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                                                                     EXHIBIT 4.2




                      AMERICAN BANK NOTE HOLOGRAPHICS, INC.
                         STOCK OPTION AGREEMENT PURSUANT
                        TO THE 2000 STOCK INCENTIVE PLAN


         WHEREAS, as of the ___ day of ___________, 200_, pursuant to the 2000
Stock Incentive Plan (the "Plan"), American Bank Note Holographics, Inc., a
Delaware corporation (the "Company"), hereby grants to ____________________ (the
"Optionee") a [NON-QUALIFIED][INCENTIVE] stock option to purchase up to ______
shares of the Common Stock of the Company, at an exercise price of $______ per
share [ISOS: FMV OR 110% FMV FOR 10% HOLDERS], subject to adjustment as provided
in the Plan.

         1. TERM OF OPTION. This option is granted as of the date first above
written (the "Date of Grant"), and shall terminate and expire, to the extent not
previously exercised, on the [TENTH] [FIFTH FOR ISOS TO 10% HOLDERS] anniversary
of the Date of Grant, or at such earlier time as may be specified in this
Agreement or the Plan.

         2. RIGHT TO EXERCISE. During the Optionee's employment or service with
the Company and its Affiliates, this option shall become vested and exercisable:
[(i) with respect to 33 1/3% of the total shares of Common Stock subject thereto
on the first anniversary of the Date of Grant and (ii) in cumulative
installments, with respect to 8 1/3% of the total shares of Common Stock subject
thereto on the last day of each of the first eight (8) consecutive three (3)
month periods immediately following the first anniversary of the Date of Grant].

         3. METHOD OF EXERCISE. This option shall be exercised by delivery of
written notice to the Company, in accordance with Section 8 below, specifying
the number of shares with respect this option is being exercised. Such notice
shall be accompanied by payment in full of the exercise price for such shares
together with the amount necessary to satisfy any applicable withholding
requirements: (i) in cash, (ii) certified or bank check, or (iii) by such other
forms of payment as may be approved by the Committee from time to time.

         4. TERMINATION OF EMPLOYMENT OR SERVICE. Upon the termination of the
Optionee's employment or service with the Company and its Affiliates, the
following rules shall apply with regard to this option:

                  (a) TERMINATION BY REASON OF DEATH, RETIREMENT OR DISABILITY.
Except as provided in Section 4(b) below, if the Optionee's employment or
service terminates by reason of the Optionee's death, Retirement (as defined in
the Plan) or Disability (as defined in the Plan), then (i) that portion of this
option which is not then exercisable shall thereupon terminate, and (ii) that
portion of this option which is then exercisable shall remain exercisable by the
Optionee (or the deceased Optionee's designated beneficiary or representative)
for a period of one year following such termination or, if sooner, until the
expiration of the term of this option, and, to the extent not exercised within
such period, shall thereupon terminate.
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                  (b) TERMINATION FOR CAUSE. If the Optionee's employment or
service is terminated by the Company or an Affiliate for Cause (as defined in
the Plan) or if, at the time of such termination, grounds for a termination for
Cause exist, then this option (whether or not otherwise exercisable) shall
immediately terminate and cease to be exercisable.

                  (c) OTHER TERMINATION. Except as provided in Section 4(a) or
Section 4(b) above, if the Optionee's employment or service terminates for any
reason or no reason, then (i) that portion of this option which is not then
exercisable shall thereupon terminate, and (ii) that portion of this option
which is then exercisable shall remain exercisable during the ninety (90) day
period following such termination or, if sooner, until the expiration of the
term of this option and, to the extent not exercised within such period, shall
thereupon terminate.

         5. RIGHTS AS A STOCKHOLDER. No shares of Common Stock shall be issued
or delivered hereunder until full payment for such shares has been made and any
other exercise conditions have been fully satisfied. The Optionee shall have no
rights as a stockholder with respect to any shares subject to the Option until
the date a stock certificate for such shares is issued to the Optionee.

         6. NONTRANSFERABILITY. This option is not assignable or transferable
other than by will or the laws of descent and distribution, and this option
shall be exercisable during the lifetime of the Optionee only by the Optionee.
This option shall be null and void and without effect upon any attempted
assignment or transfer except as herein provided, including without limitation,
any purported assignment, whether voluntary or by operation of law, pledge,
hypothecation or other disposition, attachment, trustee process or similar
process, whether legal or equitable, upon this option.

         7. NO EMPLOYMENT OR SERVICE RIGHTS CONFERRED. Neither the grant of this
option nor the exercise thereof shall confer upon the Optionee any right with
respect to continuance of the Optionee's employment or service with the Company
or its Affiliates.

         8. NOTICES. Any notice, payment or communication required or permitted
to be given by any provision of this Agreement shall be in writing and shall be
delivered personally or sent by certified mail, return receipt requested,
addressed as follows: if to American Bank Note Holographics, Inc., 399 Executive
Boulevard, Elmsford, New York 10523 Attention: President; if to Optionee, at the
address set forth on the signature page hereto. Each party may, from time to
time, by notice to the other party hereto, specify a new address for delivery of
notices to such party hereunder.

         9. SUBJECT TO THE PLAN. This option is subject to all the terms and
conditions of the Plan, and specifically to the power of the Committee to make
interpretations of the Plan and of options granted thereunder. By acceptance
hereof, the Optionee acknowledges receipt of a copy of the Plan and hereby
accepts and agrees to be bound by all of its terms and conditions and the
Optionee recognizes and agrees that all determinations, interpretations or other
actions respecting the Plan made by the Committee are final, conclusive and
binding upon all parties, including the Optionee and

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the Optionee's heirs and representatives. Capitalized terms that are used but
not defined herein shall have the meanings ascribed thereto in the Plan.

         10. MISCELLANEOUS. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
permitted assigns. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to conflicts
of law provisions. This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes any prior
understandings, agreements or representations between the parties with respect
to the subject matter hereof. This Agreement may not be amended, other than as
provided in the Plan, except by written instrument executed by the parties
hereto.

         IN WITNESS WHEREOF, this Agreement is executed as of the date first
above written.



                                   AMERICAN BANK NOTE HOLOGRAPHICS, INC.


                                   By:
                                        --------------------------------
                                        Name:
                                        Title:


         The undersigned Optionee hereby accepts the terms of this Agreement and
the Plan.



                                   Optionee


                                   By:
                                        --------------------------------

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                                   -------------------------------------
                                                 (Address)




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