Document:

Annex II

     

    Registration
      Rights

     

    1. Definitions.
      As used
      in this Annex II, the following terms shall have the following meanings
      (with other capitalized terms used but not defined in this Annex II having
      the meaning ascribed to such terms in the Purchase Agreement):

     

    “Advice”
shall
      have the meaning set forth in Section 7(b)
      of this
      Annex II.

     

    “Board”
shall
      have the meaning set forth in Section 2(b)
      of this
      Annex II.

     

    “Commission”
shall
      mean the Securities and Exchange Commission or any other federal agency at
      the
      time administering the Securities Act.

     

    “Common
      Stock”
shall
      mean the InCard Common Stock and any other class of securities into which the
      InCard Common Stock may hereafter have been reclassified or changed
      into.

     

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

     

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

     

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

     

    “Issued
      Securities”
shall
      mean all of the shares of Common Stock issued as Equity Consideration pursuant
      to the Purchase Agreement.

     

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

     

    “Other
      Shares”
shall
      have the meaning set forth in Section 7(g)
      of this
      Annex II.

     

    “Other
      Stockholders”
shall
      have the meaning set forth in Section 7(g)
      of this
      Annex II.

     

    “Proceeding”
shall
      mean an action, claim, suit, investigation or proceeding (including, without
      limitation, an investigation or partial proceeding, such as a deposition),
      whether commenced or threatened.

     

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

     

    “Prior
      Registration Statement”
shall
      mean the registration statement filed by InCard in connection with the Prior
      Transaction and pursuant to that certain Registration Rights Agreement dated
      as
      of May 30, 2006, by and among InCard and the investors identified on the
      signature pages thereto (such investors being, the “Prior
      Investors”).

     

    
      
         

      

      
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    “Prior
      Transaction”
shall
      mean the transactions contemplated by that certain Securities Purchase Agreement
      dated as of May 30, 2006, by and among InCard and the Prior Investors,
      pursuant to which the Company issued to the Prior Investors an aggregate of
      3,785,500 shares of Common Stock.

     

    “Purchase
      Agreement”
shall
      mean the Asset Purchase Agreement, dated as of June [__], 2006, by and among
      InCard, the Company and Prosodie, S.A.

     

    “Registrable
      Securities”
shall
      mean, as of the date in question, (a) all of the Issued Securities and (b)
      any
      securities issued or issuable upon any stock split, dividend or other
      distribution, recapitalization or similar event with respect to the foregoing;
      provided, however, that Registrable Securities shall not include any shares
      of
      Common Stock constituting the Equity Consideration (i) sold to or through a
      broker or dealer or underwriter in a public distribution or a public securities
      transaction, (ii) sold in a transaction exempt from the registration and
      prospectus delivery requirements of the Securities Act under Section 4(1)
      thereof so that all transfer restrictions and restrictive legends with respect
      thereto are removed upon the consummation of such sale, or (iii) which at any
      time have become capable of being resold without volume restrictions pursuant
      to
      Rule 144(k). 

     

    “Registration
      Statement”
shall
      mean the registration statements required to be filed by InCard pursuant to
      Section 2(a)
      of this
      Annex II and any additional registration statements required to be filed by
      InCard pursuant to Section 3(c)
      of this
      Annex II, including (in each case) the Prospectus, amendments and
      supplements to such registration statement or Prospectus, including pre- and
      post-effective amendments, all Annexes thereto, and all material incorporated
      by
      reference or deemed to be incorporated by reference in such registration
      statement in compliance with the Securities Act. 

     

    “Rule 144”
shall
      mean Rule 144 promulgated by the Commission pursuant to the Securities Act,
      as such Rule may be amended from time to time, or any similar successor
      rule or regulation hereafter adopted by the Commission having substantially
      the
      same purpose and effect as such Rule.

     

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

     

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

     

    “Trading
      Day”
shall
      mean a day on which the Common Stock is traded on a securities exchange or
      an
      automated interdealer quotation system.

     

    “Trigger
      Date”
shall
      mean the date on which the Prior Registration Statement is declared effective
      by
      the Commission.

     

    2. Registration.

     

    (a) As
      soon
      as practicable but in no event later than forty-five (45) days following
      the Trigger Date, InCard shall file with the Commission a registration statement
      for an offering to be made on a delayed or continuous basis pursuant to
      Rule 415 of the Securities Act registering the resale from time to time by
      the Company of all of the Registrable Securities. Subject to the provisions
      set
      forth in this Annex II, InCard shall use its commercially reasonable
      efforts to cause such registration statement to be declared effective under
      the
      Securities Act as promptly as possible after the filing thereof, and shall
      use
      its commercially reasonable efforts to keep such registration statement
      effective under the Securities Act by preparing and filing with the Commission
      such amendments and supplements to such registration statement and Prospectus
      and taking such other action, if any, as may be necessary to keep such
      Registration Statement effective under the Securities Act until the earlier
      of:
      (i) the date that all Registrable Securities covered by such registration
      statement have been sold pursuant to such registration statement, or (ii) the
      date that all Registrable Securities covered by such registration statement
      may
      be sold without volume restrictions pursuant to Rule 144 (in a single three
      month period) as reasonably determined by counsel to InCard (the “Effectiveness
      Period”).
      InCard shall use commercially reasonable efforts to request effectiveness of
      such registration statement as of 5:00 pm Eastern Time on a Trading Day. InCard
      shall immediately notify the Company via facsimile of the effectiveness of
      such
      registration statement on the same Trading Day that InCard telephonically
      confirms effectiveness with the Commission, which shall be the date requested
      for effectiveness of such registration statement. InCard shall, by 9:30 am
      Eastern Time on the Trading Day after the such effective date, file a
      registration statement pursuant to Rule 424(b) with the Commission. At the
      time such registration statement is declared effective, the Company shall be
      named as a selling security holder in such registration statement and the
      related prospectus in such a manner as to permit the Company to deliver such
      prospectus to purchasers of registered securities in accordance with applicable
      law. Notwithstanding anything to the contrary contained herein, in the event
      that the registration statement required to be filed hereunder is not declared
      effective by the Commission under the Securities Act by a date that is nine
      months from the Closing Date, InCard shall pay to the Company an amount in
      cash
      equal to $98,707.50 for each 30-day period thereafter (or a prorated amount
      thereof for any period less than 30 days based on the number of days within
      such
      30 day period that have passed) until such registration statement is declared
      effective.

     

    
      
         

      

      
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    (b) InCard
      shall not be obligated to take any action to effect any such registration
      pursuant to Section 2(a)
      of this
      Annex II if in the good faith judgment of the board of directors of InCard
      (the “Board”),
      such
      registration would be seriously detrimental to InCard and the Board concludes
      upon the advice of counsel, as a result, that it is essential to defer the
      filing of such registration statement at such time, and InCard thereafter
      delivers to the Company a certificate, signed by the President or Chief
      Executive Officer of InCard, stating that in the good faith judgment of the
      Board it would be seriously detrimental to InCard and its stockholders for
      a
      registration statement to be filed and therefore in the best interest of InCard
      and its stockholders to defer the filing of such registration statement, then
      InCard’s obligation to use its commercially reasonable efforts to register under
Section 2(a)
      of this
      Annex II shall be deferred for a period not to exceed 90 days from the date
      of delivery of the written request from the Company; provided,
      however,
      that
      InCard may not utilize this right more than once in any 12 month period.
      Following the date that the Registration Statement is declared effective by
      the
      Commission, the Company shall be permitted, subject to the other provisions
      hereof, to offer and sell the Registrable Securities included thereon in the
      manner described in such Registration Statement during the period of its
      Effectiveness Period; provided,
      however,
      that
      the Company shall arrange for delivery of a current prospectus to the transferee
      of the Registrable Securities.

     

    (c) Notwithstanding
      the foregoing, the parties expressly acknowledge and agree that (i) the
      registration rights granted to the Company pursuant to this Annex II
      constitute a material term of its business decision to enter into the Asset
      Purchase Agreement and consummate the transactions contemplated thereby, and
      (ii) in the event that the Commission notifies InCard in writing that the
      registration by InCard of all of the Registrable Securities is prohibited by
      applicable law or Commission regulations, the parties will negotiate in good
      faith towards a mutually-acceptable resolution to permit the Company to receive
      the benefits originally contemplated by the grant of such rights hereunder,
      to
      the fullest extent permissible under applicable law or Commission
      regulation.

     

    
      
         

      

      
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    3. Registration
      Procedures.
      In
      connection with InCard’s registration obligations hereunder, InCard
      shall:

     

    (a) Not
      less
      than five Trading Days prior to the filing of each Registration Statement or
      any
      related Prospectus or any amendment or supplement thereto (including any
      document that would be incorporated or deemed to be incorporated therein by
      reference), InCard shall (i) furnish to the Company copies of all such documents
      proposed to be filed and (ii) cause its officers, directors, counsel and
      independent certified public accountants to respond to such inquiries as shall
      be necessary, in the reasonable opinion of the Company’s counsel to conduct a
      reasonable investigation within the meaning of the Securities Act. The Company
      agrees to furnish to InCard such information regarding the Company, the
      Registrable Securities held by it, and the distribution proposed by the Company
      as InCard may reasonably request in writing and as shall be required in
      connection with any registration referred to in Section 2(a)
      of this
      Annex II, and the refusal to furnish such information by the Company shall
      relieve InCard of its obligations set forth in this Annex II.

     

    (b) i) Prepare
      and file with the Commission such amendments, including post-effective
      amendments, to a Registration Statement and the Prospectus used in connection
      therewith as may be necessary to keep a Registration Statement continuously
      effective as to the applicable Registrable Securities for the Effectiveness
      Period and prepare and file with the Commission such additional Registration
      Statements in order to register for resale under the Securities Act all of
      the
      Registrable Securities; (ii) cause the related Prospectus to be amended or
      supplemented by any required Prospectus supplement (subject to the provisions
      set forth in this Annex II), and as so supplemented or amended to be filed
      pursuant to Rule 424; and (iii) respond as promptly as commercially
      practicable, but in no event later than 30 days following receipt, to any
      comments received from the Commission with respect to a Registration Statement
      or any amendment thereto and as promptly as commercially practicable provide
      the
      Company true and complete copies of all correspondence from and to the
      Commission relating to a Registration Statement; provided,
      that,
      in the event that the nature and substance of any such comments received from
      the Commission or any events or circumstances involving InCard at the time
      of
      receipt of such comments are such that the Company cannot, in good faith and
      upon the exercise all commercially reasonable efforts, respond within such
      30
      day period, then InCard shall use its commercially reasonable efforts to respond
      to such comments as promptly as commercially practicable after the expiration
      of
      such 30 day period.

     

    (c) Notify
      the Company (which notice shall, pursuant to clauses (ii) through (v) of this
      Section 3(c),
      be
      accompanied by an instruction to suspend the use of the Prospectus until the
      requisite changes have been made) as promptly as reasonably possible (and,
      in
      the case of (i)(A) of this Section 3(c),
      not
      less than five Trading Days prior to such filing) and (if requested by the
      Company) confirm such notice in writing no later than one Trading Day following
      the day (i)(A) when a Prospectus or any Prospectus supplement or post-effective
      amendment to a Registration Statement is proposed to be filed; (B) when the
      Commission notifies InCard whether there will be a “review” of such Registration
      Statement and whenever the Commission comments in writing on such Registration
      Statement (InCard shall provide true and complete copies thereof and all written
      responses thereto to the Company); and (C) with respect to a Registration
      Statement or any post-effective amendment, when the same has become effective;
      (ii) of any request by the Commission or any other Federal or state governmental
      authority for amendments or supplements to a Registration Statement or
      Prospectus or for additional information; (iii) of the issuance by the
      Commission or any other federal or state governmental authority of any stop
      order suspending the effectiveness of a Registration Statement covering any
      or
      all of the Registrable Securities or the initiation of any Proceedings for
      that
      purpose; (iv) of the receipt by InCard of any notification with respect to
      the
      suspension of the qualification or exemption from qualification of any of the
      Registrable Securities for sale in any jurisdiction, or the initiation or
      threatening of any Proceeding for such purpose; and (v) of the occurrence of
      any
      event or passage of time that makes the financial statements included in a
      Registration Statement ineligible for inclusion therein or any statement made
      in
      a Registration Statement or Prospectus or any document incorporated or deemed
      to
      be incorporated therein by reference untrue in any material respect or that
      requires any revisions to a Registration Statement, Prospectus or other
      documents so that, in the case of a Registration Statement or the Prospectus,
      as
      the case may be, it will not contain any untrue statement of a material fact
      or
      omit to state any material fact required to be stated therein or necessary
      to
      make the statements therein, in light of the circumstances under which they
      were
      made, not misleading. 

     

    
      
         

      

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

     

    (e) Furnish
      to the Company, without charge, at least one conformed copy of each such
      Registration Statement and each amendment thereto, including financial
      statements and schedules, all documents incorporated or deemed to be
      incorporated therein by reference to the extent requested by the Company, and
      all exhibits to the extent requested by the Company (including those previously
      furnished or incorporated by reference) promptly after the filing of such
      documents with the Commission.

     

    (f) Promptly
      deliver to the Company, without charge, as many copies of the Prospectus or
      Prospectuses (including each form of prospectus) and each amendment or
      supplement thereto as the Company may reasonably request in connection with
      resales by the Company of Registrable Securities or as otherwise may be required
      under the Securities Act. Subject to the provisions set forth in this
      Annex II, InCard hereby consents to the use of such Prospectus and each
      amendment or supplement thereto by the Company in connection with the offering
      and sale of the Registrable Securities covered by such Prospectus and any
      amendment or supplement thereto, except after the giving of any notice pursuant
      to Section 3(c)
      of this
      Annex II.

     

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

     

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

     

    (i) Upon
      the
      occurrence of any event contemplated by Section 3(c)(v)
      of this
      Annex II, as promptly as reasonably possible under the circumstances taking
      into account InCard’s good faith assessment of any adverse consequences to
      InCard and its stockholders of the premature disclosure of such event, prepare
      a
      supplement or amendment, including a post-effective amendment, to a Registration
      Statement or a supplement to the related Prospectus or any document incorporated
      or deemed to be incorporated therein by reference, and file any other required
      document so that, as thereafter delivered, neither a Registration Statement
      nor
      such Prospectus will contain an untrue statement of a material fact or omit
      to
      state a material fact required to be stated therein or necessary to make the
      statements therein, in light of the circumstances under which they were made,
      not misleading. If InCard notifies the Company in accordance with clauses (ii)
      through (v) of Section 3(c)
      of this
      Annex II to suspend the use of any Prospectus until the requisite changes
      to such Prospectus have been made, then the Company shall suspend use of such
      Prospectus. InCard will use commercially reasonable efforts to ensure that
      the
      use of the Prospectus may be resumed as promptly as is practicable.

     

    
      
         

      

      
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    (j) During
      the period when copies of the Prospectus are required to be delivered under
      the
      Securities Act, file all documents required to be filed pursuant to the Exchange
      Act.

     

    4. Registration
      Expenses.
      All
      fees and expenses incident to the performance of or compliance with the
      provisions set forth in this Annex II by InCard shall be borne by InCard
      whether or not any Registrable Securities are sold pursuant to a Registration
      Statement. The fees and expenses referred to in the foregoing sentence shall
      include, without limitation, (i) all registration and filing fees (including,
      without limitation, fees and expenses (A) with respect to filings required
      to be
      made with the securities exchange or automated interdealer quotation system
      on
      which the Common Stock is then listed for trading, and (B) in compliance with
      applicable state securities or Blue Sky laws reasonably agreed to by InCard
      in
      writing (including, without limitation, fees and disbursements of counsel for
      InCard in connection with Blue Sky qualifications or exemptions of the
      Registrable Securities and determination of the eligibility of the Registrable
      Securities for investment under the laws of such jurisdictions as requested
      by
      the Company), (ii) printing expenses (including, without limitation, expenses
      of
      printing certificates for Registrable Securities and of printing prospectuses
      if
      the printing of prospectuses is reasonably requested by the holders of a
      majority of the InCard Common Stock included in a Registration Statement),
      (iii)
      messenger, telephone and delivery expenses, (iv) fees and disbursements of
      counsel for InCard, (v) Securities Act liability insurance, if InCard so desires
      such insurance, and (vi) fees and expenses of all other Persons retained by
      InCard in connection with the consummation of the transactions contemplated
      by
      this Annex II. In addition, InCard shall be responsible for all of its
      internal expenses incurred in connection with the consummation of the
      transactions contemplated by this Annex II (including, without limitation,
      all salaries and expenses of its officers and employees performing legal or
      accounting duties), the expense of any annual audit and the fees and expenses
      incurred in connection with the listing of the Registrable Securities on any
      securities exchange or automated interdealer quotation system as required
      hereunder. Except as may be contemplated by Section 5 hereof, in no event
      shall InCard be responsible for any broker or similar commissions or any legal
      fees or other costs of the Company.

     

    5. Indemnification.

     

    (a) Indemnification
      by InCard.
      InCard
      shall, notwithstanding any termination of the provisions set forth in this
      Annex II, indemnify and hold harmless the Company, its officers, directors,
      affiliates and agents, and each person who controls the Company (within the
      meaning of Section 15 of the Securities Act or Section 20 of the
      Exchange Act), to the fullest extent permitted by applicable law, from and
      against any and all losses, claims, damages, liabilities, costs (including,
      without limitation, reasonable attorneys’ fees) and expenses (collectively,
“Losses”),
      as
      incurred, to which the Company or such controlling persons may become subject
      insofar as such Losses arise out of or relate to any untrue or alleged untrue
      statement of a material fact contained in a Registration Statement, any
      Prospectus or any form of prospectus or in any amendment or supplement thereto
      or in any preliminary prospectus, or arise out of or relate to any omission
      or
      alleged omission of a material fact required to be stated therein or necessary
      to make the statements therein (in the case of any Prospectus or form of
      prospectus or supplement thereto, in light of the circumstances under which
      they
      were made) not misleading, except to the extent, but only to the extent, that
      (i) such untrue statements or omissions are based solely upon information
      regarding the Company furnished in writing to InCard by the Company expressly
      for use therein, or to the extent that such information relates to the Company
      or the Company’s proposed method of distribution of Registrable Securities and
      was reviewed and expressly approved in writing by the Company expressly for
      use
      in a Registration Statement, such Prospectus or such form of Prospectus or
      in
      any amendment or supplement thereto or (ii) in the case of an occurrence of
      an
      event of the type specified in Section 3(c)(ii)-(v)
      of this
      Annex II, the use by the Company of an outdated or defective Prospectus
      after InCard has timely notified the Company in writing that the Prospectus
      is
      outdated or defective and prior to the receipt by the Company of the Advice
      contemplated in Section 7(b)
      of this
      Annex II. InCard shall notify the Company promptly of the institution,
      threat or assertion of any Proceeding arising from or in connection with the
      transactions contemplated by this Annex II of which InCard is
      aware.

     

    
      
         

      

      
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    (b) Indemnification
      by the Company.
      The
      Company shall indemnify and hold harmless InCard, its officers, directors,
      affiliates and agents, and each person who controls InCard (within the meaning
      of Section 15 of the Securities Act and Section 20 of the Exchange
      Act), to the fullest extent permitted by applicable law, from and against all
      Losses, as incurred, to which InCard, each of its directors, officers or
      controlling persons may become subject insofar as such Losses arise out of
      or
      based solely upon: (x) the Company’s failure to comply with the prospectus
      delivery requirements of the Securities Act, (y) any untrue or alleged untrue
      statement of a material fact contained in any Registration Statement, any
      Prospectus, or any form of prospectus, or in any amendment or supplement thereto
      or in any preliminary prospectus, or arise out of or relate to any omission
      or
      alleged omission of a material fact required to be stated therein or necessary
      to make the statements therein not misleading (i) to the extent, but only to
      the
      extent, that (i) such untrue statements or omissions are based solely upon
      information regarding the Company furnished in writing to InCard by the Company
      expressly for use therein, or to the extent that such information relates to
      the
      Company or the Company’s proposed method of distribution of Registrable
      Securities and was reviewed and expressly approved in writing by the Company
      expressly for use in a Registration Statement, such Prospectus or such form
      of
      Prospectus or in any amendment or supplement thereto or (ii) in the case of
      an
      occurrence of an event of the type specified in Section 3(c)(ii)-(v)
      of this
      Annex II, the use by the Company of an outdated or defective Prospectus
      after InCard has notified the Company in writing that the Prospectus is outdated
      or defective and prior to the receipt by the Company of the Advice contemplated
      in Section 7(b)
      of this
      Annex II, and (z) on the part of the Company to comply with the agreements
      contained in Section 6
      of this
      Annex II with regard to the sale of the Registrable Securities. In no event
      shall the liability of the Company hereunder be greater in amount than the
      dollar amount of the net proceeds received by the Company upon the sale of
      the
      Registrable Securities giving rise to such indemnification
      obligation.

     

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

     

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

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

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

     

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

     

    The
      parties hereto agree that it would not be just and equitable if contribution
      pursuant to this Section 5(d)
      were
      determined by pro rata allocation or by any other method of allocation that
      does
      not take into account the equitable considerations referred to in the
      immediately preceding paragraph. Notwithstanding the provisions of this
Section 5(d),
      the
      Company shall not be required to contribute, in the aggregate, any amount in
      excess of the amount by which the proceeds actually received by the Company
      from
      the sale of the Registrable Securities subject to the Proceeding exceeds the
      amount of any damages that the Company has otherwise been required to pay by
      reason of such untrue or alleged untrue statement or omission or alleged
      omission, except in the case of fraud by the Company.

     

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

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    6. Resales
      of Securities

     

    (a) The
      Company covenants and agrees not to make any sale of all or a portion of the
      Registrable Securities without satisfying the requirements of the Securities
      Act
      and the rules and regulations thereunder, including, in the event of any resale
      under the Registration Statement, the prospectus delivery requirements under
      the
      Securities Act as applicable to it.

     

    (b) The
      Company agrees that it will promptly notify InCard of any changes in the
      information set forth in the Registration Statement regarding the Company or
      its
      plan of distribution.

     

    (c) Each
      certificate representing Registrable Securities that have not been registered
      pursuant to this Annex II shall be stamped or otherwise imprinted with legends
      stating that the Registrable Securities represented by the certificate have
      been
      acquired for investment and have not been registered under the Securities Act
      and that such shares may not be sold, transferred, or pledged in the absence
      of
      such registration and/or legends that InCard typically stamps or otherwise
      imprints on certificates representing unregistered shares of Common Stock
      (including any legend required under applicable state securities laws or the
      InCard’s charter documents).

     

    7. Miscellaneous

     

    (a) Other
      Registration Rights.
      

     

    (i) As
      of the
      Closing Date, InCard has not entered into any agreement with respect to its
      securities that would have the effect of impairing the rights granted to the
      Company in this Annex II or otherwise conflicts with the provisions
      hereof.  Notwithstanding the foregoing, the Company hereby expressly
      acknowledges that the rights granted to it in Section
      7(d)
      hereof
      may not be exercised with respect to the Prior Registration
      Statement.

     

    (ii) From
      and
      after the Closing Date, InCard shall not, without the prior written consent
      of
      the Company, enter into any agreement with any stockholder or prospective holder
      of any securities of InCard which would allow such stockholder or prospective
      holder to include such securities in any registration filed hereunder, unless
      under the terms of such agreement, such holder or prospective holder may include
      such securities in any such registration only to the extent that the inclusion
      of such holder’s securities will not reduce the amount of the Registrable
      Securities which is so included.

     

    (b) Discontinued
      Disposition.
      The
      Company agrees by its acquisition of such Registrable Securities that, upon
      receipt of a notice from InCard of the occurrence of any event of the kind
      described in Section 3(c)
      of this
      Annex II or any other event requiring discontinued use of the Prospectus,
      the Company will forthwith discontinue disposition of such Registrable
      Securities under a Registration Statement until the Company’s receipt of the
      copies of the supplemented Prospectus and/or amended Registration Statement,
      or
      until it is advised in writing (the “Advice”)
      by
      InCard that the use of the applicable Prospectus may be resumed, and, in either
      case, has received copies of any additional or supplemental filings that are
      incorporated or deemed to be incorporated by reference in such Prospectus or
      Registration Statement. InCard will use its commercially reasonable efforts
      to
      ensure that the use of the Prospectus may be resumed as promptly as
      practicable.

     

    (c) Transfer
      of Registration Rights.
      Except
      in connection with the transfer of all of the Registrable Securities by the
      Company to one Person or to up to three Affiliates of the Company in a single
      transaction pursuant to which all of the rights granted under this Annex II
      are assigned to such Person, the rights granted under this Annex II may not
      be assigned by the Company to any Person. In the event that the rights granted
      under this Annex II are assigned by the Company to a Person in compliance
      with this Section 7(c),
      the
      Company shall provide to InCard written notice at the time of or within a
      reasonable time after said assignment, stating the name and address of the
      assignee, and, provided,
      further,
      that
      the assignee of such rights assumes in writing the obligations of the Company
      under this Annex II.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    (d) Piggy-Back
      Registrations.
      Subject
      to Section 7(a)
      of this
      Annex II, if at any time during the Effectiveness Period there is not an
      effective Registration Statement covering all of the Registrable Securities
      and
      InCard shall determine to prepare and file with the Commission a registration
      statement relating to an offering for its own account or the account of others
      under the Securities Act of any of its equity securities, other than on
      Form S-4 or Form S-8 (each as promulgated under the Securities Act) or
      their then equivalents relating to equity securities to be issued solely in
      connection with any acquisition of any entity, business or assets (other than
      cash) or equity securities issuable in connection with the stock option or
      other
      employee benefit plans, then InCard shall send to the Company written notice
      of
      such determination and, if within 30 days after the date of such notice, the
      Company shall so request in writing, InCard shall include in such registration
      statement all or any part of such Registrable Securities such holder requests
      to
      be registered; provided,
      that,
      InCard shall not be required to register any Registrable Securities pursuant
      to
      this Section 7(d)
      that are
      eligible for resale pursuant to Rule 144(k) or that are the subject of a
      then effective Registration Statement.

     

    (e) Procedure
      for Underwriter Cutbacks.
      In any
      circumstance in which all of the Registrable Securities and other shares of
      Common Stock with registration rights (the “Other
      Shares”)
      requested to be included in a registration on behalf of the Company or Persons
      other than the Company who, by virtue of agreements with InCard, are entitled
      to
      include their securities in certain registrations of the Common Stock, including
      registrations hereunder (the “Other
      Stockholders”)
      cannot
      be so included as a result of limitations of the aggregate number of shares
      of
      Registrable Securities and Other Shares that may be so included based on the
      good faith determination of the InCard board of directors that the inclusion
      of
      all such securities would be materially detrimental to the success of the
      offering, the number of shares of Registrable Securities and Other Shares that
      may be so included shall be allocated first, to the Other Shares requested
      by
      the Other Stockholders who have exercised their piggy-back registration rights
      set forth in their respective agreements entered into with InCard and second,
      among the Common Stock that InCard desires to include in such registration
      and
      the Registrable Securities pro rata based upon the total number of shares of
      Common Stock that InCard desires to include in such registration and the
      Registrable Securities, respectively; provided,
      however,
      that
      such allocation shall not operate to reduce the aggregate number of Other
      Shares, shares of Common Stock that InCard desires to include in such
      registration and Registrable Securities to be included in such registration
      if
      the Company or any Other Stockholder does not request inclusion of the maximum
      number of shares of Registrable Securities or Other Shares allocated to the
      Company or such Other Stockholder pursuant to the above-described procedure,
      in
      which case the remaining portion of his, her or its allocation shall be
      reallocated among the Company and those requesting Other Stockholders whose
      allocations did not satisfy their requests pro rata on the basis of total number
      of shares of Registrable Securities and Other Shares held by the Company and
      such Other Stockholders, and this procedure shall be repeated until all shares
      of Registrable Securities and Other Shares which may be included in the
      registration on behalf of the Company and Other Stockholders have been so
      allocated. Notwithstanding the foregoing, in no event shall this
      Section 7(e) or any other provision of this Agreement, other than as
      contemplated by Section 2(c) hereof, operate to reduce the number of
      Registrable Securities to be included on the registration statement to be filed
      by InCard pursuant to Section 2(a) hereof.

     

    (f) Market
      Stand-off.
      The
      Company hereby agrees that it will not, without the prior written consent of
      InCard, sell or otherwise transfer for value any Registrable Securities except
      as follows:

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    (i) Up
      to an
      aggregate of 25% of the Issued Securities during the period commencing on the
      Closing Date and ending on the three hundred sixty sixth (366th)
      day
      thereafter;

     

    (ii) Up
      to an
      aggregate of 55% of the Issued Securities (inclusive of any shares sold pursuant
      to clause (i) hereof) during the period commencing on the 367th
      day
      following the Closing Date and ending on the 732nd
      day
      thereafter; and

     

    (iii) Up
      to all
      of the Issued Securities during the period following the 732nd day
      thereafter.

     

    Notwithstanding
      anything to the contrary herein, the foregoing restrictions shall lapse in
      their
      entirety immediately upon the announcement by InCard of a transaction (or series
      of transactions) resulting in a change of control of InCard.

     

     

    
      
         

      

      
        11EXECUTION
      VERSION

     

    LICENSE
      AGREEMENT

     

    This
      LICENSE AGREEMENT (this “Agreement”),
      dated
      as of June 28, 2006 (the “Effective
      Date”),
      is
      entered into by and between nCryptone, S.A. (formerly known as AudioSmartCard,
      S.A.), a corporation organized under the laws of France (“Licensee”),
      and
      Innovative Card Technologies, Inc., a Delaware corporation (“Licensor”).
      Terms
      used but not otherwise defined in this Agreement shall have the meanings
      assigned to them in that certain Asset Contribution Agreement, dated as of
      June 28, 2006 (the “Asset
      Contribution Agreement”),
      by
      and among Licensee, Licensor, and Prosodie, S.A.

     

    RECITALS

     

    A. Licensor
      and Licensee have entered into the Asset Contribution Agreement whereby Licensor
      has transferred the Contributed Assets to Licensee.

     

    B. As
      a
      result of its receipt of the Contributed Assets, Licensor owns certain
      intellectual property rights including, but not limited to, the Licensed Patents
      (as defined below), that relate to technology
      allowing for the emission of an encrypted sound signal representing a dynamic
      password from financial transaction and similar credit card size cards
      containing identification mode (recognition of the caller) and authentication
      technology that Licensee markets presently under the brand name
“nC AudioCard” (including
      any future upgrades thereto or improvements thereon, the “nC AudioCard”).

     

    C. As
      a
      condition to its entering into the Asset Contribution Agreement, Licensee has
      required that Licensor enter into this Agreement and license the Licensed
      Patents to Licensee pursuant to the terms hereof.

     

    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.

    DEFINED
      TERMS

     

    1.1 “dollars”
or
      “$”
means
      United States dollars.

     

    1.2 “Intellectual
      Property Right”
means
      any right relating to any Intellectual Property.

     

    1.3 “Know-How”
means
      confidential or proprietary information related to the nC AudioCard or any
      components thereof that is known by Licensor as of the Effective Date and is
      not
      generally known to the public, including without limitation, 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 developed by employees or independent contractors of Licensor
      and useful in connection with the development, manufacture, use or sale of
      the
      nC AudioCard, which is owned or controlled by Licensor as of the Effective
      Date.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    1.4 “Licensed
      Patents”
means
      any and all patents and patent applications listed on Schedule 1
      attached
      hereto and incorporated herein by reference and all foreign counterpart patents,
      reissues, continuations, continuations-in-part, revisions, extensions, divisions
      and reexaminations thereof.

     

    1.5 “Patent
      Expiration”
means,
      with respect to a particular patent, that patent’s expiration, abandonment,
      cancellation, award to a party other than Licensor in an interference
      proceeding, or a final declaration of invalidity or unenforceability by a court
      or other authority of competent jurisdiction (including final rejection in
      a
      re-examination or re-issue proceeding) from which no further appeal has or
      can
      be taken, or being rendered unenforceable for any other reason.

     

    1.6 “Valid
      Claim”
means
      (a) an issued claim affecting a Licensed Patent that has not
      (i) expired or been canceled, (ii) been declared invalid by an
      unreversed and unappealable decision of a court or other appropriate body of
      competent jurisdiction, (iii) been admitted to be invalid or unenforceable
      through reissue, disclaimer or otherwise, and/or (iv) been abandoned in
      accordance with or as permitted by the terms of this Agreement or by mutual
      written consent; or (b) a claim included in a pending patent application
      within the Licensed Patents that is being actively prosecuted in accordance
      with
      this Agreement and that has not been (i) canceled, (ii) withdrawn from
      consideration, (iii) finally determined to be unallowable by the applicable
      governmental authority for whatever reason (and from which no appeal is or
      can
      be taken), and/or (iv) abandoned in accordance with or as permitted by the
      terms of this Agreement or by mutual written consent.

     

    ARTICLE
      II.

    GRANT
      OF LICENSE

     

    2.1 Grant
      of License.
      Subject
      to the terms and conditions of this Agreement, Licensor hereby grants to
      Licensee, and Licensee accepts, a fully-paid, royalty-free, non-exclusive,
      transferable, assignable, sublicenseable object code-only right and license
      to
      (i) make, have made, use, sell and have sold products and services which but
      for
      this license would infringe the Licensed Patents, solely for use in the
nC AudioCard
      and
      (ii)
      use the Know-How internally solely for the purpose of exercising its rights
      under clause (i) above with respect to the nC AudioCard (the “Licensed
      Rights”).
      Notwithstanding anything herein to the contrary, Licensor shall only be required
      to deliver such Know-How as it determines, in its commercially reasonable
      judgment, is required for Licensee to fully exploit the nC AudioCard.
      Nothing contained in this Agreement shall be interpreted as to obligate Licensor
      to provide Licensee with any support services or manpower.

     

    2.2 Term
      and Termination.
      

     

    (a) The
      term
      of this Agreement shall be for a term commencing on the Effective Date and,
      unless sooner terminated, extending until the Patent Expiration of the last
      to
      expire of all patents included in the Licensed Patents or until there remains
      no
      Valid Claim under the Licensed Patents, whichever occurs earlier.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    (b) This
      Agreement may only be terminated by Licensee, with or without cause, on such
      date as is indicated in a written notice delivered to Licensor pursuant to
      Section 5.2
      (such
      date to be determined in Licensee’s sole and absolute discretion).

     

    (c) Upon
      any
      termination pursuant to this Section 2.2,
      Licensee shall have ninety (90) days in which to sell-off existing inventories
      of products including one or more components covered by the Licensed Patents.
      All sublicenses granted pursuant to this Agreement shall terminate
      immediately.

     

    (d) The
      parties agree that this Agreement is intended to be and shall be deemed to
      be an
      intellectual property license within the meaning of Section 365(n) of the United
      States Bankruptcy Code, as amended, for purposes of the protections afforded
      to
      licensees thereunder.

     

    ARTICLE
      III.

    LICENSE
      FEES

     

    3.1 License
      Fee.
      On the
      Effective Date, Licensee shall pay Licensor an upfront licensing fee of ten
      dollars ($10) for the Licensed Rights.

     

    3.2 Withholding
      Taxes.
      Licensee shall be entitled to deduct and withhold from the consideration
      otherwise payable pursuant to this Agreement to Licensor 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.

     

    ARTICLE
      IV.

    LICENSED
      PATENTS

     

    4.1 Maintenance.
      Licensor shall timely make all maintenance fee and annuity payments on all
      the
      Licensed Patents and shall maintain the Licensed Patents in good
      standing.

     

    4.2 Enforcement.
      Licensor shall, at its election and expense, have the right, but not the
      obligation, to prosecute any and all claims against third parties for
      infringement of any Licensed Patent. If Licensor finds it necessary or
      desirable, it may join Licensee as a party in any suit or proceeding against
      third parties alleging infringement of any Licensed Patent.

     

    ARTICLE
      V.

    MISCELLANEOUS

     

    5.1 Confidentiality.
      Any
      information acquired by one of the respective parties from another of the
      respective parties concerning existing or contemplated products, services,
      Intellectual Property Rights (including, without limitation, the Licensed
      Patents and the Know-How) processes, techniques, Know-How or data owned by
      and
      confidential to the disclosing party, (herein referred to as “Confidential
      Information”),
      unless provided for elsewhere in this Agreement, is and shall be the property
      of
      the disclosing party and shall be maintained in confidence and not used by
      the
      receiving party except as necessary to perform the duties set forth in this
      Agreement. The obligation of confidentiality under this Section 5.1
      shall
      not apply to Confidential Information that:

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    (a) is
      now or
      comes to be in the public domain through no fault of the receiving
      party;

     

    (b) is
      released expressly stating that it is without restriction to the receiving
      party
      by the disclosing party in writing;

     

    (c) is
      lawfully obtained by the receiving party from third parties under no duty of
      confidentiality to the disclosing party; or

     

    (d) can
      be
      demonstrated by competent proof to have been known or hereafter developed by
      the
      receiving party independently of any disclosure of Confidential Information
      by
      the disclosing party.

     

    The
      receiving party agrees to treat Confidential Information with the same degree
      of
      care to avoid disclosure as it employs with respect to its own Confidential
      Information and in no event less than commercially reasonable care.

     

    5.2 Notices.
      All
      notices, requests, demands, Third Party 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 Licensor, 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

              

      

       

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

       

      
        	 	 
	 	
                If
                  to Licensee, addressed to:

              
	 	 
	 	
                nCryptone
                  S.A.

              
	 	
                150,
                  rue Galliéni

              
	 	
                92641
                  Boulogne Cedex

              
	 	
                France

              
	 	
                Attn:             André
                  Saint-Mleux

              
	 	
                Phone:          
                  +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

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

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

              

      

    

     

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

     

    5.3 Recordation
      of this Agreement.
      Where
      required or otherwise as reasonably recommended by Licensee’s counsel, Licensor
      shall file this Agreement with any relevant governmental or quasi-governmental
      offices and registers. Licensor agrees to give or obtain any document or
      signature which may be required for such filings. If Licensor fails to make
      any
      such filings in a timely manner, Licensor appoints Licensee as its
      attorney-in-fact for the purpose of making such filings. The costs resulting
      from these formalities shall be borne exclusively by Licensor and, in the event
      that Licensee incurs any expenses in connection with any filings pursuant to
      this Section 5.3,
      Licensor will promptly reimburse Licensee for all such reasonable
      expenses.

     

    5.4 Representations
      and Warranties.

     

    (a) Each
      of
      the parties represents and warrants that that it is authorized to enter into
      this Agreement, and that it has secured such authorizations and approvals from
      its board of directors or as otherwise appropriate in furtherance of entering
      into this Agreement.

     

    (b) Licensor
      represents and warrants that it has the right and authority to grant the license
      granted hereunder and perform its other obligations contained
      herein.

     

    5.5 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.

     

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    5.6 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.

     

    5.7 Entire
      Agreement.
      This
      Agreement, including the schedules attached hereto, and any 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,
      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.

     

    5.8 Assignment
      and
      Sublicense.

     

    (a) Neither
      this Agreement nor any of the rights or obligations hereunder may be assigned
      by
      Licensor without the prior written consent of Licensee.

     

    (b) Licensee
      may, upon written notice to Licensor indicating the identity of any proposed
      assignee or sublicensee, freely assign and sublicense its rights and obligations
      hereunder; provided,
      however,
      that
      Licensee shall not assign this Agreement or grant any sublicense hereunder
      to
      any person that produces or distributes products or provides services in direct
      competition with the products and services of Licensor; provided further
      that any
      sublicense granted by Licensee under this Agreement shall contain terms and
      conditions at least as restrictive as those contained in this Agreement and
      shall contain no rights to further sublicense; provided further
      that any
      permitted assignee or transferee must expressly consent in writing to be bound
      by the terms and conditions of this Agreement.

     

    (c) Notwithstanding
      anything herein to the contrary, either party may, with written notice to the
      other party, assign this Agreement (i) to the survivor in a merger involving
      such party, (ii) to the acquirer of all or substantially all of such party’s
      assets, stock, or a business unit related to this license agreement or (iii)
      an
      Affiliate of such party.

     

    (d) Any
      sublicense granted or assignment or transfer in violation of this Section 5.8
      shall be
      void and without effect.

     

    5.9 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.

     

    5.10 No
      Other Representations or Warranties.
      EXCEPT
      AS EXPRESSLY SET FORTH HEREIN, LICENSOR EXPRESSLY DISCLAIMS ANY REPRESENTATIONS,
      WARRANTIES OR CONDITIONS, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, WITH
      RESPECT TO THE LICENSED PATENTS, KNOW-HOW, LICENSED RIGHTS AND ANY OTHER MATTERS
      CONTEMPLATED BY THIS AGREEMENT, INCLUDING ANY IMPLIED WARRANTIES OF
      MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR VALIDITY OF TECHNOLOGY
      (PATENTED OR UNPATENTED), OR NONINFRINGEMENT.

     

    
      
         

      

      
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    5.11 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.

     

    5.12 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.

     

    5.13 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.

     

    5.14 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.

     

    5.15 Consent
      to Jurisdiction.
      Subject
      to Section 5.18
      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 5.18
      hereof
      or (iv) in the event a Dispute is determined to be unarbitrable pursuant to
      an
      arbitration decision rendered in application of Section 5.18
      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 5.2.
      Nothing
      in this Agreement will affect the right of any party to this Agreement to serve
      process in any other manner permitted by law.

     

    
      
         

      

      
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    5.16 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 5.16.

     

    5.17 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.

     

    5.18 Arbitration.
      It is
      understood and agreed between the parties hereto that if the transactions
      contemplated by the Asset Contribution 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:

     

    (a) 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.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    (b) 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. Licensor shall select
      one
      arbitrator and Licensee 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.

     

    5.19 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.

     

    5.20 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.

     

    5.21 Expenses.
      Except
      as otherwise expressly provided herein, all costs and expenses incurred in
      connection with this Agreement and the transactions contemplated herein shall
      be
      paid by the party incurring such expenses.

     

    5.22 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.

     

    5.23 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.

     

    
      
         

      

      
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    5.24 Survival.
      Article V
      and
Sections 5.10,
      5.15,
      5.16
      and
5.18
      shall
      survive the expiration or termination of this Agreement for any reason;
provided,
      however,
      that
      termination pursuant to Section 2.3(b)
      shall
      not relieve a defaulting or breaching party from any liability to the other
      party hereto.

     

    5.25 LIMITATION
      OF LIABILITY.
      IN NO
      EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR (1) ANY INDIRECT,
      INCIDENTAL, SPECIAL, EXEMPLARY, CONSEQUENTIAL (INCLUDING BUT NOT LIMITED TO,
      LOSS OF INCOME, PROFIT, OR SAVINGS) OR PUNITIVE DAMAGES ARISING OUT OF OR IN
      CONNECTION WITH THE AGREEMENT, EVEN IF THE RESPONSIBLE PARTY HAD BEEN ADVISED
      OF
      THE POSSIBILITY OF SUCH DAMAGES OR EVEN IF SUCH DAMAGES WERE REASONABLY
      FORESEEABLE OR (2) AN AMOUNT IN EXCESS OF ONE MILLION DOLLARS
      ($1,000,000).

     

    [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:

            

    

    

    
      
         

      

      
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    SCHEDULE
      1

    LICENSED
      PATENTS

     

     

    
      	1)	
              #15602
                FR

            

    

     

    

    
      
         

      

      
        S-1

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