American Bank Note Holographics Announces Agreement In Principle To Settle Pending Class Action Securities Litigation.

Business Editors

ELMSFORD, N.Y.--(BUSINESS WIRE)--June 28, 2000

The Company Also Announces Agreement In Principle To Settle All

Claims With Its Former Parent, American Banknote Corporation

American Bank Note Holographics, Inc. (OTC Bulletin Board:ABHH) (the "Company") today announced that it and certain other defendants had reached agreements in principle to settle all of the claims against it, its former parent, American Banknote Corporation ("ABN"), certain former officers and directors of the Company, certain current and former officers and directors of ABN and certain other defendants in the purported class actions, In Re American Bank Note Holographics, Inc. Securities Litigation and In Re American Banknote Corporation Securities Litigation filed in the United States District Court (the "Court") for the Southern District of New York against those defendants.

The parties have signed a Memorandum of Understanding which is subject to the execution of a definitive settlement agreement and the approval of the Court as well as the approval of the Bankruptcy Court for the Southern District of New York in which the Chapter 11 case of ABN is pending.

The proposed settlement of the class action litigation provides for a release of all claims that the plaintiffs in each action have and may have against the Company and certain other defendants. The proposed settlement calls for a cash payment of $12,500,000 to be funded entirely by the Company's and ABN's insurance carrier. The Company will have no cash payment obligation with respect to the settlement. In connection with the settlement, the Company will issue and distribute 1,460,000 shares of the Company's Common Stock as well as warrants to purchase 863,647 shares of the Company's Common Stock, at an exercise price of $6.00 per share. The warrants will be exercisable for a 30 month period commencing with final settlement approval by the Court. ABN will also issue and distribute certain of its securities as part of the settlement. The settlement proceeds after expenses will be allocated and distributed among the class members in the American Bank Note Holographics action and the American Banknote Corporation action in amounts to be determined in the settlement agreement and subject to the approval of the Court.

The Company also entered into an agreement in principle with ABN to resolve all claims between the parties. This agreement includes, among other things, mutual general releases of the parties including a release from any obligations under the Separation Agreement between the parties dated July 20, 1998 as well as a release of all sums allegedly owing to the other party. ABN shall be responsible for and indemnify the Company for all income and franchise tax liabilities of the Company up to the date of the IPO. The Company will withdraw its claim against ABN in ABN's Chapter 11 case. The Company will receive 25,000 shares of stock of reorganized ABN as part of ABN's Chapter 11 plan. This agreement is subject to the execution of definitive agreements, the Court approval of the settlement of the class action litigation and approval of the Bankruptcy Court in which the Chapter 11 case of ABN is pending.

Kenneth Traub, President and Chief Executive Officer of American Bank Note Holographics, commented, "The agreements in principle that we have reached to settle the securities litigation as well as all issues with the former parent are a significant milestone. The new management of the Company has been determined to resolve these issues and remove the uncertainties, expense and distraction of continuing litigation. We are enthusiastic about the increased flexibility this will give us to focus on operations, and to extend our leadership position in the security holography industry."

American Bank Note Holographics is a leader in the origination, production, and marketing of mass-produced holograms. The Company's products are used for security applications, such as counterfeiting protection for transaction cards, identification cards and documents of value, authentication of consumer and industrial products and tamper resistance as well as for packaging and promotional applications.

This news release includes forward-looking statements that involve risks and uncertainties. Although the Company believes such statements are reasonable, it can make no assurances that such statements will prove to be correct. Such statements are subject to certain factors which may cause actual results to differ materially from forward-looking statements, including but not limited to, the outcome of pending shareholder litigation; competition in the market for holograms; retaining and attracting key employees; and changes in business conditions which might impact customers and suppliers. The Company undertakes no obligation to publicly release results of any of these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unexpected results.