,
        and
        that Agent has no obligation to delay the sale of any Pledged Securities
        for the
        period of time necessary to register the Pledged Securities for sale to the
        public under the Securities Laws. Each Debtor shall cooperate with Agent
        in its
        attempt to satisfy any requirements under the Securities Laws (including,
        without limitation, registration thereunder if requested by Agent) applicable
        to
        the sale of the Pledged Securities by Agent.

     

       11.Costs
        and Expenses.
        Each
        Debtor agrees to pay all reasonable out-of-pocket fees, costs and expenses
        incurred in connection with any filing required hereunder, including without
        limitation, any financing statements pursuant to the UCC, continuation
        statements, partial releases and/or termination statements related thereto
        or
        any expenses of any searches reasonably required by the Agent. The Debtors
        shall
        also pay all other claims and charges which in the reasonable opinion of
        the
        Agent is reasonably likely to prejudice, imperil or otherwise affect the
        Collateral or the Security Interests therein. The Debtors will also, upon
        demand, pay to the Agent the amount of any and all reasonable expenses,
        including the reasonable fees and expenses of its counsel and of any experts
        and
        agents, which the Agent, for the benefit of the Secured Parties, may incur
        in
        connection with the creation, perfection, protection, satisfaction, foreclosure,
        collection or enforcement of the Security Interest and the preparation,
        administration, continuance, amendment or enforcement of this Agreement and
        pay
        to the Agent the amount of any and all reasonable expenses, including the
        reasonable fees and expenses of its counsel and of any experts and agents,
        which
        the Agent, for the benefit of the Secured Parties, and the Secured Parties
        may
        incur in connection with (i) the enforcement of this Agreement, (ii) the
        custody
        or preservation of, or the sale of, collection from, or other realization
        upon,
        any of the Collateral, or (iii) the exercise or enforcement of any of the
        rights
        of the Secured Parties under the Debenture. Until so paid, any fees payable
        hereunder shall be added to the principal amount of the Debenture and shall
        bear
        interest at the Default Rate.

    

       12.  Responsibility
        for Collateral.
        The
        Debtors assume all liabilities and responsibility in connection with all
        Collateral, and the Obligations shall in no way be affected or diminished
        by
        reason of the loss, destruction, damage or theft of any of the Collateral
        or its
        unavailability for any reason. Without limiting the generality of the foregoing,
        (a) neither the Agent nor any Secured Party (i) has any duty (either before
        or
        after an Event of Default) to collect any amounts in respect of the Collateral
        or to preserve any rights relating to the Collateral, or (ii) has any obligation
        to clean-up or otherwise prepare the Collateral for sale, and (b) each Debtor
        shall remain obligated and liable under each contract or agreement included
        in
        the Collateral to be observed or performed by such Debtor thereunder. Neither
        the Agent nor any Secured Party shall have any obligation or liability under
        any
        such contract or agreement by reason of or arising out of this Agreement
        or the
        receipt by the Agent or any Secured Party of any payment relating to any
        of the
        Collateral, nor shall the Agent or any Secured Party be obligated in any
        manner
        to perform any of the obligations of any Debtor under or pursuant to any
        such
        contract or agreement, to make inquiry as to the nature or sufficiency of
        any
        payment received by the Agent or any Secured Party in respect of the Collateral
        or as to the sufficiency of any performance by any party under any such contract
        or agreement, to present or file any claim, to take any action to enforce
        any
        performance or to collect the payment of any amounts which may have been
        assigned to the Agent or to which the Agent or any Secured Party may be entitled
        at any time or times.

    

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

      13.  Security
        Interests Absolute.
        All
        rights of the Secured Parties and all obligations of the Debtors hereunder,
        shall be absolute and unconditional, irrespective of: (a) any lack of validity
        or enforceability of this Agreement, the Debenture or any agreement entered
        into
        in connection with the foregoing, or any portion hereof or thereof; (b) any
        change in the time, manner or place of payment or performance of, or in any
        other term of, all or any of the Obligations, or any other amendment or waiver
        of or any consent to any departure from the Debenture or any other agreement
        entered into in connection with the foregoing; (c) any exchange, release
        or
        nonperfection of any of the Collateral, or any release or amendment or waiver
        of
        or consent to departure from any other collateral for, or any guarantee,
        or any
        other security, for all or any of the Obligations; (d) any action by the
        Secured
        Parties to obtain, adjust, settle and cancel in its sole discretion any
        insurance claims or matters made or arising in connection with the Collateral;
        or (e) any other circumstance which might otherwise constitute any legal
        or
        equitable defense available to a Debtor, or a discharge of all or any part
        of
        the Security Interests granted hereby. Until the Obligations shall have been
        paid and performed in full, the rights of the Secured Parties shall continue
        even if the Obligations are barred for any reason, including, without
        limitation, the running of the statute of limitations or bankruptcy. Each
        Debtor
        expressly waives presentment, protest, notice of protest, demand, notice
        of
        nonpayment and demand for performance. In the event that at any time any
        transfer of any Collateral or any payment received by the Secured Parties
        hereunder shall be deemed by final order of a court of competent jurisdiction
        to
        have been a voidable preference or fraudulent conveyance under the bankruptcy
        or
        insolvency laws of the United States, or shall be deemed to be otherwise
        due to
        any party other than the Secured Parties, then, in any such event, each Debtor’s
        obligations hereunder shall survive cancellation of this Agreement, and shall
        not be discharged or satisfied by any prior payment thereof and/or cancellation
        of this Agreement, but shall remain a valid and binding obligation enforceable
        in accordance with the terms and provisions hereof. Each Debtor waives all
        right
        to require the Secured Parties to proceed against any other person or
entity
        or
to
        apply
        any Collateral which the Secured Parties may hold at any time, or to marshal
        assets, or to pursue any other remedy. Each Debtor waives any defense arising
        by
        reason of the application of the statute of limitations to any obligation
        secured hereby.

    

       14.
         Term
        of Agreement.
        This
        Agreement and the Security Interests shall terminate on the date on which
        all
        payments under the Debenture have been indefeasibly paid in full and all
        other
        Obligations have been paid or discharged; provided, however, that all
        indemnities of the Debtors contained in this Agreement (including, without
        limitation, Annex B hereto) shall survive and remain operative and in full
        force
        and effect regardless of the termination of this Agreement.

    

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

      15.
         Power
        of Attorney; Further Assurances.

    

      (a)
         Each
        Debtor authorizes the Agent, and does hereby make, constitute and appoint
        the
        Agent and its officers, agents, successors or assigns with full power of
        substitution, as such Debtor’s true and lawful attorney-in-fact, with power, in
        the name of the Agent or such Debtor, to, after the occurrence and during
        the
        continuance of an Event of Default, (i) endorse any note, checks, drafts,
        money
        orders or other instruments of payment (including payments payable under
        or in
        respect of any policy of insurance) in respect of the Collateral that may
        come
        into possession of the Agent; (ii) to sign and endorse any financing statement
        pursuant to the UCC or any invoice, freight or express bill, bill of lading,
        storage or warehouse receipts, drafts against debtors, assignments,
        verifications and notices in connection with accounts, and other documents
        relating to the Collateral; (iii) to pay or discharge taxes, liens, security
        interests or other encumbrances at any time levied or placed on or threatened
        against the Collateral; (iv) to demand, collect, receipt for, compromise,
        settle
        and sue for monies due in respect of the Collateral; (v) to transfer any
        Intellectual Property or provide licenses respecting any Intellectual Property;
        and (vi) generally, at the option of the Agent, and at the expense of the
        Debtors, at any time, or from time to time, to execute and deliver any and
        all
        documents and instruments and to do all acts and things which the Agent deems
        necessary to protect, preserve and realize upon the Collateral and the Security
        Interests granted therein in order to effect the intent of this Agreement
        and
        the Debenture all as fully and effectually as the Debtors might or could
        do; and
        each Debtor hereby ratifies all that said attorney shall lawfully do or cause
        to
        be done by virtue hereof. This power of attorney is coupled with an interest
        and
        shall be irrevocable for the term of this Agreement and thereafter as long
        as
        any of the Obligations shall be outstanding. The
        designation set forth herein shall be deemed to amend and supersede any
        inconsistent provision in the Organizational Documents or other documents
        or
        agreements to which any Debtor is subject or to which any Debtor is a party.
        Without
        limiting the generality of the foregoing, after the occurrence and during
        the
        continuance of an Event of Default, each Secured Party is specifically
        authorized to execute and file any applications for or instruments of transfer
        and assignment of any patents, trademarks, copyrights or other Intellectual
        Property with the United States Patent and Trademark Office and the United
        States Copyright Office.

    

    (b)
       On
      a
      continuing basis, each Debtor will make, execute, acknowledge, deliver, file
      and
      record, as the case may be, with the proper filing and recording agencies in
      any
      jurisdiction, including, without limitation, the jurisdictions indicated on
      Schedule
      C
      attached
      hereto, all such instruments, and take all such action as may reasonably be
      deemed necessary or advisable, or as reasonably requested by the Agent, to
      perfect the Security Interests granted hereunder and otherwise to carry out
      the
      intent and purposes of this Agreement, or for assuring and confirming to the
      Agent the grant or perfection of a perfected security interest in all the
      Collateral under the UCC.

    

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    (c)
       Each
      Debtor hereby irrevocably appoints the Agent as such Debtor’s attorney-in-fact,
      with full authority in the place and instead of such Debtor and in the name
      of
      such Debtor, from time to time in the Agent’s discretion, to take any action and
      to execute any instrument which the Agent may deem necessary or advisable to
      accomplish the purposes of this Agreement, including the filing, in its sole
      discretion, of one or more financing or continuation statements and amendments
      thereto, relative to any of the Collateral without the signature of such Debtor
      where permitted by law, which financing statements may (but need not) describe
      the Collateral as “all assets” or “all personal property” or words of like
      import, and ratifies all such actions taken by the Agent. This power of attorney
      is coupled with an interest and shall be irrevocable for the term of this
      Agreement and thereafter as long as any of the Obligations shall be
      outstanding.

    

       16.  Notices.
        All
        notices, requests, demands and other communications hereunder shall be subject
        to the notice provision of the Purchase Agreement (as such term is defined
        in
        the Debenture).

    

       17.  Other
        Security.
        To the
        extent that the Obligations are now or hereafter secured by property other
        than
        the Collateral or by the guarantee, endorsement or property of any other
        person,
        firm, corporation or other entity, then the Agent shall have the right, in
        its
        sole discretion, to pursue, relinquish, subordinate, modify or take any other
        action with respect thereto, without in any way modifying or affecting any
        of
        the Secured Parties’ rights and remedies hereunder.

    

      18.  Appointment
        of Agent.
        The
        Secured Parties hereby appoint Paul T. Dacier, Executive Vice President and
        General Counsel, EMC Corporation to act as their agent (“Dacier”
or
        “Agent”)
        for
        purposes of exercising any and all rights and remedies of the Secured Parties
        hereunder. Such appointment shall continue until revoked in writing by a
        Majority
        in Interest, at which time a Majority in Interest
        shall
        appoint a new Agent, provided that Dacier may not be removed as Agent unless
        EMC
        Corporation shall then hold less than $500,000 in principal amount of
        Debenture;
        provided,
        further,
        that
        such removal may occur only if each of the other Secured Parties shall then
        hold
        not less than an aggregate of $5,000,000 in principal amount of Debenture.
        The
        Agent
        shall have the rights, responsibilities and immunities set forth in Annex
        B
        hereto.

     

       19.  Commercially
        Reasonable. For
        purposes of this Agreement, any time any action, cost or expense is undertaken
        by the Secured Parties or the Agent, such action, cost or expense shall be
        required to be commercially reasonable under the
        circumstances.

    

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    20. Miscellaneous.

    

    (a)
       No
      course
      of dealing between the Debtors and the Secured Parties, nor any failure to
      exercise, nor any delay in exercising, on the part of the Secured Parties,
      any
      right, power or privilege hereunder or under the Debenture shall operate as
      a
      waiver thereof; nor shall any single or partial exercise of any right, power
      or
      privilege hereunder or thereunder preclude any other or further exercise thereof
      or the exercise of any other right, power or privilege.

    

    (b)
       All
      of
      the rights and remedies of the Secured Parties with respect to the Collateral,
      whether established hereby or by the Debenture or by any other agreements,
      instruments or documents or by law shall be cumulative and may be exercised
      singly or concurrently.

    

    (c)
       This
      Agreement,
      together with the exhibits and schedules hereto, contain the entire
      understanding of the parties with respect to the subject matter hereof and
      supersede all prior agreements and understandings, oral or written, with respect
      to such matters, which the parties acknowledge have been merged into this
      Agreement and the exhibits and schedules hereto.
      No
      provision of this Agreement may be waived, modified, supplemented or amended
      except in a written instrument signed, in the case of an amendment, by the
      Debtors and the Secured Parties or, in the case of a waiver, by the party
      against whom enforcement of any such waived provision is sought. 

    

    (d)
       If
      any
      term, provision, covenant or restriction of this Agreement is held by a court
      of
      competent jurisdiction to be invalid, illegal, void or unenforceable, the
      remainder of the terms, provisions, covenants and restrictions set forth herein
      shall remain in full force and effect and shall in no way be affected, impaired
      or invalidated, and the parties hereto shall use their commercially reasonable
      efforts to find and employ an alternative means to achieve the same or
      substantially the same result as that contemplated by such term, provision,
      covenant or restriction. It is hereby stipulated and declared to be the
      intention of the parties that they would have executed the remaining terms,
      provisions, covenants and restrictions without including any of such that may
      be
      hereafter declared invalid, illegal, void or unenforceable.

    

    (e)
       No
      waiver
      of any default with respect to any provision, condition or requirement of this
      Agreement shall be deemed to be a continuing waiver in the future or a waiver
      of
      any subsequent default or a waiver of any other provision, condition or
      requirement hereof, nor shall any delay or omission of any party to exercise
      any
      right hereunder in any manner impair the exercise of any such
      right.

    

      (f)
         This
        Agreement shall be binding upon and inure to the benefit of the parties and
        their successors and permitted assigns. The Company and the Guarantors may
        not
        assign this Agreement or any rights or obligations hereunder without the
        prior
        written consent of each Secured Party (other than by merger). Any Secured
        Party
        may assign any or all of its rights under this Agreement to any Person to
        whom
        such Secured Party assigns or transfers any Obligations, provided such
        transferee agrees in writing to be bound, with respect to the transferred
        Obligations, by the provisions of this Agreement that apply to the “Secured
        Parties.”

    

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

    (g)
       Each
      party shall take such further action and execute and deliver such further
      documents as may be necessary or appropriate in order to carry out the
      provisions and purposes of this Agreement.

    

    (h)
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Agreement shall be governed by and construed and enforced in accordance
      with the internal laws of the State of New York, without regard to the
      principles of conflicts of law thereof. Each Debtor agrees that all proceedings
      concerning the interpretations, enforcement and defense of the transactions
      contemplated by this Agreement and the Debenture (whether brought against a
      party hereto or its respective affiliates, directors, officers, shareholders,
      partners, members, employees or agents) shall be commenced exclusively in the
      state and federal courts sitting in the City of New York, Borough of Manhattan.
      Each Debtor hereby irrevocably submits to the exclusive jurisdiction of the
      state and federal courts sitting in the City of New York, Borough of Manhattan
      for the adjudication of any dispute hereunder or in connection herewith or
      with
      any transaction contemplated hereby or discussed herein, and hereby irrevocably
      waives, and agrees not to assert in any proceeding, any claim that it is not
      personally subject to the jurisdiction of any such court, that such proceeding
      is improper. Each party hereto hereby irrevocably waives personal service of
      process and consents to process being served in any such proceeding by mailing
      a
      copy thereof via registered or certified mail or overnight delivery (with
      evidence of delivery) to such party at the address in effect for notices to
      it
      under this Agreement and agrees that such service shall constitute good and
      sufficient service of process and notice thereof. Nothing contained herein
      shall
      be deemed to limit in any way any right to serve process in any manner permitted
      by law. Each party hereto hereby irrevocably waives, to the fullest extent
      permitted by applicable law, any and all right to trial by jury in any legal
      proceeding arising out of or relating to this Agreement or the transactions
      contemplated hereby. 

    

    (i)
       This
      Agreement may be executed in any number of counterparts, each of which when
      so
      executed shall be deemed to be an original and, all of which taken together
      shall constitute one and the same Agreement. In the event that any signature
      is
      delivered by facsimile transmission, such signature shall create a valid binding
      obligation of the party executing (or on whose behalf such signature is
      executed) the same with the same force and effect as if such facsimile signature
      were the original thereof.

    

    (j) All
      Debtors shall jointly and severally be liable for the obligations of each Debtor
      to the Secured Parties hereunder.

    

    (k) Each
      Debtor shall indemnify, reimburse and hold harmless the Agent and the Secured
      Parties and their respective partners, members, shareholders, officers,
      directors, employees and agents (and any other persons with other titles that
      have similar functions) (collectively, “Indemnitees”)
      from
      and against any and all losses, claims, liabilities, damages, penalties, suits,
      costs and expenses, of any kind or nature, (including fees relating to the
      cost
      of investigating and defending any of the foregoing) imposed on, incurred by
      or
      asserted against such Indemnitee in any way related to or arising from or
      alleged to arise from this Agreement or the Collateral, except any such losses,
      claims, liabilities, damages, penalties, suits, costs and expenses which result
      from the gross negligence or willful misconduct of the Indemnitee as determined
      by a final, nonappealable decision of a court of competent jurisdiction. This
      indemnification provision is in addition to, and not in limitation of, any
      other
      indemnification provision in the Debenture, the Purchase Agreement (as such
      term
      is defined in the Debenture) or any other agreement, instrument or other
      document executed or delivered in connection herewith or therewith.

    

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

      (l) Nothing
        in this Agreement shall be construed to subject Agent or any Secured Party
        to
        liability as a partner in any Debtor or any if its direct or indirect
        subsidiaries that is a partnership or as a member in any Debtor or any of
        its
        direct or indirect subsidiaries that is a limited liability company, nor
        shall
        Agent or any Secured Party be deemed to have assumed any obligations under
        any
        partnership agreement or limited liability company agreement, as applicable,
        of
        any such Debtor or any if its direct or indirect subsidiaries or otherwise,
        unless and until any such Secured Party exercises its right to be substituted
        for such Debtor as a partner or member, as applicable, pursuant
        hereto.

    

      (m)
         To
        the
        extent that the grant of the security interest in the Collateral and the
        enforcement of the terms hereof require the consent, approval or action of
        any
        partner or member, as applicable, of any Debtor or any direct or indirect
        subsidiary of any Debtor or compliance with any provisions of any of the
        Organizational Documents, the Debtors hereby grant such consent and approval
        and
        waive any such noncompliance with the terms of said
        documents.

    

    [SIGNATURE
      PAGES FOLLOW]

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

    

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Security
      Agreement to be duly executed on the day and year first above
      written.

    

    

    
      	
              INNOVATIVE
                CARD TECHNOLOGIES, INC.

            
	
              By:__________________________________________

              Name:

              Title:

            
	 
	
              PASCO,
                INC.

               

            
	
              By:__________________________________________

              Name:

              Title:

            

    

    

     

    

    

    [SIGNATURE
      PAGE OF HOLDERS FOLLOWS]

    
      
         

      

      
        24

        
          

        

      

      
         

      

    

    [SIGNATURE
      PAGE OF HOLDERS TO INVC SA]

     

    Name
      of
      Investing Entity: __________________________

     

    Signature
      of Authorized Signatory of Investing entity:
      _________________________

     

    Name
      of
      Authorized Signatory: _________________________

     

    Title
      of
      Authorized Signatory: __________________________

     

    [SIGNATURE
      PAGE OF HOLDERS FOLLOWS]

    

    

    

    
      
         

      

      
        25

        
          

        

      

      
         

      

    

     

    

    SCHEDULE
      A

    

    

    Principal
      Place of Business of Debtors:

    

    Locations
      Where Collateral is Located or Stored:

    

    SCHEDULE
      B

    

    

    

    

    SCHEDULE
      C

    

    

    

    

    SCHEDULE
      D

    Legal
      Names and Organizational Identification Numbers

    

    

    

    

    SCHEDULE
      E

    Names;
      Mergers and Acquisitions

    

    

    

    SCHEDULE
      F

    Intellectual
      Property

    

    

    

    SCHEDULE
      G

    Account
      Debtors

    

    

    

    SCHEDULE
      H

    Pledged
      Securities

    

     

    

    
      
        
        

         

      

      
        26

        
          

        

      

      
         

        
        

      

    

    ANNEX
      A

    to

    SECURITY

    AGREEMENT

    

    FORM
      OF ADDITIONAL DEBTOR JOINDER

    

    Security
      Agreement dated as of April 15, 2008 made by

    Innovative
      Card Technologies, Inc., a Delaware corporation 

    and
      its
      subsidiaries party thereto from time to time, as Debtors

    to
      and in
      favor of

    the
      Secured Parties identified therein (the “Security
      Agreement”)

    

    Reference
      is made to the Security Agreement as defined above; capitalized terms used
      herein and not otherwise defined herein shall have the meanings given to such
      terms in, or by reference in, the Security Agreement.

    

    The
      undersigned hereby agrees that upon delivery of this Additional Debtor Joinder
      to the Secured Parties referred to above, the undersigned shall (a) be an
      Additional Debtor under the Security Agreement, (b) have all the rights and
      obligations of the Debtors under the Security Agreement as fully and to the
      same
      extent as if the undersigned was an original signatory thereto and (c) be deemed
      to have made the representations and warranties set forth therein as of the
      date
      of execution and delivery of this Additional Debtor Joinder. WITHOUT LIMITING
      THE GENERALITY OF THE FOREGOING, THE UNDERSIGNED SPECIFICALLY GRANTS TO THE
      SECURED PARTIES A SECURITY INTEREST IN THE COLLATERAL AS MORE FULLY SET FORTH
      IN
      THE SECURITY AGREEMENT AND ACKNOWLEDGES AND AGREES TO THE WAIVER OF JURY TRIAL
      PROVISIONS SET FORTH THEREIN.

    

    Attached
      hereto are supplemental and/or replacement Schedules to the Security Agreement,
      as applicable.

    

    An
      executed copy of this Joinder shall be delivered to the Secured Parties, and
      the
      Secured Parties may rely on the matters set forth herein on or after the date
      hereof. This Joinder shall not be modified, amended or terminated without the
      prior written consent of the Secured Parties.

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, the undersigned has caused this Joinder to be executed in
      the
      name and on behalf of the undersigned.

    

    [Name
      of
      Additional Debtor]

    

    By:       

    Name:

    Title:

    

    Address:

     

    Dated:   

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    ANNEX
      B

    to

    SECURITY

    AGREEMENT

    

    THE
      AGENT

    

    1.
      Appointment. The
      Secured Parties (all capitalized terms used herein and not otherwise defined
      shall have the respective meanings provided in the Security Agreement to which
      this Annex B is attached (the "Agreement")),
      by
      their acceptance of the benefits of the Agreement, hereby designate Paul T.
      Dacier, Executive Vice President and General Counsel, EMC Corporation
      (“Dacier”
or
      “Agent”)
      as the
      Agent to act as specified herein and in the Agreement. Each Secured Party shall
      be deemed irrevocably to authorize the Agent to take such action on its behalf
      under the provisions of the Agreement and any other Transaction Document (as
      such term is defined in the Debenture) and to exercise such powers and to
      perform such duties hereunder and thereunder as are specifically delegated
      to or
      required of the Agent by the terms hereof and thereof and such other powers
      as
      are reasonably incidental thereto. The Agent may perform any of its duties
      hereunder by or through its agents or employees.

    

    2.
      Nature
      of Duties.
      The
      Agent shall have no duties or responsibilities except those expressly set forth
      in the Agreement. Neither the Agent nor any of its partners, members,
      shareholders, officers, directors, employees or agents shall be liable for
      any
      action taken or omitted by it as such under the Agreement or hereunder or in
      connection herewith or therewith, be responsible for the consequence of any
      oversight or error of judgment or answerable for any loss, unless caused solely
      by its or their gross negligence or willful misconduct as determined by a final
      judgment (not subject to further appeal) of a court of competent jurisdiction.
      The duties of the Agent shall be mechanical and administrative in nature; the
      Agent shall not have by reason of the Agreement or any other Transaction
      Document a fiduciary relationship in respect of any Debtor or any Secured Party;
      and nothing in the Agreement or any other Transaction Document, expressed or
      implied, is intended to or shall be so construed as to impose upon the Agent
      any
      obligations in respect of the Agreement or any other Transaction Document except
      as expressly set forth herein and therein.

    

    3.
      Lack
      of Reliance on the Agent.
      Independently and without reliance upon the Agent, each Secured Party, to the
      extent it deems appropriate, has made and shall continue to make (i) its own
      independent investigation of the financial condition and affairs of the Company
      and its subsidiaries in connection with such Secured Party’s investment in the
      Debtors, the creation and continuance of the Obligations, the transactions
      contemplated by the Transaction Documents, and the taking or not taking of
      any
      action in connection therewith, and (ii) its own appraisal of the
      creditworthiness of the Company and its subsidiaries, and of the value of the
      Collateral from time to time, and the Agent shall have no duty or
      responsibility, either initially or on a continuing basis, to provide any
      Secured Party with any credit, market or other information with respect thereto,
      whether coming into its possession before any Obligations are incurred or at
      any
      time or times thereafter. The Agent shall not be responsible to the Debtors
      or
      any Secured Party for any recitals, statements, information, representations
      or
      warranties herein or in any document, certificate or other writing delivered
      in
      connection herewith, or for the execution, effectiveness, genuineness, validity,
      enforceability, perfection, collectibility, priority or sufficiency of the
      Agreement or any other Transaction Document, or for the financial condition
      of
      the Debtors or the value of any of the Collateral, or be required to make any
      inquiry concerning either the performance or observance of any of the terms,
      provisions or conditions of the Agreement or any other Transaction Document,
      or
      the financial condition of the Debtors, or the value of any of the Collateral,
      or the existence or possible existence of any default or Event of Default under
      the Agreement, the Debenture or any of the other Transaction
      Documents.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    4.
      Certain
      Rights of the Agent.
      The
      Agent shall have the right to take any action with respect to the Collateral,
      on
      behalf of all of the Secured Parties. To the extent practical, the Agent shall
      request instructions from the Secured Parties with respect to any material
      act
      or action (including failure to act) in connection with the Agreement or any
      other Transaction Document, and shall be entitled to act or refrain from acting
      in accordance with the instructions of a Majority in Interest; if such
      instructions are not provided despite the Agent’s request therefor, the Agent
      shall be entitled to refrain from such act or taking such action, and if such
      action is taken, shall be entitled to appropriate indemnification from the
      Secured Parties in respect of actions to be taken by the Agent; and the Agent
      shall not incur liability to any person or entity by reason of so refraining.
      Without limiting the foregoing, (a) no Secured Party shall have any right of
      action whatsoever against the Agent as a result of the Agent acting or
      refraining from acting hereunder in accordance with the terms of the Agreement
      or any other Transaction Document, and the Debtors shall have no right to
      question or challenge the authority of, or the instructions given to, the Agent
      pursuant to the foregoing and (b) the Agent shall not be required to take any
      action which the Agent believes (i) could reasonably be expected to expose
      it to
      personal liability or (ii) is contrary to this Agreement, the Transaction
      Documents or applicable law.

    

    5.
      Reliance.
      The
      Agent shall be entitled to rely, and shall be fully protected in relying, upon
      any writing, resolution, notice, statement, certificate, telex, teletype or
      telecopier message, cablegram, radiogram, order or other document or telephone
      message signed, sent or made by the proper person or entity, and, with respect
      to all legal matters pertaining to the Agreement and the other Transaction
      Documents and its duties thereunder, upon advice of counsel selected by it
      and
      upon all other matters pertaining to this Agreement and the other Transaction
      Documents and its duties thereunder, upon advice of other experts selected
      by
      it. Anything to the contrary notwithstanding, the Agent shall have no obligation
      whatsoever to any Secured Party to assure that the Collateral exists or is
      owned
      by the Debtors or is cared for, protected or insured or that the liens granted
      pursuant to the Agreement have been properly or sufficiently or lawfully
      created, perfected, or enforced or are entitled to any particular
      priority.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    6.
      Indemnification.
      To the
      extent that the Agent is not reimbursed and indemnified by the Debtors, the
      Secured Parties will jointly and severally reimburse and indemnify the Agent,
      in
      proportion to their initially purchased respective principal amounts of
      Debenture, from and against any and all liabilities, obligations, losses,
      damages, penalties, actions, judgments, suits, costs, expenses or disbursements
      of any kind or nature whatsoever which may be imposed on, incurred by or
      asserted against the Agent in performing its duties hereunder or under the
      Agreement or any other Transaction Document, or in any way relating to or
      arising out of the Agreement or any other Transaction Document except for those
      determined by a final judgment (not subject to further appeal) of a court of
      competent jurisdiction to have resulted solely from the Agent's own gross
      negligence or willful misconduct. Prior to taking any action hereunder as Agent,
      the Agent may require each Secured Party to deposit with it sufficient sums
      as
      it determines in good faith is necessary to protect the Agent for costs and
      expenses associated with taking such action.

    

    7.
      Resignation
      by the Agent. 

    (a)
      The
      Agent may resign from the performance of all its functions and duties under
      the
      Agreement and the other Transaction Documents at any time by giving 30 days'
      prior written notice (as provided in the Agreement) to the Debtors and the
      Secured Parties. Such resignation shall take effect upon the appointment of
      a
      successor Agent pursuant to clauses (b) and (c) below.

    

      (b)
        Upon
        any such notice of resignation, the Secured Parties, acting by a Majority
        in Interest,
        shall
        appoint a successor Agent hereunder.

    

    (c)
      If a
      successor Agent shall not have been so appointed within said 30-day period,
      the
      Agent shall then appoint a successor Agent who shall serve as Agent until such
      time, if any, as the Secured Parties appoint a successor Agent as provided
      above. If a successor Agent has not been appointed within such 30-day period,
      the Agent may petition any court of competent jurisdiction or may interplead
      the
      Debtors and the Secured Parties in a proceeding for the appointment of a
      successor Agent, and all fees, including, but not limited to, extraordinary
      fees
      associated with the filing of interpleader and expenses associated therewith,
      shall be payable by the Debtors on demand.

    

    8.
      Rights
      with respect to Collateral.
      Each
      Secured Party agrees with all other Secured Parties and the Agent (i) that
      it
      shall not, and shall not attempt to, exercise any rights with respect to its
      security interest in the Collateral, whether pursuant to any other agreement
      or
      otherwise (other than pursuant to this Agreement), or take or institute any
      action against the Agent or any of the other Secured Parties in respect of
      the
      Collateral or its rights hereunder (other than any such action arising from
      the
      breach of this Agreement) and (ii) that such Secured Party has no other rights
      with respect to the Collateral other than as set forth in this Agreement and
      the
      other Transaction Documents. Upon the acceptance of any appointment as Agent
      hereunder by a successor Agent, such successor Agent shall thereupon succeed
      to
      and become vested with all the rights, powers, privileges and duties of the
      retiring Agent and the retiring Agent shall be discharged from its duties and
      obligations under the Agreement.  After any retiring Agent’s resignation or
      removal hereunder as Agent, the provisions of the Agreement including this
      Annex
      B shall inure to its benefit as to any actions taken or omitted to be taken
      by
      it while it was Agent.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00140-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00140-of-00352.parquet"}]]