Document:

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                                                                   Exhibit 10.28

                                  LANGER, INC.
                            2001 STOCK INCENTIVE PLAN
                             STOCK OPTION AGREEMENT

                  STOCK OPTION AGREEMENT (the "Agreement") made as of the 15th
day of April, 2002, by and between Langer, Inc., a New York corporation, having
its principal office at 450 Commack Road, Deer Park, New York 11729 (the
"Company"), and Anthony J. Puglisi, an individual residing at 15 Carriage Court,
Muttontown, New York 11791 (the "Optionee"). Capitalized terms not defined
herein shall have the meanings ascribed to them in the Company's 2001 Stock
Incentive Plan.

                  WHEREAS, the Company has heretofore adopted the Langer, Inc.
2001 Stock Incentive Plan (the "Plan") for the benefit of certain employees,
officers, directors, consultants, independent contractors and advisors of the
Company or any Parent, Affiliate or Subsidiary of the Company, which Plan has
been approved by the Company's stockholders; and

                  WHEREAS, the Optionee is a valued and trusted employee of the
Company and/or one of its Subsidiaries and the Company believes it to be in the
best interests of the Company to secure the future services of the Optionee by
providing the Optionee with an inducement to remain an employee and/or
consultant of the Company and/or one of its Subsidiaries through the grant of an
option to acquire an ownership interest in the Company.

                  NOW, THEREFORE, the parties agree as follows:

         1. OPTION GRANT. Subject to the provisions hereinafter set forth and
the terms and conditions of the Plan, the Company hereby grants to the Optionee,
as of April 15, 2002 (the "Grant Date"), the right, privilege and option (the
"Option") to purchase all or any part of an aggregate of ninety thousand
(90,000) shares (the "Shares") of common stock of the Company, par value $.01
per share (the "Common Stock"), such number being subject to adjustment as
provided in the Plan. This Option is intended to qualify as an "incentive stock
option" ("ISO") within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"), to the extent permitted under Section 422 of
the Code.

         2. EXERCISE PRICE. Subject to adjustment as provided in the Plan, the
purchase price per Share of Common Stock as to which this Option is exercised
(the "Exercise Price") shall be eight dollars and seven cents ($8.07), the Fair
Market Value of such Shares on the Grant Date.

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         3. EXERCISE OF OPTION. The term of the Option shall be for a period of
ten (10) years from the Grant Date and shall expire without further action being
taken at 5:00 p.m., April 15, 2012, subject to earlier termination as provided
in Section 5 hereof (the "Expiration Date"). The Option may be exercised at any
time, or from time to time, prior to the Expiration Date (or such additional
period as may be permitted under the Plan) as to any part or all of the Shares
covered by the Option, pursuant to the vesting schedule contained in Section 4.1
hereof; provided, however, that the Option may not be exercised as to less than
one hundred (100) shares, unless it is exercised as to all Shares as to which
this Option is then exercisable.

         4.       VESTING SCHEDULE.

                  4.1 The Shares into which this Option is exercisable shall
vest in accordance with the following schedule:

                                                                Number of
                  Vesting Date                              Shares Exercisable
                  ------------                              ------------------

                  April 15, 2003                              20,000 Shares
                  April 15, 2004                              20,000 Shares
                  April 15, 2005                              50,000 Shares

                  Notwithstanding the forgoing vesting schedule, in event of
termination of employment (i) by the Company other than for Cause, death, or
Disability or (ii) by the Optionee voluntarily for Good Reason (as such
capitalized terms are defined in the Optionee's employment agreement with the
Company), all of the Options which are not then vested (or such portion thereof
as the Optionee may elect) shall immediately vest.

                  4.2 Notwithstanding the vesting schedule set forth in Section
4.1 hereof, such vesting schedule may be accelerated by the Board of Directors
or the Committee in their sole decision.

                  4.3 Shares that are vested pursuant to the schedule set forth
in Section 4.1 hereof are "Vested Shares." Shares that are not vested pursuant
to the schedule set forth in Section 4.1 hereof are "Unvested Shares."

         5.       TERMINATION.

                  5.1 Termination for Any Reason Except Death, Disability or
Cause. If Optionee is Terminated for any reason (including if the Optionee
voluntarily terminates employment by the Company) other than Optionee's death,
Disability or Cause, then this Option, to the extent (and only to the extent)
that it is vested in accordance with the schedule set forth in Section 4.1
hereof on the Termination Date, may be exercised by Optionee no later than three
(3) months after the Termination Date, (or such longer time period not exceeding
five (5) years as may be determined by the Committee, with any

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exercise beyond three (3) months after the Termination Date deemed to be a
NQSO), but in any event no later than the Expiration Date.

                  5.2 Termination Because of Death or Disability. If Optionee is
Terminated because of death or Disability of Optionee, then this Option, to the
extent that it is vested in accordance with the schedule set forth in Section
4.1 hereof on the Termination Date, may be exercised by Optionee (or Optionee's
legal representative or authorized assignee) no later than twelve (12) months
after the Termination Date (or such longer time period not exceeding five (5)
years as may be determined by the Committee, with any such exercise beyond
twelve (12) months after the Termination Date when the Termination is for
Participant's death or Disability, deemed to be a NQSO), but in any event no
later than the Expiration Date. Any exercise after three months after the
Termination Date when the Termination is for any reason other than Optionee's
disability, within the meaning of Section 22(e)(3) of the Code, shall be deemed
to be the exercise of a nonqualified stock option.

                  5.3 Termination for Cause. If an Optionee is terminated for
Cause, neither the Optionee, the Optionee's estate nor such other person who may
then hold the Option shall be entitled to exercise any Option with respect to
any Shares whatsoever, after termination of service, whether or not after
termination of service the Optionee may receive payment from the Company or
Subsidiary for vacation pay, for services rendered prior to termination, for
services rendered for the day on which termination occurs, for salary in lieu of
notice, or for any other benefits. In making such determination, the Committee
shall give the Optionee an opportunity to present to the Committee evidence on
his behalf. For the purpose of this paragraph, termination of service shall be
deemed to occur on the date when the Company dispatches notice or advice to the
Optionee that Optionee's service is terminated.

         For purposes of this Agreement, Termination for Cause means that the
Company has cause to terminate an Optionee's employment or service under any
existing employment, consulting or any other agreement between the Optionee and
the Company or the Company's Subsidiary or Affiliate or, if such an agreement
does not exist, upon finding that (i) the Optionee has ceased to perform his
duties (other than as a result of his incapacity due to physical or mental
illness or injury), which constitutes an intentional or extended neglect of
his/her duties, (ii) the Optionee has engaged or is about to engage in conduct
materially injurious to the Company or one the Company's Subsidiaries or
Affiliates or (iii) the Optionee has been convicted of a misdemeanor carrying a
jail sentence of six months or more or a felony.

                  5.4 No Obligation to Employ. NOTHING IN THE PLAN OR THIS
AGREEMENT SHALL CONFER ON OPTIONEE ANY RIGHT TO CONTINUE IN THE EMPLOY OF, OR
OTHER RELATIONSHIP WITH, THE COMPANY OR ANY SUBSIDIARY OF THE COMPANY, OR LIMIT
IN ANY WAY THE RIGHT OF THE COMPANY OR ANY AFFILIATE OR SUBSIDIARY OF THE
COMPANY TO TERMINATE OPTIONEE'S EMPLOYMENT OR OTHER RELATIONSHIP AT ANY TIME,
WITH OR WITHOUT CAUSE. THIS AGREEMENT DOES NOT CONSTITUTE AN EMPLOYMENT
CONTRACT. THIS

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AGREEMENT DOES NOT GUARANTEE EMPLOYMENT FOR THE LENGTH OF TIME OF THE VESTING
SCHEDULE OR FOR ANY PORTION THEREOF.

         6.       MANNER OF EXERCISE.

                  6.1 Stock Option Exercise Agreement. To exercise this Option,
Optionee (or in the case of exercise after Optionee's death, Optionee's
executor, administrator, heir or legatee, as the case may be) must deliver to
the Company an executed stock option exercise agreement in the form attached
hereto as Exhibit A, or, at the Committee's sole discretion, in such other form
as may be approved by the Company from time to time (the "Exercise Agreement"),
which shall set forth, inter alia, Optionee's election to exercise this Option,
the number of shares being purchased, any restrictions imposed on the Shares and
any representations, warranties and agreements regarding Optionee's investment
intent and access to information as may be required by the Company to comply
with applicable securities laws. If someone other than Optionee exercises this
Option, then such person must submit documentation reasonably acceptable to the
Company that such person has the right to exercise this Option.

                  6.2 Limitations on Exercise. This Option may not be exercised
unless such exercise is in compliance with all applicable federal and state
securities laws, as they are in effect on the date of exercise.

                  6.3 Payment. The Exercise Agreement shall be accompanied by
full payment of the aggregate Exercise Price for the Shares being purchased (a)
in cash (by check), or (b) provided that a public market for the Company's stock
exists: (1) through a "same day sale" commitment from Optionee and a
broker-dealer that is a member of the National Association of Securities Dealers
(an "NASD Dealer") whereby Optionee irrevocably elects to exercise this Option
and to sell a portion of the Shares so purchased to pay for the aggregate
Exercise Price and whereby the NASD Dealer irrevocably commits upon receipt of
such Shares to forward the aggregate Exercise Price directly to the Company; or
(2) through a "margin" commitment from Optionee and an NASD Dealer whereby
Optionee irrevocably elects to exercise this Option and to pledge the Shares so
purchased to the NASD Dealer in a margin account as security for a loan from the
NASD Dealer in the amount of the aggregate Exercise Price, and whereby the NASD
Dealer irrevocably commits upon receipt of such Shares to forward the aggregate
Exercise Price directly to the Company. Notwithstanding the foregoing, the Board
of Directors or the Committee, in their sole discretion, may allow for the full
payment of the aggregate Exercise Price for the Shares being purchased to be
made by any other method which is in accordance with the provisions of the Plan.

                  6.4 Tax Withholding. Prior to the issuance of the Shares upon
exercise of this Option, Optionee must pay or provide for any applicable federal
or state withholding obligations of the Company. If the Committee permits,
Optionee may provide for payment of withholding taxes upon exercise of this
Option by requesting that the Company retain Shares with a Fair Market Value
equal to the minimum amount of

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taxes required to be withheld. In such case, the Company shall issue the net
number of Shares to the Optionee by deducting the Shares retained from the
Shares issuable upon exercise.

                  6.5 Issuance of Shares. Provided that the Exercise Agreement
and payment are in form and substance satisfactory to the Company, and upon the
Company's request counsel for the Company, the Company shall issue the Shares
registered in the name of Optionee, Optionee's authorized assignee, or
Optionee's legal representative, and shall deliver certificates representing the
Shares with the appropriate legends affixed thereto.

         7. NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. To the extent
this Option is an ISO, if Optionee sells or otherwise disposes of any of the
Shares acquired pursuant to the ISO on or before the later of (a) the date two
(2) years after the Date of Grant, and (b) the date one (1) year after transfer
of such Shares to Optionee upon exercise of this Option, then Optionee shall
immediately notify the Company in writing of such disposition.

         8. COMPLIANCE WITH LAWS AND REGULATIONS. The exercise of this Option
and the issuance and transfer of Shares to the Optionee shall be subject to
compliance by the Company and Optionee with (i) all applicable requirements of
federal and state securities laws, (ii) all applicable requirements of any stock
exchange on which the Company's Common Stock may be listed and (iii) any
applicable policy of the Company regarding the trading of securities of the
Company, each at the time of such issuance and transfer. Optionee understands
that the Company is under no obligation to register or qualify the Shares with
the SEC, any state securities commission or any stock exchange to effect such
compliance.

         9. NONTRANSFERABILITY OF OPTION. This Option may not be transferred in
any manner other than by will or by the laws of descent and distribution. During
the lifetime of Optionee, the Option shall be exercisable only by Optionee
personally or by the Optionee's legal representative. The terms of this Option
shall be binding upon the executors, administrators, successors and assigns of
Optionee.

         10. PRIVILEGES OF STOCK OWNERSHIP. Optionee shall not have any of the
rights of a stockholder with respect to any Shares until the Shares are issued
to Optionee.

         11. INTERPRETATION. Any dispute regarding the interpretation of this
Agreement shall be submitted by Optionee or the Company to the Committee for
review. The resolution of such a dispute by the Committee shall be final and
binding on the Company and Optionee.

         12. ENTIRE AGREEMENT. The Plan is incorporated herein by reference.
This Agreement and the Plan and the Exercise Agreement constitute the entire
agreement

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and understanding of the parties hereto with respect to the subject matter
hereof and supersede all prior understandings and agreements with respect to
such subject matter.

         13. NOTICES. Any notice required to be given or delivered to the
Company under the terms of this Agreement shall be in writing and addressed to
the Corporate Secretary of the Company at its principal corporate offices. Any
notice required to be given or delivered to Optionee shall be in writing and
addressed to Optionee at the address indicated above or to such other address as
such party may designate in writing from time to time to the Company. All
notices shall be deemed to have been given or delivered upon: personal delivery;
three (3) days after deposit in the United States mail by certified or
registered mail (return receipt requested); one (1) business day after deposit
with any return receipt express courier (prepaid); or one (1) business day after
transmission by facsimile.

         14. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Agreement. This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer set forth herein, this Agreement shall be binding upon
Optionee and Optionee's heirs, executors, administrators, legal representatives,
successors and assigns.

         15. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, applicable to agreements made
and to be performed entirely within such state, other than conflict of laws
principles thereof directing the application of any law other than that of New
York.

         16. ACCEPTANCE. Optionee hereby acknowledges receipt of a copy of the
Plan and this Agreement. Optionee has read and understands the terms and
provisions of the Plan, and accepts this Option subject to all the terms and
conditions of the Plan and this Agreement. This Option is subject to, and the
Company and the Optionee agree to be bound by, all of the terms and conditions
of the Plan under which this Option was granted, as the same shall have been
amended, restated or otherwise modified from time to time in accordance with the
terms thereof. Pursuant to said Plan, the Board of Directors of the Company, or
the Committee, is vested with final authority to interpret and construe the Plan
and this Option, and its present form is available for inspection during the
business hours by the Optionee or other persons entitled to exercise this Option
at the Company's principal office. Optionee acknowledges that there may be
adverse tax consequences upon exercise of this Option or disposition of the
Shares and that the Company has advised Optionee to consult a tax advisor prior
to such exercise or disposition.

         17.      COVENANTS OF THE OPTIONEE

                  The Optionee agrees (and for any heir, executor,
administrator, legal representative, successor, or assignee hereby agrees), as a
condition upon exercise of the Option granted hereunder:

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                  (a) Upon the request of the Company, to execute and deliver a
certificate, in form satisfactory to the Company, certifying that the Shares
being acquired upon exercise of the Option are for such person's own account for
investment only and not with any view to or present intention to resell or
distribute the same. The Optionee hereby agrees that the Company shall have no
obligation to deliver the Shares issuable upon exercise of the Option unless and
until such certificate shall be executed and delivered to the Company by the
Optionee or any successor.

                  (b) Upon the request of the Company, to execute and deliver a
certificate, in form satisfactory to the Company, certifying that any subsequent
resale or distribution of the Shares by the Optionee shall be made only pursuant
to either (i) a Registration Statement on an appropriate form under the
Securities Act of 1933, as amended (the "Securities Act"), which Registration
Statement has become effective and is current with regard to the Shares being
sold, or (ii) a specific exemption from the registration requirements of the
Securities Act, but in claiming such exemption the Optionee shall, prior to any
offer of sale or sale of such Shares, obtain a prior favorable written opinion
of counsel, in form and substance satisfactory to counsel for the Company, as to
the application of such exemption thereto. The foregoing restriction contained
in this subparagraph (b) shall not apply to (i) issuances by the Company so long
as the Shares being issued are registered under the Securities Act and a
prospectus in respect thereof is current, or (ii) re-offerings of Shares by
Affiliates of the Company (as defined in Rule 405 or any successor rule or
regulation promulgated under the Securities Act) if the Shares being re-offered
are registered under the Securities Act and a prospectus in respect thereof is
current.

                  (c) That during the term of the Optionee's employment with the
Company, the Optionee shall not sell, assign, or otherwise transfer any of the
Shares received upon exercise of the Option without the prior written consent of
the Board. Prior to any such proposed sale, assignment, or other transfer, the
Optionee shall notify the Board in writing of the terms thereof. Upon the
consent of the Board, the Optionee may sell, assign, or transfer such Shares in
accordance with such terms within the thirty (30) days following the grant of
such consent.

                  (d) That certificates evidencing Shares purchased upon
exercise of the Option shall bear a legend, in form satisfactory to counsel for
the Company, manifesting the investment intent and resale restrictions of the
Optionee described in this Section.

                  (e) That upon exercise of the Option granted hereby, or upon
sale of the Shares purchased upon exercise of the Option, as the case may be,
the Company shall have the right to require the Optionee to remit to the
Company, or in lieu thereof, the Company may deduct, an amount of shares or cash
sufficient to satisfy federal, state or local withholding tax requirements, if
any, prior to the delivery of any certificate for such Shares or thereafter, as
appropriate.

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         18.      OBLIGATIONS OF THE COMPANY

                  18.1 Upon the exercise of this Option in whole or in part, the
Company shall cause the purchased Shares to be issued only when it shall have
received the payment of the aggregate Exercise Price in accordance with the
terms of this Agreement.

                  18.2 The Company shall cause certificates for the Shares as to
which the Option shall have been exercised to be registered in the name of the
person or persons exercising the Option, which certificates shall be delivered
by the Company to the Optionee only against payment of the aggregate Exercise
Price in accordance with the terms of this Agreement for the portion of the
Option exercised.

                  18.3 In the event that the Optionee shall exercise this Option
with respect to less than all of the Shares of Common Stock that may be
purchased under the terms hereof, the Company shall issue to the Optionee a new
Option, duly executed by the Company and the Optionee, in form and substance
identical to this Option, for the balance of Shares of Common Stock then
issuable pursuant to the terms of this Option.

                  18.4 Notwithstanding anything to the contrary contained
herein, neither the Company nor its transfer agent shall be required to issue
any fraction of a Share of Common Stock in connection with the exercise of this
Option, and the Company shall, upon exercise of this Option in whole or in part,
issue the largest number of whole Shares of Common Stock to which this Option is
entitled upon such full or partial exercise and shall return to the Optionee the
amount of the aggregate Exercise Price paid by the Optionee in respect of any
fractional Share.

                  18.5 The Company may endorse such legend or legends upon the
certificates for Shares issued to the Optionee pursuant to the Plan and may
issue such "stop transfer" instructions to its transfer agent in respect of such
Shares as, in its discretion, it determines to be necessary or appropriate to:
(i) prevent a violation of, or to perfect an exemption from, the registration
requirements of the Securities Act; (ii) implement the provisions of the Plan
and any agreement between the Company and the Optionee with respect to such
Shares; or (iii) permit the Company to determine the occurrence of a
disqualifying disposition, as described in Section 421(b) of the Code, of Shares
transferred upon exercise of an incentive stock option granted pursuant to this
Agreement and under the Plan.

                  18.6 The Company shall pay all issue or transfer taxes with
respect to the issuance or transfer of Shares to the Optionee, as well as all
fees and expenses necessarily incurred by the Company in connection with such
issuance or transfer, except fees and expenses which may be necessitated by the
filing or amending of a Registration Statement under the Securities Act, which
fees and expenses shall be borne by the Optionee, unless such Registration
Statement under the Securities Act has been filed by the Company for its own
corporate purposes (and the Company so states) in which event

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the Optionee shall bear only such fees and expenses as are attributable solely
to the inclusion of the Shares he or she receives in the Registration Statement.

                  18.7 All Shares issued following exercise of the Option and
the payment of the aggregate Exercise Price in accordance with the terms of this
Agreement therefor shall be fully paid and non-assessable to the extent
permitted by law.

         19.      MISCELLANEOUS

                  19.1 If the Optionee loses this Agreement representing the
Option granted hereunder, or if this Agreement is stolen or destroyed, the
Company shall, subject to such reasonable terms as to indemnity as the
Committee, in its sole discretion shall require, enter into a new option
agreement pursuant to which the Company shall issue a new Option, in form and
substance identical to this Option, and in substitution for, the Option so lost,
stolen or destroyed, and in the event this Agreement representing the Option
shall be mutilated, the Company shall, upon the surrender hereof, enter into a
new option agreement pursuant to which the Company shall issue a new Option, in
form and substance identical to this Option, and in substitution for, the Option
so mutilated.

                  19.2 This Agreement cannot be amended, supplemented or
changed, and no provision hereof can be waived, except by a written instrument
making specific reference to this Agreement and signed by the party against whom
enforcement of any such amendment, supplement, modification or waiver is sought.
A waiver of any right derived hereunder by the Optionee shall not be deemed a
waiver of any other right derived hereunder.

                  19.3 This Agreement may be executed in any number of
counterparts, but all counterparts will together constitute but one agreement.

                  19.4 In the event of a conflict between the terms and
conditions of this Agreement and the Plan, the terms and conditions of the Plan
shall govern.

                  19.5 Any dispute regarding the interpretation of this
Agreement shall be submitted by Optionee or the Company to the Committee for
review. The resolution of such a dispute by the Committee shall be final and
binding on the Company and Optionee.

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         IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in duplicate by its duly authorized representative and Optionee has
executed this Agreement in duplicate as of the Date of Grant.

                                        LANGER, INC.

                                        By:      /s/ Andrew H. Meyers
                                                 ---------------------
                                                 Name:  Andrew H. Meyers
                                                 Title: President

                                        OPTIONEE

                                         /s/ Anthony J. Puglisi
                                         ----------------------
                                         Anthony J. Puglisi

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                                    EXHIBIT A

                                  LANGER, INC.
                     2001 STOCK INCENTIVE PLAN (THE "PLAN")
                         STOCK OPTION EXERCISE AGREEMENT

         I hereby elect to purchase the number of shares of Common Stock of
Langer, Inc. (the "Company") as set forth below:

Optionee                            _________________________________________
Social Security Number:             _________________________________________
Address:                            _________________________________________
Type of Option:
         [ ] Incentive Stock Option [ ] Nonqualified Stock Option

Number of Shares Purchased:         _________________________________________
Exercise Price per Share:           _________________________________________
Aggregate Exercise Price:           _________________________________________
Date of Option:                     _________________________________________
Exact Name of Title to Shares:      _________________________________________

1. DELIVERY OF EXERCISE PRICE. Optionee hereby delivers to the Company the
Aggregate Exercise Price, to the extent permitted in the Option Agreement (the
"Option Agreement"), as follows (check as applicable and complete):

[ ]      in cash (by check) in the amount of $_____________________;

[ ]      by cancellation of indebtedness of the Company to Optionee in the
         amount of $___________________________________;

[ ]      by delivery of ______________________________ fully-paid, nonassessable
         and vested shares of the Common Stock of the Company owned by Optionee
         for at least six (6) months prior to the date hereof (and which have
         been paid for within the meaning of SEC Rule 144), or obtained by
         Optionee in the open public market, and owned free and clear of all
         liens, claims, encumbrances or security interests, valued at the
         current Fair Market Value of $____________________ per share;

[ ]      by tender of a promissory note in the principal amount of
         $________________________, secured by a Pledge Agreement of even date
         herewith (the par value of the Shares is tendered in cash (or by
         check));

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[ ]      by the waiver hereby of compensation due or accrued to Optionee for
         services rendered in the amount of $__________________________________

[ ]      through a "same-day-sale" commitment, delivered herewith, from Optionee
         and the NASD Dealer named therein, in the amount of
         $_______________________________; or

[ ]      through a "margin" commitment, delivered herewith from Optionee and
         the NASD Dealer named therein, in the amount of $_____________________

2. MARKET STANDOFF AGREEMENT. Optionee, if requested by the Company and an
underwriter of Common Stock (or other securities) of the Company, agrees not to
sell or otherwise transfer or dispose of any Common Stock (or other securities)
of the Company held by Optionee during the period requested by the managing
underwriter following the effective date of a registration statement of the
Company filed under the Securities Act, provided that all officers and directors
of the Company are also requested to enter into similar agreements. Such
agreement shall be in writing in a form satisfactory to the Company and such
underwriter. The Company is hereby entitled to impose stop-transfer instructions
with respect to the shares (or other securities) subject to the foregoing
restriction until the end of such period.

3. TAX CONSEQUENCES. OPTIONEE UNDERSTANDS THAT OPTIONEE MAY SUFFER ADVERSE TAX
CONSEQUENCES AS A RESULT OF OPTIONEE'S PURCHASE OR DISPOSITION OF THE SHARES.
OPTIONEE REPRESENTS THAT OPTIONEE HAS CONSULTED WITH ANY TAX CONSULTANT(S)
OPTIONEE DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR DISPOSITION OF THE
SHARES AND THAT OPTIONEE IS NOT RELYING ON THE COMPANY FOR ANY TAX ADVICE.

4. ENTIRE AGREEMENT. The Plan and Option Agreement are incorporated herein by
reference. This Exercise Agreement, the Plan and the Option Agreement constitute
the entire agreement and understanding of the parties and supersede in their
entirety all prior understandings and agreements of the Company and Optionee
with respect to the subject matter hereof, and are governed by New York law
applicable to contracts executed and to be fully performed therein, other than
conflict of laws principles thereof directing the application of any law other
than that of New York.

Date: _________________________             _________________________________
                                                 SIGNATURE OF OPTIONEE

                                       48<PAGE>

                                                                   EXHIBIT 10.22

                        SETTLEMENT AGREEMENT AND RELEASE

         The "parties" to this Settlement Agreement and Release ("Settlement
Agreement"), which was made and entered into as of April 15, 2002, are Image
Sensing Systems, Incorporated ("ISS"), Flow Traffic Limited ("Flow Traffic"),
Grove Place Limited ("Grove Place") and Anthony Gould ("Gould").

         WHEREAS, on or about December 1, 1998, ISS and Grove Place entered into
a Consultancy Agreement. A copy of the Consultancy Agreement is attached hereto
as Exhibit A. Pursuant to that Consultancy Agreement, Gould has acted as
Managing Director of ISS with a mission to create an Asian presence for products
developed or offered by ISS with a long term objective to develop a full line
products supply, service and integration business for the traffic and
transportation sector within Asia.

         WHEREAS, on or about February 11, 2002, Gould also agreed to serve as
President and Chief Executive Officer of ISS.

         WHEREAS, Gould is also a member of both the ISS Board of Directors and
the Flow Traffic Board of Directors.

         WHEREAS, the parties to this Settlement Agreement mutually desire to
terminate the Consultancy Agreement as provided herein, under the terms and
conditions provided herein. This Settlement Agreement shall supercede the
Consultancy Agreement under the terms and conditions provided herein.

         WHEREAS, ISS, Flow Traffic, Grove Place and Gould recognize the
inconvenience and expense of litigation, and wish to avoid such inconvenience
and expense. As a result, the parties hereto desire to terminate, compromise and
settle any and all claims each might have, pursuant to the following terms and
conditions.
<PAGE>
         NOW, THEREFORE, in consideration of the promises contained herein, the
parties agree as follows:

                              SETTLEMENT AGREEMENT

         1. Termination of Consultancy Agreement. All parties to this Settlement
Agreement mutually agree that this Settlement Agreement supercedes and replaces
the Consultancy Agreement. Moreover, pursuant to this Settlement Agreement, all
parties mutually agree to the termination of the Consultancy Agreement effective
immediately, with the sole exception that Grove Place and Gould's obligations
pursuant to Paragraph numbered 6 (Confidential Information) and Paragraph
numbered 11 (Post Termination Obligations of the Consultant) shall survive the
termination of this Consultancy Agreement in their entirety, and are hereby
incorporated into this Settlement Agreement and made a part hereof as if fully
set forth herein.

         2. Termination Payment to Gould. Pursuant to the following schedule,
ISS shall pay to Grove Place $178,000 ("Termination Pay"): $60,000 by April 19,
2002; $60,000 by September 1, 2002; and $58,000 by January 7, 2003. Said
Termination Pay is solely in connection with the termination of the Consultancy
Agreement. Termination Pay shall be paid by wire transfer to an account in Hong
Kong pursuant to wire transfer instructions to be provided by Grove Place no
later than April 16, 2002. In the event that wire transfer instructions are not
provided by Grove Place by April 16, 2002, the deadlines otherwise noted in this
paragraph shall be extended by one day for each day Grove Place is late. For
purposes of illustration only, in the event that Grove Place does not provide
wire transfer instructions until April 17, 2002, then the other deadlines in
this paragraph shall be modified as followed: the first payment shall be due on
April 20, 2002; the second payment on September 2, 2002; and the third payment
on January 8, 2003. In the event that any deadline under this Settlement
Agreement falls on a weekend or

                                      -2-
<PAGE>
holiday, the deadline shall be extended to the next business day. Payment is
effective upon the date of the wire transfer.

         Grove Place and Gould acknowledge the adequacy and sufficiency of (1)
the Termination Pay, (2) the mutual termination of the Consultancy Agreement,
(2) Gould's resignation from all positions with ISS and Flow Traffic and the
acceptance of those resignations by ISS and/or Flow Traffic; and (3) the other
terms and conditions of this Settlement Agreement, as consideration for this
Settlement Agreement, including, but not limited to, provisions contained herein
related to the termination of the Consultancy Agreement, the numbered paragraphs
which survive the termination of the Consultancy Agreement, the releases, and
the numbered paragraphs of this Settlement Agreement.

                  In the event that ISS does not pay the Termination Pay in a
timely fashion, Grove Place shall send a notice by fax and mail to ISS at the
following number and address: (1) fax to the Attention of the Chairperson of the
Board of Directors (651-603-7765); and (2) address at 1600 University West, 500
Spruce Tree Centre, St. Paul, MN 55104. Said notice shall identify the payment
which was not paid in a timely fashion and an address and fax number to which
ISS can respond. If the payment was made in a timely fashion, ISS shall respond
that the payment was made in a timely fashion. If the payment was not made in a
timely fashion, ISS shall have ten additional days from the date of notice
("Grace Period") to pay to Grove Place the amount past due ("the Delinquent
Amount"). If ISS fails to pay said Delinquent Amount within the Grace Period,
ISS shall pay simple interest on the Delinquent Amount at an annual rate equal
to one (1) percentage points above the rate of interest publicly announced by
U.S. Bank National Association (as of the date the Delinquent Amount is due) as
its prime rate, and shall be liable for Grove Place's cost of collection.

                                      -3-
<PAGE>
         3. Resignation from All Positions. Gould hereby resigns from all
positions with ISS and Flow Traffic, including, but not limited to, any and all
positions he holds as an officer, consultant, employee, agent, representative
and/or director of ISS and Flow Traffic.

         4. Mutual Nondisparagement. All parties to this Settlement Agreement
mutually agree that each will not engage in any verbal, written or other
communications that in any way disparage, defame, libel, slander, malign or
otherwise cause harm or potential harm to the reputation or goodwill of ISS,
Flow Traffic or Grove Place, or the officers, directors and employees of the
ISS, Flow Traffic or Grove Place, and further will not engage in any verbal,
written or other communication that in any way disparage, defame, libel,
slander, malign or otherwise cause harm or potential harm to the reputation of
Gould.

         5. Irreparable Harm/Injunctive Relief: The parties to this Settlement
Agreement mutually agree that any breach of paragraph 5 of this Settlement
Agreement or of numbered paragraphs 6 and 11 of the Consultancy Agreement which,
pursuant to paragraph 1 above survive termination of the Consultancy Agreement,
and are incorporated herein and made a part hereof, would result in irreparable
harm to ISS, entitling ISS, among other things, to immediate injunctive relief.

         6. Amendment No. 2 To Shares Sale and Purchase Agreement. ISS and Grove
Place Limited agree to execute Amendment No. 2 To Shares Sale and Purchase
Agreement, a copy of which is attached hereto as Exhibit B.

         7. Release by ISS and Flow Traffic. ISS and Flow Traffic hereby release
any and all claims, causes of actions, obligations or liabilities, solely in
connection with the amount of Termination Pay to be paid pursuant to this
Settlement Agreement. ISS and Flow Traffic covenant and agree that neither will
file or pursue any claim or cause of action against Grove

                                      -4-
<PAGE>
Place or Gould in connection with the amount of Termination Pay to be paid
pursuant to this Settlement Agreement. If ISS or Flow Traffic breaches this
covenant, the breaching party shall pay the attorneys' fees and costs of the
party against whom the claim, or cause of action was asserted, related to
securing dismissal of said claim or cause, or cause of action.

         8. Release by Grove Place and Gould. Gould, for and on behalf of
himself and his heirs, administrators, executors, successors and assigns and
Grove Place, its parents, subsidiaries, related companies, affiliates and
assigns, and its current and former owners, directors, officers, agents,
attorneys, employees and representatives, hereby release, acquit and forever
discharge ISS and Flow Traffic, their parents, subsidiaries, related companies,
affiliates, and assigns, and their current and former directors, officers,
agents, attorneys, employees and representatives, from any and all claims,
charges, causes of actions, obligations or liabilities, known and unknown, which
arise on or before the effective date of this Settlement Agreement. By way of
illustration only, this Release encompasses, but is not limited to: any claim or
allegations stemming from the Consultancy Agreement, Gould's resignations, the
Termination Pay, and claims, charges, or causes of action that could be brought
under Title VII of the Civil Rights Act of 1964, 42 U.S.C. Section 2000(e) et
seq., as amended; the Civil Rights Act of 1866, as amended; the Equal Pay Act,
as amended; United States Executive Orders 11246 and 11375; The Regulations of
the Office of Federal Contract Compliance Programs, as amended; the
Rehabilitation Act of 1973, as amended, 29 U.S.C. Section 701, et. seq.; the Age
Discrimination in Employment Act (including the Older Workers Benefit Protection
Act), 29 U.S.C. Section 621 et seq.; the Americans With Disabilities Act, 42
U.S.C. Sections 12101-12213; the Employee Retirement Income Security Act
(ERISA), 29 U.S.C. Section 1001, et seq.; the Fair Labor Standards Act, 29
U.S.C. Section 201, et seq.; the National Labor Relations Act, 29 U.S.C. Section
151, et seq., the Worker Adjustment Retraining

                                      -5-
<PAGE>
and Notification Act, 29 U.S.C. Section 2101, et seq., the Minnesota Human
Rights Act, Minn. Stat. Section 363.01, et seq.; any and all statutes providing
rights and protections of any kind for employees working in the state of
Minnesota, and any other federal, state, or local statute, ordinance, regulation
or rule, including any attorneys' fees, liquidated damages, punitive damages,
and any costs or disbursements that could be awarded in connection with these or
any other statutory claims; and claims, charges or causes of action which could
be brought based on contract, quasi-contract, implied contract, wrongful or
constructive discharge, breach of the covenant of good faith and fair dealing,
libel, defamation, slander, negligent or intentional infliction of emotional
distress, discrimination on any basis prohibited by statute, ordinance or public
policy, negligence, interference with business opportunity or with contracts, or
unfair insurance practices, and any other cause of action whatsoever, any of
which arise on or before the date of the effective date of this Settlement
Agreement.

         Gould, for and on behalf of himself and his heirs, administrators,
executors, successors and assigns and Grove Place, its parents, subsidiaries,
related companies, affiliates and assigns, and its current and former owners,
directors, officers, agents, attorneys, employees and representatives, hereby
covenants and agrees that neither will file or otherwise pursue any claim,
charge, or cause of action against ISS or Flow Traffic, their parents,
subsidiaries, related companies, affiliates, or assigns, or against their
current and former directors, officers, agents, attorneys, employees or
representatives which relates to the matters released in this paragraph. If
Grove Place or Gould breach this covenant, the breaching party shall pay the
attorneys' fees and costs of the party against whom the claim, charge or cause
of action was asserted, related to securing dismissal of said claim, charge or
cause of action.

                                      -6-
<PAGE>
         9. Assumption of Settlement Agreement Successors and Assignees. Flow
Traffic's and ISS's rights and obligations under this Settlement Agreement will
inure to the benefit of and be binding upon Flow Traffic's and ISS's successors
and assignees. Grove Place's rights and obligations under this Settlement
Agreement will inure to the benefit of and be binding upon Grove Place's rights
and obligations under this Settlement Agreement. Gould's rights and obligations
under this Settlement Agreement will inure to the benefit of and be binding upon
his heirs, administrators, executors, successors and assigns.

         10. Oral Modification Not Binding. This instrument is the entire
Settlement Agreement of the parties. Oral changes will have no effect. It may be
altered only by a written agreement signed by both parties.

         11. Review of Settlement Agreement. The parties to this Settlement
Agreement, each affirm and acknowledge that each has read the foregoing
Settlement Agreement and that each has either consulted with or had the
opportunity to consult with an attorney prior to signing this Settlement
Agreement. The parties to this Settlement Agreement further affirm and agree
that this Settlement Agreement is written in language understandable to them and
that each understands the meaning of the terms of this Settlement Agreement and
their effect.

         12. Knowing and Voluntary Settlement Agreement. The parties to this
Settlement Agreement acknowledge that each has entered into this Settlement
Agreement knowingly and voluntarily; that each has had a reasonable period of
time within which to consider this Settlement Agreement; and that each has had
the opportunity to retain and be represented by counsel in connection with this
Settlement Agreement, whether or not he has elected to retain counsel.

                                      -7-
<PAGE>
         13. Instrument. The parties agree that this Settlement Agreement may be
executed in any number of counterparts, each of which may be deemed an original,
and all of which when taken together shall constitute one and the same
instrument.

         14. Choice of Forum. The parties agree that any dispute arising over
this Settlement Agreement shall be brought exclusively in the appropriate courts
in the State of Minnesota.

Dated: April 15, 2002                       IMAGE SENSING SYSTEMS, INCORPORATED

                                            By /s/ James Murdakes
                                              ---------------------------------
                                               Its:   Chairman
                                                   ----------------------------

Dated: April 15, 2002                       FLOW TRAFFIC LIMITED
             -----

                                            By /s/ Johan Billow
                                              ---------------------------------
                                               Its:   Director
                                                   ----------------------------

Dated: April 15, 2002                       GROVE PLACE LIMITED
             -----

                                            By /s/ Anthony Gould
                                              ---------------------------------
                                               Its:   Authorized Signatory
                                                   ----------------------------

Dated: April 15, 2002                       ANTHONY GOULD
             -----

                                               /s/ Anthony Gould
                                               --------------------------------

                                      -8-

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