Vice President, Finance Employment Agreement

AMENDED AND RESTATED EMPLOYMENT AGREEMENT





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



R E C I T A L



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



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



AGREEMENT



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



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



SECTION 2. POSITION AND DUTIES . Executive shall assume the responsibilities and perform the duties of Vice President, Finance of the Company. The Executive shall also serve in such similar capacities as may be assigned to him in good faith from time to time by the President or Chief Financial Officer of the Company. Executive agrees to devote substantially all of his business time, attention, skill and best efforts to the diligent performance of his duties hereunder at the Company92s headquarters located at 2 Applegate Drive, Robbinsville, New Jersey 08691 or his home office and shall be loyal to the Company and its affiliates and subsidiaries, and use his best efforts to further their interests. Executive shall work in the Company92s Robbinsville office a minimum of three days per week, except due to approved vacation or illness. The Executive shall perform such tasks and responsibilities assigned to him by the Chief Executive Officer and the Chief Financial Officer of the Company, including without limitation, assisting with and/or overseeing the financial management and financial reporting of the Company. In the performance of his duties, Executive agrees to abide by and comply with all policies, practices, handbooks, procedures and guidelines which are now in effect or which the Company may adopt, modify, supplement or change from time to time.



SECTION 3. TERM OF EMPLOYMENT . The term of employment hereunder shall commence on the date hereof and shall continue thereafter until the earlier of (i) March 31, 2006 or (ii) termination pursuant to Section 10 hereof (the "Employment Term"). The date of the last day of the Employment Term shall be hereinafter referred to as the "Termination Date". Executive92s employment by the Company shall terminate on the Termination Date.






SECTION 4. EXCLUSIVITY . During the term of Executive92s employment with the Company, Executive shall not without the prior written consent of the Board of Directors (i) perform any managerial, sales, marketing or technical services directly or indirectly for any person or entity competing directly or indirectly with the Company or any of its subsidiaries in the holography business; (ii) perform any such services for any entity owned, directly or indirectly, by anyone competing, either directly or indirectly, with the Company or any of its subsidiaries in the holography business; (iii) on his own behalf or that of any other person or entity, compete, either directly or indirectly, with the Company or any of its subsidiaries, to sell any products or services marketed or offered by the Company or any of its subsidiaries; (iv) engage or become interested, directly or indirectly, as owner, employer, partner, consultant, through stock ownership (except ownership of less than one percent of the number of shares outstanding of any securities which are listed for trading on any securities exchange, provided that the specific nature and amount of the investment, if over $50,000 shall be immediately disclosed to the Company in writing), investment of capital, lending of money or property, or otherwise either alone or in association with others, in the operation of any type of business or enterprise which conflicts or interferes with the performance of Executive92s services hereunder or (v) engage in any activities which could reasonably be deemed to be a conflict of interest with his duties hereunder or his obligations to the Company.



SECTION 5. COMPENSATION AND BENEFITS .



(a) Salary and Bonus . As compensation for the performance of the Executive92s services hereunder, during the Employment Term and the Severance Period (as defined below), the Company will pay to the Executive an annual base salary of $240,000. In the event that the Employment Term is extended by the Company, in its sole discretion, Executive92s salary will be raised by a minimum of 3% annually, as determined by the Board of Directors. For purposes hereof, "Severance Period" shall mean the nine-month period commencing the day following the Termination Date or in the event of an extended Employment Term the day following the termination of such extended Employment Term, as the case may be. During the Severance Period, upon Executive92s execution and delivery to the Company on the Termination Date or in the event of an extended Employment Term the date of Executive92s last day of employment with the Company of a general release substantially equivalent to the release set forth in Section 11 hereof, Executive shall receive benefits as described below, and shall be paid in accordance with the customary payroll practices of the Company for its senior management personnel (collectively, the "Severance Benefits"). Notwithstanding the foregoing, in no event shall there be a Severance Period nor shall Executive be entitled to any salary, Severance Benefits or other benefits to the extent Executive was terminated for cause (as defined in Section 10(a)) or resigned other than for Good Reason (as defined in Section 10(e)(ii)) during the Employment Term or any extended Employment Term.



(b) Benefits . During the Employment Term and Severance Period, the Executive shall be eligible to participate, on the same basis and subject to the same qualifications as other senior management personnel of the Company, in any pension, profit sharing, savings, bonus, life insurance, hospitalization, dental, drug prescription, disability, accidental death and dismemberment and other benefit plans and policies as may from time to time be in effect with respect to senior management personnel of the Company (collectively, the " Benefits"). The Executive shall also be entitled to vacation days, holidays and sick days in accordance with the



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policies of the Company as may be in effect from time to time; provided, however, that upon termination of Executive92s employment for any reason (including resignation by the Executive), the Company shall pay Executive for accrued vacation time from the inception of his employment through the last date of employment as set forth on Exhibit A, on a pro rated basis calculated on the basis of the Executive92s Salary in effect on the Termination Date. The Executive shall also be entitled to have his existing leased car (the "Leased Car") extended through the Termination Date in accordance with the terms set forth on Exhibit B. In the event that the Executive continues to be employed by the Company through March 31, 2006 and Executive chooses to apply for unemployment benefits, the Company will not contest the Executive92s application. Further, in the event that the Executive is terminated without cause or resigns for Good Reason prior to March 31, 2006, the Company will not contest the Executive92s application for such benefits.



(c) Stock Options . The Executive shall be eligible to receive grants of options to purchase equity in the Company during the Employment Term as determined, from time to time, in the sole discretion of the Board or the Compensation Committee. All of Executive92s options shall vest immediately upon the expiration of the Employment Term and remain exercisable for a period of two years.



(d) Expenses . The Company will pay or promptly reimburse the Executive for all reasonable out-of-pocket business, entertainment and travel expenses incurred by the Executive in the performance of his duties hereunder upon presentation of appropriate supporting documentation and otherwise in accordance with the expense reimbursement policies of the Company in effect from time to time. Such expenses shall include the cost of (i) gas and tolls incurred by the Executive in connection with the Executive92s travel to and from his residence and the Company92s headquarters located at 2 Applegate Drive, Robbinsville, New Jersey 08691 and (ii) accommodations in the Robbinsville, New Jersey vicinity. The Company shall also promptly reimburse the Executive for out-of-pocket expenses incurred for moving and storage costs associated with his previously planned relocation and home sale preparation. Such costs shall be limited to $1,400.



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



SECTION 6. CONFIDENTIALITY . The Executive acknowledges and agrees that (a) in connection with his employment by the Company, the Executive will be involved in the Company92s and its subsidiaries92 (if any) operations; (b) in order to permit him to carry out his responsibilities, the Company may disclose, to the Executive, in strict confidence, or the Executive may develop, confidential proprietary information and trade secrets of the Company and its affiliates, including without limitation (i) unpublished information with respect to the Company concerning marketing or sales plans, operational techniques, strategic plans and the identity of suppliers and supply contacts; (ii) unpublished financial information with respect to the Company, including information concerning revenues, profits and profit margins; (iii) internal confidential manuals and memos; and (iv) "material inside information" as such phrase is used for purposes of the Securities Exchange Act of 1934, as amended (collectively, " Confidential Information"); and (c) the Company and its affiliates derive significant economic



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value and competitive advantage by reason of the fact that such Confidential Information, in whole or in part, is not generally known or readily ascertainable by the Company92s or its affiliates92 actual or potential competitors and, as such, constitutes the Company92s and its affiliates92 valuable trade secrets.



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



The restrictions set forth in this Section 6 shall not apply to those particular portions of Confidential Information, if any, that (a) have been published by any of the Company or any of its affiliates in a patent, article or other similar tangible publication or (b) become available to the Executive from a source other than the Company, provided that the source of such Confidential Information was not known by the Executive, after reasonable inquiry, to be bound by a confidentiality agreement with or other obligation of confidentiality to the Company or any of its affiliates.



The foregoing restrictions on the disclosure of Confidential Information set forth in this Section 6 shall not apply to those particular portions of Confidential Information, if any, that are required to be disclosed in connection with any legal process; provided that, at least ten (10) days in advance of any required disclosure, or such lesser time as may be required by circumstances, the Executive shall furnish the Company with a copy of the judicial or administrative order requiring that such information be disclosed together with a written description of the information proposed to be disclosed (which description shall be in sufficient detail to enable the Executive and its affiliates to determine the nature and scope of the information proposed to be disclosed), and the Executive covenants and agrees to cooperate with the Company and its affiliates to deliver the minimum amount of information necessary to comply with such order.



This Section 6 shall survive any termination of this Agreement.



SECTION 7. COVENANT NOT TO COMPETE .



(a) Scope . In order to fully protect the Company92s Confidential Information, during the Employment Term and for a period of one year thereafter (the "Non-competition Period"), the Executive shall not, except as authorized in writing by the Board, directly or indirectly, render services to, assist, participate in the affairs of, or otherwise provide assistance to any person or enterprise (other than the Company and its subsidiaries, if any), which person or enterprise is engaged in, or is planning to engage in, and shall not personally engage in any business in any jurisdiction where the Company has transacted business at any time prior to the Termination Date that is competitive with the business of the Company or any of its subsidiaries, if any, with respect to any products or



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services of the Company or any of its subsidiaries, if any, in any capacity which would utilize the Executive92s services with respect to any products or services of the Company or any of its subsidiaries, if any, that were within the Executive92s management responsibility at any time within the twelve (12) month period immediately prior to the Termination Date.



(b) Remedies . The parties recognize, acknowledge and agree that (i) any breach or threatened breach of the provisions of this Section 7 shall cause irreparable harm and injury to the Company and that money damages will not provide an adequate remedy for such breach or threatened breach and (ii) the duration, scope and geographical application of this Agreement are fair and reasonable under the circumstances, and are reasonably required to protect the legitimate business interests of the Company. Accordingly, Executive agrees that the Company shall be entitled to have the provisions of this Agreement specifically enforced by any court having jurisdiction, and that such a court may issue a temporary restraining order, preliminary injunction or other appropriate equitable relief, without having to prove the inadequacy of available remedies at law. In addition, the Company shall be entitled to avail itself of all such other actions and remedies available to it or any of its affiliates under law or in equity and shall be entitled to such damages as it sustains by reason of such breach or threatened breach. It is the express desire and intent of the parties that the provisions of this Agreement be enforced to the full extent possible.



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