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                                                                     EXHIBIT 4.1




                      AMERICAN BANK NOTE HOLOGRAPHICS, INC.
                      NON-QUALIFIED STOCK OPTION AGREEMENT
                    PURSUANT TO THE 1998 STOCK INCENTIVE PLAN


         As of the 11th day of May, 1999, pursuant to the 1998 Stock Incentive
Plan, as amended (the "Plan"), American Bank Note Holographics, Inc., a Delaware
corporation (the "Company"), hereby grants to _________________________ (the
"Grantee") a non-qualified stock option to purchase __________ shares of the
Common Stock of the Company, at an exercise price of $2.50 per share, 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 will terminate and expire, to the extent not
previously exercised, on the tenth anniversary of the Date of Grant, or at such
earlier time as may be specified in the Plan.

         2. RIGHT TO EXERCISE. During the Grantee's employment or service, this
option will 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. Subject to the applicable limitations
set out in the Plan or as otherwise set out in this Agreement, prior to issuance
of any shares of Common Stock, the Grantee shall deliver an investment
representation as deemed necessary by the Board of Directors of the Company or
such Committee established by the Board of Directors (the "Committee").

         3. METHOD OF EXERCISE. This option shall be exercised by delivery of
written notice to the Company, in accordance with Section 7 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, cashiers check or money order, (ii) by delivery of an
equivalent value in shares of Common Stock previously owned by the Grantee for
at least six (6) months, or (iii) by such other methods approved by the Board of
Directors or the Committee.

         4. TERMINATION OF EMPLOYMENT OR SERVICE. In all events where Grantee's
employment or service by the Company and its Subsidiaries and Parents is
terminated, the options granted hereunder shall be governed by the Plan.

         5. SUBJECT TO PLAN. This option is subject to all the terms and
conditions of the Plan, and specifically to the power of the Board of Directors
or the Committee to make interpretations of the Plan and of options granted
thereunder, and of the Board of Directors of the Company to alter, amend,
suspend or discontinue the Plan subject to the limitations expressed in the
Plan. By acceptance hereof, the Grantee acknowledges receipt of a copy of the
Plan and hereby accepts and agrees to be bound by all of its terms and
conditions. In addition, the Grantee recognizes and agrees that all
determinations, interpretations or other actions respecting the Plan made by the
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Board of Directors of the Company or of the Committee, and that such
determinations, interpretations or other actions are final, conclusive and
binding upon all parties, including the Grantee, his heirs and representatives.

         6. NON-ASSIGNABILITY OF THIS OPTION. This option shall not be
assignable or transferable by the Grantee except by will or by the laws of
decent distribution. During the Grantee's lifetime, this option shall only be
exercisable by the Grantee.

         7. 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, NY 10523 Attention: President; if to Grantee, 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. Any such notice shall be deemed to be
delivered, given, and received for all purposes as of the date such notice is
properly mailed.

         8. BINDING EFFECT. Except as otherwise provided in this Agreement or in
the Plan, every covenant, term, and provision of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
legatees, legal representatives, successors, transferees, and assigns.

         9. HEADINGS. Section and other headings contained in this Agreement are
for reference purposes only and are not intended to describe, interpret, define
or limit the scope or intent of this Agreement or any provision hereof.

         10. SEVERABILITY. Every provision of this Agreement is intended to be
severable. If any term or provision hereof is illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the validity or
legality of the remainder of this Agreement.

         11. GOVERNING LAW. The internal laws of the State of New York shall
govern the validity of this Agreement, the construction of its terms, and the
interpretation of the rights and duties of the parties hereto.




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         IN WITNESS WHEREOF, this Agreement is executed as of the 11th day of
May, 1999.


                                   AMERICAN BANK NOTE HOLOGRAPHICS, INC.



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


         The undersigned Grantee hereby accepts the terms of the foregoing Stock
Option Agreement and the Plan.



                                   Grantee

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

                                   -------------------------------------

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




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