Exhibit 10.1

AGREEMENT

between

American Bank Note Holographics, Inc. (“ABNH”)

and

VISA International Service Association (“VISA”)

A. RECITALS

 

  1. ABNH has been an authorized supplier of holograms for VISA cards since
1984.

 

  2. VISA and ABNH (collectively hereinafter the “Parties”) signed a VISA
International Holographic Magnetic Stripe Tape Manufacturing Approval Agreement
dated April 8, 2005, inter alia obliging ABNH to manufacture holographic
magnetic stripe tape (“HMS”) bearing the trade or service marks of VISA (“HMS
Manufacturing Agreement”).

 

  3. Pursuant to the HMS Manufacturing Agreement, between September 2005 and
March 2006, approximately 32 million VISA cards with HMS were manufactured and
then issued worldwide, and an additional approximately 68 million VISA cards
with HMS were manufactured.

 

  4. VISA advised members to stop the production and issuance of any VISA cards
with the HMS as of March 14, 2006, and recommended alternative design options.

 

  5. On November 7, 2006, VISA terminated the HMS Manufacturing Agreement.

 

  6. In an effort to resolve claims of damages by both VISA and ABNH arising
from the HMS Manufacturing Agreement, and with a view of preserving the business
relationship between ABNH and VISA, the parties have agreed to a mutual release
of all claims arising from the HMS Manufacturing Agreement with the terms set
forth below.

B. AGREEMENT: For good and valuable consideration and for the mutual covenants
and conditions set forth herein, the Parties agree to the following (the
“Agreement”):

 

  1.

Mutual Release: Except for the obligations specifically set forth in this
Agreement, ABNH and VISA, for themselves and their respective agents, servants,
members, parent companies, subsidiaries, affiliates, officers, directors,
stockholders, attorneys, insurers, representatives, partners (either limited or
general), predecessors in interest, assigns, and successors do hereby

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forever release, acquit, and fully discharge each other and each of their
respective agents, servants, members, spouses, employees, parent companies,
subsidiaries, officers, directors, stockholders, attorneys, insurers,
representatives, partners (either limited or general), predecessors in interest,
assigns, and successors of and from any and all manner of action or actions,
cause or causes of action, in law or in equity, suits, debts, liens, contracts,
agreements, promises, liabilities, claims (including, but not limited to, claims
for attorneys’ fees, costs, and sanctions), damages, demands, losses, costs, or
expenses of any nature, character, description, either direct or consequential,
whether now known or unknown, vested or contingent, suspected or unsuspected,
and whether or not concealed or hidden, which they may have now, may have had at
any time heretofore, or may have at any time hereafter, arising from, resulting
from, or related to the HMS Manufacturing Agreement (the “Released Claims”).

 

  2. With respect to the releases contained in section B.1 above, the Parties
expressly acknowledge and agree that they are general in nature and as broad as
may be granted under applicable law and that this Agreement fully and finally
settles and forever resolves all of the Released Claims between ABNH and VISA,
even those which are unknown, unanticipated or unsuspected, or those which may
hereafter arise as the result of the Parties’ alleged wrongful conduct prior to
entry into this Agreement related in any way to the Released Claims. Upon the
advice of legal counsel, the Parties hereby expressly waive all benefits and
protections under Section 1542 of the Civil Code of California, as well as under
any other statutes, legal decisions or common law principles of similar effect
to the extent that such benefits or protections may contravene the provisions of
this Agreement. Section 1542 of the Civil Code of California states:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.”

 

  3. As additional consideration for releases contained in B.1 above, the
parties agree to the following:

 

  a. ABNH intends to continue to supply the Dove and the Mini Dove holograms to
Visa-approved card manufacturers for as long as Visa continues to permit or
require the Dove or Mini Dove on VISA cards.

 

  b.

VISA intends to continue to authorize ABNH as a supplier of the Dove and Mini
Dove for as long as VISA permits or requires the Dove or Mini Dove to be placed
on VISA cards to the extent that ABNH continues to

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meet the specifications for the Dove or Mini Dove and provided ABNH continues to
meet the requirements applicable to Visa-approved suppliers, as set forth in
Exhibit A to this Agreement

 

  c. VISA may at its sole discretion replace the Dove or Mini Dove with a
different hologram or similar device, including a holographic magnetic stripe
(“New Device”) on VISA cards to be issued in the future. In the event that Visa
decides to develop or use a New Device for VISA cards, VISA has the sole
discretion to determine who will create the New Device which could be ABNH, VISA
itself, or another entity. If ABNH originates the New Device for VISA, ABNH
shall supply a master plate to any additional supplier of VISA’s choosing at no
charge so that both ABNH and any additional supplier can produce the New Device
for VISA cards. If a supplier other than ABNH originates the New Device, VISA
intends to consider ABNH as a secondary supplier to produce the New Device for
VISA cards, provided that ABNH has the ability to meet VISA’s specifications for
the New Device.

 

  d. Section B.3.c above is subject to the execution of a commercially
reasonable and mutually acceptable agreement between ABNH and VISA.

 

  e. ABNH and VISA will work together to develop a mutually agreeable method for
the secure destruction of the VISA HMS materials currently in ABNH’s possession.

C. General Provisions

 

  1. The Parties understand and agree that this Agreement is entered into in
compromise of a dispute between the Parties, that the releases given herein are
not to be construed as an admission of liability on the part of either party,
that the Parties deny any liability on their respective parts and that the
Parties by entering into this Agreement do so merely to avoid costly and lengthy
litigation and to preserve the existing business relationship.

 

  2. The Parties represent and acknowledge that in executing this Agreement they
did not rely and have not relied upon any representation or statement made by
the other or by any of the other’s agents, attorneys, or representatives with
regard to the subject matter, basis or effect of this Agreement or otherwise,
other than those specifically stated in this Agreement.

 

  3.

The Parties agree not to divulge the terms of this Agreement to any third
parties, other than their respective attorneys or financial advisors (who in
turn shall not divulge its contents to others), without the express consent of
the other party, except the parties agree that either party can file this
agreement with the Securities and Exchange Commission if required under the
applicable laws and regulations. The Parties may divulge the contents of this
Agreement if compelled by a valid subpoena or as otherwise required by law, but
in any

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case only after providing the other party with prior written notice as soon as
practicable and with reasonable opportunity to contest such subpoena or other
requirement.

 

  4. Each party shall bear its own costs in connection with the negotiation and
drafting of this Agreement.

 

  5. This Agreement shall be binding upon the Parties and upon their successors
and assigns, and shall inure to the benefit of said parties and each of them and
to their successors and assigns. VISA and ABNH each warrants that it has not
transferred to any person or entity any rights, causes of action or claims
released in this Agreement.

 

  6. This Agreement sets forth the entire agreement between the Parties and
fully supersedes any and all prior agreements or understandings, written or
oral, between the Parties hereto pertaining to the subject matter hereof.

 

  7. Neither of the Parties to this Agreement shall be deemed to be the author
of this Agreement nor any specific term, provision or condition herein. Any
ambiguities shall be resolved, and the terms, provisions and conditions of this
Agreement shall be construed and interpreted, without regard to which party may
have suggested, drafted, revised or otherwise authored this Agreement or any of
its specific terms, provisions or conditions, and this Agreement shall be
construed and interpreted as if drafted jointly by each of the Parties hereto.

 

  8. The Parties to this Agreement hereby confirm and admit that they have read
and/or understand this Agreement and that they have been fully advised and
represented by counsel with respect to this Agreement and all negotiations
giving rise to it, and that they have fully discussed this Agreement and all of
its terms, consequences and ramifications with their respective counsel.

 

  9. This Agreement may not be changed, altered or modified except in writing
signed by each party to this Agreement.

 

  10. This Agreement shall be interpreted in accordance with the plain meaning
of its terms and not strictly for or against any of the Parties hereto. This
Agreement shall be construed and governed under the laws of the State of
California.

 

  11.

The parties agree that any and all disputes, controversies or claims arising out
of or relating in any way to this Agreement, including the formation,
interpretation, breach or termination thereof, including whether the claims
asserted are arbitrable, will be referred to and finally determined by
arbitration in accordance with the JAMS International Arbitration Rules. A
demand for arbitration must be made in writing and in accordance with the JAMS
International Arbitration Rules, within the applicable statute of limitations
period. The tribunal will consist of three arbitrators, selected in accordance
with the JAMS International Arbitration Rules. The place of arbitration will be

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San Francisco County, California, United States. The language to be used in the
arbitral proceedings will be English. Both Parties have the right to be
represented by counsel at arbitration. Each party is responsible for paying the
fees of its own attorneys, subject to any remedies which may be provided by law.
Judgment upon the award rendered by the arbitrators may be entered by any court
having jurisdiction thereof.

 

  12. This Agreement may be executed in counterparts, and all such executed
counterparts together shall constitute one original Agreement which shall be
binding on each party to this Agreement.

 

  13. ABNH shall not make or cause to be made any oral or written statements
which can reasonably be regarded as reflecting negatively on Visa or its
products. Nothing contained herein, however, shall prevent ABNH from producing
documents, or providing truthful testimony, pursuant to a lawful subpoena or an
order of a court of competent jurisdiction on any subject matter.

 

  14. VISA shall not make or cause to be made any oral or written statements
which can reasonably be regarded as reflecting negatively on ABNH or its
products. Nothing contained herein, however, shall prevent VISA from producing
documents, or providing truthful testimony, pursuant to a lawful subpoena or an
order of a court of competent jurisdiction on any subject matter.

 

  15. Notices. Any notice required or permitted to be given under this Agreement
shall be delivered personally, or with a reputable overnight carrier, addressed
as follows:

 

If to ABNH:

     Mr. Kenneth Traub      President and Chief Executive Officer      American
Bank Note Holographics, Inc.      2 Applegate Drive      Robbinsville, NJ 08691

If to VISA:

     Mr. John Elkins      Executive Vice President      Visa International     
P.O Box 8999      San Francisco, CA 94128-8999

or to such other address as a Party may from time to time specify in writing to
the other Parties in accordance with the terms hereof.

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Robbinsville, New Jersey; June 26, 2007

   

San Francisco, California; July 18, 2007

Place, date     Place, date On behalf of ABNH:     On behalf of VISA:

/s/ Kenneth Traub

   

/s/ John Elkins

Kenneth Traub     John Elkins

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EXHIBIT A

 

1. Definitions. As used in this Exhibit, the following capitalized terms have
the meanings given to them below:

1.1. “Confidential Information” means any data or information provided or made
available by or on behalf of Visa, any Visa Affiliate or any Visa member
institution to Supplier and/or any of its Personnel in connection with this
Agreement to the extent that such data or information: (a) is marked as
confidential or proprietary; (b) is otherwise identified orally or in writing as
confidential or proprietary; or (c) should reasonably be understood to be
confidential in nature. Without limiting the generality of the preceding
sentence, the term “Confidential Information” includes without limitation all
terms and conditions of this Agreement.

1.2. “Full-Size Dove Hologram” mean a security hologram featuring the image of a
dove in flight with the nominal dimensions of 20.83mm” by 15.88mm with a corner
radius of 1.599mm”

1.3. “Mini-Dove Hologram” means a security hologram featuring the image of a
dove in flight with the nominal dimensions of 16.16mm” by 12.31mm with a corner
radius of 2.46mm”

1.4. “Visa Affiliate” means any Visa subsidiary or affiliate, including without
limitation, Visa U.S.A. Inc., Visa Canada Association, Visa Europe Ltd., Visa
Europe Services, Inc., Visa International Service Association, Inovant LLC or a
respective subsidiary or affiliate of any of the foregoing and each of their
respective directors, officers, employees, agents and affiliates.

1.5. “Intellectual Property Rights” means any and all of the following, arising
in any jurisdiction in the world: (a) patents, patent applications,
continuations, continuations-in-part, divisionals, renewals and reissuances;
(b) copyrights; (c) trademarks, service marks, trade names and trade dress;
(d) trade secrets; (e) design rights; (f) data rights; (g) mask work rights;
(h) moral rights; (i) foreign equivalents of any of the foregoing; (j) any other
intellectual property rights; (k) registrations of, and applications for, any of
the foregoing; and (l) the right to sue for any present and/or past violation,
infringement or misappropriation of any of the foregoing.

1.6. “Key Controls” means the operational and security standards adopted by
Visa, as such standards may be amended by Visa from time to time. Key Controls
are Confidential Information.

1.7. “Personnel” means a party’s employees, agents, consultants, contractors and
subcontractors, together with the personnel of any of the foregoing.

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1.8. “Services” means the services performed by or on behalf of Supplier under
this Agreement.

1.9. “Supplier Affiliate” means any entity that now exists or that is hereafter
created that directly or indirectly controls, is controlled by or is under
common control with Supplier, where “control” refers to the possession, directly
or indirectly, of the power to direct or cause the direction of management or
policies of an entity, whether through beneficial ownership of securities or
other equity interests, by contract or otherwise.

1.10. “Visa Approved Card Manufacturer’ means a manufacturer of payment cards
that has been authorized by Visa to produce Visa-branded payment cards.

1.11. “Visa Dove Holograms” means the Full-Size Dove Hologram and Mini-Dove
Hologram security holograms featuring the image of a dove in flight.

 

2. Production Samples of Visa Dove Holograms. Upon Visa’s request, Supplier will
provide to Visa randomly selected samples of an amount of 1000 each of Full-Size
Dove Holograms and Mini-Dove Holograms taken from a production run as specified
by Visa. Visa at its discretion shall review the sample Full-Size Dove Holograms
and Mini-Dove Holograms for the purposes of quality control inspection.

 

3. Plant Security Standards. The plant security standards contained in the Visa
International Security Validation Requirements for Card Vendors manual
(“Manual”) set the minimum security and integrity processing standards to be
maintained by Supplier as applicable during the term of this Agreement. Supplier
warrants and represents that during the term of this Agreement it will, at a
minimum, maintain the security controls, production standards, and
transportation standards set forth in said Manual as applicable, the contents of
which are incorporated by reference herein, unless and then only to the extent
excused by Visa in a written waiver.

 

4. Security Inspections. Supplier authorizes Visa to designate a
representative(s) to inspect Supplier’s facilities where Visa Dove Holograms are
manufactured and/or stored during normal business hours, with advance notice in
written form, to ensure, among other things, that Supplier is complying with the
Manual as applicable, transportation requirements, background investigation
checks, and standards of professional conduct as set forth herein. Supplier
shall cooperate fully with such representative(s) in the conduct of such
inspection. The inspections shall be carried out in compliance with Supplier’s
security rules. Visa shall provide Supplier with the name and the passport
number/ID-document-number of the respective representative in advance. On
Supplier’s request, any inspections according to this Section shall be subject
to the prior execution of a Non Disclosure Agreement between Supplier and Visa.

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5. Audit Rights. Supplier shall allow Visa or its designated agent access with
advance notice in written during normal business hours during the term of this
Agreement and for six (6) months thereafter to perform audits of Supplier’s
facilities, operations and records relating to Services to determine whether
Supplier is in compliance with this Agreement, and adherence to Key Controls, as
described in paragraph 6 below. Supplier shall also provide Visa or its
designated agent during normal business hours with books, records and supporting
documentation adequate to evaluate Supplier’s performance. The audits shall be
carried out in compliance with Supplier’s security rules. Visa shall provide
Supplier with the name and the passport number/ID-document-number of the
respective persons who will perform audits in advance. On Supplier’s request,
any audits according to this Section shall be subject to prior conclusion of a
Non Disclosure Agreement between Supplier and the respective person.

 

6. Key Controls. When handling Visa information, Supplier will comply with
Visa’s Key Controls.

 

7. Insurance. The coverage required to be procured and maintained by Supplier
under this provision includes the following, together with any additional
coverage that may be required under any other exhibit to this Agreement:

 

  7.1.1. Statutory Workers Compensation, as required by applicable law;

 

  7.1.2. Employment Practices Liability, with a minimum limit of one million
dollars ($1,000,000) or other currency equivalent;

 

  7.1.3. Commercial General Liability, including Advertising Injury, Personal
Injury, Products Liability, Completed Operations Liability, and Contractual
Liability, on an occurrence basis, with the following minimum limits for bodily
injury and property damage: one million dollars ($1,000,000) per occurrence, and
two million dollars ($2,000,000) annual aggregate or equivalent in other
currency; such coverage should include worldwide territory and respond to claims
brought in the United States of America with an umbrella policy in the amount of
twenty-five million dollars ($25,000,000);

 

  7.1.4. Commercial Automobile Insurance, including owned, leased, hired or
non-owned vehicles with minimum limits of one million dollars ($1,000,000) each
accident or equivalent in other currency for bodily injury and property damage;

 

  7.1.5. Insurance covering fraud, theft, forgery, alteration, mysterious
disappearance and destruction, with a minimum limit of one million dollars
($1,000,000) each loss and annual aggregate;

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  7.1.6. Professional Liability for negligent acts, errors or omissions in
connection with the Services provided under this Agreement, with a minimum limit
of one million dollars ($1,000,000) each claim and annual aggregate (or
equivalent in other currency); such coverage should include worldwide territory
and respond to claims brought in the United States of America; and

 

  7.1.7. Such other coverage, if any, as Supplier may be required to maintain
pursuant to applicable laws and regulations.

 

  7.2. Supplier shall cause Visa and the Visa Affiliates to be included as
Additional Insureds (or Principals) under the Commercial General Liability
coverage described in 7.1.3 above for any claims, liability and losses actually
or allegedly arising out of or in connection with the Services.

 

  7.3. Certificates. Supplier shall furnish one or more certificates,
satisfactory to Visa, from each insurer evidencing that the coverage required by
this Section is in full force and effect in compliance with the provisions of
this Section. Each such certificate shall state the relevant policy number(s),
date(s) of expiration and limits of coverage, and shall further state that such
coverage shall not be canceled or materially changed until the expiration of at
least thirty (30) days after written notice of such cancellation or change has
been received by Visa. Supplier shall cause such certificates to be sent such
address as may be specified by Visa from time to time.

 

  7.4. Subcontracting. If Supplier subcontracts any Services in accordance with
the provisions of this Agreement, Supplier shall cause each applicable
Subcontractor to procure and maintain the insurance coverage required by this
Section 7, fully in accordance with the provisions of this Section.

 

  7.5. Waiver of Subrogation. Supplier agrees to waive any right of subrogation
against Visa and the Visa Affiliates for any death or injury to Supplier’s
Personnel, arising out of or in connection with Supplier’s performance of the
Services. Further, Supplier shall ensure that the Workers’
Compensation/Employers’ Liability insurers providing the coverage required by
this Section 7.1.1 and 7.1.2, agree to waive subrogation against Visa and the
Visa Affiliates, for any claims arising out of or in connection with Supplier’s
performance of the Services.

 

8. Return or Destruction. Upon the earliest of: (a) the termination or
expiration of this Agreement; or (b) Visa’s demand, Supplier shall promptly
return to Visa all Visa property and all Confidential Information.
Alternatively, if so directed by Visa, Supplier shall destroy all Confidential
Information, and all copies thereof, in Supplier’s possession or control, and
shall provide a certificate signed by an officer of Supplier that certifies such
destruction in detail acceptable to Visa.

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9. Revocation. Visa may temporarily or permanently revoke Supplier’s right to
manufacture Visa Dove Holograms for any or all Visa Approved Card Manufacturers
upon the occurrence of any of the following:

 

  a. Supplier’s actual merger, consolidation, change of control or financial
condition which creates, in Visa’s opinion, unreasonable potential for damage or
financial loss to Visa or its Visa Approved Card Manufacturers if the
manufacture of Visa Dove Holograms, possession of Visa Dove Holograms, and/or
possession of materials necessary to manufacture Visa Dove Holograms were to
continue.

 

  b. Supplier fails in Visa’s opinion, to maintain sufficient quality control
standards to enable Supplier to comply with the Hologram Specifications attached
as exhibit B.

 

  c. Supplier does not maintain security and audit integrity processing controls
consistent with the Manual as applicable or if Visa agrees to alternative
controls and procedures, Supplier does not maintain security controls consistent
with such alternatives controls and procedures. Supplier is unable to maintain
in force the insurance coverage provided for in this Agreement.

 

  d. VISA replaces the Dove or Mini Dove with a different hologram or similar
device, including a holographic magnetic stripe on VISA cards to be issued in
the future.

 

10. Effect of Termination or De-Approval. Upon expiration or any termination of
this Agreement: (a) Supplier shall return the Plates and all Confidential
Information in accordance with the section 8 to Visa and an officer of Supplier
shall certify in writing to Visa that Supplier has destroyed all Visa Dove
Holograms that are remaining in Supplier’s inventory.

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1. Specifications for Visa Dove Holographic Foil

 

  1.1. Project Title:

 

  1.1.1. Visa Dove Holograms (Full Size and Mini-Dove)

 

  1.2. Product Numbers

 

  1.2.1. 3082 Full Size Silver

  1.2.2. 8344 Full Size Gold

  1.2.3. 3756 Mini Silver

  1.2.4. 3757 Mini Gold

 

  1.3. Holographic Image Description:

 

  1.3.1. The holographic image consists of a “Dove in flight”

 

  1.4. Product Description

 

  1.4.1. Fully metalized holographic silver or gold foil (as specified) with hot
melt adhesive suitable for application to PVC, PET-G, PET, ISO or approved
substrates or payment compliant cards using standard and approved methods and
application equipment used in the card industry.

 

  1.5. Format for Delivery

 

  1.5.1. Core

 

  1.5.1.1. Core ID is nominally 3”

  1.5.1.2. Core width to be nominally 1.5” for Full and 1.3” for Mini Rolls to
be provided in label copy position as required by Visa approved card
manufacturers:

 

  1.5.2. Slitting

 

  1.5.2.1. Width to be 1.375” for Full and 1.199 for Mini +/- 0.015”

  1.5.2.2. Telescoping should not exceed .020” from either side of the reel

 

  1.5.3. Registration:

 

  1.5.3.1. Each image shall include a diffractive registration block which acts
as a target for application equipment.

 

  1.5.4. Roll Quantity and Numbering

 

  1.5.4.1. Each roll shall be a minimum 25,000 images

  1.5.4.2. Holographic Images are sequentially numbered for inventory purposes
for the end user (card manufacturer).

  1.5.4.3. Each roll shall be uniquely identified by manufacturer lot number and
roll number.

 

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  1.5.5. Splices

 

  1.5.5.1. Maximum of 3 per roll

  1.5.5.2. Splices will be made as butt splices

 

  1.6. Inspection Methods and Criteria

 

  1.6.1. All visual inspections are to be done with the naked eye

 

  1.6.2. All viewing will take place with direct overhead lighting under normal
white fluorescent lighting conditions 550-750 lux or equivalent

 

  1.6.3. Visa Quality Assurance Standard Chart is to be used by the card
manufacturers as guidance for acceptance of holographic image imperfections such
as spots, mottle, and haze

 

  1.6.4. Repeating or continuous imperfections which are apparent with the naked
eye are not acceptable

 

  1.6.5. When properly applied to the card, the Visa hologram cannot be lifted
intact off the card without destroying the hologram. A tape or other similar
industry test shall be used for testing adhesion such that the Visa hologram
cannot be removed or lifted off the card and reapplied to another subsequent
card.

 

  1.6.6. The configuration and adhesive qualities of the Visa dove hologram must
be able to withstand exposure to ambient temperatures and conditions throughout
the world.

 

  1.6.7. The configuration and adhesive qualities of the Visa dove hologram must
be able to sustain prolonged contact with the materials normally used to store
Visa cards, such a vinyl polyethylene and paper.

 

  1.6.8. The hologram shall be resistant to wear and tear as will occur during
normal use of a payment card.

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VISA QA STANDARD CHART    LOGO [g52055image002.jpg]    LOGO [g52055image003.jpg]

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GENERAL RULES

 

Repeating or continuous defects which are apparent at first glance are generally
unacceptable. Single occurrences not more than one in hundred feet are
acceptable. Defects apparent only upon close scrutiny are generally acceptable.
   Revision: June 13, 2007