Document:

Exhibit
      10.44

    
      

      

      

      
 

      

      INNOVATIVE
        CARD TECHNOLOGIES, INC.

      

      

      

      2007
        EQUITY INCENTIVE PLAN, 

      
 

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      TABLE
        OF
        CONTENTS

      

        
          	
                  SECTION
                    1: BACKGROUND, PURPOSE AND DURATION

                
	
                  1.1
                    Background and Effective Date

                
	
                  1.2
                    Purpose of the Plan

                
	
                  1.3
                    Duration of the Plan

                
	
                  1.4
                    Termination of Old Plans

                
	
                  SECTION
                    2 DEFINITIONS

                
	
                  2.1
                    1934 Act

                
	
                  2.2
                    Affiliate

                
	
                  2.3
                    Affiliated SAR

                
	
                  2.4
                    Applicable Laws

                
	
                  2.5
                    Award

                
	
                  2.6
                    Award Agreement

                
	
                  2.7
                    Board or Board of Directors

                
	
                  2.8
                    Change in Control

                
	
                  2.9
                    Code

                
	
                  2.10
                    Committee

                
	
                  2.11
                    Company

                
	
                  2.12
                    Consultant

                
	
                  2.13
                    Director

                
	
                  2.14
                    Disability

                
	
                  2.15
                    Employee

                
	
                  2.16
                    ERISA

                
	
                  2.17
                    Fair Market Value

                
	
                  2.18
                    Freestanding SAR

                
	
                  2.19
                    Incentive Stock Option

                
	
                  2.20
                    Nonqualified Stock Option

                
	
                  2.21
                    Option

                
	
                  2.22
                    Option Price

                
	
                  2.23
                    Participant

                
	
                  2.24
                    Performance Share

                
	
                  2.25
                    Performance Unit

                
	
                  2.26
                    Period of Restriction

                
	
                  2.27
                    Plan

                
	
                  2.29
                    Retirement

                
	
                  2.30
                    Rule 16b-3

                
	
                  2.31
                    Section 16 Person

                
	
                  2.32
                    Shares

                
	
                  2.33
                    Stock Appreciation Right or SAR

                
	
                  2.34
                    Subsidiary

                
	
                  2.35
                    Tandem SAR

                
	
                  2.36
                    Termination of Employment

                
	
                  SECTION
                    3 ADMINISTRATION

                
	
                  3.1
                    The Committee

                
	
                  3.2
                    Authority of the Committee

                
	
                  3.3
                    Decisions Binding

                

        

         

        
          
            
            

          

          
            i

            
              

            

          

          
            
            

          

        

         

        
          	
                  SECTION
                    4 SHARES SUBJECT TO THE PLAN

                
	
                  4.1
                    Shares Available

                
	
                  4.1.1
                    Maximum Shares Available Under Plan

                
	
                  4.1.2
                    General Award Limitation

                
	
                  4.1.3
                    Adjustments

                
	
                  4.2
                    Number of Shares

                
	
                  4.2
                    Lapsed Awards

                
	
                  SECTION
                    5 STOCK OPTIONS

                
	
                  5.1
                    Grant of Options

                
	
                  5.2
                    Award Agreement

                
	
                  5.3
                    Option Price

                
	
                  5.3.1
                    Nonqualified Stock Options

                
	
                  5.3.2
                    Incentive Stock Options

                
	
                  5.3.3
                    Substitute Options

                
	
                  5.4
                    Expiration of Options

                
	
                  5.4.1
                    Expiration Dates

                
	
                  5.4.2
                    Committee Discretion

                
	
                  5.5
                    Exercise of Options

                
	
                  5.6
                    Payment

                
	
                  5.7
                    Restrictions on Share Transferability

                
	
                  5.8
                    Certain Additional Provisions for Incentive Stock
                    Options

                
	
                  5.8.1
                    Exercisability

                
	
                  5.8.2
                    Termination of Employment

                
	
                  5.8.3
                    Company and Subsidiaries

                
	
                  5.8.4
                    Expiration

                
	
                  5.9
                    Nontransferability

                
	
                  SECTION
                    6 STOCK APPRECIATION RIGHTS

                
	
                  6.1
                    Grant of SARs

                
	
                  6.2
                    Exercise of Tandem SARs

                
	
                  6.2.1
                    ISOs

                
	
                  6.3
                    Exercise of Affiliated SARs

                
	
                  6.4
                    Exercise of Freestanding SARs

                
	
                  6.5
                    SAR Agreement

                
	
                  6.6
                    Expiration of SARs

                
	
                  6.7
                    Payment of SAR Amount

                
	
                  6.8
                    Nontransferability of SARs

                
	
                  Section
                    7 RESTRICTED STOCK

                
	
                  7.1
                    Grant of Restricted Stock

                
	
                  7.2
                    Restricted Stock Agreement

                
	
                  7.3
                    Transferability

                
	
                  7.4
                    Other Restrictions

                
	
                  7.5
                    Removal of Restrictions

                
	
                  7.6
                    Voting Rights

                
	
                  7.7
                    Dividends and Other Distributions

                
	
                  7.8
                    Return of Restricted Stock to Company

                
	
                  7.9
                    Repurchase Option

                
	
                  SECTION
                    8 PERFORMANCE UNITS AND PERFORMANCE SHARES

                
	
                  8.1
                    Grant of Performance Units/Shares

                
	
                  8.2
                    Value of Performance Units/Shares

                
	
                  8.3
                    Earning of Performance Units/Shares

                
	
                  8.4
                    Form and Timing of Performance Units/Shares

                
	
                  8.5
                    Cancellation of Performance Units/Shares

                
	
                  8.6
                    Nontransferability

                

        

         

        
          
            
            

          

          
            ii

            
              

            

          

          
            
            

          

        

         

        
          	
                  SECTION
                    9 BENEFICIARY DESIGNATION

                
	
                  SECTION
                    10 DEFERRALS

                
	
                  SECTION
                    11 RIGHTS OF EMPLOYEES AND CONSULTANTS

                
	
                  11.1
                    No Effect on Employment or Service

                
	
                  11.2
                    Participation

                
	
                  SECTION
                    12 AMENDMENT, SUSPENSION, OR TERMINATION

                
	
                  SECTION
                    13 TAX WITHHOLDING

                
	
                  13.1
                    Withholding Requirements

                
	
                  13.2
                    Shares Withholding

                
	
                  SECTION
                    14 INDEMNIFICATION

                
	
                  SECTION
                    15 ADJUSTMENTS UPON CHANGES IN CAPITALIZATION,
                    DISSOLUTION, MERGER OR ASSET SALE

                
	
                  15.1
                    Adjustments

                
	
                  15.2
                    Change in Control

                
	
                  SECTION
                    16 CONDITIONS UPON ISSUANCE OF SHARES

                
	
                  16.1
                    Legal Compliance

                
	
                  16.2
                    Investment Representations

                
	
                  SECTION
                    17 INABILITY TO OBTAIN AUTHORITY

                
	
                  SECTION
                    18 RESERVATION OF SHARES

                
	
                  SECTION
                    19 LEGAL CONSTRUCTION

                
	
                  19.1
                    Gender and Number

                
	
                  19.2
                    Severability

                
	
                  19.3
                    Requirements of Law

                
	
                  19.4
                    Securities Law Compliance

                
	
                  19.5
                    Governing Law

                
	
                  19.6
                    Captions

                

        

      

       

      
        
          
          

        

        
          iii

          
            

          

        

        
          
          

        

      

      INNOVATIVE
        CARD TECHNOLOGIES, INC.

      

      2007
        Equity Incentive Plan,

      

       

      Innovative
        Card Technologies, Inc. hereby adopts the 2007 Equity Incentive Plan, effective
        as of September 24, 2007 as follows: 

       

      SECTION
        1  

      BACKGROUND,
        PURPOSE AND DURATION 

       

      1.1  Background
        and Effective Date.
        The Plan
        provides for the granting of Nonqualified Stock Options, Incentive Stock
        Options, Stock Appreciation Rights (or SARs), Restricted Stock, Restricted
        Stock
        Units, Performance Units and Performance Shares. The Plan is adopted and
        effective as of September 24, 2007, subject to approval by the stockholders
        of
        the Company within twelve (12) months. The Company will seek stockholder
        approval in the manner and to the degree required under Applicable Laws.
        Awards
        may be granted prior to the receipt of stockholder approval, but such grants
        shall be null and void if such approval is not in fact received within twelve
        (12) months. 

       

      1.2  Purpose
        of the Plan.
        The
        purpose of the Plan is to promote the success, and enhance the value, of the
        Company by aligning the interests of Participants with those of the Company’s
        shareholders, and by providing Participants with an incentive for outstanding
        performance. The Plan is further intended to provide flexibility to the Company
        in its ability to motivate, attract, and retain the services of outstanding
        individuals, upon whose judgment, interest, and special effort the success
        of
        the Company largely is dependent.

       

      1.3  Duration
        of the Plan.
        The
        Plan shall commence on the date specified in Section 1.1
        and
        subject to SECTION
        12
        (concerning the Board’s right to amend or terminate the Plan), shall remain in
        effect thereafter. However, without further stockholder approval, no Incentive
        Stock Option may be granted under the Plan on or after September 24, 2017.
        

       

      1.4  Termination
        of the 2004 Stock Incentive Plan.
        The
        Company’s existing 2004 Stock Incentive Plan shall terminate as to new grants
        effective upon stockholder approval of this Plan, and no further grants of
        awards shall be made under the 2004 Stock Incentive Plan after the date of
        such
        approval. The termination of the 2004 Stock Incentive Plan will not affect
        the
        rights of holders of options previously granted and outstanding under the
        2004
        Stock Incentive Plan.

       

      SECTION
        2

      DEFINITIONS

       

      The
        following words and phrases shall have the following meanings unless a different
        meaning is plainly required by the context: 

       

      2.1  “1934
        Act”
        means
        the Securities Exchange Act of 1934, as amended. Reference to a specific
        section
        of the Exchange Act or regulation thereunder shall include such section or
        regulation, any valid regulation promulgated under such section, and any
        comparable provision of any future legislation or regulation amending,
        supplementing or superseding such section or regulation. 

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      2.2  “Affiliate”
        means
        any corporation or any other entity (including, but not limited to, partnerships
        and joint ventures) controlling, controlled by, or under common control with
        the
        Company. 

       

      2.3  “Affiliated
        SAR”
        means an
        SAR that is granted in connection with a related Option, and which automatically
        will be deemed to be exercised at the same time that the related Option is
        exercised. 

       

      2.4  “Applicable
        Laws”
        means
        the requirements relating to the administration of equity plans under U.
        S.
        state corporate laws, U.S. federal and state securities laws, the Code, any
        stock exchange or quotation system on which the Shares are is listed or quoted
        and the applicable laws of any foreign country or jurisdiction where Awards
        are,
        or will be, granted under the Plan.

       

      2.5  “Award”
        means,
        individually or collectively, a grant under the Plan of Nonqualified Stock
        Options, Incentive Stock Options, SARs, Restricted Stock, Restricted Stock
        Units, Performance Units, or Performance Shares. 

       

      2.6  “Award
        Agreement”
        means
        the written agreement setting forth the terms and provisions applicable to
        each
        Award granted under the Plan. 

       

      2.7  “Board”
        or “Board of Directors”
        means
        the Board of Directors of the Company. 

       

      2.8  “Change
        in Control”
        is
        defined in Section 15.2.

       

      2.9  “Code”
        means
        the Internal Revenue Code of 1986, as amended. Reference to a specific section
        of the Code or regulation thereunder shall include such section or regulation,
        any valid regulation promulgated under such section, and any comparable
        provision of any future legislation or regulation amending, supplementing
        or
        superseding such section or regulation. 

       

      2.10  “Committee”
        means
        the committee appointed by the Board to administer the Plan pursuant to
        Section 3.1.
        

       

      2.11  “Company”
        means
        Innovative Card Technologies Inc., a Delaware corporation, or any successor
        thereto. 

       

      2.12  “Consultant”
        means an
        individual who provides significant services to the Company and/or an Affiliate,
        including a Director who is not an Employee. 

       

      2.13  “Director”
        means
        any individual who is a member of the Board of Directors of the Company.
        

       

      2.14  “Disability”
        means a
        permanent and total disability within the meaning of Code Section 22(e)(3).

       

      2.15  “Employee”
        means an
        employee of the Company or of an Affiliate, whether such employee is so employed
        at the time the Plan is adopted or becomes so employed subsequent to the
        adoption of the Plan. 

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      2.16  “ERISA”
        means
        the Employee Retirement Income Security Act of 1974, as amended. Reference
        to a
        specific section of ERISA shall include such section, any valid regulation
        promulgated thereunder, and any comparable provision of any future legislation
        amending, supplementing or superseding such section. 

       

      2.17  “Fair
        Market Value”
        means as
        of any date, the value of a Share determined as follows:

       

      (a)  If
        the
        Shares are listed on any established stock exchange or a national market
        system,
        including without limitation the Nasdaq Global Select Market or The Nasdaq
        Capital Market of The Nasdaq Stock Market, its Fair Market Value shall be
        the
        closing sales price for such Share (or the closing bid, if no sales were
        reported) as quoted on such exchange or system on the day of, or, if such
        day is
        not a market trading day, the last market trading day prior to, the day of
        determination, as reported in The Wall Street Journal or such other source
        as
        the Committee deems reliable;

       

      (b)  If
        the
        Shares are regularly quoted by a recognized securities dealer but selling
        prices
        are not reported, the Fair Market Value of the Share shall be the mean between
        the high bid and low asked prices for the Shares on the day of, or, if such
        day
        is not a market trading day, the last market trading day prior to, the day
        of
        determination, as reported in The Wall Street Journal or such other source
        as
        the Committee deems reliable; or 

       

      (c)  In
        the
        absence of an established market for the Shares, the Fair Market Value shall
        be
        determined in good faith by the Committee. 

       

      2.18  “Freestanding
        SAR”
        means a
        SAR that is granted independently of any Option. 

       

      2.19  “Incentive
        Stock Option” or “ISO”
        means an
        option to purchase Shares, which is designated as an Incentive Stock Option
        and
        is intended to meet the requirements of Section 422 of the Code.

       

      2.20  “Nonqualified
        Stock Option”
        means an
        option to purchase Shares which is not intended to be an Incentive Stock
        Option.

       

      2.21  “Option”
        means an
        Incentive Stock Option or a Nonqualified Stock Option. 

       

      2.22  “Option
        Price”
        means
        the price at which a Share may be purchased pursuant to an Option. 

       

      2.23  “Participant”
        means an
        Employee, Consultant or Director who has an outstanding Award.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      2.24  “Performance
        Measures”
        shall
        mean the criteria and objectives, established by the Committee, which shall
        be
        satisfied or met (i) as a condition to the grant or exercisability of all
        or a
        portion of an Option or SAR or (ii) during the applicable Period of Restriction
        or Performance Period as a condition to the vesting of the holder’s interest, in
        the case of a Restricted Stock Award, of the Shares subject to such Award,
        or,
        in the case of a Restricted Stock Unit Award, Performance Share Award or
        Performance Unit Award, to the holder’s receipt of the Shares subject to such
        Award or of payment with respect to such Award. To the extent necessary for
        an
        Award to be qualified performance-based compensation under Section 162(m)
        of the
        Code and the regulations thereunder, such criteria and objectives shall include
        one or more of the following corporate-wide or subsidiary, division, operating
        unit or individual measures, stated in either absolute terms or relative
        terms,
        such as rates of growth or improvement: the attainment by a Share of a specified
        Fair Market Value for a specified period of time, earnings per share, return
        to
        stockholders (including dividends), return on assets, return on equity, earnings
        of the Company before or after taxes and/or interest, revenues, market share,
        cash flow or cost reduction goals, interest expense after taxes, return on
        investment, return on investment capital, economic value created, operating
        margin, net income before or after taxes, pretax earnings before interest,
        depreciation and amortization, pretax operating earnings after interest expense
        and before incentives, and/or extraordinary or special items, operating
        earnings, net cash provided by operations, and strategic business criteria,
        consisting of one or more objectives based on meeting specified market
        penetration, geographic business expansion goals, cost targets, customer
        satisfaction, reductions in errors and omissions, reductions in lost business,
        management of employment practices and employee benefits, supervision of
        litigation and information technology, quality and quality audit scores,
        productivity, efficiency, and goals relating to acquisitions or divestitures,
        or
        any combination of the foregoing. In the sole discretion of the Committee,
        but
        subject to Section 162(m) of the Code, the Committee may amend or adjust
        the
        Performance Measures or other terms and conditions of an outstanding Award
        in
        recognition of unusual or nonrecurring events affecting the Company or its
        financial statements or changes in Applicable Laws or accounting
        principles.

       

      2.25  “Performance
        Period”
        shall
        mean any period designated by the Committee during which (i) the Performance
        Measures applicable to an Award shall be measured and (ii) the conditions
        to
        vesting applicable to an Award shall remain in effect. 

       

      2.26  “Performance
        Share”
        means an
        Award granted to an Employee pursuant to SECTION
        8
        having
        an initial value equal to the Fair Market Value of a Share on the date of
        grant.

       

      2.27  “Performance
        Unit”
        means an
        Award granted to an Employee pursuant to SECTION
        8
        having
        an initial value (other than the Fair Market Value of a Share) that is
        established by the Committee at the time of grant. 

       

      2.28  “Period
        of Restriction”
        means
        the period during which conditions to vesting applicable to an Award shall
        remain in effect. 

       

      2.29  “Plan”
        means
        the Innovative Card Technologies, Inc. 2007 Equity Incentive Plan, as set
        forth
        in this instrument and as hereafter amended from time to time. 

       

      2.30  “Restricted
        Stock”
        shall
        mean Shares which are subject to a Period of Restriction and which may, in
        addition thereto, be subject to the attainment of specified Performance Measures
        within a specified Performance Period.

       

      2.31  “Restricted
        Stock Unit”
        shall
        mean a right to receive one Share or, in lieu thereof, the Fair Market Value
        of
        such Share in cash, which shall be contingent upon the expiration of a specified
        Period of Restriction and which may, in addition thereto, be contingent upon
        the
        attainment of specified Performance Measures within a specified Performance
        Period.

       

      2.32  “Retirement”
        means,
        in the case of an Employee, a Termination of Employment by reason of the
        Employee’s retirement at or after age 62. 

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      2.33  “Rule
        16b-3”
        means
        Rule 16b-3 promulgated under the 1934 Act, and any future regulation amending,
        supplementing or superseding such regulation. 

       

      2.34  “Section
        16 Person”
        means a
        person who, with respect to the Shares, is subject to Section 16 of the
        1934 Act. 

       

      2.35  “Shares”
        means
        the shares of common stock, $0.001 par value, of the Company. 

       

      2.36  “Stock
        Appreciation Right” or “SAR”
        means an
        Award, granted alone or in connection with a related Option, that pursuant
        to
        the terms of SECTION
        7
        is
        designated as an SAR. 

       

      2.37  “Subsidiary”
        means
        any “subsidiary corporation” (other than the Company) as defined in Code
        Section 424(f). 

       

      2.38  “Tandem
        SAR”
        means an
        SAR that is granted in connection with a related Option, the exercise of
        which
        shall require forfeiture of the right to purchase an equal number of Shares
        under the related Option (and when a Share is purchased under the Option,
        the
        SAR shall be canceled to the same extent). 

       

      2.39  “Termination
        of Employment”
        means a
        cessation of the employee-employer or director or other service arrangement
        relationship between an Employee, Consultant or Director and the Company
        or an
        Affiliate for any reason, including, but not by way of limitation, a termination
        by resignation, discharge, death, Disability, Retirement, or the disaffiliation
        of an Affiliate, but excluding any such termination where there is a
        simultaneous reemployment or re-engagement by the Company or an Affiliate.
        

       

      SECTION
        3

      ADMINISTRATION
        

       

      3.1  The
        Committee.
        The
        Plan
        shall be administered by a committee of the Board that meets the requirements
        of
        this Section 3.1
        (hereinafter referred to as “the
        Committee”).
        The
        Committee shall consist of not less than two (2) Directors. The members of
        the
        Committee shall be appointed from time to time by, and shall serve at the
        pleasure of, the Board of Directors. The Committee shall be comprised solely
        of
        Directors who are “outside directors” under Section 162(m) of the Code,
“non-employee directors” under Rule 16b-3 and “independent directors” under the
        requirements of any national securities exchange or system upon which the
        Shares
        are then listed and/or traded. 

       

      3.2  Authority
        of the Committee.
        The
        Committee shall have all powers and discretion necessary or appropriate to
        administer the Plan and to control its operation, including, but not limited
        to,
        the power (a) to determine which Employees, Consultants and Directors shall
        be
        granted Awards, (b) to prescribe the terms and conditions of such Awards,
        (c) to
        interpret the Plan and the Awards, (d) to adopt rules for the administration,
        interpretation and application of the Plan as are consistent therewith, and
        (e)
        to interpret, amend or revoke any such rules. 

       

      The
        Committee, in its sole discretion and on such terms and conditions as it
        may
        provide, may delegate all or any part of its authority and powers under the
        Plan
        to one or more directors and/or officers of the Company; provided,
        however,
        that
        the Committee may not delegate its authority and powers with respect to Section
        16 Persons or with respect to Awards which are intended to constitute “qualified
        performance-based compensation”, within the meaning of Section 162(m) of
        the Code. 

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      3.3  Decisions
        Binding.
        All
        determinations and decisions made by the Committee shall be final, conclusive,
        and binding on all persons, and shall be given the maximum deference permitted
        by law. 

       

      SECTION
        4

      SHARES
        SUBJECT TO THE PLAN 

       

      4.1  Shares
        Available. 

       

      4.1.1  Maximum
        Shares Available Under Plan.
        The
        aggregate number of Shares available for issuance under the Plan may not
        exceed
        four million (4,000,000) Shares. Such shares may be authorized but unissued
        shares or treasury shares.

       

      4.1.2  General
        Award Limitation.
        No
        Participant may receive Awards under the Plan which are intended to constitute
        “qualified performance-based compensation”, within the meaning of
        Section 162(m) of the Code, for more than 1,000,000 Shares in the aggregate
        in any single calendar year. 

       

      4.1.3   Adjustments.
        All
        Share numbers in this Section 4.1
        are
        subject to adjustment as provided in SECTION
        15.

       

      4.2  Number
        of Shares.
        The
        following rules will apply for purposes of the determination of the number
        of
        Shares available for grant under the Plan: 

       

      (a)  While
        an
        Award is outstanding, it shall be counted against the authorized pool of
        Shares,
        regardless of its vested status. 

       

      (b)  The
        grant
        of an Option or Restricted Stock shall reduce the Shares available for grant
        under the Plan by the number of Shares subject to such Award. 

       

      (c)  The
        grant
        of a Tandem SAR shall reduce the number of Shares available for grant by
        the
        number of Shares subject to the related Option (i.e., there is no double
        counting of Options and their related Tandem SARs); provided,
        however,
        that,
        upon the exercise of such Tandem SAR, the authorized Share pool shall be
        credited with the appropriate number of Shares representing the number of
        shares
        reserved for such Tandem SAR less the number of Shares actually delivered
        upon
        exercise thereof or the number of Shares having a Fair Market Value equal
        to the
        cash payment made upon such exercise. 

       

      (d)  The
        grant
        of an Affiliated SAR shall reduce the number of Shares available for grant
        by
        the number of Shares subject to the SAR, in addition to the number of Shares
        subject to the related Option; provided, however, that, upon the exercise
        of
        such Affiliated SAR, the authorized Share pool shall be credited with the
        appropriate number of Shares representing the number of shares reserved for
        such
        Affiliated SAR less the number of Shares actually delivered upon exercise
        thereof or the number of Shares having a Fair Market Value equal to the cash
        payment made upon such exercise. 

       

      
        
          
          

        

        
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      (e)  The
        grant
        of a Freestanding SAR shall reduce the number of Shares available for grant
        by
        the number of Freestanding SARs granted; provided,
        however,
        that,
        upon the exercise of such Freestanding SAR, the authorized Share pool shall
        be
        credited with the appropriate number of Shares representing the number of
        shares
        reserved for such Freestanding SAR less the number of Shares actually delivered
        upon exercise thereof or the number of Shares having a Fair Market Value
        equal
        to the cash payment made upon such exercise. 

       

      (f)  The
        Committee shall in each case determine the appropriate number of Shares to
        deduct from the authorized pool in connection with the grant of Performance
        Units and/or Performance Shares. 

       

      (g)  To
        the
        extent that an Award is settled in cash rather than in Shares, the authorized
        Share pool shall be credited with the appropriate number of Shares having
        a Fair
        Market Value equal to the cash settlement of the Award. 

       

      4.3  Lapsed
        Awards.
        If an
        Award is cancelled, terminates, expires, or lapses for any reason (with the
        exception of the termination of a Tandem SAR upon exercise of the related
        Option, or the termination of a related Option upon exercise of the
        corresponding Tandem SAR), any Shares subject to such Award again shall be
        available to be the subject of an Award. 

       

      SECTION
        5

      STOCK
        OPTIONS 

       

      5.1  Grant
        of Options.
        Options
        may be granted to Employees, Consultants and Directors at any time and from
        time
        to time, as determined by the Committee in its sole discretion. The Committee,
        in its sole discretion, shall determine the number of Shares subject to Options
        granted to each Participant. The Committee may grant ISOs, NQSOs, or a
        combination thereof. 

       

      5.2  Award
        Agreement.
        Each
        Option shall be evidenced by an Award Agreement that shall specify the Option
        Price, the expiration date of the Option, the number of Shares to which the
        Option pertains, any conditions to exercise of the Option, and such other
        terms
        and conditions as the Committee, in its discretion, shall determine. The
        Award
        Agreement also shall specify whether the Option is intended to be an ISO
        or a
        NQSO. 

       

      5.3  Option
        Price.
        Subject
        to the provisions of this Section 5.3,
        the
        Option Price for each Option shall be determined by the Committee in its
        sole
        discretion. 

       

      5.3.1  Nonqualified
        Stock Options.
        In the
        case of a Nonqualified Stock Option, the Option Price shall be not less than
        one
        hundred percent (100%) of the Fair Market Value of a Share on the date that
        the
        Option is granted. 

       

      5.3.2  Incentive
        Stock Options.
        In the
        case of an Incentive Stock Option, the Option Price shall be not less than
        one
        hundred percent (100%) of the Fair Market Value of a Share on the date that
        the
        Option is granted; provided,
        however,
        that if
        at the time that the Option is granted, the Employee (together with persons
        whose stock ownership is attributed to the Employee pursuant to Section 424(d)
        of the Code) owns stock possessing more than 10% of the total combined voting
        power of all classes of stock of the Company or any of its Subsidiaries,
        the
        Option Price shall be not less than one hundred and ten percent (110%) of
        the
        Fair Market Value of a Share on the date that the Option is granted. 

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      5.3.3  Substitute
        Options.
        Notwithstanding the provisions of Sections 5.3.1
        and
5.3.2,
        in the
        event that the Company or an Affiliate consummates a transaction described
        in
        Section 424(a) of the Code (e.g., the acquisition of property or stock from
        an
        unrelated corporation), persons who become Employees, Consultants or Directors
        on account of such transaction may be granted Options in substitution for
        options granted by their former employer. If such substitute Options are
        granted, the Committee, in its sole discretion, may determine that such
        substitute Options shall have an exercise price less than 100% of the Fair
        Market Value of the Shares on the date the Option is granted. 

       

      5.4  Expiration
        of Options.
        Unless
        the applicable stock option agreement provides otherwise, each Option shall
        terminate upon the first to occur of the events listed in Section 5.4.1,
        subject
        to Section 5.4.2. 

       

      5.4.1  Expiration
        Dates. 

       

      (a)  The
        date
        for termination of the Option set forth in the Award Agreement; 

       

      (b)  The
        expiration of ten years from the date the Option was granted, or 

       

      (c)  The
        expiration of three months from the date of the Participant’s Termination of
        Employment for a reason other than the Participant’s death, Disability or
        Retirement, or 

       

      (d)  The
        expiration of twelve months from the date of the Participant’s Termination of
        Employment by reason of Disability, or 

       

      (e)  The
        expiration of twelve months from the date of the Participant’s death, if such
        death occurs while the Participant is in the employ or service of the Company
        or
        an Affiliate. 

       

      5.4.2  Committee
        Discretion.
        The
        Committee shall provide, in the terms of each individual Option, when such
        Option expires and becomes unexercisable. After the Option is granted, the
        Committee, in its sole discretion may, subject to the requirements of Section
        409A of the Code, extend the maximum term of such Option.
        The
        foregoing discretionary authority is subject to the limitations and restrictions
        on Incentive Stock Options set forth in Section 5.8.

       

      5.5  Exercise
        of Options.
        Options
        granted under the Plan shall be exercisable at such times, and subject to
        such
        restrictions and conditions, as the Committee shall determine in its sole
        discretion. After an Option is granted, the Committee, in its sole discretion,
        may accelerate the exercisability of the Option. 

       

      5.6  Payment.
        The
        Committee shall determine the acceptable form of consideration for exercising
        an
        Option, including the method of payment. In the case of an Incentive Stock
        Option, the Committee shall determine the acceptable form of consideration
        at
        the time of grant. Such consideration may consist entirely of:

       

      (a)  cash;

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      (b)  check;

       

      (c)  promissory
        note;

       

      (d)  other
        Shares which have a Fair Market Value on the date of surrender equal to the
        aggregate exercise price of the Shares as to which said Option shall be
        exercised;

       

      (e)  consideration
        received by the Company from a licensed broker under a cashless exercise
        program
        implemented by the Company to facilitate “same day” exercises and sales of
        Options;

       

      (f)  a
        reduction in the amount of any Company liability to the Participant, including
        any liability attributable to the Participant's participation in any
        Company-sponsored deferred compensation program or arrangement;

       

      (g)  any
        combination of the foregoing methods of payment; or

       

      (h)  such
        other consideration and method of payment for the issuance of Shares to the
        extent permitted by applicable laws. 

       

      5.7  Restrictions
        on Share Transferability.
        The
        Committee may impose such restrictions on any Shares acquired pursuant to
        the
        exercise of an Option, as it may deem advisable, including, but not limited
        to,
        restrictions related to Federal securities laws, the requirements of any
        national securities exchange or system upon which such Shares are then listed
        and/or traded, and/or any blue sky or state securities laws. 

       

      5.8  Certain
        Additional Provisions for Incentive Stock Options. 

       

      5.8.1  Exercisability.
        The
        aggregate Fair Market Value (determined at the time the Option is granted)
        of
        the Shares with respect to which Incentive Stock Options are exercisable
        for the
        first time by any Employee during any calendar year (under all plans of the
        Company and its Subsidiaries) shall not exceed $100,000. 

       

      5.8.2  Termination
        of Employment.
        No
        Incentive Stock Option may be exercised more than three months after the
        Participant’s termination of employment for any reason other than Disability or
        death, unless (a) the Participant dies during such three-month period, and
        (b)
        the Award Agreement and/or the Committee permits later exercise. No Incentive
        Stock Option may be exercised more than one year after the Participant’s
        termination of employment on account of Disability, unless (a) the Participant
        dies during such one-year period, and (b) the Award Agreement and/or the
        Committee permit later exercise.

       

      5.8.3  Company
        and Subsidiaries Only.
        Incentive Stock Options may be granted only to persons who are Employees
        of the
        Company and/or a Subsidiary at the time of grant. 

       

      5.8.4  Expiration.
        No
        Incentive Stock Option may be exercised after the expiration of 10 years
        from
        the date such Option was granted; provided,
        however,
        that if
        the Option is granted to an Employee who, together with persons whose stock
        ownership is attributed to the Employee pursuant to Section 424(d) of the
        Code,
        owns stock possessing more than 10% of the total combined voting power of
        all
        classes of the stock of the Company or any of its Subsidiaries, the Option
        may
        not be exercised after the expiration of 5 years from the date that it was
        granted.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      5.9  Non-transferability
        of Options.
        No
        Option granted under the Plan may be sold, transferred, pledged, assigned,
        or
        otherwise alienated or hypothecated, other than by will, the laws of descent
        and
        distribution, or as provided under SECTION
        9.
        All
        Options granted to a Participant under the Plan shall be exercisable during
        his
        or her lifetime only by such Participant. 

       

      SECTION
        6

      STOCK
        APPRECIATION RIGHTS

       

      6.1  Grant
        of SARs.
        An SAR
        may be granted to an Employee, Consultant or Director at any time and from
        time
        to time as determined by the Committee, in its sole discretion. The Committee
        may grant Affiliated SARs, Freestanding SARs, Tandem SARs, or any combination
        thereof. The Committee shall have complete discretion to determine the number
        of
        SARs granted to any Participant, and consistent with the provisions of the
        Plan,
        the terms and conditions pertaining to such SARs. However, the grant price
        of a
        Freestanding SAR shall be at least equal to the Fair Market Value of a Share
        on
        the date of grant. The grant price of Tandem or Affiliated SARs shall equal
        the
        Option Price of the related Option. 

       

      6.2  Exercise
        of Tandem SARs.
        Tandem
        SARs may be exercised for all or part of the Shares subject to the related
        Option upon the surrender of the right to exercise the equivalent portion
        of the
        related Option. A Tandem SAR may be exercised only with respect to the Shares
        for which its related Option is then exercisable. 

       

      6.2.1  ISOs.
        Notwithstanding any contrary provision of the Plan, with respect to a Tandem
        SAR
        granted in connection with an ISO: (i) the Tandem SAR shall expire no later
        than
        the expiration of the underlying ISO; (ii) the value of the payout with respect
        to the Tandem SAR shall be for no more than one hundred percent (100%) of
        the
        difference between the Option Price of the underlying ISO and the Fair Market
        Value of the Shares subject to the underlying ISO at the time the Tandem
        SAR is
        exercised; and (iii) the Tandem SAR shall be exercisable only when the Fair
        Market Value of the Shares subject to the ISO exceeds the Option Price of
        the
        ISO. 

       

      6.3  Exercise
        of Affiliated SARs.
        An
        Affiliated SAR shall be deemed to be exercised upon the exercise of the related
        Option. The deemed exercise of an Affiliated SAR shall not necessitate a
        reduction in the number of Shares subject to the related Option. 

       

      6.4  Exercise
        of Freestanding SARs.
        Freestanding SARs shall be exercisable on such terms and conditions as the
        Committee, in its sole discretion, shall determine. 

       

      6.5  SAR
        Agreement.
        Each
        SAR shall be evidenced by an Award Agreement that shall specify the grant
        price,
        the term of the SAR, the conditions of exercise, and such other terms and
        conditions as the Committee, in its sole discretion, shall determine.

       

      6.6  Expiration
        of SARs.
        An SAR
        granted under the Plan shall expire upon the date determined by the Committee,
        in its sole discretion, and set forth in the Award Agreement. Notwithstanding
        the foregoing, the rules of Section 5.4
        (pertaining to Options) also shall apply to SARs. 

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      6.7  Payment
        of SAR Amount.
        Upon
        exercise of an SAR, a Participant shall be entitled to receive payment from
        the
        Company in an amount determined by multiplying: 

       

      (a)  The
        difference between the Fair Market Value of a Share on the date of exercise
        over
        the grant price; times 

       

      (b)  The
        number of Shares with respect to which the SAR is exercised. 

       

      At
        the
        discretion of the Committee, the payment upon SAR exercise may be in cash,
        in
        Shares of equivalent value, or in some combination thereof. 

       

      6.8  Nontransferability
        of SARs.
        No SAR
        granted under the Plan may be sold, transferred, pledged, assigned, or otherwise
        alienated or hypothecated, other than by will, the laws of descent and
        distribution, or as permitted under SECTION
        9.
        An SAR
        granted to a Participant shall be exercisable during the Participant’s lifetime
        only by such Participant. 

       

      SECTION
        7

      RESTRICTED
        STOCK AND RESTRICTED STOCK UNITS

       

      7.1  Grant
        of Restricted Stock and Restricted Stock Units.
        Subject
        to the terms and provisions of the Plan, the Committee, at any time and from
        time to time, may grant Shares of Restricted Stock to Employees, Consultants
        or
        Directors in such amounts as the Committee, in its sole discretion, shall
        determine. 

       

      7.2  Award
        Agreement.
        Each
        Award of Restricted Stock or Restricted Stock Units shall be evidenced by
        an
        Award Agreement that shall specify the Period of Restriction, the number
        of
        Shares subject to the Award, and such other terms and conditions as the
        Committee, in its sole discretion, shall determine. Unless the Committee
        determines otherwise, Shares subject to a Restricted Stock Award shall be
        held
        by the Company as escrow agent until the restrictions on such Shares have
        lapsed. 

       

      7.3  Transferability.
        Except
        as provided in this SECTION
        7,
        Shares
        subject to an Award of Restricted Stock or Restricted Stock Units may not
        be
        sold, transferred, pledged, assigned, or otherwise alienated or hypothecated
        until the end of the applicable Period of Restriction. All rights with respect
        to the Restricted Stock or Restricted Stock Units granted to a Participant
        under
        the Plan shall be available during his or her lifetime only to such Participant.
        

       

      7.4  Other
        Restrictions.
        The
        Committee, in its sole discretion, may impose such other restrictions on
        any
        Award of Restricted Stock or Restricted Stock Units as it may deem advisable
        including, without limitation, restrictions based upon the attainment of
        specific Performance Measures, and/or restrictions under applicable Federal
        or
        state securities laws; and may legend the certificates representing Restricted
        Stock to give appropriate notice of such restrictions. For example, the
        Committee may determine that some or all certificates representing Shares
        of
        Restricted Stock shall bear the following legend: 

       

      “The
        sale
        or other transfer of the shares of stock represented by this certificate,
        whether voluntary, involuntary, or by operation of law, is subject to certain
        restrictions on transfer as set forth in the Innovative Card Technologies
        Inc.
        2007 Equity Incentive Plan, and in a Restricted Stock Agreement. A copy of
        the
        Plan and such Restricted Stock Agreement may be obtained from the Secretary
        of
        Innovative Card Technologies, Inc.”

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      7.5  Removal
        of Restrictions.
        Except
        as otherwise provided in this SECTION
        7,
        Shares
        covered by each Restricted Stock or Restricted Stock Unit Award made under
        the
        Plan shall be delivered to the Participant as soon as practicable after the
        last
        day of the Period of Restriction. The Committee, in its discretion, may
        accelerate the time at which any restrictions shall lapse, and/or remove
        any
        restrictions. After the restrictions have lapsed, the Participant shall be
        entitled to have any legend or legends under Section 7.4
        removed
        from his or her Share certificate, and the Shares shall be freely transferable
        by the Participant. 

       

      7.6  Voting
        Rights.
        During
        the Period of Restriction, Participants holding Shares subject to a Restricted
        Stock Award granted hereunder may exercise full voting rights with respect
        to
        those Shares, unless the Committee determines otherwise. 

       

      7.7  Dividends
        and Other Distributions.
        During
        the Period of Restriction, Participants holding Shares of Restricted Stock
        shall
        be entitled to receive all dividends and other distributions paid with respect
        to such Shares, unless otherwise provided in the Award Agreement. If any
        such
        dividends or distributions are paid in Shares, the Shares shall be subject
        to
        the same restrictions on transferability and forfeitability as the Shares
        of
        Restricted Stock with respect to which they were paid. Participants holding
        Restricted Stock Unit Awards shall be entitled to receive dividend equivalents
        with respect to dividends and other distributions paid with respect to Shares
        only to the extent provided in the applicable Award Agreement. 

       

      7.8  Return
        of Restricted Stock to Company.
        Subject
        to the applicable Award Agreement and Section 7.5,
        upon
        the earlier of (a) the Participant’s Termination of Employment, or (b) the date
        set forth in the Award Agreement, the Restricted Stock for which restrictions
        have not lapsed shall revert to the Company and, subject to Section 4.3,
        again
        shall become available for grant under the Plan. 

       

      7.9  Repurchase
        Option.
        Unless
        the Committee determines otherwise, the Restricted Stock Purchase Agreement
        pursuant to which a Participant purchases Restricted Shares shall grant the
        Company a repurchase option exercisable upon the voluntary or involuntary
        termination of the Participant's service with the Company for any reason
        (including death or Disability). The purchase price for Shares repurchased
        pursuant to the Restricted Stock Purchase Agreement shall be the original
        price
        paid by the Participant and may be paid by cancellation of any indebtedness
        of
        the Participant to the Company. The repurchase option shall lapse at a rate
        determined by the Committee.

       

      SECTION
        8

      PERFORMANCE
        UNITS AND PERFORMANCE SHARES 

       

      8.1  Grant
        of Performance Units/Shares.
        Performance Units and Performance Shares may be granted to Employees,
        Consultants or Directors at any time and from time to time, as shall be
        determined by the Committee, in its sole discretion. The Committee shall
        have
        complete discretion in determining the number of Performance Units and
        Performance Shares granted to each Participant. 

       

      8.2  Value
        of Performance Units/Shares.
        Each
        Performance Unit shall have an initial value that is established by the
        Committee at the time of grant. Each Performance Share shall have an initial
        value equal to the Fair Market Value of a Share on the date of grant. The
        Committee shall set Performance Measures in its discretion which, depending
        on
        the extent to which they are met, will determine the number and/or value
        of
        Performance Units/Shares that will be paid out to the Participants and the
        Performance Period during which the Performance Measures must be met.

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      8.3  Earning
        of Performance Units/Shares.
        After
        the applicable Performance Period has ended, the holder of Performance
        Units/Shares shall be entitled to receive a payout of the number of Performance
        Units/Shares earned by the Participant over the Performance Period, to be
        determined as a function of the extent to which the corresponding Performance
        Measures have been achieved. After the grant of a Performance Unit/Share,
        the
        Committee, in its sole discretion, may reduce the amount payable with respect
        to
        such Performance Unit/Share. 

       

      8.4  Form
        and Timing of Payment of Performance Units/Shares.
        Payment
        of earned Performance Units/Shares shall be made as soon as practicable after
        the expiration of the applicable Performance Period. The Committee, in its
        sole
        discretion, may pay earned Performance Units/Shares in the form of cash,
        in
        Shares (which have an aggregate Fair Market Value equal to the value of the
        earned Performance Units/Shares at the close of the applicable Performance
        Period) or in a combination thereof. 

       

      8.5  Cancellation
        of Performance Units/Shares.
        Subject
        to the applicable Award Agreement, upon the earlier of (a) the Participant’s
        Termination of Employment, or (b) the date set forth in the Award Agreement,
        all
        remaining Performance Units/Shares shall be forfeited by the Participant
        to the
        Company, and subject to Section 4.3,
        the
        Shares subject thereto shall again be available for grant under the Plan.
        

       

      8.6  Non-transferability.
        Performance Units/Shares may not be sold, transferred, pledged, assigned,
        or
        otherwise alienated or hypothecated, other than by will, the laws of descent
        and
        distribution, or as permitted under SECTION
        9.
        A
        Participant’s rights under the Plan shall be exercisable during the
        Participant’s lifetime only by the Participant or the Participant’s legal
        representative.

       

      SECTION
        9

      BENEFICIARY
        DESIGNATION 

       

      If
        permitted by the Committee, a Participant may name a beneficiary or
        beneficiaries to whom any unpaid vested Award shall be paid in event of the
        Participant’s death. Each such designation shall revoke all prior designations
        by the same Participant and shall be effective only if given in a form and
        manner acceptable to the Committee. In the absence of any such designation,
        benefits remaining unpaid at the Participant’s death shall be paid to the
        Participant’s estate and, subject to the terms of the Plan, any unexercised
        vested Award may be exercised by the Committee or executor of the Participant’s
        estate.

       

      SECTION
        10

      DEFERRALS
        

       

      The
        Committee, in its sole discretion, may permit a Participant to defer receipt
        of
        the payment of cash or the delivery of Shares that would otherwise be due
        to
        such Participant under an Award. Any such deferral elections shall be subject
        to
        such rules and procedures as shall be determined by the Committee in its
        sole
        discretion, and the requirements of Section 409A of the Code. 

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      SECTION
        11

      RIGHTS
        OF
        EMPLOYEES AND CONSULTANTS 

       

      11.1  No
        Effect on Employment or Service.
        Nothing
        in the Plan shall interfere with or limit in any way the right of the Company
        to
        terminate any Participant’s employment or service at any time, with or without
        cause. 

       

      11.2  Participation.
        No
        Employee, Consultant or Director shall have the right to be selected to receive
        an Award under this Plan, or, having been so selected, to be selected to
        receive
        a future Award.

       

      SECTION
        12

      AMENDMENT,
        SUSPENSION, OR TERMINATION 

       

      The
        Board, in its sole discretion, may alter, amend or terminate the Plan, or
        any
        part thereof, at any time and for any reason. However, as required by Applicable
        Laws, no alteration or amendment shall be effective without further stockholder
        approval. Neither the amendment, suspension, nor termination of the Plan
        shall,
        without the consent of the Participant, alter or impair any rights or
        obligations under any Award theretofore granted. No Award may be granted
        during
        any period of suspension nor after termination of the Plan.

       

      SECTION
        13

      TAX
        WITHHOLDING 

       

      13.1  Withholding
        Requirements.
        Prior
        to the delivery of any Shares or cash pursuant to an Award, the Company shall
        have the power and the right to deduct or withhold, or require a Participant
        to
        remit to the Company, an amount sufficient to satisfy Federal, state, and
        local
        taxes required to be withheld with respect to such Award. 

       

      13.2  Shares
        Withholding.
        The
        Committee, in its sole discretion and pursuant to such procedures as it may
        specify from time to time, may permit a Participant to satisfy the minimum
        statutory tax withholding obligation, in whole or in part, by delivering
        to the
        Company Shares having a value equal to the amount required to be withheld.
        The
        value of the Shares to be delivered will be based on their Fair Market Value
        on
        the date of delivery.

       

      SECTION
        14

      INDEMNIFICATION
        

       

      Each
        person who is or shall have been a member of the Committee, or of the Board,
        shall be indemnified and held harmless by the Company against and from any
        loss,
        cost, liability, or expense that may be imposed upon or reasonably incurred
        by
        him or her in connection with or resulting from any claim, notion, suit,
        or
        proceeding to which he or she may be a party or in which he or she may be
        involved by reason of any action taken or failure to act under the Plan or
        any
        Award Agreement and against and from any and all amounts paid by him or her
        in
        settlement thereof, with the Company’s approval, or paid by him or her in
        settlement thereof, with the Company’s approval, or paid by him or her in
        satisfaction of any judgment in any such action, suit, or proceeding against
        him
        or her, provided he or she shall give the Company an opportunity, at its
        own
        expense, to handle and defend the same before he or she undertakes to handle
        and
        defend it on his or her own behalf. The foregoing right of indemnification
        shall
        not be exclusive of any other rights of indemnification to which such persons
        may be entitled under the Company’s Certificate of Incorporation or Bylaws, as a
        matter of law, or otherwise, or any power that the Company may have to indemnify
        them or hold them harmless. 

       

      
        
          
          

        

        
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      SECTION
        15

      ADJUSTMENTS,
        CHANGE IN CONTROL

       

      15.1  Adjustments.
        In the
        event of any stock split, stock dividend, recapitalization, reorganization,
        merger, consolidation, combination, exchange of shares, liquidation, spin-off
        or
        other similar change in capitalization or event, or any distribution to holders
        of Shares other than a regular cash dividend, the number and class of securities
        available under this Plan, the number and class of securities subject to
        each
        outstanding Option and the purchase price per security, the terms of each
        outstanding SAR, the maximum number of securities with respect to which Awards
        which are intended to constitute “qualified performance-based compensation”,
        within the meaning of Section 162(m) of the Code, may be granted during any
        calendar year to any Participant, the terms of each outstanding Restricted
        Stock
        Award, Restricted Stock Unit Award, Performance Share Award and Performance
        Share Unit Award, including the number and class of securities subject thereto,
        shall be appropriately adjusted by the Committee, such adjustments to be
        made in
        the case of outstanding Options and SARs without an increase in the aggregate
        purchase price or base price. The decision of the Committee regarding any
        such
        adjustment shall be final, binding and conclusive. If any such adjustment
        would
        result in a fractional security being (a) available under this Plan, such
        fractional security shall be disregarded, or (b) subject to an Award under
        this
        Plan, the Company shall pay the holder of such Award, in connection with
        the
        first vesting, exercise or settlement of such Award, in whole or in part,
        occurring after such adjustment, an amount in cash determined by multiplying
        (i)
        the fraction of such security (rounded to the nearest hundredth) by (ii)
        the
        excess, if any, of (A) the Fair Market Value on the vesting, exercise or
        settlement date over (B) the exercise or base price, if any, of such Award.
        

       

      15.2  Change
        in Control.
        Notwithstanding any provision in this Plan or any Agreement, in the event
        of a
        Change in Control (as defined below), the Committee (as constituted prior
        to
        such Change in Control) may, in its discretion, provide that any one or more
        of
        the following shall occur: (i) all outstanding Options and SARs shall
        immediately become exercisable in full; (ii) all outstanding Restricted Stock
        or
        Restricted Stock Unit Awards shall immediately vest; (iii) the Performance
        Period applicable to any outstanding Award shall lapse; (iv) the Performance
        Measures applicable to any outstanding Award shall be deemed to be satisfied
        at
        the target level or at any other level as determined by the Committee (as
        constituted prior to such Change in Control); (v) the shares of stock of
        the
        corporation resulting from such Change in Control, or a parent corporation
        thereof, be substituted for some or all of the Shares subject to an outstanding
        Award, with an appropriate and equitable adjustment to such Award as shall
        be
        determined by the Committee in accordance with Section 15.1; (vi) require
        outstanding Awards, in whole or in part, to be surrendered to the Company
        by the
        holder, and to be immediately cancelled by the Company, and to provide for
        the
        holder to receive (A) a cash payment in an amount equal to (i) in the case
        of an
        Option or an SAR, the number of Shares then subject to the portion of such
        Option or SAR surrendered multiplied by the excess, if any, of the highest
        per
        share price offered to holders of Shares in any transaction whereby the Change
        in Control takes place, over the purchase price or base price per share of
        Shares subject to such Option or SAR, (ii) in the case of a Restricted Stock
        or
        Restricted Stock Unit award, the number of Shares then subject to the portion
        of
        such Award surrendered multiplied by the highest per share price offered
        to
        holders of Shares in any transaction whereby the Change in Control takes
        place,
        and (iii) in the case of a Performance Unit award, the number of Performance
        Units then subject to the portion of such award surrendered; (B) shares of
        capital stock of the corporation resulting from such Change in Control, or
        a
        parent corporation thereof, having a fair market value not less than the
        amount
        determined under clause (A) above; or (C) a combination of the payment of
        cash
        pursuant to clause (A) above and the issuance of shares pursuant to clause
        (B)
        above. 

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

       

      For
        purposes of this Agreement, a “Change of Control” means the happening of any of
        the following events:

       

      (a)  When
        any
“person,” as such term is used in Sections 13(d) and 14(d) of the Exchange
        Act (other than the Company, a Subsidiary or a Company employee benefit plan,
        including any trustee of such plan acting as trustee) is or becomes the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act),
        directly or indirectly, of securities of the Company representing fifty percent
        (50%) or more of the combined voting power of the Company’s then outstanding
        securities entitled to vote generally in the election of directors;
        or

       

      (b)  The
        consummation of a merger or consolidation of the Company with any other
        corporation, other than a merger or consolidation which would result in the
        voting securities of the Company outstanding immediately prior thereto
        continuing to represent (either by remaining outstanding or by being converted
        into voting securities of the surviving entity) more than fifty percent (50%)
        of
        the total voting power represented by the voting securities of the Company
        or
        such surviving entity outstanding immediately after such merger or
        consolidation, or the sale or disposition by the Company of all or substantially
        all the Company’s assets; or

       

      (c)  The
        dissolution or liquidation of the Company; or

       

      (d)  A
        change
        in the composition of the Board of Directors of the Company, as a result
        of
        which fewer than a majority of the directors are Incumbent Directors.
“Incumbent
        Directors”
shall
        mean directors who either (A) are directors of the Company as of the date
        the Plan is approved by the stockholders, or (B) are elected, or nominated
        for election, to the Board of Directors of the Company with the affirmative
        votes of at least a majority of the Incumbent Directors at the time of such
        election or nomination (but shall not include an individual whose election
        or
        nomination is in connection with an actual or threatened proxy contest relating
        to the election of directors to the Company). 

       

      SECTION
        16

      CONDITIONS
        UPON ISSUANCE OF SHARES 

       

      16.1  Legal
        Compliance.
        Shares
        shall not be issued pursuant to the exercise of an Award unless the exercise
        of
        such Award and the issuance and delivery of Shares shall comply with Applicable
        Laws and shall be further subject to the approval of counsel for the Company
        with respect to such compliance. 

       

      16.2  Investment
        Representations.
        As a
        condition to the exercise of an Award, the Company may require the person
        exercising such Award to represent and warrant at the time of any such exercise
        that the Shares are being purchased only for investment and without any present
        intention to sell or distribute such Shares if, in the opinion of counsel
        for
        the Company, such a representation is required.

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

      SECTION
        17

      INABILITY
        TO OBTAIN AUTHORITY 

       

      The
        inability of the Company to obtain authority from any regulatory body having
        jurisdiction, which authority is deemed by the Company's counsel to be necessary
        to the lawful issuance and sale of any Shares hereunder, shall relieve the
        Company of any liability in respect of the failure to issue or sell such
        Shares
        as to which such requisite authority shall not have been obtained.

       

      SECTION
        18

      RESERVATION OF SHARES
        

       

      The
        Company, during the term of this Plan, will at all times reserve and keep
        available such number of Shares as shall be sufficient to satisfy the
        requirements of the Plan.

       

      SECTION
        19

      LEGAL
        CONSTRUCTION 

       

      19.1  Gender
        and Number.
        Except
        where otherwise indicated by the context, any masculine term used herein
        also
        shall include the feminine; the plural shall include the singular and the
        singular shall include the plural. 

       

      19.2  Severability.
        In the
        event any provision of the Plan shall be held illegal or invalid for any
        reason,
        such illegality or invalidity shall not affect the remaining parts of the
        Plan,
        and the Plan shall be construed and enforced as if the illegal or invalid
        provision had not been included.

       

      19.3  Requirements
        of Law.
        The
        granting of Awards and the issuance of Shares under the Plan shall be subject
        to
        all Applicable Laws.

       

      19.4  Securities
        Law Compliance.
        With
        respect to Section 16 Persons, transactions under this Plan are intended
        to
        comply with all applicable conditions of Rule 16b-3. To the extent any provision
        of the Plan, Award Agreement or action by the Committee fails to so comply,
        it
        shall be deemed null and void, to the extent permitted by law and deemed
        advisable by the Committee.

       

      19.5  Governing
        Law.
        The
        Plan and all Award Agreements shall be construed in accordance with and governed
        by the laws of the State of Delaware.

       

      19.6  Captions.
        Captions are provided herein for convenience only, and shall not serve as
        a
        basis for interpretation or construction of the Plan.

       

       

      
        
          
          

        

        
          17MOUNTAINS
      WEST EXPLORATION, INC.

    2001
      BUTTERFIELD ROAD

    DOWNERS
      GROVE, IL 60515

    

    

    September
      19, 2007

    

    Larry
      Malone

    4455
      Kettering Drive

    Long
      Grove, IL 60047

     

    

    Dear
      Larry:

     

    It
      is our
      pleasure to offer you the position of President and COO of Mountains West
      Exploration, Inc. The following are the details of our offer:

     

    
      	
            	1.	
              A
                base salary of $240,000 annually.

            

    

     

    
      	
            	2.	
              You
                will receive 7% of the total outstanding fully diluted shares in
                stock
                options of Mountains West Exploration, Inc. The options will vest
                over a
                three year period, 40% upon signing and 20% at the end of each successive
                year end period. The options will be issued at $.51, which is the
                trading
                value as of today, September 19,
                2007.

            

    

     

    
      	
            	3.	
              Employee
                health and dental insurance coverage is provided at the same level
                as the
                rest of the company, once insurance coverage is
                initiated.

            

    

     

    
      	
            	4.	
              You
                will be eligible to participate in the company sponsored 401K plan
                when it
                is implemented.

            

    

     

    Written
      acceptance will constitute a start date for basis of a strike price of the
      option grant.

     

     

    
      	
              /s/
                Lee Wiskowski

            	
              9/19/2007

            	 	
              /s/
                Larry Malone

            	
              9/19/2007

            
	
              Lee
                Wiskowski

            	
              Date

            	 	
              Larry
                Malone

            	
              Date

            
	
              President

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