**Exhibit 10.1**

SECOND AMENDMENT

AGREEMENT, made this  12th day ofSeptember, 2006 entered into between MACK-CALI CW REALTY ASSOCIATESL.L.C., a New York limited liabilitycompany, having its principal office at 100 Clearbrook Road, Elmsford, New York10523 (herein referred to as “Owner”), and AMERICAN BANKNOTE HOLOGRAPHICS,INC., a Delaware corporation, having an office at 2 Applegate Drive,Robbinsville, New Jersey 08691 (hereinreferred to as “Tenant”).

WITNESSETH:

WHEREAS, Owner’s predecessor ininterest, Robert Martin Company, and Tenant entered into a written leaseagreement dated July 23, 1992, as amended by First Amendment dated August 19,1993 (herein collectively referred to as the “Lease”) wherein and whereby Ownercurrently leases to Tenant and Tenant currently hires from Owner approximately58,934 square feet in the building known as 399 Executive Boulevard, Elmsford,New York, for a term which currently expires on December 31, 2007 (the “ExpirationDate”), and

WHEREAS, the parties heretodesire to amend the Lease pursuant to the terms and provisions set forth below;

NOW, THEREFORE, in considerationof the mutual covenants herein contained and other good and valuableconsideration, each to the other in hand paid, IT IS AGREED as follows:

1.            Effective as of April 1, 2006, through andincluding December 31, 2007, the Fixed Annual Rent shall be decreased from “$745,515.10per annum” to “$670,963.59 per annum,” as follows:
| **Period**             | ** ** | **Annual Rent** | ** ** | **Monthly Rent** | ** ** | **Annual Per Sq. Ft.  Rent** | ** ** |
|------------------------|------------|----------------------|------------|-----------------------|------------|---------------------------------------------|------------|
| 4/1/06 – 12/31/07 |       | $                    | 670,963.59 |                  | $          | 55,913.63                                   |       | $ | 11.39 |   |
|                        |            |                      |            |                       |            |                                             |            |  |  |  |

 

2.            Tenantshall pay the sum of $100,000.00 to Owner, upon the execution and delivery ofthis Second Amendment by Tenant, which sum shall be applied towards thedemolition and/or restoration work to be performed by Owner in the demisedpremises, as hereinafter provided. Each of Owner and Tenant acknowledges that(a) Tenant is currently not operating its business in the demised premises and(b) such failure to operate its business in the demised premises shall notconstitute an event of default under the Lease. Tenant hereby grants to Ownerthe right, at Owner’s option, in its sole discretion, to enter upon the demisedpremises at any time from and after the date of this Second Amendment, upon 24hours notice to Tenant, to perform such demolition and restoration work asOwner may desire. Entry by Owner and the performance of work by Owner in thedemised premises shall not entitle Tenant to any claim against Owner forinterruption of business or to any abatement in rent, shall not constitute aconstructive or partial eviction and shall not constitute an acceptance ofpossession of the demised premises by Owner, nor a release of Tenant from anyliability of Tenant under the Lease except as provided for herein. Owner willindemnify and hold Tenant harmless from all loss, cost, and expenses,including, without limitation, reasonable attorney’s fees and disbursements,arising from any property damage or personal injury occurring from the datehereof to the extent caused by the entry of Owner, its agents or employees intothe demised premises. Tenant shall continue to be liable for all terms andconditions to be performed by Tenant under the Lease including, without limitation, the obligation to maintain thedemised premises including, withoutlimitation, maintaining its service contracts on the HVAC units servingexclusively the demised premises (except as hereinafter provided), to maintaininsurance, to pay for utilities, and to pay rent through and including December31, 2007, the current expiration date of the Lease. Notwithstanding anything herein to the contrary, Owner herebyacknowledges its understanding and agreement that Tenant is hereby released,effective from the date hereof, from any and all accrued and unaccruedobligations provided for in the Lease with respect to  repair andrestoration of the demised premises at the expiration or earlier termination ofthe term. In 

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addition to theforegoing, in the event Owner performs demolition in any part of the demisedpremises, Tenant shall be released of its obligation to maintain those HVACunits serving that portion of the demised premises affected by the demolition.The cost of all utility services in the demised premises  shall continue to be paid by Tenant directlyto the utility company, provided, however, in the event Owner enters thedemised premises and performs demolition and/or restoration work therein and asa result the utility bills for the demised premises shall increase as a resultof said usage (as opposed to electric rate increase), Owner shall reimburseTenant for the excess cost of utilities within thirty (30) days after Tenant’swritten request therefor, which request shall be accompanied by past andpresent utility bills evidencing the increased usage and cost thereof. Notwithstanding anything herein to the contrary,Owner shall have no obligation whatsoever to spend all or any portion of Tenant’saforesaid contribution to demolish and/or restore the demised premises. Notwithstanding anything herein to the contrary,all of Owner’s obligations under the Lease shall remain in full force andnothing herein shall be deemed or construed as a release of Owner from any ofits obligations and liabilities respecting repair and maintenance, as set forthwith greater specificity in Article 4, footnote 3 of the Lease.

3.            In consideration of Tenant’s aforesaid$100,000.00 Tenant contribution toward the cost of demolition and restoration,Owner shall accept the premises in its current as-is condition, andnotwithstanding anything in the Lease to the contrary, Tenant shall have noobligation to repair or restore the premises upon the expiration or earliertermination of the term. Notwithstanding anything herein to thecontrary, the release of Tenant from its obligation to demolish, repair orrestore the premises upon the expiration or earlier termination of the Lease,as provided for in the immediately preceding sentence, shall, in no event, bedeemed or construed as a release of Tenant from any of its obligations andliabilities respecting Hazardous Materials, as set forth with greaterspecificity in Section 58(l) of the Lease. The foregoing sentence shall not be deemed or construed as increasing ordiminishing, in any respect, any of the obligations and liabilities of Tenantrespecting Hazardous Materials as set forth in Section 58(l) of the Lease.

4.            Owner shall have the right, at its option, at anytime, exercisable upon giving Tenant at least five (5) days advancewritten notice (“Surrender Notice”), toelect to delete from the demised premises all or any portion of the demisedpremises, as designated in Owner’s notice (“Surrendered Premises”) and upon theexpiration of said five (5) day period (said date being the “SurrenderDate”), the Surrendered Premises shall bedeemed deleted from the demised premises. For the initial ninety (90) day period following the Surrender Date,Tenant shall pay one hundred percent (100%) of all Fixed Annual Rent (asset forth in Paragraph 1 above) and additional rent  payable under the Lease for the SurrenderedPremises that would otherwise have been due and payable for the SurrenderedPremises for the aforesaid ninety (90) day period, as said Fixed Annual Rentand additional rent would have come due in monthly installments under the Leasehad Owner not exercised its rights hereunder with respect to the SurrenderedPremises,   and on said ninetieth (90th) day following the SurrenderDate (or the first business day thereafter if such 90th day is not a business day), Tenant shall payto Owner one hundred percent (100%) of all Fixed Annual Rent (as set forth inParagraph 1 above) and additional rent payable under the Lease for theSurrendered Premises that would otherwise have been due and payable for theSurrendered Premises for the balance of the term of the Lease had Owner notexercised its rights hereunder (conclusively presuming the additional rent tobe the same as was payable for the year immediately preceding such termination)(the payment covering the initial 90 days and the payment covering the balanceof the term is hereinafter referred ton together as the “Surrender Payment”),time being of the essence with respect to Tenant’s payment of the SurrenderPayment on or before said ninetieth (90th) day,  (ii) ifthe Surrendered Premises are a portion of the demised premises, from and afterthe Surrender Date, the Fixed Annual Rent payable under the Lease shall bedecreased by an amount equal to the Fixed Annual Rent that would otherwise havebeen due and payable for the Surrendered Premises for the balance of the termof the Lease had Owner not exercised its rights hereunder and Tenant’sProportionate Share shall be proportionately reduced (and Tenant’s obligationto pay additional rent including, without limitation, Common Area MaintenanceCharge and Tax Escalation shall be appropriately adjusted) to reflect thedeletion of the Surrendered Premises from the demised premises, and (iii) allother terms and provisions set forth in the Lease shall apply. Owner shallperform all work necessary to delete the Surrendered Premises from the demisedpremises at Owner’s cost and 

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expense. Promptly after Owner’s giving of theSurrender Notice, upon request of either party, the parties shall execute anamendment to the Lease confirming the deletion of the Surrendered Premises fromthe demised premises.  Except as set forth herein, all leaseprovisions applicable as of the natural expiration of the Lease shall apply tothe Surrender Date with respect to the Surrendered Premises (as if theSurrender Date were the expiration date of the Lease).

5.            As security for Tenant’s obligation to pay FixedAnnual Rent and additional rent under the Lease (including, without limitation,the Surrender Payment described in Paragraph 4 hereinabove), Tenant shalldeliver to Owner simultaneously with the execution of this Second Amendment, anirrevocable negotiable letter of credit issued by and drawn upon suchcommercial bank selected by Tenant and acceptable to Owner (at its solediscretion) and in form and content acceptable to Owner (also at its solediscretion) (the form attached hereto as Exhibit A and the issuing bank shownthereon are deemed acceptable to Owner) for the account of Owner, in the sum ofSEVEN HUNDRED EIGHTY-NINE THOUSAND SIX HUNDRED SIX  AND 80/100 DOLLARS ($789,606.80).  Said letter of credit shall be for a term ofnot less than one (l) year and shall be renewed by Tenant (without notice fromOwner) no later than thirty (30) days prior to its expiration, and theexpiration of each replacement thereof, until Owner shall be required to returnthe security to Tenant pursuant to the terms of this Lease but in no eventearlier than ten (10) days after the Expiration Date, and each such renewedletter of credit shall be delivered to Owner no later than thirty (30) days priorto the expiration of the letter of credit then held by Owner.  If Tenant shall default in any of its paymentof Fixed Annual Rent or additional rent (including,without limitation, the Surrender Payment described in Paragraph 4 hereinabove),and any portion of the security deposit shall be utilized by Owner to cure suchnon-payment (it being agreed and acknowledged Owner may access such securitydeposit solely in the event of any such non-payment), Tenant shall, within five(5) days after request by Owner, replenish the security account by depositingwith Owner, in cash or by letter of credit, an amount equal to that utilized byOwner.  Failure of Tenant to complystrictly with the provisions of this Article shall constitute a material breachof this Lease and Owner shall be entitled to present the letter of credit thenheld by it for payment (without notice to Tenant) in the event of any breach byTenant of this Section 5 of this Amendment or any of Tenant’s obligations topay Fixed Annual Rent and additional rent (including,without limitation, the Surrender Payment described in Paragraph 4 hereinabove)under the lease. In the event of a bank failure or insolvency affectingthe letter of credit, Tenant shall replace same within twenty (20) days after beingrequested to do so by Owner.

Notwithstanding anything herein to the contrary,during the last twelve (12) months of the term of the Lease, said letter ofcredit shall be reduced on the 15th day of each month by $65,800.57, providedTenant has paid to Owner the monthly installment of Fixed Annual Rent andadditional rent for said month by the 5th day of said month. In the event Ownershall give Tenant a Surrender Notice for a Surrender Date that occurs duringthe last twelve (12) months of the term of the Lease, said letter of creditshall be reduced by an amount equal to Tenant’s payment of the SurrenderPayment to Owner for the Surrendered Premises, pursuant to Paragraph 4 hereof.Owner shall consent to said reductions of the letter of credit and shallfurnish written notification of such consent in the form required by theissuing bank within five (5) days following Owner’s receipt of the aforesaidpayments from Tenant.

6.            Section 59(d)(1) of the Lease is amended bydeleting “provided however, that Tenant shall first obtain the consent of Ownerwhich consent shall not be unreasonably withheld or delayed” and inserting inits place “provided however, that, notwithstanding anything in the Lease to thecontrary, Tenant shall first obtain the written consent of Owner in eachinstance, which consent shall be granted or denied in Owner’s sole discretion.”Tenant hereby unconditionally waives any and all claims against Owner inconnection with Tenant’s proposed sublease of the demised premises to PortableStorage LLC d/b/a PODS.

7.          Articles 61 (Option for Additional Space) and 62(Option to Renew) of the Lease are hereby deleted in their entireties.

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8.            Tenant agrees not to disclose the terms,covenants, conditions or other facts with respect to this Second Amendment,including, but not limited to, the Fixed Annual Rent, to any person,corporation, partnership, association, newspaper, periodical or other entityexcept to Tenant’s counsel, accountants, financial advisors and as may beotherwise required by law or judicial decision. This non-disclosure and confidentiality agreement shall be binding uponTenant without limitation as to time, and a breach of this paragraph shallconstitute a material breach under the Lease.

9.            Each of Owner and Tenant represents that it hasdealt with no broker in connection with this Second Amendment and agreesto indemnify and hold the other harmless from any and all claims of any brokerarising out of or in connection with any claim that such broker dealt with theindemnifying party in connection with the representation and negotiations of,or entering into of, this Second Amendment.

10.      Tenant hereby represents to Owner thatexcept as otherwise provided for in this Amendment, to Tenant’s knowledge (i)there exists no default under the Lease either by Tenant or Owner; (ii) Tenantis entitled to no credit, free rent or other offset or abatement of the rentsdue under the Lease; and (iii) there exists no offset, defense or counterclaimto Tenant’s obligation under the Lease.

11.      Except as otherwise set forth herein, all theother terms and provisions contained in the Lease shall remain in full forceand effect.

12.      It is understood and agreed that this SecondAmendment is submitted to Tenant forsignature with the understanding that it shall not bind either of the partieshereto unless and until fully executed original copies thereof have beenexchanged by Owner and Tenant.

13.      The Lease, as hereby amended, shall be bindingupon the parties hereto, their successors and assigns.

IN WITNESS WHEREOF, the partieshereto have hereunto set their hands and seal the day and year first abovewritten.
|        | MACK-CALI CW REALTY ASSOCIATES L.L.C. |
|--------|---------------------------------------|
|   |                                  |   |
|   | By:                                   | Mack-Cali Realty, L.P., member |
|   | By:                                   | Mack-Cali Realty  Corporation |
|   |                                  | general partner |
|   |                                  |   |
|   |                                  |   |
|   | By:                                   |   |   |
|   |                                  | Michael A. Grossman |
|   |                                  | Executive Vice-President |
|   |                                  |   |
|   | AMERICAN BANKNOTE HOLOGRAPHICS, INC.  |
|   |                                  |   |
|   |                                  |   |
|   | By:                                   |   |   |
|   |                                  | Name: |
|   |                                  | Title: |
|   |                                  |   |
|        |                                       |  |  |  |

####  

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#### **EXHIBIT A**

###### SAMPLE FORM – LETTER OF CREDIT

|                   |        |
|------------------------|--------|
|                   |   | [DATE] |
| TO:                    |   |   |
| [Name of  Beneficiary] |   |   |
| [Address]              |   |   |
|                   |   |   |
|                   | Re:    | Irrevocable Letter of Credit |

 

Gentlemen:

By order of our client,                                                              ,we hereby establish our irrevocable Letter of Credit No.               in your favor for a sum or sums not to exceed $                                  -(                                  U.S.Dollars) in the aggregate, effective immediately.

This Letter of Credit shall bepayable in immediately available funds in U.S. Dollars.  Funds under this credit are payable to youupon your presentation to us a sight draft drawn on us in the form annexedhereto.  All drafts must be marked: “Drawnunder Letter of Credit No.           of [Name of Issuing Bank].

ThisLetter of Credit shall expire twelve (12) months from the date hereof; but isautomatically extendable, so that this Letter of Credit shall be deemedautomatically extended, from time to time, without amendment, for one year fromthe expiration date hereof and from each and every future expiration date,unless at least sixty (60) days prior to any expiration date we shall notifyyou by registered mail that we elect not to consider this Letter of Creditrenewed for any such additional period. The final expiration date hereof shall be no earlier than [fillin suitable date after expiration of lease].

ThisLetter of Credit is transferable and may be transferred one or more times.  However, no transfer shall be effectiveunless advice of such transfer is received by us in our standard form.

We herebyagree to honor each draft drawn under and in compliance with this Letter ofCredit, if duly presented at our offices at                                                              orat any other of our offices.

ThisLetter of Credit is subject to the International Standby Practices 1998,International Chamber of Commerce Publication No. 590.
|   | [Name of Bank] |
|--------|----------------|
|   |           |
|   | By:            |

 

[Annex Bank’s Formof Sight Draft]

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**Exhibit 1**
| BENEFICIARY:                       | APPLICANT:                          |
|------------------------------------|-------------------------------------|
| MACK-CALI CW REALTY ASSOCIATES LLC | AMERICAN BANK NOTE HOLOGRAPHICS INC |
| 100 CLEARBROOK RD                  | 2 APPLEGATE DRIVE                   |
| ELMSFORD NY 10523                  | ROBBINSVILLE, N.J. 08691            |

 

IRREVOCABLE STANDBY LETTER OF CREDIT
| OUR REFERENCE: | 18103596-00-000   |
|----------------|-------------------|
| AMOUNT:        | USD $789,606.80   |
| ISSUE DATE:    | AUGUST 24, 2006   |
| EXPIRY DATE:   | DECEMBER 15, 2007 |
| EXPIRY PLACE:  | OUR COUNTERS      |

 

BY ORDER OF OUR CLIENT,AMERICAN BANK NOTE HOLOGRAPHICS, INC., WE ESTABLISH OUR IRREVOCABLE STANDBYLETTER OF CREDIT NO. 18103596-00-000 IN YOUR FAVOR FOR A SUM OR SUMS NOT TOEXCEED US$789,606.80 (SEVEN HUNDRED EIGHTY NINE THOUSAND SIX HUNDRED SIX AND80/100 UNITED STATES DOLLARS) IN THE AGGREGATE, EFFECTIVE IMMEDIATELY.

THIS LETTER OF CREDIT SHALLBE PAYABLE IN IMMEDIATELY AVAILABLE FUNDS IN U.S. DOLLARS. FUNDS UNDER THISCREDIT ARE PAYABLE TO YOU UPON YOUR PRESENTATION TO US A SIGHT DRAFT DRAWN ONUS IN THE FORM ATTACHED HERETO AS ANNEX I ACCOMPANIED BY BENEFICIARY’SSTATEMENT PURPORTEDLY SIGNED BY AN AUTHORIZED REPRESENTATIVE READING ASFOLLOWS:

“I (STATE NAME AND TITLE)HEREBY CERTIFY THAT I AM AN AUTHORIZED REPRESENTATIVE OF MACK-CALI CW REALTYASSOCIATES LLC AND I FURTHER CERTIFY THAT THE AMOUNT OF THE ACCOMPANYING DRAFTREPRESENTS FUNDS DUE US AS AMERICAN BANK NOTE HOLOGRAPHICS, INC. HAS FAILED TOCOMPLY WITH THE TERMS AND CONDITIONS OF THE SECOND AMENDMENT TO THE LEASEAGREEMENT DATED JULY 26, 2006 BETWEEN MACK-CALI CW REALTY ASSOCIATES LLC ANDAMERICAN BANK NOTE HOLOGRAPHICS, INC.”

ALL DRAFTS MUST BE MARKED: “DRAWNUNDER LETTER OF CREDIT NO. 18103596-00-000 DATED AUGUST 24, 2006 OF PNC BANK,NATIONAL ASSOCIATION.”

IT IS A CONDITION OF THELETTER OF CREDIT THAT THE TOTAL AMOUNT SHALL AUTOMATICALLY REDUCE WITHOUTAMENDMENT IN ACCORDANCE WITH THE FOLLOWING SCHEDULE:
| DATE OF REDUCTION | ** ** | **AMOUNT OF REDUCTION** | ** ** | **LC AMOUNT** | ** ** |
|-----------------------------|------------|-----------------------------------|------------|--------------------|------------|
| ** **                  | ** ** | ** **                        | ** ** | ** **         | ** ** |
| JANUARY 15, 2007            |       | $                                 | 65,800.57  |               | $          | 723,806.23 |   |
| FEBRUARY I5,  2007          |       | $                                 | 65,800.57  |               | $          | 658,005.66 |   |
| MARCH 15, 2007              |       | $                                 | 65,800.57  |               | $          | 592,205.09 |   |
| APRIL 15, 2007              |       | $                                 | 65,800.57  |               | $          | 526,404.52 |   |
| MAY 15, 2007                |       | $                                 | 65,800.57  |               | $          | 460,603.95 |   |
| JUNE 15, 2007               |       | $                                 | 65,800.57  |               | $          | 394,803.38 |   |
| JULY 15, 2007               |       | $                                 | 65,800.57  |               | $          | 329,002.81 |   |
| AUGUST 15, 2007             |       | $                                 | 65,800.57  |               | $          | 263,202.24 |   |
| SEPTEMBER 15,  2007         |       | $                                 | 65,800.57  |               | $          | 197,401.67 |   |
| OCTOBER 15, 2007            |       | $                                 | 65,800.57  |               | $          | 131.601.10 |   |
| NOVEMBER 15,  2007          |       | $                                 | 65,800.57  |               | $          | 65,800.53 |   |
| DECEMBER 15, 2007           |       | $                                 | 65,800.53  |               | -0-        |   |

 

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THIS LETTER OF CREDIT EXPIRESWITH OUR CLOSE OF BUSINESS AT 5:00 P.M. EASTERN TIME AT THIS OFFICE ON DECEMBER15, 2007.

WEHEREBY ENGAGE WITH YOU THAT DRAFT(S) DRAWN UNDER AND IN COMPLIANCE WITH THETERMS AND CONDITIONS OF THIS LETTER OF CREDIT WILL BE DULY HONORED IF PRESENTEDTO US AT THIS OFFICE ON OR BEFORE THE EXPIRY DATE.

THIS LETTER OF CREDIT ISSUBJECT TO THE INTERNATIONAL STANDBY PRACTICES 1998, INTERNATIONAL CHAMBER OFCOMMERCE PUBLICATION NO. 590.

 
|                                 |   |
|---------------------------------|--------|
| PNC BANK, NATIONAL ASSOCIATION  |
| GLOBAL TRADE SERVICE OPERATIONS |

 

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