Exhibit 10.2


 


EMPLOYMENT AGREEMENT


 


THIS EMPLOYMENT
AGREEMENT, (this “Agreement”), is made and entered into as of June 9,
2005, by and between Mark Bonney (the “Executive”) and American Bank
Note Holographics, Inc., a Delaware corporation (the “Company”).


 


RECITAL


 


WHEREAS, the Company desires that the Executive be
employed to serve as its Executive Vice President, Chief Financial Officer and
Secretary, and the Executive desires to be so employed by the Company, upon the
terms and subject to the conditions set forth herein.


 


AGREEMENT


 


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


 


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


 


SECTION 2.      POSITION
AND DUTIES. The Executive shall assume the responsibilities and perform the
duties of Executive Vice President and Chief Financial Officer of the Company,
and shall report to the Chief Executive Officer of the Company.  The Executive shall be responsible for the
financial management and financial reporting of the Company and shall also
perform such duties and responsibilities assigned to him from time to time by
the Chief Executive Officer of the Company. 
The Executive agrees to devote substantially all of his business time,
attention, skill and best efforts to the diligent performance of his duties
hereunder and shall be loyal to the Company and its affiliates and
subsidiaries, and use his best efforts to further their interests. The
Executive shall not engage in any business activities (other than for the
Company) which would in any way affect his ability to perform his duties as
full time employee under this Agreement. The Company recognizes that the
Executive is a member of the board of directors of the Community Health Center, Inc.
and the Angel Investor Forum, Inc., and the Company will permit Executive
to continue to serve on such board of directors, as long as such service is
performed by Executive essentially during evenings, weekends and/or Executive’s
vacation days; and such service does not conflict with any other obligation of
Executive to the Company.  Executive
shall notify each of the entities of which he is a member of the board of
directors of his employment by the Company and shall substantially reduce his
time commitment to such entities shortly following the execution of this
Agreement.  In the performance of his
duties, the Executive agrees to abide by and comply with all policies,
practices, handbooks, procedures and guidelines which are now in effect or
which the Company may adopt, modify, supplement or change from time to time.


 


SECTION 3.      TERM
OF EMPLOYMENT. The term of employment hereunder shall commence on the date
hereof and shall continue thereafter until the earlier of (i) one year
from the date hereof or (ii) termination pursuant to Section 9 hereof
(the “Employment Term”). This


 





















 


Agreement shall be automatically renewed annually for
successive one year terms, unless the Company gives written notice at least
sixty (60) days prior to the end of the Employment Term of its election to
terminate such employment at the end of such Employment Term. Notwithstanding
the foregoing, if the Executive’s employment is terminated pursuant to Section 9
of this Agreement, the automatic renewal provided herein shall be of no further
effect as of the Termination Date (as defined herein). In the event the
Executive’s employment is not renewed at the end of the Employment Term (except
as otherwise provided in Section 9 hereof), the Company will pay to the
Executive an amount equal to the Executive’s then existing Salary  (as defined) for the next six months in
accordance with the customary payroll practices of the Company and shall  continue all Benefits (as defined below) for
such six-month period.


 


SECTION 4.      COMPENSATION
AND BENEFITS.


 


(a)           Salary
and Bonus. As compensation for the performance of the Executive’s services
hereunder, during the Employment Term, the Company will pay to the Executive an
annual base salary of not less than $215,000 per annum (the “Salary”).  In the event this Agreement is renewed
pursuant to Section 3 above, the Salary may or may not be increased at the
sole discretion of the Board of Directors (the “Board”), or a committee
designated by the Board to make such determination (the “Compensation
Committee”), in consultation with the Chief Executive Officer.  The Executive will also be eligible to
receive a bonus each year (the “Bonus”). 
Within 30 days following the end of each fiscal year of the Company, the
payment of any Bonus (or no Bonus) shall be determined by the Board or the
Compensation Committee in consultation with the Chief Executive Officer, and
shall be based on the Executive’s and the Company’s performance against the
objectives to be determined by the Board or the Compensation Committee, in
consultation with the Chief Executive Officer at the beginning of each fiscal
year.  The Executive’s Salary and any
Bonus will be payable in accordance with the customary payroll practices of the
Company for its senior management personnel.


 


(b)           Benefits.
During the Employment Term, the Executive shall be eligible to participate, on
the same basis and subject to the same qualifications as other senior
management personnel of the Company, in any pension, profit sharing, savings,
bonus, life insurance, health insurance, hospitalization, dental, drug
prescription, disability, accidental death and 
dismemberment and other benefit plans and policies as may from time to
time be in effect with respect to personnel of the Company (collectively, the “Benefits”).  The Executive shall also be entitled to vacation
days (including the right to accrue unused vacation time from year to year if
the Agreement is renewed pursuant to Section 3 above), holidays and sick
days in accordance with the policies of the Company as may be in effect from
time to time; provided, however, that upon termination of the Executive’s
employment for any reason (including resignation by the Executive), the Company
shall pay the Executive for accrued vacation time unused as of the last date of
employment, on a pro rated basis calculated on the basis of the Executive’s
Salary in effect on the Termination Date. 
The Executive shall also be entitled to receive a car allowance of $700
per month (inclusive of the cost of gas, tolls, repairs, insurance, maintenance
and other car related expenses).  The
parties anticipate the Executive will relocate his personal residence in
connection with his employment hereunder, and the Company shall reimburse the
Executive for all reasonable expenses specifically related to such relocation,
subject to a maximum amount of $100,000, upon the submission of supporting
documentation for such expenses. To the extent includible in income, the
reimbursement of these relocation expenses will be grossed-up to


 


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eliminate any federal or state tax consequence to the
Executive of his relocation. Until such time as the Executive relocates his
personal residence and in no event longer than two years from the date hereof,
the Company shall provide the Executive with a corporate apartment for use in
connection with his employment hereunder.


 


(c)           Stock
Options. As additional compensation hereunder the Executive shall be
granted stock options to purchase up to 112,500 shares of the Company’s common
stock, par value $.001 per share (the “Common Stock”) at an exercise
price equal to the fair market value of the Common Stock on the date of the
grant, pursuant to any stock option plan or other equity incentive plan of the
Company (collectively, the “Plans”). 
Such options will vest as to 37,500 shares on each anniversary of the
date of grant, provided that the Executive remains employed by the Company
through each such applicable anniversary date. 
The options and any shares of Common Stock underlying options may be
subject to certain restrictions as disclosed in the  Plans. 
The Executive shall be eligible to receive subsequent grants of options
to purchase equity in the Company during the Employment Term as determined,
from time to time, in the sole discretion of the Board or the Compensation
Committee in consultation with the Chief Executive Officer.   In addition, the option to purchase 25,000
shares of Common Stock granted to the Executive on February 19, 2003 and
the option to purchase 5,000 shares of Common Stock granted to the Executive on
January 7, 2005 shall remain outstanding during the Employment Term (but
in no event beyond the expiration of stated terms thereof) and shall continue
to vest in accordance with their terms during the Executive’s period of
employment hereunder.


 


(d)           Expenses.
The Company will pay or promptly reimburse the Executive for all reasonable
out-of-pocket business, entertainment and travel expenses (other than
commutation expenses relating to the Executive’s travel from his residence to
the Company’s headquarters located at 2 Applegate Drive, Robbinsville, NJ
08691) incurred by the Executive and approved by the Chief Executive Officer in
the performance of his duties hereunder upon presentation of appropriate
supporting documentation and otherwise in accordance with the expense
reimbursement policies of the Company in effect from time to time.


 


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


 


SECTION 5.      CONFIDENTIALITY.  The Executive acknowledges and agrees that (a) in
connection with his employment by the Company, the Executive will be involved
in the Company’s and its subsidiaries’ (if any) operations; (b) in order
to permit him to carry out his responsibilities, the Company may disclose, to
the Executive, in strict confidence, or the Executive may develop, confidential
proprietary information and trade secrets of the Company and its affiliates,
including without limitation (i) unpublished information with respect to
the Company concerning marketing or sales plans, operational techniques,
strategic plans and the identity of suppliers and supply contacts; (ii) unpublished
financial information with respect to the Company, including information
concerning revenues, profits and profit margins; (iii) internal
confidential manuals and memos; and (iv) “material inside information” as
such phrase is used for purposes of the Securities Exchange Act of 1934, as
amended (collectively, “Confidential Information”); and (c) the
Company and its affiliates derive significant economic value and competitive
advantage by reason of the fact that such Confidential Information, in


 


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whole or in part, is not generally known or readily
ascertainable by the Company’s or its affiliates’ actual or potential
competitors and, as such, constitutes the Company’s and its affiliates’
valuable trade secrets.


 


In addition to any obligations set forth herein, and
in recognition of the foregoing acknowledgments, for himself and on behalf of
his affiliates, the Executive agrees that during the Employment Term and
thereafter he will not, directly or indirectly, use, disseminate or disclose,
any Confidential Information (other than for the legitimate business purposes
of the Company), and that he will not knowingly permit any of his affiliates
to, directly or indirectly, use, disseminate or disclose, any Confidential
Information. At the end of the Employment Term, the Executive agrees to deliver
immediately to the Company the originals and all copies of Confidential
Information in his possession or control, whether in written form, on computers
or discs or otherwise, or evidence that any such Confidential Information has
been destroyed.


 


The restrictions set forth in this Section 5
shall not apply to those particular portions of Confidential Information, if
any, that (a) have been published by any of the Company or any of its
affiliates in a patent, article or other similar tangible publication; (b) is
or becomes part of the public domain through no fault of the Executive; (c) which
was in the Executive’s possession at the time of disclosure and was not
acquired directly or indirectly from the Company; or (d) which was
received by a third party who did not receive such information from the
Company, and the third party did not require the Executive to maintain such
information as confidential.


 


The foregoing restrictions on the disclosure of
Confidential Information set forth in this Section 5 shall not apply to
those particular portions of Confidential Information, if any, that are
required to be disclosed in connection with any legal process; provided that,
at least ten (10) days in advance of any required disclosure, or such
lesser time as may be required by circumstances, the Executive shall furnish
the Company with a copy of the judicial or administrative order requiring that
such information be disclosed together with a written description of the
information proposed to be disclosed (which description shall be in sufficient
detail to enable the Executive and its affiliates to determine the nature and
scope of the information proposed to be disclosed), and the Executive covenants
and agrees to cooperate with the Company and its affiliates to deliver the
minimum amount of information necessary to comply with such order.


 


This Section 5 shall survive any termination of
this Agreement.


 


SECTION 6.      COVENANT
NOT TO COMPETE.


 


(a)           Scope.
During the term of the Executive’s employment with the Company and for a period
of one year thereafter (the “Non-competition Period”), the Executive
shall not, in any jurisdiction where the Company has transacted business prior
to the date the Executive ceases to be an employee of the Company, (i) perform
any managerial, sales, marketing or technical services directly or indirectly
for any person or entity competing directly or indirectly with the Company or
any of its subsidiaries in the holography 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) on his own behalf or that of any other
person or entity, compete, either directly or indirectly, with the Company or
any of its subsidiaries, to sell any products or services marketed or offered
by the


 


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Company or any of its subsidiaries; or (iv) engage
or become interested, directly or indirectly, as owner, employer, partner,
consultant, through stock ownership (except ownership of less than one percent
of the number of shares outstanding of any securities which are listed for
trading on any securities exchange, provided that the specific nature and
amount of the investment, if over $50,000, shall be immediately disclosed to
the Company in writing), investment of capital, lending of money or property,
or otherwise either alone or in association with others, in the operation of
any type of business or enterprise which conflicts or interferes with the
performance of the Executive’s services hereunder.


 


(b)           Remedies.
The parties recognize, acknowledge and agree that (i) any breach or threatened
breach of the provisions of this Section 6 shall cause irreparable harm
and injury to the Company and that money damages will not provide an adequate
remedy for such breach or threatened breach and (ii) the duration, scope
and geographical application of this Agreement are fair and reasonable under
the circumstances, and are reasonably required to protect the legitimate
business interests of the Company. Accordingly, the Executive agrees that the
Company shall be entitled to have the provisions of this Agreement specifically
enforced by any court having jurisdiction, and that such a court may issue a
temporary restraining order, preliminary injunction or other appropriate
equitable relief, without having to prove the inadequacy of available remedies
at law. In addition, the Company shall be entitled to avail itself of all such
other actions and remedies available to it or any of its affiliates under law
or in equity and shall be entitled to such damages as it sustains by reason of
such breach or threatened breach. It is the express desire and intent of the
parties that the provisions of this Agreement be enforced to the full extent
possible.


 


(c)           Severability.
If any provision of Section 6(a) is held to be unenforceable because
of the duration of such provision, the area covered thereby or the scope of the
activity restrained, the parties hereby expressly agree that the court making
such determination shall have the power to reduce the duration and/or areas of
such provision and/or the scope of the activity to be restrained contained in
such provision and, in its reduced form, such provision shall then be
enforceable. The parties hereto intend and agree that the covenants contained
in Section 6(a) shall be construed as a series of separate covenants,
one for each municipality, community or county included within the area
designated by Section 6(a). Except for geographic coverage, the terms and
conditions of each such separate covenant shall be deemed identical to the
covenant contained in Section 6(a). Furthermore, if any court shall refuse
to enforce any of the separate covenants deemed included in Section 6(a),
then such unenforceable covenant shall be deemed eliminated from the provisions
hereof to the extent necessary to permit the remaining separate covenants to be
enforced in accordance with their terms. The prevailing party in any action
arising out of a dispute in respect of any provision of this Agreement shall be
entitled to recover from the non-prevailing party reasonable attorneys’ fees
and costs and disbursements incurred in connection with the prosecution or
defense, as the case may be, of any such action.


 


SECTION 7.      RESPONSIBILITY
UPON TERMINATION. Upon the termination of his employment for any reason and
irrespective of whether or not such termination is voluntary on his part:


 


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(a)           The
Executive shall advise the Company of the identity of his new employer within
ten (10) days after accepting new employment and further agrees to keep
the Company so advised of any change in employment during the Non-competition
Period;


 


(b)           The
Company in its sole discretion may notify any new employer of the Executive
that he has an obligation not to compete with the Company during the
Non-competition Period; and


 


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


 


SECTION 8.      NONSOLICITATION.
The Executive agrees that for a period of twelve (12) months after the date he
ceases to be an employee of the Company, he will not, and will not assist any
of his affiliates to, directly or indirectly, recruit or otherwise solicit or
induce any employee, customer, partner or supplier of the Company or any of its
affiliates to terminate its relationship or arrangement with the Company or any
of its affiliates, otherwise change its relationship with the Company or any of
its affiliates, or establish any relationship with the foregoing or any of its
or their respective affiliates for any business purpose.


 


SECTION 9.      TERMINATION.


 


(a)           Termination
for Cause. Notwithstanding anything contained herein to the contrary, the
Board may terminate the Executive’s employment with the Company for cause;
provided that the Executive shall be given notice of the Company’s intent to
terminate his employment for cause, the nature of the cause and, if curable, a
reasonable opportunity to remedy the cause. For the purposes of this Section 9(a),
the term “reasonable” shall mean that amount of time deemed reasonable by the
Board acting in good faith and in light of the nature of the cause. For
purposes of this Agreement, the term “cause” shall mean, the occurrence of any
one or more of the following (i) the commission of any act of theft or
fraud on the part of the Executive against the Company, (ii) any act or
omission which constitutes a material breach by the Executive of this
Agreement, including a refusal or failure by the Executive to perform his
duties and obligations hereunder, (iii) the Executive has been convicted
of a crime, (iv) the Executive becomes Disabled (as hereinafter defined),
or (v) the death of the Executive. For purposes of this Agreement, “Disabled”
shall mean the Executive’s inability, due to illness, accident or any other
physical or mental condition, to perform the essential functions of his
position or this Agreement, with or without reasonable accommodation, for more
than 26 weeks consecutively or for intermittent periods aggregating 39 weeks
during any 78-week period during the Employment term, except as otherwise
required by law.


 


If, during the Employment Term the Company terminates
the Executive’s employment pursuant to clauses (i), (ii), (iii), (iv) or (v) 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 receive any further Salary following the Termination Date, (b) cease
to be covered under


 


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or be permitted to
participate in any Benefits (except payments due to the Executive or the
Executive’s beneficiaries or representatives under any applicable life or
disability insurance plans or policies) and (c) shall have no further
right to purchase shares of the Company’s Common Stock pursuant to the Plans.


 


(b)           Termination
Without Cause and Resignation For Good Reason.  The Company shall have the right to terminate
this Agreement and the employment of the Executive with the Company for any
reason or no reason and without cause upon written notice to the Executive of
such termination, and the Executive shall have the right to resign for Good
Reason (as hereinafter defined); provided that, except as otherwise provided in
paragraph (c) below, (i) the Company shall continue to pay to the
Executive the Salary then in effect for six months following the Termination
Date, in accordance with the customary payroll practices of the Company for its
senior management personnel, provided that the Executive has executed and
delivered to the Company a general release in favor of the Company, effective
upon the Executive’s last day of employment, (ii) the Company shall
continue any benefits in which the Executive then participates on the same
basis of participation and subject to all terms and conditions of such plans as
applied prior to such termination or resignation and (iii) the Executive
shall be entitled to exercise any stock options granted under the Plans that
have vested as of the Termination Date for a period of nine months following
the Termination Date.


 


(c)           Termination
Upon Change of Control or Resignation for Good Reason Following a Change of
Control. In the event the Executive’s employment is terminated by the
Company subsequent to a Change of Control (as hereinafter defined) or the
Executive resigns from the Company for Good Reason (as hereinafter defined) at
any time following a Change of Control, the Company will pay the Executive a
severance amount, in one lump sum, within 30 days of such termination, equal to
the product of (x) the Salary and Bonus multiplied by (y) one and one-half
(1.5).  If a payment is made to the
Executive pursuant to this paragraph (c), in no event shall the Executive
receive any payments pursuant paragraph (b) of this Section 9. To the
extent that such amounts are in excess of the amount allowable as a deduction
under Section 280(G) of the Code, or are subject to excise tax
pursuant to Section 4999 of the Code, the Company will gross-up any
additional amounts due, and all non-vested options to purchase shares of Common
Stock granted under the Plans shall vest on the Termination Date and all
restrictions on Common Stock purchased by the Executive under the Plans shall,
subject to applicable securities laws, rules and regulations, lapse on the
Termination Date.


 


(d)           Resignation.
The Executive shall have the right to terminate this Agreement and his
employment with the Company upon fourteen (14) calendar days prior written
notice to the Company. Except if the Executive’s resignation is for Good Reason
in accordance with paragraphs (b) and (c) above, from and after the
effective date of such resignation, the Executive shall (i) have no right
to receive any further Salary or bonus hereunder; (ii) cease to be covered
under or be permitted to participate in any Benefits (except payments due the
Executive or the Executive’s beneficiaries or representatives under any
applicable pension, profit sharing, life or disability insurance plans or
policies); and (iii) forfeit any and all non-vested options granted or
non-vested Common Stock purchased under the Plans.


 


(e)           Definitions.
For purposes of this Section 9 the terms listed below shall mean the
following:


 


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(i)            “Change
in Control” shall mean:


 


(a)           the
direct or indirect acquisition, whether by sale, merger, consolidation, or
purchase of assets or stock, by any person, corporation, or other entity or
group thereof of the beneficial ownership (as that term is used in Section 13(d)(l)
of the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder) of shares in the Company which, when added
to any other shares the beneficial ownership of which is held by the acquiror,
shall result in the acquirer’s having more than 33% of the votes that are
entitled to be cast at meetings of stockholders as to matters on which all
outstanding shares are entitled to be voted as a single class; provided,
however, that such acquisition shall not constitute a Change of Control for
purposes of this Agreement if prior to such acquisition a resolution declaring
that the acquisition shall not constitute a Change of Control is adopted by the
Board with the support of a majority of the Board members who either were members
of the Board for at least two years prior to the date of the vote on such
resolution or were nominated for election to the Board by at least two-thirds
of the directors then still in office who were members of the Board at least
two years prior to the date of the vote on such resolution; and provided
further, that neither the Company, nor any person who as of the date hereof was
a director or officer of the Company, nor any trustee or other fiduciary
holding securities under an employee benefit plan of the Company, nor any
corporation owned, directly or indirectly, by the shareholders of the Company
in substantially the same proportions as their ownership of shares of the
Company shall be deemed to be an “acquirer” for purposes of this Section.


 


(b)           the
election during any two-year period to a majority of the seats on the Board of
Directors of the Company of individuals who were not members of the Board at
the beginning of such period unless such additional or replacement directors
were approved by at least 80% of the continuing directors.


 


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


 


(ii)           “Good
Reason” shall mean the occurrence of (a) a material breach of this
Agreement by the Company or (b) the failure of the Company to continue to provide
the Executive with salary and benefits substantially similar to those described
in this Agreement, or to continue in effect any benefit or stock option plan
which is material to the Executive’s compensation, including but not limited
to, the Plans, or the failure to pay the Executive a Bonus pursuant to the
terms and subject to the conditions of Section 4(a) hereof; provided,
however, the Executive shall not be deemed to have Good Reason to terminate his
employment until such time as the Company shall have received notice of the
Executive’s intent to terminate his employment upon the occurrence of an event
set forth in (a) or (b) above, the nature of such event(s) and the
Company has been given thirty (30) days to remedy such events.


 


SECTION 10.    AUTHORITY.
The Executive represents and warrants that he has the ability to enter into
this Agreement and perform all obligations hereunder, and that there are no
restrictions on the Executive or any obligations owed by him to third parties
which are reasonably likely, in any way, to detract from or adversely affect
his performance hereunder.


 


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SECTION 11.    MISCELLANEOUS.


 


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


 


(b)           Entire
Agreement. The parties hereto acknowledge and agree that this Agreement
supersedes all previous contracts and agreements between the Company and the
Executive relating to the subject matter hereof and that any such previous
contracts or agreements shall become null and void upon execution of this
Agreement. This Agreement constitutes the complete agreement among the parties
hereto with respect to the subject matter hereof and no party has made or is
relying on any promises by any other party or their respective representatives not
contained in this Agreement.


 


(c)           Severability.
If any provision of this Agreement is held to be illegal, invalid or
unenforceable under present or future laws, such provision shall be fully
severable, this Agreement shall be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part of this
Agreement, and the remaining provisions of this Agreement shall remain in full
force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance from this Agreement. If any
provision of this Agreement is held to be unenforceable because of the duration
of such provision, the area covered thereby or the scope of the activity
restrained, the parties hereby expressly agree that the court making such
determination shall have the power to reduce the duration and/or areas of such
provision and/or the scope of the activity to be restrained contained in such
provision and, in its reduced form, such provision shall then be enforceable.


 


(d)           Successor
and Assigns.


 


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


 


(ii)           This
Agreement shall be binding upon and inure to the benefit of the Company and
their successors. The rights and obligations of the Company pursuant to this
Agreement are freely assignable and transferable by Company without the consent
of the Executive without his being relieved of any obligations hereunder,
including, without  limitation, an
assignment or transfer in connection with a merger or consolidation of the
Company, or a sale or 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 the benefit of the surviving business entity or the business
entity to which such assets shall be transferred and such successor shall
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
transaction had taken place.


 


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(e)           Governing
Law. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without regard to the conflict of law rules thereof.


 


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


 


(g)           Notices.
All notices and communications under this Agreement shall be in writing and
shall be personally delivered or sent by prepaid certified mail, return receipt
requested, or by recognized courier service, and addressed as follows:


 


(i)                                     If
to the Company to:


 


American Bank Note Holographics, Inc.


2 Applegate Drive


Robbinsville, NJ 08691


Attention:   Chief Executive
Officer


Telephone: (609) 632-0800


Facsimile: (609) 632-0850


 


with a copy to:


 


Fulbright & Jaworski L.L.P.


666 Fifth Avenue


New York, NY 10103


Attention: Paul Jacobs, Esq.


Telephone: (212) 318-3000


Facsimile: (212) 318-3400


 


(ii)                                  If
to the Executive to:


 


Mark Bonney


12 Vincent Avenue


Old Saybrook, CT 06475


Telephone: (860) 395-0833


Facsimile: (203) 286-2098


 


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


 


(h)           Counterparts.
This Agreement may be executed in counterparts, each of which will be deemed an
original but all of which will together constitute one and the same agreement.


 


(i)            Effectiveness.  As a condition to the effectiveness of this Agreement
the Executive shall have resigned from the Board of Directors of the Company.


 


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


 


	
   

  	
  AMERICAN
  BANK NOTE HOLOGRAPHICS, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Kenneth Traub

  	
   

  
	
   

  	
   

  	
  Name:
  

  	
  Kenneth
  Traub

  	
   

  
	
   

  	
   

  	
  Title:

  	
  President
  and CEO

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MARK
  BONNEY

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Mark Bonney