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Exhibit 10.18


HANKIN MANAGEMENT COMPANY

AMERICAN BANK NOTE HOLOGRAPHICS, INC.


October 9, 2002/kat


LEASE AGREEMENT

THIS AGREEMENT OF LEASE, made effective as of the
1st day of August 2002, (the Effective Date) by and
between MARK HANKIN and HANMAR ASSOCIATES, MLP, a Pennsylvania
limited partnership, as tenants in common, P.O. Box 26767,
Elkins Park, PA 19027 (Lessor) and AMERICAN BANK
NOTE HOLOGRAPHICS, INC., a Delaware corporation, 1448 County
Line Road, Huntingdon Valley, PA 19006, (Lessee).

Lessor and Lessee, in consideration of the mutual
covenants herein contained and other good and valuable
consideration, receipt of which is hereby acknowledged, and
intending to be legally bound hereby agree as follows:

1.     Lease and
Premises.

A.     Definitions

(i) In the event Lessee leases only a
portion of a building which is not a condominium (the
Building), whether or not any other portion of the
Building, not leased to Lessee, is then occupied by other
tenants of Lessor:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
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| | (a)     The term Premises shall be
    defined to include the interior space and surface of the
    adjacent demising walls and the exterior walls adjacent to the
    Premises leased to Lessee as shown on plan attached hereto as
    Exhibit B, and all Systems (as hereinafter
    defined), equipment, and other apparatus (including exterior
    stairs) appurtenant thereto or used in connection therewith,
    together with (x) the non-exclusive right to park on the
    lot on which the Building is located (the Lot);
    (y) full right of ingress and egress through and across the
    exterior portions of the Lot to and from the Premises; and
    (z) the non-exclusive right to use Common Elements (as
    hereinafter defined); and
|
| | (b)     Common
    Elements shall be defined to include, but not be limited
    to, driveways, sidewalks, non-structural components of the
    Building, gutters and downspouts attached to the Building,
    surface of exterior walls of the Building, landscaped areas,
    elevators, common hallways, common vestibules and stairwells, if
    any situated in the Building or on the Lot.                                                                                                                                                                                                                                                                                                                                                                   

(ii)     In the event
that Lessee leases an entire Building which is not a
condominium, the Term Premises shall mean the entire
Building including all walls, floors, structural (as hereinafter
defined) and non-structural elements, roof, all Systems and
equipment situated therein and thereon, and the entire Lot,
including but not limited to, all paved areas and all land
included on the Lot, under and subject to any and all easements
and rights-of-ways affecting the Lot.

(iii) Pro Rata Basis means a
fraction, the numerator of which is the total square footage of
the Premises, Unit H and the denominator of which is the
total square footage of all occupied sections in the Building,
which shall be a maximum of 30,000 square feet, unless otherwise
provided herein. In the case of lease of an entire Building, the
Pro Rata Basis shall be One Hundred (100%) percent. In the case
of lease of a condominium Unit or Units, the Pro Rata Basis
shall be a fraction, the numerator of which is the Percentage
Interest of the Premises and the denominator of which is the
Percentage Interests of all occupied Units in the condominium.
In the case of limited Common Elements, Pro Rata Basis shall be
determined by the above formulae, substituting Units using the
particular limited Common Element in the denominator.

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HANKIN MANAGEMENT COMPANY


AMERICAN BANK NOTE HOLOGRAPHICS, INC.


October 9, 2002/kat


(iv) A Unit: for non condominium
Premises, only, is a portion of a Building separated by demising
walls, and for condominium Premises is the Unit as defined in
the applicable recorded Declaration of Condominium.

(v) A condominium exists where
the Building or Lot is the subject of a Recorded Declaration of
Condominium.

B.     Lessor hereby
demises and leases to Lessee and Lessee hereby hires from Lessor
that certain Premises situate in Lower Moreland Township,
Montgomery County, Pennsylvania, known as Condominium
Unit H, 1448 County Line Road, Huntingdon
Valley, PA, including the Building containing approximately
30,000 sq. ft., more or less, and the other
improvements constructed on the Lot.

C.     The parties
hereby mutually covenant and agree that the Premises is accepted
in its existing condition as of the date of execution of this
Lease subject to any conditions to the contrary in
Exhibit A attached. Lessee warrants that, prior
to the execution of this Lease, it has completely inspected the
Premises and accepts same in the condition existing at the date
of execution thereof, except as otherwise provided in
Exhibit A.

D.     The Premises
shall be occupied and used for light manufacturing and related
offices in accordance with applicable laws, ordinances and
regulations. Under no circumstances whatsoever may the Premises
be used in Annual Rent, installments on account of the annual
Taxes and annual insurance premium whole or in part for
personal, family, residential or household purposes.

2.     Term.

A.     The term of this
Lease shall be five (5) years beginning the earlier of:

(i) August 1, 2002: and terminating July 31,
2007;

B.     For the purposes
of this Lease the date of commencement of the term of the Lease
shall be termed Lease Commencement Date. For the
purposes of this Lease the date of expiration of the latest
term, Renewal Term (as hereinafter defined) or Extension Term
(as hereinafter defined) of this Lease shall be termed the
Lease Termination Date.

C.     If Lessee remains
in possession of the Premises, (including failure to restore the
same to the condition required hereunder being deemed to
constitute possession of the Premises), after Lessor has
cancelled the term of the Lease, or Lessor has exercised its
option under Article 25A(ii), infra, after the Lease
Termination Date, (a Holding Over), without the
prior written consent of Lessor, such Holding Over shall create
a Holding Over tenancy from month to month, commencing on the
day after the Lease Termination Date (the Holdover
Term), with respect to the Premises on all of the same
terms and conditions as are in effect on the last day of the
preceding term, except that the monthly installment of Minimum
Annual Rent payable during each Holdover Term shall be increased
to an amount equal to three times the monthly installment of
Minimum Annual Rent in effect on the last day of the preceding
term (the Holdover Rent). Notwithstanding anything
set forth to the contrary, Lessor may cancel the Holdover Term
at any time within such Holding Over tenancy upon five
(5) days prior notice to Lessee, but such cancellation
notwithstanding, Holdover Rent shall accrue and shall be payable
by Lessee until such time (Restoration Date) as
Lessee vacates fully the Premises and restores the same to the
condition required hereunder.

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HANKIN MANAGEMENT COMPANY


AMERICAN BANK NOTE HOLOGRAPHICS, INC.


October 9, 2002/kat


D.     Lessor shall not
be liable to Lessee in any respect in the event that Lessor is
unable to deliver possession of the Premises to Lessee, provided
Lessee shall not be required to pay rent and additional rent
until such time as Lessor delivers possession and during the
period that Lessor is unable to give possession, all rights and
remedies of both parties hereunder shall be suspended, and if
Lessor is unable for any reason to give possession of the
Premises within thirty (30) days of Lessees written demand
therefore, following commencement of the term hereof, providing
Lessee has not occupied any
portion of the Premises, Lessor shall have the option, by notice
to Lessee, to cancel this Lease Agreement and receive return of
any prepaid rents and security deposit in full and final
settlement of any and all claims against Lessor, whereupon this
lease shall become null and void.

E.     For purposes
hereof, the term Lease Year shall mean each
consecutive period of twelve (12) months commencing on the Lease
Commencement Date (or the first day of the month after the Lease
Commencement Date, if the Lease Commencement Date occurs on any
day other than the first day of the month) and each yearly
anniversary of such date during the term hereof, any Extension
Term, and any Renewal term.

3.     Minimum Annual
Rent.

The minimum annual rent (Minimum Annual
Rent) payable by Lessee to Lessor shall be One Hundred
Forty-Four Thousand and 00/100 Dollars ($144,000.00) per
Lease Year, lawful money of the United States of America,
payable in monthly installments in advance during the said term
of this Lease in sums of Twelve Thousand and 00/100 Dollars
($12,000.00) on the first day of each month, rent to begin from
the Lease Commencement Date, the first installment to be paid at
the time of signing this Lease. The first installment of Minimum
Annual Rent to be made during the occupancy of the Premises
shall be adjusted to pro rate a partial month of occupancy, if
any, at the inception of this Lease at the rate of Minimum
Annual Rent in effect during the first Lease Year.

4.     Additional
Rent.

As additional rent (Additional Rent),
hereunder, Lessee shall pay to Lessor the following on or before
the date such additional payments shall become due (which shall
be ten (10) days after the date that any bill is posted in the
United States mail):

A.     Non-Compliance
Amounts. All sums which may become due by reason of the failure
of Lessee to comply with any of the terms, covenants and
conditions of this Lease to be kept and observed by Lessee, and
any and all damages and costs and expenses (including without
limitation thereto, reasonable attorneys fees) which
Lessor may suffer or incur by reason of any default of Lessee
and any damages to the Premises caused by any act or omission of
Lessee together with interest to the date of payment at a rate
per annum equal to five hundred (500) basis points above the
prime interest rate (Prime + 5%) of Pennsylvania
Business Bank, Philadelphia, Pennsylvania, or its successor, in
effect during the period said payment is due or, if no
successor, the prime interest as reported in the Wall Street
Journal newspaper during the period said payment is due
(Wall Street Journal Prime).

B.     Taxes and
Insurance Escrows. All Taxes (as hereinafter
defined), on a Pro-Rata Basis, assessed or imposed upon, or
allocable to the Premises and/or the Lot of which the Premises
is a part during the term of this Lease and any Extension Term,
Renewal Term or Holdover Term. The building is located on Tax
Parcel #41-00-02426-00-8. This Tax Parcel is only for this
particular building.

By Lease Agreement dated August 13, 1984, as
amended and supplemented by Lease Renewal Agreements dated
March 23, 1989, March 24, 1992, January 22, 1993, July 26, 1994 and

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HANKIN MANAGEMENT COMPANY


AMERICAN BANK NOTE HOLOGRAPHICS, INC.


October 9, 2002/kat


May 28, 1996 (collectively, the Prior
Lease), Lessor demised and let to Lessee or its
predecessor or predecessors, and Lessee hired from Lessor, that
certain building known as Condominium Unit H
erected at 1448 County Line Road, Lower Moreland Township,
Montgomery County, Pennsylvania (Prior Premises) for
a term expiring July 31, 2002. Lessor shall credit Lessee
with the amount of any unearned Additional Rent for Taxes paid
by Lessee to Lessor under the Prior Lease toward Additional Rent
for Taxes due under this Lease.

Taxes as utilized in this Lease shall
mean all taxes, assessments and charges of whatsoever nature
levied upon or with respect to the Premises or Lessors
ownership interest in the Premises. Taxes shall
include, without limitation, all general real property taxes,
including but not limited to, municipality, county and school
district real estate tax levies, and general and special
assessments, charges, fees, or assessments for transit, trash,
housing, police, fire, water, sewer, road, capital improvement
district impositions, or other governmental services or
purported benefits inuring to the Premises, sewer or water
connection and/or tapping fees, service payments in lieu of
taxes, and any tax, fee or excise on the act of entering into
and/or maintaining this Lease or any other lease of space on the
Premises, or the use or occupancy of the Premises or any part
thereof, or on the rent payable under any lease or in connection
with the business of leasing the Premises, including, but not
limited to, business privilege taxes that have been, or are now,
or hereafter levied or assessed against Lessor by the United
States of America, the Commonwealth of Pennsylvania or any
political subdivision, political corporation, district or other
political or public entity, whether quasi in nature or
otherwise, and water and sewer rents, unless such water and
sewer rents are billed based on consumption, or as otherwise
provided in paragraphs 5 and 35 of this Lease, but shall
not include any federal or state income tax levied solely on
Lessors income generally, or gift, Estate or Inheritance
Taxes imposed on Lessor.

The amount due hereunder on account of Taxes
shall be apportioned for that part of the first and last
calendar years covered by the term hereof as regards to county
and township real estate taxes and for that part of the first
and last July 1st fiscal years covered by the term hereof,
regarding school real estate taxes or such other allocation,
based on the actual fiscal year of the taxing authority. Lessee
shall, within ten (10) days of the posted date of a bill, pay
Lessor for all Taxes assessed or imposed upon or allocable to
the Premises.

(i) Upon execution of this Lease, or within
ten (10) days of the posted date of a bill therefore, Lessee
shall pay Lessor the pro rated portion of all Taxes assessed or
imposed against the Premises for periods of the term hereof
included within bills for taxes received by Lessor prior to the
Effective Date.

(ii) Notwithstanding anything above to the
contrary, Lessee shall also pay to Lessor concurrently with
payment of monthly installments of Minimums, as defined in
Paragraph 7 of this Lease, assessed against or allocable to
the Premises in an amount which shall be the product of the
number of square feet of the Premises leased to Lessee
multiplied by Seven Cents ($.07) per square foot for Taxes and
Three Cents ($.03) per square foot for insurance premiums to
permit Lessor to pay said Taxes and insurance premiums as and
when they become due. These items of Additional Rent may be
subsequently adjusted by Lessor to accurately reflect actual
Taxes and insurance premiums allocated to the Premises for any
Lease Year. Without limitation of the foregoing, should the sums
paid by Lessee to Lessor on account of Taxes and insurance
premiums not be sufficient to cover the assessed Taxes and
insurance premiums on the Premises at the time of presentation
of said real estate tax bill and insurance premium bill to
Lessee by Lessor, Lessee shall pay to Lessor, within ten (10)
days of posted date of said bills from Lessor, the amount which
is necessary to pay the full amount of said bills. Such amounts
shall be held by or transmitted to any Mortgagee requiring such
payments and applied on account of the real estate taxes and
insurance premiums as and when payments therefore are due. Any
amounts held in escrow by Lessor pursuant to this paragraph may
be deposited in a non-interest bearing account. Lessee hereby
authorizes Lessor in its sole discretion to apply such deposit,
or any part thereof, against any

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HANKIN MANAGEMENT COMPANY


AMERICAN BANK NOTE HOLOGRAPHICS, INC.


October 9, 2002/kat


arrearage by Lessee in the payment of Minimum
Annual Rent and/or Additional Rent. In the event Lessor assigns
its interest in this Lease, Lessor shall have the right to pay
the balance of such amounts then in its possession to the
assignee, and Lessor shall thereupon be completely released from
any liability with respect to such amounts.

(iii) If the amount of Additional Rent for
real estate taxes and insurance premiums paid by Lessee during
any Lease Year exceeds the amount paid by Lessor for real estate
taxes and insurance premiums in said Lease Year, the excess
shall either be refunded to Lessee by Lessor (upon termination
of the Lease) or credited against real estate taxes and
insurance premiums due to be paid in the next Lease Year, in
Lessors discretion, provided Lessee is not otherwise in
default hereunder, in which event such excess shall be applied
toward such default.

(iv) At all times, Lessee shall be
responsible for and shall pay before delinquency, all municipal,
county, state or federal taxes (including water and sewer rents
or charges) assessed against any leasehold interest or any personal
property of any kind, owned, installed or used by Lessee. Lessee shall pay all business privilege,
mercantile, or occupational taxes and all other nuisance taxes
levied against Lessee for the Premises or arising by virtue of
Lessees use and occupancy thereof (including any taxes on
Lessees payment of rent to Lessor).

(v) After written notice to Lessor, Lessee
at its own expense, may contest by appropriate legal proceedings
promptly instituted and thereafter conducted in good faith and
with due diligence, the amount or validity, in whole or in part,
of any real estate taxes; provided Lessee shall have deposited
with Lessor such security for payment of the contested taxes
with interest and penalties as may be required by Lessor.

(vi) At its own option, Lessor may contest
or appeal by appropriate proceedings the amount and/or validity
of, in whole or in part, any real estate assessment or taxes
imposed upon the Premises or the building and/or the property of
which the Premises is a part and Lessee shall reimburse Lessor
for all of the reasonable direct and indirect costs thereof,
including but not limited to application, attorney and appraisal
fees.

C.     Assessments
for Common Expenses. All invoices and assessments for Common
Expenses (as hereinafter defined) which may, from time to time,
be levied by the Lessor upon the Premises shall be allocated to
the Premises, as Additional Rent, on a Pro Rata Basis, with the
exception of costs and expenses related to Limited Common
Elements associated with a specific Unit, or Units, which shall
be allocated only to tenants of that Unit, or those Units, in
proportions equal to a fraction, the numerator of which is the
total square footage of the Premises and the denominator of
which shall be the total square footage of the occupied Units in
the Building. Provided, however, that Lessee shall pay, as
Additional Rent, amounts expended for maintenance, repair and
replacement of Common Elements due to the act or neglect of
Lessee, its employees, contractors or business visitors.

Lessor shall credit Lessee with the amount of any
unearned Additional Rent for Common Expenses paid by Lessee to
Lessor under the Prior Lease toward Additional Rent for Common
Expenses due under this Lease.

The term Common Expenses, shall
include, without limitation, the following expenses:
Maintenance, repair, replacement, renewal and additions to all
Common Elements, including but not limited to driveways,
sidewalks, non-structural components of the Premises and
landscaped areas, (except as otherwise provided in
paragraph 6B hereof); rubbish and garbage removal; the
premiums for insuring the Building and Common Elements,
including all alterations, additions and improvements other than
Lessees alterations, additions and improvements, fixtures
and equipment against loss or damage by fire, all extended
coverage, and rental value insurance (covering twelve (12)
months rental on a fully gross

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HANKIN MANAGEMENT COMPANY


AMERICAN BANK NOTE HOLOGRAPHICS, INC.


October 9, 2002/kat


basis) for the full, fair, insurable value
thereof, exclusive of foundations, excavations, and pavement,
and insuring Lessor (and any industrial development authority in
title to the Premises) against liability for bodily injury
(including death), personal injury and property damage; the
costs incurred in policing and inspecting the Common Elements,
maintaining security protection from the Common Elements, which
the Lessor deems to be reasonable, necessary and appropriate,
and expenses related thereto; the costs of maintenance of
on-site sanitary sewage facilities maintained by the Lessor, if
applicable; the costs of maintaining the sanitary and storm
lines, the costs of maintaining the water lines, the fire
hydrant system and excess water charges relating to the
operation of the water and fire hydrant systems; the costs of
maintaining the electrical system and charges relating to the
operations of the electrical system, if any, condominium
association assessments applicable to the Premises; and the
costs of professional services and any other costs incurred for
the operation of the Common Elements for the benefit of the
Lessor. Provided, however, that the costs of sewage disposal
shall be paid by the Lessee in accordance with the terms set
forth in Paragraph 5 hereinbelow. A Limited Common
Element is one whose use is restricted by the applicable
recorded governing document, to less than the entire property,
such as a walkway or landing serving only specific rental units,
but not all. To the extent that Lessor, or any of its
affiliates, performs any work or service, which is included in
the common area reimbursement cost, the price charge by Lessor,
or its affiliates, for such work or service shall not exceed the
cost thereof reasonably available from unrelated third parties
on an arms length basis from whom Lessor purchases such
services.

Common Expense shall specifically exclude
expenditures for repairs occasioned by Lessors or its
agents or employees negligence; expenditures for costs of
advertising and leasing commissions, incurred by Lessor in
connection with efforts to obtain new tenants for the building;
expenditures for salaries or benefits of executive officers (or
an officer or like position above the level of building or
project manager); cost of repair or replacement occasioned by
(i) casualty of an insurable nature of which insurance is
required to be carried by the Lessor (except for the deductible)
or (ii) by any other tenant in the building to the extent
that the Lessor has a right to recover against such other
tenant; costs incurred in connection with the sale, financing or
refinancing of the building; costs incurred in connection with
the late payment by Lessor of taxes, utility bills and similar
items; rent for any on-site management offices; costs incurred
by Lessor incurred as a result of correcting defects in or
inadequacy of the initial design or construction of the building
unless as a result of Lessees use, misuse or neglect of
the Premises.

The foregoing notwithstanding, Common Expense
shall not include any single item which (i) would be
capitalized by Lessor under generally acceptable accounting
principles, and (ii) Lessees pro-rata portion of such
item would exceed $5,000.00 and (iii) it would increase the
total Common Expenses by 25% over the highest prior year unless
such item of Common Expense is performed as a result of
Lessees use, misuse or neglect.

(i) Notwithstanding anything contained
herein to the contrary, Lessee shall be responsible for any
increase in Lessors property and/or liability insurance
premiums, if said increase is caused by any act or neglect of
Lessee or the nature of Lessees business. Lessee shall not
be responsible for any increase in said premiums, if said
increase is caused by any act or neglect or by nature of any
business of any other tenant or section owner in the building
other than that of Lessee.

(ii) The above notwithstanding, in the event
that Lessee occupies the whole building, Lessee shall be
obligated to perform and pay for all the Common Expenses and any
other expenses relating to the Premises except for those
expenses specified in section 6.B. hereof.

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HANKIN MANAGEMENT COMPANY


AMERICAN BANK NOTE HOLOGRAPHICS, INC.


October 9, 2002/kat


D.     Delinquent
Payments.

(i) If Lessee shall fail to make payments of
any rent or other cash payments due to Lessor within the time
periods prescribed in the Lease, Lessee shall pay to Lessor
interest from the end of the payment period to the date of
Lessors receipt of such payment at an interest rate of
Five Hundred (500) basis points above the prime interest rate
charged during the time of said delinquency at the Wall Street
Journal Prime. Payment period for installments of Minimum Annual
Rent, and Additional Rent and other payments hereunder shall be
as defined under Sections 3 and 4 herein above and payment
period for all other items shall be defined as ten (10) days
from the date of any invoice from Lessor to Lessee.

(ii) If Lessee does not pay any installment
of Minimum Annual Rent or any item of Additional Rent on the day
when the same shall become due and payable, and such failure
shall continue for a period of ten (10) days, Lessee shall pay
Lessor as Additional Rent a late charge at the rate of five
cents ($.05) for each dollar of such installment of Minimum
Annual Rent or item of Additional Rent for each month or a
portion of a month that the same shall remain unpaid; provided,
however, that such charge shall in no event be less than Fifty
Dollars ($50.00) for any month or a portion of a month that any
installment of Minimum Annual Rent or item of Additional Rent
shall remain unpaid. Such charge shall be in the form of
Additional Rent for the purposes of defraying administrative
expenses of Lessor and is not intended as a penalty against
Lessee. The provision of this paragraph shall not preclude
Lessor from exercising its options as set forth in any other
sections of this Lease, or as provided by law.

E.     Service
Charge. In addition to all Additional Rent provided herein,
Lessee shall pay to Lessor a service charge of Ten (10) percent
of all amounts billed (except service charges) to cover expenses
for issuing all bills other than the monthly installments of
Minimum Annual Rent. Said charges shall not exceed Twenty-five
($25.00) Dollars per invoice.

5.     Utilities.

Lessee shall heat the Premises at its own expense
and shall also pay all charges of suppliers, utility companies
or public authorities (Utility Suppliers) for
electricity, gas, telephone, water, steam, sewer service or
other services or utilities furnished to the Premises. No
payment by Lessee shall be less than the minimum fee per user
charged by any and all Utility Suppliers. Under no circumstances
shall Lessor be required to furnish any utilities or any other
service of any kind to the Premises or any part thereof.
However, if the Premises is not served by public sewer or water
service and is served by a holding tank or on-site sanitary
sewage disposal system or private water (Private
System), Lessee shall pay the costs of same, based upon a
fraction, the numerator of which shall equal Lessees total
water usage for the billing period, and the denominator of which
shall equal the total volume of all water usage for the billing
period of all owners and/or occupiers of the Building, or
Buildings, of which the Premises forms a part, served by the
particular Private System. In the event that utility service is
furnished by Lessor, Lessee agrees to pay for such service at
the rates charged by Lessor as permitted by the PUC or other
applicable regulatory agencies, but such rates shall be no less
than those charged by the public utility company or other
Utility Supplier, servicing the area as if said public utility
or Utility Supplier, were furnishing the service, and said
charges shall be due and payable by Lessee with ten (10) days of
the posted date of the bill presented by Lessor or its agent. In
the event that Lessor shall activate any of such services to the
Premises, Lessee shall reimburse Lessor for the costs thereof as
Additional Rent.

6.     Repairs.

A.     Except As Set
Forth In paragraph 6(B) hereof or otherwise set forth herein,
Lessee, shall, at Lessees sole expense, in a timely manner
as necessary to protect the Premises from waste and

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HANKIN MANAGEMENT COMPANY


AMERICAN BANK NOTE HOLOGRAPHICS, INC.


October 9, 2002/kat


deterioration, make all necessary or appropriate
repairs, replacements, renewals, and additions, interior and
exterior, non-structural, ordinary and extraordinary, foreseen
and unforeseen, required to keep and maintain the Premises and
all Systems (as hereinafter defined), equipment and apparatus
appurtenant thereto or used in connection therewith in good
order and condition. If, and only if, Lessee does not lease an
entire Building, Lessor shall maintain (at lessees expense
in accordance with the provisions of Paragraph 4C,
infra) the non-roof and non-structural Common Elements.

(i) With respect to the air conditioning,
heating and ventilation systems (HVAC), electrical,
plumbing, mechanical, fire alarm, sprinkler and gas
(collectively, the Systems) or any thereof existing
on the Premises, Lessee agrees that it shall, at its own cost
and expense, be required to maintain, repair, and replace the
Systems, in good operating condition, at its sole cost and
expense during the term of this Lease, and any Extension Term,
Renewal Term or Holdover Term. Lessee shall install any new or
replacement Systems subject to Lessors absolute prior
written approval. With respect to the HVAC, Lessee shall enter
into and pay for a service/labor contract with OReilly and
Associates of Chestnut Hill, or an All Embracing Service
Contract with HVAC Services, Inc. of Philadelphia PA or
other qualified HVAC service provider subject to Lessors
prior written approval (which approval shall not be unreasonably
withheld), beginning on the Lease Commencement Date, which
contracts shall continue during the term of this Lease, and any
Extension Term, Renewal Term or Holdover Term and will be
subject to the prior written approval of Lessor. Failure of
Lessee to enter such contract shall be construed as a default
under the terms of this Lease. In addition to any rights or
remedies which Lessor may have as set forth in this Lease to
cure such default, Lessor shall have the right to enter into
such maintenance contracts as required hereunder and Lessee
shall reimburse Lessor for the cost of such contracts plus
Twenty-One Percent (21%) for service charges thereon within ten
(10) days of receipt of such bill. A copy of said service/labor
contract shall be deposited with Lessor within ten (10) days
after the date on which procurement of said service/labor
contract shall be required under the terms hereof.



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| | (a) The above notwithstanding and provided
    that Lessee has continually maintained a Service/Labor Contract
    and continues its Service/Labor Contract (HVAC
    Contract) with E.B. OReilly Servicing Corporation
    (Contractor), or any of its related companies, for
    the proper and timely maintenance, repair and/or restoration
    (Maintenance) of the existing, original roof-top
    mounted HVAC system servicing part of the original existing
    offices from the initial term of the Prior Lease between the
    predecessors of Lessor and Lessee (HVAC Unit) and
    further provided that such Maintenance is and has been performed
    on a continuing and timely basis and all such Maintenance is and
    has been performed in a good and workmanlike manner, Lessee
    shall not be required to replace such HVAC Unit, if such is
    considered not to be repairable by the Contractor. In such
    instance, Lessor will replace such HVAC Unit provided Lessee is
    not then nor ever has been in default under any of the terms and
    conditions of this Lease beyond the applicable cure periods. In
    the event that Lessee has complied with all of the conditions
    specified in this Subsection, and the HVAC Unit is deemed to be
    no longer reasonably repairable by the Contractor, Lessor shall
    replace such HVAC Unit at its sole cost and expense.

(ii) Any repairs, replacements, renewals,
maintenance and additions, and any labor performed or materials
furnished in, on or about the Premises shall be performed and
furnished by Lessee to the satisfaction of Lessor and in strict
compliance with all applicable laws, regulations, ordinances and
requirements of all duly constituted municipal authorities or
other governmental bodies having jurisdiction over the Premises
and the requirements of any board of underwriters having
jurisdiction thereover. All material used in repair,
replacement, maintenance and renewal of the Premises shall be of
equal or better quality to the same material in the Premises on
the Lease Commencement Date and meet the same or better
installation specifications. Prior to commencement of any work
or the ordering of any material, Lessee shall give notice
thereof to Lessor and prepare and file with the Prothonotary of
The Court of Common Pleas of the County in which the Premises is
located, at Lessees sole cost and expense, a waiver of
mechanics lien, in form acceptable to Lessor, which shall
be executed

8



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HANKIN MANAGEMENT COMPANY


AMERICAN BANK NOTE HOLOGRAPHICS, INC.


October 9, 2002/kat


by all contractors and subcontractors who are to
perform work on the Premises; Lessee shall present to Lessor,
prior to the commencement of work, a time-stamped copy of said
waiver as filed with the Prothonotary and true and correct
copies of all building permits applicable to the Premises.

(iii) Any repairs necessitated by holes or
marks on the walls will be billed directly, as Additional Rent,
to the Lessee by Lessor during the term of this Lease, and any
Extension Term, Renewal Term or Holdover Term, or after
termination of this Lease and shall be paid within ten (10) days
of receipt of said bill.

(iv) Off-Premises Restoration. At
Lessees sole cost and expense, Lessee shall restore
promptly all damage to off-Premises roadways and other public or
private improvements installed by Lessor, or at Lessors
expense, in the industrial park or center in which the Premises
is located (collectively, the Public Improvements),
resulting from the act or neglect of Lessee, its agents,
servants, contractors or subcontractors or business visitors
(Public Improvement Damage), to the satisfaction of
Lessor and all applicable governmental agencies. Lessee shall
indemnify Lessor and save it harmless from all liability, costs
and expenses resulting from Public Improvement Damage, including
but not limited to reasonable counsel fees and expenses.

B.     
Roof and Structural
Repairs. Upon receipt of written
notice, certified mail, return receipt requested, to Mark
Hankin, personally, as the authorized representative of Lessor,
from Lessee, the Lessor agrees to proceed with due diligence to
repair any leaks in the roof, or make any repairs to the
structural walls (including exterior painting, gutters and
downspouts, pent eves, mansward roofs and siding), foundation
and other structural portions of the herein Premises or the
Building of which the Premises is a part (Structural
defined as load bearing elements and exterior curtain
walls but no interior walls), at Lessors sole cost
and expense provided such repairs are not made necessary by the
act or neglect of Lessee, and its employees, contractors or
business visitors, and in such case, at Lessees sole cost
and expense, as Additional Rent. In no event, however, shall
Lessor be liable to Lessee for damages, including consequential
damages, for any loss or damage sustained by Lessee due to, or
alleged to be due to, failure of Lessor to make such repairs in
a timely or proper manner. In the event Lessor fails to make
said repairs within a reasonable time and in a proper manner,
after notice by Lessee by certified mail, return receipt
requested, to Mark Hankin, personally, as the authorized
representative of Lessor, Lessee shall have the right to proceed
with said repairs, upon prior written notice to Lessor in compliance
with the terms and conditions of this Lease, at a reasonable
cost and Lessor shall repay Lessee the reasonable costs of said
repairs, but Lessee may not set off the amount of such costs
against any rent or other charges due to Lessor pursuant to the
terms of this Lease. Provided, however, that Lessor may submit
the questions of the reasonableness of said bills and/or
Lessors responsibility to pay for same to court
adjudication or arbitration in accordance with
Paragraph 38(A), infra.

C.     Notice.
Lessee is required to make all requests regarding the Premises
by notice, in writing, certified mail, return receipt requested
to Mark Hankin, personally, as authorized representative of
Lessor, or assert any allegations of breach of the Lease by
Lessor in writing, certified mail, return receipt requested to
Mark Hankin, personally, as authorized representative of Lessor,
within thirty (30) days of the alleged occurrence. FAILURE TO
DO SO CONSTITUTES A WAIVER OF CLAIM AGAINST LESSOR FOR THAT
REQUEST OR BREACH.

D.     In the event of
failure of Lessee to timely perform the maintenance and repairs
to the Premises required hereunder, or in the event Lessee shall
request Lessor to perform items of maintenance or repair or make
improvements to Premises, Lessor at its sole option, may without
prior notification to Lessee, enter the Premises and perform
such repairs, the costs thereof together with twenty-one percent

9



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HANKIN MANAGEMENT COMPANY


AMERICAN BANK NOTE HOLOGRAPHICS, INC.


October 9, 2002/kat


(21%) overhead to be charged by Lessor to Lessee
as Additional Rent, which shall be paid within ten (10) days of
the date the bill thereof has been placed or posted
with the United States Postal Service.

7.     Insurance.

I.     LESSORS
INSURANCE:

A.     During the term
of this Lease, Lessor shall keep all Units (including the
Premises) and Common Elements (except Alterations and
Improvements, as herein after defined, and such items as are not
covered by standard policies of insurance, such as foundation
and paved and landscaped areas), insured against loss or damage
from all risks, including fire and extended coverage, water
damage, flood damage, (if required by Lessors mortgage),
for the full and fair replacement value (as may be revised by
the Lessor from time to time) of all Units and Common Elements,
and rent insurance in an amount sufficient to cover all rentals
on a fully gross basis, as prescribed by this Lease, for a
duration of not less than Twelve (12) months. All such policies
of insurance shall be maintained with such companies as Lessor
may select having a rating with the Bests Rating Guide of
a minimum A policy holders rating and
X financial rating. Such policies of insurance
shall be made and taken out in the name of the Lessor (and any
industrial development authority and other appropriate parties
designated by Lessor as additional insured) with loss thereunder
payable to Lessor or any mortgagee of Lessor as their interests
may appear and as Lessor shall direct. The above
notwithstanding, the Lessor accepts the Kemper Group of
Insurance Companies as an acceptable provider of the insurance
coverage required by Lessee.

B.     During the entire
term hereof, Lessor may procure and maintain Commercial General
Liability Insurance covering the Premises and the Common
Elements with minimum limits of liability with respect to
personal injury of One Million Dollars ($1,000,000.00) for each
occurrence, Two Million Dollars ($2,000,000.00) aggregate, with
contingent liability coverage in an amount not less than One
Million Dollars ($1,000,000.00) in favor of Lessor, any Industrial
Development Authority in title to the Premises, any mortgagee of
record and other appropriate parties designated by Lessor as
their interests may appear. Such insurance shall be maintained
with such companies and in such amounts as the Lessor may from
time to time designate, all such companies to be of the same
financial rating as required in Paragraph 7.I.A.
hereinabove.

C.     The premiums for
such insurance as set forth in
Subparagraphs 7 (I) A and B hereinabove, shall be
paid by Lessee, as Additional Rent, on a Pro-Rata Basis, in
accordance with the terms set forth in Paragraph 4C hereof.

II.     LESSEES
INSURANCE:

A.     Liability.

Lessee shall provide and keep in force at its own
cost and expense:



| |                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) Commercial General Liability Insurance,
    including Personal Injury, Bodily Injury Including Death, and
    Property Damage covering premises liability, independent
    contractors liability, and contractual liability, with minimum
    limits of coverage of One Million Dollars ($1,000,000.00) per
    occurrence and Two Million Dollars ($2,000,000.00) aggregate
    applicable to the Premises only.
|
| | (ii) Workers Compensation Insurance in
    the full statutory amount.                                                                                                                                                                                                                                                                                                                                               
|
| | (iii) All policies carried hereunder,
    providing liability coverage, will include Lessor as an
    additional named insured with respect to ownership of the
    Premises.                                                                                                                                                                                                                                        

10



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HANKIN MANAGEMENT COMPANY


AMERICAN BANK NOTE HOLOGRAPHICS, INC.


October 9, 2002/kat


B.     Lessees
Personal Property. Lessee shall keep its personal property,
improvements, betterments and trade fixtures in the Premises
insured with all risks insurance in an amount to
cover 100% of the replacement cost of the personal property,
improvements, betterments and trade fixtures.

C.     Insurance
policies required to be carried by Lessee under this Lease shall:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) Be issued by insurance companies
    licensed to do business in the State of Pennsylvania, with
    general policyholders ratings of at least A and a
    financial rating of at least XI in the most current
    Bests Insurance Reports available on the date of issuance.
    If the Bests ratings are changed or discontinued, the
    Lessor shall designate, by notice to Lessee, an equivalent
    method of rating insurance companies;
|
| | (ii) Provide that the insurance not be
    cancelled or materially changed in scope or amount of coverage
    unless thirty (30) days advance notice is given to the Lessor;                                                                                                                                                                                                                                                                          
|
| | (iii) Be primary policies  not
    contributing with, or in excess of the coverage that the Lessor
    may carry;                                                                                                                                                                                                                                                                                                                                    
|
| | (iv) Be permitted to be carried under a
    blanket policy. However, a specific minimum limit
    must be listed which is applicable to the Premises and
    acceptable to the Lessor.                                                                                                                                                                                                                                                              
|
| | (v) Be maintained during the entire term and
    any Extension Term, Renewal Term or Holdover Term of this Lease.                                                                                                                                                                                                                                                                                                                                     

D.     By the Lease
Commencement Date and prior to Lessee entering possession of the
Premises, and upon each renewal of its insurance policies,
Lessee shall provide certificates of insurance to Lessor by
notice hereunder. The certificates shall specify amounts, types
of coverage, the waiver of subrogation, specified in Paragraph
13 hereof, and the insurance criteria listed in this
subparagraph 7 (II). The policies shall be renewed or
replaced and maintained by Lessee. If Lessee fails to give any
required certificate within the time provided herein, Lessor may
obtain and pay for that insurance and receive reimbursement from
Lessee as Additional Rent, any other provision of this Lease
notwithstanding.

8.     Destruction of
Premises.

A.     Total
Destruction of Premises. In the event the Premises are
totally destroyed or so damaged by fire or other casualty
covered by a policy or policies of insurance maintained by
Lessor, that in Lessors opinion the same cannot be
repaired and restored within sixty (60) days from Lessor
receiving notice from Lessee of the happening of such casualty,
this Lease shall absolutely cease and terminate and the Minimum
Annual Rent and Additional Rent shall abate for the balance of
the term. Nothing contained herein shall be construed to affect
Lessors right to collect the proceeds of rental value
insurance on the Premises. The above notwithstanding, in the
event that Lessor has another facility that is suitable for
Lessees business operations and Lessee and Lessor are able
to negotiate a mutually satisfactory Lease, Lessor shall make
such facility available to Lessee and at the time of
commencement of the Lease for the other facility, this Lease
shall terminate.

B.     Partial
Destruction of Premises. If such damage, covered by a policy
or policies of insurance maintained by Lessor, be only partial
and such that the Premises can be restored, in Lessors
opinion, to approximately their former condition within one
hundred eighty (180) days from the date of Lessor receiving
notice from Lessee of the happening of such casualty, Lessor
may, at its sole option, restore the same with reasonable
promptness, Lessee to pay the amount of any deductible or other
restoration cost not covered by the proceeds of insurance,
reserving the right to enter upon the Premises

11



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HANKIN MANAGEMENT COMPANY


AMERICAN BANK NOTE HOLOGRAPHICS, INC.


October 9, 2002/kat


for that purpose. Lessee shall pay the amount of
any deductible or other restoration costs not covered by the
proceeds of insurance. The current deductible on Lessor casualty
insurance is $5,000.00. Lessor shall endeavor to maintain such
level of deductible provided that it remains available at
comparable prices. Lessor also reserves the right to enter upon
the Premises whenever necessary to repair damage caused by fire
or other casualty to the building of which the Premises is a
part, whether the building is a single tenant or a multi-tenant
building, even though the effect of such entry is to render the
Premises or part thereof untenantable. In either event, the
Minimum Annual Rent and Additional Rent shall be apportioned and
suspended during the term Lessor is in possession, taking into
account the portion of the Premises rendered untenantable and
the duration of said possession. Nothing contained herein shall
affect or limit Lessors right to collect the proceeds of
any rental value insurance on the Premises. If a dispute arises
as to the amount of rent due under the clause, Lessee agrees to
pay the full amount claimed by Lessor, but Lessee shall have the
right, only, to proceed to recover the alleged excess payment,
if any, by final and binding Arbitration in accordance with the
terms of Paragraph 38(A), infra.

C.     Lessor shall make
such election to repair the Premises or terminate this Lease by
giving written notice thereof to Lessee within sixty (60) days
from the day Lessor receives written notice from Lessee that the
Premises has been destroyed or damaged by fire or other casualty.

D.     Lessor shall not
be liable for any damage, compensation or claim by reason of the
necessity of repairing any portion of the Premises, the
interruption of the use of the Premises, any inconvenience or
annoyance arising as a result of such repairs or interruption or
the termination of this Lease by reason of damage or destruction
of the Premises or any part thereof.

9.     Condemnation.

A.     Total
Condemnation. In the event the entire Premises are taken or
condemned by any public or quasi-public authority exercising the
right of eminent domain, this Lease shall terminate as of the
date the condemning authority takes possession of the Premises,
with the same force and effect as though such date were the date
fixed herein for expiration of the term. The entire amount of
any award for such taking shall belong to the Lessor, Lessee
hereby expressly waiving any and all claims or rights to any
portion of such award. Lessee may separately pursue with the
condemning authority, its own claim for moving expenses, damages
for business interruption or damages to Lessees personal
property.

B.     Partial
Condemnation. In the event that a portion of the Premises,
but not the entire Premises is taken or condemned for a public
or quasi-public use, the Minimum Annual Rent herein shall abate
equitably in proportion to the area of the building on the
Premises condemned as of the date on which the condemning
authority shall take possession of the condemned property.
Provided, however, that if the condemnation were so extensive
that the Premises is not suitable for Lessees use as set
forth herein, the taking shall be considered a total taking and
subparagraph A above will apply. The entire amount of any award
for such taking shall belong to Lessor except for moving,
business interruption expenses and damages to Lessees
personal property, if any awarded directly to Lessee and Lessee
hereby waives any other right it may have to any portion of such
award. If the parties are unable to agree as to whether any
taking is so substantial as to constitute a total taking for the
purposes of this Lease, or as to the amount of abatement of rent
after a partial taking, Lessee agrees to pay the full amount
claimed by Lessor, and Lessee shall only have the right to
promptly proceed to resolve any disputed excess payments to
final and binding Arbitration in accordance with
Paragraph 38(A), infra.

C.     If the condemning
authority should take only the right to possession for a fixed
period of time or for the duration of an emergency or other
temporary condition, then, notwithstanding anything hereinabove
provided, this Lease shall continue in full force and effect
without any abatement of Minimum Annual rent and Additional Rent
and the amounts payable by the condemning authority with respect
to any period of time prior to the expiration or sooner
termination of this Lease (not exceeding the

12



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HANKIN MANAGEMENT COMPANY
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
October 9, 2002/kat


Minimum Annual Rent and Additional Rent paid by Lessee to Lessor
during said period of time) shall be paid by Lessor to Lessee out of
the amount of any condemnation award received by Lessor.

10. Use and Compliance with Regulations.

Lessee hereby covenants and agrees that it will at no time
use the Premises for any other use or purpose other than the use
described in subparagraph 1 (D), supra. Lessee further agrees that it
will at no time use the Premises in any manner which may be deemed a
violation of any municipal (including, but not limited to, municipal
authorities, regulatory agencies and water and sewer authorities),
state or federal law or regulations. Lessee shall comply at its sole
cost and expense with any and all municipal, state and federal
regulations or laws covering Lessees occupancy and/or any additional
installations, other than those specifically provided for in this
Lease, which may be required, including, but not limited to, full
compliance with the Americans with Disabilities Act. Lessee shall
also comply at its sole cost and expense with any and all reasonable
rules and regulations promulgated by Lessor by notice hereunder. In
the event the installation of a sprinkler system, an emergency
lighting system and/or a fire/smoke alarm or monitoring system or
public sewer or water connection or tapping fees are necessitated by
any governmental body for issuance of a building permit and/or
occupancy permit for the Premises, or generally after the Effective
Date, the actual cost for the providing and installing the system
shall be paid by Lessee to Lessor within ten (10) days of the posted
date of a bill therefore. Twenty One Percent (21%) of the cost thereof
shall be paid prior to the commencement of any work and the balance
shall be escrowed by Lessee in a manner acceptable to Lessor. Lessor
shall not be responsible for obtaining occupancy or other permits for
Lessee. Responsibility for obtaining all necessary occupancy or other
permits shall be the obligation of Lessee, but Lessor shall provide all reasonable
non-financial assistance to Lessee.

Lessee further agrees that it will use every reasonable
precaution against fire or other casualty; peaceably deliver up and
surrender possession of the Premises to the Lessor at the expiration
or sooner termination of this Lease promptly delivering to Lessor at
Lessors office all keys for the Premises; and give to Lessor prompt
written notice of any fire or other casualty, or any damage
occurring on or to the Premises.

Lessee further covenants and agrees that it will not, without
first obtaining the consent in writing of Lessor, and without
providing Lessor with reimbursement for any expenses incurred or
incidental to Lessees proposed action, do or suffer to be done,
any act, matter or thing objectionable to the property insurance
companies whereby the property insurance or any other insurance now
in force or hereafter to be placed on the Premises, or any part
thereof, or on the building of which the Premises may be a part,
shall become void or suspended, or whereby the same shall be rated as
a more hazardous risk  that at the date of execution of this Lease,
or employ any person or persons objectionable to the underwriting
insurance companies or carry or have any benzene or explosive matter
of any kind in and about the Premises. In case of a breach of this
covenant (in addition to all other remedies given to Lessor in case
of the breach of any of the conditions of covenants of this lease)
Lessee agrees to pay to Lessor as Additional Rent any and all
increase or increases of premiums on insurance carried by Lessor on
the Premises, or any part thereof, or on the building of which the
Premises may be a part, caused in any way by the occupancy of Lessee.

Lessee hereby agrees to protect, indemnify and save Lessor
harmless from and against any and all loss, damage, expense, cause of
action, suits, demands, judgments, and claims of any nature
whatsoever arising as a result of Lessees breach of the covenants
contained in this paragraph, in addition to any other indemnification
provisions set forth in this Lease. Lessee shall deposit no process
wastes into the sanitary sewer system serving the Premises and agrees
that only sanitary waste shall be inserted into the sanitary sewer
system.

13



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HANKIN MANAGEMENT COMPANY
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
October 9, 2002/kat


11. Indemnification.

A. The Lessee shall keep, save and hold harmless the Lessor from
any and all losses, damages and liability for anything and everything
whatsoever (i) arising from or out of the occupancy of the Premises
and use of abutting and nearby common areas or any part thereof or any
sidewalks, streets, driveways, right of way or roadways, adjacent or
nearby thereto, during the term of this Lease, or any Holdover,
Renewal, or Extension Term thereof, by or under the Lessee, the
Lessees agents, servants, contractors, sub-contractors, or business
visitors, and (ii) from any loss or damage or liability, as above
described, arising from any fault or negligence by the Lessee or any
failure on the Lessees part to comply with any of the covenants,
terms and conditions contained in this Lease, or regardless of
Lessees fault to the extent of any deductible in any policy of
insurance covering the loss or damage. Provided, however, that
Lessees obligations hereunder shall be pro-ratably reduced to the
extent that a particular claim, liability, expense, loss, damage,
demand, fine or cause of action is a result of Lessors gross
negligence or willful misconduct.

B. Notwithstanding anything set forth herein to the contrary, in
the event Lessor is held liable to an employee of Lessee (either an
actual employee or one deemed to be an employee by operation of law)
on account of work-related injuries sustained by such employee,
Lessee shall be liable to Lessor for damages, contribution and
indemnity in any action at law or otherwise. This subparagraph 11(B)
shall constitute a written contract between Lessor and Lessee
pursuant to Section 303(b) of the Workmens Compensation Act, 77 P.S.
Section 481(b).

12. Assignment and Subletting. Lessee covenants and agrees that
it will not, without first obtaining the consent, in writing of
Lessor, which consent shall not be unreasonably withheld, provided
the business operations of such assignee on the Premises shall be no
more hazardous than that of Lessees present business and shall
comply with the zoning and all other governmental regulations and
regulations of insurance underwriters and without providing Lessor
with reimbursement for any reasonable expenses incurred or incidental
to Lessees proposed action, assign, mortgage or pledge this Lease,
or under-let, or sub-lease the Premises, or any part thereof, nor
shall any assignee or sub-lessee assign, mortgage or pledge this Lease
or such sub-lease, without an additional written consent by the
Lessor, which consent may be withheld for any reason whatsoever, or
no reason, and without such consent no such assignment, mortgage or
pledge shall be valid. The above notwithstanding, Lessee shall not
mortgage or pledge this Lease without the prior approval of Lessor,
which approval may be withheld for any reason whatsoever, or no
reason. If the Lessee becomes insolvent, or makes an assignment for
the benefit of creditors, or if a petition in bankruptcy is filed by
or against the Lessee or a bill in equity or other proceeding for the
appointment of a receiver for the Lessee is filed, or if the real or
personal property of the Lessee shall be sold or levied upon by any
Sheriff, Marshall or Constable, the same shall be a violation of this
covenant. Should the Lessor consent in writing to any such assignment
or subletting, the business of the assignee or the sublessee shall be
no more hazardous than that of Lessees present business and shall
comply with the zoning and all other governmental regulations and
regulations of insurance underwriters. Provided, however, Lessee
shall not be relieved of any liability or responsibility under the
terms of this Lease by reason of such assignment or subletting.

An assignment of this Lease shall be deemed to have occurred if
in a single transaction or a related or unrelated series of
transactions, and whether Lessee is a corporation, partnership or
other entity, more than fifty percent (50%) or more of the ownership
interests in Lessee (whether shares, partnership interests,
membership interests or other equity, and whether one or more classes
thereof) are transferred, diluted, reduced, or otherwise affected
with the result that the owners or holders on the date of this Lease
of the ownership interests in each class of equity of Lessee together
cease to own fifty percent (50%) or more of such equity. This section
shall not apply to sale of shares of stock on the NASDAQ National
Listings or the New York or American Stock Exchanges.



14




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##### 



HANKIN MANAGEMENT COMPANY
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
October 9, 2002/kat


13. Waiver of Subrogation.

Lessor and Lessee hereby release each other and otherwise waive
any claim that each may have against the other for damage to
property, which and to the extent such damage is, should, or would
be covered by property insurance required by this Lease to be
maintained by such party and further agree that all insurance
policies which each of them shall, should, or would carry to insure
the Premises and the contents therein against casualty loss shall
contain waivers of the right of subrogation against Lessor and Lessee
herein, their heirs, administrators, successors and assigns.

14. Security Deposit.

Lessee shall have deposited with Lessor upon execution hereof,
the sum of Eight Thousand Seven Hundred Fifty and 00/100 Dollars
($8,750.00) for Lessees faithful performance of Lessees obligations
hereunder. Lessee has on deposit with Lessor a security deposit in
the amount of Eight Thousand Seven Hundred Fifty and 00/100 Dollars
($8,750.00) under the terms and conditions of its Prior Lease, which
shall be credited against the security deposit due hereunder.
Additionally, from time to time, as necessary, Lessee shall deposit
with Lessor amounts as determined by Lessor under paragraph 24(D),
infra., to secure the removal of Alterations and Improvements (as
hereinafter defined) upon termination of the Lease. If Lessee fails
to pay rent or other charges due hereunder, or otherwise defaults
with respect to any provision of this Lease, Lessor may use, apply or
retain all or any portion of said security deposit for the payment of
any rent or other charge in default or for the payment of other sums
to which Lessor may become obligated by reason of Lessees default,
or to compensate Lessor for any loss or damage which Lessor may
suffer thereby. If Lessor so uses or applies all or any portion of said
deposit, Lessee shall within ten (10) days after written demand
thereof, deposit funds with Lessor, by good check, in an amount
sufficient to restore said deposit to the full amount herein above
stated and Lessees failure to do so shall be a material breach of
this Lease. If Lessee is in default under this Lease more two
(2) times within any twelve (12) month period, irrespective of
whether or not such default is cured, then, without limiting Lessors
other rights and remedies provided for in this Lease or at law or
equity, or both, the Lessee, within ten (10) days of notice from
Lessor, shall deposit with Lessor such amount as is necessary to
increase the deposit held by Lessor to two (2) times the amount held
at the time of said notice. Lessor shall not be required to keep said
deposit separate from its general accounts. If Lessee performs all of
Lessees obligations hereunder, said deposit, or so much thereof as
had not theretofore been applied by Lessor, shall be returned to
Lessee without interest (or at Lessors option, to the last assignee,
if any, of Lessees interest hereunder) at the expiration of the term
hereof, and after Lessee has vacated the Premises. No trust
relationship is granted herein between Lessor and Lessee with respect
to said security deposit.

15. Inspection - Access. Lessor may, at all reasonable times, by
itself or its duly authorized agents, go upon and inspect the Premise
and every part thereof and/or at their option to make repairs,
alterations, and additions to the Premises or the building of which
the Premise is a part. Provided, however, that Lessor agrees that
they will not enter upon the Premise for repairs except during normal
business hours unless said repairs are of an emergency nature.

16. Rights of Transferee or Assignee. All rights granted to
Lessor hereunder may be exercised by any transferee or assignee of
Lessors right, title and interest in this Lease in his, her, or its
own name, any statute, rule of court, custom or practice to the
contrary notwithstanding. In addition, upon such assignment, Lessor
may pay over any security deposit hereunder to said transferee or
assignee and upon said payment, all obligations of Lessor to Lessee
pertaining to said security deposit shall terminate. In addition,
upon assignment or transfer of Lessors interest herein to an
Assignee or a Transferee, any



15




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HANKIN MANAGEMENT COMPANY
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
October 9, 2002/kat




17. Restriction on Floor and Wall Loads and Machinery. Lessee shall
not place any weight upon any floor or wall of the Premises which is
greater than the floor load per square foot or wall load per square
foot respectively, which such floor or wall, respectively, was
designed to bear and which is permitted by law. In no event shall
Lessee place any weight upon any portion of the Premises beyond the
safe carrying capacity of the structure. Lessee shall not use or
operate any machinery that, in Lessors sole opinion, is harmful to
the building or disturbing to other Section Owners or occupants of the other
Sections.

18. Signs.

A. Lessee may erect reasonable signs which shall not detract from the
appearance of, or cause any damage to, the Premises, the building of
which the Premises is a part, the industrial center in which it is
situated, and the surrounding environment, having first obtained
Lessors written permission as to the location, installation and
appearance of said signage. Lessee shall conform, at its sole cost
and expense, with all governmental and Lessors rules and regulations
with respect to Lessees signs and in no event shall Lessees signs
exceed the agreed percentage of the sign area permitted by said
regulations on a Pro Rata Basis. In addition, Lessee shall erect no
signs on the Premises which will in any way damage, injure or lessen
the physical or structural integrity of the roof or structure of the
Premises or the building of which the Premises is a part. With
respect to Lessees signs, Lessee will save Lessor harmless from any
mechanics liens claims or claims for personal injury or property
damage arising from the erection, provision, installation,
maintenance or removal of said signs. At the termination of this
Lease, Lessee shall remove all signs and shall restore the portion of
the Premises on which Lessees Sign were located to its original good
condition, without any allowance for wear and tear, at Lessees sole
cost and expense.

B. In the event that the building of which the Premises forms a part
is a multi-tenant building, and Lessee does not lease the whole
building, Lessor agrees to cause the erection of a directory-type
sign on the lot of which the Premises is a part at a location to be
selected by Lessor and Lessee shall reimburse Lessor for the cost
thereof in proportion to the area which Lessees portion of said sign
bears to total sign area plus Twenty One Percent (21%) of the cost
for placing Lessees name on the sign, as Additional Rent.

C. The above notwithstanding, Lessor may at its sole discretion
require that Lessee conform to a standard sign design. Lessee shall
be required to use the design requirements of Lessor and to use the
contractor designated by Lessor. All other terms of this Paragraph
shall remain in full force and effect.

D. In addition, Lessor may require the installation of individual
wall plaque signs at the loading dock area of the premises. The cost
of said signs to be paid by Lessee to Lessor, as Additional Rent.

19. Quiet Enjoyment. Notwithstanding anything herein contained to the
contrary, Lessees possession will not be interfered with by any
person claiming by, through, or under Lessor, or by any successor of
Lessor, so long as Lessee complies with the terms of this Lease and
is not in default hereunder.

20. Events of Default - Remedies.

A. The following events or any one or more of them shall be events of
default under this Lease (See Subparagraph P for applicable grace and
cure periods):

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HANKIN MANAGEMENT COMPANY
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
October 9, 2002/kat


|                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                      | (i) Lessee
shall fail to pay any Minimum Annual Rent, Additional Rent or other
sums payable hereunder when the same are due and payable; or                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                      | (ii) Lessee
shall fail to perform or comply with any of the other terms,
covenants, agreements or conditions hereof; or                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                      | (iii) Lessee
shall make a general assignment for the benefit of creditors or shall
admit in writing its inability to pay its debts as they become due, or
shall file a petition in bankruptcy or shall be adjudged a bankrupt
or insolvent, or shall file a petition seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or
similar relief under any present or future statute, law or
regulation, or shall file an answer admitting or not contesting the
material allegations of a petition against it in any such proceeding,
or shall seek or consent to or acquiesce in the appointment of any
trustee, receiver or liquidator of Lessee or any material part of its
property; or
|                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                      | (iv) If
within sixty (60) days after commencement of any proceedings against
Lessee seeking any reorganization, arrangement, composition,
readjustment, liquidation or dissolution or similar relief under any
present or future statute, law or regulation, such proceedings shall
not have been dismissed or, if, within sixty (60) days after the
appointment without the consent or acquiescence of Lessee of any
trustee, receiver or liquidator of Lessee or any material part of its
properties, such appointment shall not have been vacated.                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                      | (v) Lessee
shall vacate the Premises in violation of Paragraph 28 hereof.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                                     
|B. In
the event of any such event of default (regardless of the pendency of
any proceeding which has or might have the effect of preventing
Lessee from complying with the terms of this Lease) Lessor at any
time thereafter may exercise any one or more of the following
remedies:
|                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                      | (i) [Reserved]                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                      | (ii) Termination
of Lease. Lessor may terminate this Lease, by notice to Lessee (the
Termination Notice) setting forth the Lease Termination
Date, without any right by Lessee to reinstate its rights by payment
of rent due or other performance of the terms and conditions hereof.
On or before the Lease Termination Date, Lessee shall surrender
possession of the Premises to Lessor and restore the Premises to the
condition required by the terms and conditions of this Lease. Lessor
shall immediately become entitled to receive from Lessee all unpaid
installments of Minimum Annual Rent, Holdover Rent, Additional Rent, and other charges hereunder,
accruing up to and including the Restoration Date.    
|                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                      | (iii) Re-leasing.
Without terminating this Lease, Lessor may re-enter and repossess the
Premises or any part thereof, (which shall not constitute an eviction
or a surrender of the Lease by Lessee) and lease them to any other
person upon such terms as Lessor shall deem reasonable for a term
within or beyond the term of this Lease; provided, however, that any
such re-leasing prior to termination shall be for the account of
Lessee, and Lessee shall remain liable for:                                                                                                                                                                                                                                           



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HANKIN MANAGEMENT COMPANY
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
October 9, 2002/kat


| |                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                               | (1) All
Minimum Annual Rent, Additional Rent and other sums which would be
payable under this Lease by Lessee in the absence of such expiration,
termination or repossession, less                                                                                                                                                  
|
| |                                                                                                                                                                                                                                                                                                                                                                                               | (2) The net
proceeds, if any, of any re-leasing effective for the account of
Lessee after deducting from such process without limitation, all
repossession costs, brokers commissions, attorneys
commissions, attorneys fees and expenses, employees
expenses, alteration costs and expenses of preparation for such
re-leasing.
|
|
| | If the
Premises are at the time of default sublet or leased by Lessee to
others, Lessor may, as Lessees agent, collect rents due from
any subtenant or other tenant and apply such rents to the rent and
other obligations due hereunder without in any way affecting
Lessees obligations to Lessor hereunder. Such agency, being
given for security, is hereby declared to be irrevocable.
|
| | (iv) Acceleration
of Rent. Lessor may declare rent and all items of Additional Rent
for the entire balance of the then current term immediately due and
payable, together with all other charges, payments, costs and
expenses payable by Lessee as though such amounts were payable in
advance on the date of the event of default occurred.                                                
|

C. Except as expressly provided herein no repossession of the
Premises or any part thereof or exclusion of Lessee from the Premises
pursuant to subparagraph B above or otherwise shall relieve
Lessee of its liabilities and obligations hereunder, all of which
shall survive such exclusion, expiration, or repossession and Lessor
may, at its option, sue for and collect rent and other charges due
hereunder at any time and from time to time as and when such charges
accrue or are accelerated or submit to Arbitration in accordance with
the provisions of subparagraph 38(A), infra.

D. With respect to any portion of the Premises, which is vacant
or which is physically occupied by Lessee, Lessor may remove all
persons and property therefrom and store such property in a public
warehouse or elsewhere at the cost of and for the account of
Lessee, without service of notice or resort to legal process (all of
which Lessee expressly waives) and without being deemed guilty of
trespass or becoming liable for any loss or damage which may be
occasioned thereby. Lessor shall have a lien for the payment of all
sums agreed to be paid by Lessee herein upon all Lessees
property, which lien is to be in addition to any landlords lien
now or hereafter provided by law.

E. The parties hereby waive trial by jury in any action,
proceeding, or counterclaim brought by either of them against the
other on any matters arising out of or in any way connected with
this Lease, the relationship of Lessor and Lessee, Lessees use
or occupancy of the Premises and/or any claim of injury or damages.
In the event Lessor commences any proceedings for non-payment of rent
or Additional Rent, Lessee will not interpose any counterclaim of any
nature or description in any such proceedings. This shall not be
construed, however, as a waiver of Lessees right to assert any
such claims in any separate action brought by Lessee.

F. Lessee hereby expressly waives and all rights of redemption
granted by or under any present or future law in the event this Lease
is terminated or Lessee is evicted or dispossessed by reason of
violation by Lessee of any of the provisions of this Lease.

G. In the event of breach or threatened breach by Lessee of any
provision of this Lease, Lessor shall have the right of injunction as
if other remedies were not provided for herein.

H. No right or remedy herein conferred upon or reserved to
Lessor is intended to be exclusive of any other right or remedy
herein or by law provided, but each shall be cumulative and in

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HANKIN MANAGEMENT COMPANY
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
October 9, 2002/kat


addition to every other right or remedy given
herein or now or hereafter existing at law or in equity or by statute.

I. If Lessee shall default in the performance of any covenant
required to be performed by it under this Lease, Lessor may perform
the same for the account and at the expense of Lessee. If Lessor at
any time is compelled to pay or elects to pay, any sum of money or to
do any act, which will require the payment of any sum of money by
reason of the failure of Lessee to comply with any provisions hereof,
or if Lessor is compelled to incur any expense, including reasonable
counsel fees, in instituting, prosecuting or defending against any
action or proceedings instituted by reason of any default of Lessee
hereunder, the amount of such payments or expenses shall be paid by
Lessee to Lessor as Additional Rent, on the next day following such
payment or the incurring of such expenses upon which a regular
monthly rental is due, together with interest thereon at the rate set
forth herein.

J. No waiver by Lessor of any breach by Lessee of any of its
obligations, agreements or covenants hereunder shall be a waiver of
any subsequent breach or of any other obligation, agreement or
covenant, nor shall any forbearance by Lessor to seek a remedy for
any breach by Lessee be a waiver by Lessor of its rights and remedies
with respect to such or any subsequent breach.

K. Lessee expressly waives any right of defense which it may
have based on any purported merger of any cause of action, and neither
the commencement of any actions or proceeding nor the settlement
thereof or the entering of judgment therein shall bar Lessor from
bringing subsequent actions or proceedings from time to time.



*** NOTICE ***


In Pennsylvania, court decisions provide that a Tenant can waive its
due process rights to a deprivation of hearing and notice when it
voluntarily, knowingly and intelligently consents to an
agreement containing a cognovit, (meaning, confession of
judgment) clause. See Jordan v. Fox, Rothschild,
OBrien & Frankel, 20 F.3d 1250 (3d Cir. 1994) (holding
that judgment against a reasonably sophisticated, corporate
[or business] debtor, who has signed an instrument containing a
document permitting judgment by confession as part of a commercial
transaction, is enforceable in the same manner as any other
judgment); Rappaport v. Norlar, Inc., No. 93-4756, 1994 U.S. Dist.
Lexis 5754 at #18 (E.D. Pa. April 29, 1994) and Germantown Savings
Bank v. Talacki, 520, 657 A.2d 1285, 1289 (Pa. Super. Ct. 1995).

THE FOLLOWING PARAGRAPHS 20(L) AND 20(M) EACH SETS FORTH A
WARRANT OF ATTORNEY FOR ANY PROTHONOTARY OR ATTORNEY OF COURT OF
RECORD TO CONFESS JUDGMENT AGAINST THE LESSEE. IN GRANTING THESE
WARRANTS OF ATTORNEY TO CONFESS JUDGMENT AGAINST THE LESSEE, THE
LESSEE, FOLLOWING CONSULTATION WITH (OR DECISION NOT TO CONSULT)
SEPARATE COUNSEL FOR THE LESSEE AND WITH KNOWLEDGE OF THE LEGAL EFFECT
THEREOF, HEREBY KNOWINGLY, INTENTIONALLY, VOLUNTARILY AND
UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS THE LESSEE HAS OR MAY HAVE
TO PRIOR NOTICE AND AN OPPORTUNITY FOR HEARING UNDER THE RESPECTIVE
CONSTITUTIONS AND LAWS OF THE UNITED STATES OF AMERICA, THE
COMMONWEALTH OF PENNSYLVANIA OR ELSEWHERE. IT IS SPECIFICALLY
ACKNOWLEDGED BY THE LESSEE THAT THE LESSOR HAS RELIED ON THESE
WARRANTS OF ATTORNEY IN EXECUTING THIS LEASE AND AS AN INDUCEMENT TO
GRANT FINANCIAL ACCOMMODATIONS HEREUNDER TO THE LESSEE.

LESSEE EXPRESSLY WARRANTS AND REPRESENTS THAT THE FOLLOWING
WARRANT OF ATTORNEY TO CONFESS JUDGMENT HAS BEEN AUTHORIZED EXPRESSLY

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HANKIN MANAGEMENT COMPANY
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
October 9, 2002/kat


BY PROPER ACTION OF THE BOARD OF DIRECTORS OF
LESSEE (IF LESSEE IS A CORPORATION) OR THE PARTNERS OF LESSEE (IF
LESSEE IS A PARTNERSHIP), OR THE MEMBERS OF LESSEE (IF LESSEE IS A
LIMITED LIABILITY COMPANY).

Notwithstanding anything in Paragraphs 20(L) AND 20(M) to the
contrary, these Paragraphs and the authority granted by Lessee therein
are not and shall not be construed to constitute a power of
attorney and are not governed by the provisions of 20 Pa. C. S.
Chapter 56. Furthermore, an attorney or other person or entity acting
under these Paragraphs 23(L) AND 23(M) shall not have any fiduciary
obligations to Lessee and, without limiting the foregoing shall have
NO duty to: (1) exercise the powers for the benefit of Lessee,
(2) keep separate any assets of Lessee from those of such
attorney, other person or entity or Lessor, (3) exercise
reasonable caution and prudence on behalf of Lessee, or
(4) keep a full and accurate record of all actions, receipts and
disbursements on behalf of Lessee.

LESSEE AND LESSOR HEREBY CONSENT TO THE JURISDICTION OF THE
COURT OF COMMON PLEAS OF MONTGOMERY COUNTY PENNSYLVANIA OR THE FEDERAL
DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA FOR ANY
PROCEEDING IN CONNECTION HEREWITH, AND HEREBY WAIVE OBJECTIONS AS TO
VENUE AND CONVENIENCE OF FORUM IF VENUE IS IN MONTGOMERY COUNTY,
PENNSYLVANIA OR IN THE FEDERAL DISTRICT COURT FOR THE EASTERN DISTRICT
OF PENNSYLVANIA. IN ANY ACTION OR SUIT UNDER THIS LEASE, SERVICE OF
PROCESS MAY BE MADE UPON LESSOR OR ANY LESSEE BY MAILING A COPY OF
THE PROCESS BY FIRST CLASS MAIL TO THE RECIPIENT AT THE RESPECTIVE
ADDRESS SET FORTH IN PARAGRAPH 26, INFRA. LESSOR AND LESSEE
HEREBY WAIVES ANY AND ALL OBJECTIONS TO SUFFICIENCY OF SERVICE OF
PROCESS IF DULY SERVED IN THIS MANNER.

L. Upon the occurrence of any event of default, which is not cured
within any period of time herein provided and after an additional ten
(10) days written notice of default under the terms and conditions of
this Lease, Lessee, with understanding of the RELINQUISHMENT OF
CERTAIN RIGHTS to which Lessee would otherwise be entitled as a
matter of law and due process including the right to notice and
judicial hearing, hereby irrevocably empowers any Prothonotary,
clerk or attorney of any court of the Commonwealth of Pennsylvania to
appear for Lessee, with or without declaration filed, as of any term,
and therein TO CONFESS OR ENTER JUDGMENT AGAINST LESSEE for
rent and/or the charges, payments, costs and expenses herein
reserved as rent, or herein agreed to be paid by lessee, and then due
and unpaid and for interest and costs, together with a reasonable
attorneys commission of not less than Ten Percent (10%) of such
rents or other charges or expenses then due. Such authority shall not
be exhausted by one exercise thereof, but judgment may be confessed
as aforesaid from time to time as often as any of said rent and/or
other charges reserved as rent or agreed to be paid by Lessee shall
fall due or be in arrears.

M. Upon the occurrence of any event of default which is not cured
within any period of time herein provided, Lessee with understanding
of the RELINQUISHMENT OF CERTAIN RIGHTS, to which Lessee would
otherwise be entitled as a matter of law and due process, including
the right to notice and judicial hearing, hereby authorizes and
empowers any attorney of any court of record in the Commonwealth of
Pennsylvania as attorney for Lessee, as well as for all persons
claiming under, by or through Lessee, to appear for Lessee and enter in any competent court,
in accordance with the then execution or appeal, against Lessee and
all persons claiming under, by or through Lessee and therein
CONFESS JUDGMENT FOR THE RECOVERY BY LESSOR OF POSSESSION OF THE
PREMISES, for which this Lease (or a copy of thereof) shall be
sufficient warrant, whereupon if Lessor so desires, a writ of
possession may be issued forthwith, without any prior writ or
proceeding whatsoever.

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HANKIN MANAGEMENT COMPANY
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
October 9, 2002/kat


It is hereby expressly agreed that if for any
reason, after such action has been commenced, the same shall be
discontinued, marked satisfied of record or terminated, or possession
of the Premises remain in or be restored to Lessee, Lessor shall have
the right for the same default, or any subsequent default, to bring
one or more actions in the manner herein set forth to recover
possession of the Premises.

N. In any action involving a confession of judgment by Lessor against
Lessee, Lessor shall first cause to be filed in such action an
affidavit made by it or someone acting for it, setting forth the
facts necessary to authorize the entry of judgment and if a true copy
of this Lease (and such affidavit shall be sufficient evidence of the
truth of the copy) be filed in such action, it shall not be necessary
to file the original as warrant of attorney, any rule of court,
custom or practice to the contrary notwithstanding. Lessee hereby
releases Lessor and any and all attorneys who may appear for Lessee,
from all liability for all errors in said proceedings.

O. If proceedings shall be commenced by Lessor to recover possession
under the Acts of Assembly and Rules of Civil Procedure, either at
the end of the term or earlier termination of this Lease, or for
nonpayment of rent or any other reason, Lessee specifically waives
the right to the three (3) month notice and to the fifteen (15) or
thirty (30) days notice required by the Landlord and Tenant Act of
1951, and agrees that notice under either Pa. R.C.P. 2973.2 or Pa.
R.C.P. 2973.3, as amended from time to time, shall be sufficient in
either or any such case.

P. Notwithstanding anything herein elsewhere contained to the
contrary, Lessor agrees that Lessor will not exercise any right or
remedy provided for in this Lease or allowed by law, because of any
default of Lessee, unless Lessor shall first have given written
notice thereof to Lessee, and Lessee, (i) within a period of fifteen
(15) days thereafter shall have failed to pay the sum or sums due if
the default consists of the failure to pay money, or (ii) if said
default shall consist of anything other than the failure to pay the
sum or sums due hereunder, Lessee shall have failed within the period
of twenty (20) days after notice from Lessor to have cured said
default, except that, if such default cannot be cured within said
twenty (20) days, Lessee shall only be in default
if Lessee shall have failed to begin and actively and diligently in
good faith proceed with the correction of the default until it shall
be fully corrected not later than sixty (60) days after such notice;
provided, further, however, that no such notice from Lessor shall be
required nor shall Lessor be required to allow any part of the said
notice periods if Lessee shall have removed from or shall be in the
course of removing from the Premises in violation of Paragraph 28,
infra, or Lessee shall have failed to provide any
insurance required by this Lease or if a Petition in Bankruptcy or
for reorganization shall have been filed by or against the Lessee
resulting in an order for relief in bankruptcy, or for
reorganization, or if a receiver or trustee is appointed for Lessee
and such appointment and such receivership or trusteeship is not
terminated within sixty (60) days, or if Lessee makes an assignment
for the benefit of creditors, or if Lessee is levied upon and is
about to be sold out upon the Premises by any sheriff, Marshall or
constable, or if Lessee violates any of the
provisions of Paragraph 40, infra, dealing with
Hazardous Substances. Notwithstanding Lessor shall not be required to
give any notice called for by this Paragraph of the Lease more than
two (2) times within any Lease Year. Nothing contained herein shall
be deemed to constitute a waiver of Lessees right under law to
appeal any judgment or proceeding and seek to have the judgment
opened or stricken.

21. Mechanics Liens. Lessee shall not permit any
mechanics, materialmans or similar liens to remain upon
the Premises for labor or material furnished to Lessee or claimed to
have been furnished to Lessee in connection with work of any
character performed or claimed to have been performed on the Premises
or at the direction or with the consent of Lessee, whether such work
was performed or materials furnished before or after the commencement
of the term of this Lease. Lessee may, however, contest the validity
of any such lien or claim, provided Lessee shall give Lessor such
reasonable security to insure payment and to prevent any sale,
foreclosure or forfeiture of the Premises by reason of such
non-payment as Lessor may require. Upon final determination of the
validity of any such lien or claim, Lessee shall immediately pay any
judgment or decree rendered against Lessee or Lessor with all proper
costs and

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HANKIN MANAGEMENT COMPANY
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
October 9, 2002/kat


charges and shall cause such lien to be released of
record without cost to Lessor. Notwithstanding anything contained
herein to the contrary, Lessee shall at all times prepare and file a
waiver of mechanics liens prior to the commencement of any
work, or the ordering of any material, in compliance with the terms
of Paragraph 6(A), supra, Lessee shall not commence any such work
until and unless Lessor issues its prior written approval thereof in
accordance with Paragraph 24(B) infra.

22. Subordination. This Lease shall be subordinate in all
respects to any Lease or other arrangement or right to possession
under which the Lessor is in control of the Premises to the rights of
the owner or owners of the Premises and of the land or buildings of
which the Premises are a part, to all rights of the Lessors
landlord and to any and all liens of any mortgages or other
encumbrances now or hereafter encumbering the Premises or any  part
thereof, or upon the land and/or the buildings, and any Declaration
of Condominium executed by Lessor hereafter, with the same force and
effect as if such Mortgage had been executed, acknowledged, delivered
and recorded prior to the execution of this Lease. The subordination
contained in this Paragraph is and shall be effective without the
necessity of any further act or writing by either party hereto, but
Lessee agrees that it will, immediately upon Lessors request,
deliver such additional documents as any mortgagee may require to
confirm such subordination. Lessee, at the request of any mortgagee
or any one acquiring title to Lessors estate or the Premises by
foreclosure, deed in lieu of foreclosure or otherwise, shall attorney
to the then owner and recognize such owner as Lessor for the balance
of the term of this Lease, subject to all of the terms and provisions
hereof. Such mortgagee or purchaser at said foreclosure sale shall
not be:

| |                                                                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | A. Liable for any
act or omission of Lessor;                                                                                                                                          
| |                                                                                                                                                                                       
| | B. Subject to any
offsets or defenses which Lessee may have against the Lessor;                                                                                                       
| |                                                                                                                                                                                       
| | C. Bound by any
rent or additional rent which the Lessee may have paid to the Lessor
for more than the current month;                                                                 
| |                                                                                                                                                                                       
| | D. Bound by any
amendment or modification of the lease made, without its consent;                                                                                                     
| |                                                                                                                                                                                       
| | E. Entitled to any
security deposits paid to Lessor by Lessee if Lessor has exercised
its rights under this Lease to apply such security deposits against
sums or rents due to Lessor.

Any mortgagee of Lessor may, at any time, at its option, by notice to
Lessor and Lessee, declare its mortgage subordinate in lien and
payment to this Lease, in which event, this Lease shall be deemed
superior to such mortgage.

Upon receipt of written request by Lessee, Lessor agrees to request
from the then current mortgagee on behalf of Lessee, a Non-Disturbance
Agreement from Lessors mortgagee on the mortgagees
standard form. Any fee charged for this agreement by the mortgagee
and all reasonable costs and expenses incurred by Lessor in its
efforts to obtain the same (whether or not successful) shall be paid
by Lessee as Additional Rent. Lessors failure to acquire such
Non-Disturbance Agreement shall not be deemed to be a default under
this Lease.

23. Estoppel Certificate. Lessee agrees to execute and
deliver to any mortgagee or purchaser of the Premises immediately
upon request, an Estoppel Certificate, in form to be
supplied by Lessor, stating the amount of rent due from Lessee
hereunder; that this Lease remains in full force and effect without
any modifications, except for modifications requested by any such
mortgage; that Lessee consents to any reasonable modification of the
Lease (except rental terms) requested by any mortgagee; that Lessee
has no setoffs against rent; or, if Lessee has any setoffs against
rent or, if this Lease has been

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HANKIN MANAGEMENT COMPANY
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
October 9, 2002/kat


modified, the exact nature of the modification and
the precise amount of the setoffs and such other matters reasonably
requested by said mortgagee or purchaser.

24. Alterations and Improvements.

A. Lessee may, at its sole cost and expense, make additional
alterations, additions, or improvements to the interior of the
Premises, which is the subject of this Lease (hereinafter called
Alterations and Improvements), provided that such
Alterations and Improvements shall not adversely or otherwise affect
the roof and Structural portions of the Premises or the building of
which the Premises is a part in the case of multi-tenant properties,
or any Systems contained therein. THE ABOVE NOTWITHSTANDING,
LESSEE SHALL NOT, UNDER ANY CIRCUMSTANCES MAKE ANY HOLES IN OR
PENETRATIONS OF THE ROOF OF THE BUILDING WITHOUT THE PRIOR WRITTEN
CONSENT OF LESSOR, WHICH MAY BE WITHHELD, DELAYED OR REFUSED FOR ANY
REASON OR NO REASON WHATSOEVER.

B. All such Alterations and Improvements shall be in accordance with
detailed plans and specifications to be supplied by Lessee to Lessor,
which plans shall in all instances first be subject to Lessors
prior written approval (Lessors Approval), which
Lessors Approval shall not be unreasonably withheld. In the
event that Lessor grants approval for the construction of such
Interior Improvements, Lessor shall also advise Lessee, if Lessor
will allow such Interior Improvements to remain upon the Premises as
of the Lease Termination Date. If Lessor shall determine that such
Interior Improvements are to remain upon the Premises, as of the
Lease Termination Date, Lessee shall be required to restore them to
the same condition as existed upon the initial completion of the
construction of such Interior Improvements and to the specifications
initially approved by the Lessor. In the event that Lessor shall not
confirm in writing to Lessee that such Interior Improvements shall
remain upon the Premises, it shall be deemed to be a requirement that
such Interior Improvements be removed from the Premises prior to the
Lease Termination Date specified in Subparagraph D hereinbelow.
Lessee shall provide Lessor with evidence that each contractor
performing work on the Premises has adequate workmens
compensation insurance, Commercial General Liability insurance, and
Vehicular Liability insurance (written on an occurrence basis) in the
amount of at least One Million Dollars ($1,000,000.00) per occurrence
and at least Two Million Dollars ($2,000,000.00) aggregate as to the
Premises for bodily injury, including death, personal injury and
property damage, in the form of a certificate from an insurer, who
shall be reasonably satisfactory to Lessor, to the effect that such
insurance may not be canceled or substantially modified without at
least thirty (30) days prior written notice, certified mail,
return receipt requested, to Mark Hankin, personally, as authorized
representative of Lessor. Said insurance policies shall be with an
insurance company having a Best Rating of A and shall name Lessor, Montgomery County Industrial Development
Authority, any mortgagee of record and other appropriate parties
designated by Lessor as additional named insureds. Lessors
Approval is intended solely for purposes of this Paragraph 24, for
the purpose of providing Lessor with notice of all Alterations and
Improvements, and the opportunity to reject any adverse effect on the
Premises and Lessors obligations under this Lease.
Lessors Approval shall not signify approval by Lessor of the
design or functionality of any Alterations and Improvements and shall
not confer any rights whatsoever on third parties.

C. No Alterations and Improvements by Lessee at the Premises shall be
done except after filing a waiver of mechanics lien in
accordance with the provisions of Paragraphs 6 and 7 hereinabove. A
time-stamped copy of each mechanics lien waiver
shall be filed with Lessor prior to the commencement of any work or
purchase of any material by Lessee or any subcontractor.

D. As to Alterations and Improvements installed with prior
Lessors Approval, Lessee may, or at Lessors demand,
shall remove all Alterations and Improvements prior to the end of the
term of this Lease and Lessee shall at its own cost and expense,
return the Premises to its condition as of the

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HANKIN MANAGEMENT COMPANY
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
October 9, 2002/kat


Lease Commencement Date of the Prior Lease. In the
event, in violation of subparagraph B hereof, Lessee installs
Alterations and Improvements upon the Premises without prior
Lessors Approval, Lessee shall remove all Alterations and
Improvements prior to the end of this Lease, at its own cost and
expense, returning the Premises to its condition as of the Lease
Commencement Date. In the event Lessee shall fail to remove the
Alterations and Improvements and restore the Premises, as herein
provided, Lessor shall have the right to go upon the Premises and do
so, and Lessee agrees to pay the cost thereof plus Twenty One Percent
(21%) of the cost thereof, as Additional Rent. Additionally, Lessor
may decline to accept surrender of the Premises by Lessee so long as
such Alterations and Improvements have not been removed and until
removal of the same and restoration of the Premises, Lessee shall be
deemed to have held over under the provisions  of paragraph 2(C),
supra. With respect to those Alterations and Improvements
which, with Lessors consent, have remained upon the Premises
at the end of the term of this Lease, Lessee agrees that title to the
same shall vest in Lessor. Prior to commencing to install any
Alterations or Improvements, Lessee shall deposit with Lessor an
additional security deposit, to be held by Lessor in accordance with
the provisions of paragraph 14, supra., in an amount
reasonably established by Lessor to cover the cost of removal of said
Alterations and Improvements upon termination of this Lease

E. If as a result of any Interior Improvements which may be made to
the Premises by the Lessee, either pursuant to this clause or without
authorization from the Lessor, any person and/or property shall be
injured and/or damaged, liability therefore shall be the sole
responsibility of Lessee.

F. In making any Alterations and Improvements, Lessee shall comply
with any and all laws, statutes, ordinances, rules and regulations
and requirements of the municipal and other duly constituted
governmental authorities and insurance organizations.

G. It is understood and agreed that no Alterations and Improvements
to any portion of the Premises except the interior of the Building
(Exterior Alterations and Improvements) may be performed
by Lessee, except in full compliance with any conditions established
by Lessor, in writing prior to the  performance thereof. Lessee must
first obtain Lessors Approval for any such Exterior Alterations
and Improvements, which Lessors Approval may be withheld for
any reason whatsoever, whereupon all of the remaining provisions of
this Paragraph 24 relating to the duties and responsibilities of the
Lessee shall apply to all such proposed Exterior Alterations and
Improvements. All such Exterior Alterations and Improvements are to
be made at Lessees sole cost and expense.

25. Extensions - Renewals - CPI Escalator.

A. Extensions. Lessee may terminate this Lease at the end of
this term and any renewal term or extension term, by giving to Lessor
written notice at least six (6) months prior thereto, and Lessor
may terminate this Lease at the end of this term and any renewal or
extension thereof by giving to Lessee written notice at least
twelve (12) months prior thereto (each an
Expiration Notice); but in default of a timely Expiration
Notice given by either party in the manner provided herein, this Lease
shall continue for one (1) year (Extension Term)
commencing the day after the expiration of the current term, upon the
terms and conditions in force immediately prior to the expiration of
the then-current term, Extension Term, or Renewal Term (except for
the Minimum Annual Rent, which shall be computed in subparagraph 25(C)), and so on from year to year, unless terminated by the giving
of an Expiration Notice within the times and in the manner aforesaid.
Provided, however: that if Lessor shall have given notice to Lessee,
(an Amendment Notice) at any time prior to the expiration
of any term hereby created of its intention to change any of the
terms and conditions of this Lease and Lessee shall not within ten
(10) days from such Amendment Notice notify Lessor, by Expiration
Notice, of Lessees intention to vacate the Premises at the end
of the then current term, Lessee shall be considered as Lessee under
the terms and conditions mentioned in the then current
term, Lessee
shall be considered as Lessee under the terms and conditions
mentioned in the Amendment Notice for a further term of one year, as
above provided, or for such longer further term as

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HANKIN MANAGEMENT COMPANY
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
October 9, 2002/kat


may be stated in the Amendment Notice. In the event
that Lessee or Lessor shall have given a valid and timely Expiration
Notice, and Lessee shall fail or refuse to completely vacate the
Premises and restore the same to the condition required in this Lease
on or before the end of the term hereof (the Expiration
Date), then it is expressly agreed that the Lessor shall have
the option either:

| |                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) to disregard
the Expiration Notice as having no force and effect, whereupon the
Expiration Notice shall be null and void, ab initio, as if never
given; or
| |                                                                                                                                                               
| | (ii) treat Lessee
as Holding Over, in accordance with paragraph 2(C) hereof.                                                                                  

All powers granted to
Lessor by this Lease shall be exercised and all obligations imposed
upon Lessee by this Lease shall be performed by Lessee as well during
any Holding Over, Extension Term, or Renewal Term as during the
original term hereof.

Notwithstanding
anything set forth in subparagraph 25(A) to the contrary, if the
term of this Lease is not previously terminated, the term of this
Lease shall end absolutely, without further notice, at 11:59 p.m. on
the day previous to the 29th anniversary of the Lease Commencement
Date.

B. Option to Renew.

Provided Lessee has
not ever been, nor is in default under the terms of this Lease beyond
the applicable cure periods, as provided in Section 20.P. hereof,
Lessee shall have the right and privilege at its election to renew
the term of this Lease for a further period of two (2) years
(Renewal Term) to commence upon expiration of the
original term hereof, by giving Lessor written notice of its execution
to renew at least thirteen (13) months prior to the expiration of the
original term hereof. Such renewal shall be on the same terms and
conditions (except for this option to renew, which shall be
eliminated and except for the Minimum Annual Rent which shall be
calculated as is set forth in the following paragraph) as herein
provided for the original term. In the event Lessee does not exercise
its option to renew, then the term of this Lease shall continue in
accordance with the provisions of subparagraph A hereof except for
any increase in Minimum Annual Rent as is set forth in subparagraph C
hereof and except further if Lessor has given Lessee an Expiration
Notice as provided in subparagraph A hereof.

C. Computation of
Minimum Annual Rent in the Event of Extension or Renewal

In the event of
extension of this Lease in accordance with subparagraph A hereof (or
exercise of Lessees option to renew in accordance with the terms of
subparagraph B hereof) commencing with the installment of Minimum
Annual Rent due on the first day of the Extension term (or Renewal
Term as the case may be) the Minimum Annual Rent set forth in this
Lease for the last Lease Year of the original term shall be increased
by the greater of:

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) Five Percent
(5%) per annum, compounded, from the Lease Commencement Date to the
date of termination of the term previous to the Extension Term or
Renewal Term for which the computation is made; or                                                                                                                                                                                                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (ii) The extent
that the Consumer Price Index for All Urban Consumers
(the CPI U) for the United States of America published by
the Bureau of Labor Statistics of the United States Department
of Labor (1982-84 = 100) for the last reported month at the
time of the expiration of the term of this Lease and the same month
for each succeeding year (the Adjustment Index) is higher
than the CPI U for the last reported month at the time of execution
of this Lease (the Base Index).

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HANKIN MANAGEMENT COMPANY
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
October 9, 2002/kat


The new Minimum
Annual Rent effective on and after the first day of the Extension
Term, or Renewal Term, for the balance of the Extension Term, or
Renewal Term shall be (a) the Minimum Annual Rent as set forth in
this Lease for the last Lease Year of the term plus the greater of
(b) the percentage increase computed under subparagraph 25(C)(i)
above multiplied by the Minimum Annual Rent as set forth in this
Lease for the last Lease Year of the term hereof or (c) an amount
which is equal to the product obtained by multiplying the said
Minimum Annual Rent for the last Lease Year of the term by a
fraction, the numerator of which is the difference between the
Adjustment Index and the Base Index and the denominator of which is
the Base Index.

Said Minimum Annual
Rent shall be payable in advance in equal monthly installments
commencing on the first day of the Extension Term, or Renewal Term
and on the first day of each month thereafter during said Extension
Term, or Renewal Term.

If at the time of any
adjustment of the Minimum Annual Rent, the CPI U is no longer
reported or its basic principal has been altered, an alternative
method shall be used to increase the Minimum Annual Rent to
equitably reflect any increase in the cost of living. Under no
circumstances, however, shall any new Minimum Annual Rent be less
than the Minimum Annual Rent set forth in this Lease for the last
Lease year of the original term, increased by the sum of Five Percent
(5%) per annum compounded from the Lease Commencement Date to the
later of the date of termination of the original term of the Lease,
the last previous Extension Term, or Renewal Term of the Lease.

26. Place of
Payment of Rent and Notices.

A.     (i)
All rent shall be payable without notice or demand; and

(ii)
All notices other than rent shall be given to Lessor by registered or
certified mail, return receipt requested, or a nationally recognized
overnight mail delivery service issuing return- receipts, at the
following address or at such other address as Lessor may designate by
written notice to Lessee:

For notices by United States Mail:

| |                                               
| | ----------------------------------------------
| | Mark HankinP.O. Box 26767Elkins Park, PA
19027

For notices by nationally-recognized
overnight delivery service:

| |                                                                                            
| | -------------------------------------------------------------------------------------------
| | Mark Hankinc/o Hankin Management
Company5301 Tacony StreetBuilding #1Philadelphia, PA 19137

In particular, all
notices relating to terminations, extensions and renewals of this
Lease as more fully set forth in Paragraph 25 and to repairs and
replacements as more fully set forth in Paragraph 6(B) must be sent
to Mark Hankin, personally, as authorized representative of Lessor,
by certified mail, return-receipt requested, to the address stated
hereinabove or by a nationally-recognized overnight mail service
issuing return-receipts to the address stated hereinabove.

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HANKIN MANAGEMENT COMPANY
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
October 9, 2002/kat

These notice provisions
are an essential requirement of this Lease and the Lessee agrees that
no evidence of any other notice other than certified mail, return
receipt requested addressed to Mark Hankin, personally, as authorized
representative of Lessor or by a nationally recognized overnight mail
service with a return receipt to the address stated hereinabove to
Mark Hankin, personally, as authorized representative of Lessor may
be introduced at the time of any trial herein, or arbitration. Any
notice sent to any other person or any other manner shall be deemed
null and void.

B.  All
notices shall be given to Lessee by registered or certified mail,
return receipt requested, or a nationally recognized overnight mail
delivery service, at the following address or such other address as
Lessee may designate by written notice to Lessor:

American Bank Note Holographics, Inc.
1448 County Line Road
Huntingdon Valley, PA 19006

or by hand-delivery to the Premises.

27.  Condition
of Premises at Termination.  At the expiration of the term hereof,
Lessee shall surrender the Premises to Lessor in good order and
condition, all Alterations and Improvements designated by Lessor for
removal pursuant to Paragraph 24(D) having been removed, all
Systems in good operating condition, broom clean, free of trash,
rubbish or debris (interior and exterior) and without consideration
of, or allowance for, wear and tear, but damage by insured fire or
other insured casualty alone excepted. Lessor may decline to accept
surrender of the Premises if any of the above have not been completed
to Lessors satisfaction, in which event, Paragraph 25(A),
supra., shall apply. Provided Lessee is not in default
hereunder and subject to the provisions of Paragraph 24 hereof,
all furniture and trade fixtures installed at the expense of Lessee
shall remain the property of Lessee. Provided Lessee is not in default
hereunder and subject to the provisions of Paragraph 24 hereof,
Lessee shall remove fixtures and/or equipment installed by Lessee in
the herein Premises during the term of this Lease and any renewal or
extension term. Lessee agrees to repair its cost and expense any
damage done to the Premise by reason of the removal of such fixtures
and/or equipment without any consideration of, or allowances for,
wear and tear.

28.  Vacation.  
Lessee shall not vacate or desert the Premises during the term of
this Lease or permit the same to be empty and unoccupied without the
prior written consent of Lessor, which consent shall not be
unreasonably withheld, and without Lessee complying with the
requirements set forth in Exhibit C (Vacation
Requirements). If Lessor does so consent, Lessee shall take
adequate measures to secure and monitor the Demised Premises in
addition to any other requirements or conditions reasonably imposed
by Lessor.

29.  Net
Lease.  Except as otherwise specifically provided
herein to the contrary, the parties intend this to be a
net-net-net Lease pursuant to which the rent payable
hereunder shall be absolutely net return to Lessor for the term of
this Lease, undiminished by the taxes (real estate, business
privilege, mercantile, etc.) or any of them or any part thereof or
any other carrying charges, maintenance charges, Common Expenses,
assessments, or any other charges of any kind or nature whatsoever
except any mortgage now or hereafter placed upon the Premise and
Lessor shall not be required to perform any services or furnish any
utilities of any kind or nature whatsoever. Lessor may discontinue at
any time any and all facilities furnished and services rendered by
Lessor not expressly covenanted for herein or required to be
furnished or rendered by law, it being understood that they
constitute no part of the consideration of this Lease.

30.  [Reserved]

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HANKIN MANAGEMENT COMPANY
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
October 9, 2002/kat


31. Additional
Security. Should the roof, structural, or mechanical portions of
the Premises be subjected to damage by corrosion or similar damage,
by virtue of Lessees use, abuse or misuse of the Premises,
Lessee shall be responsible to reimburse Lessor for the full direct
and indirect costs to effectuate such repairs, maintenance or
replacements. In addition, Lessor shall have the right to require
that Lessee shall post an additional security deposit with Lessor as
Lessor shall demand to cover the estimated repair, maintenance or
replacement cost thereof.

32. Effect of
Repairs on Rental. No contract entered into or that may be
subsequently entered into by Lessor with Lessee, relative to any
alterations, additions, improvements or repairs, nor the failure of
Lessor to make such alterations, additions, improvements or repairs
as required by any such contract, nor the making by Lessor or his
agents or contractors of such alterations, additions, improvements or
repairs shall in any way affect the payment of the rent or said
other charges at the time specified in this Lease, except to the
extent and in the manner herein provided.

33. Conduct of
Lessee. This Lease is granted upon the expressed condition that
Lessee and/or the occupants of the Premises herein leased shall not
conduct themselves in a manner which is contrary to any law,
ordinance or regulation or to the provisions of this Lease, and if at
any time during the term of this Lease or any extension or
continuation thereof Lessee or any occupier of the said Premises
shall have conducted itself in such manner which is improper or
objectionable, Lessee shall be taken to have broken the covenants and conditions of this lease, and Lessor
will be entitled to all of the rights and remedies granted and
reserved herein for the Lessees failure to observe all of the
covenants and conditions of this Lease.

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HANKIN MANAGEMENT COMPANY
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
October 9, 2002/kat


34. Trash
Disposal. Lessee shall provide a trash dumpster for the Premises.
Lessee shall pay bills for said trash collection within ten (10) days
of receipt of said bill from said trash hauler.

35. Meters.

A. Water
Meter. If a water meter is not in place to measure the water
consumption by the Lessee and would not be supplied by the Utility
Supplier serving the Premises, Lessor agrees to install a water meter
in the Premises herein described to measure the water consumption of
the said Premises. Said meter may be a sub-meter from the meter
installed by the Utility Supplier serving the said Premises, if there
is more than one (1) tenant in the building.

B. Electrical.
In the event that electricity is supplied to the Premises and is not
supplied directly by a public utility, then Lessor may elect to
install a meter or a sub-meter in the Premises herein described to
measure the electricity consumption of the said Premises.

C. Gas. In the
event that gas is supplied to the Premises and is not supplied
directly by a Utility Supplier, then Lessor may elect to install a
meter or sub-meter in the Premises herein described to measure the
gas consumption of the said Premises.

D. All charges and
payments due to Lessor under Paragraphs 35(A), 35(B) and 35(C)
herein shall be paid in accordance with the provisions of Paragraph 5
supra.

36. Real Estate
Brokers. The parties warrant to one another that neither party
was introduced to the other through the intervention of a real estate
broker other than Hart Corporation, whose commission shall be paid in
full by Lessor. In the event commissions are claimed by any
other real estate broker claiming to have introduced Lessee to
Lessor or claiming to be the efficient, procuring cause of this
Lease, all of said commission shall be paid by Lessee and Lessor shall
not be responsible in any event whatsoever for the payment of
commissions to real estate brokers regarding any Lease or sale of the
Premises.

37. Lessors
Signs. Lessor shall have the right to display a For
Sale sign at any time, and also, after notice from either party
of intention to determine this Lease, or any time within three (3)
months prior to the expiration of this Lease, a For Rent
sign, or both For Rent and For Sale signs;
and all said signs shall be placed upon such part of the Premises as
Lessor may elect and may contain such matter as Lessor shall require.
Prospective purchasers or tenants, authorized by Lessor may inspect
the Premises at reasonable hours at any time on reasonable advanced
notice to Lessee so as to minimize the effect of same on
Lessees use and enjoyment of the Premises.

38.
Miscellaneous.

A. Where any
provision of this Lease mandates or permits a claim or controversy
hereunder to be submitted to arbitration, such claim or controversy
shall (or may, where arbitration is not mandated) be submitted to
final and binding Arbitration in the American Arbitration Association
in Philadelphia PA, in accordance with the rules and regulations of
the American Arbitration Association, as modified herein. Judgment
upon the award rendered by the American Arbitration Association shall
be entered in any court having  jurisdiction thereof. The following
standards shall supplement the regulations of the American Arbitration
Association and shall control in the event of conflict.

| |                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------
| | (i) The aggrieved
party shall request arbitration after the dispute arises and promptly
serve notice of submission to the other party;

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HANKIN MANAGEMENT COMPANY
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
October 9, 2002/kat


| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                          
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | (a) The above
notwithstanding, the Lessee shall be required to request such
arbitration no later than thirty (30) days after the dispute arises
and failure by Lessee to make such timely request shall be deemed to
be a waiver of Lessees rights, hereunder and full award shall
be granted to Lessor;
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (ii)
Within twenty (20) days of submission, each party shall submit a
proposed award (Proposed Award) to the American
Arbitration Association, each individual item of dispute may be
submitted as a separate item of dispute for decision making purposes,
even though they may be submitted under the same arbitration hearing;                                                                                                                                                          
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (iii)
The arbitrator shall have jurisdiction, only, to enter, as an award,
the Proposed Award of one or the other party, together with all
amounts payable under Paragraph 38(a)(iv), infra., and
may not make any other award or finding;                                                                                                                                                                                                                                                   
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (iv)
All costs and expenses of the arbitration shall be paid by the
non-prevailing party and shall be added to the award. Each party
shall bear their own counsel fees, except that if the arbitration is
brought by Lessor as a result of a default by Lessee and Lessor shall
prevail in the arbitration, Lessee shall reimburse Lessor for all
expenses, including reasonable attorneys fees in the same
manner as provided in Paragraph 20(I) hereof, which shall be added to
the award.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (v) In
the event that the non-prevailing party does not make the required
payment(s) within ten (10) days of the arbitration, the prevailing
party shall have the right to confess judgment as provided in
Paragraph 20 hereof.                                                                                                                                                                                                                                                              

B. Parties
Bound. Subject to the provisions of this Lease regarding consent
by Lessor, this Lease shall be binding upon and inure to the benefit
of and be enforceable by their respective successors and assigns.

C. Waiver of
Custom. Lessor shall have the right at all times, any law, usage
or custom notwithstanding, to enforce strictly the provisions of this
Lease, and the failure of Lessor at any time or times, strictly to
enforce any provision hereof, shall not be construed as having created
a custom or waiver in any way contrary to the specific provisions of
this Lease or as having in any way or manner modified this Lease.

D. Number and
Gender. For the purpose of this Lease, the singular shall include
the plural and the plural shall include the singular and the
masculine shall include the feminine and the neuter, and vice versa,
as the context may require. The word Lessor as used
herein shall mean the owner from time to time of fee or equitable
title to the Premises and upon transfer of fee or equitable title,
the person named herein as Lessor shall have no further liability or
obligation hereunder.

E. Captions.
The captions contained herein are for the convenience of the parties
only. They do not in any way modify, amplify, alter or give full
notice of the provisions hereof.

F. Amendments.
This Lease may be changed, waived, discharged or terminated only by
an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge, or termination is
sought.

G. Partial
Invalidity. If any clause or provision of this Lease or the
application thereof to any person or in any circumstance shall by any
extent be invalid or unenforceable, the remainder of this Lease, or
the application of such clause or provision to persons or in
circumstances other than those as to which it is invalid or
unenforceable, shall not be affected thereby, and each clause and
provision of this lease shall be valid and enforceable to the fullest
extent permitted by law.



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HANKIN MANAGEMENT COMPANY
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
October 9, 2002/kat


H. Governing
Law. This Lease shall be governed by the laws of the Commonwealth
of Pennsylvania.

I. Entire
Agreement. This Lease constitutes the entire agreement between
the parties hereto and cannot be modified except in writing as an
Addendum to this Lease, which Addendum must be executed by both the
Lessor and Lessee. Except as set forth herein, there are no promises,
representations or understandings between the parties of any kind or
nature whatsoever.

Neither party is to
rely on the oral statements of any party nor, in particular, on any
oral statement or writing of any AGENT OR APPARENT PURPORTED AGENT OF
THE OTHER PARTY. NO EVIDENCE OF ORAL STATEMENT OR RELIANCE UPON ANY
SUCH ORAL STATEMENT MAY BE INTRODUCED AT THE TIME OF TRIAL AND/OR
HEARING.
SECRETARIES, RECEPTIONISTS, PARALEGALS, RENTAL AGENTS, BROKERS,
SECURITY GUARDS, DOORMEN, CONSTRUCTION PERSONNEL, ADMINISTRATIVE
ASSISTANTS AND/OR BOOKKEEPERS HAVE NO AUTHORITY UNDER ANY
CIRCUMSTANCES TO BIND ANY PARTY, EITHER ORALLY OR IN WRITING.

IT IS SPECIFICALLY
UNDERSTOOD THAT LESSORS COUNSEL DOES NOT HAVE THE AUTHORITY TO
MODIFY, AMEND OR EXTEND THE LEASE.

ALL NOTICES OF
TERMINATION SHOULD BE SENT TO MARK HANKIN, PERSONALLY, AS THE
AUTHORIZED REPRESENTATIVE OF LESSOR, BY CERTIFIED MAIL, RETURN
RECEIPT REQUESTED. IT IS ESSENTIAL THAT THIS CONDITION BE STRICTLY
ADHERED TO BY LESSEE.

The intention of the
parties to modify the Agreement shall be evidenced solely by a
written document signed by Mark Hankin, personally, as the authorized
representative of Lessor, and the designated representative of Lessee
and must contain the words intending to be legally bound.

J. Rules and
Regulations. At any time or times, and from time to time, Lessor
may make such reasonable rules and regulations as may be necessary or
desirable for the safety, care and cleanliness of the Premises and/or
Huntingdon Valley Industrial Center and of real and personal
properties contained therein and for the preservation of good order.
Such rules and regulations shall, when communicated in writing to
Lessee, form a part of this Lease.

K. Time of
the Essence. All time set forth in this Lease shall be deemed to
be of the essence, and all notices or consents required herein shall
be deemed to have been given as of the date placed in the United
States Postal Service  or a nationally recognized overnight mail
delivery service as evidenced by the date shown on certified or
registered mail receipt form, or in the case of notices for Lessee,
Lessor may in the alternative, hand deliver the notice to the
Premises.

L. Lessee agrees that
it will pay the rent and all other charges herein reserved as rent at
the times and at the place that the same are payable, without fail;
and if Lessor shall at any time or times accept said rent or rent
charges after the same shall have become delinquent, such acceptance
shall not excuse delay upon subsequent occasions, or constitute or be
construed as a waiver of any  of Lessors rights. Lessee agrees
that any charge or payment herein reserved, included, or agreed to be
paid by Lessee may be proceeded for and recovered by Lessor by legal
process in the same manner as rent due and in arrears.

M. Lessee agrees that
if, with the permission in writing of Lessor, Lessee shall vacate or
decide at any time during the term of this lease, or any renewal
thereof, to vacate the herein Premises

N. [Reserved]



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HANKIN MANAGEMENT COMPANY
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
October 9, 2002/kat


prior to the expiration of this Lease, or any
renewal hereof, Lessee will not cause or allow any other agent to
represent Lessee in any subletting or re-leasing of the Premises
other than an agent approved by the Lessor and that should Lessee do
so, or attempt to do so, the Lessor may remove any signs that may be
placed on or about the Premises by such other agent without any
liability to Lessee or to said agent, the Lessee assuming all
responsibility for such action.

O. Lessee agrees that
any and all payments due hereunder shall be due and payable by Lessee
without any deduction or setoff whatsoever, and Lessee hereby
expressly waives any right to deduct or setoff any amounts from any
such payments.

P. All utility
charges, whether billed as a common area expense or whether billed by
separate utility meter, shall be considered as Additional Rents under
this Lease.

Q. Consents and
Approvals. Except as may otherwise be provided in this Lease, any
consent or approval required pursuant to this Lease shall not be
unreasonably withheld, delayed or conditioned and shall be exercised
in good faith and delivered in writing.

39. Americans With
Disabilities Act. Within ten (10) days after receipt, Lessor and
Lessee shall advise the other party in writing and provide the other
with copies of (as applicable), any notices alleging violation of the
Americans with Disabilities Act of 1990 (ADA) relating to
any portion of the Premises, the Building or the Lot; any claims
made or threatened in writing regarding non-compliance with the ADA
and relating to any portion of the Premises, the Building or the Lot;
or any governmental or regulatory actions or investigations
instituted or threatened regarding non-compliance with the ADA and
relating to any portion of the Premises, the Building or the Lot.

40. Hazardous
Substances. As used herein, Hazardous Substance means
any substance which is toxic, ignitable, reactive or corrosive and
which is regulated by any local government, the State of Pennsylvania
or the United States Government. Hazardous Substance includes any and
all materials or substances which are defined as hazardous
wastes, or extremely hazardous wastes or
hazardous substance pursuant to state, federal or local
governmental laws or regulations. Hazardous Substance
includes, but is not restricted to asbestos, polychlorinated
biphenyls (PCBs) and petroleum. Lessee shall not cause or permit any
Hazardous Substance to be used, stored, generated or disposed of on,
about, or in the Premises by Lessee, Lessees agents, employees,
contractors or invitees, without first obtaining Lessors written consent, which may be withheld,
delayed, or conditioned at Lessors sole and absolute
discretion. If Hazardous Substances are used, stored, generated or
disposed of on or in the Premises or if the Premises become
contaminated in any manner for which Lessee is legally liable, Lessee
shall indemnify, defend and hold harmless the Lessor from any and all
claims, damages, fines, judgments, penalties, costs, liabilities or
losses (including without limitation, a decrease in value of the
Premises or the Building or the Lot, damages, because of adverse
impact on marketing of the Premises and any and all sums paid for
settlement of claims, attorneys, consultant and expert fees)
arising during or after the term hereof and arising as a result of
such contamination by Lessee. The indemnification includes, without
limitation, any and all costs
incurred, because of any investigation of the Lot or any clean-up,
removal or restoration mandated by a federal, state or local agency
or political subdivision. In addition, if Lessee causes or permits
the presence of any Hazardous Substance on the Premises and this
results in contamination, Lessee shall promptly, at its sole expense,
take any and all necessary actions to return the Premises to the
condition existing before the presence of any such Hazardous
Substance on the Premises,



32




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HANKIN MANAGEMENT COMPANY
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
October 9, 2002/kat


provided, however, that Lessee shall first obtain Lessors approval for any such
remedial action. Within ten (10) days after receipt, Lessor and Lessee shall
advise the other party in writing and provide the other party with copies of
(as applicable), any notices alleging violation of any law or regulation
relating to any Hazardous Substance upon any portion of the Premises, the
Building or the Lot; any claims made or threatened in writing regarding
non-compliance with any law or regulation involving the presence of any
Hazardous Substance or any portion of the Premises, the Building or the Lot; or
any governmental or regulatory actions or investigations instituted or
threatened regarding non-compliance with any law or regulation involving any
Hazardous Substance upon any portion of the Premises, the Building or the Lot.
If Lessor has reasonable cause to believe that the Premises is in violation of
any of the provisions of this Article 40, Lessor shall, upon prior notice to
Lessee, have the right, but no obligation, at any time that is reasonable under
the circumstances: (i) to enter upon the Premises, take samples, review
Lessees books and records for any notices related to
environmental violations,
interview Lessees employees and officers; (ii) either, cause environmental
site assessments in accordance with ASTM Standard E-1527-97 (as amended, from
time to time, (the ESAs) to be performed, or require Lessee to cause the
ESAs to be performed and provided to Lessor within a reasonable time; and
(iii) conduct such other activities as Lessor, in its sole and absolute
discretion, deems appropriate, ((i),(ii) and (iii) being referred to herein as
the Audit). Lessee shall cooperate fully in the conduct of the
Audit. Lessor
shall not unreasonably disturb the normal operation of the Premises in the
course of the Audit. Lessee shall, upon demand, pay, as Additional Rent all
costs and expenses of Lessor connected with the Audit if it discloses the need
for any remedial work. Where materials generated by Lessee are disposed of off
of the Premises, Lessee agrees that Lessor is not the owner of the materials,
and indemnifies and holds Lessor harmless for any costs incurred in defending
and paying for any action where it is alleged that Lessor is the owner of the
materials.

41. Bankruptcy or Insolvency.

A. If a petition is filed by or an order for relief is entered against Lessee
under Chapter 7 of the Bankruptcy Code and the trustee of Lessee elects to
assume this Lease for the purpose of assigning it, the election or assignment,
or both, may be made only if all of the terms and conditions of Paragraphs
41(B) and 41(D) of this Lease are satisfied. Lessees rights to be compensated
for damages in the bankruptcy proceeding, however, shall survive.

B. If Lessee files a petition for reorganization under Chapter 11 or 13 of the
Bankruptcy Code or a proceeding that is filed by or against Lessee under any
other chapter of the Bankruptcy Code is converted to a Chapter 11 or 13
proceeding and Lessees trustee or Lessee, as a debtor-in-possession, fails to
assume this Lease within sixty (60) days of filing of the petition or the
conversion, the trustee or the debtor-in-possession will be deemed to have
rejected this Lease. The election to assume this Lease must be given by notice
hereunder and, in Lessors business judgment, all of the following conditions,
which Lessor and Lessee acknowledge to be commercially reasonably, must have
been satisfied:

| |     |                                                                                                                                                                                                                                                                                                     |                                                                                                                       
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------
| | (a) | The trustee or the debtor-in-possession has cured or has provided to the
Lessor adequate assurance, as defined in this Paragraph, that:                                                                                                                                                            
|
| |     | (i)                                                                                                                                                                                                                                                                                                 | The trustee will cure all monetary defaults under this Lease within ten
(10) days from the date of the assumption; and
|
| |     | (ii)                                                                                                                                                                                                                                                                                                | The trustee will cure all non-monetary defaults under this Lease within
thirty (30) days from date of assumption.     
|
| | (b) | The trustee or the debtor-in-possession has compensated Lessor, or has
provided to Lessor adequate assurance as defined in this Paragraph, that
within ten (10) days from the date of the assumption, Lessor will be
compensated for any pecuniary loss it incurred arising from the default of the
|



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HANKIN MANAGEMENT COMPANY
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
October 9, 2002/kat


|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | Lessee, the trustee or the debtor-in-possession as recited in Lessors written
statement of pecuniary loss sent to the trustee or the debtor-in-possession by
notice hereunder.                                                                                                           
|  
|   | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | The trustee or the debtor-in-possession has provided Lessor with adequate
assurance of the future performance of each of Lessees obligation under the
Lease; provided, however, that:                                                                                                    
|  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | (i)                                                                                                                                                                                                                                                                                        | The trustee or debtor-in-possession will also deposit with Lessor as
security for the timely payment of rent, an amount equal to three months
Minimum Annual Rent and Additional Rent accruing under this Lease on a fully
gross basis;                                                                                                                                                                                                                 
|  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | (ii)                                                                                                                                                                                                                                                                                       | The obligations imposed upon the trustee or the debtor-in-possession will
continue for Lessee after the completion of bankruptcy proceedings.                                                                                                                                                                                                                                                                                                           
|  
|   | (d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Lessor has determined that the assumption of the Lease will not breach any
provision in any other lease, mortgage, refinancing agreement or other
agreement by which Lessor is bound relating to the Premises.                                                                            
|  
|   | (e)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | For purposes of this Paragraph,
adequate assurance means that:                                                                                                                                                                                                                          
|  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | (i)                                                                                                                                                                                                                                                                                        | Lessor will determine that the trustee or the debtor-in-possession has,
will continue to have, sufficient unencumbered assets after payment of all
secured obligations and administrative expenses to assure Lessor that the
trustee or debtor-in-possession will have sufficient funds to fulfill Lessees
obligations under this Lease.                                                                                                               
|  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | (ii)                                                                                                                                                                                                                                                                                       | An order will have been entered segregating sufficient cash payable to
Lessor and/or a valid and perfected first lien in security interest will have
been granted in property of Lessee, trustee or debtor-in-possession
that is acceptable for value in kind to Lessor to secure to Lessor
the obligation of the trustee or debtor-in-posession to cure the
monetary or non-monetary defaults under this Lease within the time periods set
forth above.
|  
|C. | In the event that this Lease is assumed by a trustee appointed to Lessee or
by Lessee, as debtor-in-possession, under the provisions of Paragraph 41(B) of
this Lease, and, thereafter, Lessee is either adjudicated bankrupt or files a
subsequent petition for arrangement under Chapter 11 of the Bankruptcy Code,
then Lessor may terminate, at its option, this Lease and all of Lessees rights
under it by giving notice of Lessors election to terminate.                                                                                   
|  
|D. | If the trustee or the debtor-in-possession has assumed the Lease, under the
terms of subparagraphs (A) or (B) hereof, to assign or to elect to assign
Lessees interest under this Lease of the estate created by that interest or
any other person, that interest or estate may be assigned only if Lessor
acknowledges in writing that the intended assignee has provided adequate
assurance, as defined in this subparagraph (D), of future performance of all of
the terms, covenants and conditions of this Lease to be performed by the
Lessee.
|  
|   | For the purpose of this subparagraph
(D), adequate assurance of future
performance means that the Lessor has ascertained that each of the following
conditions have been satisfied:                                                                                                                                                                                                                                                                                                                                                                
|  
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | The assignee has submitted a current financial statement, audited by a
certified public accountant, that shows a net worth and working capital in
amounts determined by Lessor to be sufficient to assure the future performance
by the assignee of Lessees obligations under this Lease;
|  



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HANKIN MANAGEMENT COMPANY
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
October 9, 2002/kat


| |                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (b) If requested
by Lessor, the assignee will obtain guaranties in form and substance
satisfactory to Lessor from one or more persons who satisfy
Lessors standards of creditworthiness;                             
| |                                                                                                                                                                                                                       
| | (c) Lessor has
obtained all consents or waivers from any third party required under
any lease, mortgage, financing arrangement, or other agreement by
which Lessor is bound to enable Lessor to permit the assignment.

E. When, pursuant to
the Bankruptcy Code, the trustee or the debtor-in-possession is
obligated to pay reasonable use and occupancy charges for the use of all
or part of the Premises, the charges will not be less than the
minimum monthly rent and all Additional Rent accruing hereunder on a
fully gross basis.

F. Neither
Lessees interest in the Lease or any estate of Lessee created
in the Lease will pass to any trustee, receiver, assignee for the
benefit of creditors, or any other person or entity or otherwise by
operation of law under the laws of any state having jurisdiction
over the person or property of Lessee (State Law) unless
Lessor consents in writing to this transfer. Lessors acceptance
of rent or any other payments from any trustee, assignee, receiver,
person or entity will not be deemed to have been waived, or waive,
the need to obtain Lessors consent or Lessors right to
terminate this Lease for any transfer of Lessees interest under
this Lease without this consent.

G. Lessor may
terminate, at its option, by giving Lessee written notice of this
election, this Lease and all of Lessees rights under this Lease
if any of the following events occur:

| |                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) Lessees
estate created by this Lease is taken in execution or by other
process of law;                                                                                                                                    
| |                                                                                                                                                                                                                                
| | (b) Lessee or any
guarantor of Lessees obligations under this Lease
(Guarantor) is adjudicated insolvent pursuant to the
provisions of any present or future insolvency law under the laws of
any state having jurisdiction;
| |                                                                                                                                                                                                                                
| | (c) Any
proceedings or filings by or against that Guarantor under the
Bankruptcy Code or any similar provisions of any future federal
bankruptcy laws;                                                                         
| |                                                                                                                                                                                                                                
| | (d) A receiver or
trustee of the property of Lessee or the Guarantor is appointed under
State Law by reason of Lessees or Guarantors insolvency or
inability to pay its debts as they become due or otherwise; or            
| |                                                                                                                                                                                                                                
| | (e) Any assignment
for the benefit of creditors is made of Lessees or
Guarantors property under State Law.                                                                                                                   

42.
EFFECTIVENESS: THE FURNISHING OF THE FORM OF THIS LEASE, SHALL
NOT CONSTITUTE AN OFFER OF ANY KIND OR A RESERVATION OF ANY OPTION
FOR THE LEASED SPACE; THIS LEASE SHALL BECOME EFFECTIVE UPON AND ONLY
UPON ITS  EXECUTION BY AND DELIVERY TO EACH PARTY HERETO.



35




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HANKIN MANAGEMENT COMPANY
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
October 9, 2002/kat


IN WITNESS WHEREOF,
AND INTENDING TO BE LEGALLY BOUND, we have hereunto set our hands and
seal the date first above written.

|                |  |                                                                                                                            |                    |  |       |         
|--------------- |  | -------------------------------------------------------------------------------------------------------------------------- | ------------------ |  | ----- | --------
|               
|                |  | By:                                                                                                                        | -s- Mark Hankin    |  | Date: | 10/18/02
|WITNESS         |  |                                                                                                                            | Mark Hankin        |  |       |         
|               
|                |  | HANMAR ASSOCIATES, MLP, A
PENNSYLVANIALIMITED PARTNERSHIP, BY INDUSTRIAL REALESTATE MANAGEMENT,
ITS GENERAL PARTNER-LESSOR
|               
|               
|                |  | By:                                                                                                                        | -s- Mark Hankin    |  | Date: | 10/18/02
|                |  |                                                                                                                            |                    |  |       |         
|                |  | Its:                                                                                                                       | Pres               |  |       |         
|                |  |                                                                                                                            |                    |  |       |         
|               
|                |  | AMERICAN BANK NOTE HOLOGRAPHICS,
INC. LESSEE                                                                              
|               
|               
|-s- ILLEGIBLE   |  | By:                                                                                                                        | -s- Kenneth Traub  |  | Date: | 10/16/02
|WITNESS         |  |                                                                                                                            | President          |  |       |         
|                |  | Kenneth Traub                                                                                                              |                    |  |      
|                |  | Print Name                                                                                                                 |                    |  |      
|               
|               
|Corporate Seal: |  | Attest:                                                                                                                    | -s- Alan Goldstein |  | Date: | 10/16/02
|                |  |                                                                                                                            | Secretary          |  |       |         
|                |  | -s- Alan Goldstein                                                                                                         |                    |  |      
|                |  | Print Name                                                                                                                 |                    |  |      



36




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HANKIN MANAGEMENT COMPANY
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
October 9, 2002/kat

EXHIBIT A
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
1448 COUNTY LINE ROAD
HUNTINGDON VALLEY, PA

Lessor and Lessee mutually agree that the Demised Premises are
accepted in its existing "as-is, where-is" condition, except that the
Lessor shall:



|   |  |                                                                                                                           
|-- |  | --------------------------------------------------------------------------------------------------------------------------
|1. |  | Re-paint the exterior block wall of the building;                                                                         
|  
|2. |  | Repair or replace at Lessor's option, the exterior fire door on
the north side of the building;                           
|  
|3. |  | Service the other three (3) metal fire doors in the exterior
masonry walls of the building;                               
|  
|4. |  | Repair any existing damage to or replace at Lessor's option, the
mansard roof on the southeast corner of the building; and
|  
|5. |  | Clean the ceramic tile walls and floors and the plumbing fixtures in the
existing bathrooms.                              
|  
|  
|  
|  
|  
|  
|  
|  
|  

NOTE: The above improvements will not be completed as of the Lease
Commencement Date.

37



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##### 





[floorplan]









Exhibit B



















38



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##### 



Exhibit C

VACATION REQUIREMENTS

Work to be performed by Lessee in the event that Lessee vacates the
Demised Premises during the term of the Lease:



|    |  |                                                                                                                                                                                                                                                                                                                                                           
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.  |  | Lessee shall notify Lessor in writing, certified mail, return
receipt requested, of its intention to vacate the Premises in advance
of such vacation;                                                                                                                                                                                                     
|   
|2.  |  | Such vacation shall not occur until ten (10) days after receipt of such notification;                                                                                                                                                                                                                                                                     
|   
|3.  |  | Lessee shall ensure that the heating system is activated and that
the thermostats are set at no less than 55 Degrees and continually
inspect the facility to ensure the maintenance of such temperature;                                                                                                                                                  
|   
|4.  |  | Lessee shall provide a temperature monitor, which is to be monitored by a
central call station to ensure that the building maintains a minimum
55 Degree temperature. A central call monitoring company shall be
required to contact such employees as designated by Lessee and Mark
Hankin at 215-537-8400, ext. 134 (office) or 215-651-0855 (cellular);
|   
|5.  |  | Lessee shall ensure that the gas and electric bills are paid and
the heat and electric remain activated at all times;                                                                                                                                                                                                                                     
|   
|6.  |  | Lessee shall drain and winterize the domestic water lines and
winterize the sinks and toilets by installing antifreeze in the
toilet bowls, tank and the drain lines of the sinks;                                                                                                                                                                        
|   
|7.  |  | Lessee shall continually inspect to ensure that the exterior
lights are operating;                                                                                                                                                                                                                                                                        
|   
|8.  |  | Lessee shall insure that the sprinkler system is monitored for
temperature and activation;                                                                                                                                                                                                                                                                
|   
|9.  |  | Lessee shall install a centrally monitored burglar system which
shall be continually monitored in the same fashion as the temperature
monitors to ensure against break-ins and vandalism;                                                                                                                                                                 
|   
|10. |  | Lessee shall continually inspect the interior and exterior of
the building to ensure against vandalism damage, broken water lines,
etc.                                                                                                                                                                                                                   
|   
|11. |  | Lessee shall comply with any requirements of any current or
future insurance carrier regarding the maintenance and monitoring of
the Premises.