<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
..X.. QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
..... TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period from _________to _________
Commission File Number 1-3410
AMERICAN BANKNOTE CORPORATION
(Exact name of Registrant as specified in its charter)
A Delaware I.R.S. Employer
Corporation No. 13-0460520
51 West 52nd Street, New York, New York 10019
Telephone - Area Code 212-582-9200
United States Banknote Corporation
(Former name or former address, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing for the past 90 days. Yes X No
At July 31, 1995 - 19,110,763 shares of common stock were outstanding.
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AMERICAN BANKNOTE CORPORATION
(formerly named United States Banknote Corporation)
FORM 10-Q
I N D E X
PAGE
NO.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements - Unaudited
Condensed Consolidated Balance Sheets
June 30, 1995 and December 31, 1994. . . . . . . . 3
Condensed Consolidated Statements of Operations
For the six months and second quarters ended
June 30, 1995 and 1994 . . . . . . . . . . . . . . 4
Condensed Consolidated Statements of Cash Flows
For the six months ended June 30, 1995 and 1994 5
Condensed Consolidated Statement of Stockholders' Equity
For the six months ended June 30, 1995 . . . . . . 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . 10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . 16
Item 2. Changes in Securities . . . . . . . . . . . . . . 16
Item 4. Submission of Matters to a Vote
of Security Holders. . . . . . . . . . . . . . . . 16
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . 17
<PAGE>
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except for share data)
<TABLE>
June December
30, 1995 31, 1994
ASSETS (Unaudited)
<S> <C> <C>
Current assets
Cash and cash equivalents. . . . . . . . . . . . . $ 22,767 $ 31,658
Accounts receivable, net of allowance for
doubtful accounts of $738 and $471. . . . . . . . 34,789 43,783
Other receivables. . . . . . . . . . . . . . . . . 5,416 4,767
Inventories. . . . . . . . . . . . . . . . . . . . 17,933 20,497
Deferred income tax benefits . . . . . . . . . . . 2,836 5,685
Prepaid expenses . . . . . . . . . . . . . . . . . 4,340 2,971
Total current assets . . . . . . . . . . . . 88,081 109,361
Property, plant and equipment, at cost,
net of accumulated depreciation and
amortization of $50,644 and $44,517. . . . . . . . 211,794 215,859
Other assets . . . . . . . . . . . . . . . . . . . 25,946 23,985
Excess of cost of investment in subsidiaries
over net assets acquired, net of accumulated
amortization of $2,448 and $1,851. . . . . . . . . 33,148 33,745
$ 358,969 $ 382,950
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portions of long-term debt . . . . . . . . $ 166 $ 359
Accounts payable and accrued expenses. . . . . . . 36,700 43,115
Total current liabilities. . . . . . . . . . 36,866 43,474
Long-term debt, net of unamortized discount
of $1,173 and $1,221 . . . . . . . . . . . . . . . 191,241 191,192
Other liabilities. . . . . . . . . . . . . . . . . . 14,246 16,188
Deferred income taxes . . . . . . . . . . . . . . . 64,035 69,319
306,388 320,173
Commitments and Contingencies
Stockholders' equity
Preferred Stock, authorized 5,000,000 shares,
no shares issued or outstanding . . . . . . . . . - -
Common Stock, par value $.01 per share,
authorized 50,000,000 shares; issued
19,391,763 shares and 19,289,888 shares . . . . . 194 193
Capital surplus. . . . . . . . . . . . . . . . . . 67,091 66,883
Retained earnings (deficit). . . . . . . . . . . . (13,451) (3,046)
Treasury stock, at cost (281,000 shares) . . . . . (1,253) (1,253)
Total stockholders' equity . . . . . . . . . 52,581 62,777
$ 358,969 $ 382,950
</TABLE>
See notes to condensed consolidated financial statements.
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AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
(Amounts in thousands, except per share data)
<TABLE>
Six Second
Months Ended Quarter Ended
June 30 June 30
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Sales . . . . . . . . . . . . . . . $ 96,659 $ 96,303 $ 47,591 $ 52,688
Costs and expenses
Cost of goods sold. . . . . . . . . 70,098 57,141 38,149 32,174
Selling and administrative . . . . 20,509 18,805 10,561 9,712
Depreciation and amortization . . . 6,555 6,434 3,310 3,227
97,162 82,380 52,020 45,113
(503) 13,923 (4,429) 7,575
Other (expense) income
Interest expense. . . . . . . . . . (11,460) (9,553) (5,692) (5,467)
Foreign exchange gain
(loss), net . . . . . . . . . . . 58 (7,899) (10) (3,460)
Other, net. . . . . . . . . . . . . 1,070 824 603 475
(10,332) (16,628) (5,099) (8,452)
Loss before income taxes. . . . . . (10,835) (2,705) (9,528) (877)
Income tax charge (benefit). . . . . (430) (1,271) 80 (412)
Loss before extraordinary item. . . (10,405) (1,434) (9,608) (465)
Extraordinary item . . . . . . . . . - (114) - (114)
NET LOSS. . . . . . . . . . . . . . $(10,405) $ (1,548) $ (9,608) $ (579)
Weighted average number of
common and common equivalent
shares outstanding. . . . . . . . 19,070 19,060 19,120 19,060
Net loss per share:
Operations. . . . . . . . . . . . . $ (.55) $ (.07) $ (.50) $ (.02)
Extraordinary item. . . . . . . . . - (.01) - (.01)
Net loss per share. . . . . . . . $ (.55) $ (.08) $ (.50) $ (.03)
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE>
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AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(Amounts in thousands)
<TABLE>
Six Months Ended
June 30
<S> <C> <C>
1995 1994
Operating Activities
Net cash from operations, after adjustments
to reconcile net loss to net cash
provided by operating activities. . . . . . . . $ (5,297) $ 13,140
Accounts and other receivables. . . . . . . . . 7,642 (7,370)
Inventories . . . . . . . . . . . . . . . . . . 2,564 (1,079)
Prepaid and other assets. . . . . . . . . . . . (1,585) (1,186)
Accounts payable and accrued expenses . . . . . (4,732) (1,365)
Deferred debt costs . . . . . . . . . . . . . . - (3,769)
Other . . . . . . . . . . . . . . . . . . . . . (3,899) (3,353)
Net cash used in Operating Activities. . . . . . . (5,307) (4,982)
Investing Activities
Capital expenditures, net . . . . . . . . . . . . (2,062) (3,791)
Other long-term investments. . . . . . . . . . . . (1,321) -
Net cash used in Investing Activities. . . . . . . (3,383) (3,791)
Financing Activities
Proceeds from 11 5/8% Senior Notes . . . . . . . . - 63,718
Proceeds from issuance of Common Stock . . . . . . 18 122
Repayment of bank borrowings . . . . . . . . . . . - (40,000)
Acquisition of treasury stock. . . . . . . . . . . - (128)
Payment of other long-term
obligations and other . . . . . . . . . . . . . (192) (284)
Net cash (used in) provided by
Financing Activities. . . . . . . . . . . . . . (174) 23,428
Effect of foreign currency exchange rate
changes on cash and cash equivalents . . . . . . . (27) 188
Increase (decrease) in cash
and cash equivalents . . . . . . . . . . . . . . . (8,891) 14,843
Cash and cash equivalents - beginning of period. . . 31,658 15,437
Cash and cash equivalents - end of period . . . . . $ 22,767 $ 30,280
</TABLE>
See notes to condensed consolidated financial statements.
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AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY -
UNAUDITED
SIX MONTHS ENDED JUNE 30, 1995
(Amounts in thousands)
<TABLE>
Retained
Common Stock Capital Earnings Treasury Total
Shares Amount Surplus (Deficit) Stock Equity
<S> <C> <C> <C> <C> <C> <C>
Balance -
January 1, 1995 19,290 $193 $66,883 $(3,046) $(1,253) $62,777
Issuance of common
shares and other 102 1 208 209
Net loss (10,405) (10,405)
Balance -
June 30, 1995 19,392 $194 $67,091 $(13,451) $(1,253) $52,581
</TABLE>
See notes to condensed consolidated financial statements.
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AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
Note A - Basis of Presentation
As of July 1, 1995, the name of the corporation was changed to
American Banknote Corporation from United States Banknote Corporation.
The accompanying unaudited condensed consolidated financial
statements do not contain all disclosures required by generally accepted
accounting principles. Reference should be made to the Company's Annual
Report on Form 10-K and Form 10-K/A for the year ended December 31,
1994. The accompanying unaudited condensed consolidated financial
statements reflect all adjustments (consisting of normal recurring
adjustments) which are, in the opinion of management, necessary for a
fair statement of the results of the interim periods presented and are
not necessarily indicative of the results which may be expected for a
full fiscal year.
In May 1994, the Company wrote off as a net extraordinary charge to
income $0.1 million of deferred debt expenses, net of tax benefits
(approximately $0.1 million), related to the early extinguishment of the
Company's bank indebtedness. (See Note C).
Primary and fully-diluted loss per share are the same.
Cash tax payments for the six months ended June 30, 1995 and 1994,
amounted to approximately $1.2 million in both periods. Cash interest
payments for the six months ended June 30, 1995 and 1994 amounted to
approximately $10.5 million and $7.7 million, respectively. In
addition, a net cash interest payment of $0.3 million was made in the
six months ended June 30, 1995 versus the receipt of net cash interest
of $0.7 million in the six months ended June 30, 1994 under interest
rate swap agreements.
The fair value of the Company's swap and cap agreements represented a
net payable position of approximately $0.7 million as of June 30, 1995.
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AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
Note B - Inventories
Inventories consist of the following (in thousands):
June December
30, 1995 31, 1994
<TABLE>
<S> <C> <C>
Work in process. . . . . . . . . . . . $ 10,347 $ 12,963
Raw materials and supplies . . . . . . 7,586 7,534
Total inventories . . . . . . . . . $ 17,933 $ 20,497
</TABLE>
Note C - Senior Debt
Senior debt consists of the following (in thousands):
June December
30, 1995 31, 1994
<TABLE>
<S> <C> <C>
10-3/8% Senior Notes,
due June 1, 2002 . . . . . . . . . $126,500 $126,500
11-5/8% Senior Notes,
due August 1, 2002,
net of unamortized discount
of $1,173 and $1,221 (a). . . . . . 63,827 63,779
Other long-term obligations. . . . . . 1,080 1,272
Less current portion . . . . . . . . . (166) (359)
Total senior debt . . . . . . . . . $191,241 $191,192
</TABLE>
(a) On May 4, 1994, the Company completed a private placement of
$65 million principal amount of the 11-5/8% Senior Notes. The
proceeds were used, in part, to prepay $40 million outstanding
indebtedness under bank borrowings.
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AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
Note D - Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses consist of the following (in
thousands):
June December
30, 1995 31, 1994
<TABLE>
<S> <C> <C>
Accounts payable . . . . . . . . . . . $ 8,978 $10,633
Accrued expenses . . . . . . . . . . . 5,525 9,924
Customers' advances. . . . . . . . . . 6,243 6,656
Salaries and wages . . . . . . . . . . 5,887 5,645
Restructuring and merger -
related accruals. . . . . . . . . . 4,072 4,202
Interest payable . . . . . . . . . . . 3,476 3,550
Other . . .. . . . . . . . . . . . . . 2,519 2,505
Total accounts payable
and accrued expenses. . . . . . $36,700 $43,115
</TABLE>
Note E - Commitments and Contingencies
The Company is involved in various litigations (reference is made to
"Part II - Other Information, Item 1. Legal Proceedings" herein), the
adverse determination of which would have a material adverse effect on
the financial condition or results of operations of the Company. The
Company believes, however, that it has good and meritorious defenses to
the litigations and intends to vigorously defend against such actions.
<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Comparison of Results of the Six Months Ended June 30, 1995
With the Six Months Ended June 30, 1994
Sales in 1995 increased by $0.4 million from 1994. Government and
Corporate and Commercial sales decreased $1.4 million and $2.2 million,
respectively. Holographic sales increased $4.0 million. The decrease
in Government sales is primarily due to food coupons ($4.0 million) and
U.S. Postal ($1.4 million), partially offset by increases in currency
($1.5 million) automobile vouchers, drivers licenses and other product
sales ($2.5 million). The reduction in food coupon sales reflects a
trend that can be expected to continue through the rest of the year.
See "Liquidity and Capital Resources." The decrease in Corporate and
Commercial sales is primarily due to decreases in stocks and bonds ($7.2
million) and personalized checks and other product sales ($0.9 million),
partially offset by increases in prepaid telephone card sales ($5.9
million). The increase in Holographic sales is primarily in credit
cards. The change in various components of sales is affected by the
timing of contract awards and delivery requirements of customers.
Cost of goods sold increased $13.0 million (22.7%) from 1994 and as
a percentage of sales was 72.5% in 1995 as compared to 59.3% in 1994.
Cost of goods sold increased ($6.2 million) mainly due to the write-off
of inventory related to work for an overseas customer that went out of
business, manufacturing losses on certain other orders and a change in
product mix. The Company does not expect to incur additional charges
from the inventory and manufacturing losses in the future. The
increased cost of sales percentage also was impacted by reduced margins
in Brazil since margins, in the prior year, were higher as sales
included inflationary price adjustments which have now been eliminated
as part of a new economic stabilization program. While margins were
lower due to this program, earnings were favorably affected by the
virtual elimination of translation losses. The new prepaid telephone
card production lines in Brazil increased fixed manufacturing cost which
was offset in part by lower domestic fixed manufacturing cost. The
product mix in any given period is not indicative of the expected
product mix which can be expected in future periods.
<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - Continued
Selling and administrative expenses in 1995 increased by $1.7
million from 1994 (9.1%) primarily as a result of the settlement of an
executive severance agreement and increased commission expense in
Brazil. As a percentage of sales, selling and administrative expenses
increased to 21.2% from 19.5%.
Interest expense increased $1.9 million in 1995 primarily due to the
issuance of $65 million 11-5/8% Senior Notes during May 1994 at a higher
rate of interest than the $40 million of bank debt it replaced. In
addition, the Company incurred net interest expense ($0.2 million) in
1995 versus income ($0.3 million) in 1994 under its interest rate swap
agreements as a result of higher interest rates.
Foreign exchange gain (loss), net, is a result of the Company's
translation of Brazilian local currency financial statements into
dollars in accordance with Statement of Financial Accounting Standards
("SFAS") No. 52 "Foreign Currency Translation." As a result, the
translation adjustment is recorded as a period item. Improving economic
conditions in Brazil stemming from the country's July 1994 economic
stabilization program resulted in a $8.0 million reduction in foreign
exchange loss.
Income taxes (benefits) are based on book income (loss) using an
estimated annual effective tax rate that assumes various taxation
assumptions such as state and local taxes, utilization of foreign taxes
as credits against US federal taxes and timing of certain deductions.
The loss for the period resulted in a change in the annual estimated
effective tax rate, accordingly, the Company recorded a nominal tax
benefit primarily due to the tax benefit from domestic losses being
offset by U.S. and Brazilian taxes on profits earned in Brazil.
The extraordinary item of $0.1 million in 1994, represents the
writeoff of deferred debt expenses, net of tax benefits (approximately
$0.1 million) related to the early extinguishment of the Company's $40
million bank indebtedness.
<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - Continued
Comparison of Results of the Second Quarter Ended June 30, 1995
With the Second Quarter Ended June 30, 1994
Sales in 1995 decreased by $5.1 million (9.7%) from 1994.
Government and Corporate and Commercial sales decreased $4.5 million and
$2.2 million, respectively, partially offset by increased Holographic
sales of $1.6 million. The decrease in Government is primarily due to
food coupons ($5.6 million) partially offset by increases in currency
($0.6 million), automobile vouchers and drivers licenses ($0.5 million).
The reduction in food coupon sales reflects a trend that can be expected
to continue through the rest of the year. See "Liquidity and Capital
Resources". The decrease in Corporate and Commercial sales is primarily
due to decreases in stocks and bonds ($3.8 million), commercial and
other product sales ($2.4 million), partially offset by increases in
prepaid telephone cards ($3.3 million) and travelers check sales ($0.7
million). The increase in Holographic sales is primarily in credit
cards. The change in various components of sales is affected by the
timing of contract awards and delivery requirements of customers.
Cost of goods sold increased $6.0 million (18.6%) from 1994 and as a
percentage of sales was 80.2% in 1995 as compared to 61.1% in 1994.
Despite lower sales, cost of goods sold increased ($6.2 million) mainly
due to the write-off of inventory related to work for an overseas
customer that went out of business, manufacturing losses on certain
other orders and a change in product mix. The Company does not expect to
incur additional charges from the inventory and manufacturing losses in
the future. The increased cost of sales percentage also was impacted
by reduced margins in Brazil since margins, in the prior year, were
higher as sales included inflationary price adjustments which have now
been eliminated as part of a new economic program. While margins were
lower due to this program, earnings were favorably affected by the
virtual elimination of translation losses. Fixed costs as a percentage
of sales increased due to lower sales. The product mix in any given
period is not indicative of the expected product mix which can be
expected in future periods.
Selling and administrative expenses increased by $0.8 million from
1994 primarily due to the settlement of an executive severance
agreement. As a result of lower sales and increased costs, selling and
administrative expenses as a percentage of sales, increased to 22.2%
from 18.4%.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - Continued
Interest expense increased $0.2 million in 1995. The Company
incurred net interest expense ($.1 million) in 1995 versus income ($0.3
million) in 1994 under its interest rate swap agreements as a result of
higher interest rates.
Foreign exchange translation loss, net, is a result of the Company's
translation of Brazilian local currency financial statements into
dollars in accordance with Statement of Financial Accounting Standards
("SFAS") No. 52 "Foreign Currency Translation." As a result, the
translation adjustment is recorded as a period item. See "Impact of
Inflation." Improving economic conditions in Brazil stemming from the
country's July 1994 economic stabilization program resulted in a $3.5
million reduction in foreign exchange loss.
Income taxes (benefits) are based on book income (loss) using an
estimated annual effective tax rate that assumes various taxation
assumptions such as state and local taxes, utilization of foreign taxes
as credits against US federal taxes and timing of certain deductions.
As a result of the change in the annual estimated effective tax rate,
the Company reduced the amount of the tax benefit recorded in the first
quarter of 1995.
The extraordinary item of $0.1 million in 1994, represents the
writeoff of deferred debt expenses, net of tax benefits (approximately
$0.1 million) related to the early extinguishment of the Company's $40
million bank indebtedness.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - Continued
LIQUIDITY AND CAPITAL RESOURCES
For the six months ended June 30, 1995, the Company's net cash used
in operating activities was approximately $5.3 million. The net loss of
$10.4 million was adjusted by $5.1 million to reconcile the net loss to
net cash from operations before changes in operating assets and
liabilities. The non-cash adjustments principally consisted of
depreciation and amortization of $6.6 million.
The net decrease in accounts and other receivables of $7.6 million
and inventory of $2.6 million provided cash during the period. Cash was
used to reduce accounts payable and accrued expenses by $4.7 million,
reduce other liabilities by $3.9 million and increase prepaid and other
assets by $1.6 million.
Net cash used in investing activities was $3.4 million as a result
of capital expenditures for new equipment of $2.1 million and a long-term
investment in marketable securities of $1.3 million.
Net cash used for financing activities amounted to $.2 million
resulting primarily from payments of long-term debt.
At June 30, 1995, the Company had approximately $22.8 million in
cash and cash equivalents, $126.5 million of 10-3/8% Senior Notes
outstanding, $65 million of 11-5/8% Senior Notes outstanding, and
approximately $15.6 million of availability under the Credit Agreement,
after giving effect to $4.4 million of outstanding letters of credit.
The Company is currently negotiating an additional extension of its
Credit Agreement which expires on August 31, 1995.
Certain states are continuing the evaluation of the feasibility of
utilizing electronic benefit transfer ("EBT") programs which replace the
traditional methods of distribution of public assistance benefits to
recipients, including replacing food coupons with debit-type cards. Food
coupon production constitutes a significant component of the Company's
sales and earnings. While sales of food coupons have increased in recent
years, recent reforms proposed by Congress as well as EBT programs and
the USDA's high level of food coupon inventory will reduce the Company's
volume of food coupon production for 1995 and in future years. The USDA
is currently soliciting bids for the future printing of food coupons at
substantially lower volumes than in prior years. Reference is made to
the Company's Annual Report on Form 10-K and Form 10-K/A for the year
ended December 31, 1994.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES - continued
Management of the Company believes that cash flows from operations
of the Company, together with its cash balances and available
borrowings, will be sufficient to service its working capital and debt
service requirements and fund capital expenditures for the foreseeable
future.
NEW ACCOUNTING STANDARD
In March 1995, SFAS No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed Of," was issued
and contains changes to current accounting practices and must be adopted
for fiscal years beginning after December 15, 1995. Management
estimates that the adoption of this Standard will not have a material
effect on the Company's financial statements and will be adopted in
1996.
IMPACT OF INFLATION
The Company's domestic operations are not significantly affected by
inflation. ABN-Brazil sales for 1995 contributed a significant portion
of consolidated sales of the Company (37.6%). Reference is made to the
Company's Form 10-K and Form 10-K/A for the year ended December 31, 1994
"Impact of Inflation."
On July 1, 1994 the Brazilian government introduced a new currency,
the "Real" as part of the government's economic stabilization program
designed to reduce the country's hyperinflation. Prior to the
introduction of the Real, the Brazilian government created a new
monetary unit (the "URV") as a transition mechanism. During this period
prices were re-negotiated in URV's. From April 1 to June 30, 1994
inflation increased over pre URV levels, resulting in higher than
anticipated translation losses. However, the inflation rate has
decreased substantially (to approximately 1.2% per month in June 1995
versus 45.2% per month in June 1994) and in 1995 Company realized a
nominal translation gain. The Company cannot predict what impact, if
any, such initiatives will have on the Brazilian economy or on
ABN-Brazil's results of operations.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to the Company's Annual Report on Form 10-K and
Form 10-K/A for the year ended December 31, 1994.
ITEM 2. CHANGES IN SECURITIES,
A Certificate of Amendment to the Certificate of Incorporation of
the Corporation was filed with the Secretary of State of Delaware on
June 6, 1995 to change the name of the Corporation from United States
Banknote Corporation to American Banknote Corporation, effective July 1,
1995.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
As a result of a vote of stockholders at the Annual Meeting of
Stockholders held on June 6, 1995, it was resolved that:
1. The Directors nominated for election were elected with the votes
cast as follows:
Nominee Votes in Favor Votes Withheld
Morris Weissman 15,189,836 1,114,874
Ron K. Glover 15,187,393 1,117,317
Bette B. Anderson 15,187,057 1,117,653
C. Gerald Goldsmith 15,191,688 1,113,022
Ira J. Hechler 15,191,977 1,112,733
David S. Rowe-Beddoe 15,191,670 1,113,040
2. The proposal to change the Company's name from United States
Banknote Corporation to American Banknote Corporation was
approved by a vote of 16,083,141 shares in favor, 170,132 shares
against and 51,437 shares abstained; and
3. The proposal to approve the appointment of Deloitte & Touche LLP
as independent auditors for the fiscal year ending December 31, 1995
was approved by a vote pf 16,106,598 shares in favor, 146,114 shares
against and 51,998 shares abstained; and
4. The stockholder proposal that the Board of Directors be requested
to take the steps necessary to provide that a stenographic record
be kept of the annual meeting and be made available to
stockholders for a reasonable charge was not approved by a vote
of 2,415,273 shares in favor, 3,997,126 shares against, 311,420 shares
abstained and 9,580,891 shares were broker non-votes.
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit
Number
3.1 Certificate of Incorporation of the Company including
Amendment #1 thereto.
3.2 By-Laws of the Company including amendments thereto
4.1 Third Amendment, dated as of May 26, 1995, to Credit
Agreement among American Bank Note Company and Citibank,
N.A., as Agent, dated as of June 23, 1993
4.2 Temporary Waiver of Financial Covenants, dated as June
30, 1995, to Credit Agreement among American Bank Note
Company and Citibank, N.A., as Agent, dated as of June
23, 1993
10.1 Severance Agreement effective as of July 19, 1995.
27 Article 5 Financial Data Schedule
(b) Reports on Form 8-K
a) Form 8-K filed June 5, 1995, Item 5 Other Events
Item 7 Exhibits
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
AMERICAN BANKNOTE CORPORATION
(formerly named United States Banknote Corporation)
By: s/ John T. Gorman
John T. Gorman
Executive Vice President,
Chief Financial Officer and
Chief Accounting Officer
Date: August 11, 1995
<PAGE>
<PAGE>
Exhibit Index
List of Exhibits Pursuant to Item 601 of Regulation S-K: Exhibit
Page #
Exhibit
3.1 Certificate of Incorporation of the Company including
Amendment #1 thereto
3.2 By-Laws of the Company including amendments thereto
4.1 Third Amendment, dated as of May 26, 1995, to Credit
Agreement among American Bank Note Company and Citibank,
N.A., as Agent, dated as of June 23, 1993
4.2 Temporary Waiver of Financial Covenants, dated as June 30,
1995, to Credit Agreement among American Bank Note Company
and Citibank, N.A., as Agent, dated as of June 23, 1993
10.1 Severance Agreement effective as of July 19, 1995
27 Article 5 Financial Data Schedule
<PAGE>
<PAGE>
BLANK PAGE
<PAGE>
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
UNITED STATES BANKNOTE CORPORATION
_________________________________________
ADOPTED IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 242 OF THE
DELAWARE GENERAL CORPORATION LAW
________________________________________
It is hereby certified that:
1. The present name of the corporation (the
"Corporation") is United States Banknote Corporation.
2. The Certificate of Incorporation of the
Corporation was filed with the Secretary of State of Delaware on
June 29, 1993.
3. Article FIRST of the Certificate of Incorporation
of the Corporation is hereby amended to read in its entirety as
follows:
FIRST: The name of this corporation (hereinafter
called the "Corporation") is AMERICAN BANKNOTE
CORPORATION.
4. The foregoing amendment was declared advisable by
the directors of the Corporation pursuant to a resolution duly
adopting the amendment on March 3,1995, and was duly adopted in
accordance with the provisions of Section 242 of the Delaware
General Corporation Law by the affirmative vote of the
stockholders of the Corporation.
5. The foregoing amendment is to become effective
July 1, 1995.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this
Certificate to be signed by Harvey J. Kesner, its Senior Vice
President, and Ward A.W. Urban, its Assistant Secretary, this
6 day of June, 1995
UNITED STATES BANKNOTE CORPORATION
By: Harvey J. Kesner
Harvey J. Kesner
Senior Vice President
Attest:
By: Ward A.W. Urban
Ward A.W Urban, Assistant Secretary
<PAGE>
CERTIFICATE OF INCORPORATION
OF
UNITED STATES BANKNOTE CORPORATION
The undersigned, a natural person, for the purpose of
organizing a corporation for conducting the business and
promoting the purposes hereinafter stated, under the provisions
and subject to the requirements of the laws of the State of
Delaware (particularly Chapter 1, Title 8 of the Delaware Code
and the acts amendatory thereof and supplemental thereto, known,
identified and referred to as the "General Corporation Law of
the State of Delaware") hereby certifies that:
FIRST: The name of this Corporation (hereinafter called
the "Corporation") is United States Banknote Corporation.
SECOND: The address, including street, number, city and
county, of the registered office of the Corporation in the State
of Delaware is Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801, County of New Castle; and the name
of the registered agent of the Corporation in the State of
Delaware at such address is The Corporation Trust Company.
THIRD: The nature of the business and of the purposes to
be conducted and promoted by the Corporation are to conduct any
lawful business, to promote any lawful purpose, and to engage in
any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of
Delaware.
FOURTH: The Corporation shall have the authority to issue
the following classes of stock:
(1) a total of fifty million (50,000,000) shares of
Common Stock, each of such shares of Common Stock with a
par value of one cent ($.01); and
<PAGE>
(2) a total of five million (5,000,000) shares of
Series Preferred Stock, each of such shares of Preferred
Stock with a par value of one cent ($.01 to be issued (I)
in such series and with such designations, powers,
preferences, rights, voting rights and such qualifications,
limitations or restrictions thereof as the Board of
Directors shall fix by resolution or resolutions which are
permitted by Section 151 of the Delaware General
Corporation Law for any such series of Preferred Stock, and
(ii) in such number of shares in each series as the Board
of Directors shall, by resolution, fix provided that the
aggregate number of all shares of Series Preferred Stock
issued does not exceed the number of shares of Series
Preferred Stock authorized hereby.
FIFTH: The name and mailing address of the incorporator
are as follows: Julie A. Beyers, Stroock & Stroock & Lavan,
Seven Hanover Square, New York, New York 10004.
SIXTH: Whenever a compromise or arrangement is proposed
between this Corporation and its creditors or any class of them
and/or between this Corporation and its stockholders or any
class of them, any court of equitable jurisdiction within the
State of Delaware may, on the application in a summary way of
this Corporation or any creditor or stockholder thereof or on
the application of any receiver or receivers appointed for this
Corporation under the provisions of Section 291 of Title 8 of
the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for this
Corporation under the provisions of Section 279 of Title 8 of
the Delaware Code, order a meeting of the creditors or class of
creditors, and/or of the stockholders or class of stockholders,
of this Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number
representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders,
of this Corporation, as the case may be, agree to any compromise
or arrangement and to any reorganization of this Corporation as
a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if
sanctioned by the court to which the said application has been
made, be binding on all the creditors or class of creditors,
and/or on all the stockholders or class of stockholders, of this
Corporation, as the case may be, and also on this Corporation.
SEVENTH: The number of directors of the Corporation shall
be not less than three nor more than 21, such number to be fixed
from time to time exclusively by the Board of Directors in
accordance with the By-Laws of the Corporation.
<PAGE>
EIGHTH: The original By-Laws of the Corporation shall be
adopted by the incorporator. Thereafter, the power to make,
alter, or repeal the By-Laws, and to adopt any new By-Law, shall
be vested in the Board of Directors, subject to the power of the
holders of the capital stock of the Corporation to alter, amend
or repeal the By-Laws.
NINTH: To the fullest extent that the General Corporation
Law of the State of Delaware, as it exists on the date hereof or
as it may hereafter be amended, permits the limitation or
elimination of the liability of directors, no director of this
Corporation shall be personally liable to this Corporation or
its stockholders for monetary damages for breach of fiduciary
duty as a director. Notwithstanding the foregoing, a director
shall be liable to the extent provided by applicable law (1) for
any breach of the directors' duty of loyalty to the Corporation
or its stockholders, (2) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation
of law, (3) under Section 174 of the General Corporation Law of
the State of Delaware, or (4) for any transaction from which the
director derived any improper personal benefit. Neither the
amendment or repeal of this Article, nor the adoption of any
provision of this Certificate of Incorporation inconsistent with
this Article shall adversely affect any right or protection of a
director of the Corporation existing at the time of such
amendment or repeal.
TENTH: The Corporation shall, to the fullest extent
permitted by Section 145 of the General Corporation Law of the
State of Delaware, as the same may be amended and supplemented,
or by any successor thereto, indemnify any and all persons whom
it shall have power to indemnify under said section from and
against any and all of the expenses, liabilities or other
matters referred to in or covered by said section. The
Corporation shall advance expenses to the fullest extent
permitted by said section. Such right to indemnification and
advancement of expenses shall continue as to a person who has
ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators
of such a person. The indemnification and advancement of
expenses provided for herein shall not be deemed exclusive of
any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any By-Law,
agreement, vote of stockholders or disinterested directors or
otherwise.
<PAGE>
ELEVENTH: The Corporation reserves the right to amend,
alter, change or repeal any provision contained in this
Certificate of Incorporation, and any other provisions
authorized by the laws of the State of Delaware at the time in
force may be added or inserted in the manner now or hereafter
provided herein or by statute, and all rights, preferences and
privileges of whatsoever nature conferred upon stockholders,
directors or any other persons whomsoever by and pursuant to
this Certificate of Incorporation in its present form or as
amended are granted subject to the rights reserved in this
Article ELEVENTH.
Executed at New York, New York on June 28, 1993.
By: Julie A. Beyers
JULIE A. BEYERS,
Incorporator
UNITED STATES BANKNOTE CORPORATION
(Note: Name changed to American Banknote Corporation on July 1, 1995)
BY-LAW AMENDMENTS ADOPTED JUNE 6, 1994
ARTICLE I Section 6(k) and (l)
ARTICLE I Sec. 6(k)
Notice of Stockholder Proposal. At an annual meeting of the
stockholders, only such business shall be conducted as shall have been
properly brought before the meeting. To be properly brought before an
annual meeting business must be (a) specified in the notice of meeting
(or any supplement thereto) given by or at the direction of the Board of
Directors, (b) otherwise properly brought before the meeting by or at the
direction of the Board of Directors, or otherwise properly brought
before the meeting by a stockholder. For business to be properly brought
before an annual meeting by a stockholder, the stockholder must have
given timely notice thereof in writing to the Secretary of the
Corporation. To be timely, a stockholder's notice must be personally
delivered to or mailed (by United States mail, postage pre-paid) and
received by the Secretary at the principal executive offices of the
Corporation not later than the following dates: (1) 60 days in advance of
such meeting if such meeting is to be held on a day which is within 30
days preceding the anniversary of the previous year's annual meeting or
90 days in advance of such meeting if such meeting is to be held on or
after the anniversary of the previous year's annual meeting; and (2) with
respect to any other annual meeting of stockholders, the close of
business on the tenth day following the date public disclosure of the
date of such meeting is first made. A stockholder's notice to the
Secretary shall set forth as to each matter the stockholder proposes to
bring before the annual meeting (a) a brief description of the business
desired to be brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (b) the name and address,
as they appear on the Corporation's books, of the stockholder proposing
such business, the class and number of shares of the Corporation
which are beneficially owned by the stockholder, and (d) any material
interest of the stockholder in such business. Notwithstanding anything
in the By-Laws to the contrary, no business shall be conducted at any
annual meeting except in accordance with the procedures set forth in this
paragraph __. The Chairman of the annual meeting shall, if the facts
warrant, determine and declare to the meeting that business was not
properly brought before the meeting in accordance with the provisions of
this paragraph __, and if he should so determine, he shall so declare to
the meeting and any such business not properly brought before the meeting
shall not be transacted.<PAGE>
<PAGE>
ARTICLE I Sec. 6(l)
Procedure for Nominations by Stockholders. Nominations of
candidates for election as directors at any meeting of stockholders
called for the election of directors (an "Election Meeting") may be made
by the Board of Directors or by any stockholder entitled to vote at such
Election Meeting only in accordance with the procedures established by
this paragraph __. Any stockholder entitled to vote for the election of
a director at an Election Meeting may nominate one or more persons for
such election only if written notice of such stockholder's intent to make
such nomination is given, either by personal delivery or by United States
mail postage pre-paid, to the Secretary of the Corporation. Such notice
must be received by the Secretary at the principal executive offices of
the Corporation not later than the following dates: (1) with respect to
an annual meeting of stockholders, 60 days in advance of such meeting if
such meeting is to be held on a day which is within 30 days preceding the
anniversary of the previous year's annual meeting or 90 days in advance
of such meeting if such meeting is to be held on or after the anniversary
of the previous year's annual meeting; and (2) with respect to any other
annual meeting of stockholders or a special meeting of stockholders, the
close of business on the tenth day following the date public disclosure
of the date of such meeting is first made. The written notice shall set
forth (a) as to each person whom the stockholder proposes to nominate for
election as director (I) the name, age, business address and residence
address of each nominee proposed in such notice, (ii) the principal
occupation or employment of each such nominee, (iii) the number of shares
of capital stock of the Corporation which are beneficially owned by each
such nominee, and (iv) such other information concerning each such
nominee as would be required under the rules of the United States
Securities and Exchange Commission to be set forth in a proxy statement
soliciting proxies for the election of such nominee as a director
(including without limitation, a signed consent of each such nominee to
serve as a director of the Corporation, if elected) and (b) as to the
stockholder giving the notice (I) the name and address, as they appear on
the Corporation's books, of such stockholder and (ii) the number of
shares of capital stock of the Corporation which are beneficially owned
by such stockholder. At the request of the Board of Directors, any
person nominated by the Board of Directors for election as a Director
shall furnish to the Secretary of the Corporation that information
required to be set forth in a stockholders' notice of nomination which
pertains to the nominee. No person shall be eligible for election as a
Director of the Corporation unless nominated in accordance with the
procedures set forth in this paragraph ____. The Chairman of the meeting
shall, if the facts warrant, determine and declare to the meeting that a
nomination was not made in accordance with the procedures prescribed by
the By-Laws, and if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.
<PAGE>
BY-LAWS
OF
UNITED STATES BANKNOTE CORPORATION
(A Delaware Corporation)
(Note: Name changed to American Banknote Corporation on July 1, 1995)
ARTICLE I
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK.
(a) Every holder of stock in the Corporation shall be entitled to
have a certificate signed by, or in the name of, the Corporation by the
Chairman or Vice-Chairman of the Board of Directors, if any, or by the
President or a Vice-President and by the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary of the Corporation
representing the number of shares owned by such person in the
Corporation. If such certificate is countersigned by a transfer agent
other than the Corporation or its employee or by a registrar other than
the Corporation or its employee, any other signature on the certificate
may be a facsimile. In case any officer, transfer agent, or registrar
who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or
registrar before such certificate is issued, it may be issued by the
Corporation with the same effect as if such person were such officer,
transfer agent or registrar at the date of issue.
(b) Whenever the Corporation shall be authorized to issue more
than one class of stock or more than one series of any class of stock,
and whenever the Corporation shall issue any shares of its stock as
partly paid stock, the certificates representing shares of any such class
or series or of any such partly paid stock shall set forth thereon the
statements prescribed by the General Corporation Law. Any restrictions
on the transfer or registration of transfer of any shares of stock of any
class or series shall be noted conspicuously on the certificate
representing such shares.
The Corporation may issue a new certificate of stock in place
of any certificate theretofore issued by it, alleged to have been lost,
stolen or destroyed, and the Board of Directors may require the owner of
any lost, stolen or destroyed certificate, or such person's legal
representative, to give the Corporation a bond sufficient to indemnify
the Corporation against any claim that may be made against it on account
of the alleged loss, theft or destruction of any such certificate or the
issuance of any such new certificate.
<PAGE>
2. FRACTIONAL SHARE INTERESTS.
The Corporation may, but shall not be required to, issue fractions
of a share.
3. STOCK TRANSFERS.
Upon compliance with provisions restricting the transfer or
registration of transfer of shares of stock, if any, transfers or
registration of transfer of shares of stock of the Corporation shall be
made only on the stock ledger of the Corporation by the registered holder
thereof, or by such person's attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary of the Corporation or
with a transfer agent or a registrar, if any, and on surrender of the
certificate or certificates for such shares of stock properly endorsed
and the payment of all taxes due thereon.
4. RECORD DATE FOR STOCKHOLDERS.
(a) In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the Board of Directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing
the record date is adopted by the Board of Directors, and which record
date shall not be more than sixty nor less than ten days before the date
of such meeting. If no record date has been fixed by the Board of
Directors, the record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close
of business on the day next preceding the day on which notice is given,
or, if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the
adjourned meeting.
(b) In order that the Corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or
allotment of any rights or the stockholders entitled to exercise any
rights in respect of any change, conversion or exchange of stock, or for
the purpose of any other lawful action, the Board of Directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted, and which record date shall
be not more than sixty days prior to such action. If no record date has
been fixed, the record date for determining stockholders for any such
purpose shall be at the close of business on the day on which the Board
of Directors adopts the resolution relating thereto.
<PAGE>
5. MEANING OF CERTAIN TERMS.
As used herein in respect of the right to notice of a meeting of
stockholders or a waiver thereof or to participate or vote thereat or to
consent or dissent in writing in lieu of a meeting, as the case may be,
the term "share" or "shares" or "share of stock" or "shares of stock" or
"stockholder" or "stockholders" refers to an outstanding share or shares
of stock and to a holder or holders of record of outstanding shares of
stock when the Corporation is authorized to issue only one class of
shares of stock, and said reference is also intended to include any
outstanding share or shares of stock and any holder or holders of record
of outstanding shares of stock of any class upon which or upon whom the
Certificate of Incorporation confers such rights where there are two or
more classes or series of shares of stock or upon which or upon whom the
General Corporation Law confers such rights notwithstanding that the
Certificate of Incorporation may provide for more than one class or
series of shares of stock, one or more of which are limited or denied
such rights thereunder; provided, however, that no such right shall vest
in the event of an increase or a decrease in the authorized number of
shares of stock of any class or series which is otherwise denied voting
rights under the provisions of the Certificate of Incorporation,
including any preferred stock which is denied voting rights under the
provisions of the resolution or resolutions adopted by the Board of
Directors with respect to the issuance thereof.
6. STOCKHOLDER MEETINGS.
(a) TIME. The annual meeting shall be held on the date and at the
time fixed, from time to time, by the Board of Directors. A special
meeting shall be held on the date and at the time fixed by the Board of
Directors.
(b) PLACE. Annual meetings and special meetings shall be held at
such place, within or without the State of Delaware, as the Board of
Directors may, from time to time, fix. Whenever the Board of Directors
shall fail to fix such place, the meeting shall be held at the registered
office of the Corporation in the State of Delaware.
CALL. Annual meetings may be called by the Board of Directors
or by any officer instructed by the Board of Directors to call the
meeting. Special meetings of the stockholders may be called by the
Chairman of the Board of Directors whenever he shall deem it proper to do
so; and on the request to him in writing by a majority of the Directors
or by the holders of three-fifths of the total amount of the
Corporation's issued and outstanding capital stock which is regularly
entitled to vote.
<PAGE>
(d) NOTICE OR WAIVER OF NOTICE. Written notice of all meetings
shall be given, stating the place, date and hour of the meeting. The
notice of an annual meeting shall state that the meeting is called for
the election of Directors and for the transaction of other business which
may properly come before the meeting, and shall (if any other action
which could be taken at a special meeting is to be taken at such annual
meeting), state such other action or actions as are known at the time of
such notice. The notice of a special meeting shall in all instances
state the purpose or purposes for which the meeting is called and no
other business shall be transacted at such meeting. Except as otherwise
provided by the General Corporation Law, a copy of the notice of any
meeting shall be given, personally or by mail, not less than ten days nor
more than sixty days before the date of the meeting, unless the lapse of
the prescribed period of time shall have been waived, and directed to
each stockholder at such person's address as it appears on the records of
the Corporation. Notice by mail shall be deemed to be given when
deposited, with postage thereon prepaid, in the United States mail. If a
meeting is adjourned to another time, not more than thirty days hence,
and/or to another place, and if an announcement of the adjourned time and
place is made at the meeting, it shall not be necessary to give notice of
the adjourned meeting unless the Board of Directors, after adjournment,
fixes a new record date for the adjourned meeting. Notice need not be
given to any stockholder who submits a written waiver of notice before or
after the time stated therein. Attendance of a person at a meeting of
stockholders shall constitute a waiver of notice of such meeting, except
when the stockholder attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither
the business to be transacted at, nor the purpose of, any regular or
special meeting of the stockholders need be specified in any written
waiver of notice.
(e) STOCKHOLDER LIST. There shall be prepared and made, at least
ten days before every meeting of stockholders, a complete list of the
stockholders, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten days prior to the meeting
either at a place within the city where the meeting is to be held, which
place shall be specified in the notice of the meeting, or if not so
specified, at the place where the meeting is to be held. The list shall
also be produced and kept at the time and place of the meeting during the
whole time thereof, and may be inspected by any stockholder who is
present. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by
this section or the books of the Corporation, or to vote at any meeting
of stockholders.
<PAGE>
(f) CONDUCT OF MEETING. Meetings of the stockholders shall be
presided over by one of the following officers in the order of seniority
and if present and acting: the Chairman of the Board, if any, the Vice-
Chairman of the Board, if any, the President, a Vice President, a
chairman for the meeting chosen by the Board of Directors or, if none of
the foregoing is in office and present and acting, by a chairman to be
chosen by the stockholders. The Secretary of the Corporation or, in such
person's absence, an Assistant Secretary, shall act as secretary of every
meeting, but if neither the Secretary nor an Assistant Secretary is
present the chairman for the meeting shall appoint a secretary of the
meeting.
(g) PROXY REPRESENTATION. Every stockholder may authorize another
person or persons to act for such stockholder by proxy in all matters in
which a stockholder is entitled to participate, whether by waiving notice
of any meeting, voting or participating at a meeting, or expressing
consent or dissent without a meeting. Every proxy must be signed by the
stockholder or by such person's attorney-in-fact. No proxy shall be
voted or acted upon after three years from its date unless such proxy
provides for a longer period. A duly executed proxy shall be irrevocable
if it states that it is irrevocable and, if, and only as long as, it is
coupled with an interest sufficient in law to support an irrevocable
power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or
an interest in the Corporation generally.
(h) INSPECTORS AND JUDGES. The Board of Directors, in advance of
any meeting, may, but need not, appoint one or more inspectors of
election or judges of the vote, as the case may be, to act at the meeting
or any adjournment thereof. If an inspector or inspectors or judge or
judges are not appointed by the Board of Directors, the person presiding
at the meeting may, but need not, appoint one or more inspectors or
judges. In case any person who may be appointed as an inspector or judge
fails to appear or act, the vacancy may be filled by appointment made by
the person presiding thereat. Each inspector or judge, if any, before
entering upon the discharge of such person's duties, shall take and sign
an oath faithfully to execute the duties of inspector or judge at such
meeting with strict impartiality and according to the best of his
ability. The inspectors or judges, if any, shall determine the number of
shares of stock outstanding and the voting power of each, the shares of
stock represented at the meeting, the existence of a quorum and the
validity and effect of proxies, receive votes, ballots or consents, hear
and determine all challenges and questions arising in connection with the
right to vote, count and tabulate all votes, ballots or consents,
determine the result, and do such other acts as are proper to conduct the
election or vote with fairness to all stockholders. On request of the
person presiding at the meeting, the inspector or inspectors or judge or
judges, if any, shall make a report in writing of any challenge, question
or matter determined by such person or persons and execute a certificate
of any fact so found.
<PAGE>
(I) QUORUM. Except as the General Corporation Law or these By-
Laws may otherwise provide, the holders of a majority of the outstanding
shares of stock entitled to vote shall constitute a quorum at a meeting
of stockholders for the transaction of any business. The stockholders
present may adjourn the meeting despite the absence of a quorum. When a
quorum is once present to organize a meeting, it is not broken by the
subsequent withdrawal of any shareholders.
(j) VOTING. Each stockholder entitled to vote in accordance with
the terms of the Certificate of Incorporation and of these By-Laws, or,
with respect to the issuance of preferred stock, in accordance with the
terms of a resolution or resolutions of the Board of Directors providing
for the issuance thereof, shall be entitled to one vote (or, in the case
of preferred stock, such number of votes as is specified in he applicable
resolutions of the Board of Directors providing for the issuance
thereof), in person or by proxy, for each share of stock entitled to vote
held by such stockholder. In the election of Directors, a plurality of
the votes present at the meeting and entitled to vote on the election of
Directors shall elect. Any other action shall be authorized by the
affirmative vote of a majority of the shares present at the meeting and
entitled to vote on the subject matter, except where the Certificate of
Incorporation or the General Corporation Law prescribes a different
percentage of votes and/or a different exercise of voting power.
Voting by ballot shall not be required for corporate action except
as otherwise provided by the General Corporation Law.
ARTICLE II
DIRECTORS
1. FUNCTIONS AND DEFINITION.
The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors of the Corporation. The
use of the phrase "whole Board" herein refers to the total number of
Directors which the Corporation would have if there were no vacancies.
2. QUALIFICATIONS AND NUMBER.
A Director need not be a stockholder, a citizen of the United
States, or a resident of the State of Delaware. The initial Board of
Directors shall consist of three persons. Thereafter the number of
Directors constituting the whole board shall be at least three and not
more than 21. Subject to the provisions of the Certificate of
Incorporation, the number of Directors may be increased or decreased by
action of the Board of Directors.
<PAGE>
3. ELECTION AND TERM.
The first Board of Directors, unless the members thereof shall have
been named in the Certificate of Incorporation, shall be elected by the
incorporator or incorporators and shall hold office until the first
annual meeting of stockholders and until their successors have been
elected and qualified or until their earlier resignation or removal. Any
Director may resign at any time upon written notice to the Corporation.
Thereafter, Directors who are elected at an annual meeting of
stockholders, and Directors who are elected in the interim to fill
vacancies and newly created Directorships, shall hold office until the
next annual meeting of stockholders and until their successors have been
elected and qualified or until their earlier resignation or removal. In
the interim between annual meetings of stockholders or of special
meetings of stockholders called for the election of Directors and/or for
the removal of one or more Directors and for the filling of any vacancies
in the Board of Directors, including vacancies resulting from the removal
of Directors for cause or without cause, any vacancy in the Board of
Directors may be filled by the vote of a majority of the remaining
Directors then in office, although less than a quorum, or by the sole
remaining Director.
Subject to the rights of holders of any class or series of stock
having a preference over the Common Stock as to dividends or upon
liquidation, nominations for the election of Directors shall be made by
the Board of Directors or a proxy committee appointed by the Board of
Directors or by any stockholder entitled to vote in the election of
Directors generally. However, any stockholder entitled to vote in the
election of Directors generally may nominate one or more persons for
election as Directors at a meeting only if written notice of such
stockholder's intent to make such nomination or nominations has been
given, either by personal delivery or by United States mail, postage
prepaid, to the Secretary of the Corporation not later than (I) with
respect to an election to be held at an annual meeting of stockholders,
45 days in advance of such meeting, and (ii) with respect to an election
to be held at a special meeting of stockholders for the election of
Directors, the close of business on the seventh day following the date on
which notice of such meeting is first given to stockholders. Each such
notice from the stockholder to the Secretary shall set forth: (a) the
name and address of the stockholder who intends to make the nomination
and of the person or persons to be nominated; (b) a representation that
the stockholder is a holder of record of stock of the corporation
entitled to vote at such meeting and intends to appear in person or by
proxy at the meeting to nominate the person or persons specified in the
notice; a description of all arrangements or understandings between
the stockholder and each nominee and any other person or persons (naming
such person or persons) pursuant to which the nomination or nominations
are to be made by the stockholder; (d) such other information regarding
each nominee proposed by such stockholder as would be required to be
included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission, had the nominee been nominated, or
intended to be nominated, by the Board of Directors; and (e) the consent
of each nominee to serve as a Director of the corporation if so elected.
The chairman of the meeting may refuse to acknowledge the nomination of
any person not made in compliance with the foregoing procedure.
<PAGE>
4. MEETINGS.
(a) TIME. Regular meetings shall be held at such time as the
Board shall fix. Special meetings may be called upon notice.
(b) FIRST MEETING. The first meeting of each newly elected Board
may be held immediately after each annual meeting of the stockholders at
the same place at which the meeting is held, and no notice of such
meeting shall be necessary to call the meeting, provided a quorum shall
be present. In the event such first meeting is not so held immediately
after the annual meeting of the stockholders, it may be held at such time
and place as shall be specified in the notice given as provided for
special meetings of the Board of Directors, or at such time and place as
shall be fixed by the consent in writing of all of the Directors.
(c ) PLACE. Meetings, both regular and special, shall be held at
such place within or without the State of Delaware as shall be fixed by
the Board.
(d) CALL. No call shall be required for regular meetings for
which the time and place have been fixed. Special meetings may be called
by or at the direction of the Chairman of the Board, the President, or of
a majority of the Directors.
(e) NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice
shall be required for regular meetings for which the time and place have been
fixed. Written, oral or any other mode of notice of the time and place
shall be given for special meetings at least three days prior to the
meeting; notice may be given by telephone of telefax (in which case it is
effective when given) or by mail (in which case it is effective seventy-two
hours after mailing by prepaid first class mail). The notice of any
meeting need not specify the purpose of the meeting. Any requirement of
furnishing a notice shall be waived by any Director who signs a written
waiver of such notice before or after the time stated therein.
Attendance of a Director at a meeting of the Board shall constitute a
waiver of notice of such meeting, except when the Director attends a
meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not
lawfully called or convened.
(f) QUORUM AND ACTION. A majority of the whole Board shall
constitute a quorum except when a vacancy or vacancies prevents such
majority, whereupon a majority of the Directors in office shall
constitute a quorum, provided that such majority shall constitute at
least one-third (1/3) of the whole Board. Any Director may participate
in a meeting of the Board by means of a conference telephone or similar
communications equipment by means of which all Directors participating in
the meeting can hear each other, and such participation in a meeting of
the Board shall constitute presence in person at such meeting. A
majority of the Directors present, whether or not a quorum is present,
may adjourn a meeting to another time and place. Except as herein
<PAGE>
otherwise provided, and except as otherwise provided by the General
Corporation Law, the act of the Board shall be the act by vote of a
majority of the Directors present at a meeting, a quorum being present.
The quorum and voting provisions herein stated shall not be construed as
conflicting with any provisions of the General Corporation Law and these
By-Laws which govern a meeting of Directors held to fill vacancies and
newly created Directorships in the Board.
(g) CHAIRMAN OF THE MEETING. The Chairman of the Board, if any
and if present and acting, shall preside at all meetings. Otherwise, the
Vice-Chairman of the Board, if any and if present and acting, or the
President, if present and acting, or any other Director chosen by the
Board, shall preside.
5. REMOVAL OF DIRECTORS.
Any or all of the Directors may be removed for cause or without
cause by the stockholders.
6. COMMITTEES.
The Board of Directors may, by resolution passed by a majority of
the whole Board, designate one or more committees, each committee to
consist of one or more of the Directors of the Corporation. The Board
may designate one or more Directors as alternate members of any
committee, who may replace any absent or disqualified member at any
meeting of the committee. Any such committee, to the extent provided in
the resolution of the Board, shall have and may exercise the powers of
the Board of Directors in the management of the business and affairs of
the Corporation, and may authorize the seal of the Corporation to be
affixed to all papers which may require it. In the absence or
disqualification of any member of any such committee or committees, the
members thereof present at any meeting and not disqualified from voting,
whether or not they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member.
7. EXECUTIVE COMMITTEE.
(a) Appointment. The Directors at their meeting held immediately
after the annual meeting of stockholders shall appoint the Chairman of
the Board, the President, and such other members of their body as they
shall determine in their sole discretion as an Executive Committee.
During the intervals between the meetings of the Board of Directors, the
Executive Committee shall possess and may exercise (subject to any
regulations which the Directors may from time to time make) all the
powers of the Board of Directors in the management and direction of the
operations of the corporation (except only such acts as must by law be
performed by the Directors themselves) in such manner as the Executive
Committee may deem best for the interests of the corporation in all cases
in which specific directions shall not have been given by the Board of
Directors. All action by the Executive Committee shall be reported to
and shall be subject to review by the Board of Directors.
<PAGE>
(b) Chairman. The Board of Directors shall designate one of the
members of the Executive Committee to be its Chairman. The Chairman of
the Executive Committee shall preside at all meetings of the Executive
Committee. The Chairman of the Executive Committee shall perform such
other duties as may be designated by the Board of Directors.
Meetings. The Executive Committee shall meet at the office of
the corporation at such times as they shall by resolution appoint, and
may meet at any other time or place on the call of the Chairman.
(d) Notice of Meeting. Notice of meetings of the Executive
Committee shall be given to each member by the Chairman at least five
days before the meeting.
(e) Waiver of Notice. If any meeting of the Executive Committee
at which all of the members are present, though held without notice, any
and all business may be transacted in the same manner as if due notice
had been given.
(f) Quorum. A majority of the members of the Executive Committee
shall constitute a quorum.
(g) Rules. The Executive Committee may from time to time adopt
rules for its procedures not in conflict with the By-Laws of the
Corporation or the actions taken by the Board of Directors.
(h) Vacancies. The Board of Directors shall have the power at any
time to fill vacancies in, change the membership of, or to dissolve the
Executive Committee.
8. ACTION IN WRITING.
Any action required or permitted to be taken at any meeting of the
Board of Directors or any committee thereof may be taken without a
meeting if all members of the Board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the Board or committee.
ARTICLE III
OFFICERS
1. EXECUTIVE OFFICERS.
The Board of Directors may elect or appoint a Chairman of the Board
of Directors, a President, one or more Vice Presidents (which may be
denominated with additional descriptive titles), a Secretary, one or more
Assistant Secretaries, a Treasurer, one or more Assistant Treasurers and
such other officers as it may determine. Any number of offices may be
held by the same person.
<PAGE>
2. TERM OF OFFICE: REMOVAL.
Unless otherwise provided in the resolution of election or
appointment, each officer shall hold office until the meeting of the
Board of Directors following the next annual meeting of stockholders and
until such officer's successor has been elected and qualified or until
the earlier resignation or removal of such officer. The Board of
Directors may at any time remove any officer for cause or without cause.
3. AUTHORITY AND DUTIES.
All officers, as between themselves and the Corporation, shall have
such authority and perform such duties in the management of the
Corporation as may be provided in these By-Laws, or, to the extent not so
provided, by the Board of Directors.
4. THE CHAIRMAN OF THE BOARD OF DIRECTORS.
The Chairman of the Board of Directors, if present and acting,
shall preside at all meetings of the Board of Directors, otherwise, the
President, if present, shall preside, or if the President does not so
preside, any other Director chosen by the Board shall preside. The
Chairman of the Board of Directors shall be the chief executive officer
of the Corporation.
5. THE PRESIDENT.
The President shall be the chief operating officer of the
Corporation.
6. VICE PRESIDENTS.
Any Vice President that may have been appointed, in the absence or
disability of the President, shall perform the duties and exercise the
powers of the President, in the order of their seniority, and shall
perform such other duties as the Board of Directors shall prescribe.
7. THE SECRETARY.
The Secretary shall keep in safe custody the seal of the
Corporation and affix it to any instrument when authorized by the Board
of Directors, and shall perform such other duties as may be prescribed by
the Board of Directors. The Secretary (or in such officer's absence, an
Assistant Secretary, but if neither is present another person selected by
the Chairman for the meeting) shall have the duty to record the
proceedings of the meetings of the stockholders and Directors in a book
to be kept for that purpose.
<PAGE>
8. THE TREASURER.
The Treasurer shall have the care and custody of the corporate
funds, and other valuable effects, including securities, and shall keep
full and accurate accounts of receipts and disbursements in books
belonging to the Corporation and shall deposit all moneys and other
valuable effects in the name and to the credit of the Corporation in such
depositories as may be designated by the Board of Directors. The
Treasurer shall disburse the funds of the Corporation as may be ordered
by the Board, taking proper vouchers for such disbursements, and shall
render to the President and Directors, at the regular meetings of the
Board, or whenever they may require it, an account of all transactions as
Treasurer and of the financial condition of the Corporation. If required
by the Board of Directors, the Treasurer shall give the Corporation a
bond for such term, in such sum and with such surety or sureties as shall
be satisfactory to the Board for the faithful performance of the duties
of such office and for the restoration to the Corporation, in case of
such person's death, resignation, retirement or removal from office, of
all books, papers, vouchers, money and other property of whatever kind in
such person's possession or under such person's control belonging to the
Corporation.
ARTICLE IV
CORPORATE SEAL
AND
CORPORATE BOOKS
The corporate seal shall be in such form as the Board of Directors
shall prescribe. The books of the Corporation may be kept within or
without the State of Delaware, at such place or places as the Board of
Directors may, from time to time, determine.
ARTICLE V
FISCAL YEAR
The fiscal year of the Corporation shall be fixed, and shall be
subject to change, by the Board of Directors.
ARTICLE VI
INDEMNITY
(a) Any person who was or is a party or threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an
action by or in the right of the Corporation) by reason of the fact that
he or she is or was a Director, officer, employee or agent of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise (including employee benefit
plans) (hereinafter an "indemnitee"), shall be indemnified and held
harmless by the Corporation to the fullest extent authorized by the
<PAGE>
General Corporation Law, as the same exists or may hereafter be amended
(but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification than
permitted prior thereto), against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by such indemnitee in connection with such action, suit or
proceeding, if the indemnitee acted in good faith and in a manner he or
she reasonably believed to be in or not opposed to the best interests of
the Corporation, and with respect to any criminal action or proceeding,
had no reasonable cause to believe such conduct was unlawful. The
termination of the proceeding, whether by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent, shall
not, of itself, create a presumption that the person did not act in good
faith and in a manner which he or she reasonably believed to be in or not
opposed to the best interests of the Corporation and, with respect to any
criminal action or proceeding, had reasonable cause to believe such
conduct was unlawful.
(b) Any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the
right of the Corporation to procure a judgment in its favor by reason of
the fact that he or she is or was a Director, officer, employee or agent
of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another
Corporation, partnership, joint venture, trust or other enterprise
(including employee benefit plans) shall be indemnified and held harmless
by the Corporation to the fullest extent authorized by the General
Corporation Law, as the same exists or may hereafter be amended (but, in
the case of any such amendment, only to the extent that such amendment
permits the Corporation to provide broader indemnification than permitted
prior thereto), against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection with the defense or
settlement of such action or suit if he or she acted in good faith and in
a manner he or she reasonably believed to be in or not opposed to the
best interests of the Corporation and except that no indemnification
shall be made in respect of any claim, issue or matter as to which such
person shall have been adjudged to be liable to the Corporation unless
and only to the extent that the Court in which such suit or action was
brought, shall determine, upon application, that, despite the
adjudication of liability but in view of all the circumstances of the
case, such person is fairly and reasonably entitled to indemnity for such
expenses which such court shall deem proper.
All reasonable expenses incurred by or on behalf of the
indemnitee in connection with any suit, action or proceeding, may be
advanced to the indemnitee by the Corporation to the extent permitted
under the General Corporation Law.
(d) The rights to indemnification and to advancement of expenses
conferred in this article shall not be exclusive of any other right which
any person may have or hereafter acquire under any statute, the
Certificate of Incorporation, a By-Law of the Corporation, agreement,
vote of stockholders or disinterested Directors or otherwise.
<PAGE>
(e) The indemnification and advancement of expenses provided by
this article shall continue as to a person who has ceased to be a
Director, officer, employee or agent and shall inure to the benefit of
the heirs, executors and administrators of such person.
ARTICLE VII
AMENDMENTS
The By-Laws may be amended, added to, rescinded or repealed at any
meeting of the Board of Directors or of the stockholders, provided that
notice of the proposed change was given in the notice of the meeting.
<PAGE>
THIRD AMENDMENT
TO
CREDIT AGREEMENT
Introduction
This Agreement, dated as of May 26, 1995 (this
"Amendment"), is by and among American Bank Note Company, a New
York Corporation (the "Borrower"), American Bank Note Holo-
graphics, Inc. , a Delaware corporation ("ABH"), and United
States Banknote Corporation , a Delaware corporation ("USBC"),
each currently having an address at 51 West 52nd Street, 14th
Floor, New York, New York 10019, and Citibank, N.A., a national
banking association currently having an address at 399 Park
Avenue, New York, New York 10043 ("Citibank"),
Creditanstalt-Bankverein, an Austrian banking corporation acting
through its U.S. federal branch and currently having an address
at 245 Park Avenue, New York, New York 10167, The Nippon Credit
Bank, Ltd., a Japanese banking corporation acting through its New
York branch and currently having an address at 245 Park Avenue,
New York, New York 10167, and other banks named in the Existing
Credit Agreement as defined below, (collectively, the "Banks"),
and Citibank, N.A., as Agent.
Recitals
The Borrower, ABH (in and after the First Loan
Amendment), USBC, the Banks and the Agent are parties to a Credit
Agreement dated as of May 26, 1992, as modified by letter
agreements dated as of January 5, 1993, September 30, 1993,
December 31, 1993 (two letters), and December 31, 1994, and as
amended by a First Amendment to Credit Agreement dated as of
June 23, 1993, and a Second Amendment to Credit Agreement dated
as of March 25, 1994 (as so modified and amended, the "Existing
Credit Agreement"), pursuant to which the Banks established a
$20,000,000 committed revolving credit facility that is scheduled
to expire on the date hereof. Capitalized terms used and not
otherwise defined or amended in this Amendment shall have the
meanings respectively assigned to them in the Existing Credit
Agreement.
The Borrower, ABH and USBC have requested that the
Commitment be temporarily extended to August 31, 1995, in order
to permit them to obtain a permanent refinancing of the Loans,
and the Banks have agreed to such extension on the condition
(among others) that Advances will not be available if the
Borrower, ABH, USBC and their affiliates have cash, cash
equivalents and other Permitted Investments that then aggregate
more than $5,000,000.
<PAGE>
The Borrower, ABH and USBC have requested that the
Banks and the Agent enter into this Amendment in order to approve
and reflect the foregoing, and the Banks and the Agent have
agreed to do so, all upon the terms and provisions and subject to
the conditions hereinafter set forth.
Agreement
In consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth, the parties
hereto hereby agree as follows:
Section 1. Amendment to Existing Credit Agreement.
The Existing Credit Agreement is hereby amended as of the date
first written above as follows:
(A) In Section 1.01 of the Existing Credit Agreement,
the definitions of "Agreement", "Loan Documents" and
"Termination Date" are hereby deleted in their entirety, and the
following new definitions are hereby inserted in their respective
places:
"Agreement" shall mean this Credit Agreement, together
with all schedules and exhibits hereto, as amended by the
First Loan Amendment, the Second Loan Amendment, and the
Third Loan Amendment, and as the same may be supplemented,
modified, amended or restated from time to time in the
manner provided herein.
"Loan Documents" shall mean this Agreement, the Notes,
the ABH Guaranty, the Security Agreement, any mortgages,
assignments, instruments and other documents creating or
evidencing any interest in any Collateral securing or
intending to secure anyone's Obligations under any of the
foregoing, and all waivers, consents, agreements, reports,
statements, certificates, schedules and other documents
executed by the requisite person(s) pursuant to or in
connection with any of the foregoing and accepted or
delivered by the Agent hereunder (with the consent of such
Banks, if any, as may be required hereunder), whether prior
to, on or from time to time after the date hereof, as each
may be supplemented, modified, amended or restated from time
to time in the manner provided therein.
"Termination Date" shall mean August 31, 1995, or the
earlier date of termination in whole of the Commitments
pursuant to this Agreement.
<PAGE>
(B) In Section 1.01 of the Existing Credit Agreement,
the following new definitions of "Security Agreement" and "Third
Loan Amendment", are hereby inserted in their respective proper
alphabetical positions without the deletion or modification of
any other material:
"Security Agreement" shall mean the Security Agreement
between the Borrower and the agent (for the benefit of all
of the Banks) dated as of December 31, 1994, as the same may
be supplemented, modified, amended, restated or replaced
from time to time in the manner provided therein.
"Third Loan Amendment" shall mean the Third Amendment
to Credit Agreement dated as of May 26, 1995, among the
Borrower, ABH, USBC, the Banks and the Agent
(C ) In Section 2.03 of the Existing Credit Agreement,
the following new subsection is hereby inserted at the end of
such Section without the deletion or modification of any
material:
(I) With respect to each Letter of Credit requested
that would expire after the scheduled Termination Date, and
to the extent on the fourteenth day preceding the
Termination Date (1) there are any Letters of Credit
outstanding that have not previously been cash
collateralized and (2) the Borrower and/or USBC shall not
have received by that date a commitment from a bank group to
completely replace this facility (which commitment is in
form and substance acceptable to the Agent): (A) the
aggregate amount of all such Letters of Credit shall not
exceed U.S.$5,000,000.00 (taking into account the U.S.
Dollar equivalent of the aggregate face amount of any Letter
of Credit then outstanding in any foreign currency); (B)
all such Letters of Credit shall be immediately cash
collateralized, upon issuance, or on the fourteenth day
preceding the Termination Date if not previously cash
collateralized, as applicable, in an amount that is not less
than 100% of the aggregate face amount of all such Letters
of Credit then outstanding, except that any Letter of Credit
denominated in a foreign currency shall be cash
collateralized in an amount that is not less than 105% of
the U.S. Dollar equivalent of the aggregate face amount then
outstanding, which cash collateral shall be deposited with
the Agent and held as security pursuant to the Security
Agreement; and the terms and provisions of the Credit
Agreement shall continue in full force and effect after such
Termination Date
<PAGE>
with respect to all such Letters of Credit until all of the
Letters of Credit have been drawn upon or returned and all
of the loans and other obligations thereunder have been paid
and satisfied. The Banks agree to issue Letters of Credit
under the Credit Agreement that may expire beyond the
scheduled Termination Date, notwithstanding Section
2.03(a)(iii)(B) of the Credit Agreement, but subject to all
other relevant terms and provisions of the Credit Agreement.
(D) In Section 3.02 if the Existing Credit Agreement,
subsection (a) is hereby deleted in its entirety, and the
following new subsection is hereby inserted in its place:
: (a) the following statements shall each be true:
(I) The representations and warranties contained
in Section 4.01 (excluding those contained in
subsections (e) and (f) thereof) are correct on and as
of the date of such Borrowing or the issuance of such
Letter of Credit, before and after giving effect to
such Borrowing and to the application of the proceeds
therefrom, or to the issuance of such Letter of Credit,
as though made on and as of such date,
(ii) No event has occurred and is continuing, or
would result from such Borrowing or from the
application of the proceeds therefrom, which
constitutes an Event of Default or a Default, and
(iii) The aggregate cash, cash equivalents and
other Permitted Investments of USBC, the Borrower, ABH
and their respective affiliates shall be less than
U.S.$5,000,000 (with investments carried in any foreign
currency being converted to their U.S. Dollar
equivalents on the date of calculation at such rates
and reflecting such costs of conversion as the Agent
may reasonably determine).
(E) Section 5.04 of the Existing Credit Agreement is
hereby deleted in its entirety, and the following new section is
hereby inserted in its place:
Section 5.04. Certain Financial Covenants. The
Borrower and USBC covenant and agree that, from the date of
the First Amendment until the Obligations have been fully
paid and satisfied, unless the Agent (with the consent of
the Majority Banks, as and if required) shall consent
otherwise in writing:
<PAGE>
(a) USBC's financial measurements used in the
following covenants: (I) shall be determined in accordance
with GAAP (as of the date of calculation) consistently
applied except to the extent otherwise specified by a
particular definition or covenant; (ii) shall be computed
for USBC and all of its Subsidiaries on a consolidated basis
in accordance with those accounting principles; and (iii)
shall refer to the corresponding items in the financial
statements of USBC and its Subsidiaries for the relevant
periods except to the extent otherwise specified or defined
herein. USBC and the Banks covenant and agree to reset in
good faith the financial covenants set forth in this
Section, as well as the corresponding provisions of the
financial covenants compliance certificate required by
Section 5.01(e)(I) and (ii) hereof, from time to time with
each (x) material change in GAAP and (y) securities offering
by USBC or refinancing of the indebtedness under the USBC
Loan Documents, in each case so as to maintain the integrity
and intent of such covenants.
(b) USBC shall not permit: (I) the Consolidated Net
Worth of USBC and its Subsidiaries to be at any time during
any period set forth below less than the amount set forth
below under the heading "Consolidated Net Worth" for the
corresponding period; (ii) the Net Worth of Borrower and its
subsidiaries to be at any time during any period set forth
below less than the amount set forth below under the heading
"Borrower Net Worth" for the corresponding period; and (iii)
the Net Worth of ABH and its subsidiaries to be at any time
during any period set forth below less than the amount set
forth below under the heading "ABH Net Worth" for the
corresponding period:
Consolidated Borrower ABH
Period Net Worth Net Worth Net Worth
March 31, 1995, $54,500,000 $128,000,000 $23,000,000
through
June 29, 1995
June 30, 1995, $55,000,000 $130,000,000 $23,000,000
and thereafter
<PAGE>
USBC shall not permit the Consolidated leverage
ratio of USBC and its Subsidiaries (consisting of the ratio
of the Consolidated Total Liabilities to the Consolidated
Net Worth) to exceed the ratio set forth below for the
corresponding date:
Consolidated
Period Leverage Ratio
March 31, 1995 5.90 to 1.0
June 30, 1995, 5.85 to 1.0
and any Quarter's end thereafter
(d) USBC shall not permit the Consolidated interest
coverage ratio of the Borrower and its Subsidiaries
(consisting of the ratio of the Consolidated Available
Earnings to the Consolidated Cash Interest Expense) for any
fiscal year or other period of four consecutive fiscal
quarters ending on a date set forth below to be less than
the ratio set forth below for the corresponding date:
Period Ending Interest Coverage Ratio
March 31, 1995 1.45 to 1.0
June 30 , 1995, 1.50 to 1.0
and any Quarter's end thereafter
(e) USBC shall not permit the Consolidated current
ratio of USBC and its Subsidiaries (consisting of the ratio
of the Consolidated Current Assets to the Consolidated
Current Liabilities of USBC and its Subsidiaries) to be at
any time less than 2.0 to 1.0.
(f) USBC shall not directly or indirectly make, incur
or permit to exist Consolidated Capital Expenditures on the
part of USBC and its Subsidiaries exceeding $7,000,000
during the 6 month period ending June 30, 1995.
(g) USBC shall not cause or permit any change of the
fiscal year of USBC and its Subsidiaries from December 31 of
each year.
<PAGE>
(h) The Borrower shall not cause, suffer or permit any
Subsidiary to take any action that would result, or would be
reasonably likely to result, in the violation of any
financial covenant applicable to such Subsidiary (and its
subsidiaries) in this Section, with the various financial
measurements and covenants set forth in this Section being
recalculated on a pro forma basis (from the then most recent
quarterly or subsequent pro forma calculations) to include
the effect of the proposed action(s).
(F) The Borrower has requested, and the Banks have agreed,
to continue to include the receivables and inventory of ABH in
the calculation of the Borrowing Base under the Agreement through
August 31, 1995, upon the terms and provisions contained in the
First Loan Amendment.
Section 2. Acknowledgment of Outstanding Loans. The
Borrower and ABH each hereby acknowledges, certifies and agrees
that: (a) pursuant to the Existing Credit Agreement, the Bank
has made loans on a revolving basis to the Borrower that are
outstanding as of the date of this Amendment in the aggregate
principal amount of $ -0- ; (b) the obligations of the
Borrower to repay those loans (with interest) to the Bank and to
perform or otherwise satisfy its other Obligations, as well as
the security interests in the Collateral granted by the Borrower
to the Bank, under the Existing Credit Agreement and other Loan
Documents (I) each remain and shall continue in full force and
effect, both before and after giving effect to this Amendment,
(ii) are not subject as of the date of this Amendment to any
defense, counterclaim, setoff, right of recoupment, abatement,
reduction or other claim or determination, and (iii) are and
shall continue to be governed by the terms and provisions of the
Existing Credit Agreement and other Loan Documents as
supplemented, modified and amended by this Amendment; ABH
has given its absolute, unconditional and irrevocable guaranty to
the Banks of the full and punctual payment and satisfaction of
those loans and the other Borrower's Obligations (as defined in
the Guaranty) as and when due, whether at stated maturity, by
acceleration or otherwise, pursuant to the Guaranty and the other
Loan Documents; and (d) that guaranty and the other obligations
of ABH (if any) under the Guaranty and other Loan Documents (I)
each remains and shall continue in full force and effect, both
before and after giving effect to this Amendment, (ii) are not
subject as of the date of this Amendment to any defense,
counterclaim, setoff, right of recoupment, abatement, reduction
or other claim or determination on the part of ABH, and (iii) are
and shall continue to be governed by the terms and provisions of
the Guaranty and other Loan Documents as supplemented, modified
and amended by this Amendment.
<PAGE>
Section 3. Bringdown of Representations, Etc. As of
the date of this Amendment: (a) the representations and
warranties of each of the Borrower, ABH and USBC set forth in the
Credit Agreement and other Loan Documents are true and correct in
all material respects with the same effect as though those
representations and warranties had been made on and as of the
date hereof; (b) no Event of Default or Default has occurred
and is continuing, excluding, however, those events subject to an
express written waiver or consent from the Banks, if any;
the information set forth in the Secretary's or Officer's Cer-
tificate most recently delivered to the Banks respecting (among
other things) the authorizing resolutions, organizational and
governing documents and the incumbency of the officers of each of
the Borrower, ABH and USBC is true and complete in all material
respects as if those certificates had been delivered on and as of
the date of this Amendment; and (d) there are no actions, suits
or proceedings pending or, to the best knowledge of the
undersigned, threatened or contemplated by any person for the
liquidation or dissolution of the Borrower, ABH or USBC or
otherwise threatening their respective existences or challenging
or calling into question the power or authority of the Borrower,
ABH or USBC to execute or deliver any Loan Document to which it
is or will be a party or to perform any of its obligations
thereunder.
Section 4. Amendment Fee and Additional Documents. As
a condition precedent to the effectiveness of this Amendment, the
Borrower, ABH and USBC: (a) shall pay an amendment fee of
$50,000 to the Banks in respect of this Amendment; (b) shall
cause the execution and delivery of this Amendment; and
shall deliver such other instruments and other documents (I) as
may be required by this Amendment or listed in the final version
of the Checklist of Closing Documents delivered to the Borrower
on or before the date this Amendment becomes effective, and (ii)
as the Bank may request to effect this Amendment. Each
instrument and document shall be in such form and substance as
may be acceptable to the Bank in its discretion.
Section 5. Counterparts. This Amendment may be signed
in two or more counterpart copies of the entire document or of
signature pages to the document, each of which may be executed by
one or more of the parties hereto, but all of which, when taken
together, shall constitute a single agreement binding upon all of
the parties hereto.
<PAGE>
Section 6. Governing Law, Etc. This Amendment is a
Loan Document and shall be governed by and construed in
accordance with the applicable terms and provisions of Article
VIII of the Existing Credit Agreement (as amended hereby) and
Sections 12 through 26 of the Security Agreement, which terms and
provisions are incorporated herein by reference.
Section 7. Agreement to Continue as Amended. The
Existing Credit Agreement and the other Loan Documents, as
supplemented, modified and amended by this Amendment, shall
remain and continue in full force and effect after the date
hereof.
In Witness Whereof, the parties hereto have executed and
delivered this Amendment as of the date first written above.
American Bank Note Company
By: Ward A.W. Urban
Ward A.W. Urban, Treasurer
American Bank Note Holographics, Inc.
By: Ward A.W. Urban
Ward A.W. Urban, Treasurer
United States Banknote Corporation
By: Ward A.W. Urban
Ward A.W. Urban, Treasurer
Citibank, N.A.
By: William G. Martens
William G. Martens III, Vice President
[Signatures Continued]
<PAGE>
Creditanstalt-Bankverein
By: Geoffrey D. Spillane
Geoffrey D. Spillane, Senior Associate
By: Christina T. Schoen
Christina T. Schoen, Vice President
The Nippon Credit Bank, Ltd.
By: Clifford Abramsky
Clifford Abramsky, Vice President
Citibank, N.A., as Agent
By William G. Martens
William G. Martens III, Vice President
<PAGE>
CITIBANK, N.A.
399 Park Avenue
New York, New York 10043
CREDITANSTALT-BANKVEREIN
245 Park Avenue
New York, New York 10167
THE NIPPON CREDIT BANK, LTD.
245 Park Avenue, 30th Floor
New York, New York 10167
CITIBANK, N.A., as Agent
399 Park Avenue
New York, New York 10043
(as of) June 30, 1995
United States Banknote Corporation
51 West 52nd Street, 14th Floor
New York, New York 10019
Attention: Mr. Ward A.W. Urban, Treasurer
American Bank Note Company
51 West 52nd Street, 14th Floor
New York, New York 10019
Attention: Mr. Ward A.W. Urban, Treasurer
Re: Temporary Waiver of Financial Covenants
Gentlemen:
American Bank Note Company ("ABN"), American Bank Note
Holographics, Inc. ("ABH"), and United States Banknote Corporation
("USBC"), and we are parties to a Credit Agreement dated as of
May 26, 1992, as modified by letter agreements dated as of January 5,
1993, September 30, 1993, December 31, 1993 (two letters), and
December 31, 1994, and as amended by a First Amendment to Credit
Agreement dated as of June 23, 1993, a Second Amendment to Credit
Agreement dated as of March 25, 1994, and a Third Amendment to Credit
Agreement dated as of May 26, 1995 (as so modified and amended, the
"Credit Agreement"), which establishes various financial covenants in
Section 5.04 thereof (as modified by said Third Amendment).
Capitalized terms used and not otherwise defined herein shall have
the meanings respectively assigned to them in the Credit Agreement.
You previously advised us that you have suffered certain
losses, which you hereby represent has caused you to be in non-
compliance with certain of your financial covenants as follows: (I)
your Consolidated Net Worth was $48,349,000.00 and ABN's Net Worth
was $129,211,000.00 as at June 30, 1995, which were less than the
$55,000,000.00 minimum Consolidated Net Worth and $130,000,000.00
minimum ABN Net Worth required by Section 5.04(b) of the Credit
Agreement; (ii) your Consolidated Leverage Ratio was 6.38 as at June
30, 1995, which was more than the 5.85 maximum Consolidated Leverage
Ratio required by Section 5.04 of the Credit Agreement; and (iii)
your Consolidated Interest Coverage Ratio was 1.44 as at June 30,
1995, which was less than the 1.50 minimum Consolidated Interest
Coverage Ratio required by Section 5.04(d) of the Credit Agreement.
You have requested, and we hereby agree (in consideration of your
agreements below), as a temporary one-time accommodation, to waive
the above-described defaults of your financial covenants under those
Sections of the Credit Agreement as at the dated indicated above and
for the periods covered thereby.
<PAGE>
In order to induce us to grant such waiver, you hereby
covenant and agree that: (a) you will not cause, suffer or permit
your consolidated cash balances of U.S. Dollars maintained in banks
and other financial institutions in the United States of America to
be at any time less than $10,000,000.00; (b) you will provide the
Banks with copies of your weekly cash reports as soon as the same
become available, commencing immediately; you will not establish
any new banking accounts (other than those on the first weekly cash
report delivered hereunder); and (d) your cumulative consolidated
capital expenditures for the current fiscal year will not exceed
$7,000,000.00 through the Termination Date.
Our waiver, modification, extension and consent is
limited to the circumstances and subject to the conditions set forth
above. It shall not in any event be deemed a continuing or further
waiver, modification, extension or consent under or waiver of any
other term or provision of the Credit Agreement or any other Loan
Document. Furthermore, our waiver, modification, extension and
consent is limited to the Credit Agreement and the other Loan
Documents, and shall not be deemed or construed to be a consent under
or waiver of any term or provision of any other agreement or
arrangement any of you or any of your affiliates may have with us.
This waiver, modification, extension and consent letter is a Loan
Document and shall be governed by and construed in accordance with
the applicable terms and provisions of the Credit Agreement and the
Security Agreement, which terms and provisions are incorporated
herein by reference.
If you accept this waiver and consent upon the
conditions we have imposed, please sign two of the enclosed copies of
this letter and return them to us, c/o Parker Chapin Flattau &
Klimpl, 1211 Avenue of the Americas, New York, New York 10036,
Attention: Lawrence David Swift, Esq.
Very truly yours,
Citibank, N.A.
By: William G. Martens
William G. Martens III, Managing Director
Creditanstalt-Bankverein
By: Gregory F. Mathis
Gregory F. Mathis, Vice President
By: Geoffrey D. Spillane
Geoffrey D. Spillane, Senior Associate
<PAGE>
[SIGNATURES CONTINUED]
The Nippon Credit Bank, Ltd.
By: Clifford Abramsky
Clifford Abramsky, Vice President
Citibank, N.A., as Agent
By: William G. Martens
William G. Martens III, Managing Director
cc: Mr. Jeffrey A. Oberg
Harvey Kesner, Esq.
Hillel M. Bennett, Esq.
ACCEPTED AND AGREED:
United States Banknote Corporation
By: S/ Ward A.W. Urban
Ward A.W. Urban, Treasurer
American Bank Note Company
By: S/ Ward A.W. Urban
Ward A.W. Urban, Treasurer
American Bank Note Holographics, Inc.
By: S/ Ward A.W. Urban
Ward A.W. Urban, Treasurer
<PAGE>
AGREEMENT
AGREEMENT, effective as of July 19, 1995, between AMERICAN BANKNOTE
CORPORATION, a Delaware corporation with its principal offices at 51 West 52nd
Street, New York, New York (the "Company") and Ron K. Glover an individual
residing at 7 Tiffany Way, Warren, New Jersey ("Glover").
W I T N E S S E T H :
WHEREAS, the Company and Glover are parties to an Employment
Agreement dated April 5, 1994 (the "Employment Agreement") pursuant to which the
Company has employed Glover as its President and Chief Operating Officer and as
a member of the Board of Directors of the Company and its subsidiaries and
Affiliates (as such term is defined under the Securities Exchange Act of 1934);
and
WHEREAS, Glover has filed a demand for arbitration of certain
disputes with the Company under the Employment Agreement (the "Arbitration");
and
WHEREAS, the Company denies any liability to Glover on the basis of
any claims which Glover may have against the Company, whether asserted or
unasserted, arising at any time up to and including the date of this Agreement,
including such claims which Glover could have made in the Arbitration; and
WHEREAS, the parties have reached a full and final settlement of all
of Glover's claims, as hereinafter set forth, without any admission by the
Company of the validity of such claims;
NOW, THEREFORE, for and in consideration of the mutual covenants,
agreements, premises and promises set forth herein, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
Section 1. Resignation. In consideration of the terms hereof,
Glover's employment as President and Chief Operating Officer of the Company and
his engagement as a member of the Board of Directors of the Company shall end by
his voluntary resignation effective as of the close of business, July 19, 1995.
Glover further agrees to resign simultaneously from any other appointments or
positions he may hold with or at the request of the Company or any of its
subsidiaries or Affiliates as of July 19, 1995. Glover agrees to execute all
necessary documents which the Company may request of him to effectuate such
resignations.
<PAGE>
<PAGE>
Section 2. Consulting Arrangements and Term. The Company retains
Glover, and Glover shall serve the Company, upon the terms and conditions
hereinafter set forth, commencing as of July 20, 1995 and continuing through and
including December 31, 1999 (the "Consulting Period"), as a consultant. Glover
agrees to make himself available no more than one day per month, subject solely
to his schedule, to provide to the Company and its subsidiaries and Affiliates
as of the date hereof such consulting services as the Board of Directors shall
reasonably request in writing provided, however, that such services do not
conflict with other employment which Glover may obtain and, provided further
that Glover shall not be required to travel outside the New York Metropolitan
area without his consent. Glover shall perform all consulting services for the
Company as an independent contractor and nothing contained in this Section 2
shall grant any authority to Glover to have any operational or management
responsibilities or to act as an agent or employee of the Company or to commit
the Company to enter into any obligation. The Company agrees to reimburse
Glover in connection with necessary and reasonable business expenses incurred in
performing his consulting services.
Section 3. Termination. The parties shall have no right to
terminate this Agreement. The parties' sole remedy for breach of this Agreement
shall be limited to an action at law or in equity.
Section 4. Compensation. In addition to any compensation due in
respect of Glover's Initial Base Salary (as defined in the Employment Agreement)
for his final payroll period through July 19, 1995 (payable upon execution of
this Agreement) the Company shall make the following payments, less any payroll
deductions required by law:
(a) A lump sum payment in the gross amount of $800,000 to be paid to
Glover simultaneously with the execution of this Agreement by bank
check or wire transfer;
(b) a lump sum payment in the amount of $700,000 to be remitted
irrevocably, and for Glover's sole and exclusive benefit,
simultaneously with the execution of this Agreement by bank check or
wire transfer to Wohl & Entwistle, L.L.P. as escrow agent pursuant
to the escrow agreement, by and among Glover, the Company and Wohl &
Entwistle, L.L.P. dated July 19, 1995 in the form attached
hereto as Exhibit B,
<PAGE>
<PAGE>
such funds to be disbursed by the escrow agent to Glover during the
Consulting Period as a consulting fee in accordance with the terms
of such escrow agreement (The Company agrees that it shall have no
claim whatsoever to such $700,000 lump sum payment and shall bring
no action at law or in equity to recover such funds or otherwise to
challenge any payments made by the escrow agent pursuant to the
escrow agreement);
discharge and forgiveness of the promissory note made by Glover in
favor of United States Banknote Corporation dated April 13, 1994 in
the principal amount of $385,287.50 and accrued interest through the
date of discharge to the extent of the difference between (x) the
sum of (I) the principal amount of the note and (ii) all unpaid and
accrued interest thereon through and including the date of the last
payment from Glover to the Company pursuant to Section 5(d) hereof
and (y) the aggregate net proceeds from the sale(s) of Glover's
common stock of the Company remitted to the Company pursuant to
Section 5(d) hereof, such discharge and forgiveness to occur
simultaneously with the execution of this Agreement. The Company
and Glover agree that interest will cease to accrue on the
promissory note as of July 19, 1995; and
(d) a lump sum payment simultaneously with the execution of this
Agreement, for twenty-four (24) accrued and unused vacation days and
any unreimbursed business expenses incurred on or before July 19,
1995 payable in accordance with Company policy.
Glover shall be entitled to continuation of his group health insurance benefits,
at his own expense, in accordance with, and only for as long as permitted by,
the Consolidated Omnibus Budget Reconciliation Act of 1985. The Company agrees
that it shall have no claim whatsoever to any payment discharge or forgiveness
and/or benefit conferred by Section 4(a), (b), and (d). If Glover shall
die or become disabled or otherwise unable to perform under this Agreement for
any reason, the Company will make the remaining payments and discharge any
remaining indebtedness to and for Glover and/or Escrow Agent if he is alive
and to his spouse and heirs if he is not without regard to his ability to
perform under this Agreement and provided the obligations of Section 4
have been satisfied.
<PAGE>
<PAGE>
Section 5. Company stock; surrender of options.
(a) Glover shall within one-hundred twenty (120) days after the date
hereof dispose of all of the shares of common stock of the Company now owned by
him in one or more public sale transactions or bona fide private sale
transactions with third parties who are not members of Glover's family or
otherwise his Affiliates (as the term "Affiliates" is defined in the Securities
Exchange Act of 1934).
(b) Prior to effecting any sale of the Company's common stock at any time,
Glover shall notify the Secretary or Chairman of the Company in writing (the
"Sales Notice") of his intent to effect such sales, which written notice shall
specify the number of shares to be sold, the sales price (if other than of
market), the intended method of sale (public or private). The Company shall
have the right, exercisable within two (2) business days of its receipt of
the Sales Notice, to direct Glover, in lieu of his effecting the transaction
contemplated by the Sales Notice, instead to sell such shares to one or more
persons designated by the Company at the price specified in the Sales Notice
-- provided that such a sale is not in the opinion of Glover's counsel, in
violation of any duty or obligation at law. The Company shall exercise the
right granted to it by the preceding sentence by delivering a written notice to
such effect to Glover within such two (2) business day period. Any such
transaction will take place at a time to be mutually agreed to by the
Company and Glover, such time to be no longer than five (5)
business days following Glover's receipt of the Company's
notice of exercise. In the event the Company notifies Glover of the exercise of
its rights provided for in this Section 5(b) following the one-hundred fifteenth
(115th) day after the date of this Agreement, the one-hundred twenty (120) day
period provided for in Section 5(a) shall be extended as necessary to allow for
the closing of the transaction specified in the Company's notice to Glover. If
the Company does not exercise its rights pursuant to this Section 5(b) or any
proposed purchaser identified by the Company fails to make timely payments
following the exercise of such rights, then Glover may sell such number of
shares as are specified in the Sales Notice, provided that such sale occurs
within the 120-day period as may be extended by this Section 5(b).
<PAGE>
<PAGE>
Subject to written advice of Glover's counsel as to compliance with
applicable law and following consultation with the Company and its counsel
during the period commencing on the date hereof and ending
one-hundred twenty (120) days after the date hereof, the Company
shall have the right to direct Glover to sell
his remaining shares of the Company's common stock in one or more transactions
to persons identified by the Company (the "Sales Directive"). Glover shall sell
those specified number of shares in accordance with the Company's direction,
provided that the price to be paid to Glover is equal to the greater of (x) the
closing sales price of the Company's common stock on the trading day immediately
preceding the date of the Company's notice to Glover that it is exercising its
rights pursuant to this Section 5 or (y) the average share price for the
period beginning five (5) days prior to the date of such Sales Directive. Any
sales to be made by Glover shall be effected within five (5) days after Glover's
receipt of the Sales Directive. In the event Glover receives a Sales Directive,
which contemplates a closing following the one-hundred twentieth (120th) day
after the date of this Agreement, then such 120-day period shall be extended as
necessary to allow for the closing of the sale specified in the Sales
Directive. If the Company were to furnish to Glover a Sales Directive
which relates to the same shares which are the subject of a
prior Sales Notice delivered by Glover to the Company, then
the provision of Section 5(b) shall govern the disposition of
such shares. The Company shall certify to Glover in writing that all material
information concerning the Company will have been publicly announced at the time
of the Sales Directive and will continue to be made available until the required
closing of such sale.
(d) Glover shall pay the proceeds of any shares sold by him pursuant to
this Section 5, net of customary brokerage commissions and reasonable attorneys'
fees, if applicable, to the Company on the date of the closing of such sales,
and upon irrevocable receipt by the Company, such net proceeds shall be
retained and applied by the Company as a credit against all unpaid and
accrued interest on and principal of the note referred to in
Section 4 hereof.
(e) In the absence of a breach of this Agreement, for a period of time
until all of the shares of the Company's common stock owned by Glover as of the
date hereof are sold, Glover hereby agrees to vote all of the shares of common
stock of the Company which he owns as of the date hereof in accordance with the
lawful recommendations of the Company's Board of Directors in respect of any
matters submitted to a vote of stockholders.<PAGE>
<PAGE>
(f) Glover hereby agrees to surrender to the Company any and all options
or other rights to purchase common stock of the Company held by Glover
immediately prior to the execution of this Agreement and further agrees that all
such options and rights are hereby canceled and shall have no further force or
effect.
Section 6. Non-Competition; Secrecy. (a) During the Consulting
Period and a period of two years thereafter (which for purposes hereof shall
also be referred to as the "Non-Compete Period"), Glover shall not:
(I) Directly or indirectly own, manage, operate, join, control or
participate in the ownership, management, operation or control of, any
business which shall be in competition with any business conducted by the
Company or any of its subsidiaries or Affiliates on the date of the
execution of this Agreement; provided, however, that the beneficial
ownership by Glover of up to 3% of the outstanding amount of any class of
securities listed on a national securities exchange or quoted on an
inter-dealer quotation system shall not be a violation of this provision;
(ii) Solicit, in competition with any business conducted by
the Company or any of its subsidiaries or Affiliates, on the date
of execution of this Agreement, any person who on the date of the
execution of the Agreement is a customer or supplier of the businesses
conducted by the Company or any of its subsidiaries or Affiliates; and
(iii) During the Non-Compete Period, induce, attempt to
induce or solicit for hire any employee, consultant, representative
or agent of the Company or any of its subsidiaries or Affiliates
as of the date hereof or encourage such person to terminate his or
her relationship, with the Company or any of its subsidiaries
or Affiliates. Nothing in this subparagraph shall
preclude Glover from retaining accountants, public relations firms,
attorneys, other similar types of vendors which had been retained by the
Company prior to the date of this Agreement.
(b) Glover agrees that he will not, during or after
the termination of the Non-Compete Period, furnish or make accessible
to any person, firm or corporation or other business entity, whether
or not in competition with the business of the Company, its
subsidiaries or Affiliates as of the date hereof, any trade secret, customer
list, financial and/or pricing information, technical data or know-how
acquired by him from the Company during his employment by the Company or its
predecessors or during the Consulting Period, whether or not in written form,
which relates to the business practices, policies and procedures, strategies,
methods, processes, equipment or other confidential or secret aspects of the
business of the Company or any subsidiary or Affiliate thereof (hereinafter
"Confidential Information"), without the prior written consent of the Company,
unless such information shall have become public knowledge, other than by being
divulged or made accessible by Glover in breach of this provision, or unless
such disclosure shall be required to be divulged by law or legal process.
The Company agrees to keep confidential and not to disclose Glover's
employment records, except to the extent otherwise provided for herein,
without Glover's prior written consent.
Remedies at law for breach of any of the provisions of this Section
6 will be inadequate, and in addition to all other remedies at law or in equity,
the Company and Glover shall be entitled to injunctive relief in the event of
any such breach.
(d) The parties shall jointly issue a press release announcing Glover's
resignation, in the form annexed hereto as Exhibit A. The parties agree that
such press release shall not be a part of any other press release, Glover's
resignation shall not be referenced in any subsequent press release or, except
as otherwise required by law, any other Company statement, and the
Company shall not issue any other press release on the same day on which
the Company announces Glover's resignation. The parties agree that
statements issued by the Company or Mr. Glover will be materially consistent
with this press release.
(e) Glover and the Company, its officers and directors represent and
warrant that in connection with his consultancy, resignation or employment,
they will not make derogatory statements about one another.
Section 7. Dismissal of Arbitration: Simultaneously with the
execution of this Agreement, Glover shall deliver to the Company an executed
stipulation of dismissal of the Arbitration with prejudice, in the form attached
hereto as Exhibit C. Glover agrees that the Company shall thereafter submit
such stipulation to the American Arbitration Association and that upon
such submission that the Arbitration shall be irrevocably terminated.
<PAGE>
<PAGE>
Section 8. Return of Company property. Glover agrees that within
ten (10) business days of the execution of this Agreement that he shall return
to the Company and not retain copies of any documents containing any
Confidential Information within the meaning of Section 6(b) and any other
property of the Company in his possession, if any, including, but not limited
to, any reports, files memoranda, correspondence, records,
computer software, door and file keys, computer access codes,
Company cars, card keys, computers, credit cards and phone cards.
Section 9. Mutual Releases of Claims.
(a) In consideration of the terms hereof, Glover agrees to and does waive
any claims he may have for employment by the Company and has agreed not to seek
such employment or reemployment by the Company in the future. Glover further
agrees to and does fully, finally and forever release and discharge the Company
and its subsidiaries and Affiliates, successors and their respective officers,
directors and shareholders ("Releasees") from any and all claims, demands and
causes of action, actions, suits, damages, losses, expenses and attorneys' fees
of any kind and every nature whatsoever, whether in law or equity, known or
unknown, arising out of or relating to Glover's employment by the Company, the
termination thereof, the Employment Agreement, and further including but not
limited to, the matters which were alleged or could have been alleged in the
Arbitration, and further including, but not limited to all claims related
thereto for wrongful discharge, breach of contract, fraud, tort, defamation,
assault, negligent or intentional infliction of emotional distress, the or
claims related thereto under the following laws (which are collectively defined
below as the "Laws"): the Civil Rights laws, Age Discrimination in
Employment Act, Americans with Disabilities Act, Employee Retirement
Income Security Act, the New York Human Rights Law, the New York
City Human Rights Law or any other federal, state or local laws,
statutes and regulations relating to employment or discrimination
in employment (collectively, the "Laws") from the inception of his employment on
April 4, 1995 through the date hereof. This release does not release or
prohibit Glover's right in any way to enforce the terms of this agreement or
any claims that may arise from the acts or omissions of Releasees after the
date of this Agreement. Neither by offering to make nor by making this
agreement does either party admit any failure of performance, wrongdoing, or
violation of law.
(b) In consideration of the terms hereof, the Company for itself and any
of its subsidiaries, Affiliates, divisions, successors and assigns, and
respective officers and directors (the "Company Releasors") agrees to and does
fully, finally and forever <PAGE>
<PAGE>
release and discharge and hold Glover harmless from any and all claims, demands
and causes of action, actions, suits, damages, losses, expenses and attorneys'
fees of any kind and every nature whatsoever, whether in law or equity, known or
unknown, arising out of or relating to Glover's employment by the Company and
services as an officer or director, the termination thereof, Glover's purchase
of any stock of the Company or the Employment Agreement, and further including,
but not limited to, all claims under federal, state or local laws, statutes and
regulations, except that the Company and its subsidiaries and Affiliates do not
release Glover from any claims, demands, causes of action, actions, suits,
damages, losses, expenses, attorneys' fees in any action brought or other
obligations claimed by any shareholder derivatively on behalf of the Company and
its subsidiaries and Affiliates. This release does not release or prohibit the
Company Releasors' right in any way to enforce the terms of this agreement or
any claims that may arise from the acts or omissions of Glover after the date of
this Agreement. Neither by offering to make nor by making this agreement does
either party admit any failure of performance, wrongdoing, or violation of law.
The parties agree that this Agreement shall have no effect on the
rights of Glover, if any, to assert a claim under any directors and officers
liability policy covering any period during which Glover was a director or
officer of the Company, nor on any right to assert such a claim under any by-law
or resolution of the Company, Board of Directors or shareholders, if any. The
Company agrees not to act to in any way reduce Glover's protections or benefits
thereunder except as it may similarly reduce protections or benefits afforded to
other officers or directors of the Company.
Section 10. Covenant Not to Sue. Glover and the Company represents
and warrants that to his and its knowledge no person or entity other than Glover
is entitled to assert any claims of any kind or character related to, or arising
out of, or in connection with Glover's employment with the Company or the
termination thereof. Glover represents and warrants that there are no pending
lawsuits, administrative charges or other claims of any nature whatsoever by him
against any of the Releasees in any state or federal court or any administrative
agency or other governmental body. Glover agrees not to assert, file or
cooperate with anyone in the assertion or filing of any claims, charges or other
legal proceedings against any of the Releasees in any forum, based upon any
events, whether known or unknown, occurring prior to the date hereof, including,
but not limited to, any event related to, arising out of, or in connection with
Glover's employment with the Company or the termination thereof or his purchase
of any stock of the<PAGE>
<PAGE>
Company, except as to the extent required to provide such information or
assistance by law or legal process but only after advance written notice to the
Company of such proposed action.
Section 11. Successors and Assigns. This Agreement shall inure to
the benefit of and be enforceable by the parties hereto and their respective
personal or legal representatives, executors, administrators, successors,
assigns, heirs, distributees, devisees and legatees; provided, that neither
party may assign any of his or its obligations hereunder.
Section 12. Severability. In case any provision in this Agreement
shall be declared invalid, illegal or unenforceable by any court of competent
jurisdiction, the validity and enforceability of the remaining provisions shall
not in any way be affected or impaired thereby. If any court of competent
jurisdiction construes any of the provisions of Section 6 hereof, or any part
thereof, to be unreasonable because of the duration of such provision or the
geographic or other scope thereof, such court may reduce the duration or
restrict the geographic or other scope of such provision and enforce such
provision as so reduced or restricted.
Section 13. Counterparts. This Agreement may be signed in one or
more counterparts, each of which shall be an original, and all of which shall
constitute one and the same agreement.
Section 14. Entire Agreement. This Agreement constitutes the
entire agreement between the parties hereto relating to the subject matter
hereof and supersedes and replaces the Employment Agreement which is canceled
and of no further force or effect. This Agreement may be modified,
supplemented or amended only by and with the express written consent of both
parties hereto.
Section 15. Governing Law. This Agreement and the legal relations
among the parties hereto shall be governed by and construed in accordance with
the laws of the State of New York applicable to contracts made and to be
performed in New York without regard to New York's choice of law rules.
Section 16. Attorneys' Fees. The parties agree that in the event
that either party brings an action to enforce the terms of this Agreement, the
Court, in its discretion, shall award the prevailing party its reasonable
attorneys' fees and costs.
Section 17. Voluntary signing of Agreement. Glover and the Company
acknowledge that before entering into this agreement, they consulted with
attorneys of <PAGE>
<PAGE>
their own choosing. Glover and the Company acknowledge that they have entered
into this agreement of their own free will, and that no promises or
representations have been made to them by any person to induce them to enter
into this agreement other than the express terms set forth herein. Glover and
the Company further acknowledge that they have read this Agreement and
understand all of its terms, including the waiver and release of claims set
forth in Section 9 above.
Section 18. Notices. All notices, requests, demands and other
communications permitted or required hereunder shall refer to this Agreement and
may be delivered personally or sent registered or certified mail, return receipt
requested or by courier service guaranteeing next-day delivery to the parties at
the addresses set forth above, or such other addresses as the parties may
designate by like notice. In addition, notice shall be required as follows:
a) If to the Company, copies to:
Dennis J. Block
Weil, Gotshal & Manges
767 Fifth Avenue
New York, New York 10153
and
General Counsel
American Banknote Corporation
51 West 52nd Street
New York, New York 10019
b) If to Glover, a copy to:
Andrew J. Entwistle
Wohl & Entwistle L.L.P.
330 Madison Avenue
New York, New York 10017
Section 19. Headings. The Section headings contained in the
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have set their hands as of
the date first above written.
AMERICAN BANKNOTE CORPORATION
By: s/ Morris Weissman
Morris Weissman
Chairman and Chief
Executive Officer
RON K. GLOVER
S/ Ron K Glover
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from
the financial statements contained in the body of the accompanying Form 10-Q
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000051124
<NAME> AMERICAN BANKNOTE CORPORATION
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 22767
<SECURITIES> 0
<RECEIVABLES> 35527
<ALLOWANCES> 738
<INVENTORY> 17933
<CURRENT-ASSETS> 88081
<PP&E> 262438
<DEPRECIATION> 50644
<TOTAL-ASSETS> 358969
<CURRENT-LIABILITIES> 36866
<BONDS> 191241
<COMMON> 194
0
0
<OTHER-SE> 52387
<TOTAL-LIABILITY-AND-EQUITY> 358969
<SALES> 96659
<TOTAL-REVENUES> 96659
<CGS> 70098
<TOTAL-COSTS> 97162
<OTHER-EXPENSES> (1128)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11460
<INCOME-PRETAX> (10835)
<INCOME-TAX> (430)
<INCOME-CONTINUING> (10405)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10405)
<EPS-PRIMARY> (.55)
<EPS-DILUTED> (.55)
</TABLE>
