Document:

STOCK PURCHASE AGREEMENT
                            ------------------------

     This  Stock  Purchase  Agreement (the "Agreement") is made and entered into
this  7th  day  of July, 2006, by and among Texas S&I, Inc., a Texas corporation
(the  "Company"), John Abdulla (the "Seller"), and Rick's Cabaret International,
Inc.,  a  Texas  corporation  ("Purchaser"  or  "Rick's").

     WHEREAS,  Seller  owns  1,000  shares  of common stock, no par value of the
Company,  which  shares represents 100% of all of the shares of capital stock of
the  Company  presently  outstanding;  and

     WHEREAS,  the  shares  of  common  stock  owned  by  Seller are hereinafter
collectively  referred  to  as  the  "Shares";  and

     WHEREAS,  the  Company  owns  and  operates an adult entertainment facility
known  as  "Club Exotica" located at 4102 Naco Perrin Street, San Antonio, Texas
78217;  and

     WHEREAS,  the Seller desires to sell the Shares of the Company to Purchaser
on  the  terms  and  conditions  set  forth  herein;  and

     WHEREAS,  Purchaser  desires  to  purchase  the  Shares of the Company from
Seller  on  the  terms  and  conditions  set  forth  herein.

     NOW,  THEREFORE, in consideration of the premises, the mutual covenants and
agreements  and  the respective representations and warranties herein contained,
and  on  the  terms  and subject to the conditions herein set forth, the parties
hereto,  intending  to  be  legally  bound,  hereby  agree  as  follows:

                                    ARTICLE I
                         PURCHASE AND SALE OF THE SHARES

     Section  1.1     Sale  of  the Shares.  Subject to the terms and conditions
                      --------------------
set  forth in this Agreement, at the Closing (as hereinafter defined) the Seller
hereby  agrees  to  sell,  transfer,  convey and deliver to Purchaser all of the
Shares of common stock of the Company, free and clear of all encumbrances, which
represents  all  of  the  outstanding  capital  stock  of the Company, and shall
deliver  to  Purchaser stock certificates representing the Shares, duly endorsed
to  Purchaser or accompanied by duly executed stock powers in form and substance
satisfactory  to  Purchaser.

     Section  1.2     Purchase  Price.  As consideration for the purchase of the
                      ---------------
Shares,  Purchaser  shall  pay  to Seller a total consideration of $125,000 (the
"Purchase  Price")  payable  as  follows:

     (a)  $45,000 shall be paid by check or wire transfer to the Seller at
          the Closing of the transaction;
     (b)  $10,000 shall be paid by check or wire transfer to Perrin Plaza
          Shopping Center, the Landlord of the existing lease at 4102 Naco
          Perrin Street, San Antonio, Texas 78217 at the Closing of the
          transaction; and
     (c)  $70,000, as evidenced by a Promissory Note payable to the Seller
          bearing interest at four percent (4%) per annum, payable monthly, and
          amortized over five (5) years (the "Promissory Note").

<PAGE>
                                   ARTICLE II
                                     CLOSING

     Section  2.1     The Closing.  The closing of the transactions contemplated
                      -----------
by  this  Agreement  shall  take  place on or before July 10, 2006 (the "Closing
Date"),  at  the  offices  of Axelrod, Smith and Kirshbaum, 5300 Memorial Drive,
Suite 700, Houston, Texas  77007, or at such other time and place as agreed upon
among  the  parties  hereto  (the  "Closing").

     Section  2.2     Delivery  and  Execution.  At  the Closing: (a) the Seller
                      ------------------------
shall  deliver  to  Purchaser certificates evidencing the Shares of the Company,
free and clear of any liens, claims, equities, charges, options, rights of first
refusal  or  encumbrances,  duly  endorsed  to  Purchaser or accompanied by duly
executed  stock  powers  in form and substance satisfactory to Purchaser against
delivery  by  Purchaser  to  the  Seller  of  payment  in an amount equal to the
Purchase  Price  of  the  Shares  being purchased by Purchaser in the manner set
forth  in Section 1.2; and (b) the Related Transactions (as defined below) shall
be  consummated  concurrently  with  the  Closing.

     Section 2.3     Related Transactions.  In addition to the purchase and sale
                     --------------------
of  the  Shares, the following actions shall take place contemporaneously at the
Closing  (collectively,  the  "Related  Transactions"):

     (i)  The Seller  will  enter  into  a  five  (5)  year  covenant  not  to
          compete  pursuant  to  the terms of which the Seller will agree not to
          compete,  either  directly  of  indirectly,  with  the  Purchaser  by
          operating  an  establishment featuring live adult entertainment within
          the  corporate  limits  of  the  city  of  San  Antonio,  Texas;  and

     (ii) The Landlord  for  the  existing  lease  agreement  for  the  location
          where  Club  Exotica  is  located  shall  consent  to  the transaction
          contemplated  by  this  Agreement  and  shall confirm that the initial
          option  to  renew and extend the lease for an additional five (5) year
          period from the end of the present term of the lease has been approved
          and  effected.

                                   ARTICLE III
                         REPRESENTATIONS AND WARRANTIES
                          OF THE SELLER AND THE COMPANY

     The  Seller  and  the  Company, jointly and severally, hereby represent and
warrant  to  Purchaser  as  follows:

     Section 3.1.    Organization, Good Standing and Qualification.  The Company
                     ---------------------------------------------
(i) is an entity duly organized, validly existing and in good standing under the
laws  of the state of Texas, (ii) has all requisite power and authority to carry
on its business, and (iii) is duly qualified to transact business and is in good
standing  in  all  jurisdictions  where  its  ownership,  lease  or operation of
property  or  the  conduct  of  its business requires such qualification, except
where  the  failure  to  do  so  would not have a material adverse effect to the
Seller  or  the  Company.

                       Stock Purchase Agreement - Page 2
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     At Closing, the authorized capital stock of the Company consists of 100,000
shares  of  common stock, no par value, of which 1,000 shares are validly issued
and outstanding. There are no shares of preferred stock authorized or issued and
there  is  no  other class of capital stock authorized or issued by the Company.
All  of  the  issued  and  outstanding shares of common stock of the Company are
owned  by  the Seller and are fully paid and non-assessable.  None of the shares
issued are in violation of any preemptive rights.  The Company has no obligation
to repurchase, reacquire, or redeem any of its outstanding capital stock.  There
are  no  outstanding  securities  convertible  into  or  evidencing the right to
purchase  or subscribe for any shares of capital stock of the Company, there are
no  outstanding  or  authorized options, warrants, calls, subscriptions, rights,
commitments  or  any other agreements of any character obligating the Company to
issue  any  shares  of  its  capital stock or any securities convertible into or
evidencing  the right to purchase or subscribe for any shares of such stock, and
there  are  no  agreements  or  understandings with respect to the voting, sale,
transfer  or  registration  of  any  shares  of  capital  stock  of the Company.

     Section 3.2     Subsidiaries.  The  Company  has  no  subsidiaries
                     ------------

     Section 3.3     Ownership of the Shares.  The Seller owns, beneficially and
                     -----------------------
of record, all of the Shares of the Company free and clear of any liens, claims,
equities,  charges,  options,  rights  of  first refusal, or encumbrances.   The
Seller has the unrestricted right and power to transfer, convey and deliver full
ownership of the Shares without the consent or agreement of any other person and
without  any designation, declaration or filing with any governmental authority.
Upon  the  transfer of the Shares to Purchaser as contemplated herein, Purchaser
will  receive good and valid title thereto, free and clear of any liens, claims,
equities,  charges,  options,  rights  of  first  refusal, encumbrances or other
restrictions  (except  those  imposed  by  applicable  securities  laws).

     Section  3.4     Authorization.  Seller  represents  that he is a person of
                      -------------
full  age  of  majority,  with full power, capacity, and authority to enter into
this  Agreement  and perform the obligations contemplated hereby by for himself.
All  action  on  the  part of Seller necessary for the authorization, execution,
delivery  and  performance  of  this Agreement by him has been taken and will be
taken  prior  to  Closing.  This  Agreement, when duly executed and delivered in
accordance  with its terms, will constitute legal, valid and binding obligations
of Seller enforceable against him in accordance with its terms, except as may be
limited  by  bankruptcy,  insolvency,  reorganization  and other similar laws of
general  application  affecting  creditors'  rights  generally  or  by  general
equitable  principles.

     All  corporate  action  on  the  part  of  the  Company  necessary  for the
authorization,  execution,  delivery  and  performance  of this Agreement by the
Company  has  been taken or will be taken prior to the Closing.  The Company has
the requisite corporate power and authority to execute, deliver and perform this
Agreement.  This  Agreement, when duly executed and delivered in accordance with
its  terms,  will  constitute  a  valid  and  binding obligation of the Company,
enforceable  against  the Company in accordance with its terms, except as may be
limited  by  bankruptcy,  insolvency,  reorganization, and other similar laws of
general  application  relating  to or affecting creditors' rights and to general
equitable  principles.

     Section 3.5      No Breaches or  Defaults.  The  execution,  delivery,  and
                      ------------------------
performance  of  this  Agreement  by  the  Seller  and the Company does not: (i)
conflict  with,  violate,  or  constitute  a  breach of or a default under, (ii)
result  in  the creation or imposition of any lien, claim, or encumbrance of any
kind  upon  the  Shares,  or (iii) require any authorization, consent, approval,
exemption,  or  other

                       Stock Purchase Agreement - Page 3
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action  by  or  filing  with any third party or Governmental Authority under any
provision  of:  (a)  any applicable Legal Requirement, or (b) any credit or loan
agreement,  promissory  note,  or any other agreement or instrument to which the
Seller  or  the  Company  is  a  party  or  by  which the Shares may be bound or
affected.  For  purposes  of  this Agreement, "Governmental Authority" means any
foreign  governmental  authority, the United States of America, any state of the
United  States,  and  any political subdivision of any of the foregoing, and any
agency,  department, commission, board, bureau, court, or similar entity, having
jurisdiction  over  the parties hereto or their respective assets or properties.
For  purposes  of  this  Agreement,  "Legal Requirement" means any law, statute,
injunction,  decree,  order  or  judgment  (or  interpretation  of  any  of  the
foregoing)  of,  and  the  terms  of  any  license  or  permit  issued  by,  any
Governmental  Authority.

     Section  3.6     Consents.  No  permit,  consent, approval or authorization
                      --------
of,  or  designation,  declaration or filing with, any Governmental Authority or
any  other person or entity is required on the part of the Seller or the Company
in  connection  with  the execution and delivery by the Seller or the Company of
this  Agreement  or  the  consummation  and  performance  of  the  transactions
contemplated  hereby.

     Section  3.7     Pending  Claims.  There  is  no  claim, suit, arbitration,
                      ---------------
investigation,  action  or other proceeding, whether judicial, administrative or
otherwise,  now  pending  or,  to  the  best  of  the  Seller's or the Company's
knowledge,  threatened  against  Seller  or  the  Company  or  their  respective
properties,  assets,  operations  or  businesses  before any court, arbitration,
administrative  or  regulatory  body or any governmental agency which may result
either  singly  or  in  the  aggregate  in  any  judgment, order, award, decree,
liability  or  other determination which will or could reasonably be expected to
have  any  effect  upon  Seller  or  the  Company  or  its prospects, results of
operation,  properties,  liabilities, assets, financial condition or business or
the  transfer  by Seller to Purchaser of the Shares under this Agreement, nor is
there  any basis known to Seller for any such action.  No litigation is pending,
or,  to  Seller's  or  the Company's knowledge, threatened against Seller or the
Company,  or  their  assets  or properties which seeks to restrain or enjoin the
execution  and  delivery  of  this Agreement or any of the documents referred to
herein  or  the  consummation of any of the transactions contemplated thereby or
hereby.  Neither Seller nor the Company is subject to any judicial injunction or
mandate or any quasi-judicial or administrative order or restriction directed to
or  against  them  or  which  would  affect  the  Company  or  the  Shares to be
transferred  under  this  Agreement.

     Section  3.8     Taxes.  The  Company  has  timely and accurately filed all
                      -----
federal,  state,  foreign and local tax returns and reports required to be filed
prior to such dates and have timely paid all taxes shown on such returns as owed
for  the  periods  of such returns, including all sales taxes and withholding or
other  payroll  related  taxes  shown  on  such  returns.  The  Company has made
adequate provision for the payment of all taxes accruable for all periods ending
on  or  before the Closing Date to any taxing authority and is not delinquent in
the  payment of any tax or governmental charge of any nature.  No assessments or
notices  of deficiency or other communications have been received by the Company
with  respect  to  any  tax  return which has not been paid, discharged or fully
reserved against and no amendments or applications for refund have been filed or
are  planned  with  respect to any such return.  There are no agreements between
the  Company  and  any  taxing  authority,  including,  without  limitation, the
Internal  Revenue  Service, waiving or extending any statute of limitations with
respect  to  any  tax  return.

                       Stock Purchase Agreement - Page 4
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     Section  3.9     Compliance  with  Laws.  The  Company is, and at all times
                      ----------------------
prior  to the date hereof have been, to the best of its knowledge, in compliance
with all statutes, orders, rules, ordinances and regulations applicable to it or
to  the  ownership  of their assets or the operation of their businesses, except
for  failures  to be in compliance that would not have a material adverse effect
on  the business, properties, condition (financial or otherwise) or prospects of
the  Company.  Seller  and  the  Company  have no basis to expect, nor have they
received, any order or notice of any such violation or claim of violation of any
such  statute, order, rule, ordinance or regulation by the Company.  Exhibit 3.9
sets forth all licenses and permits held by the Company used in the operation of
its  businesses,  all  of  which  are  in  good standing and in effect as of the
Closing  Date.  These  licenses  and  permits  represent all of the licenses and
permits  required  by  the  Company  for  the  operation  of  their  business.

     Section  3.10     Title  to Properties; Encumbrances.  The Company has good
                       ----------------------------------
and  marketable  title  to  all of its properties and assets, real and personal,
tangible  and  intangible,  that  are  material  to  the condition (financial or
otherwise),  business, operations or prospects of the Company, free and clear of
all  mortgages, claims, liens, security interests, charges, leases, encumbrances
and  other  restrictions  of any kind and nature, except (i) statutory liens not
yet  delinquent  and  (ii)  such  liens  consisting  of  zoning  or  planning
restrictions,  imperfections of title, easements and encumbrances, if any, as do
not  materially  detract from the value or materially interfere with the present
use  of  the property or assets subject thereto or affected thereby. At the time
of  Closing,  the  assets of the Company shall include, but shall not be limited
to,  the  Corporate  Real  Property  identified  on  Exhibit  3.10,  including
improvements,  furniture, fixtures, appliances and all other personalty owned by
the  Company and located thereon, which it owns free and clear of any mortgages,
liens,  claims,  security  interests,  charges,  rights  of  first  refusal  or
encumbrances and the assets set forth in the Company's 2005 corporate income tax
return, along with all equipment and fixtures located on the premises at 5002 N.
Shepherd  as  of  the  Closing  Date.

     Section  3.11     Financial  Statements.  Seller  and  the  Company  have
                       ---------------------
delivered  to  Rick's  the unaudited balance sheets of the Company as of May 31,
2006,  together with the related unaudited statements of income, for the periods
then  ended  (collectively  referred  to  as  the  "Financial Statements"). Such
Financial  Statements,  including  the related notes, are in accordance with the
books  and records of the Company and fairly represent the financial position of
the  Company  and the results of operations and changes in financial position of
the  Company  as  of  the  dates  and for the periods indicated, in each case in
conformity with generally accepted accounting principles applied on a consistent
basis.  Except  as,  and  to  the  extent  reflected  or reserved against in the
Financial  Statements,  the Company, as of the date of the Financial Statements,
has  no  material  liability  or  obligation  of  any  nature, whether absolute,
accrued,  continued or otherwise, not fully reflected or reserved against in the
Financial  Statements.  As of the Closing Date, Seller and the Company represent
there  have  been  no  adverse  changes  in  the  financial  condition  or other
operations,  business,  properties  or  assets  of  the  Company.

     Section  3.12     No Liabilities.  As of the  Closing Date the Company does
                       --------------
not  and shall not have any obligation or liability (contingent or otherwise) to
any  third  party,  except  as  disclosed  on  Exhibit  3.12.

     Section  3.13     Contracts  and  Leases.  Except  as  disclosed in Exhibit
                       ----------------------
3.13,  the Company (i) has no leases of personal property relating to the assets
of  the  Company,  whether  as  lessor  or  lessee;

                       Stock Purchase Agreement - Page 5
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(ii)  has  no  contractual  or  other  obligations relating to the assets of the
Company,  whether written or oral; and (iii) has not given any power of attorney
to  any  person  or  organization  for any purpose relating to the assets of the
Company.  The  Company  has an existing real estate lease agreement covering the
real  property  where  the  Company  operates  its business located at 4102 Naco
Perrin  Street, San Antonio, Texas 78217.  The Company has furnished Purchaser a
copy  of each and every contract, lease or other document relating to the assets
of  the  Company  to which they are subject or are a party or a beneficiary.  To
Seller's  and the Company's knowledge, such contracts, leases or other documents
are  valid and in full force and effect according to their terms and constitutes
a  legal,  valid  and binding obligation of the Company and the other respective
parties  thereto  and  are  enforceable in accordance with their terms.  Neither
Seller  nor  the  Company have any knowledge of any default or breach under such
contracts,  leases  or  other  documents  or of any pending or threatened claims
under  any  such contracts, leases or other documents.  Neither the execution of
this  Agreement,  nor  the  consummation  of  all  or  any  of  the transactions
contemplated under this Agreement, will constitute a breach or default under any
such  contracts,  leases  or other documents which would have a material adverse
effect  on  the  financial  condition  of  the  Company for the operation of its
business  after  the  Closing.

     Section  3.14     Material  Agreements;  Action.   There  are  no  material
                       -----------------------------
contracts,  agreements,  commitments,  understandings  or proposed transactions,
whether  written  or oral, to which Seller or the Company is a party or by which
they  are  bound.

     Section  3.15     No Default.  Neither Seller nor the Company is in default
                       ----------
under  any  term or condition of any instrument evidencing, creating or securing
any  indebtedness of Seller or the Company, and there has been no default in any
material  obligation  to  be  performed by Seller or the Company under any other
contract,  lease, agreement, commitment or undertaking to which it is a party or
by  which  it  or  its  assets  or  properties are bound, nor have Seller or the
Company  waived  any  material  right under any such contract, lease, agreement,
commitment  or  undertaking.

     Section  3.16     Books  and  Records.  The books of account, minute books,
                       -------------------
stock record books and other records of the Company, all of which have been made
available  to  Purchaser,  are accurate and complete and have been maintained in
accordance  with  sound business practices.  Upon Closing, all books and records
will  be  in  the  possession  of  Seller  or  the  Company.

     Section  3.17      Disclosure.  No representation or warranty of the Seller
                        ----------
or  the  Company  contained  in  this  Agreement (including the exhibits hereto)
contains  any  untrue  statement  or omits to state a material fact necessary in
order  to  make  the  statements  contained  herein  or therein, in light of the
circumstances  under  which  they  were  made,  not  misleading.

     Section  3.18     Brokerage  Commission.  No  broker or finder has acted on
                       ---------------------
behalf  of  Seller  or  the  Company  in  connection  with this Agreement or the
transactions  contemplated hereby, and no person is entitled to any brokerage or
finder's  fee or compensation in respect thereof based in any way on agreements,
arrangements  or  understandings  made by or on behalf of Seller or the Company.

                       Stock Purchase Agreement - Page 6
<PAGE>
                                   ARTICLE IV
                         REPRESENTATIONS AND WARRANTIES
                                  OF PURCHASER

     Rick's  hereby  represents  and  warrants to the Sellers and the Company as
follows:

     Section  4.1     Authorization.  Rick's  is a corporation duly organized in
                      -------------
the  state  of  Texas  and has full power, capacity, and authority to enter into
this  Agreement  and perform the obligations contemplated hereby.  All action on
the  part  of  Rick's  necessary  for the authorization, execution, delivery and
performance  of  this  Agreement by it has been taken and will be taken prior to
Closing.  This  Agreement,  when  duly executed and delivered in accordance with
its  terms,  will  constitute  legal,  valid,  and binding obligations of Rick's
enforceable  against  Rick's  in  accordance  with  its  terms, except as may be
limited  by  bankruptcy, insolvency, and other similar laws affecting creditors'
rights  generally  or  by  general  equitable  principles.

     Section  4.2     No  Breaches  or  Defaults.  The  execution, delivery, and
                      --------------------------
performance  of  this Agreement by Rick's does not:  (i) conflict with, violate,
or  constitute a breach of or a default under or (ii) require any authorization,
consent,  approval, exemption, or other action by or filing with any third party
or  Governmental  Authority  under  any  provision of:  (a) any applicable Legal
Requirement,  or (b) any credit or loan agreement, promissory note, or any other
agreement  or  instrument  to  which  Rick's  is  a  party.

     Section  4.3     Consents.  No  permit,  consent, approval or authorization
                      --------
of,  or  designation,  declaration or filing with, any Governmental Authority or
any  other person or entity is required on the part of Rick's in connection with
the  execution  and delivery by Rick's of this Agreement or the consummation and
performance of the transactions contemplated hereby other than as required under
the  federal  securities  laws.

     Section  4.4      Disclosure.  No  representation  or  warranty  of  Rick's
                       ----------
contained  in this Agreement (including the exhibits hereto) contains any untrue
statement  or  omits  to  state  a  material fact necessary in order to make the
statements  contained  herein  or  therein,  in light of the circumstances under
which  they  were  made,  not  misleading.

     Section  4.5     Brokerage  Commission.  No  broker  or finder has acted on
                      ---------------------
behalf  of  Rick's  in  connection  with  this  Agreement  or  the  transactions
contemplated  hereby, and no person is entitled to any brokerage or finder's fee
or  compensation in respect thereof based in any way on agreements, arrangements
or  understandings  made  by  or  on  behalf  of  Rick's.

                                    ARTICLE V
                             COVENANT OF THE SELLER,
                              COMPANY AND PURCHASER

     Section 5.1     Conduct of Business.  From the date of the execution hereof
                     -------------------
until the Closing Date, Seller and the Company shall operate the business of the
Company in the ordinary course consistent with past practices, and:

                       Stock Purchase Agreement - Page 7
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     (a)  the Company  will  not  authorize,  declare,  pay  or  effect  any
          dividend  or liquidation or other distribution in respect of the stock
          of  the  Company  or  other  equity interest or any direct or indirect
          redemption,  purchase  or  other acquisition of any equity interest of
          the  Company;

     (b)  the Company  will  not  make  any  changes in its condition (financial
          or  otherwise),  liabilities,  assets,  or  business  or in any of its
          business  relationships,  including  relationships  with  suppliers or
          customers,  that,  when  considered individually or in the aggre-gate,
          might  reasonably be expected to have a material adverse effect on the
          Company;

     (c)  the Company  will  not  increase  the  salary  or  other  compensation
          payable  or  to  become payable by the Company to any employee, or the
          declaration,  payment, or commitment or obligation of any kind for the
          pay-ment  by  the  Company  of  a  bonus or other additional salary or
          compensation  to  any  such  person;

     (d)  the Company  will  not  sell,  lease,  transfer or assign any of their
          assets, tangible or intangible, other than for a fair consideration in
          the  ordinary  course  of  business;

     (e)  the Company  will  not  accelerate,  terminate,  modify  or cancel any
          agreement,  contract,  lease  or  license  (or  series  of  related
          agreements, contracts, leases and licenses) involving more than $5,000
          to  which  the  Company  is  a  party;

     (f)  the Company  will  not  make  any  loans  to  any person or entity, or
          guarantee  any  loan;

     (g)  the Company  will  not  waive  or  release  any right or claim held by
          the  Company;

     (h)  the Company  will  operate  its  business  in  the ordinary course and
          consistent  with  past  practices  so  as  to  preserve  its  business
          organization  intact,  to retain the ser-vices of its employees and to
          preserve  its  goodwill  and  relationships with suppliers, creditors,
          cus-tomers,  and  others  having  business  relationships  with  it;

     (i)  the Company  will  not  issue  any  note,  bond or other debt security
          or create, incur or assume, or guarantee any indebtedness for borrowed
          money  or  capitalized  lease  obligations;

     (j)  the Company  will  not  delay  or  postpone  the  payment  of accounts
          payable and other liabilities outside the ordinary course of business;

     (k)  the Company  will  not  make  any  loan  to,  or  enter into any other
          transaction  with,  any  of  its  directors,  officers,  employees  or
          shareholders;

     (l)  the Company  will  not  issue,  sell  or  otherwise  dispose of any of
          its  equity  securities,  or  create,  sell or dispose of any options,
          rights,  conversion  rights  or other agreements or commitments of any
          kind  relating  to  the  issuance,  sale  or disposition of any of its
          equity  securities;

                       Stock Purchase Agreement - Page 8
<PAGE>
     (m)  the Company  will  not  be  a  party  to  any merger, consolidation or
          other  business  combination;  and

     (n)  the Company  will  not  agree  to  take  any  action described in this
          Section  5.1.

                                   ARTICLE VI
                         CONDITIONS TO CLOSING OF SELLER
                                 AND THE COMPANY

     Each  obligation  of  Seller and the Company to be performed on the Closing
Date  shall  be  subject to the satisfaction of each of the conditions stated in
this Article VI, except to the extent that such satisfaction is waived by Seller
and  the  Company  in  writing.

     Section  6.1     Representations  and  Warranties  Correct.  The
                      -----------------------------------------
representations  and  warranties  made  by Purchaser contained in this Agreement
shall  be  true  and  correct  as  of  the  Closing  Date.

     Section  6.2     Covenants.  All  covenants,  agreements  and  conditions
                      ---------
contained  in  this  Agreement  to  be performed by Purchaser on or prior to the
Closing  Date  shall  have  been  performed  or  complied  with in all respects.

     Section 6.3     Delivery of Certificate.  Purchaser shall provide to Seller
                     -----------------------
and the Company Certificates, dated the Closing Date and signed by the President
of  Purchaser  to the effect set forth in Section 6.1 and 6.2 for the purpose of
verifying  the  accuracy  of  such  representations  and  warranties  and  the
performance  and  satisfaction  of  such  covenants  and  conditions.

     Section  6.4     Payment  of Purchase Price.  Purchaser shall have tendered
                      --------------------------
the  Purchase  Price  for  the Shares as referenced in Section 1.2 to the Seller
concurrently  with  the  Closing.

     Section  6.5  Related  Transactions.  The  Related Transaction set forth in
                   ---------------------
Section 2.3 shall be consummated concurrently with the Closing.

     Section 6.6     Corporate Resolutions.  Purchaser shall provide resolutions
                     ---------------------
of  the  Board  of  Directors  of  the  Purchaser which approve the transactions
contemplated  herein  and  authorize  the execution, delivery and performance of
this Agreement and the documents referred to herein to which it is or is to be a
party  dated  as  of  the  Closing  Date.

     Section  6.7     Absence  of Proceedings.  No action, suit or proceeding by
                      -----------------------
or  before any court or any governmental or regulatory authority shall have been
commenced and no investigation by any governmental or regulatory authority shall
have  been  commenced seeking to restrain, prevent or challenge the transactions
contemplated  hereby  or  seeking  judgments  against  Purchaser.

                       Stock Purchase Agreement - Page 9
<PAGE>
                                   ARTICLE VII
                            CONDITIONS TO CLOSING OF
                                    PURCHASER

     Each  obligation  of Purchaser to be performed on the Closing Date shall be
subject  to  the  satisfaction  of each of the conditions stated in this Article
VII,  except  to  the  extent  that  such satisfaction is waived by Purchaser in
writing.

     Section  7.1     Representations  and  Warranties  Correct.  The
                      -----------------------------------------
representations  and  warranties made by the Seller and the Company hereof shall
be  true  and  correct  as  of  the  Closing  Date.

     Section  7.2     Covenants.  All  covenants,  agreements  and  conditions
                      ---------
contained  in this Agreement to be performed by the Seller and the Company on or
prior  to  the  Closing  Date  shall have been performed or complied with in all
respects.

     Section  7.3     Delivery  of  Certificate.  Seller  and  the Company shall
                      -------------------------
provide  to  Purchaser  certificates,  dated  the Closing Date and signed by the
Seller  and  by  the  President  of the Company, respectively, to the effect set
forth  in  Section 7.1 and 7.2 for the purpose of verifying the accuracy of such
representations  and  warranties  and  the  performance and satisfaction of such
covenants  and  conditions.

     Section  7.4     Delivery  of  Shares.  Seller  shall  have  delivered
                      --------------------
certificates evidencing the Shares of the Company, duly endorsed to Purchaser or
accompanied  by duly executed stock powers in form and substance satisfactory to
Purchaser.

     Section 7.5     Related Transactions.  The Related Transaction set forth in
                     --------------------
Section 2.3 shall be consummated concurrently with the Closing.

     Section  7.6     Corporate  Resolutions.  The  Company  shall  provide  to
                      ----------------------
Purchaser a corporate resolution of the Board of Directors of the Company, which
approves  the  transactions  contemplated  herein  and authorizes the execution,
delivery  and performance of this Agreement and the documents referred to herein
to which it is or is to be a party dated as of the Closing Date.

     Section 7.7     Consents; Transfer of Licenses.  All necessary transfers of
                     ------------------------------
licenses  and leases required for the continued operation of the business of the
Company shall have been obtained.  All business licenses of the Company shall be
in  full  force  and  effect.

     Section  7.8    Resignation.  The  Officers  and  Directors  of the Company
                     -----------
shall have provided to Purchaser their written resignations.

     Section  7.9     Absence  of Proceedings.  No action, suit or proceeding by
                      -----------------------
or  before any court or any governmental or regulatory authority shall have been
commenced and no investigation by any governmental or regulatory authority shall
have  been  commenced seeking to restrain, prevent or challenge the transactions
contemplated  hereby  or  seeking  judgments  against  the Company or any of its
assets.

                       Stock Purchase Agreement - Page 10
<PAGE>
                                  ARTICLE VIII
                                 INDEMNIFICATION

     Section  8.1     Indemnification  from  Seller and the Company.  Seller and
                      ---------------------------------------------
the  Company, jointly and severally, hereby agree to and shall indemnify, defend
(with legal counsel reasonably acceptable to Purchaser), and hold Purchaser, its
officers,  directors,  employees,  shareholders, affiliates, assigns, agents and
legal  counsel (collectively, the "Purchaser Group") harmless at all times after
the date of this Agreement, from and against any and all actions, suits, claims,
demands,  debts,  liabilities,  obligations,  losses,  damages, costs, expenses,
penalties or injury  (including reasonable attorneys' fees and costs of any suit
related  thereto)  suffered  or  incurred  by any of the Purchaser Group arising
from: (a) any misrepresentation by, or breach of any covenant or warranty of the
Seller  or the Company contained in this Agreement, or any exhibit, certificate,
or  other  instrument  furnished  or  to  be  furnished by Seller or the Company
hereunder;  (b) any nonfulfillment of any agreement on the part of Seller or the
Company  under  this  Agreement; (c) from any liability or obligation due to any
third  party by the Company incurred at or prior to the Closing Date; or (d) any
suit,  action, proceeding, claim or investigation against Purchaser which arises
from  or  which is based upon or pertaining to Seller's or the Company's conduct
or  the  operation  or  liabilities  of the business of the Company prior to the
Closing  Date.

     Section  8.2     Indemnification  from  Purchaser.  Purchaser agrees to and
                      --------------------------------
shall indemnify, defend (with legal counsel reasonably acceptable to the Seller)
and  hold  the  Seller,  the  Company,  its  officers,  directors,  employees,
shareholders,  agents,  affiliates,  legal  counsel,  successors  and  assigns
(collectively, the "Seller's Group") harmless at all times after the date of the
Agreement  from  and against any and all actions, suits, claims, demands, debts,
liabilities,  obligations, losses, damages, costs, expenses, penalties or injury
(including  reasonably  attorney's  fees  and costs of any suit related thereto)
suffered  or  incurred  by  any  of  the  Seller's  Group,  arising from (a) any
misrepresentation  by,  or  breach  of  any  covenant  or  warranty of Purchaser
contained  in  this Agreement or any exhibit, certificate, or other agreement or
instrument  furnished  or  to  be  furnished  by  Purchaser  hereunder;  (b) any
nonfulfillment  of  any agreement on the part of Purchaser under this Agreement;
or (c) any suit, action, proceeding, claim or investigation against Seller which
arises  from  or  which  is based upon or pertaining to Purchaser conduct or the
operation  of  the  business  of  the  Company  subsequent  to the Closing Date.

     Section 8.3     Defense of Claims.  If any lawsuit or enforcement action is
                     -----------------
filed  against any party entitled to the benefit of indemnity hereunder, written
notice  thereof  shall  be  given  to  the  indemnifying  party  as  promptly as
practicable  (and  in  any  event  not  less than fifteen (15) days prior to any
hearing  date  or  other  date by which action must be taken); provided that the
failure  of  any indemnified party to give timely notice shall not affect rights
to  indemnification  hereunder  except to the extent that the indemnifying party
demonstrates  actual  damage  caused  by  such  failure.  After such notice, the
indemnifying  party  shall  be entitled, if it so elects, to take control of the
defense  and  investigation  of  such lawsuit or action and to employ and engage
attorneys  of  its own choice to handle and defend the same, at the indemnifying
party's  cost,  risk  and expense; and such indemnified party shall cooperate in
all  reasonable  respects,  at its cost, risk and expense, with the indemnifying
party and such attorneys in the investigation, trial and defense of such lawsuit
or  action  and  any  appeal  arising  therefrom;  provided,  however,  that the
indemnified party may, at its own cost, participate in such investigation, trial
and  defense  of  such  lawsuit or action and any appeal arising therefrom.  The
indemnifying  party  shall  not,  without  the  prior  written  consent  of  the

                       Stock Purchase Agreement - Page 11
<PAGE>
indemnified  party,  effect any settlement of any proceeding in respect of which
any  indemnified party is a party and indemnity has been sought hereunder unless
such  settlement  of  a  claim,  investigation,  suit,  or other proceeding only
involves  a  remedy  for  the  payment  of  money  by the indemnifying party and
includes  an  unconditional release of such indemnified party from all liability
on  claims  that  are  the  subject  matter  of  such  proceeding.

     Section  8.4     Default  of  Indemnification  Obligation.  If an entity or
                      ----------------------------------------
individual  having  an indemnification, defense and hold harmless obligation, as
above provided, shall fail to assume such obligation, then the party or entities
or  both,  as  the  case  may be, to whom such indemnification, defense and hold
harmless  obligation  is  due  shall  have the right, but not the obligation, to
assume and maintain such defense (including reasonable counsel fees and costs of
any  suit  related  thereto)  and  to make any settlement or pay any judgment or
verdict  as  the  individual  or  entities deem necessary or appropriate in such
individuals  or  entities absolute sole discretion and to charge the cost of any
such  settlement,  payment,  expense  and costs, including reasonable attorneys'
fees,  to  the  entity  or  individual  that  had the obligation to provide such
indemnification,  defense and hold harmless obligation and same shall constitute
an additional obligation of the entity or of the individual or both, as the case
may  be.

                                   ARTICLE IX
                                  MISCELLANEOUS

     Section  9.1     Amendment;  Waiver.  Neither  this  Agreement  nor  any
                      ------------------
provision  hereof  may  be  amended, modified or supplemented unless in writing,
executed  by  all  the  parties  hereto.  Except as otherwise expressly provided
herein,  no waiver with respect to this Agreement shall be enforceable unless in
writing  and  signed by the party against whom enforcement is sought.  Except as
otherwise  expressly  provided  herein,  no  failure  to  exercise,  delay  in
exercising,  or  single or partial exercise of any right, power or remedy by any
party,  and  no  course  of  dealing  between or among any of the parties, shall
constitute  a waiver of, or shall preclude any other or further exercise of, any
right,  power  or  remedy.

     Section  9.2     Notices.  Any  notices or other communications required or
                      -------
permitted  hereunder  shall be sufficiently given if in writing and delivered in
Person,  transmitted  by  facsimile  transmission (fax) or sent by registered or
certified  mail  (return  receipt  requested)  or  recognized overnight delivery
service,  postage  pre-paid,  addressed as follows, or to such other address has
such  party  may  notify  to  the  other  parties  in  writing:

     (a)  if to the Seller:           John Abdulla
                                      5868  Westheimer,  Ste.  601
                                      Houston,  Texas  77057

     (b)  if to Purchaser:            Rick's Cabaret International, Inc.
                                      Attn:  President
                                      10959  Cutten  Road
                                      Houston,  Texas  77066

                       Stock Purchase Agreement - Page 12
<PAGE>
          with a copy to:             Robert D. Axelrod
                                      Axelrod,  Smith  &  Kirshbaum
                                      5300  Memorial  Drive,  Suite  700
                                      Houston,  Texas  77007

A  notice  or  communication  will be effective (i) if delivered in Person or by
overnight  courier,  on the business day it is delivered, (ii) if transmitted by
telecopier,  on  the  business  day of actual confirmed receipt by the addressee
thereof,  and  (iii) if sent by registered or certified mail, three (3) business
days  after  dispatch.

     Section  9.3     Severability.  Whenever  possible,  each provision of this
                      ------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable  law, but if any provision of this Agreement is held to be prohibited
by  or  invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of  this  Agreement.

     Section  9.4     Assignment;  Successors  and Assigns.  Except as otherwise
                      -----------  -----------------------
provided  herein,  the  provisions  hereof shall inure to the benefit of, and be
binding  upon,  the  successors and permitted assigns of the parties hereto.  No
party  hereto  may  assign  its  rights  or  delegate its obligations under this
Agreement  without  the prior written consent of the other parties hereto, which
consent  will  not  be  unreasonably  withheld.

     Section  9.5     Survival of Representations, Warranties and Covenants. All
                      -----------------------------------------------------
representations  and  warranties made in, pursuant to or in connection with this
Agreement  shall  survive  the  execution and delivery of this Agreement for the
maximum  period  allowed  by  law.

     Section  9.6     Entire  Agreement.  This Agreement and the other documents
                      -----------------
delivered  pursuant  hereto  constitute  the  full  and entire understanding and
agreement  between  the  parties  with  regard  to the subject matter hereof and
thereof  and supersede and cancel all prior representations, alleged warranties,
statements,  negotiations,  undertakings,  letters, acceptances, understandings,
contracts and communications, whether verbal or written among the parties hereto
and thereto or their respective agents with respect to or in connection with the
subject  matter  hereof.

     Section  9.7     Choice  of  Law.  This Agreement shall be governed by, and
                      ---------------
construed  in accordance with, the laws of the State of Texas, without regard to
principles  of  conflict  of  laws.  In  any  action between or among any of the
parties, whether arising out of this Agreement or otherwise, each of the parties
irrevocably  consents to the exclusive jurisdiction and venue of the federal and
state  courts  located  in  Harris  County,  Texas.

     Section  9.8     Counterparts  and  Facsimiles.  This  Agreement  may  be
                      -----------------------------
executed  in  multiple  counterparts  and in any number of counterparts, each of
which  shall  be  deemed  an  original,  but  all  of which taken together shall
constitute  and  be  deemed  to be one and the same instrument and each of which
shall  be  considered  and  deemed an original for all purposes.  This Agreement
shall  be effective with the facsimile signature of any of the parties set forth
below  and  the facsimile signature shall be deemed as an original signature for
all  purposes and the Agreement shall be deemed as an original for all purposes.

                       Stock Purchase Agreement - Page 13
<PAGE>
     Section  9.9     Costs  and  Expenses.   Each  party  shall  pay  their own
                      --------------------
respective  fees,  costs  and  disbursements  incurred  in  connection with this
Agreement.

     Section  9.10     Section Headings.  The section and subsection headings in
                       ----------------
this Agreement are used solely for convenience of reference, do not constitute a
part of this Agreement, and shall not affect its interpretation.

     Section  9.11     No  Third-Party Beneficiaries.  Nothing in this Agreement
                       -----------------------------
will  confer  any  third  party  beneficiary  or  other  rights  upon any person
(specifically  including any employees of The Company) or any entity that is not
a  party  to  this  Agreement.

     Section  9.12     Validity.  The  invalidity  or  unenforceability  of  any
                       --------
provision  of  this Agreement shall not affect the validity or enforceability of
any  other  provisions  of  this Agreement, which shall remain in full force and
effect.

     Section  9.13     Further  Assurances.  Each  party  covenants  that at any
                       -------------------
time,  and  from  time  to  time,  after  the Closing Date, it will execute such
additional  instruments  and take such actions as may be reasonably be requested
by  the other parties to confirm or perfect or otherwise to carry out the intent
and  purposes  of  this  Agreement.

     Section  9.14     Exhibits  Not Attached.  Any exhibits not attached hereto
                       ----------------------
on  the  date  of  execution  of  this Agreement shall be deemed to be and shall
become  a  part of this Agreement as if executed on the date hereof upon each of
the  parties  initialing  and  dating  each  such exhibit, upon their respective
acceptance  of  its  terms,  conditions  and/or  form.

                   [SIGNATURES APPEAR ON THE FOLLOWING PAGE.]

                       Stock Purchase Agreement - Page 14
<PAGE>
     IN  WITNESS  WHEREOF,  the  undersigned  have  executed this Stock Purchase
Agreement to become effective as of the date first set forth above.

                                        TEXAS S&I, INC.

                                          /s/  John Abdulla
                                        -----------------------------------
                                        By:  John Abdulla, President
                                        Date:
                                              ------------------------

                                        JOHN ABDULLA

                                          /s/  John Abdulla
                                        -----------------------------------
                                        John Abdulla, Individually
                                        Date:
                                              ------------------------

                                        RICK'S CABARET INTERNATIONAL, INC.

                                          /s/  Eric  Langan
                                        -----------------------------------
                                        By:  Eric Langan, CEO/President
                                        Date:
                                              ------------------------

                       Stock Purchase Agreement - Page 15
<PAGE>
                                    EXHIBITSExecution
      Copy

    

     

    ASSET
      CONTRIBUTION AGREEMENT

     

    among

     

    INNOVATIVE
      CARD TECHNOLOGIES, INC.

     

    (“InCard”),

     

    nCRYPTONE,
      S.A.

     

    (the
      “Company”),

     

    and

     

    PROSODIE,
      S.A.

     

    (the
      “Principal Shareholder”)

     

    

    

    Dated
      as
      of June 28, 2006

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    TABLE
      OF CONTENTS

    

      
        	 	 	
                Page

              
	 	 
	
                ARTICLE
                  I.
                  CONTRIBUTION OF CONTRIBUTED ASSETS; LICENSES

              	
                1

              
	 	 	 
	
                1.1.

              	
                Transfer
                  of Contributed Assets

              	
                1

              
	
                1.2.

              	
                Assumption
                  of Liabilities

              	
                2

              
	
                1.3.

              	
                Excluded
                  Liabilities.

              	
                3

              
	
                1.4.

              	
                Termination
                  of the Joint Development Agreement

              	
                3

              
	
                1.5.

              	
                Consideration

              	
                3

              
	
                1.6.

              	
                Withholding
                  Taxes

              	
                4

              
	
                1.7.

              	
                Closing
                  Costs and Fees

              	
                4

              
	 	 
	
                ARTICLE
                  II.
                  CLOSING

              	
                4

              
	 	 	 
	
                2.1.

              	
                The
                  Closing

              	
                4

              
	
                2.2.

              	
                Closing
                  Deliveries.

              	
                4

              
	 	 
	
                ARTICLE
                  III.
                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE PRINCIPAL
                  SHAREHOLDER

              	
                7

              
	 	 	 
	
                3.1.

              	
                Organization
                  of the Company

              	
                7

              
	
                3.2.

              	
                Capitalization

              	
                7

              
	
                3.3.

              	
                Authorization.

              	
                7

              
	
                3.4.

              	
                Consents
                  and Approvals

              	
                8

              
	
                3.5.

              	
                Title
                  to Contributed Assets; Encumbrances

              	
                8

              
	
                3.6.

              	
                Contracts
                  and Commitments

              	
                8

              
	
                3.7.

              	
                No
                  Conflict or Violation

              	
                9

              
	
                3.8.

              	
                Litigation

              	
                9

              
	
                3.9.

              	
                Compliance
                  with Law

              	
                9

              
	
                3.10.

              	
                Intellectual
                  Property.

              	
                10

              
	
                3.11.

              	
                Tax
                  Matters

              	
                13

              
	
                3.12.

              	
                No
                  Brokers

              	
                14

              
	
                3.13.

              	
                No
                  Other Agreements to Sell the Assets or Capital Stock of the
                  Company

              	
                14

              
	
                3.14.

              	
                Accredited
                  Investor Status.

              	
                14

              
	
                3.15.

              	
                Material
                  Misstatements or Omissions

              	
                15

              
	 	 
	
                ARTICLE
                  IV.
                  REPRESENTATIONS AND WARRANTIES OF INCARD

              	
                15

              
	 	 	 
	
                4.1.

              	
                Organization
                  of InCard

              	
                15

              
	
                4.2.

              	
                Capitalization

              	
                15

              
	
                4.3.

              	
                Authorization

              	
                16

              
	
                4.4.

              	
                Consents
                  and Approvals

              	
                16

              
	
                4.5.

              	
                No
                  Conflict or Violation

              	
                16

              
	
                4.6.

              	
                SEC
                  Filings; Financial Statements.

              	
                16

              
	
                4.7.

              	
                Issuance
                  of InCard Common Stock

              	
                17

              
	
                4.8.

              	
                Litigation

              	
                17

              

      

       

      
        
           

        

        
          i

          
            

          

        

        
           

        

      

       

      
        	
                4.9.

              	
                Compliance
                  with Law

              	
                17

              
	
                4.10.

              	
                No
                  Brokers

              	
                18

              
	
                4.11.

              	
                Due
                  Diligence

              	
                18

              
	 	 
	
                ARTICLE
                  V.
                  COVENANTS

              	
                18

              
	 	 	 
	
                5.1.

              	
                Confidentiality;
                  Non-Competition; Non-Solicitation.

              	
                18

              
	
                5.2.

              	
                Further
                  Assurances

              	
                22

              
	
                5.3.

              	
                Conduct
                  of Business

              	
                23

              
	
                5.4.

              	
                No
                  Solicitation

              	
                22

              
	
                5.5.

              	
                Notification
                  of Certain Matters

              	
                23

              
	
                5.6.

              	
                Investigation
                  by InCard

              	
                24

              
	
                5.7.

              	
                Tax
                  Matters.

              	
                24

              
	
                5.8.

              	
                Transition
                  Services.

              	
                25

              
	
                5.9.

              	
                Electrostatic
                  Patent

              	
                26

              
	
                5.10.

              	
                Consents
                  to Assignment

              	
                26

              
	
                5.11.

              	
                Right
                  of First Refusal.

              	
                27

              
	
                5.12.

              	
                VASCO
                  and RSA Accounts Receivable

              	
                27

              
	
                5.13.

              	
                Publicity

              	
                28

              
	 	 
	
                ARTICLE
                  VI.
                  CONDITIONS TO CLOSING

              	
                28

              
	 	 	 
	
                6.1.

              	
                Conditions
                  to Obligations of the Company

              	
                28

              
	
                6.2.

              	
                Conditions
                  to Obligations of InCard

              	
                28

              
	 	 
	
                ARTICLE
                  VII.
                  INDEMNIFICATION; REMEDIES

              	
                29

              
	 	 	 
	
                7.1.

              	
                Limitation
                  on Survival of Representations and Warranties

              	
                29

              
	
                7.2.

              	
                Indemnification.

              	
                30

              
	 	 
	
                ARTICLE
                  VIII.
                  TERMINATION

              	
                33

              
	 	 	 
	
                8.1.

              	
                Termination

              	
                33

              
	
                8.2.

              	
                Effect
                  of Termination

              	
                34

              
	 	 
	
                ARTICLE
                  IX.
                  MISCELLANEOUS

              	
                34

              
	 	 	 
	
                9.1.

              	
                Defined
                  Terms

              	
                34

              
	
                9.2.

              	
                Notices.

              	
                42

              
	
                9.3.

              	
                Rules
                  of Construction

              	
                44

              
	
                9.4.

              	
                Titles

              	
                44

              
	
                9.5.

              	
                Entire
                  Agreement

              	
                44

              
	
                9.6.

              	
                Assignment

              	
                44

              
	
                9.7.

              	
                Amendment
                  or Modification

              	
                45

              
	
                9.8.

              	
                Waiver

              	
                45

              
	
                9.9.

              	
                Severability

              	
                45

              
	
                9.10.

              	
                Burden
                  and Benefit

              	
                45

              
	
                9.11.

              	
                Governing
                  Law

              	
                45

              
	
                9.12.

              	
                Consent
                  to Jurisdiction

              	
                45

              
	
                9.13.

              	
                Waiver
                  of Trial by Jury

              	
                46

              

      

       

      
        
           

        

        
          ii

          
            

          

        

        
           

        

      

       

      
        	
                9.14.

              	
                Legal
                  Fees

              	
                46

              
	
                9.15.

              	
                Arbitration

              	
                46

              
	
                9.16.

              	
                Specific
                  Performance

              	
                47

              
	
                9.17.

              	
                Cumulative
                  Remedies

              	
                47

              
	
                9.18.

              	
                Expenses

              	
                47

              
	
                9.19.

              	
                Representation
                  by Counsel

              	
                47

              
	
                9.20.

              	
                Execution
                  and Counterparts

              	
                48

              

      

    

    

    
      
         

      

      
        iii

        
          

        

      

      
         

      

    

    EXHIBITS
      AND ANNEXES

    

    
      	
              Exhibit
                A

            	
              Assignment
                of Contract Rights

            
	
              Exhibit
                B

            	
              Assignment
                of Intellectual Property Rights

            
	
              Exhibit
                C

            	
              Assumption
                Agreement

            
	
              Exhibit
                D

            	
              Evidence
                of Contribution

            
	
              Exhibit
                E

            	
              Contribution
                Agreement (“Contrat
                d’Apport”) 

            
	
              Exhibit
                F

            	
              License
                Agreement Granting Licenses from InCard to the Company

            
	
              Exhibit
                G

            	
              License
                Agreement Granting a License from the Company to InCard

            
	
              Exhibit
                H

            	
              Reseller
                Agreements

            
	
              Exhibit
                I

            	
              Services
                Agreement

            
	 	 
	
              Annex
                I-A

            	
              Accounts
                Payable

            
	
              Annex
                I-B

            	
              Assumed
                Contracts

            
	
              Annex
                II

            	
              Registration
                Rights

            

    

    

    
      
         

      

      
        iv

        
          

        

      

      
         

      

    

    ASSET
      CONTRIBUTION AGREEMENT

     

    This ASSET
      CONTRIBUTION AGREEMENT, dated
      as
      of June 28, 2006 (this “Agreement”),
      is
      entered into by and among: (i) Innovative Card Technologies, Inc., a
      Delaware corporation (“InCard”);
      (ii)
      nCryptone, S.A. (formerly known as AudioSmartCard, S.A.), a corporation
      organized under the laws of France (the “Company”);
      and
      (iii) Prosodie, S.A., a corporation organized under the laws of France (the
      “Principal
      Shareholder”).
      

     

    RECITALS

     

    A. The
      Company and InCard have jointly developed certain intellectual property related
      to financial transaction and similar cards with built-in sound storage and
      sound
      generation capability and built-in display functions pursuant to that certain
      Joint Development Agreement, dated July 25, 2005 (the “Joint
      Development Agreement”),
      and
      the Company owns all intellectual property comprising and relating to the
      product presently known as the “nC DisplayCard,” a credit card size card
      containing an embedded battery, a flexible screen, a button and a
      cryptoprocessor (including any future upgrades thereto or improvements thereon,
      the “nC
      DisplayCard”),
      none
      of which intellectual property is currently being exploited by or on behalf
      of
      the Company.

     

    B. Since
      InCard is a party to the Joint Development Agreement, InCard has knowledge
      of
      the technology incorporated in the nC DisplayCard, as well as the principal
      participants in the market owning technology similar to the nC DisplayCard,
      and,
      as such, InCard understands the technological and market characteristics of,
      as
      well as the limitations and risks associated with, the nC
      DisplayCard.

     

    C. The
      Principal Shareholder owns and controls substantially all of the outstanding
      equity interests of the Company.

     

    D. Pursuant
      to the terms and subject to the conditions set forth in this Agreement, InCard
      desires to receive the Contributed Assets (as defined herein) from the Company,
      and the Company desires to contribute the Contributed Assets to
      InCard.

     

    AGREEMENT

     

    In
      consideration of the mutual covenants and promises contained in this Agreement
      and for good and valuable consideration, the receipt and adequacy of which
      are
      hereby acknowledged, the parties to this Agreement agree as
      follows:

     

    ARTICLE
      I.

    CONTRIBUTION
      OF CONTRIBUTED ASSETS; LICENSES

     

    1.1.
       Transfer
      of Contributed Assets.
      Pursuant to the terms and subject to the conditions set forth in this Agreement,
      at the Closing, the Company shall contribute, assign, transfer, convey and
      deliver to InCard, and InCard shall, in exchange for the Equity Consideration,
      receive from the Company, all of the Company’s right, title and interest in, to
      and under the following assets (collectively, the “Contributed
      Assets”):

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (a)
       all
      Intellectual Property associated with, incorporated into or related to the
      nC
      DisplayCard, including, without limitation, all rights in and to the Beep
      Patent; 

     

    (b)
       all
      Intellectual Property that is or was newly conceived, made or created prior
      to
      the Closing Date, whether solely by one party or jointly by both parties, as
      a
      result of performance pursuant to the Joint Development Agreement;

     

    (c)
       all
      monetary deposits and work-in-process that the Company has with SmartDisplayer
      Technology Co., Ltd. (“SmartDisplayer”);

     

    (d)
       all
      work-in-process that the Company has with RSA Security, Inc. (“RSA”);

     

    (e)
       all
      Inventory;

     

    (f)
       the
      Assumed Contracts;

     

    (g)
       all
      equipment and other tangible assets of the Company primarily used in connection
      with designing, manufacturing, testing, distributing or marketing the nC
      DisplayCard; and

     

    (h)
       all
      goodwill, other intangibles and any other Intellectual Property rights relating
      to the foregoing;

     

    it
      being
      understood that no customers or goodwill associated with customers, or accounts
      receivable, purchase orders from, or contracts with, customers of the Company
      will be comprised in, or transferred or assigned with, the Contributed Assets,
      and no right or benefit arising thereunder or resulting therefrom will be
      assumed by InCard, and it being further understood that, aside from the
      Contributed Assets, no other assets of the Company shall be contributed,
      assigned, transferred, conveyed or delivered to InCard hereunder.

     

    1.2.
       Assumption
      of Liabilities.
      Upon
      the terms and subject to the conditions contained in this Agreement, InCard
      shall assume only the following Liabilities of the Company (collectively, the
      “Assumed
      Liabilities”):

     

    (a)
       all
      Liabilities accruing, arising out of or relating to events or occurrences
      happening after the Closing Date relating to the Contributed Assets (including,
      among others, the Assumed Contracts), but excluding any Liabilities related
      to
      the Contributed Assets that accrue, arise out of or relate to periods on or
      prior to the Closing Date and excluding any Liability for any Default under
      any
      such Assumed Contract by the Company occurring on or prior to the Closing Date;
      and

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    (b)
       the
      accounts payable relating to nC DisplayCard owed by the Company to
      SmartDisplayer, RSA and VASCO Data Security International, Inc. (“VASCO”),
      each
      a third-party supplier of the Company, as set forth on Annex
      I-A
      attached
      hereto.

     

    1.3.
       Excluded
      Liabilities. Notwithstanding
      any other provision of this Agreement, InCard shall not assume or otherwise
      be
      responsible for (and nothing in this Agreement or any Ancillary Agreement shall
      be construed as imposing on InCard) any Liabilities of the Company or any of
      its
      Affiliates, including, without limitation, any and all Tax Liabilities for
      federal, state, local or foreign Taxes, and any Liabilities that the Company
      is
      responsible for pursuant to Section
      1.7
      hereof,
      except for the Assumed Liabilities expressly specified in Section
      1.2
      hereof,
      whether accruing, arising out of or relating to periods prior to, on or after
      the Closing Date (collectively, the “Excluded
      Liabilities”).
      

     

    1.4.
       Termination
      of the Joint Development Agreement.
      The
      parties hereto agree and acknowledge that, effective as of the Closing Date,
      the
      Joint Development Agreement shall be terminated in its entirety and shall
      thereafter have no further force and effect, except as otherwise provided for
      in
      this Section
      1.4.
      The
      parties hereto further agree and acknowledge that (a) none of the parties shall
      retain any rights or obligations under or pursuant to the Joint Development
      Agreement after the Closing Date, and (b) each party shall release and discharge
      the other party from all rights, obligations, duties, claims, demands and causes
      of action arising or claimed as arising between the parties under the Joint
      Development Agreement on or prior to the Closing Date (including payments due
      to
      each party from the other party), which rights, obligations, duties, claims,
      demands and causes of action shall be deemed to be satisfied as of the Closing
      Date (the “JDA
      Termination”);
      provided,
      however,
      that
      the ownership rights created in the Intellectual Property developed pursuant
      to
      Section 14 of the Joint Development Agreement shall in no way be affected by
      the
      JDA Termination except as otherwise provided for pursuant to the terms of this
      Agreement.

     

    1.5.
       Consideration.
      In
      exchange for the contribution, assignment, transfer, conveyance and delivery
      from the Company to InCard of the Contributed Assets in accordance with
Section
      1.1
      hereof
      and the other Ancillary Agreements, InCard shall, at the Closing, (i) deliver
      to
      the Company 4,500,000 shares of common stock, par value $0.001 per share, of
      InCard (the “InCard
      Common Stock,”
and
      such number of shares of InCard Common Stock being the “Equity
      Consideration”),
      representing, on the date hereof, a total value of U.S.$19,741,500 (based on
      the
      straight-line average per share trading price of InCard Common Stock on the
      OTC
      Bulletin Board during the 20 consecutive trading days immediately preceding
      the
      date hereof multiplied
      by
      4,500,000 shares of InCard Common Stock) (the “Stock
      Value”)
      and
      (ii) assume the Assumed Liabilities in accordance with Section
      1.2
      hereof.
      In connection herewith, the parties hereby acknowledge that the Company shall
      have the registration rights set forth in Annex
      II
      attached
      hereto, the terms of which are incorporated by reference herein, with respect
      to
      the Registrable Securities (as such term is defined in Annex
      II
      attached
      hereto).

     

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    1.6.
       Withholding
      Taxes.
      Except
      as otherwise provided in Section
      5.7(c)
      hereof,
      InCard shall be entitled to deduct and withhold from the consideration otherwise
      payable pursuant to this Agreement to the Company (including, for the avoidance
      of doubt, any amounts payable under Section
      1.7
      hereof)
      such amounts as may be required to be deducted and withheld with respect to
      the
      making of such payment under the Code, or under any provision of state, local
      or
      foreign Tax law. To the extent that amounts are so withheld and paid over to
      the
      appropriate taxing authority, such withheld amounts shall be treated for all
      purposes of this Agreement as having been paid to such person in respect of
      which such deduction and withholding was made.

     

    1.7.
       Closing
      Costs and Fees.
      The
      Company shall be responsible for any documentary and transfer Taxes and any
      sales, use or other similar Taxes (“Transfer
      Taxes”)
      imposed by any non-United States governmental authority by reason of the
      transfers of Contributed Assets provided hereunder. InCard shall be responsible
      for any Transfer Taxes imposed by any United States governmental authorities
      by
      reason of the transfers of Contributed Assets provided hereunder. The Company
      and InCard, as the case may be, shall at their own expense file all necessary
      Tax Returns and other documentation with respect to their obligation to pay
      Transfer Taxes. The Company shall file the Contribution Agreement with the
      Tax
      authorities in France and shall be liable for and shall pay the registration
      Tax
      (“droits
      d’enregistrement”)
      with
      respect to the Contribution Agreement. The Company shall pay the fees and costs
      of recording or filing all applicable conveyancing instruments described in
      Section
      2.2
      hereof
      in France and InCard shall pay the fees and costs of recording or filing all
      applicable conveyancing instruments described in Section
      2.2
      hereof
      in the United States.

     

    ARTICLE
      II.

    CLOSING

     

    2.1.
       The
      Closing.
      The
      closing of the transactions contemplated herein (the “Closing”)
      shall
      take place at the offices of Latham & Watkins LLP, 633 West Fifth Street,
      Suite 4000, Los Angeles, California, at 9:00 a.m. on a date mutually agreed
      to by the parties hereto in writing that is not later than the second Business
      Day after the satisfaction or waiver of each of the conditions set forth in
      Sections
      6.1
      and
6.2
      hereof,
      or at such other time, date and location as the parties hereto agree in writing
      (the “Closing
      Date”);
      provided,
      that,
      InCard and the Company hereby agree that the signature pages to this Agreement,
      the Ancillary Agreements and any other documents and instruments referenced
      in
Section
      2.2
      hereof
      may be delivered by each party to the other party electronically, with the
      original signature pages to be delivered by each party to the other party
      promptly after the Closing.

    2.2.
       Closing
      Deliveries.

     

    (a)
       Deliveries
      by InCard.
      Upon
      the terms and subject to the conditions set forth in this Agreement, in reliance
      on the representations, warranties and agreements of the Company and the
      Principal Shareholder contained herein, in consideration of the contribution,
      conveyance, transfer, assignment and delivery of the Contributed Assets and
      the
      Company’s entry into the JDA Termination, at the Closing, InCard shall deliver
      each of the following (in form and substance satisfactory to the Company and
      its
      legal counsel) to the Company:

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    (i) an
      electronic copy of the stock certificate(s) representing the shares of InCard
      Common Stock constituting the Equity Consideration (it being understood that
      InCard shall deliver, or cause to be delivered, to its legal counsel’s Los
      Angeles office the original stock certificate(s) representing such shares to
      be
      held in escrow until its legal counsel’s receipt of InCard’s original signature
      pages to this Agreement, the Ancillary Agreement and any other documents and
      instruments referenced in this Section
      2.2,
      at
      which time, InCard shall direct its legal counsel to promptly deliver such
      original stock certificate(s) to the Company);

     

    (ii) the
      Assumption Agreement;

     

    (iii) the
      Assignment of Intellectual Property Rights;

     

    (iv) a
      certificate executed by the Secretary or an Assistant Secretary of InCard
      certifying as of the Closing Date (A) a true and complete copy of the
      Organizational Documents of InCard certified as of a recent date by the
      Secretary of State of the State of Delaware, (B) a true and complete copy of
      the
      resolutions of the board of directors of InCard authorizing the execution,
      delivery and performance of this Agreement and the consummation of the
      transactions contemplated hereby and (C) incumbency matters;

     

    (v) a
      certificate of good standing and/or subsistence of InCard, dated as of a recent
      date prior to the Closing, issued by the Secretary of State of the State of
      Delaware;

     

    (vi) a
      certificate executed by the Chief Executive Officer of InCard certifying as
      to
      the matters set forth in Section
      6.1(a)
      hereof
      as of the Closing Date;
      

     

    (vii) the
      Reseller Agreements;

     

    (viii) the
      License Agreements;

     

    (ix) the
      Services Agreement;

     

    (x) a
      letter
      from NagraID Corp.-Kudelski Group (“NagraID”)
      addressed to the Company confirming that, during the period that InCard has
      exclusivity rights with NagraID pursuant to the terms of that certain
      Co-Operation Agreement, dated February 1, 2005, by and between InCard and
      NagraID, as amended or supplemented from time to time, InCard has granted
      NagraID permission to manufacture the nC AudioCard for the Company and to deal
      directly with the Company; and

     

    (xi) the
      Contribution Agreement.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    (b)
       Deliveries
      by the Company.
      Upon
      the terms and subject to the conditions set forth in this Agreement, in reliance
      upon the representations, warranties and agreements of InCard contained herein
      and in consideration of InCard’s payment of the Equity Consideration to be
      delivered to the Company and entry into the JDA Termination, at the Closing,
      the
      Company shall deliver each of the following (in form and substance satisfactory
      to InCard and its legal counsel) to InCard:

     

    (i) the
      Evidence of Contribution;

     

    (ii) the
      Assignment of Contract Rights;

     

    (iii) the
      Assignment of Intellectual Property Rights;

     

    (iv) (A)
      a
      true and complete copy of the by-laws (statuts)
      of the
      Company certified as of the Closing Date by the President of the Company
      (Président
      du Conseil et Directeur Général),
      (B) a
      true and complete copy of the resolutions of the board of directors of the
      Company authorizing the execution, delivery and performance of this Agreement
      and the Ancillary Agreements to which it is a party, and the consummation of
      the
      transactions contemplated hereby and thereby, certified as of the Closing Date
      by the President of the Company (Président
      du Conseil et Directeur Général),
      (C) an
      original copy of the K-bis
      extract
      of the Company and état
      des inscriptions relating
      to the Company, in each case issued by the Commercial Court of Nanterre, dated
      as of a recent date prior to the Closing;

     

    (v) a
      certificate of non-bankruptcy (certificat
      de non faillite)
      of the
      Company as of the Closing Date, and similar certificate, dated as of a recent
      date prior to the Closing;

    (vi) a
      certificate executed by the President of the Company (Président
      du Conseil et Directeur Général)
      certifying as to the matters set forth in Section
      6.2(a)
      hereof
      as of the Closing Date; 

     

    (vii) all
      Source Code, object code and executable code for any software included in the
      Contributed Assets in electronic form, and all related documentation;

     

    (viii) the
      Reseller Agreements;

     

    (ix) the
      License Agreements;

     

    (x) the
      Services Agreement;

     

    (xi) the
      Contribution Agreement; and

     

    (xii) such
      other documents and instruments as in the opinion of counsel for InCard may
      be
      reasonably required to effectuate the terms of this Agreement and to comply
      with
      the terms hereof.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    ARTICLE
      III.

    REPRESENTATIONS
      AND WARRANTIES OF THE
      COMPANY AND THE PRINCIPAL SHAREHOLDER

     

    The
      Company hereby represents and warrants, and, with respect to the representations
      and warranties concerning the Principal Shareholder set forth in Sections
      3.2,
      3.3(b),
      3.4
      and
3.14,
      the
      Company and the Principal Shareholder jointly and severally represent and
      warrant, to InCard as follows, except as otherwise set forth on the Disclosure
      Schedules, which representations and warranties are, as of the date hereof,
      and
      will be, as of the Closing Date, true and correct:

     

    3.1.
       Organization
      of the Company.
      The
      Company is a corporation duly organized, validly existing and in good standing
      under the laws of France with full corporate power and authority to conduct
      its
      business as it is presently being conducted and to own and/or use the properties
      and assets that it purports to own and/or use. Copies of the Organizational
      Documents of the Company, and all amendments thereto, heretofore delivered
      to
      InCard are true, accurate and complete as of the date hereof. The Company is
      not
      insolvent (en
      état de cessation de paiements)
      or
      subject to any safeguard, bankruptcy or insolvency Actions under any applicable
      Regulations, nor to any Actions in view of the prevention or resolution of
      business difficulties (or any similar actions) nor in a situation likely to
      result in such Actions. 

     

    3.2.
       Capitalization.
      The
      authorized capital stock of the Company consists of 10,148,060 Actions
      Ordinaires all of which are issued and outstanding.  The Principal
      Shareholder owns 10,148,057 shares and three other shareholders of the Company
      each hold one share pursuant to a share loan, in each case, of the issued and
      outstanding Actions Ordinaires.
      The
      Principal Shareholder and such other shareholders collectively own all of the
      issued and outstanding equity interests of the Company and have the sole power
      and authority to any voting rights with respect to their respective equity
      interests in the Company.

     

    3.3.
       Authorization.
      

     

    (a)
       The
      Company has all requisite corporate power and authority, and has taken all
      corporate action necessary, to execute and deliver this Agreement and the
      Ancillary Agreements to be executed and delivered by the Company pursuant
      hereto, to consummate the transactions contemplated hereby and thereby and
      to
      perform its obligations hereunder and thereunder. The execution and delivery
      by
      the Company of this Agreement and the Ancillary Agreements to which it is a
      party, and the consummation by the Company of the transactions contemplated
      hereby and thereby have been duly approved by the board of directors and/or
      shareholders (or other analogous bodies) of the Company, and InCard has been
      provided with documentation of such approvals. No other corporate proceedings
      on
      the part of the Company are necessary to authorize this Agreement and the
      Ancillary Agreements to which it is a party and the transactions contemplated
      hereby and thereby. This Agreement has been duly executed and delivered by
      the
      Company and is, and upon execution and delivery of the Ancillary Agreements
      to
      which it is a party, each of such Ancillary Agreements will be, legal, valid
      and
      binding obligations of the Company enforceable against it in accordance with
      their terms, in each case, except as such enforceability may be limited by
      (i)
      bankruptcy, insolvency, moratorium, reorganization and other similar laws
      affecting creditors’ rights generally and (ii) the general principles of equity,
      regardless of whether asserted in a proceeding in equity or at law.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    (b)
       The
      Principal Shareholder has all requisite power and authority, and has taken
      all
      action necessary, to execute and deliver this Agreement, to consummate the
      transactions contemplated hereby and to perform its obligations hereunder.
      The
      execution and delivery by the Principal Shareholder of this Agreement, and
      the
      consummation by the Principal Shareholder of the transactions contemplated
      hereby have been duly approved by the board of directors and/or shareholders
      (or
      other analogous bodies) of the Principal Shareholder, and InCard has been
      provided with documentation of such approvals. No other corporate proceedings
      on
      the part of the Principal Shareholder are necessary to authorize this Agreement
      and the transactions contemplated hereby. This Agreement has been duly executed
      and delivered by the Principal Shareholder and is a legal, valid and binding
      obligation of such Principal Shareholder enforceable against it in accordance
      with its terms, except as such enforceability may be limited by (i) bankruptcy,
      insolvency, moratorium, reorganization and other similar laws affecting
      creditors’ rights generally and (ii) the general principles of equity,
      regardless of whether asserted in a proceeding in equity or at
      law.

    3.4.
       Consents
      and Approvals.
      Except
      as set forth on Schedule
      3.4
      of the
      Disclosure Schedules, no notice to, declaration, filing or registration with,
      or
      authorization, consent or approval of, or Permit from, any Person, is required
      to be made or obtained by the Company or the Principal Shareholder or any
      Affiliate of the Company or the Principal Shareholder in connection with the
      execution, delivery and performance of this Agreement and the Ancillary
      Agreements or the consummation of the transactions contemplated hereby and
      thereby.

     

    3.5.
       Title
      to Contributed Assets; Encumbrances.
      The
      Company has and at the Closing will transfer to InCard, good and marketable
      title to, the Contributed Assets, and upon the consummation of the transactions
      contemplated herein InCard will acquire good and marketable title to all of
      the
      Contributed Assets, in each case free and clear of all Encumbrances. The items
      of Tangible Property of the Company that are part of the Contributed Assets
      are
      in good operating condition and repair (normal wear and tear excepted), are
      free
      from material defects, have been maintained in accordance with normal industry
      practice, are fit for use in the ordinary course of business and conform in
      all
      material respects to all Regulations relating to their construction, use and
      operation.

     

    3.6.
       Contracts
      and Commitments.
      Schedule
      3.6
      of the
      Disclosure Schedules sets forth a complete and accurate list of all Contracts
      (including oral agreements) by which the Contributed Assets are bound or
      affected, including, without limitation, the Assumed Contracts. The Company
      has
      delivered to InCard true, correct and complete copies of all of the Contracts
      listed on Schedule
      3.6
      of the
      Disclosure Schedules, including all amendments and supplements thereto. All
      of
      such Contracts are valid, binding and enforceable in accordance with their
      terms. The Company has fulfilled, or taken all action necessary to enable it
      to
      fulfill when due, all of its material obligations under each such Contract.
      All
      parties to such Contracts have complied in all material respects with the
      provisions thereof, no party is in Default thereunder and no written notice
      of
      any claim of Default has been given to the Company. No event has occurred or
      circumstance exists that (with or without notice or lapse of time) may
      contravene, conflict with, or result in a violation or breach of, or give the
      Company or any other Person the right to default or exercise any remedy under,
      or to accelerate the maturity or performance of, or to cancel, terminate, or
      modify, any such Contract. 

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    3.7.
       No
      Conflict or Violation.
      Neither
      the execution, delivery or performance of this Agreement or the Ancillary
      Agreements, nor the consummation of the transactions contemplated hereby or
      thereby, nor compliance by the Company with any of the provisions hereof or
      thereof, will (a) violate or conflict with any provision of the Organizational
      Documents of the Company, (b) violate, conflict with, or result in or constitute
      a Default under, or result in the termination of, or accelerate the performance
      required by, or result in a right of termination or acceleration under, any
      of
      the terms, conditions or provisions of any Contract (including, without
      limitation, any Assumed Contracts) or Permit, to which the Company is a party
      and which could impair the ability of the Company to consummate the transactions
      contemplated by this Agreement and the Ancillary Agreements, or by which any
      Contributed Asset is bound or subject, (c) violate any Regulation or Court
      Order
      or (d) impose any Encumbrance on the Contributed Assets. 

    3.8.
       Litigation.
      Except
      as set forth on Schedule
      3.8
      of the
      Disclosure Schedules, there are no Actions pending, or to the Knowledge of
      the
      Company, threatened or anticipated (a) against, related to or affecting any
      of
      the Contributed Assets (including, without limitation, any Actions pertaining
      to
      or alleging that the Contributed Assets infringe upon, misappropriate or violate
      the Intellectual Property rights of other Persons) or (b) seeking to delay,
      limit or enjoin the transactions contemplated by this Agreement or the Ancillary
      Agreements. The Company is not in Default with respect to or subject to any
      Court Order, and there are no unsatisfied judgments against the Company, in
      each
      case relating in any way to any of the Contributed Assets.

     

    3.9.
       Compliance
      with Law.
      The
      Company is in compliance in all material respects with all, Regulations, Court
      Orders and arbitration decisions relating to the Company to the extent related
      in any respect to any of the Contributed Assets or which have any impact on
      the
      ability of the Company to consummate the transactions contemplated by this
      Agreement and the Ancillary Agreements. The Company has not received any written
      notice to the effect that, or otherwise been advised that, it is not in
      compliance with any such Regulations, Court Orders or arbitration decisions,
      which non-compliance could adversely affect the Contributed Assets or the
      ability of the Company to consummate the transactions contemplated by this
      Agreement or the Ancillary Agreements, and the Company has no reason to
      anticipate that any existing circumstances are likely to result in violations
      of
      any of the foregoing which violations could adversely affect the Contributed
      Assets or the ability of the Company to consummate the transactions contemplated
      by this Agreement or the Ancillary Agreements.

     

    
      
         

      

      
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    3.10.
       Intellectual
      Property. (a)
       Intellectual
      Property Assets.
      Schedule 3.10(a)
      of the
      Disclosure Schedules sets forth a true and complete list of all of the Company
      Registered Intellectual Property including, without limitation: (i) for
      each patent, the number, normal expiration date and subject matter of such
      patent and the jurisdiction in which such patent has been issued, or, if a
      patent application, the application number, date of filing and subject matter
      of
      such patent and the jurisdiction in which such patent application has been
      filed, (ii) for each registered trademark, service mark, logo, and trade name
      (each a “Mark”),
      the
      registration number and expiration date of and the class of goods or services
      (as applicable) covered by such Mark and the jurisdiction in which such Mark
      has
      been registered or, if an application therefor, the application/serial number
      and date of filing of such application, the jurisdiction in which such
      application has been filed and the class of goods covered by such application,
      and (iii) for each copyright, the registration number and expiration date
      of such copyright and the jurisdiction in which such copyright has been
      registered, or, if a copyright application, the application number and date
      of
      filing of such application and the jurisdiction in which such application has
      been filed. Schedule 3.10(a)
      of the
      Disclosure Schedules also sets forth all unregistered trademarks, service
      marks, logos and trade names owned by the Company with respect to the
      Contributed Assets. True and correct copies of all Company Registered
      Intellectual Property have been provided to InCard. The Intellectual Property
      included in the Contributed Assets is sufficient to allow InCard to fully
      exploit the nC DisplayCard and the Buzzer Patents in the manner currently
      exploited.

    (b)
       Ownership,
      Validity and Enforceability of Intellectual Property.
      The
      Company Registered Intellectual Property has not expired or been cancelled
      or
      abandoned, and is not subject to any pending or, to the Knowledge of the
      Company, threatened opposition, cancellation, interference, reexamination,
      litigation, arbitration or similar proceeding. All necessary registration,
      maintenance and renewal fees currently due in connection with the Company
      Registered Intellectual Property have been paid, and all necessary documents,
      recordations and certificates in connection with the Company Registered
      Intellectual Property have been filed with the relevant patent, copyright,
      trademark or other authorities in the United States or foreign jurisdictions,
      as
      the case may be, for the purposes of maintaining such Company Registered
      Intellectual Property. The Company has obtained any and all Permits and/or
      authorizations required by applicable Regulations relating to encryption means
      and/or services. The Company owns all right, title, and interest (including
      the
      sole right to enforce), free and clear of all Encumbrances, in and to all
      Company Intellectual Property, and with respect to Company Registered
      Intellectual Property is listed in the records of the appropriate United States,
      state and/or foreign authorities as the sole owner for each item thereof. Except
      for those licenses listed in Schedule
      3.10(c)
      of the
      Disclosure Schedules, the Company has not (i) transferred ownership of, or
      granted any license of or right to use, or authorized the retention of any
      rights to use or joint ownership of, any Company Intellectual Property, to
      any
      other Person, (ii) entered into any agreement whereby the Company has agreed to
      indemnify any Person for or against any interference, infringement,
      misappropriation or other conflict with respect to the Company Intellectual
      Property or (iii) permitted the Company’s rights in such Company
      Intellectual Property to enter into the public domain. Without limiting the
      generality of the foregoing, and except as set forth on Schedule
      3.10(b)
      of the
      Disclosure Schedules, no current or former employee of or independent contractor
      to the Company has any claim, right (whether or not currently exercisable)
      or
      interest to or in any Company Intellectual Property, and any such claim, right
      or interest that any current or former employee of or independent contractor
      to
      the Company might have had, has been validly and irrevocably transferred to
      the
      Company. All Company Intellectual Property that is registered with any
      Governmental Authority is valid, subsisting and enforceable.

     

    
      
         

      

      
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    (c)
       Licensing
      Agreements.
      Schedule
      3.10(c)
      of the
      Disclosure Schedules sets forth a true and complete list of all Contracts
      containing either (i) a license of (or covenant not to sue related to) Company
      Intellectual Property by the Company to a third party, or (ii) a license of
      Company Intellectual Property by a third party to the Company (in each case
      that
      have not, prior to the date hereof, expired or been terminated pursuant to
      their
      terms or operation of law). A true and correct copy of each such Contract has
      been provided to InCard. Such Contracts are legal, valid, binding, enforceable
      and in full force and effect, and the underlying Intellectual Property of each
      such Contract is not subject to any outstanding injunction, judgment, order,
      decree or ruling. No action, suit, proceeding, hearing, investigation or
      complaint is pending or, to the Knowledge of the Company, threatened, nor has
      any claim or demand been made, which challenges the legality, validity,
      enforceability or ownership of the underlying Intellectual Property of each
      such
      Contract. The consummation of the transactions contemplated by this Agreement
      and the Ancillary Agreements will not result in a breach, modification,
      cancellation, termination, suspension of, or acceleration of any payments with
      respect to such Contracts. All parties to such Contracts are in material
      compliance with, and have not materially breached any term of, any such
      Contracts, and have not performed any act or omitted to perform any act which,
      with notice or lapse of time or both, will become a material breach or default
      thereunder. No party to any such Contract has given notice of termination or
      repudiation of any provision thereof. Following the Closing Date, InCard will
      be
      permitted to exercise all of the Company’s rights under such Contracts on terms
      identical to those in effect as of the date of this Agreement and to the same
      extent the Company would have been able to had the transactions contemplated
      by
      this Agreement and the Ancillary Agreements not occurred and without the payment
      of any additional amounts or consideration other than ongoing fees, royalties
      or
      payments which the Company would otherwise have been required to pay.
Schedule
      3.10(c)
      of the
      Disclosure Schedules also sets forth a true and complete list of all royalties,
      fees, and similar payments that the Company is obligated to pay to any third
      party under such Contracts, and except as set forth therein, the Company is
      not
      obligated or under any liability whatsoever to make any payments by way of
      royalties, fees or otherwise to any owner or licensee of, or other claimant
      to,
      any Company Intellectual Property. 

     

    (d)
       Protection
      of Intellectual Property.
      The
      Company has taken all reasonable steps to obtain, maintain and protect the
      Company Intellectual Property. Without limiting the foregoing, the Company
      has
      taken all reasonable security measures to protect the secrecy, confidentiality
      and value of all of its trade secrets and confidential information, and any
      trade secrets and confidential information of third parties provided thereto,
      according to the laws of the applicable jurisdictions where such trade secrets
      and confidential information are developed, practiced or disclosed. Without
      limiting the foregoing, and except as set forth on Schedule
      3.10(d)
      of the
      Disclosure Schedules, the Company has and enforces, and has had and enforced,
      a
      policy consistent with industry practice, requiring each employee, consultant
      and contractor to execute work-for-hire, invention assignment, proprietary
      information, and confidentiality agreements (as applicable) to protect the
      Company Intellectual Property.

     

    
      
         

      

      
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    (e)
       No
      Infringement.
      The
      Company has no basis to believe that the Company Intellectual Property
      infringes, conflicts with, misappropriates, or otherwise violates any rights
      of
      any Person in or to any Intellectual Property, violates any right to privacy
      or
      publicity, or constitutes unfair competition or trade practices under the laws
      of any jurisdiction to which the Company is subject. Except as set forth in
      Schedule
      3.10(e)
      of the
      Disclosure Schedules, the Company has not received notice from any Person
      claiming that the Company Intellectual Property infringes, conflicts with,
      misappropriates or otherwise violates the rights of any Person in or to any
      Intellectual Property, violates any rights to privacy or publicity, or
      constitutes unfair competition or trade practices under the laws of any
      jurisdiction.

     

    (f)
       No
      Third Party Infringers.
      The
      Company has taken all reasonable and prudent steps consistent with industry
      practice to protect the Company Intellectual Property from infringement by
      any
      other Person. No other Person (i) has, to the Knowledge of the Company, the
      right to use any of the Company’s trademarks or service marks on the goods
      and/or services in connection with which they are now being used either in
      identical form or in such near resemblance thereto as to be likely, when applied
      to the goods or services of any such Person, to cause confusion with such
      trademarks or to cause a mistake or to deceive or (ii) has notified the Company
      that such Person is claiming any ownership of or right to use any of the Company
      Intellectual Property. The Company has no basis to believe that any other Person
      is infringing upon, violating or misappropriating any of the Company
      Intellectual Property in any way.

     

    (g)
       No
      Third Party Rights Required.
      Except
      as expressly disclosed herein, to the Knowledge of the Company, no rights or
      licenses from any other Person are required for InCard to use the Contributed
      Assets for their intended purposes including, but not limited to, making, having
      made, importing, using, selling and offering for sale the nC
      DisplayCard.

     

    (h)
       No
      Court Orders.
      There
      are no forbearances to sue, consents, settlement agreements, judgments, orders
      or similar litigation-related, inter partes or adversarial-related, or
      government-imposed obligations to which the Company is a party or are otherwise
      bound that (i) restrict the rights of the Company to use, transfer, license
      or enforce any Company Intellectual Property or (ii) grant any third party
      any
      right with respect to any Company Intellectual Property.

     

    (i)
       Open
      Source.
      To the
      Knowledge of the Company, no software included in the Contributed Assets is
      subject to any “copyleft” or other obligation or condition (including any
      obligation or condition under any “open source” license such as the GNU Public
      License, Lesser GNU Public License or Mozilla Public License) that: (i) could
      or
      does require, or could or does condition the use or distribution of such
      software on, the disclosure, licensing or distribution of any Source Code for
      any portion of such software; or (ii) could or does otherwise impose any
      limitation, restriction or condition on the right or ability of the Company
      to
      use or distribute any software.

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    (j)
       Defects.
      None of
      the software included in the Contributed Assets (i) contains any material bug,
      defect or error (including any bug, defect or error relating to or resulting
      from the display, manipulation, processing, storage, transmission or use of
      date
      data) preventing or inhibiting the full use of such software or (ii) fails
      to
      comply with any applicable warranty or other contractual commitment relating
      to
      the use, functionality or performance of such software or any product, system
      or
      service containing or used in conjunction with such software. To
      the
      Knowledge of the Company, no such software contains any “back door,” “drop dead
      device,” “time bomb,” “Trojan horse,” “virus,” or “worm” (as such terms are
      commonly understood in the software industry) or any other code designed or
      intended to have, or capable of performing, any of the following functions:
      (A)
      disrupting, disabling, harming or otherwise impeding in any material respect
      the
      operation of, or providing unauthorized access to, a computer system or network
      or other device on which such code is stored or installed; or (B) damaging
      or
      destroying any data or file without the user’s consent.

     

    (k)
       Source
      Codes.
      No
      Source Code for any software included in the Contributed Assets has been
      delivered, licensed or made available to any escrow agent or other Person who
      is
      not, as of the date of this Agreement, an employee of the Company. The Company
      has no duty or obligation (whether present, contingent or otherwise) to deliver,
      license or make available the Source Code for any such software to any escrow
      agent or other Person who is not, as of the date of this Agreement, an employee
      of the Company.

     

    (l)
       Transaction.
      The
      transactions contemplated by this Agreement and the Ancillary Agreements will
      not result in: (i) the granting to any third party any incremental right to
      or
      with respect to any Company Intellectual Property owned by, or licensed to,
      any
      of them, (ii) InCard being bound by, or subject to, any incremental non-compete
      or other incremental material restriction on the operation or scope of their
      respective businesses, or (iii) InCard being obligated to pay any incremental
      royalties or other material amounts, or offer any incremental discounts, to
      any
      third party. As used in this paragraph, an “incremental” right, non-compete,
      restriction, royalty or discount refers to a right, non-compete, restriction,
      royalty or discount, as applicable, in excess of the rights, non-competes,
      restrictions, royalties or discounts payable that would have been required
      to be
      offered or granted, as applicable, had the parties not entered into this
      Agreement and the Ancillary Agreements or consummated the transactions
      contemplated hereby.

     

    3.11.
       Tax
      Matters.
      

     

    (a)
       There
      are
      no Encumbrances for Taxes (other than for current Taxes not yet due and payable)
      upon the Contributed Assets.

     

    
      
         

      

      
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    (b)
       There
      are
      no Tax indemnity arrangements, other than as provided for in this Agreement,
      with respect to or involving the Contributed Assets.

     

    3.12.
       No
      Brokers.
      Neither
      the Company nor any of its officers, directors, employees, shareholders or
      Affiliates has employed or made any agreement with any broker, finder or similar
      agent or any person or firm which will result in the obligation of the InCard
      or
      any of its Affiliates to pay any finder’s fee, brokerage fees or commission or
      similar payment in connection with the transactions contemplated
      hereby.

     

    3.13.
       No
      Other Agreements to Sell the Assets or Capital Stock of the
      Company.
      Neither
      the Company nor any of its officers, directors, shareholders or Affiliates
      has
      any commitment or legal obligation, absolute or contingent, to any other person
      or firm other than InCard (a) to sell, assign, transfer or effect a sale of
      any
      of the Contributed Assets, (b) to sell or effect a sale of any capital stock
      of
      the Company, to effect any merger, consolidation, liquidation, dissolution
      or
      other reorganization of the Company, in each case, which results in a change
      of
      control of the Company, or (c) to enter into any agreement or cause the entering
      into of an agreement with respect to any of the foregoing. The Company is not
      now engaged in discussions or negotiations with any party other than InCard
      with
      respect to any of the foregoing. For purposes of clarity, the foregoing shall
      in
      no way restrict the actions of the Company, or its officers, directors,
      shareholders and Affiliates after the Closing Date.

     

    3.14.
       Accredited
      Investor Status. 

     

    (a)
       The
      Company acknowledges that it can bear the economic risk of its investment in
      the
      InCard Common Stock. The Company has the capacity to protect its own interests
      in connection with the InCard Common Stock. The Company has the financial
      capacity to bear the risk of its investment in the InCard Common Stock. The
      Company is an “accredited investor” within the meaning of Securities and
      Exchange Commission Rule 501 of Regulation D, as presently in effect, under
      the
      Securities Act.

     

    (b)
       The
      InCard Common Stock to be acquired by the Company will be acquired for
      investment for the Company’s own account, not as a nominee or agent, and not
      with a view to the resale or distribution of any part thereof, and neither
      the
      Company nor the Principal Shareholder has any present intention of selling,
      granting any participation in, or otherwise distributing the same. Neither
      the
      Company nor the Principal Shareholder presently has any contract, undertaking,
      agreement or arrangement with any person or entity to sell, transfer or grant
      participations to such person or to any third person, with respect to any of
      the
      InCard Common Stock.

     

    (c)
       The
      Company has received and reviewed information about InCard and has had an
      opportunity to discuss InCard’s business, management and financial affairs with
      its management. The Company understands and acknowledges that such discussions,
      as well as any written information issued by InCard (i) were intended to
      describe the aspects of InCard’s business and prospects which InCard believes to
      be material, but were not necessarily an exhaustive description, and
      (ii) may have contained forward-looking statements involving known
      and
      unknown risks and uncertainties which may cause InCard’s actual results in
      future periods or plans for future periods to differ materially from what was
      anticipated and that no representations or warranties were or are being made
      with respect to any such forward-looking statements or the probability of
      achieving any of the results projected in any of such forward-looking
      statements.

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    (d)
       The
      Company understands that the shares of InCard Common Stock are, unless and
      until
      registered as contemplated in Annex
      II
      attached
      hereto or otherwise, “restricted securities” under applicable U.S. federal and
      state securities laws and that, pursuant to these laws, the Company must hold
      the InCard Common Stock indefinitely
      until registered and qualified by state authorities, or until an exemption
      from
      applicable registration and qualification requirements is
      available.

     

    3.15.
       Material
      Misstatements or Omissions.
      No
      representations or warranties by the Company or the Principal Shareholder in
      this Agreement, nor any document, exhibit, statement, certificate or schedule
      heretofore or hereinafter furnished to InCard pursuant hereto, or in connection
      with the transactions contemplated hereby, including, without limitation, the
      Disclosure Schedules, contains or will contain any untrue statement of a
      material fact, or omits or will omit to state any material fact necessary to
      make the statements or facts contained therein not misleading. Each of the
      Company and the Principal Shareholder has disclosed all events, conditions
      and
      facts materially affecting the Contributed Assets. 

     

    ARTICLE
      IV.

    REPRESENTATIONS
      AND WARRANTIES OF INCARD

     

    InCard
      hereby represents and warrants to the Company and the Principal Shareholder
      as
      follows, which representations and warranties are, as of the date hereof, and
      will be, as of the Closing Date, true and correct:

     

    4.1.
       Organization
      of InCard.
      InCard
      is a corporation duly organized, validly existing and in good standing under
      the
      laws of Delaware with full power and authority to own and lease its properties
      and assets and conduct its businesses as such businesses are presently being
      conducted. InCard is duly qualified to do business and is in good standing
      in
      each jurisdiction in which its rights, titles and interests in or to any of
      the
      assets held by it, or the conduct of its business, require such qualification
      except where failure to be so qualified or in good standing, would not,
      individually or in the aggregate, have a material adverse effect on the
      condition (financial or otherwise), liabilities, operations or results of
      operations of InCard.

    4.2.
       Capitalization.
      The
      authorized capital stock of InCard consists of (a) 50,000,000 shares of InCard
      Common Stock and (b) 5,000,000 shares of preferred stock, par value $0.001
      per
      share, of InCard (“InCard
      Preferred Stock”).
      As of
      the date of this Agreement, there are (i) 22,014,566 shares of InCard Common
      Stock issued and outstanding, (ii) no shares of InCard Preferred Stock issued
      and outstanding; (iii) 2,215,000 shares of InCard Common Stock reserved for
      issuance pursuant to the Innovative Card Technologies, Inc. 2004 Stock Incentive
      Plan and (iv) 6,932,198 shares of InCard Common Stock reserved for issuance
      upon
      conversion of warrants. The shares of InCard Common Stock to be issued pursuant
      to Section
      1.5
      hereof,
      when issued as contemplated herein, will be duly authorized, validly issued,
      fully paid and nonassessable, will be free of restrictions on transfer, other
      than restrictions set forth herein and under applicable U.S. federal and state
      securities laws, and will not be issued in violation of any preemptive
      rights.

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    4.3.
       Authorization.
      InCard
      has all requisite power and authority, and has taken all action necessary,
      to
      execute and deliver this Agreement and the Ancillary Agreements to which it
      is a
      party, to consummate the transactions contemplated hereby and thereby and to
      perform its obligations hereunder and thereunder. The execution and delivery
      by
      InCard of this Agreement and the Ancillary Agreements to which it is a party
      and
      the consummation by InCard of the transactions contemplated hereby and thereby
      have been duly approved by the board of directors of InCard. No other corporate
      proceedings on the part of InCard are necessary to authorize this Agreement
      and
      the Ancillary Agreements to which it is a party and the transactions
      contemplated hereby and thereby. This Agreement has been duly executed and
      delivered by InCard and is, and upon execution and delivery the Ancillary
      Agreements to which it is a party, will be, legal, valid and binding obligations
      of InCard, enforceable against it in accordance with their terms, except as
      limited by bankruptcy, insolvency, reorganization, moratorium or other similar
      laws relating to creditor’s rights generally or by equitable principles (whether
      considered in an action at law or in equity).

     

    4.4.
       Consents
      and Approvals.
      Except
      for the approval of Incard’s board of directors as described in Section
      4.3
      hereof
      and except for filings, declarations, registrations, Permits, authorizations,
      consents, notice and approvals as may be required under, and other applicable
      requirements of, any U.S.
      federal and state securities law (including any blue-sky law),
      no
      notice to, declaration, filing or registration with, or authorization, consent
      or approval of, or Permit from, any Person, is required to be made or obtained
      by InCard or any of its Affiliates in connection with the execution, delivery
      and performance of this Agreement and the Ancillary Agreements or the
      consummation of the transactions contemplated hereby and
      thereby.

    4.5.
       No
      Conflict or Violation.
      Neither
      the execution, delivery or performance of this Agreement or the Ancillary
      Agreements, nor the consummation of the transactions contemplated hereby or
      thereby, nor compliance by InCard with any of the provisions hereof, will (a)
      violate or conflict with any provision of the Organizational Documents of
      InCard, (b) violate, conflict with, or result in or constitute a Default under,
      or result in the termination of, or accelerate the performance required by,
      or
      result in a right of termination or acceleration under, or result in the
      creation of any Encumbrance upon any of InCard’s assets under, any of the terms,
      conditions or provisions of any contract, indebtedness, note, bond, indenture,
      security or pledge agreement, commitment, license, lease, franchise, permit,
      agreement, authorization, concession, or other instrument or obligation to
      which
      InCard is a party or (c) violate any Regulation or Court Order. 

     

    4.6.
       SEC
      Filings; Financial Statements.

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

    (a)
       InCard
      has timely filed all registration statements, prospectuses, forms, reports
      and
      documents required to be filed by it under the Securities Act or the Exchange
      Act, as the case may be, since January 1, 2005 (collectively, the
“InCard
      SEC Filings”).
      Each
      InCard SEC Filing (A) as of its date complied in all material respects with
      the
      requirements of the Securities Act or the Exchange Act, as the case may be,
      and
      (B) did not, at the time they were filed, contain any untrue statement of a
      material fact or omit to state a material fact required to be stated therein
      or
      necessary in order to make the statements made therein, in the light of the
      circumstances under which they were made, not misleading. The
      Chief
      Executive Officer and the Chief Financial Officer of InCard have signed, and
      InCard has furnished to the Securities
      and Exchange Commission,
      all
      certifications required by Section 906 of the Sarbanes-Oxley Act of 2002, such
      certifications contain no qualifications or exceptions to the matters certified
      therein and have not been modified or withdrawn and neither InCard nor any
      of
      its officers has received notice from any applicable governmental or regulatory
      authority questioning or challenging the accuracy, completeness, form or manner
      filing or submission of such certifications. 

     

    (b)
       Each
      of
      the consolidated financial statements (including, in each case, any notes
      thereto) contained in the InCard SEC Filings was prepared in accordance with
      U.S. generally accepted accounting principals applied (except as may be
      indicated in the notes thereto and, in the case of unaudited quarterly financial
      statements, as permitted by Form 10-Q under the Exchange Act) on a consistent
      basis throughout the periods indicated (except as may be indicated in the notes
      thereto), and each presented fairly the consolidated financial position of
      InCard as of the respective dates thereof and for the respective periods
      indicated therein (subject, in the case of unaudited statements, to normal
      and
      recurring year-end adjustments). Except
      (i) as set forth or reserved for in the consolidated interim balance sheets
      of
      InCard at March 31, 2006, filed with the Securities and Exchange Commission
      on
      May 11, 2006 on Form 10-QSB or (ii) for Liabilities incurred in
      the
      ordinary course of business and
      consistent with past practice since March 31, 2006, InCard does not have any
      Liabilities that would be required by United States generally accepted
      accounting principles to be disclosed on a consolidated balance sheet of InCard
      or in the notes thereto and which has had or is reasonably likely to have a
      material adverse effect on InCard.

    4.7.
       Issuance
      of InCard Common Stock.
      Subject
      to the bona
      fide
      nature
      of the Company’s investment intent and the truth and accuracy of the Company’s
      representations set forth in Section
      3.14
      hereof,
      to the
      Knowledge of InCard, the issuance of shares of InCard Common Stock pursuant
      to
Section
      1.5
      hereof
      is exempt from the registration provisions of the Securities Act. Neither InCard
      nor any authorized agent acting on its behalf has taken any action that would
      cause the loss of such exemptions.

     

    4.8.
       Litigation.
      There
      are
      no Actions pending, or to the Knowledge of InCard, threatened or anticipated
      against InCard or any of its Affiliates seeking to delay, limit or enjoin the
      transactions contemplated by this Agreement or the Ancillary
      Agreements.

     

    4.9.
       Compliance
      with Law.
      InCard
      is
      in compliance in all material respects with all, Regulations, Court Orders
      and
      arbitration decisions applicable to InCard which could impact the ability of
      InCard to consummate the transactions contemplated by this Agreement and the
      Ancillary Agreements. InCard has not received any written notice to the effect
      that, or otherwise been advised that, it is not in compliance with any such
      Regulations, Court Orders or arbitration decisions, which
      non-compliance could adversely affect InCard or the ability of InCard to
      consummate the transactions contemplated by this Agreement or the Ancillary
      Agreements,
      and
      InCard has no reason to anticipate that any existing circumstances are likely
      to
      result in violations of any of the foregoing, which
      violations could adversely affect InCard or the ability of InCard to consummate
      the transactions contemplated by this Agreement or the Ancillary
      Agreements.

     

    
      
         

      

      
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    4.10.
       No
      Brokers.
      Neither
      InCard nor any of its Representatives or Affiliates has employed or made any
      agreement with any broker, finder or similar agent or any person or firm which
      will result in the obligation of the Company or the Principal Shareholder or
      any
      of their respective Affiliates to pay any finder’s fee, brokerage fees or
      commission or similar payment in connection with the transactions contemplated
      hereby.

     

    4.11.
       Due
      Diligence.
      InCard
      has knowledge of the technology incorporated in the nC DisplayCard, as well
      as
      the principal participants in the market owning technology similar to the nC
      DisplayCard (and the fact that said participants have filed patent applications
      relating to technology similar to the technology used in the nC DisplayCard,
      and, as such, InCard understands the technological and market characteristics
      of, as well as the limitations and risks associated with, the nC DisplayCard.
      In
      addition, InCard has performed a due diligence on the Contributed Assets, as
      well as on the costs associated with development and technical aspects related
      thereto at the Company’s headquarters in France. 

    ARTICLE
      V.

    COVENANTS

     

    The
      Principal Shareholder, the Company and InCard each covenant and agree with
      the
      other as follows:

     

    5.1.
       Confidentiality;
      Non-Competition; Non-Solicitation. 

     

    (a)
       By
      the
      Company and the Principal Shareholder.
      

     

    (i) Each
      of
      the Company and the Principal Shareholder acknowledges that it has knowledge
      of
      certain confidential and proprietary information included in the Contributed
      Assets (the “Contributed
      Assets Confidential Information”)
      and
      that the Contributed Assets Confidential Information is confidential and
      proprietary to the Company and constitutes valuable trade secrets of the Company
      and affects, among other things, the successful development and protection
      of
      the Contributed Assets and related goodwill. Each of the Company and the
      Principal Shareholder acknowledges that the unauthorized use or disclosure
      of
      the Contributed Assets Confidential Information is likely to be highly
      prejudicial to the interests of InCard or its customers, advertisers, clients
      and patrons, or an improper disclosure or misappropriation of trade secrets.
      Each of the Company and the Principal Shareholder agrees that a substantial
      portion of the consideration to be paid pursuant to Section
      1.5
      hereof
      is being paid for the Contributed Assets Confidential Information and that
      the
      Contributed Assets Confidential Information represents a substantial investment
      having great economic and commercial value to InCard. Each of the Principal
      Shareholder and the Company further acknowledges that InCard would be
      irreparably damaged if any of the Contributed Assets Confidential Information
      were disclosed to, used or exploited on behalf of, or misappropriated by any
      Person other than InCard or any of its Affiliates. Accordingly, each of the
      Company and the Principal Shareholder covenants and agrees that it shall not,
      directly or indirectly, and shall require that its agents, Representatives,
      Affiliates and any other Persons acting on the Company’s or the Principal
      Shareholder’s behalf (the Company, the Principal Shareholder and such agents,
      Representatives, Affiliates and other Persons acting on the Company’s or the
      Principal Shareholder’s behalf being collectively referred to as the
“Company
      Restricted Persons”)
      do
      not, without the prior written consent of InCard, disclose, use, exploit,
      furnish or make accessible to anyone or any other entity, the Contributed Assets
      Confidential Information at any time for so long as the Contributed Assets
      Confidential Information shall remain secret or confidential or otherwise remain
      wholly or partially protectable.

     

    
      
         

      

      
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    (ii) As
      partial consideration for InCard’s
      investment of time, money and resources in acquiring the Contributed Assets,
      each
      of
      the Company and the Principal Shareholder agrees that, during the period
      commencing on the date hereof and ending on the three year anniversary of the
      Closing Date (the “Restricted
      Period”),
      subject to the proviso set forth at the end of this Section
      5.1(a)(ii),
      neither
      the Company nor the Principal Shareholder shall in any capacity, or in
      association with others, directly or indirectly, as advisor, agent, owner,
      partner, stockholder, beneficial owner or in any other capacity, and shall
      use
      its best efforts to ensure that the other Company Restricted Persons do not,
      directly or indirectly:

     

    (A)
       to
      sell
      or manufacture, or to license the technology to any other Person allowing such
      Person to sell or manufacture, a credit card size card containing an embedded
      battery, a flexible screen, a button and a cryptoprocessor anywhere in the
      world
      (the “Company
      Competitive Activities”);

     

    (B)
       own
      any
      interest in, manage, operate, advise, participate in or control any business
      or
      organization that engages in a Company Competitive Activity;

     

    (C)
       solicit
      for employment or engagement any person or entity who is or becomes employed
      or
      engaged by, or as an officer or director of, InCard or any of its Affiliates;
      or

     

    (D)
       solicit
      or entice customers or suppliers of InCard or its Affiliates to cease doing
      business with or reduce its relationship with InCard or its
      Affiliates;

     

    
      
         

      

      
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    provided,
      that
      the ownership of less than 5% of the outstanding equity interest in a publicly
      traded entity shall not constitute a violation of this Section
      5.1(a)(ii)
      so long
      as none of the Company, the Principal Shareholder and any other Company
      Restricted Person has any active participation in the business of such
      entity.

     

    (iii) Each
      of
      the Company and the Principal Shareholder hereby expressly acknowledges that
      the
      covenants contained in this Section
      5.1(a)
      and in
Section
      5.11
      hereof
      are integral to the issuance and delivery of the Equity Consideration in
      exchange for the contribution of the Contributed Assets by InCard and that
      without the protection of such covenants, InCard would not have entered into
      this Agreement. Each of the Company and the Principal Shareholder hereby further
      acknowledges that money damages will be impossible to calculate and may not
      adequately compensate InCard in connection with an actual or threatened breach
      by a Company Restricted Person of the provisions of this Section
      5.1(a)
      and
Section
      5.11
      hereof.
      Accordingly, on its own behalf and on behalf of each of the other Company
      Restricted Persons, each of the Company and the Principal Shareholder hereby
      expressly waives all rights to raise the adequacy of InCard’s remedies at law as
      a defense if InCard seeks to enforce by injunction or other equitable relief
      the
      due and proper performance and observance of the provisions of this Section
      5.1(a)
      or
Section
      5.11
      hereof.
      In addition, InCard shall be entitled to pursue any other available remedies
      at
      law or equity, including the recovery of money damages, in respect of the actual
      or threatened breach of the provisions of this Section
      5.1(a)
      or
Section
      5.11
      hereof.
      Each of the Company and the Principal Shareholder hereby expressly waives any
      right to assert inadequacy of consideration as a defense to enforcement of
      the
      covenants in this Section
      5.1(a)
      or
Section
      5.11
      hereof
      should such enforcement ever become necessary. 

    (b)
       By
      InCard.

     

    (i) InCard
      acknowledges that it has knowledge of certain confidential and proprietary
      information associated with the nC AudioCard (such information solely associated
      with the nC AudioCard and not otherwise included in the Contributed Assets
      being, the “nC
      AudioCard Confidential Information”)
      and
      that the nC AudioCard Confidential Information is confidential and proprietary
      to the Company and constitutes valuable trade secrets of the Company and
      affects, among other things, the successful development and protection of the
      nC
      AudioCard and related goodwill. InCard acknowledges that the unauthorized use
      or
      disclosure of the nC AudioCard Confidential Information is likely to be highly
      prejudicial to the interests of the Company or its customers, advertisers,
      clients and patrons, or an improper disclosure or misappropriation of trade
      secrets. InCard further acknowledges that the Company would be irreparably
      damaged if any of the nC AudioCard Confidential Information were disclosed
      to,
      used or exploited on behalf of, or misappropriated by any Person other than
      the
      Company or any of its Affiliates. Accordingly, InCard covenants and agrees
      that
      it shall not, directly or indirectly, and shall require that its agents,
      Representatives, Affiliates and any other Persons acting on InCard’s behalf
      (InCard and such agents, Representatives, Affiliates and other Persons acting
      on
      InCard’s behalf being collectively referred to as the “InCard
      Restricted Persons”)
      do
      not, without the prior written consent of the Company, disclose, use, exploit,
      furnish or make accessible to anyone or any other entity, the nC AudioCard
      Confidential Information at any time for so long as the nC AudioCard
      Confidential Information shall remain secret or confidential or otherwise remain
      wholly or partially protectable.

     

    
      
         

      

      
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    (ii) As
      partial consideration for the Company’s
      investment of time, money and resources in selling the Contributed Assets to
      InCard, InCard
      agrees
      that, during the Restricted Period, subject to the proviso set forth at the
      end
      of this Section
      5.1(b)(ii),
      InCard
      shall not in any capacity, or in association with others, directly or
      indirectly, as advisor, agent, owner, partner, stockholder, beneficial owner
      or
      in any other capacity, and shall use its best efforts to ensure that the other
      InCard Restricted Persons do not, directly or indirectly:

     

    (A)
       without
      entering into separate agreements with the Company upon terms and conditions
      mutually acceptable to the Company and InCard (the negotiation of which InCard
      will initiate promptly following the Closing), manufacture (1) a credit card
      size card containing an embedded battery, flexible screen, a button and a
      cryptoprocessor which also emits an encrypted sound signal representing a
      dynamic password or (2) a credit card size card that emits an encrypted sound
      signal (collectively, the “InCard
      Competitive Activities”);

    (B)
       own
      any
      interest in, manage, operate, join, be employed by, advise, participate in
      or
      control any business or organization that engages in a InCard Competitive
      Activity;

     

    (C)
       subject
      to Section
      5.8
      hereof,
      solicit for employment or engagement any person or entity who is or becomes
      employed or engaged by, or as an officer or director of, the Company or any
      of
      its Affiliates; or

     

    (D)
       solicit
      or entice customers or suppliers of the Company or its Affiliates to cease
      doing
      business with or reduce its relationship with the Company or its
      Affiliates;

     

    provided,
      that
      the ownership of less than 5% of the outstanding equity interest in a publicly
      traded entity shall not constitute a violation of this Section
      5.1(b)(ii)
      so long
      as none of InCard and any other InCard Restricted Person has any active
      participation in the business of such entity.

     

    (iii) InCard
      hereby expressly acknowledges that the covenants contained in this Section
      5.1(b)
      are
      integral to the contribution of the Contributed Assets to InCard in exchange
      for
      the Equity Consideration and that without the protection of such covenants,
      the
      Company would not have entered into this Agreement. InCard hereby further
      acknowledges that money damages will be impossible to calculate and may not
      adequately compensate the Company in connection with an actual or threatened
      breach by a InCard Restricted Person of the provisions of this Section
      5.1.
      Accordingly, on its own behalf and on behalf of each of the other InCard
      Restricted Persons, InCard hereby expressly waives all rights to raise the
      adequacy of the Company’s remedies at law as a defense if the Company seeks to
      enforce by injunction or other equitable relief the due and proper performance
      and observance of the provisions of this Section
      5.1(b).
      In
      addition, the Company shall be entitled to pursue any other available remedies
      at law or equity, including the recovery of money damages, in respect of the
      actual or threatened breach of the provisions of this Section
      5.1(b).
      InCard
      hereby expressly waives any right to assert inadequacy of consideration as
      a
      defense to enforcement of the covenants in this Section
      5.1(b)
      should
      such enforcement ever become necessary.

     

    
      
         

      

      
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    5.2.
       Further
      Assurances.
      Upon
      the terms and subject to the conditions contained herein, the parties agree,
      both before and after the Closing, (a) to use all commercially reasonable
      efforts to take, or cause to be taken, all actions and to do, or cause to be
      done, all things necessary to consummate and make effective the transactions
      contemplated by this Agreement and the Ancillary Agreements, (b) to execute
      any
      documents, instruments or conveyances of any kind which may be reasonably
      necessary to carry out any of the transactions contemplated hereunder or
      thereunder, and (c) to cooperate with each other in connection with the
      foregoing. Without limiting the foregoing, the parties agree to use their
      respective commercially reasonable efforts (i) to obtain all necessary waivers,
      consents and approvals necessary or desirable for the consummation of the
      transactions contemplated by this Agreement or the Ancillary Agreements from
      other parties to any Assumed Contract; (ii) to obtain all necessary Permits
      as
      are required to be obtained under any Regulations applicable to the Contributed
      Assets or the transactions contemplated by this Agreement and the Ancillary
      Agreements; (iii) to defend all Actions challenging this Agreement or the
      consummation of the transactions contemplated by this Agreement and the
      Ancillary Agreements; (iv) to lift or rescind any injunction or restraining
      order or other Court Order adversely affecting the ability of the parties to
      consummate the transactions contemplated hereby; (v) to give all notices to,
      and
      make all registrations and filings with third parties, including, without
      limitation, submissions of information requested by Governmental Authorities;
      and (vi) to fulfill all conditions to this Agreement. The Company shall provide
      InCard with a reasonable opportunity to review, comment on and approve any
      waivers, consents, approvals, notices, orders, registrations and filings to
      be
      made, given or used by the Company and shall promptly deliver to InCard a copy
      of each such registration or filing made, each such notice given and each such
      waiver, consent, approval or order obtained by the Company prior to the Closing
      Date.

    5.3.
       Conduct
      of Business.
      Except
      as otherwise expressly permitted by this Agreement, between the date of this
      Agreement and the Closing Date, the Company shall conduct the portion of the
      Company’s business related to the Contributed Assets in the ordinary course of
      business. The Company shall not, without the prior consent of InCard, take
      any
      affirmative action, or fail to take any reasonable action within its control,
      that would in any way adversely impact the value of the Contributed Assets
      to
      InCard. InCard, the Company and the Principal Shareholder shall not, without
      the
      prior consent of the others, take any affirmative action, or fail to take any
      reasonable action within its control, that would in any way adversely impact
      their respective ability to consummate the transactions contemplated by this
      Agreement and the Ancillary Agreements.

     

    
      
         

      

      
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    5.4.
       No
      Solicitation.
      From the
      date hereof through the Closing or the earlier termination of this Agreement,
      neither the Company nor the Principal Shareholder shall, and each of them shall
      cause each of their respective Representatives (including, without limitation,
      investment bankers, attorneys and accountants), not to, directly or indirectly,
      enter into, solicit, initiate or continue any discussions or negotiations with,
      or encourage or respond to any inquiries or proposals by, or participate in
      any
      negotiations with, or provide any information to, or otherwise cooperate in
      any
      other way with, any corporation, partnership, person or other entity or group,
      other than InCard and its Representatives, concerning any sale of all or a
      portion of the Contributed Assets, or of any shares of capital stock of the
      Company, other than the sale of any capital stock of the Company representing
      a
      minority interest in the Company that would not adversely affect the ability
      of
      the Company to consummate the transactions contemplated by this Agreement or
      the
      Ancillary Agreements, or any merger, consolidation, liquidation, dissolution
      or
      similar transaction involving the Company (each such transaction being referred
      to herein as a “Proposed
      Acquisition Transaction”).
      Neither the Company nor the Principal Shareholder shall, directly or indirectly,
      through any officer, director, employee, Representative, agent or otherwise,
      solicit, initiate or encourage the submission of any proposal or offer from
      any
      Person or entity relating to any Proposed Acquisition Transaction or participate
      in any negotiations regarding, or furnish to any other person any information
      with respect to the Company for the purposes of, or otherwise cooperate in
      any
      way with, or assist or participate in, facilitate or encourage, any effort
      or
      attempt by any other person to seek or effect a Proposed Acquisition
      Transaction. Each of the Company and the Principal Shareholder hereby represents
      and warrants that it is not now engaged in discussions or negotiations with
      any
      party other than InCard with respect to any of the foregoing. The Company and
      the Principal Shareholder shall promptly advise such prospective purchaser
      or
      soliciting party, by written notice (with a copy to InCard) of the terms of
      this
Section
      5.4
      and will
      promptly notify InCard (orally and in writing) if any such offer, or any inquiry
      or contact with any Person with respect thereto, is made and shall provide
      InCard with a copy of such offer, the terms of any proposal, including, without
      limitation, the identity of the prospective purchaser or soliciting party,
      and
      shall keep InCard informed on the status of any negotiations regarding such
      offer. Each of the Company and the Principal Shareholder agrees not to release
      any third party from, or waive any provision of, any confidentiality or
      standstill agreement to which the Company or the Principal Shareholder is a
      party.

    5.5.
       Notification
      of Certain Matters.
      From
      the date hereof through the Closing, the Company and the Principal Shareholder
      shall give prompt notice to InCard of (a) the occurrence, or failure to occur,
      of any event which occurrence or failure would be likely to cause any
      representation or warranty contained in this Agreement or in any exhibit or
      schedule hereto to be untrue or inaccurate in any respect and (b) any failure
      of
      the Company, the Principal Shareholder or any Affiliate of the Company or the
      Principal Shareholder, or of any of their respective Representatives, to comply
      with or satisfy any covenant, condition or agreement to be complied with or
      satisfied by such Person under this Agreement or any exhibit or schedule hereto;
      provided,
      however,
      that
      such disclosure shall not be deemed to cure any breach of a representation,
      warranty, covenant or agreement or to satisfy any condition. Each of the Company
      and the Principal Shareholder shall promptly notify InCard of any Default,
      the
      threat or commencement of any Action, or any development that occurs before
      the
      Closing that could in any way materially affect the Contributed Assets or the
      ability of InCard and the Company to consummate the transactions contemplated
      by
      this Agreement and the Ancillary Agreements.

     

    
      
         

      

      
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    5.6.
       Investigation
      by InCard.
      From the
      date hereof through the Closing Date, the Company shall, and shall cause its
      officers, directors, employees and agents to, afford the Representatives of
      InCard and its Affiliates reasonable access at all reasonable times to the
      Company for the purpose of inspecting the Contributed Assets, and to the
      officers, employees, agents, properties, books and records and Contracts of
      the
      Company to the extent such access is for the purpose of inspecting the
      Contributed Assets, and shall furnish InCard and its Representatives all
      financial, operating, scientific, technical and other data and information
      related to the Contributed Assets as InCard or its Affiliates, through their
      respective Representatives, may reasonably request.

    5.7.
       Tax
      Matters. 

     

    (a)
       The
      Company, the Principal Shareholder and InCard agree to use reasonable efforts
      to
      allocate the Equity Consideration and the Assumed Liabilities among the
      Contributed Assets (the “Asset
      Allocation”)
      within
      20 days after the Closing Date. To the extent applicable, the Company, the
      Principal Shareholder and InCard hereby agree that (i) the Asset Allocation
      shall be completed in the manner required by Code Section 1060 and any
      counterpart under French Tax law, (ii) they shall comply with all filing, notice
      and reporting requirements described in Code Section 1060 and the Treasury
      Regulations promulgated thereunder, including the timely preparation and filing
      of Form 8594 and any counterpart under French Tax law and (iii) they will report
      the federal, state, foreign and other Tax consequences of the transactions
      contemplated by this Agreement in a manner consistent with such Asset
      Allocation. If the Company, the Principal Shareholder and InCard are unable
      to
      agree on an Asset Allocation, then an independent qualified valuation firm
      mutually selected by the Company, the Principal Shareholder and InCard shall
      resolve any remaining disagreements. Each party will submit to the mutually
      selected firm such work papers and other documents and information related
      to
      the disputed issues as may be requested and are available to that party or
      its
      independent public accountants and will be afforded the opportunity to present
      to the selected valuation firm any material related to the determination and
      to
      discuss the determination. The selected qualified valuation firm shall determine
      as promptly as practicable, but in any event within 20 days of the date on
      which
      such dispute is referred to the firm, whether the Asset Allocation was prepared
      in accordance with the standards set forth in this Section
      5.7(a)
      and
      (only with respect to the remaining disagreements submitted to the valuation
      firm) whether and to what extent (if any) the Asset Allocation requires
      adjustment. The fees and expenses of the selected valuation firm shall be paid
      one-half by the Company and the Principal Shareholder and one-half by InCard.
      The determination of the valuation firm shall be final, conclusive and binding
      on the Parties and each Party shall prepare and file the relevant governmental
      forms in accordance with such determination. In any Tax proceeding related
      to
      the determination of any Tax, neither InCard, the Company nor the Principal
      Shareholder contend or represent that such allocation determined under this
      Section
      5.7(a)
      is not a
      correct allocation. InCard, the Company and the Principal Shareholder shall
      notify and provide the other parties with reasonable assistance in the event
      of
      an examination, audit or other proceeding regarding the agreed-upon Asset
      Allocation.

     

    
      
         

      

      
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    (b)
       The
      Company, the Principal Shareholder and InCard shall provide the other with
      such
      assistance as may reasonably be requested by the other parties in connection
      with the preparation of any Tax Return, audit or other examination, or any
      proceeding, by or before any Governmental Authority relating to liability for
      Taxes, and each party shall retain and provide the requesting party with all
      books and records or other information which may be relevant to such Tax Return,
      audit, examination or proceeding. All books, records and information obtained
      pursuant to this Section
      5.7(b)
      or
      pursuant to any other provision in this Agreement that provides for the sharing
      of books, records and information or review of any Tax Return or other
      instrument relating to Taxes shall be kept confidential by the parties
      hereto.

    (c)
       Payments
      by InCard to the Company under this Agreement (but not under any License
      Agreement) shall be made free and clear of, and without deduction for any United
      States withholding Taxes under Section 1442 of the Code.

     

    5.8.
       Transition
      Services. 

     

    (a)
       Following
      the Closing Date, the Company shall provide certain transition services to
      InCard in connection with the Contributed Assets as reasonably requested by
      InCard. Such services shall be rendered by Cyril Lalo and Philippe Guillaud
      (or,
      in case of their unavailability by employees of the Company with the requisite
      skills and who are as qualified to perform such transition services) (the
“Principal
      Providers”),
      it
      being understood that the Company shall use its reasonable commercial efforts
      to
      ensure that the transition services are provided by Cyril Lalo and Philippe
      Guillaud. InCard shall reimburse the Company for the full-time cost and
      reasonable expenses of the Company incurred with respect to each such Principal
      Provider during the time in which the Principal Providers are providing such
      transition services to InCard. Following the Closing Date, InCard shall be
      permitted to solicit for employment each of the Principal Providers and such
      other employees of the Company as identified in writing by InCard prior to
      the
      Closing Date.

     

    (b)
       During
      the 12 month period following the Closing Date, InCard shall purchase from
      the
      Company 800 man-days of additional transition services at a rate of 600 Euros
      per day pursuant to the terms of the Services Agreement. The Company shall
      ensure that such transition services are rendered by its employees who have
      the
      skills and experience determined by InCard to be necessary to provide such
      additional services. The employees rendering such services shall be under the
      sole responsibility and supervision of the Company and shall in no event receive
      instructions from InCard, nor shall the employees rendering such services be
      considered employees of InCard. If InCard is not satisfied with the services
      rendered by such employees, InCard shall have the right to ask the Company
      to
      replace such employees rendering the services with different employees;
provided
      that the
      Company shall retain the full right to decide which of its employees will
      perform such additional services so long as the Company ensures that such
      employees have the skills and experience determined by InCard to be necessary
      to
      provide such additional services. 

     

    
      
         

      

      
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    (c)
       Title
      to
      all Intellectual Property, and all interest therein, created in connection
      any
      transition services rendered by employees of the Company to InCard pursuant
      to
      this Section
      5.8
      shall
      vest in InCard, and such Intellectual Property shall be a work made for hire
      and
      made in the course of providing the such transition services. The Company shall,
      and shall cause such employees rendering transition services to InCard to,
      assign, transfer and convey to InCard all right, title and interest in and
      to
      such Intellectual Property. All such Intellectual Property shall belong
      exclusively to InCard, with InCard having the right to obtain, and to hold
      in
      its own name, copyrights, trademarks, patents, registrations or such other
      protection as may be appropriate to the subject matter, and any extensions
      and
      renewals thereof; further, it is understood and agreed by the Parties that
      the
      Company shall have no obligation to register any of such intellectual property
      and that the registration of such intellectual property (including the payment
      of all costs and expenses related thereto) shall be the sole obligation of
      InCard. The Company agrees to give InCard, and any person designated by InCard,
      reasonable assistance, at InCard’s expense, required to perfect the rights
      defined in this Section
      5.8(c).

    (d)
       Notwithstanding
      anything in this Agreement to the contrary, this Agreement shall not constitute
      an agreement to assign to InCard any employees of the Company or any claim
      or
      right or any benefit arising thereunder or resulting therefrom.

     

    5.9.
       Electrostatic
      Patent.
      InCard
      hereby agrees that, following the filing by InCard with the United States Patent
      and Trademark Office of an application to register a patent with respect to,
      and
      the issuance to InCard by the United States Patent and Trademark Office of
      a
      patent for, the Electrostatic Technology (the “Electrostatic
      Patent”),
      InCard shall, in exchange for reimbursement by the Company to InCard of 50%
      of
      the costs related to the creation and registration of the Electrostatic Patent,
      grant to the Company an irrevocable, fully paid-up, exclusive, transferable,
      royalty-free right and license to make, have made, use, sell and have sold
      products solely for use in a credit card size card that emits an encrypted
      sound
      signal which but for such license would infringe the Electrostatic
      Patent.

     

    5.10.
       Consents
      to Assignment.
      Notwithstanding anything in this Agreement to the contrary, this Agreement
      shall
      not constitute an agreement to assign any Contract or any claim or right or
      any
      benefit arising thereunder or resulting therefrom if an attempted assignment
      thereof, without the consent of a third party thereto, would constitute a breach
      or Default thereof or in any way adversely affect the rights of InCard
      thereunder. If such consent is not obtained, or if an attempted assignment
      thereof would be ineffective or would affect the rights thereunder so that
      InCard would not receive all such rights, InCard shall have the option of (a)
      excluding any such Contract or any claim or right or any benefit arising
      thereunder or resulting therefrom or (b) requiring the Company to use its best
      efforts to provide to InCard after the Closing Date the benefits of such
      Contracts, including, without limitation, enforcement for the benefit of InCard
      of any and all rights of the Company against a third party thereto arising
      out
      of the breach or cancellation by such third party or otherwise. Nothing in
      this
      Agreement shall be construed as an attempt to assign any agreement or other
      instrument that by its terms is non-assignable without the consent of a third
      party. Nothing in this Section
      5.9
      shall
      affect InCard’s right to terminate this Agreement under Section
      8.1
      in the
      event that any such consent or approval is not obtained such that the condition
      to Closing set forth in Section
      6.2(b)
      hereof
      is not reasonably capable of being satisfied.

     

    
      
         

      

      
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    5.11.
       Right
      of First Refusal. 

     

    (a)
       Notice
      of Proposed Sale.
      In the
      event that the Company, or any of its officers, directors, shareholders,
      employees or Affiliates offers for sale or receives an offer to purchase (a
      “Sale
      Offer”)
      all or
      a portion of the Intellectual Property associated with, incorporated into or
      related to the nC AudioCard (the “nC
      AudioCard Assets”)
      by or
      from any Person during the four year period following the Closing Date, whether
      in writing or orally, and whether through an asset sale, a sale of a controlling
      interest in the Company or a merger or consolidation or similar transaction
      involving the Company, the Company shall promptly deliver written notice of
      such
      Sale Offer (the “ROFR
      Notice”)
      to
      InCard. The ROFR Notice shall describe in reasonable detail the Sale Offer,
      including, without limitation, the consideration to be paid for the nC AudioCard
      Assets and any other material terms and conditions upon which the Sale Offer
      has
      been made, along with copies of all material proposed agreements relating to
      such Sale Offer, including but not limited to, purchase agreements and other
      agreements or documents reasonably requested by Buyer.

     

    (b)
       Right
      of First Refusal.
      InCard
      shall have the option, exercisable upon written notice to the Company within
      60
      days after delivery of the ROFR Notice to purchase all or a portion of the
      nC
      AudioCard Assets that are subject to the Sale Offer upon the terms and
      conditions substantially set forth in the ROFR Notice. In the event that InCard
      declines to exercise in full its right of first refusal set forth in this
Section
      5.11(b),
      the
      Company then shall have the right to sell any nC AudioCard Assets subject to
      the
      Sale Offer with respect to which InCard did not exercise its right of first
      refusal set forth in this Section
      5.11(b),
      provided
      that
      such sale is on terms no more favorable to the Company than the terms specified
      in the ROFR Notice. 

     

    5.12.
       VASCO
      and RSA Accounts Receivable.
      

     

    (a)
       Promptly
      following the Closing Date, but in any event within 10 calendar days thereof,
      the Company shall pay to InCard by check or by wire transfer of immediately
      available funds to a bank account designated by InCard 50,000 Euros which
      represents all sums paid by VASCO to the Company less
      all
      costs and expenses paid by the Company to VASCO incurred by VASCO with respect
      to the products developed and the services performed by VASCO pursuant to that
      certain Letter of Intent, dated October 28, 2005, by and among VASCO, the
      Company and InCard.

     

    (b)
       Promptly
      following the receipt by the Company of the payment by RSA of the amounts
      invoiced by the Company to RSA pursuant to that certain Development and
      Evaluation Agreement, dated May 2006, by and among RSA, the Company and InCard,
      but in any event within 10 calendar days thereof, the Company shall pay to
      InCard by check or by wire transfer of immediately available funds to a bank
      account designated by InCard 11,778 Euros which represents all amounts invoiced
      less
      all
      costs and expenses incurred or paid by the Company with respect to the products
      developed and services performed for RSA pursuant to such
      agreement.

     

    
      
         

      

      
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    5.13.
       Publicity.
      Neither
      the Company, the Principal Shareholder nor InCard shall reveal publicly the
      terms of this Agreement or of the Ancillary Agreements without the consent
      of
      the other parties, except as required by law. 

     

    ARTICLE
      VI.

    CONDITIONS
      TO CLOSING

     

    6.1.
       Conditions
      to Obligations of the Company.
      The
      obligations of the Company to consummate the transactions provided for hereby
      are subject, in the discretion of the Company, to the satisfaction, on or prior
      to the Closing Date, of each of the following conditions, any of which may
      be
      waived by the Company:

     

    (a)
       Representations,
      Warranties and Covenants.
      All
      representations and warranties of InCard contained in this Agreement shall
      be
      true and correct in all material respects at and as of the date of this
      Agreement and at and as of the Closing Date (in each case without giving effect
      to materiality qualifications) and InCard shall have performed and satisfied
      in
      all material respects all agreements and covenants required hereby to be
      performed by InCard prior to or on the Closing Date.

     

    (b)
       No
      Actions or Court Orders.
      No
      suit, action, investigation, inquiry or other proceeding by any Governmental
      Authority or other Person or legal or administrative proceeding shall have
      been
      instituted or threatened which seeks to restrain, enjoin, prevent the
      consummation of or otherwise affect the transactions contemplated by this
      Agreement or the Ancillary Agreements or which questions the validity or
      legality of the transactions contemplated hereby or thereby or the ability
      of
      the Company to transfer the Contributed Assets free and clear of any
      Encumbrances.

     

    (c)
       Authorization.
      The
      Company shall have received from InCard a copy of resolutions adopted by the
      board of directors of InCard approving this Agreement and the Ancillary
      Agreements to which InCard is a party and the transactions contemplated hereby
      and thereby, certified by InCard’s corporate secretary.

     

    (d)
       Ancillary
      Agreements.
      InCard
      shall have executed and delivered the Ancillary Agreements to which InCard
      is a
      party.

     

    (e)
       Other
      Deliveries.
      InCard
      shall have delivered to the Company each of the items set forth in Section
      2.2(a)
      hereof.

     

    6.2.
       Conditions
      to Obligations of InCard.
      The
      obligations of InCard to consummate the transactions provided for hereby are
      subject, in the discretion of InCard, to the satisfaction, on or prior to the
      Closing Date, of each of the following conditions, any of which may be waived
      by
      InCard: 

     

    
      
         

      

      
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    (a)
       Representations,
      Warranties and Covenants.
      All
      representations and warranties of the Company and the Principal Shareholder
      contained in this Agreement shall be true and correct in all material respects
      at and as of the date of this Agreement and at and as of the Closing Date (in
      each case without giving effect to materiality qualifications) and the Company
      and the Principal Shareholder shall have performed and satisfied in all material
      respects all agreements and covenants required hereby to be performed by the
      Company or the Principal Shareholder prior to or on the Closing
      Date.

     

    (b)
       Consents;
      Regulatory Compliance and Approval.
      Any
      third-party and governmental consents, approvals or authorizations necessary
      for
      the valid consummation of the transactions contemplated hereby as set forth
      on
Schedule
      3.4
      of the
      Disclosure Schedules shall have been obtained in written form evidencing such
      consent.

     

    (c)
       No
      Actions or Court Orders.
      No
      suit, action, investigation, inquiry or other proceeding by any Governmental
      Authorities or other Person or legal or administrative proceeding shall have
      been instituted or threatened which seeks to restrain, enjoin, prevent the
      consummation of or otherwise affect the transactions contemplated by this
      Agreement or which questions the validity or legality of the transactions
      contemplated hereby or the ability of the Company to transfer the Contributed
      Assets free and clear of any Encumbrances.

     

    (d)
       Authorization.
      InCard
      shall have received from the Company a copy of the resolutions adopted by the
      board of directors and shareholders (or analogous body) of the Company approving
      this Agreement and the Ancillary Agreements to which the Company is a party
      and
      the transactions contemplated hereby and thereby, certified by the Company’s
      corporate secretary.

     

    (e)
       Transfer
      and Assignment.
      The
      documents to be delivered by the Company at the Closing to effect the transfer
      and assignment to InCard of all right, title and interest in and to the
      Contributed Assets shall be effective to do so.

     

    (f)
       Ancillary
      Agreements.
      Each of
      the Company shall have executed and delivered the Ancillary Agreements
      to which it is a party.

    (g)
       Other
      Deliveries.
      The
      Company shall have delivered to InCard each of the items set forth in
Section
      2.2(b)
      hereof.

     

    ARTICLE
      VII.

    INDEMNIFICATION;
      REMEDIES

     

    7.1.
       Limitation
      on Survival of Representations
      and
      Warranties.
      All of
      the representations and warranties made by each party in this Agreement or
      in
      any attachment, Exhibit, the Disclosure Schedules, certificate, document or
      list
      delivered by any such party pursuant hereto shall survive the Closing for a
      period of (and claims based upon or arising out of such representations and
      warranties may be asserted at any time before the date which shall be) one
      year
      following the Closing (except that the representations and warranties set forth
      in Sections
      3.1,
      3.2,
      and
3.3
      hereof
      shall survive indefinitely with respect to the matters addressed in such
      sections and the representations and warranties set forth in Section
      3.11
      shall
      survive until 60 days after the end of the expiration of the applicable statute
      of limitations (including any extensions)). InCard shall be entitled to rely
      upon the representations and warranties of the Company and the Principal
      Shareholder set forth in this Agreement, and the Company and the Principal
      Shareholder shall be entitled to rely upon the representations and warranties
      of
      InCard set forth in this Agreement. The termination of the representations and
      warranties provided herein shall not affect the rights of a party in respect
      of
      any Claim made by such party in a writing received by the applicable party
      prior
      to the expiration of the applicable survival period provided
      herein.

     

    
      
         

      

      
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    7.2.
       Indemnification.

     

    (a)
       By
      the
      Company.
      The
      Company shall indemnify, save and hold harmless InCard and its members,
      Affiliates and subsidiaries, and their respective Representatives (collectively,
      the “InCard
      Indemnitees”),
      from
      and against any and all costs, losses, Taxes, Liabilities, obligations, damages,
      lawsuits, deficiencies, claims, demands, expenses (whether or not arising out
      of
      third-party claims), reasonable attorneys’ fees and other amounts paid in
      investigation, defense or settlement of any of the foregoing (herein,
“Damages”),
      incurred in connection with, arising out of or resulting from (i) any breach
      of
      any representation or warranty or the inaccuracy of any representation made
      by
      the Company in or pursuant to this Agreement (in each case, without giving
      effect to materiality qualifications); (ii) any breach of any covenant or
      agreement made by the Company or the Principal Shareholder in or pursuant to
      this Agreement or (iii) the Excluded Liabilities (including, without limitation,
      any Liability for Taxes of the Company or the Principal Shareholder, including,
      without limitation, as a result of being or having been a member of an
      affiliated, consolidated, combined or unitary group or by reason of any Tax
      sharing or indemnification agreement).

     

    The
      term
“Damages”
as
      used
      in this Article
      VII
      (A) is
      not limited to matters asserted by third parties against the Company, the
      Principal Shareholder or InCard, but includes Damages incurred or sustained
      by
      the Company, the Principal Shareholder or InCard in the absence of third-party
      claims, but (B) shall exclude Damages incurred or sustained by the Company,
      the
      Principal Shareholder or InCard in the absence of third-party claims to the
      extent that they were not reasonably foreseeable at the time of execution
      hereof. 

    (b)
       By
      InCard.
      InCard
      shall indemnify and save and hold harmless the Company, the Principal
      Shareholder and their respective Representatives (collectively, the
“Company
      Indemnitees”)
      from
      and against any and all Damages incurred in connection with, arising out of,
      resulting from or incident to (i) any breach of any representation or warranty
      or the inaccuracy of any representation, made by InCard in or pursuant to this
      Agreement; (ii) any breach of any covenant or agreement made by InCard in or
      pursuant to this Agreement, (iii) the Assumed Liabilities or (iv) any United
      States withholding Taxes under Section 1442 of the Code assessed to the Company
      from payments under this Agreement (but not including payments under any License
      Agreement).

     

    
      
         

      

      
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    (c)
       Cooperation.
      The
      indemnified party shall cooperate in all reasonable respects with the
      indemnifying party and such attorneys in the investigation, trial and defense
      of
      such lawsuit or action and any appeal arising therefrom; provided,
      however,
      that
      the indemnified party may, at its own cost, participate in the investigation,
      trial and defense of such lawsuit or action and any appeal arising therefrom.
      The parties shall cooperate with each other in any notifications to
      insurers.

     

    (d)
       Claims
      Between the Indemnifying Parties.
      References in this Article
      VII
      to
“indemnifying party” when an InCard Indemnitee is an indemnified party shall be
      deemed references to the Company.

     

    (e)
       Defense
      of Third-Party Claims.
      If a
      claim for Damages (a “Claim”)
      is to
      be made by a party entitled to indemnification hereunder against the
      indemnifying party, the party claiming such indemnification shall, subject
      to
      this Article
      VII,
      give
      written notice (a “Claim
      Notice”)
      to the
      indemnifying party as soon as practicable after the party entitled to
      indemnification becomes aware of any fact, condition or event which may give
      rise to Damages for which indemnification may be sought under this Article
      VII,
      provided
      that the
      failure of any indemnified party to give prompt notice hereunder shall not
      affect rights to indemnification hereunder except to the extent that the
      indemnifying party is damaged by such failure or the Damages that are the
      subject of the Claim are exacerbated. If any lawsuit or enforcement action
      is
      filed by a third party against any party entitled to the benefit of indemnity
      hereunder, written notice thereof shall be given to the indemnifying party
      as
      promptly as practicable, provided
      that the
      failure of any indemnified party to give prompt notice hereunder shall not
      affect rights to indemnification hereunder except to the extent that the
      indemnifying party is damaged by such failure or the Damages that are the
      subject of the Claim are exacerbated. After such notice, if the indemnifying
      party shall acknowledge in writing to the indemnified party that the
      indemnifying party shall be obligated under the terms of its indemnity hereunder
      in connection with such lawsuit or action, then the indemnifying party shall
      be
      entitled, if it so elects at its own cost, risk and expense, (i) to take control
      of the defense and investigation of such lawsuit or action, (ii) to employ
      and
      engage attorneys of its own choice to handle and defend the same unless the
      named parties to such action or proceeding include both the indemnifying party
      and the indemnified party and the indemnified party has been advised in writing
      by counsel that there may be one or more legal defenses available to such
      indemnified party that are different from or additional to those available
      to
      the indemnifying party, in which event the indemnified party shall be entitled,
      at the indemnifying party’s cost, risk and expense, to separate counsel of its
      own choosing, and (iii) to compromise or settle such claim, which compromise
      or
      settlement shall be made only with the written consent of the indemnified party,
      such consent not to be unreasonably withheld; provided,
      however,
      if the
      resolution of any such Claim is reasonably expected to have an adverse effect
      on
      the indemnified party’s business operations, then, notwithstanding the
      foregoing, the indemnified party shall be entitled to control such resolution,
      including, without limitation, to take control of the defense and investigation
      of such lawsuit or action, to employ and engage attorneys of its own choice
      to
      handle and defend the same, at the indemnifying party’s cost, risk and expense,
      and to compromise or settle such Claim.

     

    
      
         

      

      
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    If
      the
      indemnifying party fails to assume the defense of such claim within thirty
      (30)
      calendar days after receipt of the Claim Notice, the indemnified party against
      which such claim has been asserted will (upon delivering notice to such effect
      to the indemnifying party) have the right to undertake, at the indemnifying
      party’s cost and expense, the defense, compromise or settlement of such claim on
      behalf of and for the account and risk of the indemnifying party; provided,
      however,
      that
      such Claim shall not be compromised or settled without the written consent
      of
      the indemnifying party, which consent shall not be unreasonably withheld. In
      the
      event the indemnified party assumes the defense of the claim, the indemnified
      party will keep the indemnifying party reasonably informed of the progress
      of
      any such defense, compromise or settlement. The indemnifying party shall be
      liable for any settlement of any action effected pursuant to and in accordance
      with this Article
      VII
      and for
      any final judgment (subject to any right of appeal), and the indemnifying party
      agrees to indemnify and hold harmless an indemnified party from and against
      any
      Damages by reason of such settlement or judgment. The right to indemnification,
      payment of Damages or other remedy based on any representations, warranties,
      covenants and obligations will not be affected by any investigation conducted
      with respect to, or any knowledge acquired (or capable or being acquired) at
      any
      time, whether before or after the execution and delivery of this Agreement
      or
      the Closing, with respect to the accuracy or inaccuracy of or compliance with,
      any such representation, warranty, covenant or obligation. The waiver of any
      condition based on the accuracy of any representation or warranty, or on the
      performance of or compliance with any covenant or obligation, will not affect
      the right to indemnification, payment of Damages, or other remedies based on
      such representations, warranties, covenants and obligations.

     

    (f)
       Limitations
      on Indemnity.
      Claims
      based upon or arising out of representations and warranties made by each party
      in this Agreement or in any attachment, Exhibit, the Disclosure Schedules,
      certificate, document or list delivered by any such party pursuant hereto may
      be
      asserted at any time before the date which shall be one year following the
      Closing, after which time no such Claims may be asserted and no indemnification
      shall be due therefor. Neither InCard, on the one hand, nor the Company, on
      the
      other hand, shall be liable to the other for Claims arising exclusively under
      Sections
      7.2(a)(i)
      or
7.2(b)(i)
      hereof
      unless the aggregate amount of Damages finally determined to arise thereunder
      exceeds U.S.$50,000, in which event the indemnifying party shall be required
      to
      pay the full amount of such Damages from the first dollar; provided,
      that
      neither InCard, on the one hand, nor the Company, on the other hand, shall
      be
      liable to the other for Claims arising exclusively under Sections 7.2(a)(i)
      or
7.2(b)(i)
      hereof
      in excess of 30% of the Stock Value (the “Cap”);
      provided,
      however,
      that in
      no event shall the limitations set forth in this Section
      7.2(g)
      apply
      (i) in the case of intentional misrepresentation, intentional breaches of
      covenants or fraud, or (ii) to inaccuracies in or breaches of any of the
      representations and warranties contained in Sections
      3.1,
      3.2,
      3.3,
      3.5
      or
3.11
      hereof.

    (g)
       Exclusive
      Remedy.
      The
      parties agree and acknowledge that the right to cancel shares of InCard Common
      Stock constituting the Equity Consideration shall be the InCard Indemnitees’
exclusive method of receiving indemnification from the Company under
Section
      7.1(a)(i)
      hereof,
      except in the case of Damages incurred in connection with, arising out of,
      resulting from or incident to any breach of any representation or warranty
      or
      the inaccuracy of any representation made by the Principal Shareholder in or
      pursuant to this Agreement or any intentional misrepresentation, intentional
      breaches of covenants or fraud, with respect to which the InCard Indemnitees
      shall be entitled to pursue any other available remedies at law or equity,
      including the recovery of money damages, in addition to any remedies available
      to the InCard Indemnitees pursuant to this Article
      VII.
      Upon
      the resolution of any Claim with respect to which the Buyer Indemnitees are
      entitled to indemnification from the Company under Section
      7.1(a)(i)
      hereof,
      the Company shall surrender to InCard a share certificate(s) representing such
      number of shares of InCard Common Stock equal to (i) the amount of Damages
      with
      respect to which the InCard Indemnitees are entitled to indemnification from
      the
      Company pursuant to such Claim divided
      by
      (ii) the
      last sale price per share of InCard Common Stock sold on the OTC Bulletin Board
      on the date set forth on the corresponding Claim Notice. In the event that
      the
      share certificate(s) so surrendered by the Company represent a number of shares
      of InCard Common Stock greater than the number of shares to be surrendered
      by
      the Company as calculated in the immediately preceding sentence, then, promptly
      upon receipt of such certificate(s), InCard shall issue to the Company a new
      share certificate(s) representing such number of shares of InCard Common Stock
      equal to the number of shares of InCard Common Stock represented by the
      certificate(s) so surrendered by the Company less
      the
      number of shares to be surrendered by the Company as calculated in the
      immediately preceding sentence. The Company agrees that it will not contribute
      or otherwise transfer to the Principal Shareholder any shares of InCard Common
      Stock constituting the Equity Consideration prior to the one year anniversary
      of
      the Closing Date. 

     

    
      
         

      

      
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    ARTICLE
      VIII.

    TERMINATION

    

    8.1.
       Termination.
      This
      Agreement may be terminated at any time prior to Closing:

    (a)
       By
      mutual
      written consent of InCard and the Company;

     

    (b)
       By
      InCard
      or the Company if the Closing shall not have occurred on or before August 1,
      2006; provided,
      however,
      that
      this provision shall not be available to InCard if the Company has the right
      to
      terminate this Agreement under clause (d) of this Section
      8.1,
      and
      this provision shall not be available to the Company if InCard have the right
      to
      terminate this Agreement under clause (c) of this Section
      8.1;

     

    (c)
       By
      InCard
      if there is a material breach of any representation or warranty set forth in
      Article
      III
      hereof
      or any covenant or agreement to be complied with or performed by the Company
      or
      the Principal Shareholder pursuant to the terms of this Agreement or the failure
      of a condition set forth in Section
      6.2
      hereof
      to be satisfied (and such condition is not waived in writing by InCard) on
      or
      prior to the Closing Date, or the occurrence of any event which results or
      would
      result in the failure of a condition set forth in Section
      6.2
      hereof
      to be satisfied on or prior to the Closing Date, provided
      that
      InCard may not terminate this Agreement prior to the Closing if the Company
      and
      the Principal Shareholder have not had an adequate opportunity to cure such
      failure; or

     

    
      
         

      

      
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    (d)
       By
      the
      Company if there is a material breach of any representation or warranty set
      forth in Article
      IV
      hereof
      or of any covenant or agreement to be complied with or performed by InCard
      pursuant to the terms of this Agreement or the failure of a condition set forth
      in Section
      6.1
      hereof
      to be satisfied (and such condition is not waived in writing by the Company
      and
      the Principal Shareholder) on or prior to the Closing Date, or the occurrence
      of
      any event which results or would result in the failure of a condition set forth
      in Section
      6.1
      hereof
      to be satisfied on or prior to the Closing Date; provided
      that the
      Company may not terminate this Agreement prior to the Closing Date if InCard
      has
      not had an adequate opportunity to cure such failure.

     

    8.2.
       Effect
      of Termination.
      In the
      event of termination of this Agreement pursuant to Section
      8.1
      hereof:

     

    (a)
       Each
      party shall redeliver all documents, work papers and other material of any
      other
      party relating to the transactions contemplated hereby, whether so obtained
      before or after the execution hereof, to the party furnishing the same;
      and

     

    (b)
       No
      party
      hereto shall have any Liability to any other party to this Agreement, except
      as
      stated in this Section
      8.2
      and
      except for any breach of this Agreement occurring prior to the proper
      termination of this Agreement. 

    The
      foregoing provisions shall not limit or restrict the availability of specific
      performance or other injunctive relief to the extent that specific performance
      or such other relief would otherwise be available to a party
      hereunder.

     

    ARTICLE
      IX.

    MISCELLANEOUS

     

    9.1.
       Defined
      Terms.
      As used
      herein, the terms below shall have the following meanings. Any such term, unless
      the context otherwise requires, may be used in the singular or plural, depending
      upon the reference.

     

    “Action”
shall
      mean any action, complaint, inquiries, complaints, assessments, inspections,
      claim, suit, litigation, proceeding, labor dispute, arbitral action,
      governmental audit, inquiry, criminal prosecution, civil or criminal
      investigation, in each case, of any nature whatsoever.

     

    “Affiliate”
shall
      have the meaning set forth in the Exchange Act.

     

    “Affiliated
      Group”
shall
      mean an affiliated group as defined in Section 1504 of the Code (or any
      analogous combined, consolidated or unitary group defined under state, local
      or
      foreign income Tax law) of which the Company is
      or has
      been a member.

     

    
      
         

      

      
        34

        
          

        

      

      
         

      

    

     

    “Ancillary
      Agreements”
shall
      mean the following agreements: (a) the Bill of Sale, (b) the Assignment of
      Contract Rights, (c) the Assignment of Intellectual Property; (d) Assumption
      Agreement, (e) the Reseller Agreements, (f) the License Agreements, (g) the
      Services Agreement and (h) all other agreements, instruments, documents and
      certificates executed, filed or otherwise prepared, exchanged or delivered
      in
      accordance with this Agreement.

     

    “Assignment
      of Contract Rights”
means
      that certain assignment of contract rights, substantially in the form attached
      hereto as Exhibit
      A,
      to be
      entered into at Closing by the Company in favor of InCard.

     

    “Assignment
      of Intellectual Property Rights”
means
      that certain assignment of intellectual property and proprietary rights,
      substantially in the form attached hereto as Exhibit
      B,
      to be
      entered into at Closing by the Company in favor of InCard.

     

    “Assumed
      Contracts”
shall
      mean the Contracts identified on Annex
      I-B
      attached
      hereto.

     

    “Assumption
      Agreement”
means
      that certain assumption agreement, substantially in the form attached hereto
      as
Exhibit C,
      to be
      entered into at Closing by the InCard in favor of the Company. 

    “Beep
      Patent”
shall
      mean the Company’s patent relating to the technology allowing for the emission
      of an encrypted sound signal representing a dynamic password from financial
      transaction and similar cards (#15602 FR).

     

    “Bill
      of Sale”
means
      that certain bill of sale, substantially in the form attached hereto as
Exhibit D,
      to be
      entered into at Closing by the Company in favor of InCard.

     

    “Business
      Day”
shall
      mean a day other than Saturday, Sunday or any day on which banks located in
      the
      State of California are authorized or obligated to close.

     

    “Buzzer
      Patents”
shall
      mean the Company’s patents relating to the technology allowing for the emission
      of a monophonic musical tone from financial transaction and similar cards
      (“Procédé
      pour émettre des signaux acoustiques à partir d’une carte à mémoire ou à puce
      pour la mise en oeuvre du procédé”
#EP
      1
      031 229, #6,748,359 and Application #519539/00 dated November 4,
      1998)

     

    “Code”
shall
      mean the Internal Revenue Code of 1986, as amended.

     

    “Company
      Intellectual Property”
shall
      mean, with respect to the Contributed Assets, any and all Intellectual Property
      that is owned by, purported to be owned by, or exclusively licensed to the
      Company. 

     

    “Company
      Registered Intellectual Property”
shall
      mean, with respect to the Contributed Assets, the applications, registrations
      and filings for Intellectual Property that have been registered, filed,
      certified or otherwise perfected or recorded, with or by any Governmental
      Authority, by or in the name of the Company.

     

    
      
         

      

      
        35

        
          

        

      

      
         

      

    

     

    “Contract”
shall
      mean any agreement, contract, note, loan, evidence of indebtedness, purchase
      order, letter of credit, indenture, security or pledge agreement, franchise
      agreement, undertaking, practice, covenant not to compete, company benefits
      plan, license, instrument, obligation, promise or commitment (in each case,
      whether written or oral and whether expressed or implied) to which the Company
      is a party or is bound.

     

    “Contribution
      Agreement”
shall
      mean that certain agreement, in the French language, regarding the contribution
      of the Contributed Assets to InCard in exchange for the Equity Consideration,
      entered into by and between InCard and the Company, to be registered with the
      French tax authorities substantially in the form attached hereto as Exhibit
      E.

     

    “Court
      Order”
shall
      mean any judgment, decision, consent decree, injunction, ruling or order of
      any
      federal, state or local court or Governmental Authority, department or authority
      that is binding on any person or its property under applicable
      law.

    “Default”
shall
      mean (a) a breach of or default under any Contract, (b) the occurrence of an
      event that with the passage of time or the giving of notice or both would
      constitute a breach of or default under any Contract, or (c) the occurrence
      of
      an event that with or without the passage of time or the giving of notice or
      both would give rise to a right of termination, renegotiation or acceleration
      under any Contract.

     

    “Disclosure
      Schedules”
shall
      mean a schedule executed and delivered by the Company and the Principal
      Shareholder to InCard as of the date hereof which sets forth the exceptions
      to
      the representations and warranties contained in Article
      III
      hereof
      and certain other information called for by this Agreement. Unless otherwise
      specified, each reference in this Agreement to any numbered schedule is a
      reference to that numbered schedule which is included in the Disclosure
      Schedules.

     

    “Electrostatic
      Technology”
shall
      mean that certain technology developed by InCard and the Company under the
      JDA,
      which technology prevents the magnetic reset of displays incorporated into
      credit card size cards such as the nC DisplayCard or the nC Audio
      Card.

     

    “Encumbrance”
shall
      mean any claim, lien, pledge, option, charge, community property interest,
      equitable interest, right of first refusal or restriction of any kind, easement,
      security interest, deed of trust, mortgage, pledge, hypothecation, right-of-way,
      encroachment, building or use restriction, conditional sales agreement,
      encumbrance or other right of third parties, whether voluntarily incurred or
      arising by operation of law, and includes, without limitation, any agreement
      to
      give any of the foregoing in the future, and any contingent sale or other title
      retention agreement or lease in the nature thereof.

     

    
      
         

      

      
        36

        
          

        

      

      
         

      

    

     

    “Exchange
      Act”
shall
      mean the Securities Exchange Act of 1934, as amended, and the rules and
      regulations promulgated thereunder.

     

    “Governmental
      Authority”
shall
      mean any government, governmental entity, department, commission, board, agency
      or instrumentality, and any court, arbitrator, tribunal or judicial body of
      any
      nation, state, province, municipality or other jurisdiction of any nature,
      including, without limitation, the European Union, any of its member states
      or
      any political subdivision thereof, any entity or body exercising executive,
      legislative, judicial, regulatory, taxing or administrative functions of or
      pertaining to government, whether national or international, and any
      governmental or judicial tribunal of competent jurisdiction.

     

    “Intellectual
      Property”
shall
      mean any and all rights in or affecting intellectual or industrial property
      or
      other proprietary rights, existing now or in the future in the United States
      or
      anywhere in the universe. Intellectual Property includes, without limitation,
      any and all rights in, to, or subsisting in the following:

     

    (a) all
      issued patents, reissued or reexamined patents, revivals of patents, divisions,
      continuations and continuations-in-part of patents, all renewals and extensions
      thereof utility models, and certificates of invention, regardless of country
      or
      formal name;

    (b) all
      published or unpublished nonprovisional and provisional patent applications,
      including the right to file other or further applications, reexamination
      proceedings, invention disclosures and records of invention;

     

    (c) all
      copyrights, copyrightable works, semiconductor topography and mask work rights,
      including, without limitation, all rights of authorship, use, publication,
      reproduction, distribution, performance, transformation, moral rights and
      ownership of copyrightable works, semiconductor topography works and mask works,
      the right to create derivative works, and all applications for registration,
      registrations, renewals and extensions of registrations, together with all
      other
      interests accruing by reason of international copyright, semiconductor
      topography and mask work conventions;

     

    (d) all
      trademarks, service marks, logos, trade names, domain names, 1-800, 1-888,
      1-877
      and other “vanity” telephone numbers, together with the goodwill of the business
      associated therewith, all applications for registration and registrations
      thereof, renewals thereof, the right to bring opposition and cancellation
      proceedings and any and all rights under the laws of trade dress;

     

    (e) all
      proprietary information and materials, whether or not patentable or
      copyrightable, and whether or not reduced to practice, including without
      limitation all technology, ideas, research and development, inventions, designs,
      manufacturing and operating specifications and processes, know-how, formulae,
      customer and supplier lists, shop rights, designs, drawings, patterns, trade
      secrets, confidential information, technical data, databases, data compilations
      and collections, computer programs, and all hardware, software and
      processes;

     

    
      
         

      

      
        37

        
          

        

      

      
         

      

    

     

    (f) all
      other
      intangible assets, properties and rights relating to the foregoing paragraphs
      (a) through (e); and

     

    (g) all
      claims, causes of action and rights to sue for past, present and future
      infringement, misappropriation or unconsented use of any of the foregoing
      intellectual and other proprietary rights set forth in the foregoing paragraphs
      (a) through (f), the right to file applications and obtain registrations, and
      all rights arising therefrom and pertaining thereto and all products, proceeds
      and revenues arising from or relating to any and all of the
      foregoing.

     

    “Inventory”
shall
      mean all inventory of components, supplies and finished product maintained
      by
      the Company related to the nC DisplayCard products or prototypes, including
      without limitation all batteries for the nC DisplayCard held by Solicore, Inc.
      on the Closing Date. 

     

    “Knowledge”
shall
      mean and an individual shall be deemed to have “Knowledge” of a particular fact
      or matter if:

    (a)
       such
      individual is actually aware of such fact or other matter; or

     

    (b)
       a
      prudent
      individual could be expected to discover or otherwise become aware of such
      fact
      or other matter in the course of conducting a reasonably comprehensive
      investigation concerning the existence of such fact or matter.

     

    A
      Person
      (other than an individual) will be deemed to have “Knowledge” of a particular
      fact or other matter if any individual who is serving, or who has at any time
      served, as a director, officer, partner, executor, trustee of, or partner in,
      such Person (or in any similar capacity) has, or had at any time had, Knowledge
      of such fact or other matter.

     

    “Liabilities”
shall
      mean any direct or indirect liability, indebtedness, obligation, commitment,
      expense, claim, deficiency, deferred income, guaranty or endorsement of or
      by
      any Person of any type, whether accrued, absolute, contingent, matured,
      unmatured or other, and shall include all reserves which shall include a reserve
      for Taxes.

     

    “License
      Agreements”
shall
      mean the License Agreements by and between InCard and the Company to be entered
      into on the Closing Date, substantially in the forms attached hereto as
Exhibits
      F
      and
G.

     

    “nC
      AudioCard”
shall
      mean the Company’s credit card size cards containing identification
      mode (recognition of the caller) and authentication technology that the Company
      presently markets under the brand name “nC
      AudioCard” (including any future upgrades thereto and improvements
      thereon).

     

    “ordinary
      course of business”
or
      “ordinary
      course”
or
      any
      similar phrase shall describe any action taken by a Person if:

     

    
      
         

      

      
        38

        
          

        

      

      
         

      

    

     

    (a)
       such
      action is consistent with the past practices of such Person and is taken in
      the
      ordinary course of the normal day-to-day operations of such Person;

     

    (b)
       such
      action is not required to be authorized by the board of directors of such Person
      (or by any Person or group of Person exercising similar authority) and is not
      required to be authorized by the parent company (if any) of such Person;
      and

     

    (c)
       such
      action is similar in nature and magnitude to actions customarily taken, without
      any authorization by the board of directors (or by any Person or group of Person
      exercising similar authority), in the ordinary course of the normal day-to-day
      operations of other Persons that are in the same line of business as such
      Person.

     

    “Organizational
      Documents”
shall
      mean (a) the articles or certificate of incorporation, all certificates of
      determination and designation, and the bylaws of a corporation; (b) the
      partnership agreement and any statement of partnership of a general partnership;
      (c) the limited partnership agreement and the certificate or articles of limited
      partnership of a limited partnership; (d) the operating agreement, limited
      liability company agreement and the certificate or articles of organization
      or
      formation of a limited liability company; (e) any charter or similar document
      adopted or filed in connection with the creation, formation or organization
      of
      any other Person; and (f) any amendment to any of the
      foregoing.

    “Permits”
shall
      mean all licenses, permits, franchises, approvals, authorizations, consents
      or
      orders of, or filings with, any Governmental Authority, whether foreign,
      federal, state or local, or any other person, necessary or desirable for the
      past, present or anticipated conduct of, or relating to the operation of the
      Company’s business (including ownership of the Agreed Domain
      Names).

     

    “Person”
shall
      mean any individual, corporation (including any non-profit corporation), general
      or limited partnership, limited liability company, joint venture, estate, trust,
      association, organization, labor union, or other entity or Governmental
      Authority.

     

    “Regulations”
shall
      mean any laws, statutes, ordinances, regulations, rules, notice requirements,
      court decisions, agency guidelines, principles of law and orders of any
      Governmental Authority, including, without limitation, environmental
      Regulations, energy, motor vehicle safety, public utility, zoning, building
      and
      health codes, occupational safety and health and laws respecting employment
      practices, employee documentation, terms and conditions of employment and wages
      and hours. 

     

    “Representative”
shall
      mean any officer, director, principal, attorney, agent, employee or other
      representative.

     

    “Reseller
      Agreements”
shall
      mean the Reseller Agreements by and between InCard and the Company to be entered
      into on the Closing Date, substantially in the form attached hereto as
Exhibit
      H.

     

    
      
         

      

      
        39

        
          

        

      

      
         

      

    

     

    “Securities
      Act”
shall
      mean the Securities Act of 1933, as amended, and the rules and regulations
      promulgated thereunder.

     

    “Services
      Agreement”
shall
      mean that certain Services Agreement by and between the Company and InCard
      to be
      entered into on the Closing Date, substantially in the form attached hereto
      as
Exhibit
      I.

     

    “Straddle
      Period”
shall
      mean any period beginning before the Closing Date and ending after the Closing
      Date.

     

    “Source
      Code”
shall
      mean computer software and code, in form other than object code form, including
      related programmer comments and annotations, help text, data and data
      structures, instructions and procedures, object-oriented and other code, which
      may be printed out or displayed in human readable form.

    “Subsidiary”
shall
      mean (a) any corporation in an unbroken chain of corporations beginning with
      the
      Company if each of the corporations other than the last corporation in the
      unbroken chain then owns stock possessing 50% or more of the total combined
      voting power of all classes of stock in one of the other corporations in such
      chain, (b) any partnership in which the Company is a general partner, or (c)
      any
      partnership in which the Company possesses a 50% or greater interest in the
      total capital or total income of such partnership.

     

    “Tax”
shall
      mean any and all taxes, including, without limitation, any net income,
      alternative or add-on minimum, gross income, gross receipts, sales, use, ad
      valorem, value added, transfer, franchise, profits, license, registration,
      recording, documentary, conveyancing, gains, withholding, payroll, employment,
      excise, severance, stamp, occupation, premium, property, environmental or
      windfall profit, custom duty or other tax, governmental fee or other like
      assessment or charge of any kind whatsoever, together with any interest,
      penalty, addition to tax or additional amount imposed by any Governmental
      Authority responsible for the imposition of any such tax (United States
      (federal, state or local) or foreign).

     

    “Tax
      Return”
shall
      mean any
      return, report, information return or other document (including schedules
      thereto, other attachments thereto, amendments thereof, or any related or
      supporting information) filed or required to be filed with any taxing authority
      in connection with the determination, assessment or collection of any Tax or
      the
      administration of any laws, regulations or administrative requirements relating
      to any Tax.

     

    “Tangible
      Property”
shall
      mean all computer equipment and other furniture, equipment and other tangible
      personal property owned or used by the Company, including any such furniture,
      equipment or other tangible personal property used by the Company pursuant
      to a
      license, lease or similar right.

     

    “Treasury
      Regulations”
shall
      mean the United States Treasury regulations promulgated under the
      Code.

     

    
      
         

      

      
        40

        
          

        

      

      
         

      

    

     

    The
      following terms shall have the meanings defined for such terms in the Sections
      set forth below:

     

    
      	 	
              Term

            	 	
              Section

            
	 	 	 	 
	 	
              Agreement

            	 	
              Preamble

            
	 	
              Asset
                Allocation 

            	 	
              5.7(a)

            
	 	
              Assumed
                Liabilities

            	 	
              1.2

            
	 	
              Cap

            	 	
              7.2(g)

            
	 	
              Claim

            	 	
              7.2(e)

            
	 	
              Claim
                Notice

            	 	
              7.2(e)

            
	 	
              Closing

            	 	
              2.1

            
	 	
              Closing
                Date

            	 	
              2.1

            
	 	
              Company

            	 	
              Preamble

            
	 	
              Company
                Competitive Activities

            	 	
              5.1(a)

            
	 	
              Company
                Indemnitees

            	 	
              7.2(b)

            
	 	
              Company
                Restricted Persons

            	 	
              5.1(a)

            
	 	
              Contributed
                Assets

            	 	
              1.1

            
	 	
              Contributed
                Assets Confidential Information

            	 	
              5.1(a)

            
	 	
              Damages

            	 	
              7.2(a)

            
	 	
              Dispute
                Notice

            	 	
              9.15

            
	 	
              Disputes

            	 	
              9.15

            
	 	
              Electrostatic
                Patent

            	 	
              5.9

            
	 	
              Equity
                Consideration

            	 	
              1.5

            
	 	
              Excluded
                Liabilities

            	 	
              1.3

            
	 	
              InCard

            	 	
              Preamble

            
	 	
              InCard
                Common Stock

            	 	
              1.5

            
	 	
              InCard
                Competitive Activities

            	 	
              5.1(b)

            
	 	
              InCard
                Indemnitees

            	 	
              7.2(a)

            
	 	
              InCard
                Preferred Stock

            	 	
              4.2

            
	 	
              InCard
                Restricted Persons

            	 	
              5.1(b)

            
	 	
              InCard
                SEC Filings

            	 	
              4.6(a)

            
	 	
              JDA
                Termination

            	 	
              1.4

            
	 	
              Joint
                Development Agreement

            	 	
              Recital
                A

            
	 	
              Mark

            	 	
              3.10(a)

            
	 	
              NagraID

            	 	
              2.2(a)

            
	 	
              nC
                AudioCard Assets

            	 	
              5.10(a)

            
	 	
              nC
                AudioCard Confidential Information

            	 	
              5.1(b)

            
	 	
              nC
                DisplayCard

            	 	
              Recital
                A

            
	 	
              Principal
                Providers

            	 	
              5.8(a)

            
	 	
              Principal
                Shareholder

            	 	
              Preamble

            
	 	
              Proposed
                Acquisition Transaction

            	 	
              5.4

            
	 	
              Restricted
                Period

            	 	
              5.1(a)

            
	 	
              ROFR
                Notice

            	 	
              5.10(a)

            
	 	
              RSA

            	 	
              1.1(d)

            
	 	
              Sale
                Offer

            	 	
              5.10(a)

            
	 	
              SmartDisplayer

            	 	
              1.1(c)

            
	 	
              Stock
                Value

            	 	
              1.5

            
	 	
              Transfer
                Taxes

            	 	
              1.7

            
	 	
              VASCO

            	 	
              1.2(b)

            

    

     

    
      
         

      

      
        41

        
          

        

      

      
         

      

    

     

    9.2.
       Notices.
      All
      notices, requests, demands, Claims and other communications which are required
      or may be given under this Agreement shall be in writing and shall be deemed
      to
      have been duly given when received if personally delivered; when transmitted
      if
      transmitted by confirmed facsimile with a copy sent by another means specified
      herein; the Business Day after it is sent if sent for next day delivery to
      a
      domestic address by recognized overnight delivery service (e.g. Federal
      Express); and five Business Days after the date mailed by certified or
      registered mail, postage prepaid, if sent by certified or registered mail,
      return receipt requested. In each case notice shall be sent to:

    

    
      	 	
              If
                to the Principal Shareholder, addressed to:

            
	 	 
	 	
              Prosodie
                S.A.

            
	 	
              150,
                rue Galliéni

            
	 	
              92641
                Boulogne Cedex

            
	 	
              France

            
	 	
              Attn:
                André Saint-Mleux

            
	 	
              Telephone:
                +33 (0) 1 46 84 11 64

            
	 	
              Fax:
                +33 (0) 1 46 84 02 26

            
	 	 
	 	
              With
                a copy to:

            
	 	 
	 	
              Baker
                & McKenzie

            
	 	
              32,
                avenue Kléber

            
	 	
              BP
                2112

            
	 	
              75771
                Paris Cedex 16

            
	 	
              France

            
	 	
              Attn:
                Alyssa Gallot

            
	 	
              Telephone:
                +33 (0) 1 44 17 53 61

            
	 	
              Fax:
                +33 (0) 1 44 17 75 03

            
	 	 
	 	
              If
                to the Company, addressed to:

            
	 	 
	 	
              nCryptone
                S.A.

            
	 	
              150,
                rue Galliéni

            
	 	
              92641
                Boulogne Cedex

            
	 	
              France

            
	 	
              Attn:
                André Saint-Mleux

            
	 	
              Telephone:
                +33 (0) 1 46 84 11 64

            
	 	
              Fax:
                +33 (0) 1 46 84 02 26

            

    

     

    
      
         

      

      
        42

        
          

        

      

      
         

      

    

     

    
      	 	 
	 	
              With
                a copy to:

            
	 	 
	 	
              Baker
                & McKenzie

            
	 	
              32,
                avenue Kléber

            
	 	
              BP
                2112

            
	 	
              75771
                Paris Cedex 16

            
	 	
              France

            
	 	
              Attn:
                Alyssa Gallot

            
	 	
              Telephone:
                +33 (0) 1 44 17 53 61

            
	 	
              Fax:
                +33 (0) 1 44 17 75 03

            
	 	 
	 	
              If
                to InCard, addressed to:

            
	 	 
	 	
              Innovative
                Card Technologies, Inc.

              11601
                Wilshire Blvd., Suite 2150

            
	 	
              Los
                Angeles, California 90025

              Attn:                   
                Bennet Tchaikovsky, CPA, Esq.

            
	 	
              Telephone:         (310)
                312-1122

            
	 	
              Fax:                     
                (310) 496-2693

            
	 	 
	 	
              With
                a copy to:

            
	 	 
	 	
              Latham
                & Watkins LLP

            
	 	
              633
                West Fifth Street, Suite 4000

            
	 	
              Los
                Angeles, California 90071

            
	 	
              Attn:
                David M. Hernand, Esq.

            
	 	
              Telephone:
                (213) 485-1234

            
	 	
              Fax:
                (213) 891-8763

            

    

     

    or
      to
      such other place and with such other copies as either party may designate as
      to
      itself by written notice to the others.

     

    9.3.
       Rules
      of Construction.
      The
      parties agree that they have been represented by counsel during the negotiation
      and execution of this Agreement and, therefore, waive the application of any
      law, regulation, holding or rule of construction providing that ambiguities
      in
      any agreement or other document will be construed against the party drafting
      such agreement or document.

     

    9.4.
       Titles.
      The
      titles, captions or headings of the Articles and Sections herein are inserted
      for convenience of reference only and are not intended to be a part of or to
      affect the meaning or interpretation of this Agreement.

     

    9.5.
       Entire
      Agreement.
      This
      Agreement, including the Exhibits and Annexes attached hereto, the Disclosure
      Schedules and the other agreements, documents and written understandings
      referred to herein or otherwise entered into or delivered by the parties hereto
      on the date of this Agreement (including without limitation the Ancillary
      Agreements), constitute the entire agreement and understanding and supersede
      all
      other prior covenants, agreements, undertakings, obligations, promises,
      arrangements, communications, representations and warranties, whether oral
      or
      written, by any party hereto or by any director, officer, employee, agent,
      Affiliate or Representative of any party hereto. There are no covenants,
      agreements, undertakings or obligations with respect to the subject matter
      of
      this Agreement other than those expressly set forth or referred to herein or
      in
      other agreements, documents and written understandings entered into or delivered
      by the parties hereto on the date of this Agreement, and no representations
      or
      warranties of any kind or nature whatsoever, express or implied, including
      any
      implied warranties of merchantability or fitness for a particular purpose,
      are
      made or shall be deemed to be made herein by the parties hereto except those
      expressly made herein.

     

    
      
         

      

      
        43

        
          

        

      

      
         

      

    

    9.6.
       Assignment.
      Neither
      this Agreement nor any of the rights or obligations hereunder may be assigned
      by
      the Principal Shareholder or the Company without the prior written consent
      of
      InCard, or assigned by InCard without the prior written consent of the Principal
      Shareholder and the Company, except that InCard may, without such consent but
      with prior notice to the Principal Shareholder and the Company, assign its
      rights hereunder; provided
      that, if
      such assignment by InCard is made prior to the Closing, then such assignment
      shall require the prior written consent of the Principal Shareholder and the
      Company unless such assignee is an Affiliate of InCard ultimately controlled
      by
      substantially the same Persons who own InCard; provided,
      further,
      that
      such assignee executes a joinder to and agrees to be bound by this Agreement.
      No
      such assignment shall release the assignor from any of its obligations
      hereunder.

     

    9.7.
       Amendment
      or Modification.
      This
      Agreement may not be amended except in an instrument in writing signed on behalf
      of each of the parties hereto. No amendment, supplement, modification or waiver
      of this Agreement shall be binding unless executed in writing by the party
      to be
      bound thereby.

     

    9.8.
       Waiver.
      Except
      where a specific period for action or inaction is provided herein, neither
      the
      failure nor any delay on the part of any party in exercising any right, power
      or
      privilege under this Agreement or the documents referred to in this Agreement
      shall operate as a waiver thereof, nor shall any waiver on the part of any
      party
      of any such right, power or privilege, nor any single or partial exercise of
      any
      such right, power or privilege, preclude any other or further exercise thereof
      or the exercise of any other such right, power or privilege. The failure of
      a
      party to exercise any right conferred herein within the time required shall
      cause such right to terminate with respect to the transaction or circumstances
      giving rise to such right, but not to any such right arising as a result of
      any
      other transactions or circumstances.

     

    9.9.
       Severability.
      If any
      term or other provision of this Agreement is invalid, illegal or incapable
      of
      being enforced as a result of any rule of law or public policy, all other terms
      and other provisions of this Agreement shall nevertheless remain in full force
      and effect so long as the economic or legal substance of the transactions
      contemplated by this Agreement is not affected in any manner materially adverse
      to any party. Upon such determination that any term or other provision is
      invalid, illegal or incapable of being enforced, the parties hereto shall
      negotiate in good faith to modify this Agreement so as to effect the original
      intent of the parties as closely as possible in an acceptable manner to the
      end
      that the transactions contemplated by this Agreement are fulfilled to the
      greatest extent possible.

     

     

    
      
         

      

      
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    9.10.
       Burden
      and Benefit.
      This
      Agreement shall be binding upon and shall inure to the benefit of, the parties
      hereto and their respective successors and permitted assigns. This Agreement
      and
      all of its conditions and provisions are for the sole and exclusive benefit
      of
      the parties hereto and their respective successors and permitted assigns, and
      nothing in this Agreement, express or implied, is intended to confer upon any
      Person other than the parties hereto any rights or remedies of any nature
      whatsoever under or by reason of this Agreement or any provision hereof;
provided,
      however,
      that
      any Person that is not a party to this Agreement but, by the terms of
Article
      VII,
      is
      entitled to indemnification, shall be considered a third-party beneficiary
      of
      this Agreement, with full rights of enforcement as though such Person was a
      signatory to this Agreement.

     

    9.11.
       Governing
      Law.
      This
      Agreement (and any claim or controversy arising out of or relating to this
      Agreement) shall be governed by the law of the State of New York without regard
      to conflict of law principles that would result in the application of any law
      other than the law of the State of New York.

     

    9.12.
       Consent
      to Jurisdiction.
      Subject
      to Section
      9.15
      hereof,
      each party to this Agreement hereby irrevocably and unconditionally submits,
      for
      itself and its property, to the exclusive jurisdiction of any New York State
      court, or Federal court of the United States of America, sitting in New York,
      and any appellate court from any thereof, (i) should emergency relief be
      required, (ii) for the purposes of enforcing any judgment rendered pursuant
      to
      the foregoing, (iii) for the purposes of enforcing any arbitration award under
      Section
      9.15
      hereof
      or (iv) in the event a Dispute is determined to be unarbitrable pursuant to
      an
      arbitration decision rendered in application of Section
      9.15
      hereof,
      and each of the parties hereby irrevocably and unconditionally (a) agrees
      not to commence any such action or proceeding except in such courts,
      (b) agrees that any claim in respect of any such action or proceeding may
      be heard and determined in such New York State court or, to the extent permitted
      by law, in such Federal court, (c) waives, to the fullest extent it may
      legally and effectively do so, any objection which it may now or hereafter
      have
      to the laying of venue of any such action or proceeding in any such New York
      State or Federal court, and (d) waives, to the fullest extent permitted by
      law, the defense of an inconvenient forum to the maintenance of such action
      or
      proceeding in any such New York State or Federal court. Each of the parties
      hereto agrees that a final judgment in any such action or proceeding shall
      be
      conclusive and may be enforced in other jurisdictions by suit on the judgment
      or
      in any other manner provided by law. Each party to this Agreement irrevocably
      consents to service of process in the manner provided for notices in
Section 9.2.
      Nothing
      in this Agreement will affect the right of any party to this Agreement to serve
      process in any other manner permitted by law.

    9.13.
       Waiver
      of Trial by Jury.
      EACH
      PARTY TO THIS AGREEMENT ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH
      MAY
      ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
      ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
      RIGHT
      IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
      INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE
      AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED
      HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO
      REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
      OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION,
      SEEK
      TO ENFORCE EITHER OF SUCH WAIVERS, (B) IT UNDERSTANDS AND HAS CONSIDERED
      THE IMPLICATIONS OF SUCH WAIVERS, (C) IT MAKES SUCH WAIVERS VOLUNTARILY,
      AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
      THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.13.

     

    
      
         

      

      
        45

        
          

        

      

      
         

      

    

     

    9.14.
       Legal
      Fees.
      If any
      party to this Agreement brings an action to enforce its rights under this
      Agreement, the prevailing party shall be entitled to recover its costs and
      expenses, including without limitation reasonable legal fees, incurred in
      connection with such action, including any appeal of such action.

     

    9.15.
       Arbitration.
      It is
      understood and agreed between the parties hereto that if the transactions
      contemplated by this Agreement are consummated, from and after the Closing
      Date,
      any and all claims, grievances, demands, controversies, causes of action or
      disputes of any nature whatsoever (including, but not limited to, tort and
      contract claims, and claims upon any law, statute, order, or regulation)
      (hereinafter “Disputes”),
      arising out of, in connection with, or in relation to this Agreement or
      questions of arbitrability under this Agreement, shall be resolved pursuant
      to
      the following procedures:

    (i) Any
      party
      may send another party or parties written notice identifying the matter in
      dispute and invoking the procedures of this Section (the “Dispute
      Notice”).
      Within 14 days from delivery of the Dispute Notice, each party involved in
      the
      dispute shall meet at a mutually agreed location in New York City, New York,
      for
      the purpose of determining whether they can resolve the dispute themselves
      by
      written agreement.

     

    (ii) All
      Disputes arising under this Agreement which are not settled amicably as
      specified above shall be referred to and finally determined by arbitration
      in
      accordance with the Rules of Arbitration of the International Chamber of
      Commerce as in force at the time when initiating the arbitration. The
      arbitration panel shall consist of three arbitrators. The Principal Shareholder
      and the Company shall select one arbitrator and InCard shall select one
      arbitrator. The two arbitrators selected by the parties shall mutually agree
      upon the third arbitrator. The place of arbitration shall be New York, New
      York.
      The language to be used in the arbitration proceedings shall be English. The
      arbitration decision shall be final and binding upon the parties and the parties
      agree that any award granted pursuant to such decision may be entered forthwith
      in any court of competent jurisdiction.

     

    
      
         

      

      
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    9.16.
       Specific
      Performance.
      Each of
      the parties hereto acknowledges and agrees that the other parties would be
      damaged irreparably, and in a manner for which monetary damages would not be
      an
      adequate remedy, in the event any of the provisions of this Agreement are not
      performed in accordance with its specific terms or otherwise are breached.
      Accordingly, each of the parties hereto agrees that the other parties shall
      be
      entitled to an injunction or injunctions to prevent breaches of the provisions
      of this Agreement and to enforce specifically this Agreement and the terms
      and
      provisions hereof in any action instituted in any court of the United States
      or
      any state thereof having jurisdiction over the parties and the matter, in
      addition to any other remedy to which they may be entitled, at law or in
      equity.

     

    9.17.
       Cumulative
      Remedies.
      All
      rights and remedies of either party hereto are cumulative of each other and
      of
      every other right or remedy such party may otherwise have at law or in equity,
      and the exercise of one or more rights or remedies shall not prejudice or impair
      the concurrent or subsequent exercise of other rights or remedies.

     

    9.18.
       Expenses.
      Except
      as otherwise expressly provided herein, whether or not the transactions
      contemplated herein are consummated, all costs and expenses incurred in
      connection with this Agreement and the transactions contemplated herein shall
      be
      paid by the party incurring such expenses.

    9.19.
       Representation
      by Counsel.
      Each
      party hereto represents and agrees with each other that it has been represented
      by or had the opportunity to be represented by, independent counsel of its
      own
      choosing, and that it has had the full right and opportunity to consult with
      its
      respective attorney(s), that to the extent, if any, that it desired, it availed
      itself of this right and opportunity, that it or its authorized officers (as
      the
      case may be) have carefully read and fully understand this Agreement in its
      entirety and have had it fully explained to them by such party’s respective
      counsel, that each is fully aware of the contents thereof and its meaning,
      intent and legal effect, and that it or its authorized officer (as the case
      may
      be) is competent to execute this Agreement and has executed this Agreement
      free
      from coercion, duress or undue influence.

     

    9.20.
       Execution
      and Counterparts.
      This
      Agreement may be executed in one or more counterparts, each of which when
      executed shall be deemed an original and all of which together shall constitute
      one and the same instrument. The parties agree that this Agreement shall be
      legally binding upon the electronic transmission, including by facsimile or
      email, by each party of a signed signature page to this Agreement to the other
      party.

     

    [Signature
      Page Follows]

     

    
      
         

      

      
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    IN
      WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
      executed on their respective behalf, by their respective officers thereunto
      duly
      authorized, all as of the day and year first set forth above.

     

    
      	 	
              INNOVATIVE
                CARD TECHNOLOGIES, INC.

            
	 	 
	 	
              By:                                                                    
                

            
	 	
              Name:

            
	 	
              Title:

            
	 	 
	 	 
	 	
              nCRYPTONE,
                S.A.

            
	 	 
	 	 
	 	 
	 	
              
                By:                                                                    
                  

              

            
	 	
              Name:

            
	 	
              Title:

            
	 	 
	 	 
	 	
              PROSODIE,
                S.A.

            
	 	 
	 	 
	 	 
	 	
              
                By:                                                                    
                  

              

            
	 	
              Name:

            
	 	
              Title:

            

    

    

     

    
      
         

      

      
        S-1

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