##### 



| | Exhibit 10.22CONFIDENTIAL TREATMENT
REQUESTED PURSUANT TO
RULE 24b-2 OF THE SECURITIES
EXCHANGE ACT OF 1934
| | -----------------------------------------------------------------------------------------------------------



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Certain portions of this exhibit have been omitted pursuant to a
request for confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934. The omitted materials have been filed
separately with the Securities and Exchange Commission.


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Hologram Agreement



This agreement is dated as of this 28 day of February 2003, (the
Agreement) by and between MasterCard International Incorporated, a
Delaware corporation with offices at 2000 Purchase Street, Purchase,
New York 10577-2509 (MasterCard), and American Bank Note
Holographics, Inc., a Delaware corporation with offices at 399
Executive Blvd., Elmsford, NY 10523 (ABNH).




The parties to this Agreement, in consideration of the
mutual promises,
convenants, and conditions set forth herein, agree as follows:




|    |  |                                             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- |  | ------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.0 |  | Manufacture of Holograms; Term of Agreement
|   
|    |  | 1.1                                         |  | For so long as this Agreement is in effect, MasterCard shall
have the right from time to time and on a non-exclusive basis, as
elsewhere described herein, to order the manufacture of holograms by
ABNH and to purchase such manufactured holograms from ABNH in
accordance with the terms of this Agreement.                                                                                                                                                                                                                                                                                                            
|   
|    |  | 1.2                                         |  | For so long as this Agreement is in effect, ABNH agrees to
accept all orders by MasterCard for the manufacture of holograms and
to manufacture and sell such manufactured holograms to
MasterCard in accordance with the terms of this Agreement.                                                                                                                                                                                                                                                                                                                                                                         
|   
|    |  | 1.3                                         |  | This Agreement shall be effective as of the date first set forth
above and shall remain in effect for a period of five years from such
date, unless terminated earlier or extended as provided herein (the
Term). The Term of this Agreement shall be automatically extended
for successive periods of two (2) years unless (i) not less than six
(6) months prior to the end of the then applicable termination date
of the Agreement, either party notifies the other party in writing
that the Agreement shall terminate at the end of such period; or (ii)
the Agreement is terminated as otherwise provided herein.
|   
|    |  | 1.4                                         |  | MasterCard shall have no obligation to order any minimum or
particular quantity of holograms from ABNH. MasterCard shall purchase
from ABNH no less than 80% of MasterCards annual hologram volume
requirements. MasterCard may, at its discretion, utilize a second
supplier to produce up to 20% of MasterCards annual hologram volume
(the Second Supplier). Pursuant to the terms of Section 20 hereof,
in certain specific circumstances, MasterCard has the right to
appoint the Second Supplier as its contingent supplier and to procure
up to 100% of its                                                    

1



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|    |  |                             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- |  | --------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |  |                             |  | hologram requirements from such contingent supplier. MasterCard and
ABNH hereby agree that the Second Supplier and such contingent
supplier shall be Crane & Co., Inc. of Dalton, MA (Crane).
MasterCard and ABNH further agree that (i) ABNH shall use its good
faith efforts to assist Crane in fulfilling its function as Second
Supplier, (ii) the Second Supplier shall supply all finished
holograms it produces on behalf of MasterCard to ABNH and will bill
ABNH for those holograms or services, and (iii) ABNH will in turn
sell such holograms to MasterCard and handle all hologram shipping,
logistics, quality control and fulfillment to MasterCards designated
card manufacturers, and will bill MasterCard for all of the holograms
in accordance with the terms of this Agreement.
|   
|    |  | 1.5                         |  | Subject to the terms of this Agreement and in order to permit
the Second Supplier and the contingent supplier to comply with the
provisions of this Agreement, ABNH hereby grants to MasterCard a
non-exclusive, royalty-free license under ABNHs patents, licenses,
and other proprietary rights covering the production of the
MasterCard holograms to make, use and sell such MasterCard holograms
throughout the world. Such license shall include the right to
sublicense third parties only to produce and sell MasterCard to
MasterCard holograms. The terms of this license and any sublicense
shall not extend beyond the production of the MasterCard holograms
and only to production of such holograms for MasterCards account.                                                           
|   
|2.0 |  | Specifications of Holograms
|   
|    |  | 2.1                         |  | ABNH shall manufacture holograms for MasterCard in accordance
with such specifications as may be agreed upon by the parties from
time to time. As of the date of this Agreement, sundry hologram
specifications, (including the MICRO GLOBES hologram (silver foil
and gold foil specifications)) have been agreed upon by the parties.
All such agreed-upon specifications are set forth in Exhibit A hereto
and incorporated herein.                                                                                                                                                                                                                                                                                                                                                                
|   
|    |  | 2.2                         |  | Any change in a hologram specification set forth in Exhibit A
and any new hologram specification shall be agreed to in writing by
the parties hereto, which writing shall be dated and signed by
representatives of each party and shall be incorporated by reference
into this Agreement. Hologram specifications may be applicable to any
payment device that bears a trademark or service mark of MasterCard,
including, by way of example and not limitation, credit cards, debit
cards, ATM cards and chip cards.                                                                                                                                                                                                                                                                                  
|   
|    |  | 2.3                         |  | If a new or changed hologram specification is for a new
origination (i.e., a different image to appear in the hologram but no
additional features in the hologram) which, in all other material
respects complies with all specifications already agreed upon by the
parties hereto, then such new or changed hologram specification shall
be deemed a modified hologram for the purposes of this Agreement
and the price per hologram shall be unaffected by such new or changed
specification.                                                                                                                                                                                                                                                                                                      
|   
|    |  | 2.4                         |  | If a new or changed hologram specification is not for a new
origination (i.e., anything other than a different image to appear in
the hologram),                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

2



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|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | 
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 
|    |  | then such a new or changed
hologram specification shall be deemed a New Hologram for
the purposes of this Agreement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|2.5 |  | ABNH shall inform MasterCard
promptly of any new processes, techniques, methods, alternatives or
devices for the production, application or use of holograms that have
applicability to payment cards that it develops or obtains the right
to employ (unless, prior to the effective date hereof, and only for
so long as such a restriction is in effect, ABNH is restricted from
such disclosure to MasterCard as a result of any third party
agreement which was entered in connection with third party
development efforts, efforts undertaken by such third party directly
or by ABNH under contract with ABNH, or research and development
efforts funded by a third party), and shall offer to make any such
new processes, techniques, methods, alternatives or devices permitted
to be disclosed available to MasterCard [*].
|   
|2.6 |  | Should MasterCard consider a
New Hologram specification for a hologram to be manufactured by ABNH,
MasterCard shall provide to ABNH such information with respect
thereto as MasterCard then has available and, within a reasonable
time thereafter, ABNH shall advise MasterCard of the proposed price
or change in price for the sale of such a New Hologram.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|2.7 |  | In the event MasterCard
requests a New Hologram, and such New
Hologram [*]. All work
in progress at the time of such agreement shall be completed in
accordance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        



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|* |  | Confidential
|- |  | ------------

3



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|    |  |                   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- |  | ----------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |  |                   |  | with the original specifications. The parties shall coordinate their
efforts to minimize inventory under discontinued specifications at
the time any specifications are changed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|    |  | 2.8               |  | Subject to Section 2.2 above, during the Term, MasterCard agrees
to offer ABNH an opportunity to produce all hologram design changes,
modified holograms and new holograms MasterCard desires to use for
credit, debit, ATM, bank and smart cards and other payment products.
All such production and the prices and conditions of sale thereof
shall be subject to this Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|    |  | 2.9               |  | MasterCard agrees to provide ABNH not less than nine (9) months
advance written notification of the effectiveness of any decision (i)
to discontinue or abandon any hologram then manufactured by ABNH; and
(ii) to require MasterCard members to use on payment products any new
or changed hologram.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|3.0 |  | Orders           
|   
|    |  | 3.1               |  | MasterCard may place orders for holograms during the Term of this
Agreement in amounts of not less than  [*] holograms per
order. ABNH agrees to complete manufacture of any such order at a
rate of delivery to be mutually agreed upon at the time of the order,
but in any event, upon MasterCards request, to deliver holograms at
a rate of not less than  [*] holograms per month, beginning
in the month after the order is placed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|4.0 |  | Plates and Images
|   
|    |  | 4.1               |  | ABNH has previously provided
MasterCard one (1) Nickel Master
Plate of the MICROGLOBES hologram ([*]) and MasterCard
agrees to be responsible for the security and storage of this ABNH
master plate. ABNH acknowledges and agrees that, at all times,
MasterCard shall be the exclusive owner of any plate bearing a
MasterCard hologram design and ABNH agrees not to use or permit use
of any such plate other than at the express written direction of
MasterCard and to immediately cease using and not permit use of any
such plate if so notified by MasterCard. ABNH shall, at its expense,
manufacture and use a new master plate no less frequently than each
twelve (12) months and shall promptly provide MasterCard with
two (2)
such master plates, one each for [*], (manufactured at Huntington
Valley, PA) and [*], (manufactured at Dalton, MA). Upon expiration or
termination of this Agreement, ABNH shall immediately deliver to
MasterCard any and all master plates and any other plates or shims
bearing any MasterCard hologram design, and MasterCard shall have
the right to use or have used any such plate(s) (subject to ABNHs
retention solely for the purposes of promptly concluding any
work-in-process ordered by MasterCard) for any purpose



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|* |  | Confidential
|- |  | ------------

4



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|    |  |                        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- |  | ---------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |  |                        |  | whatsoever without thereby incurring or creating any obligation to
pay for ABNH or any third party any license, royalty, use or other
fee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|    |  | 4.2                    |  | MasterCard hereby grants to ABNH a non-exclusive, worldwide,
royalty-free license to utilize the MasterCard name and logo
incorporated into the MICROGLOBES hologram and any additional
MasterCard approved designs or specifications contemplated herein,
including any MasterCard copyrights, trademarks, logos and the like
solely to produce the MICROGLOBES hologram and any additional hologram
designs or specifications approved by MasterCard pursuant to
Section 2 hereof for the sole purpose of ABNHs performance of this
Agreement. MasterCard shall indemnify ABNH and hold it harmless
against any and all damages, losses, claims or demands, including
reasonable legal fees, suffered by or made upon ABNH resulting from
any alleged infringement of any such copyright, trademark, logo and
the like incorporated into the MICROGLOBES hologram and other
MasterCard approved holograms.
|   
|5.0 |  | Prices for Manufacture
|   
|    |  | 5.1                    |  | During the Term of this Agreement, ABNH shall charge MasterCard
the price for holograms set forth below (silver and gold foil).
Effective the date first set forth above, ABNH shall charge MasterCard
and MasterCard shall pay to ABNH US$[*] per hologram, or US$[*] per
standard roll of holograms, with additional price reductions effective
for new orders as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   

| |                 |  |           |  |          |  |  | 
| | --------------- |  | --------- |  | -------- |  |  | 
| | Date            |  | Per Image |  | Per Reel | 
| |                 |  |           |  |         
| | 2002            |  | $[ * ]    |  | $[ * ]  
| | January 1, 2003 |  | $[ * ]    |  | $[ * ]  
| | January 1, 2004 |  | $[ * ]    |  | $[ * ]  
| | January 1, 2006 |  | $[ * ]    |  | $[ * ]  

|    |  |                                    |  |                                                                                                                                                                                                                                                                                      
|--- |  | ---------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |  | 5.2                                |  | Any price paid for holograms by MasterCard to ABNH pursuant to
this Agreement includes all license fees, royalties and other fees,
including without limitation, under any ABNH patents covering such
holograms.                                                                     
|   
|    |  | 5.3                                |  | MasterCard and ABNH agree to discuss in good faith any separate
one-time or special charges that may result from requests to explore
design changes, modified and new hologram specifications in addition
to those approved as of the date of this Agreement (85/15 and
MICROGLOBES).
|   
|6.0 |  | Payment for Manufactured Holograms
|   
|    |  | 6.1                                |  | Any order of holograms by MasterCard to ABNH shall be
manufactured and stored by ABNH and ABNH shall not invoice
MasterCard for such                                                                                                                                                 



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|* |  | Confidential
|- |  | ------------

5



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|    |  |                                       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- |  | ------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |  | 6.2                                   |  | order until the production of the entire order is satisfactorily completed.
Payment by MasterCard to ABNH shall be due no later than
forty-five (45)                                                                                                                                                                                                                                                                                                                                              
|   
|    |  | 6.3                                   |  | days from the date on which MasterCard
receives ABNHs invoice. Each ABNH
invoice to MasterCard pursuant to this Agreement shall be payable                                                                                                                                                                                                                                                                                                                                                       
|   
|    |  | 6.4                                   |  | only if accompanied by documentation sufficient to enable MasterCard to
understand, substantiate and reconcile any charges reflected thereon.                                                                                                                                                                                                                                                                                                                                                     
|   
|7.0 |  | Prices, Storage and Delivery; Returns
|   
|    |  | 7.1                                   |  | During the Term of this Agreement, ABNH shall store all holograms purchased
under this Agreement free of charge to MasterCard. ABNH solely shall be
responsible to package and ship holograms in accordance with such instructions
as MasterCard may provide from time to time. Storage of holograms by ABNH shall
be in accordance with the security control procedures set forth as
Exhibit B
(Hologram Security Procedures) hereto, which Exhibit B is attached hereto and
incorporated herein.
|   
|    |  | 7.2                                   |  | ABNH shall pay or reimburse any cost related to the return to ABNH of
holograms deemed by MasterCard not to be in compliance with the specifications
therefore. Any such return shall be in accordance with Section 11.3 of this
Agreement. The foregoing notwithstanding, ABNH shall have no obligation to pay
any shipping charges in connection with holograms that are returned, but which
are in compliance with the specifications, as provided in
Section 11.0, below.                     
|   
|8.0 |  | Insurance                            
|   
|    |  | 8.1                                   |  | During the Term of this Agreement, ABNH shall maintain in force an
insurance policy or policies with respect to the risks and for the coverage
amounts set forth below, each naming MasterCard as an additional insured or
loss payee (except MasterCard need not be named additional insured or
loss payee under ABHNs fidelity insurance policy or policies), and ABNH shall
promptly, upon execution of this Agreement and annually thereafter, provide to
MasterCard evidence thereof:       
|   

| |                     |  |        |  |  |  | 
| | ------------------- |  | ------ |  |  |  | 
| | Risk                |  | Amount | 
| |                     |  |        | 
| | Employee Dishonesty |  | $[*]   | 
| | Robbery             |  | $[*]   | 
| | Burglary            |  | $[*]   | 
| | Theft               |  | $[*]   | 
| | Disappearance       |  | $[*]   | 

| |  |  |  |                                                                                                                                                                                                                                                                                                                                                   
| |  |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |  |  | All of the foregoing insurance may be subject to a deductible amount, which
deductible amount shall not exceed $[*] per occurrence, and ABNH shall
remain liable for such deductible amount. In addition, holograms will be
insured by ABNH for replacement value against fire, flood, or other destruction
or damage. All risks in excess of such



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|* |  | Confidential
|- |  | ------------

6



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|     |  |                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|---- |  | ----------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |  |                         |  | insurance coverage, howsoever arising, shall be for the account of MasterCard
of the claimant. ABNH shall give MasterCard immediate notice of cancellation of
any of said insurance policies and notice of any alteration of said insurance
policies which is materially adverse to MasterCard; and any such cancellation
or materially adverse alteration shall entitle MasterCard to terminate this
Agreement for reason of breach thereof by ABNH pursuant to
Section 14(c) hereof.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    
|     |  | 8.2                     |  | In the event that such insurance becomes unavailable to ABNH, ABNH shall
use its best efforts to provide MasterCard with such alternative risk
protection as MasterCard shall reasonably request, taking into account the cost
of the insurance that provided the coverage called for herein while it was
available; provided, the foregoing shall not affect MasterCards absolute right
to terminate this Agreement due to ABNHs failure or inability to maintain
required insurance.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    
|     |  | 8.3                     |  | ABNH shall notify MasterCard immediately in writing of any loss or
occurrence arising out of or in any way in connection with performance of this
Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    
|9.0  |  | Limitation of Liability
|    
|     |  |                         |  | Unless and except to the extent covered by
the insurance described in Section 8.0 hereof, neither party shall be liable to the other for indirect, special,
consequential or punitive damages, including, without limitation, for loss of
business or loss of business opportunity or for any damage other than direct
and ordinary damage. Except for any liability arising pursuant to
Section 13.0
hereof, ABNHs liability to MasterCard for any claim arising in connection with
this agreement shall be limited to any amount paid to ABNH for lost, damaged or
rejected holograms. ABNH shall have no liability for any losses or damages
incurred by MasterCard after ABNH has properly shipped, pursuant to reasonable
instructions from MasterCard, holograms called for in this Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    
|10.0 |  | Force Majeure          
|    
|     |  |                         |  | In the event a party is unable to fulfill any of its obligations under this
Agreement as a result of causes or conditions beyond its reasonable control,
such party shall give prompt notice thereof to the other party and such
obligations(s) shall be suspended during the continuance of such causes or
conditions. Causes or conditions beyond a partys control shall include
(whether in its own facilities or in any other facilities affecting production
and delivery of holograms) fires, storms, earthquakes, or any other natural
disaster; civil wars, riots, or civil commotions; government priorities or
allocations or controls; lockouts, strikes, or other work stoppages;
interference or restraint of public authority (whether lawful or not);
explosion or accident; epidemics or quarantine restrictions; or any other cause
which it cannot provide against by the exercise of reasonable diligence.
Notwithstanding the foregoing, if ABNH is unable to produce any of the
holograms which have been ordered by MasterCard by reason of any of the causes
listed above, upon the request of MasterCard, ABNH shall make all reasonable
efforts to produce such holograms at one of ABNHs other facilities.

7



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|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |                          |  |     
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------ |  | ----
|11.0 |  | Quality and Security Procedures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    
|11.1 |  | Production and quality control
procedures shall be as set forth in Exhibit C
(Production and Quality Control Procedures), which Exhibit C is attached hereto
and incorporated herein.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    
|11.2 |  | Hologram Specifications shall
be as set forth in Exhibit A (MICROGLOBES
Hologram Specifications), and in Exhibit D (Foil Quality Specifications), which
Exhibit D is attached hereto and incorporated herein. Subject to ABNHs receipt
of the written prior approval of MasterCard, which approval shall not be
unreasonably withheld, ABNH may change materials or suppliers of materials or
services used to manufacture MasterCard holograms; provided, ABNH at all times
during the Term shall remain responsible for compliance with this Agreement and
Exhibits A, B, C and D hereto.                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    
|11.3 |  | ABNH shall accept the return, and reimburse MasterCard for the full price
plus prorated original and return shipping costs of reels of holograms that are
defective; provided that ABNH shall have no obligation to accept or reimburse
MasterCard for any defective reels of holograms that are not returned within
[*] from the date the recipient receives the holograms. A reel of holograms
shall be deemed defective if more than [*] of all holograms on the reels returned to ABNH do not conform to any
of the production and quality control standards referenced in Section 11.2
above, or are unusable for any reason that is the fault of ABNH, for example,
damage due to defective packaging or handling. ABNH shall review, inspect and
record all hologram images returned due to alleged nonconformance with the
hologram specifications and ABNH promptly will complete a quality assurance
report and provide a copy of that report to MasterCard no later than thirty
(30) days after the end of each calendar quarter.
|    
|11.4 |  | Security procedures shall be in accordance with the provisions of Exhibit
B (Hologram Security Procedures) hereto.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    
|11.5 |  | ABNH grants to MasterCard the right to have MasterCards designated
representative inspect ABNHs plant(s), at reasonable intervals during regular
business hours and with prior notice to ABNH, to verify the adequacy of
security procedures and production facilities throughout the process or
production, storage and shipment of holograms.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    
|11.6 |  | Audits  ABNH shall conduct each of the types of audits of holograms
described below and promptly thereafter submit audit reports to MasterCard
after each audit:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    
|     |  | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | ABNHs internal auditors
|    
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  | (1)                      |  | [*].
|    
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  | (2)                      |  | [*].
|    
|     |  | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | External auditors - [*].



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|* |  | Confidential
|- |  | ------------



8




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|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |                                                                                                                                                                      
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |  | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | MasterCard or its designee shall have the
right to conduct, [*].                                                                                                     
|    
|12.0 |  | Confidentiality                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    
|12.1 |  | Each party hereto shall maintain in confidence all confidential and
proprietary information disclosed to it by the other party hereunder or under
previous agreements between them for the production of holograms and shall
refrain from disclosing, using, practicing, or exploiting such confidential
information for its own benefit or for the benefit of any third party.
Confidential information shall include, but not be limited to, information
included in this Agreement pertaining to ABNHs price for holograms and
information contained in Section 14.0 hereof, the Exhibits hereto, any
technical information regarding the means of manufacture of holograms and their
replication, and any information of any nature which a party shall designate in
writing as confidential. Confidential information of MasterCard shall include,
but not be limited to, any list of MasterCard card vendors or members,
quantities of holograms ordered by MasterCard or by individual card vendors,
MasterCards By-laws and Rules, MasterCards manuals and guides and any
information of any nature which MasterCard shall designate in writing as
confidential.
|    
|12.2 |  | The obligations contained in Section 12.1 hereof shall not apply to any
information disclosed or acquired which:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    
|     |  | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | Is known to the recipient thereof prior to its disclosure hereunder; or                                                                                              
|    
|     |  | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | Is subsequently received by such recipient from a third party that is under
no obligation to refrain from disclosing the same; or                                    
|    
|     |  | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | Is, or through no fault of ABNH or MasterCard, as applicable, becomes
generally available to the public                                                              
|    
|     |  | (d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | Is required to be disclosed by law or applicable governmental regulation
including without limitation the regulations of the U.S. Securities and
Exchange Commission.
|    
|13.0 |  | Indemnification                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    
|     |  | ABNH warrants and represents that any hologram ABNH manufactures for MasterCard
shall not infringe any patent rights or other property rights of any third party, except such
property rights as may pertain to any MasterCard logo or design and any artwork
or other materials provided ABNH by or on behalf of MasterCard and ABNH shall
defend MasterCard, indemnify MasterCard and hold MasterCard harmless against
any and all damages, losses, claims or demands, including reasonable legal
fees, alleged against, suffered by or made upon MasterCard resulting from or
relating to any alleged infringement of any such patent rights or other
property rights except such property rights as may pertain to any MasterCard
logo or design and any artwork or other materials provided ABNH by or on behalf
of MasterCard.                                                                                                                                                                                                                                                                                                                                       



---

|* |  | Confidential
|- |  | ------------

9



---



##### 



|     |  |                                                                                                                                                                                                                                                                                                                                                                            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|14.0 |  | Termination. This Agreement may be terminated at the election of
a party:                                                                                                                                                                                                                                                                                                 
|    
|     |  | a.                                                                                                                                                                                                                                                                                                                                                                         |  | immediately in the event of a voluntary bankruptcy, or appointing
of a receiver for, or petition or application of such by the other
party, insolvency of a party, assignment for the benefit of creditors
by a party, or in the event that a substantial portion of the
property of a party is or becomes subject to levy, seizure,
assignment or sale for or by a creditor or governmental agency;                                                                                                     
|    
|     |  | b.                                                                                                                                                                                                                                                                                                                                                                         |  | immediately if this Agreement or any material part thereof is
declared to be unlawful by a governmental agency, by a final decree
of a court of law with competent jurisdiction;                                                                                                                                                                                                                                                                                                                         
|    
|     |  | c.                                                                                                                                                                                                                                                                                                                                                                         |  | In the event of a material breach of this Agreement by the other
party, including, by way of example and not limitation, the failure
of ABNH to manufacture and/or deliver holograms in a timely fashion
or the failure of MasterCard to pay ABNH as required, upon sixty (60)
days written notice to the breaching party describing the breach;
provided, if the breach is cured by the breaching party prior to the
expiration of the sixty (60) day notice period, this Agreement shall
not terminate.
|    
|15.0 |  | Warranties and Representations by ABNH                                                                                                                                                                                                                                                                                                                                    
|    
|15.1 |  | ABNH warrants and represents that the insurance coverage of the
type set forth in Section 8.0 hereof shall at all times be at least
as great as that provided any other hologram customer of ABNH. ABNH
further warrants and represents that ABNH shall provide to MasterCard
at least as much insurance coverage as ABNH may provide to any of
ABNHs hologram customers.
|    
|15.2 |  | ABNH warrants and represents that ABNH shall store MasterCard
holograms in at least as secure a manner as ABNH stores any of the
holograms ABNH manufactures and at all times in strict conformance
with MasterCards security requirements, which requirements ABNH
acknowledges receipt of.                                                                             
|    
|15.3 |  | [*]                                                                                                                                                                                                                                                                                                                                                                       
|    
|16.0 |  | Assignment                                                                                                                                                                                                                                                                                                                                                                
|    
|     |  | Neither this Agreement, nor any of the rights or obligations
hereunder, may be assigned or otherwise transferred by either party
hereto, in whole or in party, without the prior written consent of
the other party.                                                                                                                                                      
|    
|17.0 |  | Governing Law                                                                                                                                                                                                                                                                                                                                                             
|    
|     |  | This Agreement shall in all respects be governed, interpreted and
enforced in accordance with the internal laws of the State of New
York without reference to                                                                                                                                                                                                             



---

|* |  | Confidential
|- |  | ------------

10



---



##### 



|     |  |                                                                                                                                                 |  | 
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------- |  | 
|     |  | principles and conflicts of law, whose
courts sitting in New York County or Westchester County shall have
sole jurisdiction in all claims.     
|    
|18.0 |  | Paragraph Headings                                                                                                                             
|    
|     |  | Paragraph headings are for
reference purposes only and shall not affect the interpretation or
meaning of this Agreement.                       
|    
|19.0 |  | Press                                                                                                                                          
|    
|     |  | Any release issued regarding
or related to the subject matter of this Agreement shall be approved
and agreed in advance by MasterCard and ABNH.
|    
|20.0 |  | Contingency Plan                                                                                                                               
|    

(i)  Upon the
occurrence of an event (the Event) which materially and
adversely affects ABNHs ability to manufacture and distribute
the holograms ordered by MasterCard, ABNH shall provide MasterCard
with written notice of such event within one business day following
the date of its occurrence (the Event Date).

(ii)  Within
10 business days of the Event Date, ABNH shall update MasterCard
as to the status of the Event. If ABNHs ability to manufacture
and distribute holograms ordered by MasterCard has not been
substantially corrected on or before such tenth business day (the
Plan Date), ABNH shall provide MasterCard on or before
the Plan Date with a written description of the Event and the actions
ABNH intends to take to correct the Event and resume the
manufacturing and distribution activities contemplated under this
Agreement (the Plan); such description shall include the
date when the Plan is estimated to be completed.

(iii)  if, on or
before the 30th day following the Event Date, ABNH has not notified
MasterCard in writing that the Plan has been substantially completed
and the Event has been substantially corrected (a) ABNH
acknowledges that MasterCard may develop and implement a contingency
plan (the Contingency Plan) to provide for ongoing
hologram manufacture and distribution by the contingent supplier in
the event ABNH is unable for any reason (including, but not limited
to, Force Majeure as set forth in Section 10 hereof) to
manufacture and distribute the holograms ordered by MasterCard, and
(b) ABNH shall provide reasonable assistance to MasterCard to
develop and implement the Contingency Plan

(iv)  if, on or
before the 60th day following the Event Date, ABNH has not notified
MasterCard in writing that the Plan has been substantially completed
and ABNHs ability to manufacture and distribute holograms
ordered by MasterCard has been substantially corrected, MasterCard
may elect at its option to (a) implement the Contingency Plan,
(b) decrease the percentage of its annual hologram volume
requirement it purchases from ABNH under this Agreement until such
time as the Plan has been substantially

11



---



##### 



|                                                                                                                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                                                                                                                         
|----------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|completed and the Event substantially corrected, and/or (c) terminate this
Agreement upon written notice to ABNH.
|                                                                                                                 
|21.0                                                                                                              |  | Notices                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                                                                                                 
|                                                                                                                  |  | Any notice given pursuant to this Agreement shall be in writing. Notices in
writing shall be deemed sufficient if mailed by registered or certified mail,
first class postage prepaid, return receipt requested and addressed to the
party at the address below or to such address or in such manner as either party
may designate in a written notice to the other. Notices shall be effective upon
receipt.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                 
|                                                                                                                  |  | If to MasterCard:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  | MasterCard International Incorporated
2000 Purchase Street
Purchase New York 10577-2509
Attention: Senior Vice President, Security
With a copy to: General Counsel (at the same address)
|                                                                                                                 
|                                                                                                                  |  | If to ABNH:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | American Bank Note Holographics, Inc.
399 Executive Blvd.
Elmsford, NY 10523
Attention: President and CEO
With a copy to:                                                               
|                                                                                                                 
|                                                                                                                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | Fulbright & Jaworski LLP
666 Fifth Avenue
New York, NY 10103
Attention: Paul Jacobs, Esq.                                                                                               
|                                                                                                                 
|22.0                                                                                                              |  | Entire Agreement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                 
|                                                                                                                  |  | This Agreement and the Exhibits hereto, contain the entire agreement between
the parties concerning the subject matter hereof and supersede any other prior
agreements, whether written or oral. Effective the date first set forth above,
that certain Agreement between the parties dated the 1st day of February 1996,
and each and all amendments thereto, as well as the Letter Agreement dated
October 16, 1984, and any other agreements between the parties pertaining to
the subject matter herein, is terminated. The parties agree that as of the date
first set forth above, neither party has any obligation to the other party or
owes any money to the other party pursuant to the Agreement dated the 1st day
of February 1996 or the Letter Agreement dated October 16, 1984, other than the
payment by MasterCard for holograms that were sold in the ordinary course in
December 2002. Any amendment or modification hereto shall be in writing and
signed by both parties hereto.

12



---



##### 



IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.



|                                      |                                                       
|------------------------------------- | ------------------------------------------------------
|                                     
|MASTERCARD INTERNATIONAL
INCORPORATED | AMERICAN BANK NOTE
HOLOGRAPHICS, INC.                 
|                                     
|By: /s/ Joel S. Lisker                | By: /s/ Kenneth H. Traub                              
|                                     
|JOEL S. LISKER
SENIOR VICE PRESIDENT  | KENNETH H. TRAUB
PRESIDENT AND CHIEF EXECUTIVE OFFICER

13



---



##### 



EXHIBIT A

MICROGLOBES HOLOGRAM SPECIFICATIONS



|    |  |                         
|--- |  | ------------------------
|1.0 |  | MATERIAL                
|   
|    |  | [*]                     
|   
|2.0 |  | DESIGN                  
|   
|    |  | [*]                     
|   
|3.0 |  | DIMENSIONS              
|   
|    |  | [*]                     
|   
|4.0 |  | HOLOGRAM CHARACTERISTICS
|   
|    |  | [*]                     
|   





---

14



---



##### 



EXHIBIT B

HOLOGRAM SECURITY PROCEDURES



|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.0 |  | GENERAL                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|1.1 |  | The ABNH facility at Huntingdon Valley,
Pennsylvania, has been designated as the point of manufacture,
storage pending distribution, and distribution of holograms. The ABNH
facility at 399 Executive Boulevard, Elmsford, NY may also be
utilized as a secondary point of manufacture, storage pending
distribution and distribution of holograms, subject to
MasterCards inspection and approval of such facility for compliance with Exhibits B and C. The Crane facility
in Dalton, MA is designated as the Second Supplier manufacturing facility for holograms
as set forth in Section 1.4 of this Agreement. ABNH will not permit MasterCard holograms to be
manufactured, in whole or in part, or stored pending distribution at any other location without the express
prior written consent of MasterCard.
|   
|   
|2.0 |  | PRODUCTION AND STORAGE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|    |  | [*]                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|3.0 |  | INSPECTION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|    |  | [*]                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|4.0 |  | INVENTORY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|    |  | [*]                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|5.0 |  | TRANSPORTATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|    |  | [*]                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|6.0 |  | WASTE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|    |  | [*]                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   





---

15



---



##### 



EXHIBIT C

PRODUCTION AND QUALITY CONTROL PROCEDURES



|    |  |                                                                                                                                                                         
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.0 |  | GENERAL                                                                                                                                                                 
|   
|    |  | ABNH throughout the various steps of manufacturing holograms, makes use of sophisticated equipment and trained personnel
to achieve a reliable, quality assured product.
|   
|2.0 |  | MATERIAL                                                                                                                                                                
|   
|    |  | [*]                                                                                                                                                                     
|   
|3.0 |  | STAMPING (EMBOSSING) DIES                                                                                                                                               
|   
|    |  | [*]                                                                                                                                                                     
|   
|4.0 |  | MANUFACTURING QUALITY ASSURANCE                                                                                                                                         
|   
|    |  | [*]                                                                                                                                                                     
|   
|5.0 |  | FINISHED ROLL                                                                                                                                                           
|   
|    |  | [*]                                                                                                                                                                     
|   
|6.0 |  | PACKAGING                                                                                                                                                               
|   
|    |  | [*]                                                                                                                                                                     
|   
|7.0 |  | WASTE DISPOSAL                                                                                                                                                          
|   
|    |  | [*]                                                                                                                                                                     





---

16



---



##### 



EXHIBIT D

FOIL QUALITY SPECIFICATIONS



|    |  |                                                                                                                                                                                                                                                                                                                                               
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |  | These specifications, in conjunction with a visual sample control card of maximum
acceptable defects, are intended for use with hot stamp application
of ABNH MasterCard holographic foil on plastic credit cards. The specifications define the acceptable limits on defects that may arise in foil
manufacture and/or hot stamp application.
|   
|1.0 |  | Image Effects                                                                                                                                                                                                                                                                                                                                 
|   
|    |  | [*]                                                                                                                                                                                                                                                                                                                                           





---

17