<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
------------------------
(AMENDMENT NO. )
/X/ Filed by the Registrant
/ / Filed by a Party other than the Registrant
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14-a6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
American Banknote Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
PAYMENT OF FILING FEE (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined.):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: $125.
2) Form, Schedule or Registration Statement No.: 14A
3) Filing Party:
4) Date Filed:
<PAGE> 2
LOGO ------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 13, 1996
------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Annual
Meeting") of AMERICAN BANKNOTE CORPORATION (the "Company") will be held on
Thursday, June 13, 1996 at Chase World Headquarters, 270 Park Avenue, 11th Floor
Conference Room, New York, NY 10017 at 9:00 A.M., local time, for the following
purposes:
1. To elect seven Directors:
2. To consider and act upon an amendment to the Deferred Stock and
Compensation Plan for Non-employee Directors;
3. To approve the proposed appointment by the Board of Directors of
Deloitte & Touche LLP as independent auditors for the Company for the
fiscal year ending December 31, 1996 (the "Auditor Proposal"); and
4. To act upon such other matters as may properly come before the
Annual Meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on April 17, 1996 as
the record date for the determination of stockholders entitled to notice of and
to vote at the Annual Meeting and any adjournments thereof.
Stockholders are urged to attend the meeting in person. If you are not able
to do so, please sign, date and return the accompanying Proxy in the enclosed
envelope. No postage is required if mailed in the United States.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ITS NOMINEES
AS DIRECTORS, FOR APPROVAL OF THE AMENDMENT OF THE DEFERRED STOCK AND
COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS, AND FOR THE AUDITOR PROPOSAL.
By Order of the Board of Directors,
LOGO
HARVEY J. KESNER
Secretary
New York, New York
May 6, 1996
WHETHER YOU EXPECT TO ATTEND THE ANNUAL MEETING OR NOT, YOUR VOTE IS IMPORTANT.
ACCORDINGLY, YOU ARE REQUESTED TO SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE TO ENSURE THAT YOUR SHARES ARE REPRESENTED.
<PAGE> 3
AMERICAN BANKNOTE CORPORATION
200 PARK AVENUE
NEW YORK, NEW YORK 10166-4999
(212) 557-9100
------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
JUNE 13, 1996
------------------------
This Proxy Statement and the accompanying Notice of Annual Meeting and form
of Proxy are furnished in connection with the solicitation of Proxies by the
Board of Directors of American Banknote Corporation, a Delaware corporation (the
"Company"), for use at the Annual Meeting of Stockholders to be held on June 13,
1996 at 9:00 A.M., local time, at Chase World Headquarters, 270 Park Avenue,
11th Floor Conference Room, New York, New York 10017 and at any adjournments or
postponements thereof (the "Annual Meeting"). It is anticipated that this Proxy
Statement and the form of Proxy will be first mailed on or about May 6, 1996 to
holders of record on April 17, 1996 (the "Record Date") of the Company's common
stock, par value $.01 per share (the "Common Stock"). The Company's 1995 Annual
Report to Stockholders, which includes certified financial statements, is
enclosed with this Proxy Statement.
PROPOSAL 1. ELECTION OF DIRECTORS FOR A TERM OF ONE YEAR
The Board of Directors has nominated the following persons for election as
Directors at the Annual Meeting. Each nominee is presently a Director of the
Company other than Mr. Alfred Teo, a stockholder of the Company, who has advised
the Company that he is available to serve on the Board of Directors.
<TABLE>
<CAPTION>
NAME INFORMATION CONCERNING NOMINEES DIRECTOR SINCE AGE
- ------------------------------ --------------------------------------- -------------- ----
<S> <C> <C> <C>
Bette B. Anderson............. President, Kelly, Anderson, Pethick & June 1994 67
Associates, Inc., financial and
corporate consultants, since 1989.
Undersecretary of the Treasury from
1977 to 1981 and various Washington,
D.C. consulting posts from 1981 to
1991. Director, ITT Corporation,
Hartford Insurance Corporation and
ITT Educational Services. Chairperson
of the U.S. Treasury Historical
Association, member of the Council
for the Miller Foundation, University
of Virginia, and member of the
Advisory Council of the Girl Scouts
of America.
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
NAME INFORMATION CONCERNING NOMINEES DIRECTOR SINCE AGE
- ------------------------------ --------------------------------------- -------------- ----
<S> <C> <C> <C>
Dr. Oscar Arias S............. Director, Arias Foundation for Peace September 1995 56
and Human Progress. Former President of
Costa Rica and 1987 Nobel Peace Prize
recipient. President, International
Press Service; Director, Stockholm
International Peace Research
Institute, International Center for
Human Rights and Democratic
Development Institute for
International Studies at Stanford
University. Serves on the Board for
the InterAction Council, the
International Negotiation Network of
the Carter Center and Transparency
International. In addition, Dr. Arias
is an active member of The Commission
on Global Governance, the
Inter-American Dialogue and the
Society for International
Development.
C. Gerald Goldsmith........... Investor; Director, Palm Beach National July 1990 67
Bank and Trust; Director, Nine West
Group, Inc. since June 1993.
Ira J. Hechler................ Investor; Director, Leslie Fay February 1990 77
Companies, Inc. and Concord Camera
Corp.
David S. Rowe-Beddoe.......... Chairman of the Board, Welsh July 1990 58
Development Agency since 1993 and
Development Board for Rural Wales
since 1994; Director, Cavendish
Services Ltd. and Development
Securities plc. Previously held
various senior management positions,
including at Revlon, Inc. and De La
Rue plc, where he was an Executive
Director.
Alfred Teo.................... Chairman and Chief Executive Officer of -- 49
Alpha Industries, Inc. of the Sigma
Plastics Group since 1979. Chairman
and Chief Executive Officer of Red
Line Express since 1984; Hillman Eyes
since 1992 and Alpha Technologies
since 1990. Director and member of
the Compensation Committee of NatWest
Bank Corp., N.A.; Director, Fleet
Bank N.A.; Trustee, St. Joseph's
Hospital and Stevens Institute of
Technology.
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
NAME INFORMATION CONCERNING NOMINEES DIRECTOR SINCE AGE
- ------------------------------ --------------------------------------- -------------- ----
<S> <C> <C> <C>
Morris Weissman............... Chairman of the Board and Chief February 1990 54
Executive Officer of the Company since
July 1990 and Chief Operating Officer
since July 1995; Chairman of the
Board and Chief Executive Officer of
United States Banknote Company L.P.
("USBC") from 1986 through July 1990
and Vice Chairman and Director of
USBC's predecessor from 1976 to 1986.
Director of the Convenience and
Safety Corporation. Trustee of the
Jackie Robinson Foundation and the
Business Council for the United
Nations.
</TABLE>
Following the Annual Meeting, the Board will consist of seven Directors.
Between Annual Meetings the Board has the authority under the By-laws to
increase or decrease the size of the Board and to fill vacancies. Prior to the
Annual Meeting, the Board consisted of six members. The Company expects each
nominee for election to be available for election and if any nominee is not
available Proxies will be voted for the election of such substitutes as the
Board may recommend, unless the Board reduces the number of Directors.
DIRECTOR MEETINGS AND COMMITTEES
The Board of Directors held seven meetings in 1995. The Audit and
Compensation Committees each met formally four times during 1995 and the Stock
Option Committee met formally three times during 1995. Each of these committees
also met informally on several occasions. Overall attendance at Board and
Committee meetings was 93%. Attendance was at least 88% for each Director other
than Ms. Anderson, who attended 72% of the meetings of the Board and committees
on which she served.
Audit Committee. The Audit Committee consists of Messrs. Goldsmith
(Chairman), Rowe-Beddoe and Hechler and Ms. Anderson. The Audit Committee
reviews with the independent auditors the scope of their audit and non-audit
assignments and fees, the accounting principles applied by the Company in its
financial reporting, the scope of internal financial auditing procedures and the
adequacy of the Company's internal controls. The Audit Committee provides an
open avenue of communication between management, the external and internal
auditors and the Board of Directors. The Audit Committee provides similar
reviews of the Company's subsidiaries.
Compensation Committee. The Compensation Committee consists of Messrs.
Rowe-Beddoe (Chairman), Goldsmith and Hechler. The Compensation Committee has
responsibility for compensation arrangements for executive officers and certain
senior employees and reviews executive performance. The Committee periodically
consults with management and administers the Company's Long-Term Performance
Plan (the "Long-Term Performance Plan"), and Executive Incentive Plan (the
"Executive Incentive Plan"). The Compensation Committee also reports to
stockholders on executive compensation matters as required by the Securities and
Exchange Commission (page 5).
Stock Option Committee. The Stock Option Committee presently consists of
Messrs. Hechler (Chairman), Rowe-Beddoe and Goldsmith. The Stock Option
Committee periodically consults with management and administers the Company's
1990 Employee Stock Option Plan (the "1990 Stock Option Plan").
The Audit, Compensation and Stock Option Committees are composed entirely
of outside directors who are neither officers nor employees of the Company or
its subsidiaries. Members of the Compensation and Stock Option Committees are
not eligible to participate in any of the plans those Committees administer. The
Committees of the Board, as well as the full Board, have access to outside
consultants and experts as needed in connection with their deliberations.
3
<PAGE> 6
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table reflects the number of shares of Common stock
beneficially owned on April 15, 1996 by each Director, each nominee for
Director, each of those executive officers named in the Summary Compensation
Table on page 8, by all Directors and executive officers as a group and by each
other person known to the Company to own as of such date more than 5% of any
class of equity securities of the Company.
<TABLE>
<CAPTION>
AMOUNT AND PERCENTAGE
NATURE OF OF CLASS
BENEFICIAL BENEFICIALLY
NAME AND ADDRESS OWNERSHIP(1)(2) OWNED
- ------------------------------------------------------------ --------------- ------------
<S> <C> <C>
Bette B. Anderson........................................... 3,100 *
Dr. Oscar Arias S........................................... 650 *
C. Gerald Goldsmith......................................... 18,700 *
John T. Gorman.............................................. 235,566(4) 1.2%
Ira J. Hechler.............................................. 231,800 1.2%
Harvey J. Kesner............................................ 46,333 *
David S. Rowe-Beddoe........................................ 17,600 *
Alfred Teo(3)............................................... 1,508,500 7.7%
Morris Weissman............................................. 2,123,578(4)(5)(6) 10.3%
All Directors and executive officers
as a group (8 persons).................................... 2,677,327(4)(5)(6) 12.8%
Peter Cohn(7)............................................... 1,474,431 7.6%
535 West 110th Street
New York, N.Y. 10025
</TABLE>
- ---------------
(1) Unless otherwise indicated, each stockholder has sole voting and investment
power. Excludes former executive officers for which ownership information is
not available.
(2) Includes Common Stock issuable upon the exercise of stock options
exercisable within 60 days of April 15, 1996 in the amount of 15,000,
132,666, 15,000, 43,333, 15,000 and 865,833 for Messrs. Goldsmith, Gorman,
Hechler, Kesner, Rowe-Beddoe and Weissman, and 1,086,832 for all Directors
and executive officers as a group, respectively. Includes Director Common
Stock equivalent units under the Deferred Stock and Compensation Plan for
Non-employee Directors in the amount of 2,600, 650, 2,600, 2,600, and 2,600
for Ms. Anderson, Dr. Arias and Messrs. Goldsmith, Hechler and Rowe-Beddoe,
respectively.
(3) Nominee for election as a director at the Annual Meeting. Mr. Teo's address
is c/o Sigma Plastics Group, Page & Schuyler Avenue, Lyndhurst, N.J. 07071.
(4) Includes Common Stock issuable upon the exercise of performance warrants
issued under the Company's Performance Warrant Plan that are exercisable
within 60 days of April 15, 1996 in the amount of 139,500, 16,000 and
155,500 for Messrs. Weissman, Gorman and all Directors and executive
officers as a group, respectively.
(5) Includes (i) 70,000 shares held by spouse and (ii) 60,000 shares as to which
Mr. Weissman has sole voting power and a right of first refusal with respect
to any future sales.
(6) Excludes 61,250 shares of restricted Common Stock as to which Mr. Weissman
disclaims beneficial ownership, issued March 27, 1995 in lieu of a portion
of Mr. Weissman's 1994 bonus.
(7) Based on a Schedule 13D Statement dated December 15, 1994 as filed with the
Securities and Exchange Commission.
* Less than 1%.
4
<PAGE> 7
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company believes that a strong link should exist between executive
compensation and management's success in maximizing stockholder value. This
belief is adhered to by developing both short-term and long-term incentive
compensation programs which provide competitive compensation and reflect Company
performance while taking into account the Company's particular circumstances.
The Compensation Committee's role and responsibilities involve the development
and administration of executive compensation policies and programs which are
consistent with, linked to and supportive of the basic strategic objective of
maximizing stockholder value, while taking into consideration the activities and
responsibilities of the executives. The Committee reviews management's
performance on an annual basis.
The Company has applied these principles through the adoption of the
Long-Term Performance Plan and Executive Incentive Plan which were approved by
Stockholders at the 1994 Annual Meeting. Application of these principals to the
executives began in 1994 with the Chairman and Chief Executive Officer and is
continuing through the present consolidation and downsizing. Through this
process, executive benefits are now linked to corporate results with long-term
benefits realizable in 3-5 years following awards.
COMPENSATION PHILOSOPHY AND ELEMENTS
The five principles to which the Compensation Committee adheres in
discharging its responsibilities reflect the Committee's philosophy of
developing management incentive arrangements that are understandable to both
management and the Company's stockholders. First, the majority of the annual
bonus and long-term compensation for the Company's senior executive officers
should be in part at risk, with actual compensation levels correlating with the
Company's actual performance in certain key areas determined by the Compensation
Committee. Second, over time, incentive compensation of the Company's senior
executive officers should focus more heavily on long-term rather than short-term
accomplishments and results. Third, equity-based compensation and equity
ownership requirements should be used on an increasing basis so as to provide
executive officers with clear and direct links to the stockholders' interests.
Fourth, the overall executive compensation programs should be structured to
ensure the Company's ability to attract, retain, motivate and reward those
individuals who are best suited to achieving the desired performance results of
the Company, both long and short-term. Fifth, the total compensation for all
executive officers and employees of the Company should be competitive so as to
attract and retain the best people in the Company's unique industry and should
take into account the duties and responsibilities of the executive.
The Compensation Committee believes that sales and earnings growth as well
as continued improvement in cash flow should be recognized in considering
compensation levels along with improvements in overall effectiveness,
productivity, quality, return on equity and investment and success in
identifying and implementing further strategic alliances and business
combinations, while taking into account the Company's high depreciation and
amortization, non-recurring extraordinary charges and continued non-cash
charges.
In evaluating the performance and compensation of the executive officers of
the Company, the Compensation Committee has taken particular note of
management's overall success in the consolidation of the businesses that have
been brought under the Company's management during the past seven years, i.e.,
United States Banknote, American Bank Note, Jeffries Banknote, American Bank
Note Holographics, American Banknote Company Grafica e Servicos (Brazil), and
Grafica Bradesco (Brazil), as well as fundamental changes affecting the markets
in which the Company operates. With foreign operations approaching 50% of
consolidated sales and growing, management has achieved international
diversification goals and assumed added responsibilities for managing a global
business. The success of the Holographic and Brazilian operations has been
offset by a significant contraction of domestic printing operations, which has
challenged management with consolidating to meet market conditions while
identifying domestic growth opportunities. Significant organizational
realignment and substantial change in the roles of the corporate officers and
subsidiary general managers were implemented during the second half of 1995 and
continue into 1996. Coupled with a significant downsizing of the corporate
headquarters staff, and the assumption of Chief
5
<PAGE> 8
Operating Officer duties by Mr. Weissman, greater effort has been required from
the entire management team.
During 1995, the Committee retained the services of a nationally recognized
research and consulting firm, Strategic Compensation Research Associates
("SCRA"), to undertake a review of the compensation of the senior executives
(including current contracts, salaries, bonuses and other benefits) in view of
compensation packages received by senior executives of other U.S. public
companies of comparable size, profitability and stock price performance. SCRA
confirmed that the current cash compensation paid to senior executives was
reasonable compared to other companies of a similar character, both in the
printing industry and among highly-leveraged turnaround companies. (Those
companies reviewed by SCRA for comparative purposes do not necessarily include
those in the Company's performance graph since the Company operates in a highly
unique niche of the printing industry, has material foreign operations and is
highly leveraged).
SCRA's report evaluated the salaries and bonuses paid to the top executives
in nine mid-sized companies in the printing industry, eight highly leveraged
turnaround companies and all of the one hundred seventy-five companies under
$500 million of annual revenues included in the Standard & Poor's (S&P) Midcap
400, the Dow Jones Equity Market Index or the S&P 500. SCRA concluded that the
salaries and bonuses paid by the Company to its top executives are competitive
within the comparison groups and that salaries and bonuses are balanced
appropriately for the Company at this time. SCRA cautioned, however, that the
Company's compensation would be only marginally competitive considering
long-term incentive and stock ownership programs. SCRA noted that the overall
compensation program was below those of other companies because of a lack of
tangible long-term cash incentives and a weak level of meaningful stock
incentives, i.e., common interest with stockholders. SCRA recommended that the
Company accelerate the implementation of its philosophy to put more of the key
executives' compensation at risk both for short-term and long-term components.
The Committee has accepted SCRA's recommendation that as a key part of the
ongoing management restructuring a long-term incentive program for the executive
team be implemented within the parameters of the Company's plans. In order to
provide future long-term incentives SCRA recommended, and the Committee agreed,
to revitalize certain outstanding options with no meaningful value to the
executives and to grant some restricted shares and new options. The Committee
has approved a dramatic shift in the Company's compensation program which
provides stronger incentives for the key executives and for managers and other
key employees to remain with the Company and to work to achieve substantially
improved growth and results in the next three to five years. Operating division
and corporate staff managers and key employees will be eligible for significant
bonuses and long-term rewards if division and corporate goals of operating
income above a 10% return on equity (ROE) are achieved. Various officers and
managers have been offered an opportunity to participate and cancel their
contractual bonus arrangements and certain prior option grants in order to
become eligible for these programs commencing in mid-1996.
Actual compensation for 1995 for the Chief Executive Officer and certain
other executive officers has been determined with respect to written employment
agreements which set forth actual levels and minimum rates of increase. No
annual incentive award for 1995 was paid to Mr. Weissman under the terms of his
employment agreement. Bonuses for Mr. Gorman and Mr. Kesner were based upon the
proposals to each executive described above under which lower bonuses were paid
than their prior contractual arrangements provided.
The Compensation Committee believes that the program complies with the
provisions of Section 162(m) under the Internal Revenue Code of 1986, as
amended, with respect to qualifying the compensation paid to its executive
officers.
COMPENSATION COMMITTEE
David S. Rowe-Beddoe
C. Gerald Goldsmith
Ira J. Hechler
6
<PAGE> 9
PERFORMANCE GRAPH
The following performance graph compares the Company's cumulative total
stockholder return from December 31, 1990 through December 31, 1995 to that of
the Media General Composite, a broad market index, and a peer group index
created by the Company.
Because the Company is involved in a wide variety of businesses, including
security printing, holography, and credit and telephone cards, and nearly 50% of
its sales are derived from Latin America, no published peer group closely
reflects the Company's overall business or matches the relative contributions of
those businesses to the Company's overall performance. The following companies
have been included in the customized peer group index: Bowne & Co., Inc., Deluxe
Corporation, Devon Group Inc., Duplex Products Inc., John H. Harland Co.,
Merrill Corp., Moore Corporation Limited, Multi-Color Corp., The Standard
Register Company, Stevens Graphics Corporation (Class A and Class B) and
American Banknote Corporation. The customized peer group weighs the constituent
companies' common stock performance on the basis of market capitalization,
measured at the beginning of each relevant time period.
The graph assumes that the value of the investment in the Company's Common
Stock and each index was $100 on December 31, 1990 and that all dividends were
reinvested. Stock price performances shown on the graph are not indicative of
future price performances. This data was furnished by Media General Financial
Services.
CUMULATIVE TOTAL RETURN AMONG AMERICAN
BANKNOTE CORPORATION, MEDIA GENERAL'S PEER GROUP INDEX,
AND COMPOSITE BROAD MARKET INDEX
FROM DECEMBER 31, 1990 TO DECEMBER 31, 1995
<TABLE>
<CAPTION>
AMERICAN MEDIA GEN-
MEASUREMENT PERIOD BANKNOTE PEER GROUP ERAL COMPOS-
(FISCAL YEAR COVERED) CORPORATION INDEX ITE
<S> <C> <C> <C>
DEC. 31, 1990 100 100 100
DEC. 31, 1991 328.57 114.73 129.09
DEC. 31, 1992 371.43 126.56 134.25
DEC. 31, 1993 364.29 122.17 154.11
DEC. 31, 1994 128.57 107.88 152.83
DEC. 31, 1995 71.43 118.43 198.15
</TABLE>
7
<PAGE> 10
SUMMARY COMPENSATION TABLE
The following table sets forth certain information for the three years
ended December 31, 1995, 1994 and 1993, regarding the compensation of the Chief
Executive Officer of the Company and each of the other most highly compensated
executive officers of the Company who were serving at the end of the last
completed year and whose compensation exceeded $100,000 for 1995.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
---------------------------------
ANNUAL COMPENSATION AWARDS
----------------------------------- ----------------------- PAYOUTS
OTHER RESTRICTED -------
ANNUAL STOCK LTIP ALL OTHER
NAME AND COMPENSATION AWARD(S) PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(1) ($)(2) OPTIONS(#) ($) ($)(3)(4)(5)
- -------------------------- ----- --------- -------- ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Morris Weissman 1995 750,000 -0- -- -- 250,000 -- 19,040
Chairman and Chief 1994 750,000 183,750 -- 183,750 -- -- 21,918
Executive Officer 1993 592,770 704,468 -- -- 250,000 -- 77,029
John T. Gorman 1995 234,168 40,000 -- -- -- -- 15,938
Executive Vice 1994 234,168 132,200 -- -- 20,000 -- 17,224
President and Chief 1993 234,164 175,716 -- -- -- -- 14,727
Financial Officer
Harvey J. Kesner 1995 173,824 30,000 -- -- -- -- 7,500
Senior Vice President 1994 151,440 60,000 -- -- 15,000 -- 7,500
General Counsel and 1993 145,600 80,000 -- -- -- -- 8,164
Secretary
</TABLE>
The following table sets forth certain information for two additional
individuals required to be disclosed pursuant to the rules of the Securities and
Exchange Commission but who were not serving as executive officers at the end of
the last completed year:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ron K. Glover(6) 1995 216,671 -- -- -- -- -- 10,466(7)
1994 300,000 150,000 -- -- 275,000 -- 8,983
1993 -- -- -- -- -- -- --
Robert L.
Christophersen(8) 1995 129,439 41,602 -- -- -- -- 16,992
1994 184,896 89,230 -- -- 15,000 -- 21,074
1993 184,876 118,608 -- -- -- -- 17,597
</TABLE>
- ---------------
(1) The value of each of the named executive officer's perquisites did not
exceed the threshold for disclosure established under the Securities and
Exchange Commission's proxy rules.
(2) Amounts shown represent 91,875 shares of restricted stock valued at $2.00
per share awarded on March 27, 1995 representing 50% of Mr. Weissman's 1994
bonus under the Executive Incentive Plan. Restrictions lapse on one-third of
the shares upon each of the first three anniversaries of the date of award,
except that all such restricted stock immediately vests upon Mr. Weissman's
death, retirement, disability, termination or upon a "change in control."
Shares are held pursuant to a grantor trust subject to claims of the
Company's creditors until the date restrictions on the shares lapse.
Dividends are paid on these shares as, when and if dividends are paid on
Common Stock. No named executive officers held any restricted stock at
December 31, 1993.
(3) Amounts shown for 1993 consist of the following: (i) contributions to the
American Banknote Employees' Retirement Plan (the "Retirement Plan"): Mr.
Weissman ($10,000), Mr. Gorman ($10,000) and Mr. Kesner ($8,164); and (ii)
premiums paid by the Company with respect to life insurance: Mr. Weissman
($67,029) and Mr. Gorman ($4,727).
(4) Amounts shown for 1994 consist of the following: (i) contributions to
Retirement Plan: Mr. Weissman ($7,500), Mr. Gorman ($7,500) and Mr. Kesner
($7,500); and (ii) premiums paid by the Company with respect to life
insurance: Mr. Weissman ($14,418) and Mr. Gorman ($9,724).
(5) Amounts shown for 1995 consist of the following: (i) contributions, to
Retirement Plan: Mr. Weissman ($7,500), Mr. Gorman ($7,500) and Mr. Kesner
($7,500); and (ii) premiums paid by the Company with respect to life
insurance: Mr. Weissman ($11,540) and Mr. Gorman ($8,438).
(6) Salary for 1994 and 1995 reflect partial years. Mr. Glover resigned in July
1995. Amounts shown under "All Other Compensation" for 1994 consist of
$5,625 for Retirement Plan and $3,538 for life insurance; and for 1995
$3,750 for Retirement Plan and $6,716 for life insurance.
(7) Pursuant to a separation agreement, Mr. Glover also received a lump sum
payment of $800,000, $100,000 for post-termination consulting services, and
approximately $275,000 discharge of indebtedness and his prior employment
agreement was canceled.
(8) Salary for 1995 reflects a partial year. Mr. Christophersen's prior
employment Agreement was not renewed as of July 1995 although Mr.
Christophersen continued on the Company payroll through October 1995 and
thereafter as a consultant. Amounts shown for 1993 consist of $9,433 for
Retirement Plan and $8,164 for life insurance; for 1994 $7,500 for
Retirement Plan and $13,574 for life insurance; and for 1995 $7,500 for
Retirement Plan and $9,492 for life insurance.
8
<PAGE> 11
EMPLOYMENT AGREEMENTS
Mr. Weissman serves pursuant to an employment agreement with the Company
through December 31, 1999. Mr. Weissman's agreement is subject to automatic
extension unless advance notice of non-renewal is given.
Mr. Weissman's agreement provides for his engagement as Chairman and Chief
Executive Officer of the Company. The agreement provides a base salary of
$750,000 with no guaranteed bonus. Mr. Weissman participates in the Executive
Incentive Plan and receives an annual bonus equal to 6% of his annual base
salary in 1994 (adjusted in each subsequent year by compounding the 1994 base
salary by 1.07) multiplied by the number of percentage points by which "ROE" (as
defined below) exceeds 10% up to a maximum annual bonus equal to 200% of base
salary.
ROE is defined as the fraction the numerator of which is equal to the
Company's pre-tax income (including income from minority holdings, joint
ventures, dividends from investments and like income) before extraordinary
charges or similar one-time non-recurring losses or reserves not in the ordinary
course plus depreciation and amortization, and the denominator of which is
calculated as a simple average of the average monthly common equity (beginning
of month common equity plus end of month common equity divided by two) for the
calendar year.
Mr. Weissman's agreement also contains provisions for payment in the event
of disability or death in addition to maintenance of certain life insurance and
participation in Company benefit plans. Upon termination in the event of his
permanent disability, until the earlier to occur of (i) recovery from such
disability, (ii) the date employment under the employment agreement was
scheduled to terminate or (iii) death, Mr. Weissman is entitled to receive 75%
of the then effective base salary and the pro rata amount of the bonus he would
have received for the year in which he became permanently disabled based on the
number of days he was not disabled and during the time he receives 75% of his
base salary all other benefits he would have received but for the termination of
employment due to disability.
In the event Mr. Weissman's employment with the Company is terminated by
the Company (other than for cause) or is terminated by Mr. Weissman for "good
reason," Mr. Weissman is entitled to receive a lump sum equal to the greater of
his "Total Direct Compensation" for 1994 or his "Estimated Total Direct
Compensation" then in effect, as if his employment agreement had remained in
effect for the entire Term (as extended pursuant to the agreement) (or, if
following a "change in control," the greater of such amount or $5,000,000), plus
the value of his unexercised options and maintenance of certain benefits for the
remainder of the Term.
An employment agreement for Mr. Gorman provides a base salary of $234,168
and terminates on July 25, 1997. For 1995, Mr. Gorman's agreement provided for a
minimum annual bonus of 35% of base salary which has been eliminated under an
amendment to Mr. Gorman's agreement. Until July 1995, Mr. Kesner was employed
pursuant to a written employment agreement and is currently employed on
substantially equivalent terms but with no minimum annual bonus.
Mr. Gorman and Mr. Kesner are entitled to receive payments upon non-renewal
of their agreements by the Company or termination of employment, disability or
death in addition to maintenance of certain life insurance and participation in
Company benefit plans. Payment upon termination of the "Term of Employment"
includes a two year consulting period for Mr. Gorman at 50% of base salary then
in effect and for Mr. Kesner, a lump sum of one times base salary then in
effect. Upon termination in certain circumstances, including for "good reason"
(defined as certain events following a "change in control"), payment includes a
lump sum of two times base salary plus bonus then in effect for Mr. Gorman and
one times base salary plus bonus then in effect for Mr. Kesner, plus the value
of unexercised options held and maintenance of certain benefits for an eighteen
month period.
Mr. Christophersen retired from the Company in October 1995 and continues
to provide consulting services to the Company through October 1997 under the
terms of his employment agreement at 50% of his base salary in effect at
termination per year.
9
<PAGE> 12
OPTION GRANTS IN THE LAST FISCAL YEAR
The following table sets forth for the Chief Executive Officer and each of
the other named executive officers of the Company: (a) the number of options
granted during 1995; (b) the percent such number is of the total options granted
to all employees in 1995; (c) the exercise price per share; (d) the expiration
date; and (e) the potential realizable value of such options at certain assumed
rates of stock price appreciation.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
-------------------------------------- AT
% OF ASSUMED ANNUAL RATES OF
TOTAL STOCK PRICE APPRECIATION
OPTIONS FOR
OPTIONS GRANTED TO EXERCISE OPTION TERM(2)
GRANTED EMPLOYEES PRICE EXPIRATION ---------------------------
(#)(1) IN 1995 ($/SH) DATE 0%($) 5%($) 10%($)
------- ---------- -------------- ---------- ----- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Morris Weissman............... 250,000 88% $2.187 4/11/05 $-- $343,927 $871,858
</TABLE>
- ---------------
(1) Options granted under the Long-Term Performance Plan. One-third of the
options vest and become fully exercisable upon each of the first three
anniversaries of the date of grant, except that all such options immediately
vest upon the holder's death while still employed or termination of
employment in connection with a change in control. Payment of the purchase
price of shares acquired upon the exercise of options generally may be in
cash, by check, or by delivery of shares of Common Stock, or by other
permitted methods, including broker-assisted "cashless exercise" methods.
(2) The amounts set forth are based on assumed appreciation of 0% and the 5% and
10% rates as prescribed by the Securities and Exchange Commission rules and
are not intended to forecast future appreciation, if any, of the stock
price. The Company did not use an alternate formula for a grant date
valuation as it is not aware of any formula which will determine with
reasonable accuracy a present value based on future unknown or volatile
factors. Actual gains, if any, on stock option exercises and Common Stock
holdings are dependent on the future performance of the stock. There can be
no assurance that the amounts reflected in this table will be achieved.
OPTION EXERCISES AND FISCAL YEAR END VALUES
The following table sets forth for the Chief Executive Officer and each of
the other named executive officers of the Company: (a) the number of shares of
Common Stock acquired upon the exercise of options during 1995; (b) the value
realized from options exercised during 1995; (c) the number of options held as
of December 31, 1995, both exercisable and unexercisable; and (d) the value of
such options as of that date. No named executive officer exercised any options
during the last fiscal year.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND OPTION VALUE AT LAST FISCAL YEAR END
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL OPTIONS AT FISCAL
SHARES YEAR END # YEAR-END
ACQUIRED VALUE EXERCISABLE(1)/ $ EXERCISABLE(1)/
NAME ON EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
- ------------------------------- ----------- ----------- ----------------- --------------------
<S> <C> <C> <C> <C>
Morris Weissman................ -- -- 782,500/333,333 $0/$0
John T. Gorman................. -- -- 132,666/ 13,334 0/ 0
Harvey J. Kesner............... -- -- 43,333/ 10,000 0/ 0
Robert L. Christophersen....... -- -- 85,750/ 10,000 0/ 0
</TABLE>
- ---------------
(1) Amounts shown exclude Performance Warrants held by Messrs. Weissman, Gorman
and Christophersen under the Company's Performance Warrant Plan in the
amounts of 139,500, 16,000 and 14,000, respectively. All of such Performance
Warrants are presently exercisable through July 26, 2006 at an exercise
price of $0.011 per share, subject to anti-dilution provisions. The
aggregate value of unexercised in-the-money Performance Warrants at 1995
fiscal year end was $172,841, $19,824 and $17,346 for Messrs. Weissman,
Gorman and Christophersen, respectively. Mr. Glover's options expired
following his resignation.
10
<PAGE> 13
RETIREMENT PLAN
Effective April 1, 1994, the Board of Directors approved a supplemental
retirement plan for certain executives and management employees of the Company
(the "SERP"). In general, the SERP provides that a participant retiring at age
65 will receive a monthly retirement benefit equal to an amount determined, in
the case of the Company's senior executives including Messrs. Weissman, Gorman
and Kesner, by multiplying the participant's "final average compensation" (as
defined in the SERP) by a percentage equal to 3% for each of the first ten years
plus 1.5% for each of the next twenty years, of service, or for junior level
executives, by a percentage equal to 2% for each of the first ten years, 1.5%
for each of the next ten years and 1% for each of the next ten years. The result
of the computation shall be decreased by a participant's Social Security Benefit
and any amounts available from the participant's pension or profit sharing plan
from the Company or its predecessors. The retirement income shall be paid at
normal or deferred retirement date for life only with the appropriate actuarial
reduction of a joint and survivor election. Early retirement benefits are
available with a reduction of 2% for each year less than age 62. No benefit will
be provided prior to a participant achieving age 55 and 10 years of service. All
participants will receive credit for past service to the Company or any of its
wholly-owned subsidiaries. Amounts of compensation in excess of $300,000
increased by 6% on each plan anniversary commencing April 1, 1995, will not be
considered when calculating plan benefits. The Company has established a grantor
trust to which the Company can contribute assets that will be held subject to
claims of the Company's creditors until paid to SERP participants and their
beneficiaries. Mr. Weissman's benefit in the SERP is calculated based upon
compensation of $750,000. Mr. Weissman will be required to provide minimum
numbers of service years as provided in his agreement.
The following table shows the estimated annual benefit payable to employees
in various compensation and years of service categories based upon the senior
executive accrual rates. The estimated benefits apply to an employee retiring at
age sixty-five in 1995 who elects to receive his or her benefit in the form of a
single life annuity. These benefits would be reduced by any benefits
attributable to the Company's (and its predecessor's) contributions (and the
earnings thereon) to pension and/or profit sharing plans and social security.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
-----------------------------------------------------------
REMUNERATION 10 15 20 25 30
--------------------------------- ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$100,000......................... $30,000 $ 37,500 $ 45,000 $ 52,500 $ 60,000
125,000......................... 37,500 46,875 56,250 65,625 75,000
150,000......................... 45,000 56,250 67,500 78,750 90,000
200,000......................... 60,000 75,000 90,000 105,000 120,000
250,000......................... 75,000 93,750 112,500 131,250 150,000
300,000......................... 90,000 112,500 135,000 157,500 180,000
</TABLE>
DIRECTOR COMPENSATION
Non-employee Directors presently are paid $25,000 per annum for serving as
Directors and $2,000 for each meeting of the Board of Directors attended in
excess of four in any fiscal year. Non-employee Directors receive $1,000 for
each committee meeting attended. Under the Company's 1992 Non-employee Directors
Stock Option Plan (the "1992 Directors Plan"), Messrs. Goldsmith, Hechler and
Rowe-Beddoe have each been granted options for 15,000 shares. Under the 1992
Directors Plan, the options become fully exercisable upon the termination of the
holder as a Director of the Company due to death, disability or retirement or
upon a change of control. Payment of the purchase price for shares acquired upon
the exercise of options may be in cash, by check or by delivery to the Company
of shares of Common Stock, including broker-assisted "cashless exercise"
methods. No options granted under the 1992 Directors Plan have been exercised
and no further grants will be made. Under the terms of the Deferred Stock and
Compensation Plan for Non-employee Directors (the "Directors Plan"), each
non-employee director elected at an annual meeting is automatically awarded
1,300 Common Stock equivalents, which are held in a director's deferred stock
account. Directors
11
<PAGE> 14
elected or appointed other than at an annual meeting are awarded a pro rata
amount of Common Stock equivalents. A Common Stock equivalent is the
hypothetical equivalent of the Common Stock that has a value on any date equal
to the mean of the high and low trading prices of the Common Stock on such date,
and is adjusted to reflect stock dividends, splits and reclassifications. In
January of the year following the year of termination of services, each director
receives payment in shares of Common Stock equal to the balance of Common Stock
equivalents in his or her deferred stock account. In the event of a change in
control, Common Stock equivalents have a value based on the highest price of the
Common Stock during the thirty days preceding such change in control and will be
paid in cash or otherwise as the Compensation Committee may prescribe. As a
result of the Directors Plan, 1,300 Common Stock equivalents were awarded to
each of Ms. Anderson and Messrs. Goldsmith, Hechler and Rowe-Beddoe and 650
Common Stock equivalents were awarded to Dr. Arias during 1995.
Under the Directors Plan, a non-employee director may elect to defer all or
a portion of such director's annual retainer and other fees, and such deferred
amount is treated as if it were invested in a putative debenture and credited to
a deferred debenture account. A putative debenture is a hypothetical debenture
of the Company that has a face value of $100, and bears interest at a rate equal
to the seven year U.S. Treasury Bond rate in effect the week prior to the
regular January meeting of the Board. The debentures are convertible into Common
Stock at a conversion rate determined by dividing $100 by the mean of the high
and low trading prices of the Common Stock on the date the putative debenture is
credited to the director's deferred debenture account. An election to defer
shall be effective only with regard to annual retainer and fees earned no
earlier than six months following the director's election except as otherwise
provided under the Director Plan. An election shall be irrevocable with regard
to annual retainer and fees earned during the period in which the election is in
effect. Following termination of service, the director will receive, in respect
of all amounts deferred under the Director Plan, five annual payments in cash if
the value of the putative debentures, plus the interest accrued thereon, is
greater than the value of the common Stock into which the putative debentures
are convertible. Otherwise such amount shall be payable in Common Stock. In the
event of a change in control, the deferred amounts will be paid in cash or
otherwise as the Compensation Committee may prescribe.
The Company does not provide any Director retirement benefits.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company retains Kelly, Anderson, Pethick & Associates, of which Ms.
Anderson, a Director, is President and an owner, for marketing and business
development services primarily involving the Company's government contracts
business. Pursuant to an agreement entered October 1, 1995, the Company is
billed at a customary hourly rate for services performed subject to a minimum
retainer of $5,000 per month. During 1995, the Company paid approximately
$94,900 for services performed. The Company has for many years prior to Ms.
Anderson's election as a Director utilized the services of Ms. Anderson's firm
as a government consultant.
LOANS TO EXECUTIVE OFFICERS
On April 13, 1995, the Company loaned Mr. Weissman $185,750. The loan bears
interest, payable annually, at a rate equal to the rate published by Citibank,
NA as its base rate, from time to time. The loan matures on April 13, 1998. On
March 31, 1996, the amount outstanding under the loan was approximately
$200,046, which was the maximum amount outstanding to date.
PROPOSAL 2. PROPOSED AMENDMENT TO THE DEFERRED STOCK AND
COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS
PROPOSED AMENDMENT
The Board of Directors has recommended that stockholders approve an
amendment (the "Amendment") to the Directors Plan which was adopted by the Board
of Directors on March 21, 1994 and approved
12
<PAGE> 15
by stockholders at the 1994 Annual Meeting. The Amendment increases to 3,000 the
number of Common Stock equivalent awards which each director will automatically
receive on an annual basis and provides automatic grants of up to 2,000 Common
Stock equivalents to Committee chairpersons. Newly appointed directors will also
receive a one-time award of 7,500 Common Stock equivalents under the Amendment.
Upon Stockholder approval of the Amendment, Messrs Goldsmith, Hechler and
Rowe-Beddoe will each cancel their awards of 15,000 options issued under the
terminated 1992 Directors Plan and will receive an automatic one-time award of
7,500 Common Stock equivalents. A maximum of 5,000 common stock equivalents per
year for each director will be awarded under the Amendment, exclusive of the
automatic one-time awards to directors. No annual award will be made to
directors who were not directors for at least 180 days prior to an annual
meeting award date and pro-rata awards will be made for partial year Committee
chair service. Under the Amendment, no additional cash compensation will be paid
to Directors. In all other respects the Directors Plan remains unchanged.
The increase in the number of Common Stock equivalent awards to Directors
is necessary in order to satisfy the Company's concerns that it was providing
insufficient long-term variable compensation to its outside directors. In
enhancing the long-term incentives for non-employee directors with Common Stock
equivalent awards, the compensation to directors will further the interests of
the stockholders by providing a benefit in line with the goal of increasing the
value of the Company's Common Stock. The Amendment would afford directors who
are responsible for the continued growth of the Company an opportunity to
enhance their proprietary interest in the Company, thereby creating in such
persons an increased interest in and a greater concern for the welfare of the
Company. By means of the amended Directors Plan, the Company seeks to retain the
services of persons now holding directorships and to ensure the Company
continues to be able to attract and retain qualified outside directors and
encourage their active Committee participation.
Prior to effectiveness of the Amendment, based on a closing price on April
16, 1996 of $1 5/8 per share, the value of an annual award if made on that date
would have been approximately $2,112 for 1,300 Common Stock equivalents. As
amended, the value of an annual award made on that date would have increased to
approximately $4,875 for 3,000 Common Stock equivalents and directors
contributing additional services by agreeing to serve as Committee chairpersons
would receive an additional grant with a value of approximately $3,250 for 2,000
Common Stock equivalents.
The following table reflects the benefits that will be allocated to each of
the named persons or groups:
NEW PLAN BENEFITS
DEFERRED STOCK AND COMPENSATION PLAN FOR
NON-EMPLOYEE DIRECTORS
<TABLE>
<CAPTION>
DOLLAR VALUE NUMBER OF UNITS
NAME AND POSITION ($) (#)
- ------------------------------------------------------------ ------------ ---------------
<S> <C> <C>
Morris Weissman............................................. 0 0
John T. Gorman.............................................. 0 0
Harvey J. Kesner............................................ 0 0
Executive Officers as a group............................... 0 0
Non-employee Director's as a group (5 persons)*............. 24,375 15,000
All Employees as a Group.................................... 0 0
</TABLE>
- ---------------
* Reflects Common Stock equivalent awards allocated to each Non-employee
Director. Excludes common stock equivalent awards which are allocable (i) to
Non-employee Directors (2,000) as Chairpersons of each of the four presently
organized committees of the Board; and (ii) as one-time awards upon approval
of the Amendment and to new directors (7,500).
13
<PAGE> 16
REASONS FOR THE AMENDMENT
The Amendment is the result of a review of the levels of Director
compensation conducted by the Company's compensation consultant, SCRA, which
compared the Company's director compensation to that at various printing and
other companies. The conclusion of SCRA was that the present Common Stock
equivalent awards provided a hypothetical value of less than 10% of the annual
retainer of Directors of the Company as compared to a median of other companies
with such a program of 60% of retainer. While also citing various shortcomings
in the structure of the cash retainer paid to Directors, the Company has elected
not to revise the Directors' cash retainer at this time, but may consider an
increase in the future. However, in line with SCRA's recommendation to shift
more of the value of the Directors' compensation to stock, the Company developed
the Amendment which is being submitted for Stockholder approval at the Annual
Meeting.
The amended Directors Plan was approved by the Board of Directors on April
25, 1996 and effectiveness is subject to approval of the stockholders at the
Annual Meeting. If the Amendment is not approved by stockholders at the Annual
Meeting, the Amendment will not become effective and the Directors Plan will
remain effective as in effect prior to the adoption of the Amendment by the
Board of Directors.
SUMMARY OF AMENDED PLAN
The following summary of the Directors Plan as proposed to be amended (the
"Amended Plan") is not intended to be complete and is qualified in its entirety
by reference to the Amended Plan, the full text of which is set forth in Annex A
hereto.
Under the Amended Plan, each non-employee director who has served as a
director for more than 180 days automatically receives annually on the annual
meeting date 3,000 shares of Common Stock equivalents, awarded and held in a
director's deferred stock account ("Deferred Stock Account").
Directors in office on the effective date of the Amendment and newly
appointed directors appointed to fill a vacancy or a newly created position
shall automatically receive a one-time award of 7,500 Common Stock equivalents.
In addition, each Director, at the first meeting of each Committee of the
Board of Directors following an Annual Meeting of stockholders, who is selected
to serve as Chairperson of that Committee by a majority of the outside directors
serving on such Committee, shall receive on such date an award of 2,000
additional Common Stock equivalents in the director's Deferred Stock Account, or
a pro-rata amount if the Committee is formed or the Chairperson elected at a
later date.
A director may receive a maximum of 5,000 Common Stock equivalents per
calendar year, exclusive of one-time awards.
A Common Stock equivalent is the hypothetical equivalent of the Common
Stock that has a value on any date equal to the mean of the high and low trading
prices of the Common Stock on such date, and is adjusted to reflect stock
dividends, splits and reclassifications. In January of the year following the
year of termination of services, each director receives payment in shares of
Common Stock equal to the balance of Common Stock share equivalents in his or
her Deferred Stock Account. In the event of a "change in control" of the Company
(as defined in the Directors Plan), the share equivalents have a value based on
the highest price of the Common Stock during the thirty days preceding such
change in control and will be paid in cash or otherwise as the Compensation
Committee may prescribe.
In addition, under the Directors Plan, a non-employee director may elect to
defer all or a portion of such director's annual retainer and other fees, and
such deferred amount is treated as if it were invested in a putative debenture
and credited to a deferred debenture account. No changes have been made to this
aspect of the Directors Plan.
A copy of the Directors Plan, as amended, is attached to this Proxy
Statement as Annex A. Stockholders are encouraged to review the Directors Plan,
as amended, carefully. Any description in this Proxy Statement of the Directors
Plan is qualified in its entirety by reference to Annex A.
14
<PAGE> 17
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE DIRECTORS PLAN AMENDMENT.
PROPOSAL 3. AUDITOR PROPOSAL
Pursuant to the recommendation of the Audit Committee, the Board of
Directors has proposed the appointment of the firm of Deloitte & Touche LLP,
independent certified public accountants ("Deloitte"), to audit the consolidated
financial statements of the Company for the fiscal year ending December 31,
1996. Deloitte has acted as auditor of the Company or its predecessors since
1976. The stockholders are requested to approve the proposed appointment at the
Annual Meeting.
It is expected that representatives of Deloitte & Touche LLP will be
present at the Annual Meeting and available to respond to appropriate questions,
and make a statement, if they so wish.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE AUDITOR PROPOSAL.
RECOMMENDATION
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE ELECTION OF
ITS NOMINEES AS DIRECTORS, FOR THE APPROVAL OF THE DIRECTORS PLAN AMENDMENT AND
FOR THE AUDITOR PROPOSAL.
LITIGATION; COMPLIANCE
LITIGATION INVOLVING CLAIMS AGAINST DIRECTORS
In January 1994, Vladimir v. United States Banknote Corporation, et al.,
and in February 1994, Sinay v. United States Banknote Corporation, et al., were
filed in the United States District Court for the Southern District of New York
on behalf of a purported class of purchasers of Common Stock between April 1,
1993 and January 6, 1994. Also, in January 1994, Atencio v. Morris Weissman, et
al., was filed in the Court of Chancery for the State of Delaware, New Castle
County, against various directors and/or officers of the Company, on behalf of a
purported class and also derivatively on behalf of the Company which was named
as a nominal defendant. In February 1994, Rosenberg v. Morris Weissman, et al.
was filed in the same court as Atencio, alleging similar claims to Atencio, but
not on behalf of a class of plaintiffs.
The complaints in these four actions allege, among other things, that the
Company and the individual defendants knowingly or recklessly caused the market
price of its Common Stock to be inflated artificially by making misleading
statements and/or omissions of material fact concerning the risk of loss of the
Company's stamp printing contracts with the United States Postal Service
("USPS"). The Vladimir and Sinay actions seek unspecified damages. The Atencio
and Rosenberg actions also assert claims for breach of fiduciary duty by the
individual defendants, and allege that certain of the defendants sold Common
Stock while in possession of material non-public information and seek recapture
of the profits earned by the defendants who purportedly traded, the repayment by
the defendants of their 1993 salaries, damages for the costs to the Company of
defending the Vladimir actions and the annulment of the 1993 election of
directors.
On June 16, 1995, the court granted plaintiff's motion for class
certification in Vladimir and defined the class to include persons (other than
defendants and related persons) who purchased the Company's stock from April 1,
1993 through January 6, 1994. On February 28, 1996, the Sinay action was
voluntarily dismissed. The Atencio and Rosenberg actions have been stayed
pending the outcome of the Vladimir action.
On November 1, 1994, the Company filed an action against Thomas De La Rue
AG ("DLR") and its parent, De La Rue Plc in New York State Supreme Court. The
complaint alleges breach of contract in connection with the 1993 purchase of the
Company's Brazilian subsidiary from DLR and seeks in excess of $1.5 million in
damages. In December 1994, the action was removed by the defendants to the
United States District Court for the Southern District of New York. Defendants
have filed an answer denying lability and asserting counter claims. Discovery is
presently underway. On November 2, 1994, an action was commenced against the
Company and certain of its directors and officers entitled Thomas De La Rue AG
v. United States
15
<PAGE> 18
Banknote Corporation, et al. in the United States District Court of the Southern
District of New York. The complaint, as amended, alleges, among other things,
breach of contract by the Company in connection with the Brazil purchase
agreement and common law fraud based on the alleged failure to disclose the risk
of loss of the Company's stamp printing contracts with the USPS and the alleged
failure to register the Common Stock paid to De La Rue expeditiously with the
Securities and Exchange Commission. The complaint seeks unspecified damages as
well as $6.8 million for the Common Stock received by DLR in the transaction. On
November 20, 1995, De La Rue amended its complaint and eliminated all of its
federal securities law claims and the individual defendants following dismissal
of certain of De La Rue's securities law claims by the court. Discovery is
presently underway.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's officers,
directors and persons who own more than 10% of a registered class of the
Company's equity securities to file reports of ownership and changes in
ownership with the Securities and Exchange Commission and the New York Stock
Exchange. Officers, directors and greater than 10% stockholders are required by
regulations promulgated by the Securities and Exchange Commission to furnish the
Company with copies of all forms they file pursuant to Section 16(a) of the
Exchange Act.
Based solely on review of the copies of such forms furnished to the Company
and written representations from the Company's executive officers and Directors,
the Company believes that during the year ended December 31, 1995 all persons
subject to the reporting requirements of Section 16(a) filed the required
reports on a timely basis except for one late Form 3 filed February 1996 by Mr.
Arias, a nonresident of the United States, covering no transactions following
his election as Director during September 1995.
OTHER BUSINESS
The Company knows of no other matters that may be presented to the Annual
Meeting. However, if any other matter properly comes before the Annual Meeting,
or any adjournment thereof, it is intended that proxies in the accompanying form
will be voted in accordance with the judgment of the persons named therein.
PROXIES AND VOTING AT THE MEETING
Only holders of record of Common Stock at the close of business on the
Record Date are entitled to receive notice of, and to vote at, the Annual
Meeting. At the close of business on the Record Date, 19,497,380 shares of
Common Stock were issued and outstanding, with each share entitled to one vote.
The presence in person or by proxy at the Annual Meeting of the holders of a
majority of such shares shall constitute a quorum.
The affirmative vote of the holders of a plurality of the votes cast by the
holders of shares of Common Stock present in person or represented by proxy at
the Annual Meeting and entitled to vote is necessary for the election of
Directors. Abstentions and broker non-votes will have no impact on the election
of Directors. The affirmative vote of the holders of a majority of the shares of
Common Stock present in person or represented by proxy at the Annual Meeting and
entitled to vote is required for the approval of Directors Plan Amendment and
the Auditor Proposal. With respect to abstentions on this matter, the shares
will be considered present and entitled to vote at the Annual Meeting and they
will have the same effect as votes against the matters. With respect to broker
non-votes on these matters, the shares will not be considered entitled to vote
at the Annual Meeting for such matter and the broker non-votes will have the
practical effect of reducing the number of affirmative votes required to achieve
a majority vote by reducing the total number of shares from which the majority
is calculated.
Any Proxy may be revoked at any time before it is actually voted by written
notification delivered to the Secretary of the Company, by voting in person at
the Annual Meeting or by submitting another Proxy bearing
16
<PAGE> 19
a later date. Properly executed and unrevoked Proxies received by the Company
will be voted by the persons named therein at the Annual Meeting in the manner
specified therein or, if no specification is made, will be voted: (i) FOR the
election of the seven Directors listed herein; (ii) FOR the approval of the
Directors Plan Amendment; and (iii) FOR the Auditor Proposal.
The expense of preparing, printing and distributing the Proxy materials
will be paid by the Company. In addition to use of the mail, Proxies may be
solicited in person or by telephone by Directors, officers or employees of the
Company without additional compensation. The Company has engaged D. F. King &
Co., Inc., 77 Water Street, New York, New York 10005, to assist in the
solicitation of Proxies from stockholders for a fee of $6,000 plus reimbursement
for reasonable out-of-pocket expenses.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be included in the Company's proxy
materials relating to and presented at the Company's 1997 annual meeting of
stockholders must be received at the Company's principal executive offices not
later than January 8, 1997. The Company's By-laws provide additional notice
requirements for stockholder nominations and proposals. At annual meetings,
stockholders may submit nominations for directors and other proposals only upon
60 days advance written notice (90 days if the meeting is on or after the
anniversary of the prior years meeting) to the Secretary of the Company.
By Order of the Board of Directors,
LOGO
HARVEY J. KESNER
Secretary
May 6, 1996
PLEASE MARK, SIGN AND DATE THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY. NO
POSTAGE STAMP IS NECESSARY IF MAILED IN THE UNITED STATES.
17
<PAGE> 20
ANNEX A
DEFERRED STOCK AND COMPENSATION
PLAN FOR NON-EMPLOYEE DIRECTORS
(AS AMENDED APRIL 25, 1996)
SECTION 1. INTRODUCTION
1.1 Establishment. American Banknote Corporation, a Delaware corporation
(the "Company"), hereby establishes the Deferred Stock and Compensation Plan for
Non-Employee Directors (the "Plan") for those directors of the Company who are
neither officers nor employees of the Company. The Plan provides (i) for the
grant of awards in the form of Common Stock Equivalents to Directors and (ii)
the opportunity for Directors to defer receipt of all or a part of their cash
compensation through a tax effective investment mechanism. Unless otherwise
provided for herein, the term Company includes United States Banknote
Corporation and its subsidiaries.
1.2 Purposes. The purposes of the Plan are to encourage the Directors to
own shares of the Company's stock and thereby to align their interests more
closely with the interests of the other stockholders of the Company, to
encourage the highest level of Director performance by providing the Directors
with a direct interest in the Company's attainment of its financial goals, and
to provide a financial incentive that will help attract and retain the most
qualified Directors.
1.3 Effective Date. This Plan is effective as adopted by the Board of
Directors on March 21, 1994 and approved at the 1994 Annual Meeting of
Stockholders. The Plan as amended April 25, 1996, shall become effective upon
approval of the Amendment by a vote of the holders of a majority of shares of
Stock represented in person or by proxy at the 1996 Annual Meeting of
stockholders.
SECTION 2. DEFINITIONS
2.1 Definitions. The following terms shall have the meanings set forth
below:
(a) "Board" means the Board of Directors of the Company.
(b) "Cash Account" means the bookkeeping account established by the Company
in respect of each Director pursuant to Section 6.3 hereof and to which will be
credited annual retainer and/or fees and other amounts deferred pursuant to the
Plan.
(c) "Change in Control" shall have the meaning assigned to it in Section
7.2 hereof.
(d) "Committee" means the Compensation Committee of the Board or any
successor established by the Board.
(e) "Common Stock Equivalent" means a hypothetical share of Stock which
shall have a value on any date equal to the mean of the high and low prices of
the Stock as reported by the composite tape of the New York Stock Exchange on
that date, or if not then listed, the average of the bid and ask price at the
end of trading on such date (or the date next preceding such date if no trading
occurs on such date) as quoted in the National Association of Securities Dealers
Automated Quotation System, or if not then quoted, then as quoted in the over
the counter market.
(f) "Common Stock Equivalent Award" means an award of Common Stock
Equivalents granted to a Director pursuant to Section 5 of the Plan.
(g) "Debenture" means a hypothetical debenture of the Company that has a
face value of $100, bears interest at a rate equal to the seven year U.S.
Treasury Bond rate in effect the week prior to the regular January meeting of
the Board (or if no such meeting is held, the week prior to the first trading
day of the New York Stock Exchange in February) in the year in respect of which
deferred amounts are earned, and is convertible into Stock at a conversion rate
determined by dividing $100 by the mean of the high and low prices of the Stock
as reported by the composite tape of the New York Stock Exchange, or if not then
listed on the
<PAGE> 21
New York Stock Exchange, the average of the bid and ask price at the end of
trading as quoted in the National Association of Securities Dealers Automated
Quotation System, or if not then quoted, then as quoted in the over the counter
market, on the date the Debenture is credited to the Deferred Debenture Account
pursuant to Section 6.3 hereof, or if such date is not a date on which markets
are open, the date next preceding such date on which markets are open.
(h) "Deferred Debenture Account" means the bookkeeping account established
by the Company in respect of each Director pursuant to Section 6.3 hereof and to
which will be credited Debentures and other amounts pursuant to the Plan. Such
account is not meant to represent actual securities.
(i) "Deferred Stock Account" means the bookkeeping account established by
the Company in respect to each Director pursuant to Section 5.2 hereof and to
which will be credited Common Stock Equivalents pursuant to the Plan.
(j) "Director" means a member of the Board who is neither an officer nor an
employee of the Company. For purposes of the Plan, an employee is an individual
whose wages are subject to the withholding of federal income tax under section
3401 of the Internal Revenue Code, and an officer is an individual elected or
appointed by the Board or chosen in such other manner as may be prescribed in
the By-Laws of the Company to serve as such.
(k) "Employee Retirement Income Security Act" means the Employee Retirement
Income Security Act of 1974, as amended from time to time.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
(m) "Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time.
(n) "Stock" means the $.01 par value common stock of the Company.
2.2 Gender and Number. Except when otherwise indicated by the context,
the masculine gender shall also include the feminine gender, and the definition
of any term herein in the singular shall also include the plural.
SECTION 3. PLAN ADMINISTRATION
(a) The Plan shall be administered by the Committee. The members of the
Committee shall be members of the Board appointed by the Board, and any vacancy
on the Committee shall be filled by the Board. The Committee shall keep minutes
of its meetings and of any action taken by it without a meeting. A majority of
the Committee shall constitute a quorum, and the acts of a majority of the
members present at any meeting at which a quorum is present shall be the acts of
the Committee. Any action that may be taken at a meeting of the Committee may be
taken without a meeting if a consent or consents in writing setting forth the
action so taken shall be signed by all of the members of the Committee. The
Committee shall make appropriate reports to the Board concerning the operations
of the Plan.
(b) Subject to the limitations of the Plan, the Committee shall have the
sole and complete authority to: (i) impose such limitations, restrictions and
conditions upon such awards as it shall deem appropriate, (ii) interpret the
Plan and to adopt, amend and rescind administrative guidelines and other rules
and regulations relating to the Plan and (iii) make all other determinations and
take all other actions necessary or advisable for the implementation and
administration of the Plan. Notwithstanding the foregoing, the Committee shall
have no authority, discretion or power to select the Directors who will receive
awards pursuant to the Plan, determine the awards to be granted pursuant to the
Plan, the number of shares of Stock to be issued thereunder or the time at which
such awards are to be granted, establish the duration and nature of awards or
alter any other terms or conditions specified in the Plan, except in the sense
of administering the Plan subject to the provisions of the Plan. The Committee's
determinations on matters within its authority shall be conclusive and binding
upon the Company and all other persons. The Plan shall be interpreted and
implemented in a manner so that Directors will not fail, by reason of the Plan
or its implementation, to be
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<PAGE> 22
"disinterested persons" within the meaning of Rule 16b-3 under Section 16 of the
Exchange Act, as such rule may be amended.
(c) The Committee shall act on behalf of the Company as sponsor of the
Plan. All expenses associated with the Plan shall be borne by the Company.
SECTION 4. STOCK SUBJECT TO THE PLAN
4.1 Number of Shares. 200,000 shares of Stock are authorized for issuance
under the Plan in accordance with the provisions of the Plan. This authorization
may be increased from time to time by approval of the Board and by the
stockholders of the Company if such stockholder approval is required. The
Company shall at all times during the term of the Plan retain as authorized and
unissued Stock at least the number of shares from time to time required under
the provisions of the Plan, or otherwise assure itself of its ability to perform
its obligations hereunder.
4.2 Other Shares of Stock. Any shares of Stock that are subject to a
Common Stock Equivalent Award or Debenture and which are forfeited and any
shares of Stock that for any other reason are not issued to a Director shall
automatically become available again for use under the Plan if Rule 16b-3 under
the Exchange Act and interpretations of the Securities and Exchange Commission
or its Staff thereunder permit such share replenishment.
4.3 Adjustments Upon Changes in Stock. If there shall be any change in
the Stock of the Company, through merger, consolidation, reorganization, stock
dividend, stock split, spinoff, split up, dividend in kind or other change in
the corporate structure or distribution to the stockholders, appropriate
adjustments may be made by the Committee (or if the Company is not the surviving
corporation in any such transaction, the board of directors of the surviving
corporation) in the aggregate number and kind of shares subject to the Plan, and
the number and kind of shares which may be issued under the Plan. Appropriate
adjustments may also be made by the Committee in the terms of any awards under
the Plan to reflect such changes and to modify any other terms of outstanding
awards on an equitable basis as the Committee in its discretion determines.
SECTION 5. COMMON STOCK EQUIVALENT AWARDS
5.1.1 Grants of Common Stock Equivalent Awards-Annually. Common Stock
Equivalents equal to 3,000 shares of Stock shall be granted automatically each
year, immediately following the Annual Meeting (as described in the Company's
By-Laws), to each Director elected at such meeting and continuing to serve on
the Board subsequent to such meeting who has served on the Board for more than
180 days prior to such Annual Meeting.
5.1.2 Grants of Common Stock Equivalent Awards-Committees
(i) Common Stock Equivalents equal to 2,000 shares of Stock shall be
granted automatically each year to each Director elected by the majority of the
Non-employee Directors at the first directors meeting following the Annual
Meeting at which the Company's standing Committees are organized to Chair such
Committees in accordance with the By-Laws of the Company.
(ii) Common Stock Equivalents equal to 2,000 shares of Stock shall be
granted automatically each year to each Director elected by the majority of the
Non-employee Directors at the first meeting of any Special Committee organized
by the Board to Chair such Committee in accordance with the By-Laws of the
Company.
(iii) If any Committee election described in subparagraph (i) or (ii) above
shall occur after the meeting at which the Company's standing Committees are
organized and prior to August 1, Common Stock Equivalents equal to 1,500 shares
of Stock, (ii) if such election shall occur on or after August 1 and prior to
November 1, Common Stock Equivalents equal to 1,000 Shares of Stock, and (iii)
if such election shall occur on or after November 1 and prior to February 1 of
the following year, Common Stock Equivalents equal to 500 Shares of Stock, in
each case, shall be awarded.
A-3
<PAGE> 23
5.1.3 Grants of Common Stock Equivalent Awards-New Directors
(i) Following stockholder approval of the Amendment, on June 13, 1996, each
person who is a Non-Employee Director as of June 13, 1996 shall automatically
receive an award of Common Stock Equivalents equal to 7,500 shares of Stock.
(ii) On the date that a person first becomes a Non-Employee Director (other
than a person who previously had been an employee) which occurs after June 13,
1996, such person shall automatically receive an award of Common Stock
Equivalents equal to 7,500 shares of Stock.
5.1.4 Maximum Annual Awards. Each non-employee director of the Company
shall be entitled to receive not more than a maximum amount of Common Stock
Equivalents equal to 5,000 shares per calendar year, exclusive of any Common
Stock Equivalents awarded pursuant to paragraph 5.1.3 hereof.
5.1.5 Adjustment. All Common Stock Equivalents granted pursuant to this
Section 5.1 shall be adjusted as provided in Section 4.3.
5.2 Deferred Stock Account. A Deferred Stock Account shall be established
for each Director. The Deferred Stock Account shall consist of compensation in
the form of Common Stock Equivalents awarded to the Director hereunder by the
Company plus Common Stock Equivalents credited to the Deferred Stock Account in
respect of dividends and other distributions on the Stock pursuant to Sections
5.3 and 5.4.
5.3 Hypothetical Investment. Compensation awarded hereunder in the form
of Common Stock Equivalents is assumed to be a hypothetical investment in shares
of Stock, and will be adjusted to reflect stock dividends, splits and
reclassifications and as otherwise set forth in Section 4.3.
5.4 Hypothetical Dividends. Dividends and other distributions on Common
Stock Equivalents shall be deemed to have been paid as if such Common Stock
Equivalents were actual shares of Stock issued and outstanding on the respective
record or distribution dates. Common Stock Equivalents shall be credited to the
Deferred Stock Account in respect of cash dividends and any other securities or
property issued on the Stock in connection with reclassifications, spinoffs and
the like on the basis of the value of the dividend or other asset distributed
and the value of the Common Stock Equivalents on the date of the announcements
of the dividend or asset distribution, all at the same time and in the same
amount as dividends or other distributions are paid or issued on the Stock.
Fractional shares shall be credited to a Director's Deferred Stock Account
cumulatively but the balance of shares of Common Stock Equivalents in a
Director's Deferred Stock Account shall be rounded to the next highest whole
share for any payment to such Director pursuant to Section 5.6 hereof.
5.5 Statement of Account. A statement will be sent to each Director as to
the balance of his Deferred Stock Account at least once each calendar year.
5.6 Payment of Deferred Stock. Upon termination of services as a
Director, the balance of the Director's Deferred Stock Account shall be paid to
such Director in Stock in January of the year following the year of termination
of services as a Director on the basis of one share of Stock for each Common
Stock Equivalent in such Director's Deferred Stock Account.
5.7 Payments to a Deceased Director's Estate. In the event of a
Director's death before the balance of his Deferred Stock Account is fully paid
to him, payment of the balance of the Director's Deferred Stock Account shall
then be made to his estate in the time and manner selected by the Committee in
the absence of a designation of a beneficiary pursuant to Section 5.8 hereof.
The Committee may take into account the application of any duly appointed
administrator or executor of a Director's estate and direct that the balance of
the Director's Deferred Stock Account be paid to his estate in the manner
requested by such application.
5.8 Designation of Beneficiary. A Director may designate a beneficiary in
a form approved by the Committee.
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<PAGE> 24
SECTION 6. DEFERRAL OF COMPENSATION
6.1 Amount of Deferral. A Director may elect to defer receipt of all or a
specified portion of the annual retainers and/or meeting fees otherwise payable
to the Director for serving on the Board or any committee thereof.
6.2 Manner of Electing Deferral. A Director shall make elections
permitted hereunder by giving written notice to the Company in a form approved
by the Committee. The notice shall include: (i) the percentage of meeting fees
and/or annual retainer to be deferred which amount must be stated in whole
increments of 5 percent; and (ii) the time as of which deferral is to commence.
6.3 Accounts. A Cash Account and a Deferred Debenture Account shall be
established for each Director electing to defer compensation hereunder. Each
Cash Account shall be credited with the amounts deferred on the date such
compensation is otherwise payable. Such deferred amounts shall accrue notional
interest from time to time at a rate equal to the seven year U.S. Treasury Bond
rate in effect the week prior to the regular January meeting of the Board (or if
no such meeting is held, the week prior to the first trading day of the New York
Stock Exchange in February) in the year in respect of which such deferred
amounts are earned until the last trading day of the New York Stock Exchange
prior to the regular January meeting of the Board (or if no such meeting is
held, until the first trading day of February) in the year following the year in
respect of which deferred amounts are earned, at which time such deferred
amounts, including notional interest, shall be deemed invested in Deferred
Debentures and credited to the Deferred Debenture Account. Deferred amounts
shall be credited to the Deferred Debenture Account only in $100 amounts.
Fractional amounts of $100 shall remain in the Cash Account and continue to
accrue interest.
6.4 Time for Electing Deferral. Any election to (i) defer annual retainer
and/or meeting fees, (ii) alter the portion of such amounts deferred or (iii)
revoke an election to defer such amounts, must be made no later than the earlier
to occur of (a) six months prior to the time such compensation is earned by the
Director or, if permitted by the rules under Section 16 of the Exchange Act, no
later than six months prior to the time such deferred compensation is invested
in Debentures and credited to the Deferred Debenture Account pursuant to Section
6.3 hereof or (b) no later than simultaneously with the commencement of the
period in which such compensation is earned. An election to commence a deferral
may be made at any time in accordance with the procedures set forth in Section
6.2. Any election so made shall remain in effect beginning six months from the
date of election until the Director ceases to be a Director or elects in writing
to change his election, provided that with respect to a Director's election at
the time he first joins the Board, such election shall remain in effect
beginning on the date made.
6.5 Payment of Deferred Amounts. Payments from a Deferred Debenture
Account shall be made in five consecutive annual installments beginning in the
January following the Director's termination of service. Payments from a
Deferred Debenture Account shall consist of accumulated interest on the
Debentures not converted into Debentures (which amount shall only be payable in
cash) plus the greater value of (i) the face value of the Debentures or (ii) the
shares of Stock into which the Debentures are convertible. In the event the
value of the payment is determined by the amount referred to in clause (i),
payment shall be made in cash. In the event such value is determined by the
clause (ii), such payment shall be made in Stock.
6.6 Payments to a Deceased Director's Estate. In the event of a
Director's death before the balance of his Cash Account or Deferred Debenture
Account is fully paid to him, payment of the balance of the Cash Account or
Deferred Debenture Account shall then be made to his estate in the time and
manner selected by the Committee in the absence of a designation of a
beneficiary pursuant to Section 6.7 hereof. The Committee may take into account
the application of any duly appointed administrator or executor of a Director's
estate and direct that the balance of the Director's Cash Account or Deferred
Debenture Account be paid to his estate in the manner requested by such
application.
6.7 Designation of Beneficiary. A Director may designate a beneficiary in
a form approved by the Committee.
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<PAGE> 25
SECTION 7. CHANGE IN CONTROL
7.1 Settlement of Compensation. In the event of a Change in Control of
the Company as defined herein, (a)(i) to the extent not already vested, all
benefits hereunder shall be vested immediately, and (ii) awards as to a period
of time less than a full year, may be made as the Committee may determine as of
the date of such Change in Control and then paid on such basis and in such form
as the Committee may prescribe; and (b) the value of all unpaid benefits and
deferred amounts shall be paid in cash into a trust established by the Committee
for the benefit of the Directors, or otherwise on such terms as the Committee
may prescribe or permit. For purposes of this paragraph, the value of deferred
amounts shall be equal to the sum of (i) the value of all Common Stock
Equivalent Awards then held in such Director's Deferred Stock Account (the value
of which shall be based upon the highest price of the Stock as reported by the
composite tape of the New York Stock Exchange, or if not then listed on the New
York Stock Exchange as quoted on the National Association of Securities Dealers
Automated Quotation System, or if not then quoted, then as quoted in the over
the counter markets, during the thirty days immediately preceding the Change in
Control) and (ii) the greater value of (x) the cash amount equal to the face
value of the Debentures plus cash equal to accrued interest or (y) the number of
shares of Stock into which the Debentures are convertible (the value of which
shall be based upon the highest price of the Stock as reported by the composite
tape of the New York Stock Exchange or if not then listed on the New York Stock
Exchange, as quoted on the National Association of Securities Dealers Automated
Quotation System, or if not then quoted, then as quoted in the over the counter
markets, during the thirty days immediately preceding the Change in Control),
plus cash equal to accrued interest.
7.2 Definition of Change in Control. A Change in Control shall mean the
occurrence of one or more of the following events:
(i) the direct or indirect acquisition, whether by sale, merger,
consolidation, or purchase, of assets or stock, by any person, corporation or
other entity or group thereof, of the beneficial ownership (as that term is used
in Section 13(d)(1) of the Exchange Act and the rules and regulations
promulgated thereunder) of shares of Stock which, when added to any other shares
the beneficial ownership of which is held by the acquirer, shall result in the
acquirer's having more than 40% of the votes that are entitled to be cast at
meetings of stockholders of the Company as to matters on which all outstanding
shares are entitled to be voted as a single class; provided, however, that such
acquisition shall not constitute a Change in Control for purposes of this Plan
if prior to such acquisition a resolution declaring that the acquisition shall
not constitute a Change in Control is adopted by the Board with the support of a
majority of the Board members who either were members of the Board for at least
two years prior to the date of the vote on such resolution or were nominated for
election to the Board by at least two-thirds of the directors then still in
office who were members of the Board at least two years prior to the date of the
vote on such resolution; and provided further that neither the Company, nor any
person who as of March 1, 1994 was a director or officer of the Company, nor any
trustee or other fiduciary holding securities under an employee benefit plan of
the Company, nor any corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of shares of the Company shall be deemed to be an "acquirer" for
purposes of this Section 7.2; or
(ii) the individuals who, as of March 1, 1994, constitute the Board or who
thereafter are elected to the Board and whose election, or nomination for
election, to the Board was approved by a vote of at least two-thirds ( 2/3) of
the directors then still in office who either were directors as of March 1, 1994
or whose election or nomination for election was previously so approved (the
"Continuing Directors"), cease for any reason to constitute a majority of the
members of the Board; or
(iii) the stockholders of the Company approve a merger, consolidation,
recapitalization or reorganization of the Company, a reverse stock split of
outstanding voting securities, or consummation of any such transaction if
stockholder approval is not obtained, other than any such transaction which
would result in at least 75% of the total voting power represented by the voting
securities of the surviving entity outstanding immediately after such
transaction being Beneficially Owned by at least 75% of the holders of
outstanding voting securities of the Company immediately prior to the
transaction, with the voting power of each such continuing holder relative to
other such continuing holders not substantially altered in the transaction; or
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<PAGE> 26
(iv) the stockholders of the Company approve a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the Company of all
or substantially all of the Company's assets;
provided, however, that an event or transaction that would otherwise be deemed a
Change in Control under (i), (iii), or (iv) above shall not be deemed a Change
in Control if the Board adopts a resolution approved by a vote of at least
two-thirds ( 2/3) of the directors then still in office who are Continuing
Directors, not later than 30 days after the Company receives notice of the event
or transaction constituting a Change in Control under (i) above and not later
than the occurrence of the event or transaction constituting a Change in Control
under (iii) or (iv) above, determining that such event or transaction should not
constitute a Change in Control for purposes of the Plan.
For purposes of this Section 7.2, "Beneficial Owner," "Beneficially Owns,"
and "Beneficial Ownership" shall have the meanings ascribed to such terms for
purposes of Section 13(d) of the Exchange Act and the rules thereunder.
SECTION 8. ASSIGNABILITY
The right to receive payments or distributions hereunder (including any
"derivative security" issued pursuant to the Plan, as such term is defined by
the rules promulgated under Section 16 of the Exchange Act) shall not be
transferable or assignable by a Director other than by will, the laws of descent
and distribution or pursuant to a domestic relations order as defined by the
Internal Revenue Code or Title I of the Employee Retirement Income Security Act
or the rules thereunder.
SECTION 9. PLAN AMENDMENT, MODIFICATION AND TERMINATION
The Board may at any time terminate, and as provided in Section 4 may from
time to time amend or modify the Plan, provided, however, that no amendment or
modification may become effective without approval of the amendment or
modification by the stockholders if stockholder approval is required to enable
the Plan to satisfy any applicable statutory or regulatory requirements, and,
provided further that no amendment or modifications shall be made more than once
every six months that would change the amount, price or timing of the Common
Stock Equivalent Awards, other than to comport with changes in the Internal
Revenue Code, the Employee Retirement Income Security Act, or the rules
promulgated thereunder.
SECTION 10. REQUIREMENTS OF LAW
10.1 Compliance with Rule 16b-3. It is the intent of the Company that
this Plan comply in all respects with Rule 16b-3 under the Exchange Act (or any
successor rule) in connection with any Award granted to a person who is subject
to Section 16 of the Exchange Act. Accordingly, any provision of this Plan that
does not comply with the requirements of Rule 16b-3 (or any successor rule) as
then applicable to any such person shall be construed or deemed amended to the
extent necessary to conform to such requirements, except that such automatic
amendment shall not apply to any other participant who is not (at the time of
such application) subject to Section 16 of the Exchange Act. Transactions
pursuant to the Plan shall be subject to all conditions required under Rule
16b-3 to qualify such transactions for any exemption from the provisions of
Section 16(b) of the Exchange Act available under that statute.
10.2 Govering Law. The Plan and all agreements hereunder shall be
construed in accordance with and governed by the laws of the State of Delaware.
10.3 Withholding of Taxes. The Company shall have the right to deduct
from any award or other amount to be paid pursuant to this Plan, or to otherwise
require a participant to pay prior to any such award or payment, all Federal,
State or local taxes required by law to be withheld in respect of such award or
payment.
10.4 General Restrictions.
(a) Each award of shares of Stock under the Plan shall be subject to the
condition that, if at any time the Committee shall determine that (i) the
listing, registration or qualification of such Shares upon any securities
exchange or automated quotation system or under any state or federal law, (ii)
the consent or approval of any
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<PAGE> 27
government or regulatory body or (iii) an agreement by the participant with
respect thereto, is necessary or desirable, then such award shall not be
consummated, in whole or in part, unless such listing, registration,
qualification, consent, approval or agreement shall have been effected or
obtained free of any conditions not acceptable to the Committee.
(b) Shares of Stock for use under the provisions of this Plan shall not be
issued until they have been authorized for listing, upon official notice of
issuance, on the New York Stock Exchange or such other exchanges or automated
quotation system, if any, as the Stock may then be listed or quoted or as the
Board shall determine, and a registration statement under the Securities Act of
1933, as amended (the "Securities Act"), with respect to such shares shall have
become, and be, effective or the Board shall have been advised by counsel to the
Company that the issuance to, and transfer by, the participants of such Shares
does not require registration of such shares under the Securities Act.
10.5 Restrictions Under Rule 16b-3. Unless a participant is not subject
to short-swing liability under Section 16(b) of the Securities Exchange Act of
1934 in respect of the sale or other transfer of shares of Stock issued under
the Plan, such shares of Stock shall be held for at least six months from the
date of grant or award.
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<PAGE> 28
AMERICAN BANKNOTE CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
P
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
R
The undersigned hereby appoints Morris Weissman, John T. Gorman and
O Harvey J. Kesner, or any one of them, with the full power of substitution,
to vote all shares of Common Stock, par value $.01 per share,
X of AMERICAN BANKNOTE CORPORATION (the "Company") which the undersigned
is entitled to vote at the Company's Annual Meeting to be held
Y on June 13, 1996 and at any adjournments thereof, and the undersigned
authorizes and instructs said proxies to vote as directed.
Election of Directors:
The nominees are:
Bette B. Anderson David Rowe-Beddoe
Dr. Oscar Arias S. Alfred Teo
C. Gerald Goldsmith Morris Weissman
Ira J. Hechler
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this
proxy will be voted FOR all nominees listed in Proposal 1, FOR
Proposal 2 and FOR Proposal 3.
Please mark, date and sign this proxy on the reverse side and
return it promptly using the envelope provided.
(See reverse side)
<PAGE> 29
Please mark your
X vote as in this
example.
The Board of Directors recommends a vote FOR Proposal 2 and FOR
Proposal 3.
FOR VOTE WITHHELD FOR
ALL NOMINEES ALL NOMINEES
1. ELECTION OF
DIRECTORS
(See reverse side) __ __
For, except vote withheld from the following nominee(s):
-------------------------------------------------
FOR AGAINST ABSTAIN
2. PROPOSAL TO APPROVE __ __ __
AMENDMENT TO THE
NON-EMPLOYEE
DIRECTORS PLAN.
3. PROPOSAL TO APPROVE __ __ __
THE APPOINTMENT OF
DELOITTE & TOUCHE LLP
AS AUDITORS FOR THE
COMPANY FOR THE
FISCAL YEAR ENDED
DECEMBER 31, 1996.
4. IN THEIR DISCRETION, UPON ANY OTHER MATTERS WHICH MAY
PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF.
Change of Address:
Check this box and
print new address __
below:
-----------------------------
-----------------------------
-----------------------------
Receipt of the Notice
SIGNATURE(S) DATE , 1996 of Annual Meeting
- - ------------------------------------- --------- of Stockholders,
Your signatures should appear the same as the Proxy Statement
your name appears hereon, and if signing and the 1995 Annual
as an attorney, executor, administrator, Report of the Com-
trustee or guardian, please indicate the pany is hereby
capacity in which signing. When signing acknowledged.
as joint tenants, all parties to the joint
tenancy must sign. When the proxy is given
by a corporation, it should be signed by
an authorized officer.
