**Exhibit 10.1**

 

**AMENDED AND RESTATED EMPLOYMENTAGREEMENT**

 

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT, (this “Agreement”), ismade and entered into as of June 9, 2005, by and between Alan Goldstein(the “Executive”) and American Bank Note Holographics, Inc., a Delawarecorporation (the “Company”). 

 

**R E C I T A L**

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WHEREAS, the Executiveand the Company have entered into that certain Employment Agreement dated as ofMay 11, 1999 (the “Original Employment Agreement”); and

 

WHEREAS, each of theExecutive and the Company wishes to amend and restate the provisions of theOriginal Employment Agreement as hereinafter set forth.

 

**AGREEMENT**

** **

NOW THEREFORE, in consideration of the mutual promises set forth inthis Agreement and intending to be legally bound, Executive and the Companyagree as follows:

 

# SECTION 1.                                EMPLOYMENT.  The Company hereby employs Executive andExecutive hereby accepts such employment and agrees to render services to theCompany, upon the terms and conditions set forth in this Agreement.

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# SECTION 2.                                POSITIONAND DUTIES.  Executive shall assumethe responsibilities and perform the duties of Vice President, Finance of theCompany. The Executive shall also serve in such similar capacities as may beassigned to him in good faith from time to time by the President or ChiefFinancial Officer of the Company. Executive agrees to devote substantially allof his business time, attention, skill and best efforts to the diligentperformance of his duties hereunder at the Company’s headquarters located at 2Applegate Drive, Robbinsville, New Jersey 08691 or his home office and shall beloyal to the Company and its affiliates and subsidiaries, and use his bestefforts to further their interests. Executive shall work in the Company’s Robbinsville office a minimum ofthree days per week, except due to approved vacation or illness.  The Executive shall perform such tasks andresponsibilities assigned to him by the Chief Executive Officer and the ChiefFinancial Officer of the Company, including without limitation, assisting withand/or overseeing the financial management and financial reporting of theCompany. In the performance of his duties, Executive agrees to abide by andcomply with all policies, practices, handbooks, procedures and guidelines whichare now in effect or which the Company may adopt, modify, supplement or changefrom time to time.

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# SECTION 3.                                TERMOF EMPLOYMENT.  The term ofemployment hereunder shall commence on the date hereof and shall continuethereafter until the earlier of (i) March 31, 2006 or (ii) terminationpursuant to Section 10 hereof (the “Employment Term”). The date of the lastday of the Employment Term shall be hereinafter referred to as the “TerminationDate”.  Executive’s employment by theCompany shall terminate on the Termination Date.

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SECTION 4.                                EXCLUSIVITY.  During the term of Executive’s employmentwith the Company, Executive shall not without the prior written consent of theBoard of Directors (i) perform any managerial, sales, marketing ortechnical services directly or indirectly for any person or entity competingdirectly or indirectly with the Company or any of its subsidiaries in theholography business; (ii) perform any such services for any entity owned,directly or indirectly, by anyone competing, either directly or indirectly,with the Company or any of its subsidiaries in the holography business; (iii) onhis own behalf or that of any other person or entity, compete, either directlyor indirectly, with the Company or any of its subsidiaries, to sell anyproducts or services marketed or offered by the Company or any of itssubsidiaries; (iv) engage or become interested, directly or indirectly, asowner, employer, partner, consultant, through stock ownership (except ownershipof less than one percent of the number of shares outstanding of any securitieswhich are listed for trading on any securities exchange, provided that thespecific nature and amount of the investment, if over $50,000 shall beimmediately disclosed to the Company in writing), investment of capital,lending of money or property, or otherwise either alone or in association withothers, in the operation of any type of business or enterprise which conflictsor interferes with the performance of Executive’s services hereunder or (v) engagein any activities which could reasonably be deemed to be a conflict of interestwith his duties hereunder or his obligations to the Company.

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# SECTION 5.                                COMPENSATIONAND BENEFITS.

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## (a)                                  Salaryand Bonus.  As compensation for theperformance of the Executive’s services hereunder, during the Employment Termand the Severance Period (as defined below), the Company will pay to theExecutive an annual base salary of $240,000. In the event that the Employment Term is extended by the Company, in itssole discretion, Executive’s salary will be raised by a minimum of 3% annually,as determined by the Board of Directors. For purposes hereof, “Severance Period” shall mean the nine-month periodcommencing the day following the Termination Date or in the event of an extendedEmployment Term the day following the termination of such extended EmploymentTerm, as the case may be.  During theSeverance Period, upon Executive’s execution and delivery to the Company on theTermination Date or in the event of an extended Employment Term the date ofExecutive’s last day of employment with the Company of a general releasesubstantially equivalent to the release set forth in Section 11 hereof,Executive shall receive benefits as described below, and shall be paid inaccordance with the customary payroll practices of the Company for its seniormanagement personnel (collectively, the “Severance Benefits”).  Notwithstanding the foregoing, in no eventshall there be a Severance Period nor shall Executive be entitled to any salary,Severance Benefits or other benefits to the extent Executive was terminated forcause (as defined in Section 10(a)) or resigned other than for Good Reason(as defined in Section 10(e)(ii)) during the Employment Term or anyextended Employment Term.

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## (b)                                 Benefits.  During the Employment Term and Severance Period,the Executive shall be eligible to participate, on the same basis and subjectto the same qualifications as other senior management personnel of the Company,in any pension, profit sharing, savings, bonus, life insurance,hospitalization, dental, drug prescription, disability, accidental death anddismemberment and other benefit plans and policies as may from time to time bein effect with respect to senior management personnel of the Company(collectively, the “Benefits”). The Executive shall also be entitled tovacation days, holidays and sick days in accordance with the

 

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## policies of the Companyas may be in effect from time to time; provided, however, that upon terminationof Executive’s employment for any reason (including resignation by theExecutive), the Company shall pay Executive for accrued vacation time from theinception of his employment through the last date of employment as set forth onExhibit A, on a pro rated basis calculated on the basis of the Executive’sSalary in effect on the Termination Date. The Executive shall also be entitledto have his existing leased car (the “Leased Car”) extended through theTermination Date in accordance with the terms set forth on Exhibit B. Inthe event that the Executive continues to be employed by the Company through March 31,2006 and Executive chooses to apply for unemployment benefits, the Company willnot contest the Executive’s application. Further, in the event that theExecutive is terminated without cause or resigns for Good Reason prior to March 31,2006, the Company will not contest the Executive’s application for suchbenefits.

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## (c)                                  StockOptions.  The Executive shall beeligible to receive grants of options to purchase equity in the Company duringthe Employment Term as determined, from time to time, in the sole discretion ofthe Board or the Compensation Committee. All of Executive’s options shall vest immediately upon the expiration ofthe Employment Term and remain exercisable for a period of two years.

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## (d)                                 Expenses.  The Company will pay or promptly reimbursethe Executive for all reasonable out-of-pocket business, entertainment andtravel expenses incurred by the Executive in the performance of his dutieshereunder upon presentation of appropriate supporting documentation andotherwise in accordance with the expense reimbursement policies of the Companyin effect from time to time.  Suchexpenses shall include the cost of (i) gas and tolls incurred by theExecutive in connection with the Executive’s travel to and from his residenceand the Company’s headquarters located at 2 Applegate Drive, Robbinsville, NewJersey 08691 and (ii) accommodations in the Robbinsville, New Jerseyvicinity. The Company shall also promptly reimburse the Executive forout-of-pocket expenses incurred for moving and storage costs associated withhis previously planned relocation and home sale preparation. Such costs shallbe limited to $1,400.

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## (e)                                  Taxesand Withholdings. All appropriate deductions, including federal, state andlocal taxes and social security, shall be deducted from any amount paid by theCompany to the Executive hereunder in conformity with applicable laws.

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# SECTION 6.                                CONFIDENTIALITY.  The Executive acknowledges and agrees that (a) inconnection with his employment by the Company, the Executive will be involvedin the Company’s and its subsidiaries’ (if any) operations; (b) in orderto permit him to carry out his responsibilities, the Company may disclose, tothe Executive, in strict confidence, or the Executive may develop, confidentialproprietary information and trade secrets of the Company and its affiliates,including without limitation (i) unpublished information with respect tothe Company concerning marketing or sales plans, operational techniques,strategic plans and the identity of suppliers and supply contacts; (ii) unpublishedfinancial information with respect to the Company, including informationconcerning revenues, profits and profit margins; (iii) internalconfidential manuals and memos; and (iv) ”material inside information” assuch phrase is used for purposes of the Securities Exchange Act of 1934, asamended (collectively, “Confidential Information”); and (c) the Companyand its affiliates derive significant economic

 

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value and competitive advantage by reason of the fact that suchConfidential Information, in whole or in part, is not generally known orreadily ascertainable by the Company’s or its affiliates’ actual or potentialcompetitors and, as such, constitutes the Company’s and its affiliates’valuable trade secrets.

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In addition to any obligations set forth herein, and in recognition ofthe foregoing acknowledgments, for himself and on behalf of his affiliates, theExecutive agrees that he will not, directly or indirectly, use, disseminate ordisclose, any Confidential Information (other than for the legitimate businesspurposes of the Company), and that he will not knowingly permit any of hisaffiliates to, directly or indirectly, use, disseminate or disclose, anyConfidential Information. At the end of the Employment Term, the Executiveagrees to deliver immediately to the Company the originals and all copies ofConfidential Information in his possession or control, whether in written form,on computers or discs or otherwise.

 

The restrictions set forth in this Section 6 shall not apply tothose particular portions of Confidential Information, if any, that (a) havebeen published by any of the Company or any of its affiliates in a patent, article orother similar tangible publication or (b) become available to theExecutive from a source other than the Company, provided that the source ofsuch Confidential Information was not known by the Executive, after reasonableinquiry, to be bound by a confidentiality agreement with or other obligation ofconfidentiality to the Company or any of its affiliates.

 

The foregoing restrictions on the disclosure of ConfidentialInformation set forth in this Section 6 shall not apply to thoseparticular portions of Confidential Information, if any, that are required tobe disclosed in connection with any legal process; provided that, at least ten (10) daysin advance of any required disclosure, or such lesser time as may be requiredby circumstances, the Executive shall furnish the Company with a copy of thejudicial or administrative order requiring that such information be disclosedtogether with a written description of the information proposed to be disclosed(which description shall be in sufficient detail to enable the Executive andits affiliates to determine the nature and scope of the information proposed tobe disclosed), and the Executive covenants and agrees to cooperate with theCompany and its affiliates to deliver the minimum amount of informationnecessary to comply with such order.

 

This Section 6 shall survive any termination of this Agreement.

 

# SECTION 7.                                COVENANTNOT TO COMPETE.

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## (a)                                  Scope.  In order to fully protect the Company’sConfidential Information, during the Employment Term and for a period of oneyear thereafter (the “Non-competition Period”), the Executive shall not, exceptas authorized in writing by the Board, directly or indirectly, render servicesto, assist, participate in the affairs of, or otherwise provide assistance toany person or enterprise (other than the Company and its subsidiaries, if any),which person or enterprise is engaged in, or is planning to engage in, andshall not personally engage in any business in any jurisdiction where theCompany has transacted business at any time prior to the Termination Date thatis competitive with the business of the Company or any of its subsidiaries, ifany, with respect to any products or

 

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services of the Company or any of its subsidiaries, if any, in anycapacity which would utilize the Executive’s services with respect to anyproducts or services of the Company or any of its subsidiaries, if any, thatwere within the Executive’s management responsibility at any time within thetwelve (12) month period immediately prior to the Termination Date.

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## (b)                                 Remedies.  The parties recognize, acknowledge and agreethat (i) any breach or threatened breach of the provisions of this Section 7shall cause irreparable harm and injury to the Company and that money damageswill not provide an adequate remedy for such breach or threatened breach and (ii) theduration, scope and geographical application of this Agreement are fair andreasonable under the circumstances, and are reasonably required to protect thelegitimate business interests of the Company. Accordingly, Executive agreesthat the Company shall be entitled to have the provisions of this Agreementspecifically enforced by any court having jurisdiction, and that such a courtmay issue a temporary restraining order, preliminary injunction or otherappropriate equitable relief, without having to prove the inadequacy ofavailable remedies at law. In addition, the Company shall be entitled to availitself of all such other actions and remedies available to it or any of itsaffiliates under law or in equity and shall be entitled to such damages as itsustains by reason of such breach or threatened breach. It is the expressdesire and intent of the parties that the provisions of this Agreement beenforced to the full extent possible.

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## (c)                                  Severability.  If any provision of Section 7(a) isheld to be unenforceable because of the duration of such provision, the areacovered thereby or the scope of the activity restrained, the parties herebyexpressly agree that the court making such determination shall have the powerto reduce the duration and/or areas of such provision and/or the scope of theactivity to be restrained contained in such provision and, in its reduced form,such provision shall then be enforceable. The parties hereto intend and agreethat the covenants contained in Section 7(a) shall be construed as aseries of separate covenants, one for each municipality, community or countyincluded within the area designated by Section 7(a). Except for geographiccoverage, the terms and conditions of each separate covenant shall be deemedidentical to the covenant contained in Section 7(a). Furthermore, if anycourt shall refuse to enforce any of the separate covenants deemed included in Section 7(a),then such unenforceable covenant shall be deemed eliminated from the provisionshereof to the extent necessary to permit the remaining separate covenants to beenforced in accordance with their terms.

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# SECTION 8.                                RESPONSIBILITYUPON TERMINATION. Upon the termination of his employment for any reason andirrespective of whether or not such termination is voluntary on his part:

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## (a)                                  TheExecutive shall advise the Company of the identity of his new employer withinthen (10) days after accepting new employment and further agrees to keepthe Company so advised of any change in employment during the Non-competitionPeriod;

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## (b)                                 TheCompany in its sole discretion may notify any new employer, who the Company hasgood faith basis to believe is a competitor pursuant to Section 7 of thisAgreement, of the Executive that he has an obligation not to compete with theCompany during the Non-competition Period; and

 

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## (c)                                  TheExecutive shall deliver to the Company any and all records, forms, contracts,memoranda, work papers, customer data and any other documents (whether inwritten form, on computers or discs or otherwise) which have come into hispossession by reason of his employment with the Company, irrespective ofwhether or not any of said documents were prepared for him, and he shall notretain memoranda in respect of or copies of any of said documents.

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# SECTION 9.                                NONSOLICITATION.  The Executive agrees that during the term ofhis employment with the Company and for a period of twelve (12) monthsthereafter, he will not, and will not assist any of his affiliates to, directlyor indirectly, recruit or otherwise solicit or induce any executive, customer,subscriber or supplier of the Company or any of its subsidiaries about whom orwhich he gained Confidential Information while at the Company to terminate itsemployment or arrangement with the Company or any of its subsidiaries,otherwise change its relationship with the Company or any of its subsidiaries,or establish any relationship with the Executive or any of his affiliates forany business purpose deemed materially competitive with the business of theCompany or any of its subsidiaries, if any.

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# SECTION 10.                          TERMINATION.

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## (a)                                  Terminationfor Cause. Notwithstanding anything contained herein to the contrary, theBoard may terminate the Executive’s employment with the Company for cause;provided that the Executive shall be given notice of the Company’s intent toterminate his employment for cause, the nature of the cause, and, if curable, areasonable opportunity to remedy the cause. For the purposes of this Section 10(a),the term “reasonable” shall mean that amount of time deemed reasonable by theBoard acting in good faith and in light of the nature of the cause. Forpurposes of this Agreement, the term “cause” shall mean, the occurrence of anyone or more of the following (i) the commission of any act of willful andmaterial embezzlement or fraud on the part of Executive against the Company, (ii) anyact or omission which constitutes a willful and material breach by Executive ofthis Agreement, including a refusal or failure by Executive to perform hisregular duties and obligations hereunder, (iii) Executive has beenconvicted of a crime, which conviction has, or is reasonably likely to have amaterial adverse effect on the Company, or its business or will prevent theExecutive from performing his duties for a sustained period of time, (iv) Executivebecomes Disabled (as hereinafter defined), or (v) the death of Executive;provided, however, that “cause” shall not include any act or omission by theExecutive undertaken in the good faith exercise of the Executive’s businessjudgment as Vice President, Finance or in good faith reliance on the advice ofcounsel. For purposes of this Agreement, “Disabled” shall mean Executive’sinability, due to illness, accident or any other physical or mental condition,to fully perform the essential functions of his position or this Agreement formore than 26 weeks consecutively or for intermittent periods aggregating 39weeks during any 78-week period during the Employment term, except asotherwise required by law.

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If, during the Employment Term the Company terminates the Executive’semployment pursuant to clauses (i), (ii) or (iii) of this paragraph(a), then, from and after the date the Executive’s termination is effective(the “Termination Date”), the Executive shall (a) have no right to receiveany further Salary following the Termination Date, (b) be entitled toreceive any Bonus, payable on a pro rata basis, which may have accrued or whichotherwise would have

 

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been granted by the Board had the Executive not been terminated for theyear in which the Executive was terminated (c) cease to be covered underor be permitted to participate in any Benefits (except payments due to theExecutive or the Executive’s beneficiaries or representatives under anyapplicable life or disability insurance plans or policies) and (d) shallhave no further right to purchase shares of the Company’s common stock $.01 parvalue per share (the “Common Stock”) pursuant to any stock option plan or otherequity incentive plan of the Company (collectively, the “Plans”); provided,however, that all restrictions as disclosed in the Plans on the shares ofCommon Stock underlying any options granted under the Plans (the “RestrictedStock”) purchased by the Executive shall, subject to applicable securitieslaws, rules and regulations, lapse on the Termination Date.

 

If during the Employment Term the Companyterminates the Executive employment pursuant to clause (iv) or (v) ofthis paragraph (a), (a) the Company shall continue to pay the Executive(or his beneficiaries, as applicable) Salary and with respect to clause (iv) Benefits,then in effect, for a period of one year following the termination date inaccordance with the customary payroll practices of the Company for its seniormanagement personnel, (b) the Executive shall be entitled to receive anyBonus, payable on a pro rata basis, which may have accrued or which otherwisewould have been granted by the Board had the Executive not been terminated forthe year in which the Executive was terminated, and (c) the Executiveshall be entitled to all rights with respect to any options granted or CommonStock purchased under the 1998 Plan and the 2000 Plan for a period of two yearsfollowing the Termination Date including the immediate vesting of any unvestedoptions on the Termination Date and all restrictions on Restricted Stockpurchased by the Executive shall, subject to applicable securities laws, rules andregulations, lapse on the Termination Date.

 

## (b)                                 TerminationWithout Cause and Resignation For Good Reason.  The Company shall have the right to terminatethis Agreement and the employment of Executive with the Company for any reasonor no reason and without cause upon written notice to Executive of suchtermination, and the Executive shall have the right to resign for Good Reason(as hereinafter defined); provided that, except as otherwise provided inparagraph (c) below, the Severance Period shall commence on the dayimmediately following the date of such termination or resignation, as the casemay be, and the Executive shall be entitled to receive the SeveranceBenefits.  All of the Executive’s non-vestedoptions to purchase shares of Common Stock granted under the 1998 Plan and the2000 Plan shall vest on the Termination Date. The Executive shall be entitled to exercise any or all vested optionsthat were granted under the Plans for a period of two years following theTermination Date.

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## (c)                                  TerminationUpon Change of Control or Resignation for Good Reason Following a Change ofControl.  In the event Executive’semployment is terminated by the Company subsequent to a Change of Control (ashereinafter defined) or the Executive resigns from the Company for Good Reason(as hereinafter defined) the Severance Period shall commence on the dayimmediately following the date of such termination or resignation, as the casemay be, and the Executive shall be entitled to receive the Severance Benefits.If the Executive receives the Severance Benefits pursuant to this paragraph(c), in no event shall the Executive receive any Severance Benefits pursuantparagraph (b) of this Section 10. To the extent that such amounts arein excess of the amount allowable as a deduction under Section 280(G) ofthe Code, or are subject to excise tax pursuant to Section 4999 of theCode the

 

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## Company will gross-up anyadditional amounts due and (iii) all non-vested options to purchase sharesof Common Stock granted under the 1998 Plan and the 2000 Plan shall vest on theTermination Date and the Executive shall be entitled to exercise any or all ofthe vested options that were granted under the 1998 Plan or 2000 Plan for aperiod of two years following the Termination Date and all restrictions onRestricted Stock purchased by the Executive shall, subject to applicablesecurities laws, rules and regulations, lapse on the Termination Date.

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## (d)                                 Resignation.  Executive shall have the right to terminatethis Agreement and his employment with the Company upon fourteen (14) calendardays prior written notice to the Company. Except if the Executive’s resignationis for Good Reason in accordance with paragraphs (b) and (c) above,from and after the effective date of such resignation, Executive shall (i) haveno right to receive any further Salary, bonus or Severance Benefits hereunder; (ii) ceaseto be covered under or by permitted to participate in any Benefits (exceptpayments due the Executive or the Executive’s beneficiaries or representativesunder any applicable pension, profit sharing, life or disability insurance plansor policies); and (iii) forfeit any and all non-vested options granted ornon-vested Common Stock purchased under the Plans.  Notwithstanding the foregoing, if Executiveterminates his employment with the Company pursuant to this Section 10(d) priorto September 27, 2005, Executive shall purchase the Leased Car inaccordance with the terms set forth on Exhibit B.

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## (e)                                  Definitions.  For purposes of this Section 10 theterms listed below shall mean the following:

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### (i)                                     “Changein Control” shall mean:

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(a)                                  the direct or indirectacquisition, whether by sale, merger, consolidation, or purchase of assets orstock, by any person, corporation, or other entity or group thereof of thebeneficial ownership (as that term is used in Section 13(d)(1) of theSecurities Exchange Act of 1934, as amended, and the rules and regulationspromulgated thereunder) of shares in the Company which, when added to any othershares the beneficial ownership of which is held by the acquirer, shall resultin the acquirer’s having more that 33% of the votes that are entitled to becast at meetings of stockholders as to matters on which all outstanding sharesare entitled to be voted as a single class; provided, however, that suchacquisition shall not constitute a Change of Control for purposes of thisAgreement if prior to such acquisition a resolution declaring that theacquisition shall not constitute a Change of Control is adopted by the Boardwith the support of a majority of the Board members who either were members ofthe Board for at least two years prior to the date of the vote on suchresolution or were nominated for election to the Board by at least two-thirdsof the Directors then still in office who were members of the Board at leasttwo years prior to the date of the vote on such resolution; and providedfurther, that neither the Company, nor any person who as of the date hereof wasa Director or officer of the Company, nor any trustee or other fiduciaryholding securities under an employee benefit plan of the Company, nor any corporationowned, directly or indirectly, by the shareholders of the Company in thesubstantially the same proportions as their ownership of shares of the Companyshall be deemed to be an “acquirer” for purposes of this Section.

 

(b)                                 the election during any two-yearperiod to a majority of the seats on the Board of Directors of the Company ofindividuals who were not members of the

 

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Board at the beginning of such period unless such additional orreplacement directors were approved by at least 80% of the continuingdirectors.

 

(c)                                  shareholder approval of a planof complete liquidation of the Company or an agreement for the sale ordisposition by the Company of all or substantially all of the Company’s assets.

 

### (ii)                                  “GoodReason” shall mean the occurrence of (a) a breach of this Agreement by theCompany, (b) the assignment to the Executive of duties inconsistent withhis position as described in Section 2 herein, or any significant adversealteration in the status or conditions of the Executive’s employment or in thenature of the Executive’s responsibilities as described in Section herein,(c) the failure of the Company to maintain directors’ and officers’insurance at an aggregate amount at least equal to the level provided as of thedate hereof or (d) the failure of the Company to continue to provideExecutive with benefits substantially similar to those described in thisAgreement or to continue in effect any benefit or stock option plan which ismaterial to the Executive’s compensation, including but not limited to the 1998Plan; provided, however, Executive shall not be deemed to have Good Reason toterminate his employment if the reason for such termination is remedied priorto the date of termination specified in the notice of termination pursuant to Section 10(d) herein.

 

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# SECTION 11. RELEASE.  Executive for himself and for the executorsand administrators of his estate, his heirs, successors and assigns, herebyreleases and forever discharges the Company and its officers, directors,employees and stockholders and the respective executors, administrators, heirs,successors and assigns of the foregoing, from any and all claims, actions,causes of action, suits, sums of money, debts, dues, accounts, reckonings,bonds, bills, covenants, contracts, controversies, agreements, promises,demands or damages of any nature whatsoever or by reason of any matter, causeor thing regardless of whether known or unknown at present, which against theCompany or any of its officers, directors, employees or stockholders Executiveever had, now has or hereafter can, shall or may have for, upon, or by reasonof, any matter, cause or thing whatsoever from the beginning of the world tothe date hereof including, but not limited to, any matter relating to orarising out of the employment of Executive or termination thereof under anycontract, tort, federal, state or local fair employment practices or civilrights law including, but not limited to, Title VII of the Civil Rights Act of1964, as amended, the Americans with Disabilities Act, the Age Discriminationin Employment Act, the Older Workers Benefits Protection Act, the federalFamily and Medical Leave Act, or any claim for physical or emotional distressor injuries, or any other duty or obligation of any kind or description,including any implied covenant of good faith and fair dealing, implied contractof permanent employment or the tortious or willful discharge of employment.  The parties also agree that this Agreementdoes not either affect the rights and responsibilities of the Equal EmploymentOpportunity Commission to enforce the Age Discrimination in Employment Act, orjustify interfering with the protected right of an employee to file a charge orparticipate in an investigation or proceeding conducted by the Equal EmploymentOpportunity Commission under the Age Discrimination in Employment Act.  In the event the Equal Employment OpportunityCommission commences a proceeding against the Company in which Executive is anamed party, Executive agrees to waive and forego any monetary claims which maybe alleged by the Equal Employment Opportunity Commission to be owed toExecutive.  The parties agree that nothing in the provisions of this Section 11is intended to limit their rights under and concerning enforcement of thisAgreement.

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# SECTION 12. REVOCATION.  The Company has advised Executive to consultwith an attorney prior to executing this Agreement.  By executing this Agreement, Executiveacknowledges that (a) he has been provided an opportunity to consult withan attorney or other advisor of his choice regarding the terms of thisAgreement, (b) this is a final offer and Executive has been giventwenty-one (21) days in which to consider whether he wishes to enter into thisAgreement, (c) Executive has elected to enter this Agreement knowingly andvoluntarily and (d) if he does so within fewer than 21 days from receiptof the final document he has knowingly and voluntarily waived the remainingtime.  The Company reserves the right tochange or revoke this Agreement prior to Executive’s execution hereof.  This Agreement shall be fully effective andbinding upon all parties hereto immediately upon execution of this Agreementexcept as to rights or claims arising under the ADEA, in which case Executivehas seven (7) days following execution of this Agreement to change hismind (the “Revocation Period”). Executive further covenants not to contest the validity of the releaseset forth in Section 11 hereof subsequent to the Revocation Period andagrees that if he nonetheless should pursue litigation against the Companyinvolving any matter covered and released hereby, Executive agrees that hefirst shall restore to the Company the full value of all consideration he hasreceived or to which he is entitled hereunder and shall be liable for theCompany’s costs and attorneys’ fees incidental to defending such legal action.

 

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# SECTION 13. AUTHORITY.  Executive represents and warrants that he hasthe ability to enter into this Agreement and perform all obligations hereunder,and that there are no restrictions on Executive or any obligations owed by himto third parties which are reasonably likely, in any way, to detract from oradversely affect his performance hereunder.

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# SECTION 14. MISCELLANEOUS.

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## (a)                                  SeparateAgreements.  The covenants ofExecutive contained in this Agreement shall survive any termination of thisAgreement and shall be construed as separate agreements independent of anyother agreement, claim, or cause of action of Executive against the Company,whether predicated on this Agreement or otherwise. The covenants contained inthis Agreement are necessary to protect the legitimate business interests ofthe Company.

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## (b)                                 EntireAgreement.  The parties heretoacknowledge and agree that this Agreement supersedes all previous contracts andagreements between the Company and Executive relating to the subject matterhereof and that any such previous contracts or agreements, including withoutlimitation, the Original Employment Agreement, shall become null and void uponexecution of this Agreement. This Agreement constitutes the complete agreementamong the parties hereto with respect to the subject matter hereof and no partyhas made or is relying on any promises by any other party of their respectiverepresentatives not contained in this Agreement.

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## (c)                                  Severability.  If any provision of this Agreement is held tobe illegal, invalidor unenforceable under present or future laws, suchprovision shall be fully severable, this Agreement shall be construed andenforced as if such illegal, invalid or unenforceable provision had nevercomprised a part of this Agreement, and the remaining provisions of thisAgreement shall remain in full force and effect and shall not be affected bythe illegal, invalid or unenforceable provision or by its severance from thisAgreement. If any provision of this Agreement is held to be unenforceablebecause of the duration of such provision, the area covered thereby or thescope of the activity restrained, the parties hereby expressly agree that thecourt making such determination shall have the power to reduce the durationand/or areas of such provision and/or the scope of the activity to berestrained contained in such provision and, in its reduced form, such provisionshall then be enforceable.

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## (d)                                 Successorand Assigns.

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#### (i)                                     ThisAgreement is personal in nature and neither this Agreement nor any rights orobligations arising hereunder may be assigned, transferred or pledged byExecutive. This Agreement shall inure to the benefit of and be enforceable byExecutive’s personal or legal representatives, executors, administrators,successors, heirs, distributees, devisees and legatees.

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#### (ii)                                  ThisAgreement shall be binding upon and inure to the benefit of the Company andtheir successors. The rights and obligations of the Company pursuant to thisAgreement are freely assignable and transferable by Company without the consentof Executive

 

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#### without his being relivedof any obligations hereunder, including, without limitation, an assignment ortransfer in connection with a merger or consolidation of the Company, or a saleor transfer of all or substantially all of the assets of the Company; provided,the provisions of this Agreement shall be binding on and shall inure to thebenefit of the surviving business entity or the business entity to which suchassets shall be transferred and such successor shall expressly assume and agreeto perform this Agreement in the same manner and to the same extent that theCompany would be required to perform it if no such transaction had taken place.

####  

## (e)                                  GoverningLaw.  This Agreement shall be governedby and construed in accordance with the laws of the State of New York, withoutregard to the conflict of law rules thereof.

##  

## (f)                                    Amendment.  No amendment, waiver, modification or changeof an provision of this Agreement shall be valid unless in writing and signedby both parties; provided, that any such amendment, waiver, modification orchange must be consented to on behalf of the Company by the Board. The waiverof any breach of any duty, term or condition of this Agreement shall not bedeemed to constitute a waiver of any preceding or succeeding breach of the sameor any other duty, term or condition of this Agreement.

##  

## (g)                                 Notices.  All notices and communications under thisAgreement shall be in writing and shall be personally delivered or sent byprepaid certified mail, return receipt requested, or by recognized courierservice, and addressed as follows:

##  

### (i)                             If tothe Company to:

###  

American Bank Note Holographics, Inc.

2 Applegate Drive

Robbinsville, NJ 08691

Attention: President

Telephone:  (609)632-0800

Facsimile:  (609) 632-0850

 

 

With a copy to:

 

Fulbright & Jaworski LLP

666 Fifth Avenue

New York, NY 10103

Attention:  PaulJacobs, Esq.

Telephone: (212) 318-3348

Facsimile:  (212) 752-5958

 

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### (ii)                          If tothe Executive to:

###  

Alan Goldstein

1219 Baldwin Road

Yorktown Heights, NY 10598

Telephone: (914) 245-1907

Facsimile:  (914) 962-4938

 

With a copy to:

 

Sapir & Frumkin LLP

399 Knollwood Road, Suite 310

White Plains, NY 10603

Attention: William Frumkin, Esq.

Telephone: (914) 326-0366

Facsimile: (914) 682-9128

 

or to suchother address as may be specified by notice of the parties.

 

## (h)                                 Arbitration.  Except as provided for in Section 7(b),the Company and Executive agree that any claim or controversy arising out of orrelating to this Agreement or any breach thereof (“Arbitrable Dispute”) shallbe settled by arbitration if such claim or controversy is not otherwisesettled; provided, however, that nothing set forth herein shall in any waylimit the Company’s ability to seek and obtain injunctive relief in aid ofarbitration from any court of competent jurisdiction. This arbitrationagreement applies to, among others, disputes about the validity,interpretation, or effect of this Agreement. The arbitration shall take placein New York, New York, or such other location as to which the parties maymutually agree. Except as expressly set forth herein, all arbitrationproceedings under this Section 12(h) shall be undertaken inaccordance with the Commercial Arbitration Rules of the AmericanArbitration Association (the “AAA”) then in force only before individuals whoare (I) lawyers engaged full-time in the practice of law and (ii) on theAAA register of arbitrators. There shall be one arbitrator who shall be chosenin accordance with the rules of the AAA. The arbitrator may not modify orchange this Agreement in any way and shall not be empowered to award punitivedamages against any party to such arbitration. Each party shall pay the fees ofsuch party’s attorneys, the expenses of such party’s witnesses, and any otherexpenses that such party incurs in connection with the arbitration, but allother costs of the arbitration, including the fees of the arbitrator, the costof any record or transcript of the arbitration, administrative fees, and otherfees and costs shall be paid in full by the Company. Except as provided for in Section 7(b),arbitration in this manner shall be the exclusive remedy for any ArbitrableDispute should Executive or the Company attempt to resolve an ArbitrableDispute.

##  

## (i)                                     IndemnificationAgreement.  A material breach of thatcertain Indemnification Agreement, entered into as of the date hereof, betweenthe Company and the Executive, shall constitute a material breach of this Agreement.

 

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## (j)                                     Counterparts.  This Agreement may be executed incounterparts, each of which will be deemed an original but all of which willtogether constitute one and the same Agreement.

##  

IN WITNESS WHEREOF, the parties hereto have executed this Agreement asof the date first above written.

 
|   | AMERICAN BANK NOTE HOLOGRAPHICS, INC.         |
|--------|-----------------------------------------------|
|   |                                          |
|   |                                          |
|   | By:                                           | /s/ Kenneth Traub |   |
|   | Name: Kenneth Traub                           |
|   | Title: President and Chief Executive  Officer |
|   |                                          |
|   |                                          |
|   | ALAN GOLDSTEIN                                |
|   |                                          |
|   |                                          |
|   |                                          | /s/ Alan  Goldstein |

 

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Exhibit A

 

Unused Vacation Summary

1999-2004

 
| ** **             | ** ** | **Days Taken For** | ** ** | ** **   | ** ** | ** **   | ** ** |
|------------------------|------------|--------------------|------------|--------------|------------|--------------|------------|
| ** **             | ** ** | **Year**           | ** ** | **Vacation** | ** ** | **Personal** | ** ** | **Sick** | ** ** | ** ** | ** ** | ** ** | ** ** |
|                   |       |               |       |         |       |         |       |   |   |   |   |   |   |
|                   |       | 1999               |       | 8            |       | 1            |       | 1 |   |   |   |   |   |
|                   |       | 2000               |       | 13           |       | 2            |       | 1 |   |   |   |   |   |
|                   |       | 2001               |       | 11           |       | 2            |       | 1 |   |   |   |   |   |
|                   |       | 2002               |       | 16           |       | 2            |       | 1 |   |   |   |   |   |
|                   |       | 2003               |       | 18           |       | 2            |       | 1 |   |   |   |   |   |
|                   |       | 2004               |       | 16           |       | 2            |       | 0 |   |   |   |   |   |
|                   |       |               |       |         |       |         |       |   |   |   |   |   |
| **Year**               | ** ** | **1999**           | ** ** | **2000**     | ** ** | **2001**     | ** ** | **2002** | ** ** | **2003** | ** ** | **2004** | ** ** |
|                   |       |               |       |         |       |         |       |   |   |   |   |   |   |
| Vacation  Earned       |       | 15                 |       | 20           |       | 20           |       | 20 |   | 20 |   | 20 |   |
|                   |       |               |       |         |       |         |       |   |   |   |   |   |   |
| Vacation  Taken        |       | 8                  |       | 13           |       | 11           |       | 16 |   | 18 |   | 16 |   |
|                   |       |               |       |         |       |         |       |   |   |   |   |   |   |
| Unused  Vacation       |       | 7                  |       | 7            |       | 9            |       | 4 |   | 2 |   | 4 |   |
|                   |       |               |       |         |       |         |       |   |   |   |   |   |   |
| Total Unused  Vacation |       |               |       |         |       |         |       |   |   |   |   | 33 |   |
|                        |            |                    |            |              |            |              |            |  |  |  |  |  |  |  |

 

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Exhibit B

 

Leased Car

 

1.     The current lease term of the Leased Carends on September 27, 2005. If the Executive’s Termination Date is priorto September 27, 2005, the Company will continue the Leased Car benefituntil the expiration of the current lease term. At the end of the lease termthe Company will purchase the Leased Car for the residual lease value ($22,257plus sales tax for a total of $24,093) and the Executive will purchase theLeased Car from the Company for the residual value less any excess mileage chargewhich the Company would have had to pay to the leasing company when returningthe Leased Car. The Executive will pay all title fees, registration and salestax upon purchase of the Leased Car.  Theexcess mileage charge is $0.20 per mile over 36,000 miles.

 

2.     If the Termination Date is after September 27,2005, the Company will extend the lease term to the extent permissible by theleasing company of the Leased Car.

 

3.     In the event the lease for the Leased Carcannot be extended, the Company will purchase the Leased Car at the end of thecurrent lease term on September 27, 2005 for the residual value anddepreciate the Leased Car based on the monthly lease payment (approximately$485/month) it is currently paying. On the Termination Date the Executive willpurchase the Leased Car from the Company for the net book value of the LeasedCar less the excess mileage cost at that time. The excess mileage base (36,000miles) will increase by 1,000 miles per month through the Termination Date. TheExecutive will pay all title fees, registration and sales tax upon purchase ofthe Leased Car.

 

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