Document:

Exhibit 10.3

 

RECORDING REQUESTED BY AND

WHEN RECORDED MAIL TO:

 

WELLS FARGO BANK, N.A.

Commercial Mortgage Servicing

1320 Willow Pass Road, Suite 210

Concord, CA 94520

 

Loan No.: 70-0200685

(Space
Above For Recorder’s Use)

 

SUBORDINATION, NON-DISTURBANCE AND
ATTORNMENT AGREEMENT

This
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (“Agreement”) is made as of December 14, 2004, by
and between AMERICAN BANK NOTE HOLOGRAPHICS, INC., a Delaware corporation (“Subtenant”), and LASALLE BANK NATIONAL ASSOCIATION,
FORMERLY KNOWN AS LASALLE NATIONAL BANK, AS TRUSTEE FOR MORGAN STANLEY CAPITAL
I INC., COMMERCIAL MORTGAGE SECURITIES INC., COMMERCIAL MORTGAGE PASS-THROUGH
CERTIFICATES, SERIES 1999-WF1 (“Lender”),
with reference to the following facts and intentions of the
parties:

R E  C  I  T  A  L  S

A.                                   More Applied Four (DE) LLC, a Delaware limited liability company (“Owner”) is the owner of the land and
improvements commonly known as 2 Applegate Drive, Robbinsville, New Jersey, and
more specifically described in Exhibit A attached hereto (“Property”) and the
owner of the Landlord’s interest in the lease identified in Recital B below.

 

B.                                     APW North America, Inc., a Delaware corporation (“APW”), and Owner, as successor in
interest to Power (DE) QRS 14-34, Inc., a Delaware corporation, are parties to
that certain Deed of Lease Agreement dated as of May 30, 2000, as amended by
that certain First Amendment to Deed of Lease dated July 31, 2000, as amended
by that certain Second Amendment to Deed of Lease dated October 31, 2001, and
as amended by that certain Third Amendment to Deed of Lease dated December 14, 2004
(as amended, the “Master Lease”), pursuant to which Owner leases the Property, among
other locations, to APW.

 

C.                                     Subtenant and APW are parties to that certain Sublease dated as of
December 14, 2004 pursuant to which APW subleases the Property to Subtenant.

 

D.                                    Owner is indebted to Lender under a promissory note in the original
principal amount of $11,070,524, which note is secured by, among other things,
a mortgage encumbering the Property, dated October 31, 2001 and recorded on
November 7, 2001 with the Office of the County Clerk of Mercer County, New
Jersey in Mortgage Book 6391, at Page 47. Owner

 

1

 

is also obligated to Lender pursuant to a guaranty
relating to a $6,429,477 loan made by Lender’s predecessor in interest to an affiliate of Owner, which
guaranty is secured by a second mortgage encumbering the Property, dated
October 31, 2001 and recorded on November 7,
2001 with the Office of the County Clerk of Mercer County, New Jersey in
Mortgage Book 6391, at Page 118. The
aforementioned mortgages are individually and collectively referred to
herein as the “Mortgage”

 

E.                                      Pursuant to
that certain Subordination, Non-Disturbance, Attornment, Renewal and Option to Purchase Agreement dated as of December 14,
2004 between Owner and Subtenant (the  “Sublease SNDA”), the
parties thereto have agreed, among other things, that if the Master  Lease is terminated prior to the expiration or
termination of the Sublease, the Sublease will become a direct lease
between Owner and Subtenant. The Sublease, as modified by the Sublease SNDA is
referred to herein as the “Lease”.

 

F.                                      As a condition
to the Lease, Subtenant has requested that Lender make certain agreements with
Subtenant, as set forth below, and Lender is willing to make such agreements
with Subtenant if Subtenant furnishes
certain assurances to, and makes certain agreements with, Lender, as set
forth below.

 

THEREFORE, the parties agree as follows:

 

1.          SUBORDINATION.

 

1.1.     Prior Lien. The Mortgage,
and any modifications, renewals or extensions thereof,
shall unconditionally be and at all times remain a lien or charge on the
Property prior and superior to the Lease.

 

1.2.     Entire Agreement. This Agreement
shall be the whole agreement and only agreement with regard to the
subordination of the Lease to the lien or charge of the Mortgage, and shall supersede and cancel, but only insofar as would
affect the priority between the Mortgage and the Lease, any prior
agreements as to such subordination,
including, without limitation, those provisions, if any, contained in
the Lease which provide for the subordination of the Lease to a deed or deeds
of trust, a mortgage or mortgages, a deed or deeds to secure debt or a trust
indenture or trust indentures.

 

1.3.     Disbursements. Lender, in
making disbursements pursuant to the Note, the Mortgage or any loan agreements
with respect to the Property, is under no obligation or duty to, nor has Lender
represented that it will, see to the application of such proceeds by the person
or persons to whom Lender disburses such proceeds, and any application or use
of such proceeds for purposes other than those provided for in such agreement
or agreements shall not defeat this Agreement to subordinate in whole or in
part.

 

1.4.     Subordination. Subtenant intentionally and
unconditionally waives, relinquishes and subordinates all of
Subtenant’s right, title and interest in and to the Property, to the lien of
the Mortgage.

 

2

 

2.         NON-DISTURBANCE AND ATTORNMENT.

 

     2.1.   Non-Disturbance. Notwithstanding anything to the contrary contained in the Lease, so
long as there shall exist no breach, default or event of default (beyond any
period given to Subtenant in the Lease to cure such default) on the part of
Subtenant under the Lease at the time of any judicial or non -judicial
foreclosure of the Mortgage or deed in lieu thereof or at any time Lender (or
its designee or successors) otherwise acquires title to the Property, Lender
agrees that the leasehold interest of Subtenant under the Lease shall not be
terminated or otherwise disturbed by reason of such foreclosure, deed in lieu
thereof or other acquisition of the Property (and Subtenant shall not be named
as a defendant in any such foreclosure action), but rather the Lease shall
continue in full force and effect and Lender shall recognize and accept
Subtenant as Subtenant under the Lease subject to the provisions of the Lease
including, without limitation, all of the terms of the Sublease SNDA which
amend the Sublease.

 

     2.2.   Attornment. Notwithstanding anything to the contrary contained in the Lease, should
title to the Property and Owner’s interest in the Lease be transferred to
Lender or any other person or entity (“New Owner”) by, or in lieu of judicial or non-judicial foreclosure
of the Mortgage (collectively, a “Transfer”),
Subtenant agrees, for the
benefit of New Owner and effective immediately and automatically upon the
occurrence of any such Transfer, that: (a) Subtenant shall pay to New Owner all rental payments required to be made by
Subtenant pursuant to the terms of the Lease for the remainder of the
Lease term; (b) Subtenant shall be bound to New Owner in accordance with all of
the provisions of the Lease for the remainder of the Lease term; (c) Subtenant
hereby attorns to New Owner as its landlord, such attornment to be effective
and self-operative without the execution of
any further instrument; (d) New Owner shall not be liable for any default of
any  prior landlord under the Lease,
including, without limitation, Owner, except where such default is
continuing at the time New Owner acquires title to the leased premises and New Owner fails to cure same after
receiving notice thereof; (e) New Owner shall not be subject to any
offsets or defenses which Subtenant may have against any prior landlord under
the Lease, including, without limitation, Owner, except where such offsets or
defenses arise out of a default of the prior landlord which is continuing at the time New Owner acquires title to the leased
premises and New Owner fails to cure same after receiving notice
thereof; and (f) New Owner shall not be
liable for any obligations of landlord arising under the Lease following
any subsequent transfer of the title to the leased premises by New Owner.

 

                     2.3.   [Intentionally Deleted]

 

     2.4.   Option to
Purchase; Right of First Offer. The provisions
of Section 15 of the Sublease, Section 8 and Section 13 of the Sublease SNDA, and
any other provision of the Lease notwithstanding (collectively, the “Option and
ROFO Rights”), Subtenant
acknowledges and agrees as follows:

 

3

 

(i)            Without
limiting the generality of any provision of this Agreement, the Option and ROFO
Rights are subject to the provisions of the Mortgage and each of the other
documents, instruments and agreements executed in connection with the
above-described indebtedness of Owner and Owner’s affiliate to Lender (collectively,
the “Debt”);

(ii)           Subtenant shall not
have the right to exercise any of the Option and ROFO Rights as a result of the
appointment of a receiver, the foreclosure of the Mortgage, or the Transfer of
the Property in lieu of judicial or non-judicial foreclosure of the Mortgage;
and

(iii)          Subtenant shall not
have the right to exercise any option to purchase the Property included in the
Option and ROFO Rights unless and until the Debt has been indefeasibly paid in
full or unless the Debt will be paid in full contemporaneously with the closing
of the acquisition of Property in connection with Subtenant’s exercise of such
option to purchase.

 

3.              [Intentionally Deleted]

4.              [Intentionally Deleted]

5.              MISCELLANEOUS.

5.1.     Heirs, Successors and Assigns. The covenants
herein shall be binding upon, and

inure to the benefit of, the heirs, successors and assigns of the parties
hereto. Whenever necessary or appropriate to give logical meaning to a
provision of this Agreement, the term “Owner” shall be deemed to mean the then
current owner of the Property and the landlord’s interest in the Lease.

5.2.     Addresses; Request for Notice. All notices and other
communications that are required or permitted to be given to a party under
this Agreement shall be in writing and shall be sent to such party, either by
personal delivery, by overnight delivery service, by certified first class
mail, return receipt requested, or by facsimile transmission, to the address or
facsimile number below. All such notices and communications shall be effective
upon receipt of such delivery or facsimile transmission.

 

4

 

The
addresses and facsimile numbers of the parties shall be:

	
  Subtenant:

  	
   

  	
  Lender:

  
	
  American
  Bank Note Holographics, Inc.

  399 Executive Boulevard

  Elmsford, NY 10103

  Attention: Kenneth Traub, President and CEO

  	
   

  	
  LaSalle
  Bank National Association, formerly known as LaSalle National Bank, as
  Trustee for Morgan Stanley Capital I Inc., Commercial Mortgage Securities
  Inc., Commercial Mortgage Pass-Through Certificates, Series 1999-WF 1

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  c/o Wells Fargo Bank, N.A.

  
	
   

  	
   

  	
  Commercial Mortgage
  Servicing 1320 Willow Pass Road, Suite 210
  Concord, CA 94520

  

 

provided, however,
any party shall have the right to change its address for notice hereunder by the giving of written notice thereof
to the other party in the manner set forth in this Agreement.

5.3.     Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall be deemed an original
and all of which together shall constitute and be construed as one and the same
instrument.

5.4.     Section Headings. Section
headings in this Agreement are for convenience only and are not to be construed
as part of this Agreement or in any way limiting or applying the provisions
hereof.

5.5.     Attorneys’ Fees. If any legal
action, suit or proceeding is commenced between Subtenant and Lender regarding
their respective rights and obligations under this Agreement, the prevailing
party shall be entitled to recover, in addition to damages or other relief,
costs and expenses, attorneys’ fees and court costs (including, without
limitation, expert witness fees). As used herein, the term “prevailing party”
shall mean the party which obtains the principal relief it has sought, whether
by compromise settlement or judgment. If the party which commenced or
instituted the action, suit or proceeding shall dismiss or discontinue it
without the concurrence of the other party, such other party shall be deemed
the prevailing party.

6.        INCORPORATION. Exhibit A, the Owner’s Consent is attached hereto and incorporated herein by this
reference.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

5

 

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

 

“LENDER”

 

LASALLE
BANK NATIONAL ASSOCIATION, FORMERLY KNOWN AS LASALLE NATIONAL BANK, AS TRUSTEE
FOR MORGAN STANLEY CAPITAL I INC. COMMERCIAL MORTGAGE SECURITIES INC.,
COMMERCIAL MORTGAGE PASS-THROUGH
CERTIFICATES, SERIES 1999-WF1

 

	
  By:

  	
  Wells Fargo Bank, National Association, as Master
  Servicer under the Pooling and Servicing Agreement, dated February 1, 1999 by
  and between Morgan Stanley Capital I Inc., Wells Fargo Bank, National
  Association, GMAC Commercial Mortgage Corporation, LaSalle National Bank, ABN
  AMRO Bank N.V., and Norwest Bank Minnesota, National Association

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sarah J. Burns

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Sarah J. Burns

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Assistant Vice President

  	
   

  	
   

  

“SUBTENANT”

 

AMERICAN BANK NOTE HOLOGRAPHICS, INC.,

a Delaware corporation

 

 

	
  By:

  	
  /s/ Kenneth H. Traub

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Kenneth H. Traub

  	
   

  	
   

  
	
   

  	
  Its:

  	
  President and CEO

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

IT IS RECOMMENDED THAT, PRIOR TO THE EXECUTION OF THIS AGREEMENT, THE PARTIES CONSULT WITH THEIR
ATTORNEYS WITH RESPECT HERETO.

 

ALL
SIGNATURES MUST BE ACKNOWLEDGED.

 

6

 

OWNER’S
CONSENT

The undersigned, which owns
the Property and the landlord’s interest in the Lease, hereby consents to the execution of the foregoing
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT, and to
implementation of the agreements and transactions provided for therein.

“OWNER”

MORE APPLIED FOUR (DE) LLC,a
Delaware

limited liability company

 

	
  By:

  	
  Applied Four (DE) QRS
  14-75, Inc., a

  Delaware corporation, its managing

  member

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas E. Zacharias

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Thomas E. Zacharias

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Managing Director

  	
   

  	
   

  

 

7

 

	
  ACKNOWLEDGMENT

  STATE
  OF NEW YORK

  	
  )

  
	
  )

  	
  ss.

  
	
  COUNTY OF WESTCHESTER

  	
  )

  

Then personally appeared the above-named Kenneth Traub, the President
of ABNH, a Delaware Corp., and acknowledged the foregoing instrument to be his/her
free act and deed and the free act and deed of such corporation, in said
capacity, before me, December 6, 2004

 

	
  WITNESS
  my hand and official seal.

  	
   

  
	
   

  	
  /s/ Nancy A. Borst

  
	
   

  	
  Nancy A. Borst

  Notary Public State of NY

  No. 01B05057933

  Qualified in Westchester County

  
	
  Notary Public in and for
  said State

  	
   

  
	
   

  	
   

  
	
  My commission expires:

  	
  4/1/2006

  
	
  ACKNOWLEDGMENT

  STATE
  OF CALIFORNIA

  	
  )

  
	
  )

  	
  ss.

  
	
  COUNTY OF CONTRA COSTA

  	
  )

  

Then personally appeared the above-named Sarah J. Burns, the Asst VP of
Wells Fargo, a National Assoc., and acknowledged the foregoing instrument to be
his/her free act and deed and the free act and deed of such corporation, in
said capacity, before me,

 

	
  WITNESS
  my hand and official seal.

  	
   

  
	
   

  	
  /s/ Amanda Garrison

  
	
   

  	
  Amanda Garrison

  Commission # 1408202

  Notary Public California 

  Contra Costa County

  
	
  Notary Public in and for
  said State

  	
   

  
	
   

  	
   

  
	
  My commission expires:

  	
  3/3/07

  

 

8

 

	
  ACKNOWLEDGMENT

  STATE
  OF NEW YORK

  	
  )

  
	
  )

  	
  ss.

  
	
  COUNTY OF NEW YORK

  	
  )

  

 

Then
personally appeared the above-named Thomas Zacharias, the Managing Director of ,
Applied Four (DE) QRS 14-75 Inc. a Delaware Corp and acknowledged the foregoing
instrument to be his/her free act and deed and the free act and deed of such
corporation, in said capacity, before me,

 

	
  WITNESS
  my hand and official seal.

  	
   

  
	
   

  	
  /s/ Heather Coleman

  
	
   

  	
  Heather Coleman

  Notary Public State of NY

  No. 01C06087715

  Qualified in NY County

  
	
  Notary Public in and for
  said State

  	
   

  
	
   

  	
   

  
	
  My commission expires:

  	
  2/24/07

  

 

9Exhibit
10.4

 

ESCROW
AGREEMENT

 

ESCROW AGREEMENT,
made and entered into as of the 14th day of December, 2004, by and among APW NORTH AMERICA INC. (the “Sublessor”), AMERICAN BANK NOTE HOLOGRAPHICS, INC. (the “Sublessee”)
and CHICAGO TITLE INSURANCE COMPANY
(the “Escrow Agent”).

 

WHEREAS, the
Sublessor and the Sublessee are this day entering into a sublease (the “Sublease”)
with respect to the real estate located at 2 Applegate Drive, Robbinsville, New
Jersey (the “Property”);

 

WHEREAS, the
Sublessee and MORE APPLIED FOUR (DE) LLC, as Master Landlord under that certain
Deed of Lease Agreement dated as of May 30, 2000, as amended (the “Master Lease”)
with respect to the Property, are entering into a certain Subordination,
Non-disturbance, Attornment, Renewal and Option to Purchase Agreement (the “Nondisturbance
Agreement”) whereby the Master Landlord, in the event the Master Lease with
Sublessor is terminated as a result of default by the Sublessor, would
recognize Sublessee as its direct tenant under the Sublease, subject to the
terms of the Nondisturbance Agreement including an increase in the rent payable
under the Sublease;

 

WHEREAS, the parties
desire to place certain sums of money in escrow to cover the difference in said
rental amounts if the terms of the Nondisturbance Agreement become effective
with respect thereto, and to provide for the release of said sums, all in
accordance with the terms of this Agreement.

 

NOW, THEREFORE, for
$10.00 and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, it is agreed as follows:

 

1.                                       Periodic Deposit of Funds.  The Sublessee shall deposit in escrow with
the Escrow Agent, as and when same become due and payable, all Base Rent (as
defined in the Sublease) payments due under the Sublease until the Escrowed
Funds (as hereinafter defined) total $1,075,525.00 (the “Maximum Escrow Amount”).  The funds deposited hereunder shall be
collectively referred to as the “Escrowed Funds.”  The Sublessee shall receive a credit against
the Base Rent payable under the Sublease to the extent of the Escrowed
Funds.  Notwithstanding any provision
hereof to the contrary, however, it is understood and agreed that the Sublessee’s
right to pay said amounts to the Escrow Agent is contingent upon the Sublessee
timely paying to the Escrow Agent all of the amounts due as Base Rent under the
Sublease and otherwise not being in default beyond all applicable notice and
cure periods under the Sublease.  The
Sublessee shall not be permitted to make any future payments to the Escrow
Agent as provided above at any time the Sublessee is in default beyond all
applicable notice and cure periods under the Sublease.  If the Sublessee is at any time in default
beyond all applicable notice and cure periods under the Sublease, then the
Sublessor shall provide written notice thereof to the Escrow Agent to inform
the Escrow Agent that the Sublessee will not be making the foregoing
payments.  If the Sublessee cures the
default to the Sublessor’s satisfaction, the Sublessee shall again be permitted
to pay to the Escrow Agent the amounts set forth above.  The Escrow Agent shall provide the Sublessor
and the Sublessee with monthly statements confirming the then current balance
of Escrowed Funds held by it and the date and amount of the most recent deposit
of Escrowed Funds by the Sublessee. 
Notwithstanding the foregoing, it is understood that in the event that
the

 

 

Escrow Agent receives any funds, it shall be permitted to accept said
deposit(s) and such amounts shall be deemed Escrowed Funds under this
Agreement.

 

2.                                       Periodic Release of Funds.  Subject to the provisions of Paragraphs 3, 4
and 5 below, commencing on the 1st day of the month immediately
following the date that the Escrowed Funds equals the Maximum Escrowed Amount
and on the 1st day of each month thereafter through May 1, 2017,
Escrow Agent shall refund to the Sublessor the sum of $9,114.62 per month (but
only to the extent of the Escrowed Funds) without further notice to any
party.  It is understood that the foregoing
amount assumes a December 1, 2004 Commencement Date under the
Sublease.  In the event that such
Commencement Date is other than December 1, 2004, then the Sublessee and
the Sublessor shall execute an amendment to this Escrow Agreement to adjust the
monthly refund number to be equal to the total Escrowed Funds divided by the
total of months remaining in the term of the Sublease after the Escrowed Funds
equals the Maximum Escrowed Amount.  On
May 1, 2017, the entire remaining balance of the Escrowed Funds shall be paid
to the Sublessor.  The payments as
provided above shall be made without notice, demand or any other action
whatsoever, except if the provisions of Paragraphs 3, 4 or 5 would become
applicable by the terms thereof, in which event the terms thereof shall be
applicable.

 

3.                                       Release of Funds to the Sublessee.  In the event that the Master Lease is
terminated and the Master Landlord recognizes the Sublessee as its direct
tenant under the Sublease pursuant to the terms of the Nondisturbance Agreement,
then the entire balance of the Escrowed Funds shall be paid to the
Sublessee.  In order for this provision
to be effective, however, a written direction as to same signed by both the
Sublessor and the Sublessee shall be first provided to the Escrow Agent which
expressly directs the Escrow Agent to pay the entire balance of the Escrowed
Funds to the Sublessee.  The Sublessor
and the Sublessee shall be obligated to provide such written direction under
such circumstances, and the Sublessor shall indemnify and hold harmless the
Sublessee for all losses, damages, costs and expenses (including but not
limited to reasonable attorneys’ fess and expenses) as a result of the
Sublessor’s failure to provide such written direction in accordance with this
paragraph.

 

4.                                       Release of Funds to the Sublessor.  In the event that the Sublease is terminated
for any reason, except as a result of a default by the Sublessor, then the
entire balance of the Escrowed Funds shall be paid to the Sublessor.  In order for this provision to be effective,
however, a written direction as to same signed by both the Sublessor and the
Sublessee shall be first provided to the Escrow Agent which expressly directs
the Escrow Agent to pay the entire balance of the Escrowed Funds to the Sublessor.  The Sublessor and the Sublessee shall be
obligated to provide such written direction under such circumstances, and the
Sublessee shall indemnify and hold harmless the Sublessor for all losses,
damages, costs and expenses (including but not limited to reasonable attorneys’
fess and expenses) as a result of the Sublessee’s failure to provide such
written direction in accordance with this paragraph.

 

5.                                       Disbursement of Funds in Event of Dispute.  In the event of any dispute between the
parties as to the release of Escrowed Funds, written notice thereof shall be
provided to all of the other parties. 
Upon receipt of written notice of dispute as to the release of the
Escrowed Funds, the Escrow Agent shall not release any further amounts of the
Escrowed Funds until there is a written direction signed by the Sublessor and
the Sublessee as to the disbursement thereof, and if the Escrow Agent does not
receive such signed written direction within fifteen (15) business days after
the Escrow Agent’s receipt of written notice as to the dispute, then the 

 

2

 

Escrow
Agent shall deliver the Escrowed Funds to a court of competent jurisdiction and
file an action for interpleader or other writ or petition, with such court for
resolution as to how the Escrowed Funds shall be released.  The Sublessor and the Sublessee agree that
after the Escrowed Funds have been delivered to such court, the Escrow Agent
shall have no further liability hereunder and shall not be a necessary or
permitted party in any action brought regarding the Escrowed Funds.

 

6.                                       Escrow Agent’s Liability.  The Escrow Agent shall not be liable for any
mistakes of facts or error in judgment, or any acts or omissions of any kind,
unless it was caused by its willful misconduct or gross negligence, and the
parties agree, except in the case of gross negligence or willful misconduct by
the Escrow Agent, to indemnify and hold the Escrow Agent harmless from any
claims, demands, causes of action, liability, damages or judgments, including
the costs of defending any action against it, together with any reasonable
attorneys’ fees, costs and expenses incurred, all in connection with the Escrow
Agent’s undertakings pursuant to the terms and conditions of this Escrow
Agreement.

 

7.                                       Compliance with Court Orders.  The parties furthermore agree that the Escrow
Agent is hereby expressly authorized to comply with and obey any and all
orders, judgments or decrees entered or issued by any court, and, in case the
Escrow Agent obeys and complies with any such order, judgment or decree of any
court, it shall not be liable to either of the parties hereto or to any other
person, firm or corporation by reason of such compliance.

 

8.                                       Interest on Escrowed Funds.  The Escrowed Funds shall be invested in an
interest-bearing account, all interest becoming a part of the Escrowed Funds
and all taxes thereon shall be paid by the Sublessor.  Escrow Agent shall provide prompt written
notice to the Sublessor and the Sublessee of the location and account number of
such account.  The Sublessor’s Federal
Tax Identification Number shall be given in connection with the interest earned
on the Escrowed Funds. The Federal Tax Identification Number of the Sublessor
is 95-1718077.

 

9.                                       Fees to Escrow Agent.  The following fees shall be paid to the
Escrow Agent for its services under this Agreement:

 

(a)                                  $500.00
upon the execution of this Agreement as a set-up fee; and

 

(b)                                 $600.00
upon the execution of this Agreement for the services for the first year of
this Agreement and $600.00 per year on each anniversary date of this Agreement
thereafter so long as this Agreement remains in effect.

 

It is understood and agreed
that said fees shall be split equally between the Sublessor and the
Sublessee.  In addition, the Escrow Agent
shall be reimbursed for the fees and expenses it incurs under Paragraph 5
above.

 

10.                                 Attorneys Fees.  In the event of any dispute, litigation or
other enforcement action under this Agreement, as between the Sublessor and the
Sublessee the prevailing party shall be entitled to recover from the
non-prevailing party its reasonable attorneys’ fees and court costs.

 

11.                                 Notices.  All notices required or permitted under this
Agreement shall be in writing and shall be deemed duly served if and when delivered
by hand or mailed by certified

 

3

 

mail, postage prepaid, return
receipt requested or by recognized overnight courier to the address of each
party set forth below or to such other address as a party may designate in
writing to the others.

 

12.                                 Counterparts.  This Agreement may be executed in
counterparts, each of which shall constitute one and the same instrument.

 

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

 

 

	
   

  	
  SUBLESSEE:

  
	
   

  	
   

  
	
   

  	
  AMERICAN
  BANK NOTE HOLOGRAPHICS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kenneth
  H. Traub

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Kenneth H.
  Traub

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  President
  and CEO

  	
   

  
	
   

  	
   

  
	
   

  	
  Address of
  Sublessee: 399 Executive Boulevard,

  
	
   

  	
  Elmsford,
  New York, 10523, Attention: Kenneth

  
	
   

  	
  Traub,
  President and CEO

  
						

 

	
   

  	
  SUBLESSOR:

  
	
   

  	
   

  
	
   

  	
  APW NORTH AMERICA INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael
  Gasick

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Michael
  Gasick

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Treasurer

  	
   

  
	
   

  	
   

  
	
   

  	
  Address of
  Sublessor: N22 W23685 Ridgeview

  
	
   

  	
  Parkway
  West, Waukesha, WI 53188-1013

  
						

 

4

 

	
   

  	
   

  
	
  ACCEPTED:

  	
   

  
	
  ESCROW AGENT:

  	
   

  
	
   

  	
   

  
	
  CHICAGO TITLE INSURANCE COMPANY

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Lisa A.
  Petersen

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  Lisa
  Petersen

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
  Counsel

  	
   

  	
   

  
	
   

  	
   

  
	
  Address: 20900
  Swenson Drive

  	
   

  
	
  Suite 900,
  Waukesha, WI 53186

  	
   

  
						

 

5

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