Exhibit 10.1


 


AMENDED AND RESTATED EMPLOYMENT
AGREEMENT


 


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


 


R E C I T A L 


 


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


 


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


 


AGREEMENT


 


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


 


SECTION 1.                                EMPLOYMENT.  The Company hereby employs Executive and
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.  Executive shall assume
the responsibilities and perform the duties of Vice President, Finance of the
Company. The Executive shall also serve in such similar capacities as may be
assigned to him in good faith from time to time by the President or Chief
Financial Officer of the Company. Executive agrees to devote substantially all
of his business time, attention, skill and best efforts to the diligent
performance of his duties hereunder at the Company’s headquarters located at 2
Applegate Drive, Robbinsville, New Jersey 08691 or his home office and shall be
loyal to the Company and its affiliates and subsidiaries, and use his best
efforts to further their interests. 
Executive shall work in the Company’s Robbinsville office a minimum of
three days per week, except due to approved vacation or illness.  The Executive shall perform such tasks and
responsibilities assigned to him by the Chief Executive Officer and the Chief
Financial Officer of the Company, including without limitation, assisting with
and/or overseeing the financial management and financial reporting of the
Company. In the performance of his duties, 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) March 31, 2006 or (ii) termination
pursuant to Section 10 hereof (the “Employment Term”). The date of the last
day of the Employment Term shall be hereinafter referred to as the “Termination
Date”.  Executive’s employment by the
Company shall terminate on the Termination Date.


 





















 


SECTION 4.                                EXCLUSIVITY.  During the term of Executive’s employment
with the Company, Executive shall not without the prior written consent of the
Board of Directors (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 Company or any of its
subsidiaries; (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 Executive’s services hereunder or (v) engage
in any activities which could reasonably be deemed to be a conflict of interest
with his duties hereunder or his obligations to the Company.


 


SECTION 5.                                COMPENSATION
AND BENEFITS.


 


(a)                                  Salary
and Bonus.  As compensation for the
performance of the Executive’s services hereunder, during the Employment Term
and the Severance Period (as defined below), the Company will pay to the
Executive an annual base salary of $240,000. 
In the event that the Employment Term is extended by the Company, in its
sole 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 period
commencing the day following the Termination Date or in the event of an extended
Employment Term the day following the termination of such extended Employment
Term, as the case may be.  During the
Severance Period, upon Executive’s execution and delivery to the Company on the
Termination Date or in the event of an extended Employment Term the date of
Executive’s last day of employment with the Company of a general release
substantially equivalent to the release set forth in Section 11 hereof,
Executive shall receive benefits as described below, and shall be paid in
accordance with the customary payroll practices of the Company for its senior
management personnel (collectively, the “Severance Benefits”).  Notwithstanding the foregoing, in no event
shall there be a Severance Period nor shall Executive be entitled to any salary,
Severance Benefits or other benefits to the extent Executive was terminated for
cause (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 any
extended Employment Term.


 


(b)                                 Benefits.  During the Employment Term and Severance Period,
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,
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 senior management personnel of the Company
(collectively, the “Benefits”). The Executive shall also be entitled to
vacation days, holidays and sick days in accordance with the


 


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policies of the Company
as may be in effect from time to time; provided, however, that upon termination
of Executive’s employment for any reason (including resignation by the
Executive), the Company shall pay Executive for accrued vacation time from the
inception of his employment through the last date of employment as set forth on
Exhibit A, 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 have his existing leased car (the “Leased Car”) extended through the
Termination Date in accordance with the terms set forth on Exhibit B. In
the 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 will
not contest the Executive’s application. Further, in the event that the
Executive is terminated without cause or resigns for Good Reason prior to March 31,
2006, the Company will not contest the Executive’s application for such
benefits.


 


(c)                                  Stock
Options.  The Executive shall be
eligible to receive 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. 
All of Executive’s options shall vest immediately upon the expiration of
the Employment Term and remain exercisable for a period of two years.


 


(d)                                 Expenses.  The Company will pay or promptly reimburse
the Executive for all reasonable out-of-pocket business, entertainment and
travel expenses incurred by the Executive 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.  Such
expenses shall include the cost of (i) gas and tolls incurred by the
Executive in connection with the Executive’s travel to and from his residence
and the Company’s headquarters located at 2 Applegate Drive, Robbinsville, New
Jersey 08691 and (ii) accommodations in the Robbinsville, New Jersey
vicinity. The Company shall also promptly reimburse the Executive for
out-of-pocket expenses incurred for moving and storage costs associated with
his previously planned relocation and home sale preparation. Such costs shall
be limited to $1,400.


 


(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 6.                                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


 


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value and competitive advantage by reason of the fact that such
Confidential Information, in 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 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.


 


The restrictions set forth in this Section 6 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 or (b) become available to the
Executive from a source other than the Company, provided that the source of
such Confidential Information was not known by the Executive, after reasonable
inquiry, to be bound by a confidentiality agreement with or other obligation of
confidentiality to the Company or any of its affiliates.


 


The foregoing restrictions on the disclosure of Confidential
Information set forth in this Section 6 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 6 shall survive any termination of this Agreement.


 


SECTION 7.                                COVENANT
NOT TO COMPETE.


 


(a)                                  Scope.  In order to fully protect the Company’s
Confidential Information, during the Employment Term and for a period of one
year thereafter (the “Non-competition Period”), the Executive shall not, except
as authorized in writing by the Board, directly or indirectly, render services
to, assist, participate in the affairs of, or otherwise provide assistance to
any 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, and
shall not personally engage in any business in any jurisdiction where the
Company has transacted business at any time prior to the Termination Date that
is competitive with the business of the Company or any of its subsidiaries, if
any, with respect to any products or


 


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services of the Company or any of its subsidiaries, if any, in any
capacity which would utilize the Executive’s services with respect to any
products or services of the Company or any of its subsidiaries, if any, that
were within the Executive’s management responsibility at any time within the
twelve (12) month period immediately prior to the Termination Date.


 


(b)                                 Remedies.  The parties recognize, acknowledge and agree
that (i) any breach or threatened breach of the provisions of this Section 7
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, 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 7(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 7(a) shall be construed as a
series of separate covenants, one for each municipality, community or county
included within the area designated by Section 7(a). Except for geographic
coverage, the terms and conditions of each separate covenant shall be deemed
identical to the covenant contained in Section 7(a). Furthermore, if any
court 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 provisions
hereof to the extent necessary to permit the remaining separate covenants to be
enforced in accordance with their terms.


 


SECTION 8.                                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:


 


(a)                                  The
Executive shall advise the Company of the identity of his new employer within
then (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, who the Company has
good faith basis to believe is a competitor pursuant to Section 7 of this
Agreement, of the Executive that he has an obligation not to compete with the
Company during the Non-competition Period; and


 


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(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 9.                                NONSOLICITATION.  The Executive agrees that during the term of
his employment with the Company and for a period of twelve (12) months
thereafter, he will not, and will not assist any of his affiliates to, directly
or indirectly, recruit or otherwise solicit or induce any executive, customer,
subscriber or supplier of the Company or any of its subsidiaries about whom or
which he gained Confidential Information while at the Company to terminate its
employment 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 for
any business purpose deemed materially competitive with the business of the
Company or any of its subsidiaries, if any.


 


SECTION 10.                          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 10(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 willful and
material embezzlement or fraud on the part of Executive against the Company, (ii) any
act or omission which constitutes a willful and material breach by Executive of
this Agreement, including a refusal or failure by Executive to perform his
regular duties and obligations hereunder, (iii) Executive has been
convicted of a crime, which conviction has, or is reasonably likely to have a
material adverse effect on the Company, or its business or will prevent the
Executive from performing his duties for a sustained period of time, (iv) Executive
becomes Disabled (as hereinafter defined), or (v) the death of Executive;
provided, however, that “cause” shall not include any act or omission by the
Executive undertaken in the good faith exercise of the Executive’s business
judgment as Vice President, Finance or in good faith reliance on the advice of
counsel. For purposes of this Agreement, “Disabled” shall mean Executive’s
inability, due to illness, accident or any other physical or mental condition,
to fully perform the essential functions of his position or this Agreement 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) 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 receive
any further Salary following the Termination Date, (b) be entitled to
receive any Bonus, payable on a pro rata basis, which may have accrued or which
otherwise would have


 


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been granted by the Board had the Executive not been terminated for the
year in which the Executive was terminated (c) cease to be covered under
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 (d) shall
have no further right to purchase shares of the Company’s common stock $.01 par
value per share (the “Common Stock”) pursuant to any stock option plan or other
equity incentive plan of the Company (collectively, the “Plans”); provided,
however, that all restrictions as disclosed in the Plans on the shares of
Common Stock underlying any options granted under the Plans (the “Restricted
Stock”) purchased by the Executive shall, subject to applicable securities
laws, rules and regulations, lapse on the Termination Date.


 


If during the Employment Term the Company
terminates the Executive employment pursuant to clause (iv) or (v) of
this 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 in
accordance with the customary payroll practices of the Company for its senior
management personnel, (b) the Executive shall be entitled to receive any
Bonus, payable on a pro rata basis, which may have accrued or which otherwise
would have been granted by the Board had the Executive not been terminated for
the year in which the Executive was terminated, and (c) the Executive
shall be entitled to all rights with respect to any options granted or Common
Stock purchased under the 1998 Plan and the 2000 Plan for a period of two years
following the Termination Date including the immediate vesting of any unvested
options on the Termination Date and all restrictions on Restricted Stock
purchased by the Executive shall, subject to applicable securities laws, rules and
regulations, lapse on the Termination Date.


 


(b)                                 Termination
Without Cause and Resignation For Good Reason.  The Company shall have the right to terminate
this Agreement and the employment of Executive with the Company for any reason
or no reason and without cause upon written notice to 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, the Severance Period shall commence on the day
immediately following the date of such termination or resignation, as the case
may be, and the Executive shall be entitled to receive the Severance
Benefits.  All of the Executive’s non-vested
options to purchase shares of Common Stock granted under the 1998 Plan and the
2000 Plan shall vest on the Termination Date. 
The Executive shall be entitled to exercise any or all vested options
that were granted under the Plans for a period of two years following the
Termination Date.


 


(c)                                  Termination
Upon Change of Control or Resignation for Good Reason Following a Change of
Control.  In the event 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) the Severance Period shall commence on the day
immediately following the date of such termination or resignation, as the case
may 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 pursuant
paragraph (b) of this Section 10. 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


 


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Company will gross-up any
additional amounts due and (iii) all non-vested options to purchase shares
of Common Stock granted under the 1998 Plan and the 2000 Plan shall vest on the
Termination Date and the Executive shall be entitled to exercise any or all of
the vested options that were granted under the 1998 Plan or 2000 Plan for a
period of two years following the Termination Date and all restrictions on
Restricted Stock purchased by the Executive shall, subject to applicable
securities laws, rules and regulations, lapse on the Termination Date.


 


(d)                                 Resignation.  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, Executive shall (i) have
no right to receive any further Salary, bonus or Severance Benefits hereunder; (ii) cease
to be covered under or by 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.  Notwithstanding the foregoing, if Executive
terminates his employment with the Company pursuant to this Section 10(d) prior
to September 27, 2005, Executive shall purchase the Leased Car in
accordance with the terms set forth on Exhibit B.


 


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


 


(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)(1) 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 acquirer, shall result
in the acquirer’s having more that 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 the
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


 


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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 breach of this Agreement by the
Company, (b) the assignment to the Executive of duties inconsistent with
his position as described in Section 2 herein, or any significant adverse
alteration in the status or conditions of the Executive’s employment or in the
nature 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 the
date hereof or (d) the failure of the Company to continue to provide
Executive with 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 1998
Plan; provided, however, Executive shall not be deemed to have Good Reason to
terminate his employment if the reason for such termination is remedied prior
to 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 executors
and administrators of his estate, his heirs, successors and assigns, hereby
releases 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, cause
or thing regardless of whether known or unknown at present, which against the
Company or any of its officers, directors, employees or stockholders Executive
ever had, now has or hereafter can, shall or may have for, upon, or by reason
of, any matter, cause or thing whatsoever from the beginning of the world to
the date hereof including, but not limited to, any matter relating to or
arising out of the employment of Executive or termination thereof under any
contract, tort, federal, state or local fair employment practices or civil
rights law including, but not limited to, Title VII of the Civil Rights Act of
1964, as amended, the Americans with Disabilities Act, the Age Discrimination
in Employment Act, the Older Workers Benefits Protection Act, the federal
Family and Medical Leave Act, or any claim for physical or emotional distress
or injuries, or any other duty or obligation of any kind or description,
including any implied covenant of good faith and fair dealing, implied contract
of permanent employment or the tortious or willful discharge of employment.  The parties also agree that this Agreement
does not either affect the rights and responsibilities of the Equal Employment
Opportunity Commission to enforce the Age Discrimination in Employment Act, or
justify interfering with the protected right of an employee to file a charge or
participate in an investigation or proceeding conducted by the Equal Employment
Opportunity Commission under the Age Discrimination in Employment Act.  In the event the Equal Employment Opportunity
Commission commences a proceeding against the Company in which Executive is a
named party, Executive agrees to waive and forego any monetary claims which may
be alleged by the Equal Employment Opportunity Commission to be owed to
Executive.  The parties agree that nothing in the provisions of this Section 11
is intended to limit their rights under and concerning enforcement of this
Agreement.


 


SECTION 12. REVOCATION.  The Company has advised Executive to consult
with an attorney prior to executing this Agreement.  By executing this Agreement, Executive
acknowledges that (a) he has been provided an opportunity to consult with
an attorney or other advisor of his choice regarding the terms of this
Agreement, (b) this is a final offer and Executive has been given
twenty-one (21) days in which to consider whether he wishes to enter into this
Agreement, (c) Executive has elected to enter this Agreement knowingly and
voluntarily and (d) if he does so within fewer than 21 days from receipt
of the final document he has knowingly and voluntarily waived the remaining
time.  The Company reserves the right to
change or revoke this Agreement prior to Executive’s execution hereof.  This Agreement shall be fully effective and
binding upon all parties hereto immediately upon execution of this Agreement
except as to rights or claims arising under the ADEA, in which case Executive
has seven (7) days following execution of this Agreement to change his
mind (the “Revocation Period”). 
Executive further covenants not to contest the validity of the release
set forth in Section 11 hereof subsequent to the Revocation Period and
agrees that if he nonetheless should pursue litigation against the Company
involving any matter covered and released hereby, Executive agrees that he
first shall restore to the Company the full value of all consideration he has
received or to which he is entitled hereunder and shall be liable for the
Company’s costs and attorneys’ fees incidental to defending such legal action.


 


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SECTION 13. AUTHORITY.  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 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.


 


SECTION 14. MISCELLANEOUS.


 


(a)                                  Separate
Agreements.  The covenants of
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 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 Executive relating to the subject matter
hereof and that any such previous contracts or agreements, including without
limitation, the Original Employment Agreement, 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 of their respective
representatives not contained in this Agreement.


 


(c)                                  Severability.  If any provision of this Agreement is held to
be illegal, invalidor 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
Executive. This Agreement shall inure to the benefit of and be enforceable by
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 Executive


 


11





















 


without his being relived
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.


 


(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 an 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: 
President


Telephone:  (609)
632-0800


Facsimile:  
(609) 632-0850


 


 


With a copy to:


 


Fulbright & Jaworski LLP


666 Fifth Avenue


New York, NY 10103


Attention:  Paul
Jacobs, Esq.


Telephone: 
(212) 318-3348


Facsimile:  
(212) 752-5958


 


12





















 


(ii)                          If to
the 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 such
other 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 or
relating to this Agreement or any breach thereof (“Arbitrable Dispute”) shall
be settled by arbitration if such claim or controversy is not otherwise
settled; provided, however, that nothing set forth herein shall in any way
limit the Company’s ability to seek and obtain injunctive relief in aid of
arbitration from any court of competent jurisdiction. This arbitration
agreement applies to, among others, disputes about the validity,
interpretation, or effect of this Agreement. The arbitration shall take place
in New York, New York, or such other location as to which the parties may
mutually agree. Except as expressly set forth herein, all arbitration
proceedings under this Section 12(h) shall be undertaken in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association (the “AAA”) then in force only before individuals who
are (I) lawyers engaged full-time in the practice of law and (ii) on the
AAA register of arbitrators. There shall be one arbitrator who shall be chosen
in accordance with the rules of the AAA. The arbitrator may not modify or
change this Agreement in any way and shall not be empowered to award punitive
damages against any party to such arbitration. Each party shall pay the fees of
such party’s attorneys, the expenses of such party’s witnesses, and any other
expenses that such party incurs in connection with the arbitration, but all
other costs of the arbitration, including the fees of the arbitrator, the cost
of any record or transcript of the arbitration, administrative fees, and other
fees 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 Arbitrable
Dispute should Executive or the Company attempt to resolve an Arbitrable
Dispute.


 


(i)                                     Indemnification
Agreement.  A material breach of that
certain Indemnification Agreement, entered into as of the date hereof, between
the Company and the Executive, shall constitute a material breach of this Agreement.


 


13





















 


(j)                                     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.


 


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 Chief Executive
  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ALAN GOLDSTEIN

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/ Alan
  Goldstein

  



 


14





















 


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

  	
   

  
															



 


15





















 


Exhibit B


 


Leased Car


 


1.     The current lease term of the Leased Car
ends on September 27, 2005. If the Executive’s Termination Date is prior
to September 27, 2005, the Company will continue the Leased Car benefit
until the expiration of the current lease term. At the end of the lease term
the Company will purchase the Leased Car for the residual lease value ($22,257
plus sales tax for a total of $24,093) and the Executive will purchase the
Leased Car from the Company for the residual value less any excess mileage charge
which the Company would have had to pay to the leasing company when returning
the Leased Car. The Executive will pay all title fees, registration and sales
tax upon purchase of the Leased Car.  The
excess 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 the
leasing company of the Leased Car.


 


3.     In the event the lease for the Leased Car
cannot be extended, the Company will purchase the Leased Car at the end of the
current lease term on September 27, 2005 for the residual value and
depreciate the Leased Car based on the monthly lease payment (approximately
$485/month) it is currently paying. On the Termination Date the Executive will
purchase the Leased Car from the Company for the net book value of the Leased
Car less the excess mileage cost at that time. The excess mileage base (36,000
miles) will increase by 1,000 miles per month through the Termination Date. The
Executive will pay all title fees, registration and sales tax upon purchase of
the Leased Car.


 


16