Exhibit 10.1

 

      CONFIDENTIAL TREATMENT       REQUESTED PURSUANT TO RULE       24b-2 OF THE
SECURITIES       EXCHANGE ACT OF 1934

Certain portions of this exhibit have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.
The omitted materials have been filed separately with the Securities and
Exchange Commission.

Amendment No. 4 to Hologram Agreement

This Amendment No. 4 to the Hologram Agreement dated as of February 28, 2003 (as
amended pursuant to Amendment No. 1 dated as of September 29, 2003), Amendment
No. 2 dated as of March 25, 2005 and Amendment No. 3 dated as of August 24,
2005) (the “Agreement”) by and between MasterCard International Incorporated, a
Delaware corporation with offices at 2000 Purchase Street, Purchase, New York
10577-2509 (“MasterCard”), and American Bank Note Holographics, Inc., a Delaware
corporation with offices at 2 Applegate Drive, Robbinsville, NJ 08691 (“ABNH”),
is made as of December 4, 2007.

The parties to the Agreement, in consideration of the mutual promises,
covenants, and conditions set forth herein, agree as follows:

 

1.0 The Agreement is hereby amended by adding a new section 23.0 as follows:

 

  23.0 ABNH Sponsorship of MasterCard Security Conferences

MasterCard and ABNH hereby agree that ABNH shall be a Preferred Partner Sponsor
of MasterCard Security and Risk Conferences worldwide (the “Conferences”) from
the date of execution of this Agreement through December 31, 2012. ABNH shall be
provided with prominent exhibit space at the Conferences to display ABNH
promotional materials, and to offer ABNH products to MasterCard partners
including banks and card manufacturers attending the Conferences. MasterCard
shall recognize ABNH as a Preferred Partner Sponsor at the Conferences, and on
related marketing materials. Further, ABNH shall have the right to promote its
sponsorship of the Conferences on its own website and in collateral materials
and in press releases, subject to prior review and approval by MasterCard.
MasterCard currently holds approximately five security and risk conferences per
year which are widely attended by MasterCard partners worldwide. MasterCard may
change the frequency, location or content of its conferences at any time at its
discretion. ABNH shall pay MasterCard a sponsorship fee of $125,000 per quarter,
payable prior to the last day of each calendar quarter, with the first payment
of $125,000 due prior to December 31, 2007 (for the 4th quarter of 2007), and
the last required payment due on or before December 31, 2012. Should the
Hologram Agreement be terminated for any reason other than a breach by
MasterCard, including the

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exercise by MasterCard of the option described in paragraph 6.0 hereof, all sums
payable hereunder shall be accelerated and immediately payable in full upon
termination. ABNH shall be responsible for its own transportation and lodging
expenses associated with attending MasterCard conferences, but shall not be
charged any other fees by MasterCard in connection with sponsoring and attending
MasterCard conferences.

 

2.0 The Agreement is hereby amended by adding a new section 24.0 as follows:

 

  24.0 Approval of new hologram formulation and adhesive

MasterCard has evaluated a new hologram formulation and adhesive supplied by
ABNH that is intended to have superior adhesion to PET-G and certain other
substrates (the “PETG hologram”). ABNH hereby waives the minimum order
requirements of Section 3.1 hereof and the parties hereby confirm that the price
per hologram of the PETG hologram formulation shall be the same as the standard
hologram in accordance with Section 5.0 hereof. ABNH shall produce the PETG
hologram in response to orders from MasterCard under the same terms and
conditions as the standard hologram. All such PETG holograms shall meet ANSI/ISO
specifications and standards (as the case may be) and all other performance
requirements specified in the Agreement.

 

3.0 The Agreement is hereby amended by adding a new section 5.4 as follows:

 

  5.4 Volume growth incentive

MasterCard and ABNH agree that, effective January 1, 2008, and for each full
calendar year of this Agreement, in the event that MasterCard orders more than
[*] holograms in a calendar year, then any holograms ordered in excess of [*] in
that year shall be sold at a price per hologram of $[*] ($[*] per reel). For the
purposes of this Section, all holograms and HoloMag™ ordered by MasterCard shall
be counted in the calculation, and the reduced price shall apply to those
holograms sold in excess of [*] per calendar year. For the purposes of this
calculation, any HoloMag ordered by MasterCard shall be counted at the rate of 3
holograms per linear foot (i.e., a 4,000 foot reel of HoloMag shall be counted
as 12,000 holograms). For the avoidance of doubt, all holograms ordered by
MasterCard up to [*] holograms in a calendar year shall continue to be sold at
the price of $[*] per hologram ($[*] per reel) in accordance with Section 5.1.

 

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* Confidential

 

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4.0 The Agreement is hereby further amended as follows:

HoloMag Generation 1 – Amendment No. 3 to the Agreement provides for the supply
of HoloMag by ABNH to MasterCard. MasterCard decided to discontinue the use of
HoloMag due to the impact of electro-static discharge (“ESD”) on certain payment
terminals. Each party has incurred direct and indirect costs associated with the
launch of HoloMag, the ESD issue and the termination of the HoloMag program,
including without limitation, the items described in MasterCard’s letter to ABNH
dated October 19, 2007. Except for the obligations specifically set forth in
this Amendment, ABNH and MasterCard, for themselves and their respective agents,
employees, parent companies, subsidiaries, officers, directors, attorneys,
insurers, representatives, partners (either limited or general), predecessors in
interest, assigns, and successors do hereby forever release, acquit, and fully
discharge each other and each of their respective agents, employees, parent
companies, subsidiaries, officers, directors, 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 HoloMag product supplied under the Agreement through the
date hereof (the “Released Claims”). With respect to the aforementioned
releases, the Parties expressly acknowledge and agree that this Amendment fully
and finally settles and forever resolves all of the Released Claims between ABNH
and MasterCard, 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 Amendment related in any way to the Released
Claims. For the avoidance of doubt, the release set forth in this paragraph does
not extend to any party that is not referred to herein or that either Party has
no authority to bind.

HoloMag Generation 2 – ABNH has supplied MasterCard with samples of its
Generation 2 HoloMag product which MasterCard has tested. MasterCard’s testing
has confirmed that ABNH’s Generation 2 HoloMag effectively eliminates ESD, and
preserves the security and design attributes of the HoloMag product. MasterCard
is considering Generation 2 HoloMag for future deployment on MasterCard branded
cards. In the event MasterCard deploys Generation 2 HoloMag, the pricing shall
be $[*]/reel for 2-track tape and $[*]/reel for 3-track

 

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* Confidential

 

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tape, FOB ABNH, for any standard order of HiCo or LoCo tape for PVC cards placed
by MasterCard regardless of the size of the order. A standard reel is 4000 feet
long. ABNH may supply HoloMag reels in different sizes which will be priced pro
rata on a per foot basis with the aforementioned prices.

 

5.0 ABNH represents to MasterCard that, with the exception of the Released
Claims, ABNH is not currently aware of facts to suggest that MasterCard is not
in compliance with all of its obligations owed to ABNH under the Agreement,
including but not limited to, payment obligations. MasterCard represents to ABNH
that, with the exception of the Released Claims, MasterCard is not currently
aware of facts to suggest ABNH is not in compliance with all of its obligations
owed to MasterCard under the Agreement, including but not limited to the
obligation that holograms currently being sold by ABNH to MasterCard conform to
MasterCard specifications, as set forth on Exhibit A of the Agreement.

 

6.0 It is hereby understood and agreed that if, at any time, the majority of the
shares of ABNH or substantially all of its assets should be sold, transferred or
otherwise conveyed to a direct competitor (or any affiliate thereof) of
MasterCard in any aspect of the payment card processing industry, MasterCard
may, at its option, terminate this Agreement on six (6) months written notice.
Termination pursuant to this paragraph shall not relieve ABNH or its successor
in interest of the obligation to make all payments specified in paragraph 23 (as
provided herein), which shall become immediately payable in full upon
MasterCard’s exercise of its option to terminate.

 

7.0 The parties agree that except as set forth herein, the Agreement shall
remain unchanged and in full force and effect. In the event that either party
merges with or into another entity, the rights and obligations of each party
under the Agreement shall continue and inure to the benefit of the surviving
entity.

 

8.0 This Amendment shall in all respects be governed, interpreted and enforced
in accordance with the internal laws of the State of New York without reference
to principles and conflicts of law, whose courts sitting in New York County or
Westchester County shall have sole jurisdiction in all claims.

IN WITNESS WHEROF, the parties hereto have caused this Amendment to be duly
executed as of the day and year first above written.

 

MASTERCARD INTERNATIONAL INCORPORATED     AMERICAN BANK NOTE HOLOGRAPHICS, INC.
By:  

/s/ Joshua Peirez

    By:  

/s/ Kenneth Traub

Name:   Joshua Peirez     Name:   Kenneth Traub Title:       Title:   President
and CEO

 

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