<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 12, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
AMERICAN BANKNOTE CORPORATION
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C> <C>
DELAWARE 2799 13-0460520
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
AMERICAN BANK NOTE COMPANY NEW YORK 13-2735924
ABN SECURITIES SYSTEMS, INC. NEW YORK 13-2791166
HORSHAM HOLDING COMPANY, INC. PENNSYLVANIA 23-2204722
AMERICAN BANK NOTE HOLOGRAPHICS, INC. DELAWARE 13-3317668
AMERICAN BANKNOTE CARD SERVICES, INC. DELAWARE 13-3690286
AMERICAN BANKNOTE MERCHANT SERVICES, INC. DELAWARE 13-3962422
ABN INVESTMENTS, INC. DELAWARE 13-3753757
ABN EQUITIES INC. DELAWARE 13-3753756
AMERICAN BANKNOTE AUSTRALASIA HOLDINGS, INC. DELAWARE 13-3893332
ABN GOVERNMENT SERVICES, INC. DELAWARE 13-3869963
USBC CAPITAL CORP. DELAWARE 13-3778099
ABN CBA, INC. DELAWARE 13-3979794
(Exact Name of Registrant (State or Other Jurisdiction of (I.R.S. Employer
as Specified in its Charter) Incorporation or Organization) Identification No.)
</TABLE>
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200 PARK AVENUE
NEW YORK, NY 10166
(212) 557-9100
(Address, including zip code, and telephone number, including area code of
Registrants' principal executive offices)
JOHN T. GORMAN
EXECUTIVE VICE PRESIDENT
AMERICAN BANKNOTE CORPORATION
200 PARK AVENUE
NEW YORK, NY 10166
(212) 557-9100
(Name, address, including zip code, and telephone number, including area code
of agent for service)
------------------------
Copies to:
<TABLE>
<S> <C>
HARVEY J. KESNER, ESQ.
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL DENNIS J. BLOCK, ESQ.
AMERICAN BANKNOTE CORPORATION WEIL, GOTSHAL & MANGES LLP
200 PARK AVENUE 767 FIFTH AVENUE
NEW YORK, NY 10166 NEW YORK, NY 10153-0119
(212) 557-9100 (212) 310-8000
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
TITLE OF EACH CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE (1) REGISTRATION FEE
------------------------------------------------------------------------------------------------------------------------------
11 1/4% Senior Subordinated Notes due
2007, Series B....................... $95,000,000 $1,000 $95,000,000 $28,025
Guarantees of 11 1/4% Senior
Subordinated Notes due 2007, Series
B.................................... $95,000,000 (2) (2) None
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(f).
(2) No further fee is payable pursuant to Rule 457(n).
----------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE> 2
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(b) OF REGULATION S-K
SHOWING LOCATION IN PROSPECTUS OF INFORMATION
REQUIRED BY ITEMS OF PART I OF FORM S-4
<TABLE>
<CAPTION>
REGISTRATION STATEMENT ITEM NUMBER AND CAPTION CAPTION OR LOCATION IN PROSPECTUS
- ----------------------------------------------------------- -------------------------------------------
<C> <S> <C>
1. Forepart of Registration Statement and Outside Front
Cover Page of Prospectus.......................... Outside Front Cover Page
2. Inside Front and Outside Back Cover Page of
Prospectus........................................ Inside Front Cover Page; Outside Back Cover
Page
3. Risk Factors, Ratio of Earnings to Fixed Charges and
Other Information................................. Prospectus Summary; Selected Consolidated
Financial Data; Unaudited Pro Forma
Financial Information
4. Terms of the Transaction............................ Outside Front Cover Page; Summary;
Description of the Exchange Notes; The
Exchange Offer; Certain U.S. Federal
Income Tax Considerations
5. Pro Forma Financial Information..................... Unaudited Pro Forma Financial Information
6. Material Contracts with the Company Being Acquired.. Inapplicable
7. Additional Information Required..................... Inapplicable
8. Interests of Named Experts and Counsel.............. Legal Matters; Experts
9. Disclosure of Commission Position on Indemnification
for Securities Act Liabilities.................... Inapplicable
10. Information with Respect to S-3 Registrants......... Outside Front Cover Page; Summary; Risk
Factors; The Refinancing; Use of
Proceeds; Capitalization; Selected
Consolidated Financial Data; Unaudited
Pro Forma Financial Information;
Management's Discussion and Analysis of
Financial Condition and Results of
Operations; Business; Management; Certain
Relationships and Related Transactions;
Security Ownership; Description of
Certain Indebtedness
11. Incorporation of Certain Information by Reference... Incorporation of Certain Documents by
Reference
12. Information with Respect to S-3 or S-2
Registrants....................................... Inapplicable
13. Incorporation of Certain Information by Reference... Inapplicable
14. Information with Respect to Registrants other than
S-3 or S-2 Registrants............................ Inapplicable
15. Information with Respect to S-3 Companies........... Inapplicable
16. Information with Respect to S-3 or S-2 Companies.... Inapplicable
17. Information with Respect to Companies Other than S-3
or S-2 Companies.................................. Inapplicable
18. Information if Proxies, Consents or Authorizations
are to be Solicited............................... Inapplicable
19. Information if Proxies, Consents or Authorizations
are not to be Solicited or in an Exchange Offer... Management; Security Ownership; Certain
Relationships and Related Transactions
</TABLE>
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JANUARY 12, 1998
PROSPECTUS
AMERICAN BANKNOTE CORPORATION
OFFER TO EXCHANGE ITS 11 1/4% SENIOR SUBORDINATED NOTES
DUE 2007, SERIES B, FOR ANY AND ALL OF ITS OUTSTANDING
11 1/4% SENIOR SUBORDINATED NOTES DUE 2007, SERIES A
[AMERICAN BANK NOTE LOGO]
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 PM., NEW YORK CITY TIME, ON ,
1998, UNLESS EXTENDED.
American Banknote Corporation, a Delaware corporation (the "Company") hereby
offers (the "Exchange Offer"), upon the terms and conditions set forth in this
Prospectus (the "Prospectus") and the accompanying Letter of Transmittal (the
"Letter of Transmittal"), to exchange $1,000 principal amount of its 11 1/4%
Senior Subordinated Notes due 2007, Series B (the "Exchange Notes"), registered
under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to
a Registration Statement of which this prospectus is a part, for each $1,000
principal amount of its outstanding 11 1/4% Senior Subordinated Notes due 2007
(the "Old Notes"), of which $95,000,000 principal amount is outstanding. The Old
Notes were originally issued as part of units (the "Units") consisting of
$95,000,000 aggregate principal amount of Old Notes and 95,000 warrants (the
"Warrants") to purchase an aggregate of 1,185,790 shares of Common Stock, par
value $0.01 per share (the "Common Stock"), of the Company. The form and terms
of the Exchange Notes are the same as the form and terms of the Old Notes except
that (i) the Exchange Notes will bear a Series B designation, (ii) the Exchange
Notes will have been registered under the Securities Act and, therefore, will
not bear legends restricting the transfer thereof and (iii) holders of the
Exchange Notes will not be entitled to certain rights of holders of Old Notes
under the Registration Rights Agreement (as defined). The Old Notes and the
Exchange Notes are referred to herein collectively as the "Notes." The Exchange
Notes will evidence the same debt as the Old Notes (which they replace) and will
be issued under and be entitled to the benefits of the Indenture dated as of
December 12, 1997 (the "Indenture") by and among the Company, the Guarantors (as
defined) and The Bank of New York, as trustee, governing the Notes. See "The
Exchange Offer" and "Description of the Notes."
The Company will accept for exchange any and all Old Notes validly tendered and
not withdrawn prior to 5:00 p.m., New York City time on , 1998, unless
extended by the Company in its sole discretion (the "Expiration Date"). Tenders
of Old Notes may be withdrawn at any time prior to 5:00 p.m. on the Expiration
Date. The Exchange Offer is subject to certain customary conditions. See "The
Exchange Offer."
The Old Notes were sold by the Company on December 12, 1997 to Chase Securities
Inc., Bear, Stearns & Co. Inc., NationsBanc Montgomery Securities, Inc. and
Societe Generale Securities Corporation (the "Initial Purchasers") in a
transaction not registered under the Securities Act in reliance upon an
exemption under the Securities Act (the "Initial Offering"). The Initial
Purchasers subsequently placed the Old Notes with qualified institutional buyers
in reliance on Rule 144A under the Securities Act and in offshore transactions
to Non-U.S. persons in reliance on Regulation S under the Securities Act.
Accordingly, the Old Notes may not be reoffered, resold or otherwise transferred
in the United States unless registered under the Securities Act or unless an
applicable exemption from the registration requirements of the Securities Act is
available. The Exchange Notes are being offered hereunder in order to satisfy
the obligations of the Company and the Guarantors under the Registration Rights
Agreement entered into by the Company, the Guarantors and the Initial Purchaser
in connection with the Initial Offering (the "Registration Rights Agreement").
See "The Exchange Offer."
Interest on the Notes will accrue from their date of original issuance and will
be payable semi-annually in arrears on June 1 and December 1 of each year,
commencing June 1, 1998, at the rate of 11 1/4% per annum. The Notes will be
redeemable, in whole or in part, at the option of the Company on or after June
1, 2002, at the redemption prices set forth herein plus accrued and unpaid
interest to the date of redemption. In addition, at any time and from time to
time prior to December 1, 2000, the Company may, at its option, redeem up to 35%
of the aggregate principal amount of the Notes with the net cash proceeds of one
or more Public Equity Offerings (as defined) by the Company, at a redemption
price equal to 111.25% of the principal amount thereof plus accrued and unpaid
interest to the date of redemption; provided, however, that after giving effect
to any such redemption, at least 65% of the aggregate principal amount of the
Notes originally issued remains outstanding. Upon a Change in Control (as
defined), the Company will be required to make an offer to repurchase the Notes
at a price equal to 101% of the principal amount thereof plus accrued and unpaid
interest to the date of repurchase. In addition, the Company will be obligated
to offer to repurchase the Notes at 100% of the principal amount thereof plus
accrued and unpaid interest to the date of repurchase in the event of certain
Asset Sales (as defined). See "Description of the Notes."
The Notes will be general unsecured senior subordinated obligations of the
Company and will be subordinated in right of payment to all existing and future
Senior Indebtedness (as defined) of the Company. The Notes will rank pari passu
in right of payment with any future senior subordinated Indebtedness (as
defined) of the Company and will rank senior to all other Subordinated
Indebtedness (as defined) of the Company. The Notes will be guaranteed (the
"Guarantees"), jointly and severally, on a senior subordinated basis by all of
the Company's direct and indirect domestic operating Subsidiaries (as defined)
on the issue day of the Notes (the "Issue Date"), and by each direct and
indirect domestic operating Subsidiary of the Company (excluding Unrestricted
Subsidiaries (as defined)) formed or acquired thereafter (the "Guarantors"). As
of the Issue Date, the Guarantors under the Indenture were American Bank Note
Company, ABN Securities Systems, Inc., Horsham Holding Company, Inc., American
Bank Note Holographics, Inc., American Banknote Card Services, Inc., American
Banknote Merchant Services, Inc., ABN Investments, Inc., ABN Equities Inc.,
American Banknote Australasia Holdings, Inc., ABN Government Services, Inc.,
USBC Capital Corp. and ABN CBA, Inc. The Guarantees will be general unsecured
senior subordinated obligations of the Guarantors and will be subordinated in
right of payment to all existing and future Guarantor Senior Indebtedness (as
defined). The Guarantees will rank pari passu with any and all future senior
subordinated Indebtedness of the Guarantors and will rank senior to all other
subordinated Indebtedness of the Guarantors. As of September 30, 1997, after
giving pro forma effect to the Refinancing (as defined), including the issuance
of the Old Notes and the application of the net proceeds therefrom, the
aggregate principal amount of the Company's outstanding Senior Indebtedness
would have been approximately $222.5 million (excluding unused commitments),
including $80.9 million of Indebtedness of the Company's subsidiaries which
would have been effectively senior to the Notes, and the Company would have had
no senior subordinated Indebtedness outstanding other than the Notes. See
"Description of the Notes -- Ranking," "-- Subordination of the Notes" and
"-- Guarantees of the Notes."
(continued on next page)
- --------------------------------------------------------------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 17 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY HOLDERS WHO TENDER THEIR OLD NOTES IN THE EXCHANGE
OFFER.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
THE DATE OF THIS PROSPECTUS IS , 1998
<PAGE> 4
(cover page continued)
Based upon an interpretation by the staff of the Securities and Exchange
Commission (the "Commission") set forth in certain no-action letters issued to
third parties, the Company believes that the Exchange Notes issued pursuant to
the Exchange Offer in exchange for Old Notes may be offered for resale, resold
and otherwise transferred by any holder thereof (other than any such holder that
is an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act) without compliance with the registration and prospectus delivery
requirements of the Securities Act, provided that such Exchange Notes are
acquired in the ordinary course of such holder's business and such holder has no
arrangement or understanding with any person to participate in the distribution
of such Exchange Notes. See "The Exchange Offer -- Resale of the Exchange
Notes." Holders of Old Notes wishing to accept the Exchange Offer must represent
to the Company, as required by the Registration Rights Agreement, that such
conditions have been met. Each broker-dealer (a "Participating Broker-Dealer")
that receives Exchange Notes for its own account pursuant to the Exchange Offer
must acknowledge that it will deliver prospectus in connection with any resale
of such Exchange Notes. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a Participating Broker-Dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be amended or supplemented from time
to time, may be used by a Participating Broker-Dealer in connection with resales
of Exchange Notes received in exchange for Old Notes where such Old Notes were
acquired by such Participating Broker-Dealer as a result of market-making
activities or other trading activities. The Company has agreed that, for a
period of 180 days after the Expiration Date, it will make this Prospectus
available to any Participating Broker-Dealer for use in connection with any such
resale. See "Plan of Distribution."
The Company will not receive any proceeds from the Exchange Offer. The
Company has agreed to bear the expenses of the Exchange Offer. No underwriter is
being used in connection with the Exchange Offer. Holders of Old Notes not
tendered and accepted in the Exchange Offer will continue to hold such Old Notes
and will be entitled to all the rights and benefits and will be subject to the
limitations applicable thereto under the Indenture and with respect to transfer
under the Securities Act. See "The Exchange Offer."
There has not previously been any public market for the Old Notes or the
Exchange Notes. The Company does not intend to list the Exchange Notes on any
securities exchange or to seek approval for quotation through any automated
quotation system. There can be no assurance that an active market for the
Exchange Notes will develop. See "Risk Factors -- Absence of a Public Market
Could Adversely Affect the Value of Exchange Notes." Moreover, to the extent
that Old Notes are tendered and accepted in the Exchange Offer, the trading
market for untendered and tendered but unaccepted Old Notes could be adversely
affected.
ii
<PAGE> 5
(cover page continued)
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD NOTES IN ANY JURISDICTION IN WHICH
THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE
SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING HEREBY TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR
THE ACCOMPANYING LETTER OF TRANSMITTAL, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR THE GUARANTORS. NEITHER THE DELIVERY OF THIS PROSPECTUS OR THE
ACCOMPANYING LETTER OF TRANSMITTAL, NOR ANY EXCHANGE MADE HEREUNDER, SHALL UNDER
ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
UNTIL , 1998 (90 DAYS AFTER COMMENCEMENT OF THE EXCHANGE OFFER),
ALL DEALERS EFFECTING TRANSACTIONS IN THE EXCHANGE NOTES, WHETHER OR NOT
PARTICIPATING IN THE EXCHANGE OFFER, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
THE EXCHANGE NOTES WILL BE AVAILABLE INITIALLY ONLY IN BOOK-ENTRY FORM.
EXCEPT AS DESCRIBED UNDER "BOOK-ENTRY; DELIVERY AND FORM," THE COMPANY EXPECTS
THAT THE EXCHANGE NOTES ISSUED PURSUANT TO THE EXCHANGE OFFER WILL BE
REPRESENTED BY A GLOBAL NOTE (AS DEFINED), WHICH WILL BE DEPOSITED WITH, OR ON
BEHALF OF, THE DEPOSITORY TRUST COMPANY ("DTC") AND REGISTERED IN ITS NAME OR IN
THE NAME OF CEDE & CO., ITS NOMINEE. BENEFICIAL INTERESTS IN THE GLOBAL NOTE
REPRESENTING THE EXCHANGE NOTES WILL BE SHOWN ON, AND TRANSFERS THEREOF WILL BE
EFFECTED THROUGH, RECORDS MAINTAINED BY DTC AND ITS PARTICIPANTS. AFTER THE
INITIAL ISSUANCE OF THE GLOBAL NOTE, NOTES IN CERTIFICATED FORM WILL BE ISSUED
IN EXCHANGE FOR THE GLOBAL NOTE ONLY UNDER LIMITED CIRCUMSTANCES AS SET FORTH IN
THE INDENTURE. SEE "BOOK-ENTRY; DELIVERY AND FORM."
PROSPECTIVE INVESTORS IN THE EXCHANGE NOTES ARE NOT TO CONSTRUE THE
CONTENTS OF THIS PROSPECTUS AS INVESTMENT, LEGAL OR TAX ADVICE. EACH INVESTOR
SHOULD CONSULT ITS OWN COUNSEL, ACCOUNTANT AND OTHER ADVISORS AS TO LEGAL, TAX,
BUSINESS, FINANCIAL AND RELATED ASPECTS OF THE EXCHANGE NOTES. NEITHER THE
COMPANY NOR ANY OF THE GUARANTORS IS MAKING ANY REPRESENTATION TO ANY
PROSPECTIVE INVESTOR IN THE EXCHANGE NOTES REGARDING THE LEGALITY OF AN
INVESTMENT THEREIN BY SUCH PERSON UNDER APPROPRIATE LEGAL INVESTMENT OR SIMILAR
LAWS.
iii
<PAGE> 6
(cover page continued)
FORWARD LOOKING STATEMENTS
CERTAIN STATEMENTS HEREIN UNDER THE CAPTIONS "SUMMARY," "UNAUDITED PRO
FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION," "MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" AND "BUSINESS"
AND IN CERTAIN DOCUMENTS INCORPORATED BY REFERENCE HEREIN CONSTITUTE
"FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995. SUCH FORWARD-LOOKING STATEMENTS INVOLVE UNKNOWN
AND UNCERTAIN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL
RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY, OR INDUSTRY RESULTS, TO BE
MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE, OR ACHIEVEMENTS
EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. SUCH FACTORS INCLUDE,
AMONG OTHERS, THE FOLLOWING: (1) GENERAL ECONOMIC, POLITICAL, MARKET AND
BUSINESS CONDITIONS, WHICH MAY, AMONG OTHER THINGS, AFFECT DEMAND FOR THE
COMPANY'S PRODUCTS; (2) INFLATION AND CURRENCY EXCHANGE RATES IN THOSE FOREIGN
COUNTRIES IN WHICH THE COMPANY OPERATES (INCLUDING BRAZIL AND AUSTRALIA/NEW
ZEALAND WHICH ACCOUNTED FOR APPROXIMATELY 53% AND 16% OF SALES AND 63% AND 16%
OF HISTORICAL OPERATING EARNINGS, RESPECTIVELY, IN 1996 BEFORE ALLOCATION OF
CORPORATE OVERHEAD); (3) NEW PRODUCT DEVELOPMENT AND TECHNOLOGICAL ADVANCES
WHICH MAY, AMONG OTHER THINGS, COMPETE WITH OR REDUCE THE NEED FOR THE COMPANY'S
PRODUCTS; (4) COMPETITION; (5) THE LOSS OF ANY OF THE COMPANY'S SIGNIFICANT
CUSTOMERS; AND (6) THE ABILITY TO INTEGRATE ACQUISITIONS SUCCESSFULLY. THESE AND
OTHER FACTORS AFFECTING THE COMPANY'S BUSINESS ARE AS DESCRIBED IN THIS OFFERING
MEMORANDUM, ESPECIALLY UNDER "RISK FACTORS" BELOW, AND IN THE COMPANY'S FILINGS
WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES EXCHANGE ACT OF
1934. GIVEN THESE UNCERTAINTIES, PROSPECTIVE INVESTORS ARE CAUTIONED NOT TO
PLACE UNDUE RELIANCE ON SUCH FORWARD-LOOKING STATEMENTS.
iv
<PAGE> 7
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "SEC" or the Commission"). The reports,
proxy statements and other information filed by the Company with the Commission
can be inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Commission's Regional Offices at Seven World Trade Center, 13th Floor, New
York, New York 10048 and Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60601-2511. Copies of such material also can be
obtained from the Public Reference Section of the Commission, Washington, D.C.
20549 at prescribed rates. The Commission maintains a Web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. The address of such
site is http://www.sec.gov. In addition, material filed by the Company can be
inspected at the offices of the NYSE, 20 Broad Street, New York, New York 10005
on which the Company's Common Stock is listed.
The Company has filed with the Commission a Registration Statement on Form
S-4 (the "Exchange Offer Registration Statement," which term shall encompass all
amendments, exhibits, annexes and schedules thereto) pursuant to the Securities
Act, and the rules and regulations promulgated thereunder, covering the Exchange
Notes being offered hereby. This Prospectus does not contain all the information
set forth in the Exchange Offer Registration Statement. For further information
with respect to the Company and the Exchange Offer, reference is made to the
Exchange Offer Registration Statement. Statements made in this Prospectus as to
the contents of any contract, agreement or other document referred to are not
necessarily complete. With respect to each such contract, agreement or other
document filed as an exhibit to the Exchange Offer Registration Statement,
reference is made to the exhibit for a more complete description of the document
or matter involved, and each such statement shall be deemed qualified in its
entirety by such reference.
In addition, the Company has agreed that, whether or not it is required to
do so by the rules and regulations of the Commission, for so long as any Notes
remain outstanding, it will furnish to the holders of the Notes and, to the
extent permitted by applicable law or regulation, file with the Commission all
quarterly and annual financial information that would be required to be filed
with the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act or
any successor provision thereto.
2
<PAGE> 8
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission (File No.
1-3410) pursuant to the Exchange Act are incorporated herein by reference and
shall be deemed to be a part hereof:
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, as amended on Form 10-K/A filed April 30, 1997;
(2) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997;
(3) The Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997;
(4) The Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997; and
(5) The Company's Current Reports on Form 8-K/A filed January 24, 1997
and on Form 8-K filed September 25, 1997, October 9, 1997, October 24,
1997, October 29, 1997, November 4, 1997, November 7, 1997, November 10,
1997, November 17, 1997, November 24, 1997, November 25, 1997, December 2,
1997, December 9, 1997, December 10, 1997, December 12, 1997 and January 9,
1998.
All documents and reports filed by the Company with the Commission pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the Exchange Offer shall be deemed
incorporated herein by reference and shall be deemed to be a part hereof from
the date of filing of such documents and reports. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any subsequent filed document or
report that also is or is deemed to be incorporated by reference herein modifies
or supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written request of such person, a copy of
any or all of the documents which are incorporated by reference herein other
than exhibits to such documents which are not specifically incorporated by
reference herein. Requests should be directed to the Company at 200 Park Avenue,
New York, New York 10166 (telephone number (212) 557-9100), Attention:
Director -- Investor Relations.
3
<PAGE> 9
SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Offering Memorandum. Unless the context otherwise requires,
all references herein to the "Company" include American Banknote Corporation,
its subsidiaries and predecessors. The Company's principal subsidiaries are: in
the United States, American Bank Note Company ("ABN") and American Bank Note
Holographics, Inc. ("ABNH"); in Brazil, American Bank Note Company Graphica e
Servicos Ltda. ("ABNB"), which is 77.5% owned by the Company; in Australia and
New Zealand, ABN Australasia Limited, operating as Leigh-Mardon ("LM"); and in
Europe, Sati S.A., Satel S.A. and Cidel S.A. (collectively, the "Sati Group").
Unless otherwise stated, references to "dollars" and "$" are to United States
dollars. The results of the foreign operations included in the Company's
financial statements have been translated into dollars at specified rates at the
dates of such financial statements as required by Statement of Financial
Accounting Standards No. 52, "Foreign Currency Translation."
THE COMPANY
OVERVIEW
The Company is a leading global provider of secure transaction solutions,
documents and systems. The Company designs solutions and manufactures products
that incorporate anti-fraud and counterfeit resistant technologies, including
stored-value telephone, magnetic-stripe, memory and microprocessor-based
("smart-cards") transaction cards, holograms, currencies, travelers' and other
checks, stock and bond certificates and a wide variety of electronically or
digitally produced personalized documents. The Company sells these products and
services worldwide to financial institutions, governments and corporations
through its operations in the United States, Brazil, Australia, New Zealand and
France. Through selective acquisitions and strategic realignment, the Company
has positioned itself as a full service provider of technology-based solutions
for its customers' secure transaction needs. The Company's products and services
are divided into three principal groups: Transaction Cards & Systems, Printing
Services & Document Management and Security Printing Solutions. For the twelve
months ended September 30, 1997, the Company's pro forma sales and EBITDA (as
defined) were $357.7 million and $67.4 million, respectively.
The Company is capitalizing on the following trends: (i) the increasing
demand for secure transactions and documents as technological advances have
elevated concerns about counterfeiting; (ii) the increasing demand for secure
products, services and systems used in the rapidly expanding field of electronic
commerce; and (iii) the increasing outsourcing by financial institutions,
governments and major corporations of their secure document needs. The Company's
200-year heritage and its reputation for security, high quality and
accountability have enabled it to obtain additional contracts in its markets and
effectively market an expanded array of value-added products and services to its
customers. The Company continually works with customers to develop new products
and applications, blending its experience and traditional base of secure
handling and distribution expertise with its advanced technologies. Management
believes its reputation and its ability to provide a diverse mix of products and
services will allow it to obtain contracts with new customers and expand into
new geographic markets.
In 1993, the Company began positioning itself to capitalize on
international growth opportunities and began diversifying its product mix to
include technology-based products, services and solutions. The Company's
international expansion began with the acquisition of its Brazilian subsidiary,
the largest private-sector security printer and manufacturer of transaction
cards in Latin America and a leading stored-value telephone card manufacturer in
Brazil. This expansion continued in 1996 with the acquisition of Australia and
New Zealand's oldest, largest and only fully integrated provider of secure
document and transaction card solutions. Most recently, the Company expanded its
international presence in August 1997 through the acquisition of one of France's
leading providers
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of check personalization and electronic printing applications. The Company also
initiated, in 1994, a program to realign and upgrade its domestic manufacturing
operations, realize process efficiencies and reduce costs. These steps, together
with its international expansion, resulted in improved financial performance and
have allowed the Company to rapidly broaden its international presence,
technological base and product lines. From 1992 to 1996 (on a pro forma basis),
the Company's sales and EBITDA have increased from $171.9 million and $34.1
million to $365.2 million and $69.3 million, respectively, representing compound
annual growth rates of approximately 21% and 19% for sales and EBITDA,
respectively.
As illustrated by the charts below, the Company has successfully
diversified its product mix and expanded into higher growth markets, thereby
reducing its dependence on traditional security printing.
SALES BY PRODUCT GROUP
[PIE CHART]
The Company serves its customers through three principal groups:
Transaction Cards & Systems. The Company's Transaction Cards & Systems
products include credit, debit and automated teller machine ("ATM") cards,
stored-value telephone cards, transit and transportation cards and
identification systems manufactured at its facilities in Brazil, Australia and
New Zealand. Additionally, in certain markets, the Company supplies the
hardware, software and related services used in transaction processing. As the
use of magnetic-stripe cards and electronic transactions continues to increase,
the Company is expanding its capabilities and presence to service these highly
specialized markets. The Company is also developing its smart-card capabilities.
The Company was recently awarded a contract to produce smart-cards for Telstra,
the Australian national telephone company, and expects to begin manufacturing in
1998. Smart-card applications include financial transactions, secure access and
identification systems, prepaid telephone services, transportation systems, GSM
cellular phone systems, direct pay TV access, health cards and customer loyalty
programs for airlines, hotels and car rental services. The Company is also the
world's leading supplier of advanced holographic security devices used on such
branded transaction cards as MasterCard(TM), VISA(TM), Discover(TM), Europay(TM)
and Diners Club International(TM), as well as on a broad range of identification
cards and other products.
Printing Services & Document Management. The Company's Printing Services &
Document Management products and services provide customers with a full range of
document printing, personalization, inventory and distribution services. The
Company has leveraged its reputation as a leading security printer to expand its
business as public and private sector institutions increasingly outsource their
secure document needs. Utilizing advanced, computerized printing and
personalization technology as well as inventory control systems and
"just-in-time" distribution capabilities, the Company provides comprehensive
solutions for its clients. For example, over the last two years, the Company has
assumed the in-house check and document printing, processing and distribution
operations of Banco Bradesco, S.A. ("Bradesco") and Unibanco, S.A. ("Unibanco"),
two of the
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largest private banks in Brazil. In addition to its financial institution
clients, the Company also provides complete printing, personalization and
document management services for a number of other large enterprises including
utilities, insurance companies, telephone companies and government entities.
Security Printing Solutions. The Company is a leading global supplier of a
broad range of Security Printing Solutions, including travelers' cheques,
financial checks, food coupons, currency, stamps, stock and bond certificates,
transit tickets, gift certificates, passports and a wide range of other
commercial documents of value. The Company believes that it is one of the
largest printers of travelers' cheques in the world, serving such customers as
American Express, Citicorp, MasterCard(TM) and Visa(TM). The Company is the
leading private sector supplier of personalized checks in Brazil, Australia and
New Zealand and the second largest in France. The Company supplies many of the
largest private banks in its markets with checks, check personalization and
distribution of a wide array of additional printed products, in many cases under
multi-year contracts. Recent advances in color copying, desktop publishing and
laser printing have provided a unique growth opportunity as an increasing number
of customers demand enhanced security to prevent copying, counterfeiting and
fraud.
BUSINESS STRATEGY
The Company's strategy is to leverage its market leadership, superior
reputation and strong customer relationships to capitalize on the increasing
demand for high quality and cost effective secure transaction solutions. In
order to accomplish its goal, the Company intends to: (i) enhance its leadership
positions in diverse geographic markets; (ii) provide solutions-oriented
products and services; (iii) pursue strategic acquisitions and alliance
opportunities; and (iv) increase manufacturing efficiencies and reduce costs.
Enhance Leadership Positions in Diverse Geographic Markets. The Company
seeks to enhance its leadership position by developing new products and services
and expanding its geographic presence to provide customers with a full range of
secure transaction solutions. The Company targets new industries and geographic
markets in which it believes it can capture a large share of the market by
providing high quality, cost effective products and services and by offering its
advanced technological capabilities. Management believes that the growth
potential of products such as stored-value cards and electronic printing
applications as well as an increase in the demand for printing, storage and
document services will allow the Company to enhance its strong leadership
position in Brazil, Australia, New Zealand and France and to continue its
expansion into new geographic markets.
Provide Solutions-Oriented Products and Services. The Company focuses on
providing products and services designed to address all of a customer's secure
transaction and document needs. For example, in addition to printing documents
for Bradesco, Latin America's largest private bank, the Company personalizes
these documents and manages Bradesco's inventory by distributing on a
"just-in-time" basis to each of Bradesco's approximately 2,000 branches.
Additionally, Bradesco's branches are linked electronically with the Company's
310,000 square foot Sao Paulo, Brazil facility and place their orders directly
with the Company, eliminating the need for central inventory management at
Bradesco. Management believes that the ability to provide a full array of
products and services for all of its customers' secure transaction and document
needs will increase revenues from existing clients and allow the Company to
obtain contracts with new clients.
Pursue Strategic Acquisitions and Alliances. The Company continuously
evaluates domestic and international opportunities for strategic acquisitions,
joint ventures and alliances which complement and expand its core businesses.
The Company believes that significant opportunities exist that will enable the
Company to: (i) provide additional products and services to its existing
customer base; (ii) cross-sell products and services to an expanded customer
base; and (iii) expand its geographic presence. Examples of this strategy
include the acquisition of LM in June 1996 and the
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<PAGE> 12
Sati Group in August 1997. LM is the leading manufacturer and personalizer of
checks and transaction cards in Australia and New Zealand and its acquisition
marked the Company's entry into the Australasian market. The Sati Group is the
second largest provider of check personalization and distribution services in
France and its acquisition marked the Company's entry into the European market.
The Company is presently exploring additional acquisition opportunities to: (i)
increase market share; (ii) broaden its product and service offerings to
existing customers; and (iii) expand its geographic presence.
Increase Manufacturing Efficiencies and Reduce Costs. The Company is
committed to continuous improvements throughout its business to increase product
value and lower the Company's manufacturing costs. For example, the Company
realigned and consolidated its domestic manufacturing operations by closing the
Company's Los Angeles and Chicago facilities and opening a state-of-the-art
manufacturing facility in Columbia, Tennessee. These changes significantly
decreased manufacturing costs and allowed the Company to increase profitability
and bid on contracts more competitively, as evidenced by its recently awarded
contract to produce currency at its Tennessee facility for the Reserve Bank of
India. The Company has also made significant investments, both domestically and
internationally, in state-of-the-art manufacturing and distribution equipment,
systems and technologies to allow the Company to reduce costs, increase capacity
and provide the most advanced secure transaction solutions available.
RECENT DEVELOPMENTS
The Company has executed contracts for the continued supply of phone cards
for Telebras, Brazil's national telephone company. The Company anticipates that
revenues from these contracts will total approximately $18 million for the one
year period beginning December 1997. In accordance with the Brazil privatization
program for Telebras, the Company has entered into six separate agreements with
local phone operators Telerj, Teleron, Telems, Telaima, Telest and Telasa for
Rio de Janeiro and five other states. Each of the six local phone operators has
the option to extend its contract for a second year.
The Company has acquired the printing assets of Commonwealth Bank of
Australia Limited ("Commonwealth") for a purchase price of AUS$6.5 million
(approximately US$4.6 million). In connection with the purchase, the Company has
entered into a three year supply agreement for the supply of printed products to
Commonwealth with two-three year extension periods exercisable by Commonwealth.
The Company has acquired the printing assets of Bank Itau ("Itau") in
Brazil for Reals 6 million (approximately US$5.5 million). In connection with
the purchase, Itau has agreed to a two year supply agreement for the supply of
printed products to Itau with two one-year extensions exercisable by Itau.
THE REFINANCING
The Initial Offering was part of a refinancing of certain of the Company's
outstanding indebtedness (the "Refinancing"). Pursuant to the Refinancing, the
Company: (i) consummated the Initial Offering; (ii) consummated the Tender Offer
and the related Consent Solicitation (each as defined) with respect to the
Company's 11 5/8% Senior Notes due 2002 (the "11 5/8% Notes"); and (iii) repaid
outstanding amounts under the Existing Credit Facility (as defined). See
"Description of Certain Indebtedness.".
Pursuant to the Tender Offer and Consent Solicitation, on December 12,
1997, the Company purchased approximately $57 million principal amount of the
11 5/8% Notes (constituting approximately 87.7% of the outstanding 11 5/8%
Notes) for an amount in cash equal to $1,094.47 per $1,000 principal amount of
11 5/8% Notes. Each tendering holder also received accrued and unpaid interest
up to, but not including, the payment date. Pursuant to the Consent
Solicitation, the Company also
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<PAGE> 13
solicited consents from tendering holders of 11 5/8% Notes to modify certain
terms of the 11 5/8% Notes Indenture (as defined). In connection with the
Consent Solicitation, the 11 5/8% Notes Indenture was amended, which, among
other things, eliminated substantially all of the restrictive covenants
contained in the 11 5/8% Notes Indenture, and the Company paid a consent fee
(which is included in the tender price referred to above) to all tendering
holders.
------------------------
The Company is a Delaware corporation incorporated in 1993 as the successor
to United States Banknote Corporation, a New York corporation organized in 1925,
and changed its name to American Banknote Corporation in 1995. The Company's
common stock is traded on the New York Stock Exchange, Inc. under the symbol
"ABN." The Company's principal executive offices are located at 200 Park Avenue,
New York, New York 10166, and its telephone number is (212) 557-9100.
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<PAGE> 14
THE INITIAL OFFERING
The Initial Offering....... The Old Notes were sold by the Company on December
12, 1997 (the "Initial Offering") to Chase
Securities, Inc., Bear, Stearns & Co. Inc.,
NationsBanc Montgomery Securities, Inc. and Societe
Generale Securities Corporation (the "Initial
Purchasers") pursuant to a Purchase Agreement dated
December 5, 1997 (the "Purchase Agreement") as part
of Units consisting of $95,000,000 aggregate
principal amount of Old Notes and 95,000 Warrants
to purchase an aggregate of 1,185,790 shares of
Common Stock. The Initial Purchaser subsequently
resold the Old Notes to qualified institutional
buyers in reliance on Rule 144A under the
Securities Act and in offshore transactions to
Non-U.S. persons in reliance on Regulation S under
the Securities Act.
Registration Rights
Agreement................ Pursuant to the Purchase Agreement, the Company,
the Guarantors and the Initial Purchasers entered
into a Registration Rights Agreement dated as of
December 12, 1997 (the "Registration Rights
Agreement"), which grants the holders of the Old
Notes certain exchange and registration rights. The
Exchange Offer is intended to satisfy such exchange
and registration rights which terminate upon the
consummation of the Exchange Offer.
THE EXCHANGE OFFER
Securities Offered......... $95,000,000 aggregate principal amount of 11 1/4%
Senior Subordinated Notes due 2007, Series B, of
the Company (the "Exchange Notes").
The Exchange Offer......... The Company is offering to exchange $1,000
principal amount of Exchange Notes for each $1,000
principal amount of Old Notes that are properly
tendered and accepted. As of the date hereof,
$95,000,000 aggregate principal amount of Old Notes
are outstanding. The Company will issue the
Exchange Notes to holders on or promptly after the
Expiration Date.
Based on an interpretation by the staff of the
Commission set forth in no-action letters issued to
third parties, the Company believes that Exchange
Notes issued pursuant to the Exchange Offer in
exchange for Old Notes may be offered for resale,
resold and otherwise transferred by any holder
thereof (other than any such holder which is an
"affiliate" of the Company within the meaning of
Rule 405 under the Securities Act) without
compliance with the registration and prospectus
delivery provisions of the Securities Act;
provided, that such Exchange Notes are acquired in
the ordinary course of such holder's business and
that such holder does not intend to participate and
has no arrangement or understanding with any person
to participate in the distribution of such Exchange
Notes.
Any Participating Broker-Dealer that acquired Old
Notes for its own account as a result of
market-making activities or other trading
activities may be a statutory underwriter. Each
Participating Broker-Dealer that receives Exchange
Notes for its own
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<PAGE> 15
account pursuant to the Exchange Offer must
acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes.
The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a
Participating Broker-Dealer will not be deemed to
admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to
time, may be used by a Participating Broker-Dealer
in connection with resales of Exchange Notes
received in exchange for Old Notes where such Old
Notes were acquired by such Participating Broker-
Dealer as a result of market-making activities or
other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration
Date, they will make this Prospectus available to
any Participating Broker-Dealer for use in
connection with any such resale. See "Plan of
Distribution."
Any holder who tenders in the Exchange Offer with
the intention to participate, or for the purpose of
participating, in a distribution of the Exchange
Notes could not rely on the position of the staff
of the Commission enunciated in no-action letters
and, in the absence of an exemption therefrom, must
comply with the registration and prospectus
delivery requirements of the Securities Act in
connection with any resale transaction. Failure to
comply with such requirements in such instance may
result in such holder incurring liability under the
Securities Act for which the holder is not
indemnified by the Company.
Expiration Date............ 5:00 p.m., New York City time, on ,
1998 unless the Exchange Offer is extended, in
which case the term "Expiration Date" means the
latest date and time to which the Exchange Offer is
extended.
Accrued Interest on the
Exchange Notes and the
Old Notes................ Each Exchange Note will bear interest from its
issuance date. Holders of Old Notes that are
accepted for exchange will receive, in cash,
accrued interest thereon to, but not including, the
issuance date of the Exchange Notes. Such interest
will be paid with the first interest payment on the
Exchange Notes. Interest on the Old Notes accepted
for exchange will cease to accrue upon issuance of
the Exchange Notes.
Conditions to the Exchange
Offer.................... The Exchange Offer is subject to certain customary
conditions, which may be waived by the Company. See
"The Exchange Offer -- Conditions."
Procedures for Tendering
Old Notes.................. Each holder of Old Notes wishing to accept the
Exchange Offer must complete, sign and date the
accompanying Letter of Transmittal, or a facsimile
thereof (or, in the case of a book-entry transfer,
transmit an Agent's Message (as defined) in lieu
thereof), in accordance with the instructions
contained herein and therein, and mail or otherwise
deliver such Letter of Transmittal, or such
facsimile (or Agent's message), together with the
Old Notes
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<PAGE> 16
and any other required documentation to the
Exchange Agent (as defined) at the address set
forth herein. By executing the Letter of
Transmittal (or transmitting an Agent's Message),
each holder will represent to the Company that,
among other things, the Exchange Notes acquired
pursuant to the Exchange Offer are being obtained
in the ordinary course of business of the person
receiving such Exchange Notes, whether or not such
person is the holder, that neither the holder nor
any such other person has any arrangement or
understanding with any person to participate in the
distribution of such Exchange Notes and that
neither the holder nor any such other person is an
"affiliate," as defined under Rule 405 of the
Securities Act, of the Company. See "The Exchange
Offer -- Purpose and Effect of the Exchange Offer"
and "-- Procedures for Tendering."
Untendered Old Notes....... Following the consummation of the Exchange Offer,
holders of Old Notes eligible to participate but
who do not tender their Old Notes will not have any
further exchange or registration rights and such
Old Notes will continue to be subject to certain
restrictions on transfer. Accordingly, the
liquidity of the market for such Old Notes could be
adversely affected. See "Risk Factors -- Lack of
Public Market; Volatility; Restrictions on Resale."
Consequences of Failure to
Exchange................. The Old Notes that are not exchanged pursuant to
the Exchange Offer will remain restricted
securities. Accordingly, such Old Notes may be
resold only (i) to the Company, (ii) pursuant to
Rule 144A or Rule 144 under the Securities Act or
pursuant to some other exemption under the
Securities Act, (iii) outside the United States to
a foreign person pursuant to the requirements of
Rule 904 under the Securities Act, or (iv) pursuant
to an effective registration statement under the
Securities Act. See "The Exchange
Offer -- Consequences of Failure to Exchange."
Shelf Registration
Statement.................. If any holder of the Old Notes (other than any such
holder which is an "affiliate" of the Company or a
Guarantor within the meaning of Rule 405 under the
Securities Act) is not eligible under applicable
securities laws to participate in the Exchange
Offer, and such holder has satisfied certain
conditions relating to the provision of information
to the Company for use therein, the Company and the
Guarantors have agreed to register the Old Notes on
a shelf registration statement (the "Shelf
Registration Statement") and to use their best
efforts to cause it to be declared effective by the
Commission as promptly as practical on or after the
consummation of the Exchange Offer. The Company and
Guarantors have agreed to maintain the
effectiveness of the Shelf Registration Statement
for, under certain circumstances, a maximum of two
years, to cover resales of the Old Notes held by
any such holders.
Special Procedures for
Beneficial Owners........ Any beneficial owner whose Old Notes are registered
in the name of a broker, dealer, commercial bank,
trust company or other nominee and who wishes to
tender should contact such registered holder
promptly and instruct such registered holder to
tender on such beneficial owner's behalf. If such
beneficial owner wishes to
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<PAGE> 17
tender on such owner's own behalf, such owner must,
prior to completing and executing the Letter of
Transmittal and delivering its Old Notes, either
make appropriate arrangements to register ownership
of the Old Notes in such owner's name or obtain a
properly completed bond power from the registered
holder. The transfer of registered ownership may
take considerable time.
Guaranteed Delivery
Procedures............... Holders of Old Notes who wish to tender their Old
Notes and whose Old Notes are not immediately
available or who cannot deliver their Old Notes (or
comply with the procedures for book-entry
transfer), the Letter of Transmittal or any other
documents required by the Letter of Transmittal to
the Exchange Agent (or transmit an Agent's message
in lieu thereof) prior to the Expiration Date must
tender their Old Notes according to the guaranteed
delivery procedures set forth in "The Exchange
Offer -- Guaranteed Delivery Procedures."
Withdrawal Rights.......... Tenders may be withdrawn at any time prior to 5:00
p.m., New York City time, on the Expiration Date.
Acceptance of Old Notes
and Delivery of Exchange
Notes.................... The Company will accept for exchange any and all
Old Notes which are properly tendered in the
Exchange Offer prior to 5:00 p.m., New York City
time, on the Expiration Date. The Exchange Notes
issued pursuant to the Exchange Offer will be
delivered promptly following the Expiration Date.
See "The Exchange Offer -- Terms of the Exchange
Offer."
Certain U.S. Federal Income
Tax Considerations....... For a discussion of certain material U.S. federal
income tax considerations relating to the exchange
of the Exchange Notes for the Old Notes, see
"Certain U.S. Federal Income Tax Considerations."
Use of Proceeds............ There will be no cash proceeds to the Company from
the issuance of the Exchange Notes pursuant to the
Exchange Offer. See "Use of Proceeds."
Exchange Agent............. The Exchange Agent is The Bank of New York. The
address and telephone and facsimile numbers of the
Exchange Agent are set forth under "The Exchange
Offer -- Exchange Agent" and in the Letter of
Transmittal.
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<PAGE> 18
SUMMARY OF THE TERMS OF THE NOTES
The Exchange Offer applies to the Old Notes. The form and terms of the
Exchange Notes are identical in all material respects to the form and terms of
the Old Notes, except that (i) the Exchange Notes will bear a Series B
designation, (ii) the Exchange Notes will have been registered under the
Securities Act and, therefore, will not bear legends restricting the transfer
thereof and (ii) holders of the Exchange Notes will not be entitled to certain
rights of holders of Old Notes under the Registration Rights Agreement, which
rights will terminate upon consummation of the Exchange Offer. The Exchange
Notes will evidence the same debt as the Old Notes (which they replace) and will
be issued under and be entitled to the benefits of the Indenture. For further
information and for definitions of certain capitalized terms used below, see
"Description of the Notes."
Notes Offered.............. $95.0 million aggregate principal amount of 11 1/4%
Senior Subordinated Notes due 2007, Series B.
Maturity................... December 1, 2007.
Interest Payment Dates..... June 1 and December 1 of each year, commencing on
June 1, 1998.
Sinking Fund............... None.
Optional Redemption........ Except as described below, the Company may not
redeem the Notes prior to December 1, 2002. On or
after such date, the Company may redeem the Notes,
in whole or in part, at the redemption prices set
forth herein, together with accrued and unpaid
interest, if any, to the date of redemption. In
addition, at any time and from time to time on or
prior to December 1, 2000, the Company may redeem
up to 35% of the aggregate principal amount of the
Notes with the net cash proceeds from one or more
Public Equity Offerings (as defined) by the
Company, at a redemption price equal to 111.25% of
the principal amount to be redeemed, together with
accrued and unpaid interest, if any, to the date of
redemption, provided that at least 65% of the
originally issued aggregate principal amount of the
Notes remains outstanding after each such
redemption. See "Description of the Notes --
Optional Redemption."
Change of Control.......... Upon a Change of Control, the Company will be
required to make an offer to purchase the Notes at
a price equal to 101% of the principal amount
thereof, together with accrued and unpaid interest,
if any, to the date of purchase. See "Description
of the Notes -- Change of Control."
Subsidiary Guarantees...... The Notes will be guaranteed (the "Guarantees"),
jointly and severally on a senior subordinated
basis, by all of the Company's direct and indirect
domestic operating subsidiaries on the issue date
of the Notes (the "Issue Date") and by each direct
and indirect domestic operating subsidiary of the
Company (excluding Unrestricted Subsidiaries (as
defined)) formed or acquired thereafter. The
Guarantees will be general unsecured senior
subordinated obligations of the Guarantors. The
obligations of each Guarantor under its Guarantee
will be subordinated in right of payment to the
prior payment in full of all Guarantor Senior
Indebtedness (as defined) of such Guarantor to
substantially the same extent as the Notes are
subordinated to all existing and
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<PAGE> 19
future Senior Indebtedness of the Company. See
"Description of the Notes -- Guarantees of the
Notes."
Ranking.................... The Notes will be unsecured and will be
subordinated in right of payment to all existing
and future Senior Indebtedness (as defined) of the
Company. The Notes will rank pari passu in right of
payment with any future senior subordinated
Indebtedness of the Company and will rank senior to
all Subordinated Indebtedness (as defined) of the
Company. As of September 30, 1997, after giving pro
forma effect to the Refinancing, including the
issuance of the Old Notes and the application of
the net proceeds therefrom, the aggregate principal
amount of the Company's outstanding Senior
Indebtedness would have been approximately $222.5
million (excluding unused commitments), including
$80.9 million of Indebtedness of the Company's
subsidiaries which would have been effectively
senior to the Notes, and the Company would have had
no senior subordinated Indebtedness outstanding
other than the Notes. See "Description of the
Notes -- Ranking" and "-- Subordination of the
Notes."
Restrictive Covenants...... The indenture under which the Notes will be issued
(the "Indenture") will limit, among other things:
(i) the incurrence of additional indebtedness by
the Company and its Restricted Subsidiaries (as
defined); (ii) the payment of dividends on, and
redemption of, capital stock of the Company and its
Restricted Subsidiaries and the redemption of
certain subordinated obligations of the Company and
its Restricted Subsidiaries; (iii) investments;
(iv) sales of assets and Restricted Subsidiary
stock, (v) transactions with affiliates; and (vi)
consolidations, mergers and transfers of all or
substantially all of the Company's assets. The
Indenture will also prohibit certain restrictions
on distributions from Restricted Subsidiaries.
However, all of these limitations and prohibitions
are subject to a number of important qualifications
and exceptions. See "Description of the Notes --
Certain Covenants."
RISK FACTORS
See "Risk Factors" for a discussion of certain factors that should be
considered before tendering Old Notes in exchange for Exchange Notes. The risk
factors are generally applicable to the Old Notes as well as the Exchange Notes.
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SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
The following table sets forth summary historical financial data for each
of the three years in the period ended December 31, 1996, and the nine months
ended September 30, 1997 and 1996 and pro forma financial data for the year
ended December 31, 1996 and the nine months and twelve months ended September
30, 1997. The historical financial data for each of the three years in the
period ended December 31, 1996 have been derived from the Company's audited
consolidated financial statements, which are included elsewhere herein. The
historical financial data for the nine months ended September 30, 1997 and 1996
have been derived from the Company's unaudited condensed consolidated financial
statements, included elsewhere herein, which in the opinion of management
include all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of the information. The historical financial
data for the nine months ended September 30, 1997 are not necessarily indicative
of results that may be expected for the entire year. The unaudited pro forma
financial data have been derived from the Company's historical financial
statements and give effect to the Refinancing and the acquisitions of LM and the
Sati Group, in each case as if it had occurred as of the beginning of the
periods indicated, including the repayment of all amounts outstanding under the
Existing Credit Facility during each respective period, and the Refinancing and
the private placement in November 1997 of a $5 million accreted value Zero
Coupon Convertible Subordinated Debenture due 2002 (the "Convertible
Debenture"), in each case as if it had occurred on September 30, 1997. The
unaudited pro forma financial data are not intended to represent and are not
indicative of what the Company's results of operations actually would have been
or to project the Company's results of operations for any future period. The
following information is qualified by reference to, and should be read in
conjunction with, "Capitalization," "Unaudited Pro Forma Condensed Consolidated
Financial Information," "Selected Historical Financial Data," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the consolidated financial statements and the unaudited condensed consolidated
financial statements and notes thereto of the Company and of LM, included
elsewhere herein.
<TABLE>
<CAPTION>
PRO FORMA AS ADJUSTED
----------------------------------------------
NINE TWELVE
NINE MONTHS ENDED YEAR MONTHS MONTHS
YEAR ENDED DECEMBER 31 SEPTEMBER 30 ENDED ENDED ENDED
-------------------------------- -------------------- DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1994 1997 1996 1996 1997 1997
-------- -------- -------- -------- -------- ------------ ------------- -------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF
OPERATIONS DATA:
Sales................ $309,450 $206,164 $208,133 $248,416 $217,560 $365,173 $ 260,040 $ 357,699
Income (loss) from
operations before
restructuring and
idle equipment
charge(a).......... 38,987 (11,850) 18,176 29,473 26,709 44,386 30,095 42,648
Interest expense..... 28,864 23,147 21,057 24,353 20,124 36,117 26,935 36,688
Income (loss) before
extraordinary
item(b)............ 4,099 (22,415) (5,701) 4,688 2,791 2,909 3,363 4,477
OTHER FINANCIAL DATA:
EBITDA(c)............ $ 59,029 $ 2,974 $ 31,270 $ 47,272 $ 41,440 $ 69,312(d) $ 48,948(d) $ 67,379(d)
Adjusted EBITDA(c)... 59,029 17,278 38,270 47,272 41,440 69,312(d) 48,948(d) 67,379(d)
Adjusted EBITDA
margin(e).......... 19.1% 8.4% 18.4% 19.0% 19.0% 19.0% 18.8% 18.8%
Depreciation and
amortization(f).... $ 21,223 $ 15,582 $ 13,876 $ 18,948 $ 15,501 $ 26,290 $ 19,919 $ 26,148
Capital
expenditures....... 22,283 10,378 10,084 7,491 16,775 24,260 8,291 14,199
Cash interest
expense(g)......... 27,683 22,389 20,275 23,204 19,354 34,753 25,869 35,271
Ratio of EBITDA to cash interest expense........................................................................ 1.9x
BALANCE SHEET DATA
(AT END OF PERIOD):
Working capital................................................................................................. $ 70,533
Property, plant and equipment, net.............................................................................. 250,326
Total assets.................................................................................................... 521,935
Long-term debt (including current maturities)................................................................... 316,171
Stockholders' equity(b)......................................................................................... 57,528
</TABLE>
See notes to Summary Historical and Pro Forma Financial Data
15
<PAGE> 21
NOTES TO SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
(a) In 1995 and 1994, income from operations include charges for restructuring
and idle equipment of $14.3 million and $7.0 million, respectively.
(b) Pro Forma As Adjusted includes an extraordinary charge of $5.6 million, net
of applicable taxes, for the early extinguishment of debt in connection with
the Refinancing. The extraordinary charge is reflected in Pro Forma As
Adjusted stockholders' equity.
(c) EBITDA represents income (loss) from operations before depreciation and
amortization. Adjusted EBITDA represents income (loss) from operations
before depreciation and amortization, and charges for restructuring and idle
equipment. EBITDA and Adjusted EBITDA are not intended to represent cash
flow from operations as defined by generally accepted accounting principles
and should not be considered as an alternative to net income as an indicator
of operating performance or to cash flow as a measure of liquidity. The
Company has included information concerning EBITDA and Adjusted EBITDA as it
understands that such items are used by certain investors as measures of a
borrower's historical ability to service its debt. EBITDA and Adjusted
EBITDA, as presented, may not be comparable to similarly titled measures
reported by other companies, since not all companies necessarily calculate
EBITDA and Adjusted EBITDA in identical manners, and therefore are not
necessarily accurate means of comparisons between companies.
(d) Pro Forma As Adjusted EBITDA excludes cash flows from the Commonwealth and
Itau agreements.
(e) Adjusted EBITDA margin is computed as Adjusted EBITDA as a percentage of
sales.
(f) Includes the amortization of deferred financing costs of $1.2 million,
$758,000, $782,000, $1.1 million, $770,000, $1.4 million, $1.1 million and
$1.4 million for the years ended December 31, 1996, 1995, 1994, for the nine
months ended September 30, 1997 and 1996, and for the pro forma periods
ended December 31, 1996 and the nine and twelve months ended September 30,
1997, respectively.
(g) Cash interest expense represents interest expense less the amortization of
deferred financing costs noted in (f) above.
16
<PAGE> 22
RISK FACTORS
In addition to the other information contained in this Prospectus, the
following factors should be considered carefully before tendering Old Notes in
exchange for Exchange Notes. The risk factors set forth below are generally
applicable to the Old Notes as well as the Exchange Notes.
SUBSTANTIAL LEVERAGE AND ABILITY TO SERVICE DEBT
The Company is, and upon consummation of the Refinancing will be, highly
leveraged. At September 30, 1997, after giving effect to the sale of the
Convertible Debenture in November 1997 and the Refinancing and the application
of the estimated net proceeds thereof, the Company would have had: (i) total
consolidated long-term debt, including the current portion, of $316.2 million;
(ii) total stockholders' equity of $57.5 million; and (iii) a ratio of earnings
to fixed charges for the twelve months ended September 30, 1997 of 1.2 to 1.
The degree to which the Company is leveraged could have important
consequences to the holders of the Units, including: (i) the Company's ability
to obtain additional financing for working capital, capital expenditures or
acquisitions in the future may be limited; (ii) a substantial portion of the
Company's cash flow from operations may be dedicated to the payment of the
principal of and interest on its indebtedness, thereby reducing funds available
for future operation; (iii) certain of the Company's borrowings, including all
borrowings under the Existing Credit Facility, will be at variable rates of
interest, which exposes the Company to the risk of increased interest rates; and
(iv) the Company may be more vulnerable to economic downturns and be limited in
its ability to withstand competitive pressures. Certain of the Company's
competitors may currently operate on a less leveraged basis and therefore the
Company could be placed at a disadvantage relative to its competitors which have
significantly greater operating and financing flexibility than the Company. The
Company's ability to make scheduled payments of the principal of or interest on,
or to refinance, its indebtedness will depend on its future operating
performance and cash flow, which are subject to prevailing economic conditions,
prevailing interest rate levels, and financial, competitive, business and other
factors, many of which are beyond its control.
The Company believes that, based upon current levels of operations, it
should be able to meet its debt service obligations, including principal and
interest payments on the Notes when due. However, if the Company cannot generate
sufficient cash flow from operations to meet its debt service obligations, then
the Company might be required to refinance its indebtedness and may be forced to
adopt an alternative strategy that may include actions such as reducing or
delaying capital expenditures, selling assets, restructuring or refinancing its
indebtedness, or seeking additional equity capital. There is no assurance that
refinancings would be permitted by the terms of the Existing Credit Facility,
the 10 3/8% Notes Indenture (as defined), the Indenture or any other lending
arrangements then in effect or, along with the alternative strategies, could be
effected on satisfactory terms. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."
RESTRICTIONS IMPOSED BY TERMS OF INDEBTEDNESS
The Existing Credit Facility and the 10 3/8% Notes Indenture contain and
the Indenture will contain numerous restrictive covenants that limit the
discretion of the Company's management with respect to certain business matters.
These covenants place significant restrictions on, among other things, the
ability of the Company to incur additional indebtedness, to create liens or
other encumbrances, to pay dividends or make certain other payments,
investments, loans and guarantees and to sell or otherwise dispose of assets and
merge or consolidate with another entity. The Existing Credit Facility and the
10 3/8% Notes Indenture also contain a number of financial covenants that
require the Company to meet certain financial ratios and financial condition
tests. See "Description of Certain Indebtedness -- Existing Credit Facility,"
"Description of Certain Indebtedness -- Senior Notes -- 10 3/8% Notes" and
"Description of the Notes -- Certain Covenants." The Company's ability to meet
17
<PAGE> 23
these financial ratios and financial condition tests can be affected by events
beyond its control, and there can be no assurance that the Company will meet
such ratios or such tests. A failure to comply with the obligations in the
Existing Credit Facility, the 10 3/8% Notes Indenture or the Indenture could
result in an event of default under the Existing Credit Facility or the 10 3/8%
Notes Indenture or an Event of Default (as defined) under the Indenture that, if
not cured or waived, could permit acceleration of the relevant indebtedness and
acceleration of indebtedness under other instruments that may contain
cross-acceleration or cross-default provisions. In the event of an event of
default under the Existing Credit Facility or the 10 3/8% Notes Indenture or an
Event of Default under the Indenture the lenders thereunder could elect to
declare all amounts outstanding thereunder, together with accrued and unpaid
interest, to be immediately due and payable. If the indebtedness under the
Existing Credit Facility or the 10 3/8% Notes Indenture were to be accelerated,
there can be no assurance that the assets of the Company would be sufficient to
repay in full that indebtedness and the other indebtedness of the Company,
including the Notes. Other indebtedness of the Company and its subsidiaries that
may be incurred in the future may contain financial or other covenants more
restrictive than those applicable to the Notes.
SUBORDINATION; HOLDING COMPANY STRUCTURE
The Notes will be general unsecured obligations of American Banknote
Corporation (exclusive of its subsidiaries, the "Parent") and will be
subordinated in right of payment to all existing and future Senior Indebtedness
of the Parent, including the Parent's obligations under the Existing Credit
Facility and the 10 3/8% Notes Indenture. By reason of the subordination
provisions of the Indenture, in the event of the bankruptcy, liquidation,
dissolution, reorganization or other winding-up of the Parent, the assets of the
Parent will be available to pay obligations on the Notes only after all Senior
Indebtedness (including amounts incurred under the Existing Credit Facility and
the 10 3/8% Notes Indenture) has been so paid in full; accordingly, there may
not be sufficient assets remaining to pay amounts due on any or all of the Notes
then outstanding. In addition, under certain circumstances, the Parent may not
pay principal of, premium, if any, or interest on, or pay other amounts owing in
respect of the Notes, or purchase, redeem or otherwise retire the Notes, in the
event of certain defaults with respect to certain classes of Senior
Indebtedness, including Senior Indebtedness incurred under the Existing Credit
Facility and the 10 3/8% Notes Indenture. As of September 30, 1997, after giving
pro forma effect to the Refinancing, including the Offering and the application
of the net proceeds therefrom, there would have been approximately $224.2
million of Senior Indebtedness outstanding (excluding unused commitments),
including $80.9 million of Indebtedness of the Company's subsidiaries which
would have been effectively senior to the Notes. Additional Senior Indebtedness
may be incurred by the Parent from time to time, subject to certain
restrictions. See "Description of Certain Indebtedness -- Existing Credit
Facility," "Description of Certain Indebtedness -- Senior Notes -- 10 3/8%
Notes" and "Description of the Notes -- Certain Covenants -- Limitation on
Indebtedness."
The Existing Credit Facility and the 10 3/8% Notes are secured by
substantially all of the assets of the Company and its domestic operating
subsidiaries and the existing indebtedness of LM and the Sati Group is secured
by certain assets of such foreign subsidiaries and, therefore, claims of holders
of the Notes will be subordinated to the extent of the value of the assets
securing such indebtedness.
The Parent is a holding company that has no significant assets other than
its direct and indirect investments in its operating subsidiaries. Accordingly,
the Parent must rely on its subsidiaries to generate the funds necessary to meet
its obligations, including the payment of principal of and interest on the
Notes. The ability of the subsidiaries to pay dividends or make other payments
or advances will depend upon their operating results and will be subject to
applicable laws and contractual restrictions contained in the instruments
governing any indebtedness of such subsidiaries (including the Existing Credit
Facility and indebtedness of LM and the Sati Group). Certain of the Parent's
subsidiaries have incurred, and in the future may incur, indebtedness. As a
result, cash flow
18
<PAGE> 24
from the operations of such subsidiaries may be dedicated to the payment of
principal of and interest on the indebtedness of such subsidiaries, thereby
limiting the ability of such subsidiaries to pay dividends. In addition, any
dividends declared by a less than wholly owned subsidiary will be paid on a pro
rata basis to the owners of such subsidiary. In 1996, ABNB distributed an
aggregate of $12.7 million to its owners (of which the Parent received $9.9
million, or 77.5%). Although the Indenture limits the ability of Restricted
Subsidiaries to enter into consensual restrictions on their ability to pay
dividends and make other payments, such limitations are subject to a number of
significant qualifications and do not apply to Unrestricted Subsidiaries. See
"Description of the Notes -- Certain Covenants -- Limitation on Dividends and
Other Payment Restrictions Affecting Restricted Subsidiaries."
The Notes will be guaranteed, jointly and severally, by each of the
Company's direct and indirect domestic operating subsidiaries in existence on
the Issue Date and each direct and indirect domestic operating subsidiary
acquired thereafter (other than Unrestricted Subsidiaries). In addition, the
Guarantees will be subordinated in right of payment to all existing and future
Guarantor Senior Indebtedness, including the Existing Credit Facility. The Notes
will not, however, be guaranteed by the Company's foreign subsidiaries. Holders
of the Notes will not have a direct claim on the Company's interest in or assets
of such foreign subsidiaries and the Notes and the Guarantees will be
structurally subordinated to any indebtedness or other liabilities existing or
in the future incurred by such foreign subsidiaries. In 1996, approximately
68.3% of the Company's net sales (or $211.4 million) were derived from the
operations of its foreign subsidiaries.
FOREIGN OPERATIONS
The Company's financial performance on a dollar-denominated basis can be
significantly affected by changes in currency exchange rates. The Company's
foreign exchange exposure policy generally calls for selling its domestic
manufactured product in US dollars and, in the case of ABNB, LM and the Sati
Group, selling in the national currencies of the countries in which such
subsidiaries operate, in order to minimize transactions occurring in currencies
other than those of the originating country. The Company may, from time to time,
enter into foreign currency option contracts to limit the effect of currency
fluctuations on future expected cash receipts to be used for parent company
purposes, including debt service. Such activities may be discontinued at any
time depending on, among other things, management's views concerning future
exchange rates and the cost of such contracts. The Company has not engaged in
material hedging activities in connection with foreign operations. Adverse
changes in foreign interest and exchange rates could adversely affect the
Company's ability to meet its interest and principal obligations as well as
applicable financial covenants with respect to its debt, including the Notes,
the Existing Credit Facility, the 10 3/8% Notes and other indebtedness of the
Company.
Earnings on foreign investments, including operations and earnings of
foreign companies in which the Company may invest or upon which it may rely for
sales, are subject to a number of general risks, including high rates of
inflation, currency exchange rate fluctuations, trade barriers, exchange
controls, government expropriation and political instability and other risks.
These factors may affect the results of operations in selected markets included
in the Company's growth strategy. Dividends or distributions from the Company's
foreign operations could be subject to government restrictions in the future.
Currently, repatriation of earnings from the Company's foreign operations is
permitted.
The Company operates in Brazil, which in past years suffered
hyperinflationary conditions; however, the inflation rate in Brazil has
decreased substantially to approximately 6% for the first nine months of 1997,
10% for 1996 and 23% for 1995 as compared to 941% for 1994. Inflation and
currency exchange rate fluctuation in countries in which the Company generates a
large portion of its sales and earnings (including Brazil and Australia/New
Zealand, which accounted for approximately 53% and 16% of sales and 63% and 16%
of operating earnings, respectively, in 1996, before allocation of corporate
overhead) could in the future adversely affect the Company.
19
<PAGE> 25
Actions taken by foreign governments could have an important effect on the
Company's foreign operations, including ABNB, LM and the Sati Group. Political,
economic or social instability or other developments could adversely affect
these companies' financial conditions or results of operations and thereby
adversely affect the Company's ability to repay the Notes or other indebtedness
of the Company and its subsidiaries. As a result of market conditions, the
Brazilian government has recently proposed various economic austerity measures
which may impact the Brazilian economy. There can be no assurance that
substantially greater governmental restrictions will not be imposed in the
future, including restrictions or prohibitions on the repatriation of funds.
Furthermore, remittances of dividends from any foreign subsidiaries acquired or
formed by the Company in the future may be subject to certain withholding taxes
and other governmental restrictions. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Liquidity and Capital
Resources" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Impact of Inflation."
FOREIGN TAXES
Earnings of foreign subsidiaries are subject to foreign income taxes that
reduce cash flow available to meet required debt service and other obligations
of the Company. The Company presently cannot utilize foreign tax credits in the
United States until its domestic net operating loss carry forwards are
exhausted. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Tax Law Changes."
The Company has from time to time reorganized and restructured, and may in
the future reorganize and restructure, its foreign operations based on certain
assumptions about the various tax laws (including capital gains and withholding
tax), foreign currency exchange and capital repatriation laws and other relevant
laws of a variety of foreign jurisdictions. While management believes that such
assumptions are correct, there can be no assurance that foreign taxing or other
authorities will reach the same conclusion. If such assumptions are incorrect,
or if such foreign jurisdictions were to change or modify such laws, the Company
may suffer adverse tax and other financial consequences which could impair the
Company's ability to meet its payment obligations on the Notes and its other
indebtedness.
MAJOR CUSTOMERS; GOVERNMENT SALES
The Company has several key customers. Sales under contracts of
stored-value phone cards to Telebras, the Brazilian national telephone company,
accounted for approximately 13% and 24% of the Company's consolidated sales for
the years ended December 31, 1995 and 1996, respectively. The Company expects
that revenues from sales of phone cards to Telebras during 1997 will account for
less than 15% of the Company's consolidated sales. The Company's contracts with
Telebras extend through December 1998 and may be further extended through
December 1999 at the option of each of the six Telebras affiliated companies
which have executed contracts with ABNB. See "Summary -- The Company -- Recent
Developments." Sales of products and services to Bradesco accounted for 12% and
14% of the Company's consolidated sales for the years ended December 31, 1995
and 1996, respectively. Sales of food coupons to the United States Department of
Agriculture ("USDA") accounted for approximately 22%, 11% and 5% of the
Company's consolidated sales for the years ended December 31, 1994, 1995 and
1996, respectively. In September 1996, the USDA awarded ABN a contract for the
production of food coupons through September 30, 1997 with a one-year option,
which option has been exercised by USDA. The contract is expected to represent
sales of approximately $14 million per year.
There can be no assurance as to whether, or when, or on what terms, the
Company will be awarded any additional contracts from these customers in the
future, especially those that are subject to competitive bids. There also can be
no assurance that any options for continued production under any of the
Company's contracts will be exercised. In addition, the Brazilian government has
implemented a plan for the privatization of Telebras, which resulted in a split
up of
20
<PAGE> 26
certain operations of Telebras into numerous smaller companies. This split up
could result in multiple competitive bids in future years. The loss of all or a
significant portion of the Company's business with these entities would have a
material adverse effect on the sales and earnings of the Company.
Each of the agencies of the United States government for which the Company
provides products or services acts independently of the others in soliciting
bids. Government contracts are generally awarded on the basis of a competitive
bidding process and a variety of other factors, which may include price, plant
security, manufacturing controls, a preference for domestic contractors and past
performance. In addition, contracts with governmental agencies generally contain
provisions permitting termination at any time at the convenience of the agency
and give the agency the right to audit contract compliance and adjust the
contract amount for noncompliance.
ABILITY TO INTEGRATE ACQUISITIONS
A core part of the Company's business strategy is to grow through strategic
acquisitions, joint ventures and alliances. The Company's financial condition
could be adversely affected if the Company cannot successfully integrate
acquired businesses into its existing operations or if the Company is required
to materially increase the amount of its financial commitment to such
acquisitions, joint ventures or alliances. In addition, the Company may seek
strategic acquisitions, joint ventures or alliances in countries or markets in
which it does not currently operate. There can be no assurance that the Company
will be able to successfully integrate or manage such operations.
COMPETITION
The Company's principal subsidiaries conduct their businesses in highly
competitive markets. Competition in the Company's product markets is based upon
service, quality, reliability and price. In certain markets in which the Company
competes, some of the Company's competitors have greater financial and other
resources than the Company.
The future of the Company's food coupon printing is subject to competition
from electronic card-based Electronic Benefits Transaction (EBT) systems. In
addition, benefit reforms and levels of food coupon inventory caused a reduction
in the Company's 1996 food coupon production volume and continues to impact the
USDA's food coupon orders. The elimination or a substantial reduction in the use
of paper food coupons would have a material adverse effect on the sales and
earnings of the Company.
SALES OF STOCK AND BOND CERTIFICATES
Stock and bond printing accounted for approximately 14%, 11% and 8% of the
Company's consolidated sales for the years ended December 31, 1994, 1995 and
1996, respectively. The Company's overall volume of sales of stock and bond
certificates increased in 1996, but declined as a percent of sales as a result
of increases in consolidated sales. Sales of stock and bond certificates,
primarily a domestic product, are a function of trading activity, the number of
public offerings, the mix of debt and equity security issuances and regulatory
considerations. The elimination of certificates has been advocated by various
organizations in favor of the use of book-entry systems for recording security
ownership. Security sales to institutions, which have been growing, have reduced
demand for printed certificates, particularly for debt issues. Domestic stock
and bond printing has historically accounted for a sizeable portion of the
security printing sales of the Company. The Company's sales of stock and bond
certificates increased from 1995 to 1996 as a result of the increase in new
issues, stock splits and stock distributions (due to greater activity in the
domestic securities markets). No assurance can be given, however, that the high
level of activity in the domestic securities markets will continue. The
elimination or a substantial reduction in the use of certificates would have a
material adverse effect on the sales and earnings of the Company. See
"Business -- Product Lines -- Security Printing Solutions -- Stocks and Bonds."
21
<PAGE> 27
DEPENDENCE ON KEY PERSONNEL
The Company is dependent on the services of its senior management,
including Morris Weissman, Chairman of the Board and Chief Executive Officer,
and the loss of their services could have an adverse effect on the Company. The
Company has entered into employment agreements with several members of its
senior management, including Mr. Weissman. See "Management."
FRAUDULENT CONVEYANCE CONSIDERATIONS
Various fraudulent conveyance laws enacted for the protection of creditors
may apply to the Guarantors' issuance of the Guarantees. To the extent that a
court were to find that (x) a Guarantee was incurred by a Guarantor with intent
to hinder, delay or defraud any present or future creditor or the Guarantor
contemplated insolvency with a design to prefer one or more creditors to the
exclusion in whole or in part of others or (y) a Guarantor did not receive fair
consideration or reasonably equivalent value for issuing its Guarantee and such
Guarantor (i) was insolvent, (ii) was rendered insolvent by reason of the
issuance of such Guarantee, (iii) was engaged or about to engage in a business
or transaction for which the remaining assets of such Guarantor constituted
unreasonably small capital to carry on its business or (iv) intended to incur,
or believed that it would incur, debts beyond its ability to pay such debts as
they matured, the court could avoid or subordinate such Guarantee in favor of
the Guarantor's creditors. Among other things, a legal challenge of a Guarantee
on fraudulent conveyance grounds may focus on the benefits, if any, realized by
the Guarantor as a result of the issuance by the Company of the Notes. The
Indenture will contain a savings clause, which generally will limit the
obligations of each Guarantor under its Guarantee to the maximum amount as will,
after giving effect to all of the liabilities of such Guarantor, result in such
obligations not constituting a fraudulent conveyance. To the extent a Guarantee
of any Guarantor was voided as a fraudulent conveyance or held unenforceable for
any other reason, holders of the Notes would cease to have any claim against
such Guarantor and would be creditors solely of the Company and any Guarantor
whose Guarantee was not voided or held unenforceable. In such event, the claims
of the holders of the Notes against the issuer of an invalid Guarantee would be
subject to the prior payment of all liabilities of such Guarantor. There can be
no assurance that, after providing for all prior claims, there would be
sufficient assets to satisfy the claims of the holders of the Notes relating to
any avoided portions of any of the Guarantees.
The measure of insolvency for purposes of the foregoing considerations will
vary depending upon the law applied in any such proceeding. Generally, however,
a Guarantor may be considered insolvent if the sum of its debts, including
contingent liabilities, was greater than the fair marketable value of all of its
assets at a fair valuation or if the present fair marketable value of its assets
was less than the amount that would be required to pay its probable liability on
its existing debts, including contingent liabilities, as they become absolute
and mature.
Based upon financial and other information, the Company and the Guarantors
believe that the Guarantees are being incurred for proper purposes and in good
faith and that the Company and each Guarantor is solvent and will continue to be
solvent after issuing its Guarantee, will have sufficient capital for carrying
on its business after such issuance and will be able to pay its debts as they
mature. There can be no assurance, however, that a court passing on such
standards would agree with the Company.
CHANGE OF CONTROL PROVISIONS
In the event of a Change of Control, each holder of Notes will be entitled
to require the Company to purchase any or all of the Notes held by such holder
at an offer price in cash equal to 101% of the aggregate principal amount
thereof, plus accrued and unpaid interest and Additional Interest if any thereon
to the date of purchase. See "Description of the Notes -- Offer to Purchase Upon
Change of Control." The Company expects that prepayment of the Notes following a
Change of Control
22
<PAGE> 28
would constitute a default under the Existing Credit Facility and the 10 3/8%
Notes Indenture. In the event that a Change of Control occurs, the Company would
likely be required to refinance the indebtedness outstanding under the Existing
Credit Facility, the 10 3/8% Notes (as defined) and the Notes. There can be no
assurance that the Company would be able to refinance such indebtedness or, if
such refinancing were to occur, that such refinancing would be on terms
favorable to the Company.
The holders of Notes have limited rights to require the Company to purchase
or redeem the Notes in the event of a takeover, recapitalization or similar
restructuring, including an issuer recapitalization or similar transaction with
management. Consequently, the Change of Control provisions will not afford any
protection in a highly leveraged transaction, including such a transaction
initiated by the Company, management of the Company or an affiliate of the
Company, if such transaction does not result in a Change of Control or otherwise
result in an event of default under the Notes. In addition, because the
obligations of the Company with respect to the Notes are subordinated to Senior
Indebtedness of the Company, existing or future Senior Indebtedness of the
Company may prohibit the Company from repurchasing or redeeming any of the Notes
upon a Change of Control. Moreover, the ability of the Company to repurchase or
redeem the Notes following a Change of Control will be limited by the Company's
then-available resources. Accordingly, the Change of Control provision is likely
to be of limited usefulness in such situations. See "Description of the
Notes--Subordination."
The Change of Control provisions may not be waived by the Board of
Directors of the Company or the Trustee of the Notes without the consent of the
holders of at least a majority in principal amount of the Notes. As a result,
the Change of Control provisions of the Notes may in certain circumstances
discourage or make more difficult a sale or takeover of the Company and, thus,
the removal of incumbent management.
ABSENCE OF PUBLIC MARKET COULD ADVERSELY AFFECT THE VALUE OF EXCHANGE NOTES
The Old Notes were issued to, and the Company believes are currently owned
by, a relatively small number of beneficial owners. Prior to the Exchange Offer,
there has not been any public market for the Old Notes. The Old Notes have not
been registered under the Securities Act and will be subject to restrictions on
transferability to the extent that they are not exchanged for Exchange Notes by
holders who are entitled to participate in the Exchange Offer. The market for
Old Notes not tendered for exchange in the Exchange Offer is likely to be more
limited than the existing market for such Notes. The holders of Old Notes (other
than any such holder that is an "affiliate" of the Company within the meaning of
Rule 405 under the Securities Act) who are not eligible to participate in the
Exchange Offer are entitled to certain registration rights, and the Company is
required to filed a Shelf Registration Statement (as defined) with respect to
such Old Notes. The Exchange Notes will constitute a new issue of securities
with no established trading market. The Company does not intend to list the
Exchange Notes on any national securities exchange or seek the admission thereof
to trading in the National Association of Securities Dealers Automated Quotation
System. The Initial Purchasers have advised the Company that they currently
intend to make a market in the Exchange Notes, but they are not obligated to do
so and may discontinue such market making at any time. In addition, such market
making activity will be subject to the limits imposed by the Securities Act and
the Exchange Act and may be limited during the Exchange Offer and the pendency
of the Shelf Registration Statement. Accordingly, no assurance can be given that
an active public or other market will develop for the Exchange Notes or as to
the liquidity of the trading market for the Exchange Notes. If a trading market
does not develop or is not maintained, holders of Exchange Notes may experience
difficulty in reselling the Exchange Notes or may be unable to sell them at all.
If a market for the Exchange Notes develops, any such market making may be
discontinued at any time.
23
<PAGE> 29
FAILURE TO EXCHANGE OLD NOTES
Exchange Notes will be issued in exchange for Old Notes only after timely
receipt by the Exchange Agent of such Old Notes, a properly completed and duly
executed Letter of Transmittal (or Agent's Message) and all other required
documentation. Therefore, holders of Old Notes desiring to tender such Old Notes
in exchange for Exchange Notes should allow sufficient time to ensure timely
delivery. Neither the Exchange Agent nor the Company is under any duty to give
notification of defects or irregularities with respect to tenders of Old Notes
for exchange. Old Notes that are not tendered or are tendered but not accepted
will, following consummation of the Exchange Offer, continue to be subject to
the existing restrictions upon transfer thereof and, upon consummation of the
Exchange Offer, certain registration rights under the Registration Rights
Agreement will terminate. In addition, any holder of Old Notes who tenders in
the Exchange Offer for the purpose of participating in a distribution of the
Exchange Notes may be deemed to have received restricted securities, and if so,
will be required to comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction.
Each Participating Broker-Dealer that receives Exchange Notes for its own
account in exchange for Old Notes, where such Old Notes were acquired by such
Participating Broker-Dealer as a result of market-making activities or any other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes. See "Plan of Distribution."
To the extent that Old Notes are tendered and accepted in the Exchange Offer,
the trading market for untendered and tendered but unaccepted Old Notes could be
adversely affected. See "The Exchange Offer."
24
<PAGE> 30
THE REFINANCING
The Initial Offering was part of the Refinancing of certain of the
Company's outstanding indebtedness. Pursuant to the Refinancing, the Company:
(i) consummated the Initial Offering; (ii) consummated the Tender Offer and the
related Consent Solicitation with respect to the Company's 11 5/8% Notes; and
(iii) repaid outstanding amounts under the Existing Credit Facility.
The closing of each of the transactions that constituted the Refinancing
occurred concurrently with the closing of the sale of the Units in the Initial
Offering.
TENDER OFFER AND CONSENT SOLICITATION
Pursuant to a separate Offer to Purchase and Consent Solicitation Statement
dated September 25, 1997, the Company offered to repurchase all, but not less
than a majority, of its outstanding 11 5/8% Notes (the "Tender Offer") for an
amount in cash equal to $1,094.47 per $1,000 principal amount of 11 5/8% Notes.
Each tendering holder also received accrued and unpaid interest up to, but not
including, the payment date. In connection with the Tender Offer, the Company
also solicited consents (the "Consent Solicitation") from tendering holders of
11 5/8% Notes to certain proposed amendments (the "Indenture Amendments") to the
11 5/8% Notes Indenture (as defined), which amendments would, among other
things, eliminate substantially all of the restrictive covenants contained in
the 11 5/8% Notes Indenture. Holders of 11 5/8% Notes who timely tendered
received a consent payment equal to 2% of the principal amount of the related
11 5/8% Notes ($20.00 per $1,000 principal amount) (which consent payment is
included in the tender price referred to above). Following the tender of 11 5/8%
Notes and receipt of consents of holders of a majority of the 11 5/8% Notes (in
excess of $32.5 million aggregate principal amount) on October 8, 1997, the
Company and the Trustee executed a supplemental indenture containing the
Indenture Amendments, which became effective upon acceptance for purchase of the
tendered 11 5/8% Notes. In connection with the Tender Offer and Consent
Solicitation, the Company purchased, and received consents relating to,
approximately 87.7% of the outstanding 11 5/8% Notes.
25
<PAGE> 31
USE OF PROCEEDS
The Exchange Offer is intended to satisfy certain of the Company's
obligations under the Purchase Agreement and the Registration Rights Agreement.
The Company will not receive any cash proceeds from the issuance of the Exchange
Notes offered hereby. In consideration for issuing the Exchange Notes
contemplated in this Prospectus, the Company will receive Old Notes in like
principal amount, the form and terms of which are the same as the forms and
terms of the Exchange Notes (which replace the Old Notes), except as otherwise
described herein. The Old Notes surrendered in exchange for Exchange Notes will
be retired and canceled and cannot be reissued. Accordingly, issuance of the
Exchange Notes will not result in any increase or decrease in the indebtedness
of the Company. As such, no effect has been given to the Exchange Offer in the
pro forma statements or capitalization tables.
The net proceeds from the sale of the Units in the Initial Offering were
used to purchase 11 5/8% Notes tendered pursuant to the Tender Offer and to pay
the consent fees pursuant to the related Consent Solicitation and to repay
indebtedness under the Existing Credit Facility, with the remaining proceeds
used for general corporate purposes.
26
<PAGE> 32
CAPITALIZATION
The following table sets forth the unaudited consolidated capitalization of
the Company as of September 30, 1997 and as adjusted (on a pro forma basis) to
give effect to: (i) the Refinancing; and (ii) the issuance of the Convertible
Debenture in November 1997. This information should be read in conjunction with
the unaudited condensed consolidated financial statements of the Company,
including the notes thereto, "Unaudited Pro Forma Condensed Consolidated
Financial Information," "Selected Historical Financial Data" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1997
------------------------
PRO FORMA
ACTUAL AS ADJUSTED
-------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Long-term debt (including current portion)
10 3/8% Notes..................................................... $126,500 $ 126,500
11 5/8% Notes (less unamortized discount of $907 and $112)........ 64,093 7,888
Leigh-Mardon Debt (a)............................................. 57,763 57,763
Existing Credit Facility (b)...................................... 3,191 --
Notes offered hereby (c).......................................... -- 93,800
Other long-term debt (d).......................................... 30,220 30,220
-------- --------
Total long-term debt.............................................. 281,767 316,171
Total stockholders' equity (e)...................................... 57,108 57,528
-------- --------
Total capitalization...................................... $338,875 $ 373,699
======== ========
</TABLE>
- ---------------
(a) Consists of Non-Recourse Senior Debt of LM, which matures June 2001 (the
"Leigh-Mardon Senior Debt"), and Non-Recourse Subordinated Debt of LM, which
matures September 2001 (the "Leigh-Mardon Subordinated Debt" and together
with the Leigh-Mardon Senior Debt, the "Leigh-Mardon Debt"). The
Leigh-Mardon Senior Debt is a term loan of approximately US$41.3 million and
a US$4.0 million working capital facility, of which US$700,000 of
availability was used for letters of credit. The Leigh-Mardon Subordinated
Debt is a term loan of which approximately US$16.5 million was outstanding.
As of September 30, 1997, interest accrued at the rate of 7.15% per annum on
the Leigh-Mardon Senior Debt and at the rate of 8.07% per annum plus 4% upon
amounts outstanding in excess of US$15.2 million on the Leigh-Mardon
Subordinated Debt. See "Description of Certain Indebtedness -- Leigh-Mardon
Debt."
(b) The Existing Credit Facility was repaid from the proceeds of the
Refinancing. As of September 30, 1997, the interest rate under the Existing
Credit Facility was 9.0% per annum. The Existing Credit Facility expires on
October 30, 1998. See "Description of Certain Indebtedness -- Existing
Credit Facility."
(c) Net of discount to the face amount of the Old Notes attributable to the
value of the Warrants issued as part of the Units.
(d) Amounts include debt incurred in Brazil, debt incurred in connection with
the acquisition of the Sati Group and mortgages and other financings in the
United States with varying maturities.
(e) Pro Forma As Adjusted includes the net proceeds of $4.9 million from the
sale in a private placement of a Convertible Debenture, an extraordinary
charge, net of applicable income taxes, of approximately $5.6 million in
connection with the Refinancing and $1.2 million attributed to the value of
the Warrants issued as part of the Units.
27
<PAGE> 33
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The unaudited pro forma condensed consolidated balance sheet as of
September 30, 1997 includes the historical accounts of the Company and gives
effect to: (i) the sale of a Convertible Debenture in November 1997; and (ii)
the Refinancing, in each case as if it had occurred on September 30, 1997. The
unaudited pro forma condensed consolidated statements of operations of the
Company for the year ended December 31, 1996, the nine months ended September
30, 1997 and the twelve months ended September 30, 1997 include the historical
operations of the Company and give effect to the Refinancing and the acquisition
of LM, which was acquired in a two-step acquisition in June and October 1996,
and the acquisition of the Sati Group, acquired in August 1997, in each case as
if it had occurred at the beginning of each of the periods indicated. The
Refinancing Adjustments shown below do not give effect to the repayment of $10.5
million of additional borrowings under the Existing Credit Facility which were
made subsequent to September 30, 1997, nor to the acquisition of assets (and
related earnings) from Commonwealth (for approximately US$4.6 million) and from
Itau (for approximately US$5.5 million). The pro forma adjustments give effect
to the repayment of all amounts outstanding under the Existing Credit Facility
during each respective period. See "Use of Proceeds."
The unaudited pro forma condensed consolidated financial information, which
has been prepared by the Company's management, has been derived from the
historical statements of operations and balance sheets of the Company in US
dollars in accordance with generally accepted accounting principles. The
acquisition of the Sati Group has been accounted for under the purchase method
of accounting. A preliminary allocation of the purchase price has been made
based on available information and is subject to adjustment. Management does not
expect that differences between the preliminary and final purchase price
allocation will have a material impact on the Company's consolidated financial
position or results of operations.
The unaudited pro forma condensed consolidated financial information is not
intended to represent and is not indicative of what the Company's results of
operations actually would have been if the aforementioned transactions had been
consummated as of the beginning of the periods indicated, or to project the
Company's results of operations for any future period. The pro forma adjustments
are based on available information and certain assumptions that the Company
currently believes are reasonable under the circumstances. The unaudited pro
forma condensed consolidated financial information should be read in conjunction
with "The Refinancing," "Use of Proceeds," "Capitalization," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the historical financial statements and related notes thereto of the Company and
of LM, included elsewhere herein.
28
<PAGE> 34
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
AMERICAN PRO FORMA
BANKNOTE REFINANCING AS
CORPORATION ADJUSTMENTS ADJUSTED
----------- ----------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents(c)............................................... $ 3,611 $ 5,000 (a)
24,090 (b) $ 32,701 (c)
Accounts receivable, net................................................... 56,640 56,640
Inventories................................................................ 41,130 41,130
Deferred income taxes...................................................... 4,616 4,616
Prepaid expenses and other................................................. 16,161 16,161
-------- ------- -------
Total current assets................................................. 122,158 29,090 151,248
Property, plant and equipment, net........................................... 250,326 250,326
Other assets................................................................. 24,815 1,700 (b) 26,515
Excess of cost of investment in subsidiaries over net assets acquired........ 93,846 93,846
-------- ------- -------
$ 491,145 $ 30,790 $521,935
======== ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Revolving credit........................................................... $ 3,191 ($ 3,191)(b)
Current portion of long-term debt.......................................... 17,797 $ 17,797
Accounts payable and accrued expenses...................................... 63,922 150 (a)
(1,154)(b) 62,918
-------- ------- -------
Total current liabilities............................................ 84,910 (4,195) 80,715
Long-term debt, net of current maturities.................................... 260,779 38,795 (b)
(1,200)(b) 298,374
Other liabilities............................................................ 25,623 -- 25,623
Deferred income taxes........................................................ 42,372 (3,030)(b) 39,342
Minority interest............................................................ 20,353 20,353
-------- ------- -------
434,037 30,370 464,407
Stockholders' equity(d)...................................................... 57,108 4,850 (a)
1,200 (b)
(5,630)(b) 57,528
-------- ------- -------
$ 491,145 $ 30,790 $521,935
======== ======= =======
</TABLE>
See notes to Unaudited Pro Forma Condensed Consolidated Financial Information
29
<PAGE> 35
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
AMERICAN PRO FORMA PRO FORMA
BANKNOTE SATI ACQUISITION AFTER REFINANCING AS
CORPORATION LM GROUP ADJUSTMENTS ACQUISITIONS ADJUSTMENTS ADJUSTED
----------- ------- ------- ----------- ------------ ----------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Sales............................ $ 309,450 $33,474 $22,249 $365,173 $365,173
Cost of goods sold............... 202,158 21,783 16,329 240,270 240,270
-------- ------- ------- -------- --------
Gross profit..................... 107,292 11,691 5,920 124,903 124,903
Selling and administrative....... 48,263 4,504 2,824 55,591 55,591
Depreciation and amortization.... 20,042 2,077 1,795 $ 1,012(e) 24,926 24,926
-------- ------- ------- ------- -------- --------
Operating expenses............... 68,305 6,581 4,619 1,012 80,517 80,517
-------- ------- ------- ------- -------- --------
Income from operations........... 38,987 5,110 1,301 (1,012) 44,386 44,386
Interest expense................. 28,864 987 162 2,610(f) 32,623 $ 3,494(i) 36,117
Foreign translation losses,
net............................ 255 255 255
Provision for litigation......... 2,400 2,400 2,400
Other, net....................... (2,265) (5) (2,270) (2,270)
-------- ------- ------- ------- -------- ------ --------
Income before taxes on income
(benefit) and minority
interest....................... 9,733 4,128 1,139 (3,622) 11,378 (3,494) 7,884
Taxes on income (benefit)........ 400 1,793 376 (1,166)(g) 1,403 (1,223)(j) 180
-------- ------- ------- ------- -------- ------ --------
Income before minority interest
and extraordinary item......... 9,333 2,335 763 (2,456) 9,975 (2,271) 7,704
Minority interest................ 5,234 (439)(h) 4,795 4,795
-------- ------- ------- ------- -------- ------ --------
Income before extraordinary
item........................... $ 4,099 $ 2,335 $ 763 $(2,017) $ 5,180 $(2,271) $ 2,909
======== ======= ======= ======= ======== ====== ========
OTHER FINANCIAL DATA:
EBITDA (k).................................................................................................... $ 69,312 (l)
EBITDA margin (m)............................................................................................. 19.0 %
Depreciation and amortization (n)............................................................................. $ 26,290
Capital expenditures.......................................................................................... 24,260
Cash interest expense (o)..................................................................................... 34,753
Ratio of EBITDA to cash interest expense...................................................................... 2.0 x
</TABLE>
See notes to Unaudited Pro Forma Condensed Consolidated Financial Information
30
<PAGE> 36
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
AMERICAN PRO FORMA PRO FORMA
BANKNOTE SATI ACQUISITION AFTER REFINANCING AS
CORPORATION GROUP ADJUSTMENTS ACQUISITIONS ADJUSTMENTS ADJUSTED
----------- ------- ----------- ------------ ----------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Sales.................................... $ 248,416 $11,624 $260,040 $260,040
Cost of goods sold....................... 166,263 8,611 174,874 174,874
-------- ------- -------- --------
Gross profit............................. 82,153 3,013 85,166 85,166
Selling and administrative............... 34,881 1,337 36,218 36,218
Depreciation and amortization............ 17,799 850 $ 204(e) 18,853 18,853
-------- ------- ----- -------- --------
Operating expenses....................... 52,680 2,187 204 55,071 55,071
-------- ------- ----- -------- --------
Income from operations................... 29,473 826 (204) 30,095 30,095
Interest expense......................... 24,353 50 221(f) 24,624 $ 2,311(i) 26,935
Foreign translation losses, net.......... 122 122 122
Other, net............................... (2,519) (2,519) (2,519)
-------- ------- ----- -------- ------- --------
Income before taxes on income (benefit)
and minority interest.................. 7,517 776 (425) 7,868 (2,311) 5,557
Taxes on income (benefit)................ 371 265 (91)(g) 545 (809)(j) (264)
-------- ------- ----- -------- ------- --------
Income before minority interest and
extraordinary item..................... 7,146 511 (334) 7,323 (1,502) 5,821
Minority interest........................ 2,458 2,458 2,458
-------- ------- ----- -------- ------- --------
Income before extraordinary item......... $ 4,688 $ 511 $(334) $ 4,865 $(1,502) $ 3,363
======== ======= ===== ======== ======= ========
OTHER FINANCIAL DATA:
EBITDA(k).................................................................................................... $ 48,948 (l)
EBITDA margin(m)............................................................................................. 18.8 %
Depreciation and amortization(n)............................................................................. $ 19,919
Capital expenditures......................................................................................... 8,291
Cash interest expense(o)..................................................................................... 25,869
Ratio of EBITDA to cash interest expense..................................................................... 1.9 x
</TABLE>
See notes to Unaudited Pro Forma Condensed Consolidated Financial Information
31
<PAGE> 37
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
AMERICAN PRO FORMA PRO FORMA
BANKNOTE SATI ACQUISITION AFTER REFINANCING AS
CORPORATION GROUP ADJUSTMENTS ACQUISITIONS ADJUSTMENTS ADJUSTED
----------- ------- ----------- ------------ ----------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Sales.................................... $ 340,306 17,393 $357,699 $357,699
Cost of goods sold....................... 225,628 12,849 238,477 238,477
-------- ------- -------- --------
Gross profit............................. 114,678 4,544 119,222 119,222
Selling and administrative............... 49,817 2,026 51,843 51,843
Depreciation and amortization............ 23,110 1,311 $ 310(e) 24,731 24,731
-------- ------- ----- -------- --------
Operating expenses....................... 72,927 3,337 310 76,574 76,574
-------- ------- ----- -------- --------
Income from operations................... 41,751 1,207 (310) 42,648 42,648
Interest expense......................... 33,093 91 363(f) 33,547 $ 3,141(i) 36,688
Foreign translation losses, net.......... 176 176 176
Provision for litigation................. 2,400 2,400 2,400
Other, net............................... (4,073) (4,073) (4,073)
-------- ------- ----- -------- ----- --------
Income before taxes on income (benefit)
and minority interest.................. 10,155 1,116 (673) 10,598 (3,141) 7,457
Taxes on income (benefit)................ (106) 369 (150)(g) 113 (1,099)(j) (986)
-------- ------- ----- -------- ----- --------
Income before minority interest and
extraordinary item..................... 10,261 747 (523) 10,485 (2,042) 8,443
Minority interest........................ 4,265 (299)(h) 3,966 3,966
-------- ------- ----- -------- ----- --------
Income before extraordinary item......... $ 5,996 $ 747 $(224) $ 6,519 $(2,042) $ 4,477
======== ======= ===== ======== ===== ========
OTHER FINANCIAL DATA:
EBITDA(k).................................................................................................... $ 67,379 (l)
EBITDA margin(m)............................................................................................. 18.8 %
Depreciation and amortization(n)............................................................................. $ 26,148
Capital expenditures......................................................................................... 14,199
Cash interest expense(o)..................................................................................... 35,271
Ratio of EBITDA to cash interest expense..................................................................... 1.9 x
</TABLE>
See notes to Unaudited Pro Forma Condensed Consolidated Financial Information
32
<PAGE> 38
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
(a) In November 1997, the Company sold in a private placement $5.0 million
accreted value Convertible Debenture with warrants. The following reflects
the private placement:
<TABLE>
<S> <C> <C>
Proceeds from private placement............................................... $ 5,000
Accrued fees and expenses..................................................... 150
-------
Stockholders' equity.......................................................... $ 4,850
=======
</TABLE>
(b) The following reflects the effect of the Refinancing:
<TABLE>
<S> <C> <C>
Proceeds from Old Notes.................................................... $ 93,800
Proceeds from Warrants..................................................... 1,200
--------
95,000
Tender Offer for 11 5/8% Notes (less unamortized original
issue discount of $795).................................................. (56,205) $ 38,795
Repayment of Existing Credit Facility...................................... (3,191)
Net premium and expenses paid to retire above debt, including
above unamortized original issue discount of $795........................ (6,210)
Payment of accrued interest................................................ (1,154) (7,364)
--------
Payment of fees and expenses related to the new borrowings................. (4,150)
-------
Net increase in cash................................................... $ 24,090
=======
</TABLE>
Other assets were affected as follows:
<TABLE>
<S> <C> <C>
Increases in deferred financing costs relating to the Refinancing.......... $ 4,150
Write-off of deferred financing costs associated with debt retired......... (2,450) $ 1,700
--------
=======
</TABLE>
As a result of the Refinancing, stockholders' equity has been charged for an
extraordinary item relating to early extinguishment of debt, as follows:
<TABLE>
<S> <C> <C>
Net premium and expenses paid to retire above debt......................... $ (6,210)
Write-off of deferred financing costs associated with debt retired......... (2,450)
Deferred tax benefit, at statutory tax rates............................... 3,030 $ (5,630)
--------
=======
</TABLE>
(c) Pro Forma As Adjusted cash and cash equivalents excludes the repayment of
approximately $10.5 million of additional borrowings under the Existing
Credit Facility which were made subsequent to September 30, 1997 and the
acquisition of assets from Commonwealth (for approximately US$4.6 million)
and from Itau (for approximately US$5.5 million). See "Use of Proceeds."
Giving effect for these transactions, Pro Forma As Adjusted cash and cash
equivalents would be approximately $12.1 million.
(d) Stockholders' equity consist of the following:
<TABLE>
<CAPTION>
AMERICAN PRO FORMA
BANKNOTE AS
CORPORATION ADJUSTED
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Preferred Stock................................................................... -- --
Convertible Debentures............................................................ $ 3,620 $ 8,070
Common Stock...................................................................... 211 211
Capital surplus................................................................... 73,173 74,773
Retained earnings (deficit)....................................................... (16,739) (22,369)
Treasury stock.................................................................... (1,253) (1,253)
Cumulative currency translation adjustment........................................ (1,904) (1,904)
-------- --------
$ 57,108 $ 57,528
======== ========
</TABLE>
33
<PAGE> 39
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL INFORMATION -- (CONCLUDED)
<TABLE>
<CAPTION>
NINE TWELVE
YEAR MONTHS MONTHS
ENDED ENDED ENDED
DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1996 1997 1997
------------ ------------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
(e)
Additional amortization of excess cost of investment in
subsidiaries over net assets acquired over 25 years, for the
periods prior to acquisition.................................... $ 353 $ 146 $ 220
Additional depreciation and amortization based on the estimated
fair value received............................................. 659 58 90
-------- -------- --------
$ 1,012 $ 204 $ 310
======== ======== ========
(f)
Additional interest expense in connection with acquisition
borrowings...................................................... $ 2,610 $ 221 $ 363
======== ======== ========
(g)
Tax effect of deductible pro forma items at statutory rates..... $ (1,166) $ (91) $ (150)
======== ======== ========
(h)
Elimination of LM minority interest............................. $ (439) $ (299)
======== ========
(i)
Refinancing interest, including amortization of deferred
financing costs................................................. $ 10,988 $ 8,241 $ 10,988
Elimination of interest and amortization of deferred financing
costs of borrowings refinanced.................................. (7,494) (5,930) (7,847)
-------- -------- --------
$ 3,494 $ 2,311 $ 3,141
======== ======== ========
(j)
Tax effect of deductible pro forma items at statutory rates..... $ (1,223) $ (809) $ (1,099)
======== ======== ========
</TABLE>
(k) EBITDA represents income from operations before depreciation and
amortization, and is not intended to represent cash flow from operations as
defined by generally accepted accounting principles and should not be
considered as an alternative to net income as an indicator of operating
performance or to cash flow as a measure of liquidity. The Company has
included information concerning EBITDA as it understands that it is used by
certain investors as one measure of a borrower's historical ability to
service its debt. EBITDA, as presented, may not be comparable to similarly
titled measures reported by other companies, since not all companies
necessarily calculate EBITDA in an identical manner, and therefore is not
necessarily an accurate means of comparison between companies. The
calculation of EBITDA to cash interest set forth above is not calculated on
the same basis as similar calculations in various other agreements of the
Company.
(l) Pro Forma As Adjusted EBITDA excludes cash flows from the Commonwealth and
Itau agreements.
(m) EBITDA margin is computed as EBITDA as a percentage of sales.
(n) Includes the amortization of deferred financing costs of $1.4 million, $1.1
million, and $1.4 million for the year ended December 31, 1996 and the nine
months and twelve months ended September 30, 1997, respectively.
(o) Cash interest expense represents interest expense less the amortization of
deferred financing costs noted in note (n) above.
34
<PAGE> 40
SELECTED HISTORICAL FINANCIAL DATA
The following table sets forth summary selected historical financial data
for each of the five years in the period ended December 31, 1996 and for the
nine months ended September 30, 1997 and 1996. The historical financial data for
each of the three years in the period ended December 31, 1996 have been derived
from the Company's audited consolidated financial statements, which are included
elsewhere herein. The historical financial data for the nine months ended
September 30, 1997 and 1996 have been derived from the Company's unaudited
condensed consolidated financial statements, included elsewhere herein, which in
the opinion of management include all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of the information. The
historical financial data for the nine months ended September 30, 1997 are not
necessarily indicative of results that may be expected for the entire year. The
following information is qualified by reference to, and should be read in
conjunction with "Capitalization," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the consolidated financial
statements and notes thereto of the Company and LM, included elsewhere herein.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31 SEPTEMBER 30
------------------------------------------------------------ ---------------------
1996 1995 1994 1993 1992 1997 1996
-------- -------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Sales......................... $309,450 $206,164 $208,133 $200,079 $171,877 $248,416 $217,560
Gross profit.................. 107,292 57,129 77,244 82,879 62,438 82,153 74,767
Operating expenses(a)......... 68,305 54,675 52,068 45,191 36,792 52,680 48,058
-------- -------- -------- -------- -------- -------- --------
Income (loss) from operations
before restructuring and
idle equipment charge(a).... 38,987 (11,850) 18,176 25,688 25,646 29,473 26,709
Interest expense.............. 28,864 23,147 21,057 14,605 14,609 24,353 20,124
Other, net(b)................. 390 11,518 12,221 16,939 (811) (2,397) (510)
Taxes on income (benefit)(c).. 400 (11,359) (2,401) 4,289 5,367 371 877
Minority interest............. 5,234 1,563 262 797 2,458 3,427
Extraordinary items and
cumulative effect of
accounting change(d)........ 114 11,135
-------- -------- -------- -------- -------- -------- --------
Net income (loss)........... $ 4,099 $(22,415) $ (5,815) $ 1,593 $ (5,451) $ 4,688 $ 2,791
======== ======== ======== ======== ======== ======== ========
Net income (loss) per share:
Earnings before
extraordinary item........ $ 0.20 $ (1.17) $ (0.30) $ 0.08 $ 0.31 $ 0.22 $ 0.14
Net income (loss)........... 0.20 (1.17) (0.31) 0.08 (0.35) 0.22 0.14
OTHER FINANCIAL DATA:
EBITDA(e)..................... $ 59,029 $ 2,974 $ 31,270 $ 36,868 $ 34,084 $ 47,272 $ 41,440
Adjusted EBITDA(e)............ 59,029 17,278 38,270 48,868 34,084 47,272 41,440
Adjusted EBITDA margin(f)..... 19.1% 8.4% 18.4% 24.4% 19.8% 19.0% 19.0%
Depreciation and
amortization(g)............. $ 21,223 $ 15,582 $ 13,876 $ 11,880 $ 9,876 $ 18,948 $ 15,501
Capital expenditures.......... 22,283 10,378 10,084 4,263 1,961 7,491 16,775
Cash interest expense(h)...... 27,683 22,389 20,275 13,905 13,171 23,204 19,354
Ratio of earnings to fixed
charges(i).................. 1.3x 1.4x 1.7x 1.3x 1.3x
BALANCE SHEET DATA (AT END OF
PERIOD):
Working capital............... $ 35,533 $ 54,973 $ 65,887 $ 50,351 $ 54,973 $ 37,248
Property, plant and equipment,
net......................... 253,987 225,974 215,859 221,206 204,606 250,326
Total assets.................. 480,378 379,402 382,950 357,212 300,349 491,145
Long-term debt (including
current maturities)......... 277,998 194,488 191,551 168,318 128,835 278,576
Stockholders' equity.......... 46,277 40,353 62,777 68,330 61,827 57,108
</TABLE>
See notes to Selected Historical Financial Data
35
<PAGE> 41
NOTES TO SELECTED HISTORICAL FINANCIAL DATA
(a) Operating expenses include charges for restructuring and idle equipment of
$14.3 million, $7.0 million and $12.0 million in 1995, 1994 and 1993,
respectively.
(b) Other, net includes the restructuring and idle equipment charges noted
above, foreign translation losses, net, of $255,000, $38,000, $7.0 million,
$5.2 million, $122,000 and $201,000 in 1996, 1995, 1994, 1993 and nine
months ended September 30, 1997 and 1996, respectively, litigation reserve
of $2.4 million in 1996, and other income, net which includes interest
income and gains on marketable securities, net of $2.3 million, $2.8
million, $1.8 million, $222,000, $811,000, $2.5 million and $711,000 in
1996, 1995, 1994, 1993, 1992 and nine months ended September 30, 1997 and
1996.
(c) 1995 includes a $2.8 million charge and 1993 includes a $1.5 million
benefit for adjustment of deferred taxes for changes in enacted tax rates.
The 1995 amount pertained to decreases in Brazilian local tax rates and the
1993 amount pertained to increases in the U.S. federal corporate tax rate.
(d) Represents charges in connection with the early extinguishment of
indebtedness in 1994 and 1992 of $114,000 and $9.6 million, respectively,
net of associated tax benefits of approximately $5.0 million in 1992 and
the cumulative effect in 1992 on prior years of adopting Statement of
Financial Accounting Standards No 109, "Accounting for Income Taxes," of
$1.6 million.
(e) EBITDA represents income (loss) from operations before depreciation and
amortization. Adjusted EBITDA represents income from operations before
depreciation and amortization, and charges for restructuring and idle
equipment. EBITDA and Adjusted EBITDA are not intended to represent cash
flow from operations as defined by generally accepted accounting principles
and should not be considered as alternatives to net income as an indicator
of operating performance or to cash flow as a measure of liquidity. The
Company has included information concerning EBITDA and Adjusted EBITDA as
it understands that such items used by certain investors as measures of a
borrower's historical ability to service its debt. EBITDA and Adjusted
EBITDA, as presented, may not be comparable to similarly titled measures
reported by other companies, since not all companies necessarily calculate
EBITDA and Adjusted EBITDA in identical manners, and therefore are not
necessarily accurate means of comparisons between companies.
(f) Adjusted EBITDA margin is computed as Adjusted EBITDA as a percentage of
sales.
(g) Includes the amortization of deferred financing costs of $1.2 million,
$758,000, $782,000, $700,000, $1.4 million, $1.1 million and $770,000 in
1996, 1995, 1994, 1993 and 1992 and the nine months ended September 30,
1997 and 1996, respectively.
(h) Cash interest expense represents interest expense less amortization of
deferred financing costs noted in the above note(g).
(i) For purposes of determining the ratio of earnings to fixed charges,
"earnings" consist of income before income taxes and fixed charges and
fixed charges consist of interest (including capitalized interest) on all
indebtedness, amortization of deferred financing costs and that portion of
rental expense that management believes to be representative of interest.
The deficiency in earnings to fixed charges for the years 1995 and 1994
amounted to $32.2 million and $8.1 million, respectively.
36
<PAGE> 42
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company is a leading global provider of secure transaction solutions,
documents and systems for financial institutions, governments and corporations
through its operations in the United States, Brazil, Australia, New Zealand and
France. The Company designs solutions and manufactures products that incorporate
anti-fraud and counterfeit resistant technologies, including stored-value
telephone, magnetic-stripe, memory and microprocessor-based ("smart-card")
transaction cards, holograms, currencies, travelers' and other checks, stock and
bond certificates and a wide variety of electronically or digitally produced
personalized documents. Through selective acquisitions in international markets
and a program to realign its domestic manufacturing operations, the Company has
improved its financial performance and expanded its global presence,
technological base and product lines. From 1992 to 1996 (on a pro forma basis),
the Company's sales and EBITDA increased from $171.9 million and $34.1 million
to $365.2 million and $69.3 million, respectively.
In 1993, in order to address the high cost structure in its domestic
manufacturing facilities, to diversify its product offerings and reduce its
dependence on traditional security printing, the Company began to expand
internationally and realign, consolidate and upgrade its domestic manufacturing
operations. The Company closed its Los Angeles and Chicago manufacturing
facilities and opened a state-of-the-art manufacturing facility in Columbia,
Tennessee. In connection with this program, the Company incurred restructuring
charges of $12.0 million, $7.0 million and $14.3 million in 1993, 1994 and 1995,
respectively. The substantial completion of the Company's realignment in 1996
resulted in increased operating efficiencies and a reduction in manufacturing
and overhead costs, and has enabled the Company to bid on contracts more
competitively, as evidenced by its recently awarded contract to produce currency
at its new Tennessee facility for the Reserve Bank of India. In addition, over
the last three years, the Company has made significant investments, across its
geographic markets, in state-of-the-art manufacturing and distribution
equipment, systems and technologies to allow it to further reduce manufacturing
costs and provide advanced solutions for its customers.
The Company's international expansion began in 1993 with the acquisition of
its Brazilian subsidiary, the largest private-sector security printer and
manufacturer of transaction cards in Latin America and a leading stored-value
telephone card manufacturer in Brazil. This expansion continued in 1996 with the
acquisition of LM, Australia and New Zealand's oldest, largest and only fully
integrated provider of secure document and transaction card solutions. Most
recently, the Company expanded its international presence in August 1997 through
the acquisition of the Sati Group, one of France's leading providers of check
personalization and electronic printing applications. The Company's
international expansion has allowed it to capitalize on high growth markets and
diversify into new geographic markets.
37
<PAGE> 43
The realignment of the Company's domestic manufacturing facilities and its
international expansion have allowed it to successfully diversify its product
mix and customer base and to expand into higher growth markets. The following
table illustrates the shift in the composition of the Company's sales by product
group.
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31 ENDED SEPTEMBER 30
---------------------------------------------------- ---------------------------------
1994 1995 1996 1996 1997
-------------- -------------- -------------- -------------- --------------
AMOUNT % AMOUNT % AMOUNT % AMOUNT % AMOUNT %
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SALES:
Transaction Cards &
Systems................ $27.4 13.2% $51.0 24.8% $120.6 39.0% $84.1 38.7% $83.3 33.5
Printing Services &
Document Management.... 2.5 1.2 21.3 10.3 49.2 15.9 36.0 16.5 43.6 17.6
Security Printing
Solutions.............. 178.2 85.6 133.9 64.9 139.7 45.1 97.5 44.8 121.5 48.9
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
$208.1 100.0% $206.2 100.0% $309.5 100.0% $217.6 100.0% $248.4 100.0%
===== ===== ===== ===== ===== ===== ===== ===== ===== =====
</TABLE>
In 1996, the Company's customers included some of the largest users of
secure transaction solutions in each of its markets, such as Bradesco and
Telebras in Brazil, Telstra, Westpac, ANZ and National Australia Bank in
Australia, Visa(TM), MasterCard(TM), American Express and the federal government
in the United States and Banque Nationale de Paris in France. Management
believes that the Company's 200-year history, reputation for high quality
products and services, long-standing customer relationships and
solutions-oriented approach for secure transactions allow the Company to capture
an increasing part of its customers' business and provides a competitive
advantage in obtaining new business.
The Company's expansion into international markets has increased its sales
and earnings from foreign subsidiaries. See Notes A and L of "Notes to
Consolidated Financial Statements." The foreign jurisdictions in which the
Company currently operates do not restrict the repatriation of dividends and the
distribution of funds. The Company received an aggregate of $9.9 million in 1996
and $8.9 million for the nine months ended September 30, 1997 from its Brazilian
subsidiary. The Company's Australian subsidiary was prohibited under its
existing credit agreement from making dividend distributions to the Company in
1996.
RESULTS OF OPERATIONS
Comparison of Nine Months Ended September 30, 1997 and 1996
Sales increased by $30.8 million or 14.2% from the 1996 period. Sales of
Transaction Cards & Systems decreased $0.8 million or 1.0%, sales of Printing
Services & Document Management increased $7.6 million or 21.1%, and sales of
Security Printing Solutions increased $24.0 million or 24.6%. The net increase
in sales is due primarily to the inclusion of LM's sales for the entire 1997
period and the Sati Group's sales in 1997, aggregating $41.8 million. This
increase in sales was partially offset by reduced Transaction Cards & Systems
sales of stored-value telephone cards ($20.9 million). Sales by foreign
subsidiaries represented 70.7% of the Company's consolidated sales in the 1997
period as compared to 67.8% in the 1996 period, primarily due to the
acquisitions discussed above.
Cost of goods sold increased $23.5 million or 16.4%, principally due to the
inclusion of LM's cost of sales in the 1997 period. As a percentage of sales,
cost of goods sold was 66.9% in the 1997 period as compared to 65.6% in the 1996
period. This increase is primarily attributable to additional fixed costs
associated with the expanded manufacturing capacity in Brazil. Costs of goods
sold can be impacted by the mix of product sold. The product mix in any given
period is not indicative of the expected product mix in future periods.
38
<PAGE> 44
Selling and administrative expenses increased $1.6 million (4.7%) from
1996, principally due to the LM acquisition. As a percentage of sales, selling
and administrative expenses were 14.0% in the 1997 period as compared to 15.3%
in the 1996 period.
Depreciation expense increased $3.1 million, primarily due to the LM
acquisition and the expansion of manufacturing capacity.
Interest expense increased $4.2 million in the 1997 period, primarily due
to debt incurred in Australia and New Zealand to acquire LM and debt in Brazil
to fund increased manufacturing capacity.
Foreign translation losses, net, are a result of the translation of
Brazilian local currency financial statements into US dollars.
Other income, net, increased $1.8 million, primarily due to gains on
marketable securities, increased interest income and a decrease in other
expenses.
The cumulative tax provision is calculated using an estimated annual
effective income tax rate at the end of each reporting period. The rate is
reviewed and adjusted periodically to reflect changes in estimates by tax
jurisdictions in regulations, rates, deductibility of expenses, utilization of
tax credits, potential tax exposures, and state and local taxes. Reductions in
liabilities for taxes no longer required considerably impacted the estimated
annual effective income tax rate.
Minority interest in 1997 and 1996 represents the 22.5% minority interest
in ABNB, and in 1996 also included a 45% minority interest in LM.
Comparison of 1996 and 1995
Sales increased by $103.3 million or 50.1% from 1995. Sales of Transaction
Cards & Systems increased $69.6 million or 136.5%, principally due to increases
in sales of stored-value telephone cards ($48.7 million) and LM's sales since
June 1, 1996 ($20.6 million). Sales of Printing Services & Document Management
increased $27.9 million or 131.0%, principally due to including Grafica Bradesco
Ltda.'s ("Grafica Bradesco") sales for the full 1996 year and LM's sales since
June 1, 1996. Sales of Security Printing Solutions increased $5.8 million or
4.3%, principally due to LM's sales since June 1, 1996 ($25.6 million), offset
partially by decreased sales of food coupons ($9.0 million), personalized checks
($5.5 million, excluding LM's sales), currency ($3.0 million) and other
products.
Cost of goods sold increased $53.1 million or 35.6%, including LM's cost of
sales ($30.1 million), from 1995, as a result of increased sales. As a
percentage of sales, cost of goods sold declined to 65.3% in 1996 from 72.3% in
1995. Security Printing Solutions margins improved in 1996 due to product mix
and the nonrecurrence of certain charges that are included in the 1995 cost of
sales. In addition, the percentage of cost of goods sold was also favorably
impacted due to the cost reductions realized from the 1995 plant closure and
downsizing plan, which was offset in part by the start-up of the Tennessee
facility. The 1995 plant closure and downsizing plan was substantially completed
in the second quarter of 1996. Margins were favorably impacted by increased
sales of Transaction Cards & Systems as discussed above. The product mix in any
given period is not indicative of the expected product mix in future periods.
Selling and administrative expenses increased $8.4 million (21.1%) from
1995 principally due to the above acquisitions ($13.4 million), partially offset
by reduced corporate overhead ($4.0 million) and Security Printing Solutions
selling expenses ($1.0 million) as a result of the 1995 restructuring. As a
percentage of sales, selling and administrative expenses declined to 15.6% in
1996 from 19.3% in 1995.
Depreciation expense increased $5.2 million in 1996 from 1995 principally
due to the above acquisitions and to the expansion of the Transaction Cards &
Systems manufacturing capacity.
39
<PAGE> 45
Interest expense increased $5.7 million in 1996 primarily due to debt
incurred in Australia and New Zealand to acquire LM and to fund the expansion of
the Transaction Cards & Systems manufacturing capacity.
The Company recorded a $2.4 million provision relating to shareholder
litigation. See Note M of "Notes To Consolidated Financial Statements."
Foreign translation losses, net is a result of the translation of Brazilian
local currency financial statements into US dollars.
Other income, net, decreased $0.6 million principally due to an unrealized
loss in marketable securities ($1.0 million) partially offset by increased
interest and other income.
Taxes on income (benefit) are calculated using effective tax rates for each
tax jurisdiction and various assumptions such as state and local taxes and
utilization of foreign tax credits. See Note F of "Notes To Consolidated
Financial Statements."
Minority interest principally represents the ABNB 22.5% minority interest.
Comparison of 1995 and 1994
Sales decreased by $1.9 million or 0.9% from 1994. Transaction Cards &
Systems sales increased $23.6 million or 86.1%, principally due to stored-value
telephone cards ($19.0 million) and optical variable devices ($4.8 million).
Printing Services & Document Management sales increased $18.8 million or 752.0%,
principally due to the inclusion of Grafica Bradesco sales since the July 1,
1995 acquisition date. Security Printing Solutions sales decreased $44.3 million
or 24.9%, principally due to food coupons ($22.2 million), foreign security
products ($15.1 million), personalized checks ($6.8 million), stock and bonds
($5.7 million) and was partially offset by increases in sales of other products.
Cost of goods sold increased $18.1 million or 13.9% from 1994 and as a
percentage of sales was 72.3% in 1995 as compared to 62.9% in 1994. Cost of
goods sold attributable to Printing Services & Document Management increased as
a result of the Grafica Bradesco acquisition, which resulted in a change in
product mix. In addition, in the second quarter of 1995 increased costs
associated with the write-off of inventory related to work for an overseas
customer that went out of business and manufacturing losses on certain other
orders. The cost of sales percentage also was impacted by reduced margins in
Brazil since margins in the prior year were higher as sales included
inflationary price adjustments which were eliminated as part of Brazil's
Economic Stabilization Program. While margins were lower due to this program,
earnings were favorably impacted by the substantial elimination of translation
losses. The added Transaction Cards & Systems stored-value telephone card
production lines increased fixed manufacturing costs, which was offset, in part,
by lower Security Printing Solutions fixed manufacturing cost.
Selling and administrative expenses increased by $0.9 million from 1994
(2.3%) primarily as a result of the settlement of an executive severance
agreement and increased selling and administrative expenses due principally to
the Grafica Bradesco acquisition. As a percentage of sales, selling and
administrative expenses increased to 19.3% from 18.7% in 1994.
Depreciation expense increased $1.7 million in 1995, principally as a
result of the Grafica Bradesco acquisition ($0.7 million) and the expansion of
the Transaction Cards & Systems manufacturing capacity.
Interest expense increased $2.1 million in 1995 primarily due to the
issuance in May 1994 of the $65.0 million 11 5/8% Notes at a higher rate of
interest than the $40.0 million of bank debt it replaced.
Foreign translation losses, net is a result of the translation of Brazilian
local currency financial statements into US dollars. Improving economic
conditions in Brazil stemming from the country's
40
<PAGE> 46
July 1994 Economic Stabilization Program resulted in a $7.0 million reduction in
foreign translation losses.
Other income, net, increased $1.0 million principally due to an unrealized
gain in marketable securities.
Income taxes reflect a benefit in 1995 as a result of losses. The benefit
rate was lower than the 1994 effective tax rate, principally due to limitations
on deducting certain expenses for state tax purposes. As a result of changes in
enacted tax rates in 1995 ABNB realized a reduction in the net deferred tax
liability of $2.8 million.
The minority interest represents a 22.5% minority interest in ABNB's
operations since July 1, 1995.
Restructuring
In 1995, the Company recorded a pre-tax restructuring charge of
approximately $14.3 million pursuant to a restructuring plan developed by
management for the domestic security printing operations and the downsizing of
its corporate offices. The plan was substantially completed in the second
quarter of 1996.
The 1995 restructuring charge provided for those reasonably estimable costs
resulting from the plan, including costs that are: (i) associated with and will
not benefit activities that will continue or generate future revenue and are
incremental as a result of the plan; (ii) incurred under contractual agreements
(i.e. leases and employment agreements) that existed prior to the commitment
date that provide no future economic benefit; or (iii) related to asset
impairments and writedowns resulting directly from the plan. The Company had
estimated the pre-tax annual cost savings would be approximately $6.5 million,
of which approximately $5.3 million were manufacturing related fixed costs. The
Company began to realize the cost savings in the second quarter of 1996. The
Company reduced its domestic workforce by about 27% and provided a $2.9 million
reserve for severance and related costs.
Asset re-valuations and writedowns accounted for $5.0 million of the 1995
charge which reduced certain assets to their net realizable value and primarily
related to leasehold improvements.
Lease and other facility obligations accounted for $6.4 million of the 1995
charge for facilities closed in 1996.
The future cash outlays for the remaining restructuring reserve of $5.0
million at December 31, 1996 are anticipated to be $1.5 million in 1997, $1.2
million in 1998, $1.1 million in 1999 and 2000, and $0.1 million in 2001.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1997, the Company had approximately $3.6 million in cash
and cash equivalents and marketable securities. The Existing Credit Facility
provides for a three-year, $20.0 million revolving credit facility for general
working capital and letters of credit. At September 30, 1997, the Company had
approximately $13.3 million of availability under the Existing Credit Facility
before reductions for $3.6 million of outstanding letters of credit and $3.2
million of borrowings. In November 1997, the Existing Credit Facility was
amended through May 1998 to increase the current availability by $10.0 million.
In addition, LM and the Sati Group had available unused lines of credit of
approximately $2.4 million and $1.4 million, respectively. The Company's
long-term debt included $126.5 million of 10 3/8% Notes outstanding, $65.0
million of 11 5/8% Notes outstanding, $57.8 million of Leigh-Mardon Debt, $11.7
million of borrowings in Brazil, $9.5 million of the Sati Group debt and $8.6
million of other debt. Approximately $55.3 million of the 11 5/8% Notes and
outstanding amounts under the Existing Credit Facility are intended to be repaid
with the proceeds of the Offering. See
41
<PAGE> 47
"The Refinancing," "Use of Proceeds" and "Description of Certain
Indebtedness -- Existing Credit Facility."
Operating cash flows increased $4.0 million for the nine months ended
September 30, 1997 as compared to the same period in 1996 (before changes in
operating assets and liabilities) primarily as a result of increased earnings
and higher depreciation and amortization, partially offset by reduced non-cash
minority interest charges. The increase in certain non-cash charges, such as
depreciation and amortization, is due mainly to the LM and Sati Group
acquisitions and increased capital expenditures in the prior year.
Operating assets and liabilities also affected cash flows. The net decrease
in operating cash flows from such changes of $1.7 million, in the nine months
ended September 30, 1997 as compared to the same period in 1996, was primarily
due to the timing of accounts payable and accrued expenses.
Investing activities for the nine months ended September 30, 1997 included
$5.5 million for an acquisition in Brazil of the leading manufacturer of
personalized financial transaction cards. The acquisition did not have a
significant effect on the Company's results of operations. The reduced level of
capital expenditures in the 1997 period reflected the completion of the
expansion of manufacturing capacity in Brazil.
Financing activities for the nine months ended September 30, 1997 included
the issuance of a Convertible Debenture, exercise of warrants and stock options,
increased debt payments, reduced borrowings and an increased dividend payment to
ABNB's minority shareholder.
For the year ended December 31, 1996, the Company generated $7.6 million of
cash flow from operating activities compared to a use of cash of $4.5 million in
1995, and cash generated of $6.2 million in 1994.
Operating cash flows (before changes in operating assets and liabilities)
increased $33.3 million, in 1996 as compared to 1995, principally as a result of
increased earnings ($26.5 million), depreciation and amortization ($6.6
million), and minority interest charges ($3.7 million), partially offset by
decreased non-cash provisions for restructuring ($14.2 million) and deferred tax
benefits ($6.3 million). Operating cash flows (before changes in operating
assets and liabilities) decreased $24.3 million, in 1995 as compared to 1994,
principally as a result of decreased earnings ($16.7 million), increased
non-cash deferred tax benefits ($13.6 million) and decreased foreign translation
losses ($7.0 million), partially offset by increased non-cash provisions for
restructuring ($8.1 million), depreciation and amortization ($4.1 million) and
minority interest charges ($1.6 million). The increase in certain non-cash
charges, such as depreciation and amortization, and minority interest is due in
part to acquisitions.
Changes in operating assets and liabilities also affected operating cash
flows. The net decrease in operating cash flows from such changes of $21.2
million, in 1996 as compared to 1995, was principally due to the LM acquisition,
as certain operating assets, principally receivables ($8.5 million), were not
acquired, and to increased levels of receivables and inventory in 1996 ($31.9
million), partially offset by changes in other assets and liabilities. Operating
cash flows from such changes increased $13.6 million, in 1995 as compared to
1994, and was principally due to decreased levels of receivables and inventory
($27.8 million) in 1995, partially offset by decreased levels of accounts
payable ($11.3 million). The changes in assets and liabilities is due in part to
acquisitions and levels required to support sales and production requirements.
Investing activities for the years ended December 31, 1996, 1995 and 1994
used net cash flows of $24.5 million, $6.1 million and $8.4 million,
respectively, primarily for capital expenditures of $22.3 million, $10.4 million
and $10.1 million, respectively. In 1995, proceeds from the sale of a joint
venture provided $4.7 million of cash.
42
<PAGE> 48
The significant increase in capital expenditures in 1996 was due to several
programs, including the completion of a three-year program at the Company's Rio
de Janero facility, which added significant stored-value card production
capabilities, and the establishment of advanced document printing, storage and
distribution capabilities in its new Sao Paulo facility. The Company anticipates
that capital expenditures in 1997 and 1998 will be approximately $17.0 million
and $16.0 million, respectively. These amounts include approximately $5.0
million in each of 1997 and 1998 that management estimates will be required for
maintenance levels of capital expenditures. Such capital commitments include
amounts that will be financed through operating leases, capital leases, working
capital and cash flow.
Financing activities for the years ended December 31, 1996, 1995 and 1994
provided net cash flows of $7.5 million, $3.0 million and $18.9 million,
respectively. The activity in 1996 and 1995 was principally from borrowings in
connection with capital expenditures, as well as repayment of debt. In 1996, a
$2.8 million dividend payment was made to the ABNB minority shareholder. The
1994 activity was principally in connection with the 11 5/8% Notes which were
principally used to refinance certain debt ($40.0 million).
Management of the Company believes that cash flows from operations together
with cash balances, availability of funds under its and its subsidiaries' credit
facilities and proceeds from asset sales will be sufficient to service debt and
fund capital expenditures for the foreseeable future. The Company also believes
that it and its subsidiaries possess sufficient unused debt capacity and access
to debt and equity markets to pursue additional acquisition opportunities and
meet extraordinary working capital needs as they arise. In connection with a
proposed refinancing of all its indebtedness, the Company entered into certain
Treasury interest rate agreements in October 1997 that will result in a pre-tax
loss of approximately $2.3 million. The loss will be recorded in the fourth
quarter of 1997.
TAX LAW CHANGES
As a result of Brazilian tax legislation, effective for 1996, the 15%
dividend withholding tax on earnings after 1995 was eliminated. Additionally, in
1996, tax legislation which permits Brazilian companies to elect, subject to
certain limitations, to deduct dividends in computing taxable income; however,
there is a 15% withholding tax on dividends distributed in this manner. The
statutory tax rate in Brazil is approximately 33%.
IMPACT OF INFLATION
In 1994, the Brazilian government introduced a new currency as part of the
government's economic stabilization program designed to reduce the country's
hyper-inflation. As a result of this program, the inflation rate has decreased
substantially to approximately 4.6% for the first nine months of 1997, 10% for
1996 and 23% for 1995 as compared to 941% for 1994. The Company translates
ABNB's financial statements as if ABNB were operating in a hyperinflationary
economy. Currently, gains and losses resulting from translation and transactions
are determined using a combination of current and historical rates and are
reflected in earnings. If inflation rates in Brazil remain at current levels,
the method of translating ABNB's financial statements will be changed during the
fourth quarter of 1997 to the method used to translate LM's and the Sati Group's
financial statements, with such gains and losses reflected in a separate
component of equity. The Company's domestic and LM's and the Sati Group's
operations are not significantly affected by inflation. ABNB sales for the first
nine months of 1997 and for 1996 contributed 43% and 56%, respectively, of the
Company's consolidated sales. See "Risk Factors -- Foreign Operations."
See Note L of "Notes to Consolidated Financial Statements" for the
disclosure of certain financial information relating to foreign operations.
The Company has from time to time reorganized and restructured, and may in
the future reorganize and restructure, its foreign operations based on certain
assumptions about the various tax laws (including capital gains and withholding
tax), foreign currency exchange and capital repatriation laws and other relevant
laws of a variety of foreign jurisdictions.
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<PAGE> 49
BUSINESS
OVERVIEW
The Company is a leading global provider of secure transaction solutions,
documents and systems. The Company designs solutions and manufactures products
that incorporate anti-fraud and counterfeit resistant technologies, including
stored-value telephone, magnetic-stripe, memory and microprocessor-based
("smart-cards") transaction cards, holograms, currencies, travelers' cheques,
personal and corporate checks, stock and bond certificates, food coupons,
passports, ID systems/driver's licenses and a wide variety of electronically or
digitally produced personalized documents. The Company sells these products and
services worldwide to financial institutions, governments and corporations
through its operations in the United States, Brazil, Australia, New Zealand and
France. Through selective acquisitions and strategic realignment, the Company
has positioned itself as a full service provider of technology-based solutions
for its customers' secure transaction needs. The Company's products and services
are divided into three principal groups: Transaction Cards & Systems, Printing
Services & Document Management and Security Printing Solutions. For the twelve
months ended September 30, 1997, the Company's pro forma sales and EBITDA were
$357.7 million and $67.4 million, respectively.
The Company is capitalizing on the following trends: (i) the increasing
demand for secure transactions and documents as technological advances have
elevated concerns about counterfeiting; (ii) the increasing demand for secure
products, services and systems used in the rapidly expanding field of electronic
commerce; and (iii) the increasing outsourcing by financial institutions,
governments and major corporations of their secure document needs. The Company's
200-year heritage and its reputation for security, high quality and
accountability have enabled it to obtain additional contracts in its markets and
effectively market an expanded array of value-added products and services to its
customers. The Company continually works with customers to develop new products
and applications, blending its experience and traditional base of secure
handling and distribution expertise with its advanced technologies. Management
believes its reputation and its ability to provide a diverse mix of products and
services will allow it to obtain contracts with new customers and expand into
new geographic markets.
In 1993, the Company began positioning itself to capitalize on
international growth opportunities and began diversifying its product mix to
include technology-based products, services and solutions. The Company's
international expansion began with the acquisition of its Brazilian subsidiary,
the largest private-sector security printer and manufacturer of transaction
cards in Latin America and a leading stored-value telephone card manufacturer in
Brazil. This expansion continued in 1996 with the acquisition of Australia and
New Zealand's oldest, largest and only fully integrated provider of secure
document and transaction card solutions. Most recently, the Company expanded its
international presence in August 1997 through the acquisition of one of France's
leading providers of check personalization and electronic printing applications.
The Company also initiated, in 1994, a program to realign and upgrade its
domestic manufacturing operations, realize process efficiencies and reduce
costs. These steps, together with its international expansion, resulted in
improved financial performance and have allowed the Company to rapidly broaden
its international presence, technological base and product lines. From 1992 to
1996 (on a pro forma basis), the Company's sales and EBITDA have increased from
$171.9 million and $34.1 million to $365.2 million and $69.3 million,
respectively, representing compound annual growth rates of approximately 21% and
19% for sales and EBITDA, respectively.
BUSINESS STRATEGY
The Company's strategy is to leverage its market leadership, superior
reputation and strong customer relationships to capitalize on the increasing
demand for high quality and cost effective secure transaction solutions. In
order to accomplish its goal, the Company intends to: (i) enhance its leadership
positions in diverse geographic markets; (ii) provide solutions-oriented
products and
44
<PAGE> 50
services; (iii) pursue strategic acquisitions and alliance opportunities; and
(iv) increase manufacturing efficiencies and reduce costs.
Enhance Leadership Positions in Diverse Geographic Markets. The Company
seeks to enhance its leadership position by developing new products and services
and expanding its geographic presence to provide customers with a full range of
secure transaction solutions. The Company targets new industries and geographic
markets in which it believes it can capture a large share of the market by
providing high quality, cost effective products and services and by offering its
advanced technological capabilities. Management believes that the growth
potential of products such as stored-value cards and electronic printing
applications as well as an increase in the demand for printing, storage and
document services will allow the Company to enhance its strong leadership
position in Brazil, Australia, New Zealand and France and to continue its
expansion into new geographic markets.
Provide Solutions-Oriented Products and Services. The Company focuses on
providing products and services designed to address all of a customer's secure
transaction and document needs. For example, in addition to printing documents
for Bradesco, Latin America's largest private bank, the Company personalizes
these documents and manages Bradesco's inventory by distributing on a
"just-in-time" basis to each of Bradesco's approximately 2,000 branches.
Additionally, Bradesco's branches are linked electronically with the Company's
310,000 square foot Sao Paulo, Brazil facility and place their orders directly
with the Company, eliminating the need for central inventory management at
Bradesco. Management believes that the ability to provide a full array of
products and services for all of its customers' secure transaction and document
needs will increase the revenues from existing clients and allow the Company to
obtain contracts with new clients.
Pursue Strategic Acquisitions and Alliances. The Company continuously
evaluates domestic and international opportunities for strategic acquisitions,
joint ventures and alliances which complement and expand its core businesses.
The Company believes that significant opportunities exist that will enable the
Company to: (i) provide additional products and services to its existing
customer base; (ii) cross-sell products and services to an expanded customer
base; and (iii) expand its geographic presence. Examples of this strategy
include the acquisition of LM in June 1996 and the Sati Group in August 1997. LM
is the leading manufacturer and personalizer of checks and transaction cards in
Australia and New Zealand and its acquisition marked the Company's entry into
the Australasian market. The Sati Group is the second largest provider of check
personalization and distribution services in France and its acquisition marked
the Company's entry into the European market. The Company is presently exploring
additional acquisition opportunities to: (i) increase market share; (ii) broaden
its product and service offerings to existing customers; and (iii) expand its
geographic presence.
Increase Manufacturing Efficiencies and Reduce Costs. The Company is
committed to continuous improvements throughout its business to increase product
value and lower the Company's manufacturing costs. For example, the Company
realigned and consolidated its domestic manufacturing operations by closing the
Company's Los Angeles and Chicago facilities and opening a state-of-the-art
manufacturing facility in Columbia, Tennessee. These changes significantly
decreased manufacturing costs and allowed the Company to increase profitability
and bid on contracts more competitively, as evidenced by its recently awarded
contract to produce currency at its Tennessee facility for the Reserve Bank of
India. The Company has also made significant investments, both domestically and
internationally, in state-of-the-art manufacturing and distribution equipment,
systems and technologies to allow the Company to reduce costs, increase capacity
and provide the most advanced secure transaction solutions available.
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<PAGE> 51
PRODUCT LINES
The Company serves its customers through three principal groups:
Transaction Cards & Systems; Printing Services & Document Management; and
Security Printing Solutions.
As illustrated by the charts below, the Company has successfully
diversified its business mix and expanded into growth markets, thereby reducing
its dependence on traditional security printed products.
SALES BY PRODUCT GROUP
[PIE CHART A]
TRANSACTION CARDS & SYSTEMS
The Company is a leading supplier of a wide range of transaction cards and
products and systems in Brazil, Australia, New Zealand and the United States.
The Company is rapidly expanding its production and services capabilities to
capitalize on the increasingly cashless nature of financial transactions, which
primarily include: (i) stored-value cards, of which the Company is the largest
producer in Brazil and Australia; (ii) transaction cards and personalization
services; (iii) holograms, of which the Company is the world's leading supplier;
and (iv) equipment sales and services.
Stored-Value Cards. The Company entered the stored-value card market in
Brazil with the acquisition of ABNB and in Australia with the acquisition of LM.
These acquisitions have allowed the Company to rapidly expand its capabilities
and presence in regions where cashless transactions are expected to have
significant future growth. The Company is the largest supplier of stored-value
telephone cards in Brazil and Australia through its contracts with Telebras,
Brazil's national telephone company, and Telstra, Australia's national telephone
company. The Company also supplies stored-value cards to firms in the financial
and transportation industries.
The Company is also investing in smart-card development, which management
believes will complement much of the traditional magnetic-stripe card market.
The Company secured its first major smart-card contract with Telstra to supply
Telstra Eurochip telephone cards and is the only accredited third party supplier
and initializer of Visa Cash smart-cards in the world. The Company has also
identified a number of opportunities to produce smart-cards in Brazil, Australia
and New Zealand and has made significant investments in the equipment and
technology necessary to make and manufacture smart-cards for existing markets,
as well as export markets. The Company also believes that its significant
investments in smart-card technology will allow it entry into new markets,
including the United States.
Transaction Cards and Personalization Services. The Company is a leading
producer and personalizer of magnetic-stripe transaction cards, including
credit, debit, ATM, transportation, access and identification cards, supplying
customers in Brazil, Australia and New Zealand and certain other countries. The
Company supplies cards to financial institutions, including those issued
46
<PAGE> 52
for American Express, VISA(TM) and MasterCard(TM), as well as cards for major
corporations and other institutions. The Company has the ability to incorporate
a number of security features, including holograms, in substantially all of the
cards it produces.
In Australia, New Zealand and Brazil, the Company is a leader in the
manufacturing and personalization of plastic transaction cards, including
credit, debit and loyalty cards. The Company also handles large scale license
contracts for many Brazilian and Australian states and New Zealand, including
the production and personalization of drivers' and shooters' licenses. In
addition, the Company issues licenses and acts as administrative agent for the
motor vehicle departments of a number of Brazilian states.
Holograms. The Company is the world's leading supplier of holographic
security applications principally used as counterfeit deterrents on transaction
cards and other products. Holograms are two or three dimensional laser generated
optical variable devices which the Company produces and can be applied to
documents and products using a patented hot stamp application procedure. The
Company is the sole provider of transaction card holograms to MasterCard(TM),
Discover(TM), Europay(TM) and Diners Club International, and is the majority
provider of transaction card holograms to Visa(TM). To date, the Company has
produced and sold over six billion holograms for use on financial transaction
cards.
Equipment Sales and Service. The Company is a direct and third party
supplier of point of sale ("POS") and electronic funds transfer point of a sale
terminals ("EFTPOS") suitable for magnetic-stripe and smart-card applications,
PIN pads, customer service equipment and specialized software in Australia and
New Zealand. In addition, the Company has recently entered into a memorandum of
understanding with a major foreign manufacturer of terminals to develop POS and
EFTPOS terminals in Brazil. The Company's management believes a major
opportunity exists in these markets as transaction terminals are converted to
read both magnetic-stripe cards and smart-cards.
PRINTING SERVICES & DOCUMENT MANAGEMENT
The Company is continuing to expand its Printing Services & Document
Management business, as public and private sector institutions increasingly
outsource their in-house printing, personalization and document processing
operations around the world. Utilizing advanced inventory control systems and
"just-in-time" distribution capabilities, the Company helps businesses and
governmental institutions effectively lower costs by supplying all of their
printing, storage, processing and distribution needs.
Electronic Printing Applications. The Company is a full service provider
of electronic printing applications to a number of its corporate and government
customers. Electronic printing applications encompass the secure data handling,
electronic printing, personalization and mailing of documents for large-scale
billing cycles. This process consists of computer-driven, variable data
electronic printing, normally onto pre-printed base stock. Primary applications
are billing and fund collection systems, check and credit card statements,
letter checks and invoices.
In Australia, New Zealand, Brazil and France, the Company provides
electronic printing application services for institutions in the banking,
insurance, utilities and telecommunication industries, as well as a number of
state and federal government agencies. In Australia and New Zealand, for
example, LM has been awarded contracts by Victoria Workcover, Department of
Social Security, and Gas & Fuel. In Brazil, the Company is a leading provider to
the banking industry with multi-year contracts with, among others, Bradesco, and
supply purchase arrangements with major banks, such as Unibanco.
Printing, Storage & Distribution. The Company prints products such as
business forms and checks, and provides storage and distribution services to the
end user on behalf of its customers. For example, in September 1996, the Company
won a major contract to print and distribute medical forms for the Australian
Health Insurance Commission, a government agency which previously had
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<PAGE> 53
performed this function in-house. In connection with this contract, the Company
prints, stores and distributes more than 500 million Medicare Direct Bill
Payment Program forms annually, to more than 45,000 doctors throughout
Australia. The Company also prints, stores and distributes many other products
for its customers, such as travelers' cheques, which it distributes worldwide,
and food coupons for the USDA, which it distributes throughout the United
States.
SECURITY PRINTING SOLUTIONS
The Company is one of the world's leading printers of counterfeit-resistant
documents of value, including checks, money orders, passports, foreign currency,
stock and bond certificates and other commercial documents of value such as gift
certificates. Special materials, elaborate steel-engraved designs and
distinctive lithographic and intaglio printing techniques enable the Company to
manufacture products containing state-of-the-art security features. The Company
also offers anti-counterfeit features such as hidden, invisible and holographic
images used to verify authenticity on packaging. The Company's holograms are
used for accountability programs and product authentication with major licensing
organizations to prevent the sale of counterfeit goods. To ensure the protection
of its customers' orders, the Company's manufacturing, storage and distribution
facilities employ high levels of plant security, including guards, alarms, video
monitoring and extensive accountability controls. The Company recently opened a
security printing facility in Columbia, Tennessee, which utilizes
state-of-the-art multi-color presses that produce the cost effective, high
quality documents demanded by its customers. As a result of its reputation,
experience and technological expertise, the Company was recently awarded a $14
million contract to print currency for the Reserve Bank of India at its new
Tennessee facility.
Checks. The Company is the leading private sector supplier of personalized
checks for major banks in Brazil, Australia and New Zealand and the second
largest in France. Under multi-year contracts, the Company supplies the largest
banks and other financial institutions in their respective markets with checks,
same-day check personalization, and a wide array of security printing products
such as money orders and deposit books. Management of the Company believes that
additional Brazilian, Australian, New Zealand and French banks will seek to
outsource check printing and personalization, thus providing opportunities for
the Company to expand its leadership in this product area.
The Company believes that it is one of the largest printers and
distributors of travelers' cheques in the world. Customers include American
Express, Citicorp, MasterCard(TM), VISA(TM) and their issuing banks. Management
believes a large number of its contracts are the results of the Company's
success in cross-selling to existing transaction card customers.
Stocks and Bonds. The Company is the largest producer of traded stock and
bond certificates in the world. The Company produces intaglio printed
certificates with the unique border designs and vignettes as are required by the
New York Stock Exchange. The Company maintains a library of engraving plates for
a large percentage of publicly traded securities.
Government Products. Government products include a variety of security
documents printed for federal, state and local governments throughout the world.
The Company manufactures food coupons, currency, passports, visas, tax revenue
stamps, postal panels, social security cards and similar products for federal
governments. The Company also supplies secure documents, such as motor vehicle
registrations, title certificates and licenses, birth certificates, identity
cards, and transportation passes for its government customers. For example, the
Company prints American Commemorative Postage Stamp Panels for the United States
Postal Service, money orders for the Australian Post, U.S. Social Security
cards, and passports for such countries as Venezuela and Lebanon.
The USDA is the Company's largest domestic customer for whom it has printed
food coupon requirements for more than 20 years. Food coupons are intaglio
printed documents accepted by grocery stores in lieu of currency used by
millions of Americans every year.
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<PAGE> 54
SALES AND MARKETING
The Company sells its products and services through a combination of direct
sales personnel, commissioned sales personnel, independent sales representatives
and alliances. The Company markets and sells secure products and services to a
number of financial institutions, corporations, governments and government
agencies worldwide. The sales force is supported by marketing professionals who
provide research and product development assistance. The sales and marketing
activity is focused on the three main product groups with markets defined by
geographic territories.
Customers consider security, quality, reputation, features and
accountability as key factors when selecting a supplier of secure transaction
solutions, documents and systems. The Company believes that it satisfies each of
these criteria in a cost effective manner, which has contributed to its growth.
The Company's sales and product development personnel also work with customers
to develop new products and security features to insure that they will have the
most advanced security features and products available.
NEW INITIATIVES
The Company has recently added capabilities in transaction processing to
its domestic operations and has begun the acquisition of merchant processing
portfolios. These businesses, operating as American Banknote Card Services, Inc.
and American Banknote Merchant Services, Inc., service credit, debit, ATM and
EBT transactions through proprietary computer and telephone switching hardware
and software which process the financial transactions, provide customized client
reporting and offer 7 day per week, 24 hours per day customer service and
support. The Company currently has relations with nearly 1,000 merchants which
process in excess of $60 million in merchant transactions per year and believes
this will grow through the acquisition of additional merchant accounts.
The Company recently invested in a 25% interest in Ordacard Hitech
Industries (1995) Ltd. in order to take advantage of expansion opportunities in
the Middle East and Africa. Through its facilities in an industrial development
zone located in Caesarea, Israel, the Company has access to a modern plastic
card facility with smart-card and advanced personalization capabilities. During
1996, the Company and Ordacard received a $1 million grant from the BIRD
Foundation of Israel to jointly develop smart-card based medical information and
payment systems to offer to the medical community. The Company offers
identification systems, security print and card manufacturing through its
arrangements with Ordacard in the Middle East and Africa.
PROPERTIES AND FACILITIES
<TABLE>
<CAPTION>
LOCATION SIZE (IN SQ. FEET) OWNED OR LEASED OPERATIONS
- ------------------------------ ------------------ --------------- ------------------------------
<S> <C> <C> <C>
UNITED STATES:
200 Park Avenue
New York, New York............ 12,500 Leased Executive, administration and
sales offices
Horsham, Pennsylvania......... 111,000 Owned Administration and sales
offices; printing
Columbia, Tennessee........... 50,000 Owned Printing
Elmsford, New York............ 59,000 Leased Administration, sales offices,
research and development and
hologram production
Caroline Road
Horsham, Pennsylvania......... 104,000 Owned Food coupon distribution and
storage
Philadelphia
Pennsylvania.................. 95,000 Owned Ink manufacturing and storage
Huntington Valley
Pennsylvania.................. 30,000 Leased Hologram production
</TABLE>
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<PAGE> 55
<TABLE>
<CAPTION>
LOCATION SIZE (IN SQ. FEET) OWNED OR LEASED OPERATIONS
- ------------------------------ ------------------ --------------- ------------------------------
<S> <C> <C> <C>
AUSTRALIA & NEW ZEALAND:
Highett, Victoria............. 139,000 Leased ABAL head office,
administration, sales imaging,
plastic cards, manufacturing
and personalization, smart-
card manufacturing and
personalization
Dry Creek
South Australia............... 32,000 Leased Sales, check personalization
and other printing
applications
Cheltenham, Victoria.......... 24,000 Leased Sales, manufacturing and
service of point-of-sale
devices
Wellington
New Zealand................... 23,000 Leased Sales, card manufacturing and
check and card
personalization; executive
offices
Kedron, Queensland............ 18,000 Leased Sales, check and card
personalization and printing
Rosebery
New South Wales............... 16,000 Leased Card printing and
personalization
Regents Park
New South Wales............... 16,000 Leased Sales and check
personalization
Auckland, New Zealand......... 15,000 Leased Check and card manufacturing
and personalization
Perth
Western Australia............. 13,000 Leased Sales, check personalization
and printing
Canberra, ACT................. 5,000 Leased Passport production
Auckland
New Zealand................... 4,000 Leased Card manufacturing and
personalization
BRAZIL:
Jandira
Sao Paolo..................... 310,000 Leased Printing, storage and
distribution, electronic
printing and smart-card
manufacturing and
personalization
Rio de Janeiro
Rio de Janeiro................ 140,000 Owned Checks, financial and
telephone cards, intaglio
documents and printing
Erechim
Rio Grande do Sul............. 30,000 Leased Production and personalization
of transaction cards
</TABLE>
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<TABLE>
<CAPTION>
LOCATION SIZE (IN SQ. FEET) OWNED OR LEASED OPERATIONS
- ------------------------------ ------------------ --------------- ------------------------------
<S> <C> <C> <C>
FRANCE:
Chambray les
Tours, Tours.................. 43,000 Owned Headquarters, sales check
personalization and other
printing operations
Carquefou
Nantes........................ 18,000 Owned Sales and check
personalization
Dijon
Dijon......................... 18,000 Owned Sales and check
personalization
Meyzieu
Lyon.......................... 11,000 Owned Sales and check
personalization
</TABLE>
COMPETITION
Competition in the Company's markets is based upon price, service, quality,
reliability and the ability to offer a broad range of secure transaction
products and services. Each of the Company's domestic and foreign operations
conducts its business in highly competitive markets. However, no one company is
a competitor across all of the Company's products and markets. Internationally,
the Company has competitors in currencies and passports in the United Kingdom,
Germany, France and Canada, while domestically there are several different
competitors depending on the product line. In Brazil and Australia, there is
competition across different products and services, but no one company offers
the full range of secure products and services as well as the national sales and
service coverage. In France, the Company, which has a number two market share
position, has many smaller competitors in a highly fragmented market. Certain of
the Company's competitors have greater financial resources than the Company. The
Company also competes with other printers in various product lines as well as
card manufacturers and other companies engaged in businesses unrelated to
printing. Goods or services that replace printed products and holograms could
also affect demand for the Company's products.
PATENTS
The Company presently holds, or is licensed under, many United States and
foreign patents, trademarks and copyrights and continues to pursue protection
when available in strategic markets.
BACKLOG
At September 30, 1997 and December 31, 1996, the Company had an overall
backlog of approximately $70 million and $77 million, respectively. The 1997 and
1996 backlog principally consisted of orders relating to stored-value telephone
cards, currency, food coupons, travelers' cheques, passports, personal checks
and financial payment cards. Generally, a substantial portion of the Company's
backlog is produced and shipped within twelve months.
RAW MATERIALS
The Company is not materially dependent upon any one supplier for raw
materials used in its business. Certain raw materials used are available from a
limited number or only a single source supplier and certain other products,
particularly for national governments, require domestic content which limits the
number of potential suppliers. The Company's relationships with its primary
suppliers are generally reliable.
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ENVIRONMENT
The Company engages in the use or disposal of substances that may be
considered to be toxic or hazardous substances under applicable environmental
laws. The Company believes that its compliance with such laws has not had, and
will not have, a material effect on its capital expenditures, earnings,
financial position or competitive position.
EMPLOYEES
At October 31, 1997, the Company had approximately 3,372 employees
consisting of 2,980 employees engaged in manufacturing, 362 engaged in plant
administration and sales and 30 in executive, corporate and administrative
functions. Approximately 64% of the Company's domestic employees, 43% of LM's
employees, and all of ABNB's employees are represented by labor unions. The
Company has multi-year contracts with labor unions covering a substantial number
of employees of ABN and ABNH, several of which were renegotiated or entered into
during 1997. The Company's future profitability will be dependent, in part, on
its ability to maintain satisfactory relationships with labor unions and
employees and in avoiding strikes and work stoppages. The Company considers its
employee relations to be very good.
LEGAL PROCEEDINGS
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
(the "Class Action"). On June 16, 1995, the Court approved certification of a
class in Vladimir consisting of all persons who purchased stock in the open
market from April 1, 1993 through January 6, 1994. On February 26, 1996, the
Court dismissed the Sinay action, without prejudice. The parties have reached a
settlement in Vladimir, pursuant to a Stipulation of Class Action Settlement
executed on June 17, 1997. On September 30, 1997, the Court approved the
settlement dismissing the action, with prejudice.
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
derivatively on behalf of the Company. In February 1994, Rosenberg v. Morris
Weissman, et al. was filed in the same court. The Atencio and Rosenberg actions
assert claims for breach of fiduciary duty and allege the sale of Common Stock
while in possession of material non-public information. These cases have not
been actively pursued against the Company or the individual defendants. As
derivative actions, the Company's insurers will be responsible for the costs of
defending against such actions.
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, which
in December 1994 was removed to the United States District Court for the
Southern District of New York. The complaint alleges breach of contract in
connection with the 1993 purchase of the Company's Brazilian subsidiary from DLR
and seeks approximately $1.5 million in damages. DLR has asserted approximately
$400,000 in counterclaims. On September 17, 1997, the Court denied DLR's motions
for summary judgment, ruling the contract language ambiguous, and directed as an
issue for the jury whether the Company may pierce the corporate veil and proceed
with its claims against DLR's parent, De La Rue, Plc. A trial is expected to be
scheduled for early 1998.
On November 2, 1994, Thomas De La Rue AG v. United States Banknote
Corporation, et al. was commenced in the United States District Court for the
Southern District of New York. DLR alleges, among other things, breach of
contract in connection with the Brazil purchase agreement and the alleged
failure to expeditiously register with the SEC Company Common Stock issued to
DLR. DLR seeks approximately $4.0 million in connection with its claims. A trial
is expected to be scheduled for early 1998.
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During the year ended December 31, 1996, the Company recorded a $2.4
million ($0.07 per share after taxes) provision relating to pending litigation.
The Company's cost of settlement of the Vladimir action was $500,000.
The Company and its subsidiaries are parties to various additional lawsuits
(as both plaintiff and defendant) related to various matters in the normal
course of business, including patent infringement, contract, labor and
environmental, which in the opinion of management, are not anticipated to have a
material impact on its consolidated financial position or results of operations.
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<PAGE> 59
MANAGEMENT
The following table sets forth certain information regarding the current
directors and executive officers of the Company and the Guarantors.
<TABLE>
<CAPTION>
NAME AGE POSITIONS AND OFFICES
- ------------------------------------------- --- -------------------------------------------
<S> <C> <C>
Morris Weissman............................ 56 Chairman of the Board and Chief Executive
Officer of the Company and each Guarantor
John T. Gorman............................. 53 Executive Vice President and Chief
Financial Officer of the Company and each
Guarantor; Director of each Guarantor other
than ABN Investments, Inc. and ABN
Equities, Inc.
Harvey J. Kesner........................... 40 Executive Vice President, General Counsel
and Secretary of the Company and each
Guarantor; Director of ABN Securities
Systems, Inc., American Banknote Card
Services, Inc., American Banknote Merchant
Services, Inc., ABN Government Services,
Inc. and ABN CBA, Inc.
Patrick J. Gentile......................... 38 Vice President and Corporate Comptroller of
the Company and each Guarantor
Ward A.W. Urban............................ 37 Vice President, Treasurer and Assistant
Secretary of the Company and each Guarantor
Phillip Gray............................... 49 Managing Director of LM
Francis Lavelle............................ 48 Managing Director of Sati
Sidney Levy................................ 41 Managing Director of ABNB
Robert K. Wilcox........................... 50 Senior Vice President -- Manufacturing,
General Manager ABN
Josh Cantor................................ 38 Executive Vice President, General Manager
ABNH
Bette B. Anderson.......................... 69 Director of the Company
Dr. Oscar Arias S.......................... 57 Director of the Company
C. Gerald Goldsmith........................ 69 Director of the Company
Ira J. Hechler............................. 79 Director of the Company
David S. Rowe-Beddoe....................... 59 Director of the Company
Alfred Teo................................. 51 Director of the Company
</TABLE>
Morris Weissman. Mr. Weissman has served as Chairman of the Board and
Chief Executive Officer and as a Director of the Company since 1990. Mr.
Weissman assumed the additional duties of Chief Operating Officer in July 1995.
Mr. Weissman was Chairman and Chief Executive Officer of United States Banknote
Company, L.P. ("USBC") a predecessor of the Company, from 1986 to 1990 and Vice
Chairman and Director of USBC's predecessor from 1976 to 1986. Mr. Weissman is a
Director of the Convenience and Safety Corporation and a Trustee of the Jackie
Robinson Foundation and the Business Council for the United Nations.
John T. Gorman. Mr. Gorman has served as Executive Vice President and
Chief Financial Officer of the Company since 1990. Mr. Gorman was Executive Vice
President and Chief Financial Officer of USBC from 1983 to 1990 and Senior Vice
President of Finance of USBC's predecessor from 1978 to 1983.
Harvey J. Kesner, Esq. Mr. Kesner has served as Executive Vice President
of the Company since June 1996 and as General Counsel and Secretary of the
Company since 1991. Mr. Kesner was an attorney in private practice for more than
five years prior to joining the Company.
Patrick J. Gentile. Mr. Gentile has served as a Vice President of the
Company since June 1995, as Comptroller since 1989 and has been an employee of
the Company's predecessors since 1986.
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<PAGE> 60
Ward A.W. Urban. Mr. Urban has served as Treasurer of the Company since
August 1993 and as Vice President and Assistant Secretary since June 1995. Mr.
Urban was employed as an Assistant Vice President in the leveraged finance
department of Citibank, N.A. from August 1988 to August 1993.
Phillip Gray. Mr. Gray has served as General Manager of LM since 1990 and
was General Manager of its Data Card Division prior thereto since 1987.
Francis Lavelle. Mr. Lavelle has served as Managing Director of the Sati
Group since its acquisition by the Company in August 1997. Mr. Lavelle had
served as President of Solaic, S.A. since 1991, where he headed check
personalization and card operations, including smart-card manufacturing and
development, with facilities in France and Spain. Mr. Lavelle joined Sligos,
S.A., the prior owners of the Sati Group, in 1973.
Sidney Levy. Mr. Levy has served as Managing Director of ABNB since
February 1994. Prior to joining ABNB, Mr. Levy was employed as Managing Director
of De La Rue Lerchundi in Spain since 1991 and prior thereto was employed by
Thomas De La Rue Grafica e Servicos Ltda. in Brazil, serving in various
management capacities.
Robert K. Wilcox. Mr. Wilcox has served as Senior Vice
President -- Manufacturing of the Company since August 1995 and as Executive
Vice President -- Operations and General Manager of ABN since November 1995. Mr.
Wilcox was Vice President of US Operations for Transcontinental Printing and
previously held senior positions at the Bureau of Engraving and Printing as well
as Gowe Printing, Arcata Graphics and C.P.Y. Jeffries Banknote Co.
Josh Cantor. Mr. Cantor has served as Executive Vice President and General
Manager of ABNH since November 1995 and Executive Vice President of ABN since
September 1994. Mr. Cantor was Vice President -- Sales of ABN for more than five
years prior thereto.
Bette B. Anderson. Mrs. Anderson has served as a Director of the Company
since June 1994. She has served as President of Kelly, Anderson, Pethick &
Associates, Inc., a Washington based management firm, since 1991 until January
1996 when she became Vice Chairperson. Mrs. Anderson served as Undersecretary of
the Treasury from 1977 to 1981. Mrs. Anderson is a Director of ITT Corporation,
ITT Educational Services, Inc, United Payors & United Providers, Inc. and ITT
Hartford Group, Inc, and serves on various Board Committees of such companies.
Mrs. Anderson also is a member of the Treasury Historical Association, a
Director of the Miller Foundation at the University of Virginia and a member of
the Advisory Council of the Girl Scouts of America.
Dr. Oscar Arias S. Dr. Arias has served as a Director of the Company since
September 1995. He is the former President of Costa Rica and the 1987 Nobel
Peace Prize recipient. He is President of International Press Service, a
Director of the Arias Foundation for Peace and Human Progress, Stockholm
International Peace Research Institute and International Center for Human Rights
and Democratic Development Institute for International Studies at Stanford
University. In addition, Dr. Arias serves on the Board for the InterAction
Council, the International Negotiation Network of the Carter Center and
Transparency International and is an active member of The Commission on Global
Governance, the International Dialogue and the Society for International
Development.
C. Gerald Goldsmith. Mr. Goldsmith is a private investor. He has served as
a Director of the Company since 1990. He is a Director of Palm Beach National
Bank and Trust, a Director of Nine West Group, Inc. and a Director of
Innkeepers, USA.
Ira J. Hechler. Mr. Hechler is a private investor. He has served as a
Director of the Company since 1990. He is a Director of Leslie Fay Companies,
Inc. and Concord Camera Corp.
David S. Rowe-Beddoe. Mr. Rowe-Beddoe has served as a Director of the
Company since 1990. He has been Chairman of the Board of Welsh Development
Agency since 1993 and Chairman of the Development Board of Rural Wales since
1994. Mr. Rowe-Beddoe is also a Director of
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<PAGE> 61
Cavendish Services Ltd. and Development Securities plc. Mr. Rowe-Beddoe
previously held various senior management positions, including at Revlon Inc.
and De La Rue plc, where he was an Executive Director.
Alfred Teo. Mr Teo has served as a Director of the Company since 1996. He
has been Chairman and Chief Executive Officer of 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. Mr. Teo is a Director of Fleet Bank N.A. and a Trustee of St. Joseph's
Hospital and Stevens Institute of Technology.
EMPLOYMENT AGREEMENTS
Mr. Weissman serves pursuant to an employment agreement with the Company
with a term ending on December 31, 1999. The term of Mr. Weissman's agreement is
subject to automatic extension unless advance notice of non-renewal is given.
The agreement provides for a base salary of $800,000, with no guaranteed bonus.
Mr. Weissman participates in the Company's Executive Incentive Plan and pursuant
thereto, receives an annual bonus of up to 200% of base salary (as adjusted).
Mr. Gorman serves pursuant to an employment agreement with the Company with
a term ending on August 31, 1999. The term of Mr. Gorman's agreement is subject
to automatic extension unless advance notice of non-renewal is given. The
agreement provides for a base salary of $250,000 with no guaranteed bonus. For
1996, Mr. Gorman's agreement provides for an annual bonus in accordance with the
Company's Challenge 2000 Program. The bonus can range from 0-100% of base salary
based upon the level of achievement of corporate and personal goals.
Messrs. Kesner, Urban and Gentile participate in the Challenge 2000 Program
under which they are entitled to bonuses which can range from 0-100% of base
salary for Mr. Kesner, 0-75% for Mr. Urban and 0-75% for Mr. Gentile.
During 1995, the Company adopted Challenge 2000, a comprehensive program
unifying the calculation of bonuses among senior officers and providing the
award of stock-based compensation to the management of the Company. Bonuses for
management are not mandatory and are not provided in years in which the
Company's financial performance fails to meet certain targets. Subsidiary
managers receive bonuses based upon satisfaction of targets applicable to their
subsidiary as well as to the Company as a whole. In this way, the Company has
sought to align the interests of its management with the success of the Company
and increases in shareholder value. Approximately 30 of the senior Company and
subsidiary management presently participate in the Challenge 2000 program.
Executive officers of the Company are entitled to receive payments upon
termination of employment, disability or death in addition to post-termination
maintenance of certain life insurance and benefits. Upon termination by the
Company (other than for cause) or by the executive in certain circumstances,
payments would include a lump sum equal to the greater of total direct
compensation for 1994 or the total direct compensation then in effect, as if his
employment had remained in effect for the entire term or, if following a "change
in control," the greater of such amount or $5,000,000, plus the value of
unexercised options, in the case of Mr. Weissman. Upon termination by the
Company (other than for cause) or by Mr. Gorman or Mr. Kesner in certain
circumstances, payments would include a lump-sum cash payment in an amount equal
to two times annual base salary, plus bonus then in effect for Mr. Gorman and
one times annual base salary, plus, in certain circumstances, bonus then in
effect, for Mr. Kesner, plus the value of their unexercised options. Upon
termination by the Company (other than for cause), Mr. Urban is entitled to
receive an amount equal to his annual base salary.
The Company has made available certain loans to participants in its
Challenge 2000 program. Mr. Weissman is indebted to the Company in an amount
equal to approximately $685,000, plus interest, including a Challenge 2000 loan
in the amount of $500,000, which presently accrues
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<PAGE> 62
interest at 8.50%. Challenge 2000 loans are secured by Challenge 2000 stock
awards, including 140,000 shares of Restricted Stock in the case of Mr.
Weissman.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company retained Kelly, Anderson, Pethick & Associates, of which Ms.
Anderson, a Director, is Vice Chairperson and an owner, for marketing and
business development services primarily involving the Company's government
contracts business. During 1996, the Company paid approximately $72,400 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.
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<PAGE> 63
SECURITY OWNERSHIP
The following table reflects the number of shares of Common Stock
beneficially owned as of December 31, 1997 by (i) the Chief Executive Officer
and each of the other four most highly compensated executive officers, (ii) all
Directors and executive officers as a group and (iii) each other person known by
the Company to beneficially own as of such date more than 5% of any class of
equity securities of the Company.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENTAGE OF
OF BENEFICIAL COMMON STOCK
NAME AND ADDRESS OWNERSHIP(1)(2) BENEFICIALLY OWNED
- ---------------------------------------------------- ----------------- ------------------
<S> <C> <C>
Bette B. Anderson................................... 16,600 *
Dr. Oscar Arias S................................... 14,150 *
Patrick J. Gentile.................................. 10,708 *
C. Gerald Goldsmith................................. 21,200 *
John T. Gorman...................................... 184,767(3) *
Ira J. Hechler...................................... 234,300 1.1%
Harvey J. Kesner.................................... 65,826(4) *
David S. Rowe-Beddoe................................ 20,100 *
Alfred Teo.......................................... 1,899,000 9.1%
Ward A.W. Urban..................................... 7,108 *
Morris Weissman..................................... 1,861,636(3)(5)(6) 8.5%
All Directors and executive officers as a group (11
persons).......................................... 4,338,728(4)(5)(6) 19.7%
Bay Harbour Management, L.C., Tower Investment
Group, Inc., Steven A. Van Dyke, 777 South Harbor
Island Blvd., Suite 270, Tampa, FL 33602(7)....... 2,287,950 11.3%
</TABLE>
- ---------------
* Less than 1%.
(1) Unless otherwise indicated, each stockholder has sole voting and investment
power.
(2) Includes Common Stock issuable upon the exercise of stock options
exercisable within 60 days of December 31, 1997 in the amount of 8,333,
76,867, 25,351, 8,566 and 458,666 for Messrs. Gentile, Gorman, Kesner, Urban
and Weissman, and 578,283, for all executive officers, respectively.
Includes Director Common Stock equivalent units under the Deferred Stock and
Compensation Plan for Non-employee Directors in the amount of 16,600,
14,150, 20,100, 20,100, 20,100 and 10,500 units for Ms. Anderson, Dr. Arias
and Messrs. Goldsmith, Hechler, Rowe-Beddoe and Teo, respectively. Excludes
shares of Common Stock that may be issued to Directors in connection with
deferred director fees under the Deferred Stock and Compensation Plan for
Non-employee Directors in the amount of 242, 1,091, 788, 667, and 121 shares
for Ms. Anderson and Messrs. Goldsmith, Hechler, Rowe-Beddoe and Teo,
respectively.
(3) 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 November 30, 1997 in the amount of 139,500 and 16,000
shares for Messrs. Weissman and Gorman and 155,500 shares for all executive
officers, respectively.
(4) Includes 30,625 shares held in trust, as to which Mr. Kesner has sole voting
and investment power.
(5) Includes (i) 95,000 shares held by spouse as to which Mr. Weissman disclaims
beneficial ownership 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.
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<PAGE> 64
(6) Excludes 30,625 shares of Common Stock held in trust 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 13G Statement dated November 10, 1997 as filed with the
Securities and Exchange Commission.
DESCRIPTION OF CERTAIN INDEBTEDNESS
SATI GROUP DEBT
In connection with the acquisition of the Sati Group, the Company's French
holding company incurred FF56 million (approximately US$9.1 million) under term
loans which mature in 2003 and 2004. In addition, the Sati Group has a FF10
million (approximately US$1.6 million) working capital facility. As of September
30, 1997, no drawings were outstanding under the working capital facility. As of
such date, interest accrued at the rate of 5.6% per annum on the term loans. The
Sati Group debt is secured by the stock and certain assets of the Sati Group.
BRAZIL DEBT
As of September 30, 1997, ABNB had outstanding approximately R$8.1 million
(approximately
US$7.4 million) under term loans incurred to acquire equipment, which mature in
2001. In addition, ABNB had approximately R$4.7 million (approximately US$4.3
million) outstanding of debt, which matures in 1998. As of such date, interest
accrued at the average rate of 15.7% per annum on the term loan and 12% on the
other debt.
EXISTING CREDIT FACILITY
General. In January 1996, ABN and ABNH entered into a $20.0 million
revolving credit facility (the "Existing Credit Facility") with the Chase
Manhattan Bank (as successor to Chemical Bank). At September 30, 1997,
approximately $13.3 million was available under the Existing Credit Facility
before reduction for outstanding letters of credit ($3.6 million) and borrowings
($3.2 million). At September 30, 1997, interest under the Existing Credit
Facility was 9.00%. During November 1997, the Existing Credit Facility was
increased to $25.0 million and an additional $10.0 million of current
availability was provided. Upon consummation of the Initial Offering, the
Existing Credit Facility was reduced to $20.0 million and the availability
reduced in accordance with the original terms.
Guarantees. The Company acts as guarantor in respect of all monies
borrowed under the Existing Credit Facility.
Security. The Existing Credit Facility is secured by certain accounts
receivable and inventory (total carrying value of approximately $18.1 million at
September 30, 1997).
Maturity. The Existing Credit Facility will expire on October 30, 1998.
Mandatory Prepayment. The borrowing entities may be required to make
partial prepayments where their respective Availabilities (as defined in the
Existing Credit Facility) fail to equal or exceed zero.
Optional Prepayment. Any and all loans may be prepaid in specified minimum
amounts.
Interest Rates. The interest rate applicable to borrowings under the
Existing Credit Facility will vary depending on whether the funds are borrowed
as a Eurodollar Loan (as defined in the Existing Credit Facility) basis or as an
Alternate Base Loan (as defined in the Existing Credit Facility). In the case of
a Eurodollar Loan interest will be charged at specified margins over LIBO Rate
(as defined in the Existing Credit Facility). In the case of Alternate Base
Loan, interest will be charged at specified margins over the Alternate Base Rate
(as defined in the Existing Credit Facility).
Covenants; Events of Default. The Existing Credit Facility contains
covenants and events of default customary for financings of this type.
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<PAGE> 65
LEIGH-MARDON DEBT
In connection with the acquisition of LM, the Company incurred the
Leigh-Mardon Senior Debt. The Leigh-Mardon Senior Debt, which matures June 2001,
is a term loan of approximately US$41.3 million and a US$4.0 million working
capital facility, of which approximately US$0.7 million of availability was used
for letters of credit as of September 30, 1997. As of such date, interest
accrued at the rate of 7.15% per annum on the Leigh-Mardon Senior Debt. The term
loan is secured by a fixed and floating charge on LM's assets and undertakings.
The Leigh-Mardon Subordinated Debt, which matures September 2001, is a term
loan of which approximately US$16.5 million was outstanding as of September 30,
1997. As of such date, interest accrued at the rate of 8.07% per annum plus 4%
upon amounts outstanding in excess of US$15.2 million on the Leigh-Mardon
Subordinated Debt.
The Company is seeking to refinance the Leigh-Mardon Debt in whole or in
part.
SENIOR NOTES
10 3/8% Notes
In May 1992, the Company issued and sold $126.5 million aggregate principal
amount of 10 3/8% Senior Notes due 2002 (the "10 3/8% Notes"). The Notes were
issued pursuant to an indenture dated as of May 18, 1992 between the Company and
The Chase Manhattan Bank (as successor to Chemical Bank), as trustee (the
"10 3/8% Notes Indenture"), as amended. The 10 3/8% Notes were sold pursuant to
the Company's Registration Statement on Form S-1 (Reg. No. 33-46806) declared
effective by the Commission on May 18, 1992 (the "10 3/8% Notes Registration
Statement").
The 10 3/8% Notes will mature on June 1, 2002, are limited to $126.5
million in aggregate principal amount, and are senior obligations of the
Company. The 10 3/8% Notes are secured by a pledge of the capital stock of
certain of the Company's subsidiaries, as well as certain intercompany
obligations. As of the date of this Offering Memorandum, $126.5 million
principal amount of the 10 3/8% Notes were outstanding. Reference is made to the
10 3/8% Notes Indenture, which was filed as an exhibit to the 10 3/8% Notes
Registration Statement.
11 5/8% Notes
In April 1994, the Company issued and sold (the "1994 Notes Offering")
$65.0 million aggregate principal amount of 11 5/8% Senior Notes due 2002 (the
"1994 Notes"). The 1994 Notes were issued pursuant to the indenture dated as of
May 1, 1994 between the Company and State Street Bank & Trust Company (as
successor to First National Bank of Boston), as trustee (the "11 5/8% Notes
Indenture"), to qualified institutional buyers pursuant to Rule 144A under the
Securities Act. In September 1994, the Company consummated an exchange offer
pursuant to which the Company, in exchange for the $65.0 million principal
amount of the 1994 Notes outstanding, issued an equal amount of 11 5/8% Notes,
which are identical to the 1994 Notes, with the exception that the 11 5/8% Notes
have been registered under the Securities Act.
The 11 5/8% Notes will mature on August 1, 2002, are limited to $65 million
in aggregate principal amount, and are unsecured senior obligations of the
Company. As of the date of this Prospectus approximately $8.0 million principal
amount of the 11 5/8% Notes are outstanding. Reference is made to the 11 5/8%
Notes Indenture, which was filed as an exhibit to the 11 5/8% Notes Registration
Statement.
Pursuant to the Tender Offer and related Consent Solicitation, on December
12, 1997, the Company purchased approximately $57 million in aggregate principal
amount of the 11 5/8% Notes and the supplemental indenture containing the
Indenture Amendment eliminating substantially all of the restrictive covenants
contained in the 11 5/8% Notes Indenture became effective. See "The
Refinancing."
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<PAGE> 66
DESCRIPTION OF THE NOTES
The Exchange Notes offered hereby will be issued as a separate series under
the Indenture (the "Indenture") dated as of December 12, 1997 among the Company,
the Guarantors and The Bank of New York, as trustee (the "Trustee"). The form
and terms of the Exchange Notes are the same and the form and terms of the Old
Notes (which they replace) except that (i) the Exchange Notes will bear a Series
B designation, (ii) the Exchange Notes will have been registered under the
Securities Act and, therefore, will not bear legends restricting the transfer
thereof and (iii) holders of the Exchange Notes will not be entitled to certain
rights of holders of Old Notes under the Registration Rights Agreement,
including the provisions providing for an increase in the interest rate on the
Old Notes in certain circumstances relating to the timing of the Exchange Offer,
which rights will terminate when the Exchange Offer is consummated. The Old
Notes issued in the Initial Offering and the Exchange Notes offered hereby are
referred to collectively as the "Notes."
The following summary of certain provisions of the Indenture does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"), and to all of the provisions of the Indenture, including the definitions
of certain terms therein and those terms made a part of the Indenture by
reference to the Trust Indenture Act, as in effect on the date of the Indenture.
The definitions of certain capitalized terms used in the following summary are
set forth below under "Certain Definitions." References in this "Description of
the Notes" section to "the Company" mean only American Banknote Corporation and
not any of its Subsidiaries.
GENERAL
The Notes will be issued only in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. The Company will
appoint the Trustee to serve as registrar and paying agent under the Indenture
at its offices at 101 Barclay Street, New York, New York. No service charge will
be made for any registration of transfer or exchange of the Notes, except for
any tax or other governmental charge that may be imposed in connection
therewith.
RANKING
The Notes will rank junior to, and be subordinated in right of payment to,
all existing and future Senior Indebtedness of the Company, pari passu in right
of payment with all senior subordinated Indebtedness of the Company and senior
in right of payment to all Subordinated Indebtedness of the Company. At
September 30, 1997, on a pro forma basis after giving effect to the Refinancing
(assuming purchase in the Tender Offer of 85% of the 11 5/8% Notes), including
the issuance of the Notes and the application of the net proceeds therefrom, the
Company would have had approximately $224.2 million of Senior Indebtedness
outstanding (exclusive of unused commitments, including $80.9 million of
Indebtedness of the Company's subsidiaries which would have been effectively
senior to the Notes).
MATURITY, INTEREST AND PRINCIPAL OF THE NOTES
The Notes will be limited to $95.0 million aggregate principal amount and
will mature on December 1, 2007. Interest on the Notes will accrue at a rate of
11 1/4% per annum and will be payable semi-annually in arrears on each June 1
and December 1, commencing June 1, 1998, to the holders of record of Notes at
the close of business on May 15 and November 15, respectively, immediately
preceding such interest payment date. Interest will accrue from the most recent
interest payment date to which interest has been paid or, if no interest has
been paid, from December 12, 1997. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
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<PAGE> 67
OPTIONAL REDEMPTION
The Notes will be redeemable at the option of the Company, in whole or in
part, at any time on or after December 1, 2002, at the redemption prices
(expressed as a percentage of principal amount) set forth below, plus accrued
and unpaid interest thereon, if any, to the redemption date (subject to the
right of holders of record on the relevant record date to receive interest due
on the relevant interest payment date), if redeemed during the 12-month period
beginning on December of the years indicated below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
----------------------------------------------------------------- ----------
<S> <C>
2002............................................................. 105.625%
2003............................................................. 103.750%
2004............................................................. 101.875%
2005 and thereafter.............................................. 100.000%
</TABLE>
Notwithstanding the foregoing, at any time and from time to time on or
prior to December 1, 2000, the Company may redeem in the aggregate up to 35% of
the originally issued aggregate principal amount of the Notes with the net cash
proceeds of one or more Public Equity Offerings by the Company at a redemption
price in cash equal to 111.25% of the principal amount thereof, plus accrued and
unpaid interest thereon, if any, to the date of redemption (subject to the right
of Holders of record on the relevant record date to receive interest due on the
relevant interest payment date); provided, however, that at least 65% of the
originally issued aggregate principal amount of the Notes must remain
outstanding immediately after giving effect to each such redemption. Notice of
any such redemption must be given within 60 days after the date of the closing
of the relevant Public Equity Offering of the Company.
SELECTION AND NOTICE OF REDEMPTION
In the event that less than all of the Notes are to be redeemed at any time
pursuant to an optional redemption, selection of such Notes for redemption will
be made by the Trustee in compliance with the requirements of the principal
national securities exchange, if any, on which the Notes are listed or, if the
Notes are not then listed on a national securities exchange, on a pro rata
basis, by lot or by such method as the Trustee shall deem fair and appropriate;
provided, however, that no Notes of a principal amount of $1,000 or less shall
be redeemed in part; provided, further, however, that if a partial redemption is
made with the net cash proceeds of a Public Equity Offering by the Company,
selection of the Notes or portions thereof for redemption shall be made by the
Trustee only on a pro rata basis or on as nearly a pro rata basis as is
practicable (subject to the procedures of The Depository Trust Company), unless
such method is otherwise prohibited. Notice of redemption shall be mailed by
first-class mail at least 30 but not more than 60 days before the redemption
date to each Holder of Notes to be redeemed at its registered address. If any
Note is to be redeemed in part only, the notice of redemption that relates to
such Note shall state the portion of the principal amount thereof to be
redeemed. A new Note in a principal amount equal to the unredeemed portion
thereof will be issued in the name of the Holder thereof upon cancellation of
the original Note. On and after the redemption date, interest will cease to
accrue on Notes or portions thereof called for redemption as long as the Company
has deposited with the paying agent for the Notes funds in satisfaction of the
applicable redemption price pursuant to the Indenture.
SUBORDINATION OF THE NOTES
The payment of the principal of, premium, if any, and interest on the Notes
is subordinated in right of payment, to the extent and in the manner provided in
the Indenture, to the prior payment in full in cash of all Senior Indebtedness.
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<PAGE> 68
Upon any payment or distribution of assets or securities of the Company of
any kind or character, whether in cash, property or securities (excluding any
payment or distribution of Permitted Junior Securities and excluding any payment
from the trust described under "Satisfaction and Discharge of Indenture;
Defeasance" (a "Defeasance Trust Payment")), upon any dissolution or winding-up
or total liquidation or reorganization of the Company, whether voluntary or
involuntary or in bankruptcy, insolvency, receivership or other proceedings, all
Senior Indebtedness shall first be paid in full in cash before the Holders of
the Notes or the Trustee on behalf of such Holders shall be entitled to receive
any payment by the Company of the principal of, premium, if any, or interest on
the Notes, or any payment by the Company to acquire any of the Notes for cash,
property or securities, or any distribution by the Company with respect to the
Notes of any cash, property or securities (excluding any payment or distribution
of Permitted Junior Securities and excluding any Defeasance Trust Payment).
Before any payment may be made by, or on behalf of, the Company of the principal
of, premium, if any, or interest on the Notes upon any such dissolution or
winding-up or total liquidation or reorganization, any payment or distribution
of assets or securities of the Company of any kind or character, whether in
cash, property or securities (excluding any payment or distribution of Permitted
Junior Securities and excluding any Defeasance Trust Payment), to which the
Holders of the Notes or the Trustee on their behalf would be entitled, but for
the subordination provisions of the Indenture, shall be made by the Company or
by any receiver, trustee in bankruptcy, liquidation trustee, agent or other
Person making such payment or distribution, directly to the holders of the
Senior Indebtedness (pro rata to such holders on the basis of the respective
amounts of Senior Indebtedness held by such holders) or their representatives or
to the trustee or trustees or agent or agents under any agreement or indenture
pursuant to which any of such Senior Indebtedness may have been issued, as their
respective interests may appear, to the extent necessary to pay all such Senior
Indebtedness in full in cash after giving effect to any prior or concurrent
payment, distribution or provision therefor to or for the holders of such Senior
Indebtedness.
No direct or indirect payment (excluding any payment or distribution of
Permitted Junior Securities and excluding any Defeasance Trust Payment) by or on
behalf of the Company of principal of, premium, if any, or interest on the
Notes, whether pursuant to the terms of the Notes, upon acceleration, pursuant
to an Offer to Purchase or otherwise, will be made if, at the time of such
payment, there exists a default in the payment of all or any portion of the
obligations on any Designated Senior Indebtedness, whether at maturity, on
account of mandatory redemption or prepayment, acceleration or otherwise, and
such default shall not have been cured or waived or the benefits of this
sentence waived by or on behalf of the holders of such Designated Senior
Indebtedness. In addition, during the continuance of any non-payment event of
default with respect to any Designated Senior Indebtedness pursuant to which the
maturity thereof may be immediately accelerated, and upon receipt by the Trustee
of written notice (a "Payment Blockage Notice") from the holder or holders of
such Designated Senior Indebtedness or the trustee or agent acting on behalf of
the holders of such Designated Senior Indebtedness, then, unless and until such
event of default has been cured or waived or has ceased to exist or such
Designated Senior Indebtedness has been discharged or repaid in full in cash or
the benefits of these provisions have been waived by the holders of such
Designated Senior Indebtedness, no direct or indirect payment (excluding any
payment or distribution of Permitted Junior Securities and excluding any
Defeasance Trust Payment) will be made by or on behalf of the Company of
principal of, premium, if any, or interest on the Notes, to such Holders, during
a period (a "Payment Blockage Period") commencing on the date of receipt of such
notice by the Trustee and ending 179 days thereafter. Notwithstanding anything
in the subordination provisions of the Indenture or the Notes to the contrary,
(x) in no event will a Payment Blockage Period extend beyond 179 days from the
date the Payment Blockage Notice in respect thereof was given, (y) there shall
be a period of at least 181 consecutive days in each 360-day period when no
Payment Blockage Period is in effect and (z) not more than one Payment Blockage
Period may be commenced with respect to the Notes during any period of 360
consecutive days. No event of default that existed or was continuing on the date
of commencement of any
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Payment Blockage Period with respect to the Designated Senior Indebtedness
initiating such Payment Blockage Period (to the extent the holder of Designated
Senior Indebtedness, or trustee or agent, giving notice commencing such Payment
blockage Period had knowledge of such existing or continuing event of default)
may be, or be made, the basis for the commencement of any other Payment Blockage
Period by the holder or holders of such Designated Senior Indebtedness or the
trustee or agent acting on behalf of such Designated Senior Indebtedness,
whether or not within a period of 360 consecutive days, unless such event of
default has been cured or waived for a period of not less than 90 consecutive
days.
The failure to make any payment or distribution for or on account of the
Notes by reason of the provisions of the Indenture described under this
"Subordination of the Notes" heading will not be construed as preventing the
occurrence of any Event of Default in respect of the Notes. See "Events of
Default" below.
By reason of the subordination provisions described above, in the event of
insolvency of the Company, funds which would otherwise be payable to Holders of
the Notes will be paid to the holders of Senior Indebtedness to the extent
necessary to pay the Senior Indebtedness in full in cash, and the Company may be
unable to meet fully its obligations with respect to the Notes.
Subject to the restrictions set forth in the Indenture, in the future the
Company may issue additional Senior Indebtedness to refinance existing
Indebtedness or for other corporate purposes. In addition, the Notes will be
structurally subordinate to all Indebtedness of the Company's Subsidiaries that
are not Guarantors.
GUARANTEES OF THE NOTES
The Indenture will provide that each of the Guarantors will unconditionally
guarantee on a joint and several basis (the "Guarantees") all of the Company's
obligations under the Notes, including its obligations to pay principal,
premium, if any, and interest with respect to the Notes. The obligations of each
Guarantor are limited to the maximum amount that, after giving effect to all
other contingent and fixed liabilities of such Guarantor and after giving effect
to any collections from or payments made by or on behalf of any other Guarantor
in respect of the obligations of such other Guarantor under its Guarantee or
pursuant to its contribution obligations under the Indenture, will result in the
obligations of such Guarantor under its Guarantee not constituting a fraudulent
conveyance or fraudulent transfer under Federal or state law. Each Guarantor
that makes a payment or distribution under a Guarantee shall be entitled to a
contribution from each other Guarantor in a pro rata amount, based on the net
assets of each Guarantor determined in accordance with GAAP.
The Company shall cause each Restricted Subsidiary issuing a Guarantee
after the Issue Date to (i) execute and deliver to the Trustee a supplemental
indenture in form reasonably satisfactory to the Trustee pursuant to which such
Restricted Subsidiary shall become a party to the Indenture and thereby
unconditionally guarantee all of the Company's Obligations under the Notes and
the Indenture on the terms set forth therein and (ii) deliver to the Trustee an
Opinion of Counsel that such supplemental indenture has been duly authorized,
executed and delivered by such Restricted Subsidiary and constitutes a legal,
valid, binding and enforceable obligation of such Restricted Subsidiary (which
opinion may be subject to customary assumptions and qualifications). Thereafter,
such Restricted Subsidiary shall (unless released in accordance with the terms
of this Indenture) be a Guarantor for all purposes of the Indenture.
The Indenture will provide that if the Notes are defeased in accordance
with the terms of the Indenture or if, subject to the requirements of the first
paragraph under "-- Merger, Sale of Assets, Etc.," all or substantially all of
the assets of any Guarantor or the Equity Interests of any Guarantor are sold
(including by issuance or otherwise) by the Company in a transaction
constituting an Asset Sale, and if (x) the Net Cash Proceeds from such Asset
Sale are used in accordance with the covenant described under "Certain
Covenants-Disposition of Proceeds of Asset Sales" or (y) the Company delivers to
the Trustee an Officers' Certificate to the effect that the Net Cash Proceeds
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from such Asset Sale shall be used in accordance with the covenant described
under "Certain Covenants -- Disposition of Proceeds of Asset Sales" and within
the time limits specified by such covenant, then such Guarantor (in the event of
a sale or other disposition of all of the Equity Interests of such Guarantor) or
the corporation acquiring such assets (in the event of a sale or other
disposition of all or substantially all of the assets of such Guarantor) shall
be released and discharged of its Guarantee obligations in respect of the
Indenture and the Notes effective upon consummation of such transactions.
The Guarantees will be general unsecured obligations of the Guarantors. The
obligations of each Guarantor under its Guarantee will be subordinated and
junior in right of payment to the prior payment in full of all existing and
future Guarantor Senior Indebtedness of such Guarantor (which will include such
Guarantor's guarantee of the obligations of the Company under the New Credit
Facility) to substantially the same extent as the Notes are subordinated to all
existing and future Senior Indebtedness of the Company.
Any Guarantor (i) that is designated an Unrestricted Subsidiary pursuant to
and in accordance with the covenant described under "Designation of Unrestricted
Subsidiaries" or (ii) that is designated an Investment in accordance with the
definition of "Investment" shall upon such designation be released and
discharged of its Guarantee obligations in respect of the Indenture and the
Notes and any domestic Unrestricted Subsidiary whose Designation is revoked
pursuant to "Designation of Unrestricted Subsidiaries" below will be required to
become a Guarantor in accordance with the procedure described in the third
preceding paragraph.
OFFER TO PURCHASE UPON CHANGE OF CONTROL
Following the occurrence of a Change of Control (the date of such
occurrence being the "Change of Control Date"), the Company shall notify the
Holders of the Notes of such occurrence in the manner prescribed by the
Indenture and shall, within 20 days after the Change of Control Date, make an
Offer to Purchase all Notes then outstanding at a purchase price in cash equal
to 101% of the aggregate principal amount thereof, plus accrued and unpaid
interest thereon, if any, to the Purchase Date (subject to the right of Holders
of record on the relevant record date to receive interest due on the relevant
interest payment date).
If an Offer to Purchase is made, there can be no assurance that the Company
will have available funds sufficient to pay for all of the Notes that might be
tendered by Holders of Notes seeking to accept the Offer to Purchase. If the
Company fails to purchase all of the Notes tendered for purchase, such failure
will constitute an Event of Default under the Indenture. See "Events of Default"
below.
If the Company makes an Offer to Purchase, the Company will comply with all
applicable tender offer laws and regulations, including, to the extent
applicable, Section 14(e) and Rule 14e-1 under the Exchange Act, and any other
applicable Federal or state securities laws and regulations and any applicable
requirements of any securities exchange on which the Notes are listed, and any
violation of the provisions of the Indenture relating to such Offer to Purchase
occurring as a result of such compliance shall not be deemed an Event of Default
or an event that, with the passing of time or giving of notice, or both, would
constitute an Event of Default.
Except as described above with respect to a Change of Control, the
Indenture does not contain provisions that permit the Holders of the Notes to
require that the Company repurchase or redeem the Notes in the event of a
takeover, recapitalization or similar transaction.
CERTAIN COVENANTS
Limitation on Restricted Payments. The Indenture will provide that the
Company will not, and will not cause or permit any Restricted Subsidiary to,
directly or indirectly,
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(i) declare or pay any dividend or any other distribution on any
Equity Interests of the Company or any Restricted Subsidiary or make any
payment or distribution to the direct or indirect holders (in their
capacities as such) of Equity Interests of the Company or any Restricted
Subsidiary (other than any dividends, distributions and payments made to
the Company or any Restricted Subsidiary and dividends or distributions
payable to any Person solely in Qualified Equity Interests of the Company
or in options, warrants or other rights to purchase Qualified Equity
Interests of the Company);
(ii) purchase, redeem or otherwise acquire or retire for value any
Equity Interests of the Company or any Restricted Subsidiary (other than
any such Equity Interests owned by the Company or any Restricted
Subsidiary);
(iii) purchase, redeem, defease or retire for value, or make any
principal payment on, prior to any scheduled maturity, scheduled repayment
or scheduled sinking fund payment, any Subordinated Indebtedness; or
(iv) make any Investment in any Person (other than Permitted
Investments)
(any such payment or any other action (other than any exception thereto)
described in (i), (ii), (iii) or (iv) each, a "Restricted Payment"), unless
(a) no Default or Event of Default shall have occurred and be
continuing at the time or immediately after giving effect to such
Restricted Payment;
(b) immediately after giving effect to such Restricted Payment, the
Company would be able to Incur $1.00 of additional Indebtedness (other than
Permitted Indebtedness) under the Consolidated Coverage Ratio of the first
paragraph of "-- Limitation on Indebtedness" below; and
(c) immediately after giving effect to such Restricted Payment, the
aggregate amount of all Restricted Payments declared or made on or after
the Issue Date does not exceed an amount equal to the sum of (1) 50% of
cumulative Consolidated Net Income determined for the period (taken as one
period) from the beginning of the first fiscal quarter commencing after the
Issue Date and ending on the last day of the most recent fiscal quarter
immediately preceding the date of such Restricted Payment for which
consolidated financial information of the Company is available (or if such
cumulative Consolidated Net Income shall be a loss, minus 100% of such
loss), plus (2) 100% of the aggregate net cash proceeds received by the
Company either (x) as capital contributions to the Company after the Issue
Date or (y) from the issue and sale (other than to a Restricted Subsidiary)
of its Qualified Equity Interests after the Issue Date (excluding the net
proceeds from any issuance and sale of Qualified Equity Interests financed,
directly or indirectly, using funds borrowed from the Company or any
Restricted Subsidiary until and to the extent such borrowing is repaid),
plus (3) the principal amount (or accreted amount (determined in accordance
with GAAP), if less) of any Indebtedness of the Company or any Restricted
Subsidiary Incurred after the Issue Date that has been converted into or
exchanged for Qualified Equity Interests of the Company, plus (4) so long
as the Designation thereof was treated as a Restricted Payment made after
the Issue Date, with respect to any Unrestricted Subsidiary that has been
redesignated as a Restricted Subsidiary after the Issue Date in accordance
with "Designation of Unrestricted Subsidiaries" below, the Company's
proportionate interest in an amount equal to the excess of (x) the total
assets of such Subsidiary, valued on an aggregate basis at Fair Market
Value, over (y) the total liabilities of such Subsidiary, determined in
accordance with GAAP (and provided that such amount shall not in any case
exceed the Designation Amount with respect to such Restricted Subsidiary
upon its Designation), minus (5) the Designation Amount (measured as of the
date of Designation) with respect to any Subsidiary of the Company that has
been designated as an Unrestricted Subsidiary after the Issue Date in
accordance with "Designation of Unrestricted Subsidiaries" below; plus (6)
$10 million.
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The foregoing provisions will not prevent (i) the payment of any dividend
or distribution on, or redemption of, Equity Interests within 60 days after the
date of declaration of such dividend or distribution or the giving of formal
notice of such redemption, if at the date of such declaration or giving of such
formal notice such payment or redemption would comply with the provisions of the
Indenture; (ii) the purchase, redemption, retirement or other acquisition of any
Equity Interests of the Company in exchange for, or out of the net cash proceeds
of the substantially concurrent issue and sale (other than to a Restricted
Subsidiary) of, Qualified Equity Interests of the Company; provided, however,
that any such net cash proceeds and the value of any Qualified Equity Interests
issued in exchange for such retired Equity Interests are excluded from clause
(c)(2) of the preceding paragraph (and were not included therein at any time)
and are not used to redeem the Notes pursuant to "-- Optional Redemption" above;
(iii) the purchase, redemption, retirement, defeasance or other acquisition of
Subordinated Indebtedness, or any other payment thereon, made in exchange for,
or out of the net cash proceeds of, a substantially concurrent issue and sale
(other than to a Restricted Subsidiary) of (x) Qualified Equity Interests of the
Company; provided, however, that any such net cash proceeds and the value of any
Qualified Equity Interests issued in exchange for Subordinated Indebtedness are
excluded from clauses (c)(2) and (c)(3) of the preceding paragraph (and were not
included therein at any time) and are not used to redeem the Notes pursuant to
"-- Optional Redemption" above or (y) Subordinated Indebtedness permitted to be
Incurred pursuant to clause (g) of the second paragraph under "-- Limitation on
Indebtedness;" (iv) the purchase of Equity Interests from officers and directors
of the Company or any Restricted Subsidiary in an amount not to exceed $1.0
million; (v) the redemption of the Company's zero coupon convertible
subordinated debenture due 2002; and (vi) the declaration and payment of pro
rata dividends or pro rata redemptions with respect to holders of minority
interests in the common stock of a Restricted Subsidiary of the Company;
provided, however, that in the case of each of clauses (ii), (iii), (iv), (v)
and (vi), no Default or Event of Default shall have occurred and be continuing
or would arise therefrom.
In determining the amount of Restricted Payments permissible under the
immediately preceding paragraph of this covenant, amounts expended pursuant to
clauses (i), (iv) and, to the extent the redemption contemplated by clause (v)
is in cash, (v) of the immediately preceding paragraph shall be included as
Restricted Payments. The amount of any non-cash Restricted Payment shall be
deemed to be equal to the Fair Market Value thereof at the date of the making of
such Restricted Payment.
Limitation on Indebtedness. The Indenture will provide that the Company
will not, and will not cause or permit any Restricted Subsidiary to, directly or
indirectly, Incur any Indebtedness (including Acquired Indebtedness), except for
Permitted Indebtedness; provided, however, that the Company may Incur
Indebtedness (including Acquired Indebtedness), and any Restricted Subsidiary
may Incur Indebtedness (including Acquired Indebtedness), if, at the time of and
immediately after giving pro forma effect to such Incurrence of Indebtedness and
the application of the proceeds therefrom, the Consolidated Coverage Ratio would
be greater than 2.00 to 1.0.
The foregoing limitations will not apply to the Incurrence by the Company
or any Restricted Subsidiary of any of the following (collectively, "Permitted
Indebtedness"), each of which shall be given independent effect:
(a) Indebtedness under the Notes, the Indenture and the Guarantees;
(b) Indebtedness incurred under a credit facility (including the
Existing Credit Facility) or credit facilities in an aggregate principal
amount at any one time outstanding not to exceed $80.0 million or the
non-U.S. denominated equivalent thereof;
(c) Indebtedness under the 10 3/8% Notes;
(d) intercompany Indebtedness permitted by the covenant "Limitation on
Restricted Payments;"
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(e) Interest Rate Agreements and Currency Agreements of the Company
relating to Indebtedness of the Company (which Indebtedness is otherwise
permitted to be Incurred under this covenant);
(f) Existing Indebtedness (other than Indebtedness under the Existing
Credit Facility);
(g) Indebtedness to the extent representing a replacement, renewal,
refinancing or extension (collectively, a "refinancing") of outstanding
Indebtedness Incurred in compliance with the Consolidated Coverage Ratio of
the first paragraph of this covenant or clauses (a), (c) and (f) of this
paragraph of this covenant; provided, however, that (i) any such
refinancing shall not exceed the sum of the principal amount (or accreted
amount (determined in accordance with GAAP), if less) of the Indebtedness
being refinanced, plus the amount of accrued interest thereon, plus the
amount of any reasonably determined prepayment premium necessary to
accomplish such refinancing and such reasonable fees and expenses incurred
in connection therewith; (ii) Indebtedness representing a refinancing of
Indebtedness other than Senior Indebtedness shall have a Weighted Average
Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of the Indebtedness being refinanced; (iii) Indebtedness that is
pari passu with the Notes may only be refinanced with Indebtedness that is
made pari passu with or subordinate in right of payment to the Notes and
Subordinated Indebtedness may only be refinanced with Subordinated
Indebtedness and (iv) Indebtedness of a Restricted Subsidiary may only be
refinanced by Indebtedness of such Restricted Subsidiary or the Company;
(h) the Guarantees and guarantees by any Guarantor of any Indebtedness
of the Company;
(i) Indebtedness arising from agreements providing for
indemnification, adjustment of purchase price or similar obligations, or
from guarantees or letters of credit, surety bonds or performance bonds
securing any obligations of the Company or any Restricted Subsidiary
pursuant to such agreements, incurred or assumed in connection with the
acquisition or disposition of any business, assets or Restricted Subsidiary
of the Company, other than guarantees or similar credit support by the
Company of Indebtedness incurred by any person acquiring all or any portion
of such business, assets or Restricted Subsidiary for the purpose of
financing such acquisition;
(j) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient
funds in the ordinary course of business, provided that such Indebtedness
referred to in this clause (i) is extinguished within three Business Days
of its incurrence; and
(k) In addition to the items referred to in clauses (a) through (j)
above, Indebtedness of the Company and the Restricted Subsidiaries
(including any Indebtedness under the Existing Credit Facility, any
Purchase Money Indebtedness and/or any Capital Lease Obligations that
utilizes this subparagraph (k)) having an aggregate principal amount and/or
attributable indebtedness not to exceed $25.0 million at any one time
outstanding.
Limitation on Senior Subordinated Indebtedness. The Indenture will provide
that the Company will not, directly or indirectly, Incur any Indebtedness that
by its terms would expressly rank senior in right of payment to the Notes and
subordinate in right of payment to any other Indebtedness of the Company.
The Company will not permit any Guarantor to, and no Guarantor shall,
directly or indirectly, Incur any Indebtedness that by its terms would expressly
rank senior in right of payment to the Guarantee of such Guarantor and
subordinate in right of payment to any other Indebtedness of such Guarantor.
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Limitation on Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries. The Indenture will provide that the Company will not, and will
not cause or permit any Restricted Subsidiary to, directly or indirectly, create
or otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any Restricted Subsidiary to (a) pay dividends or
make any other distributions to the Company or any other Restricted Subsidiary
on its Equity Interests or with respect to any other interest or participation
in, or measured by, its profits, or pay any Indebtedness owed to the Company or
any other Restricted Subsidiary, (b) make loans or advances to, or guarantee any
Indebtedness or other obligations of, or make any Investment in, the Company or
any other Restricted Subsidiary or (c) transfer any of its properties or assets
to the Company or any other Restricted Subsidiary, except for such encumbrances
or restrictions existing under or by reason of (i) the Existing Credit Facility,
or any other agreement of the Company or the Restricted Subsidiaries outstanding
on the Issue Date, in each case as in effect on the Issue Date, and any
amendments, restatements, renewals, replacements or refinancings thereof;
provided, however, that any such amendment, restatement, renewal, replacement or
refinancing is not materially more restrictive in the aggregate with respect to
such encumbrances or restrictions than those contained in the agreement being
amended, restated, reviewed, replaced or refinanced; (ii) applicable law; (iii)
any instrument governing Indebtedness or Equity Interests of an Acquired Person
acquired by the Company or any Restricted Subsidiary as in effect at the time of
such acquisition (except to the extent such Indebtedness was Incurred by such
Acquired Person in connection with, as a result of or in contemplation of such
acquisition); provided, however, that such encumbrances and restrictions are not
applicable to the Company or any Restricted Subsidiary, or the properties or
assets of the Company or any Restricted Subsidiary, other than the Acquired
Person; (iv) customary non-assignment provisions in leases, licenses or other
agreements entered into in the ordinary course of business and consistent with
past practices; (v) any agreement for the sale or disposition of the Equity
Interests or assets of any Restricted Subsidiary; provided, however, that such
encumbrances and restrictions described in this clause (v) are only applicable
to such Restricted Subsidiary or assets, as applicable, and any such sale or
disposition is made in compliance with "Disposition of Proceeds of Asset Sales"
below to the extent applicable thereto; (vi) refinancing indebtedness permitted
under clause (g) of the second paragraph of "Limitation on Indebtedness" above;
provided, however, that such encumbrances and restrictions contained in the
agreements governing such Indebtedness are not materially more restrictive in
the aggregate than those contained in the agreements governing the Indebtedness
being refinanced immediately prior to such refinancing; (vii) the Indenture, the
Notes and the Guarantees; and (viii) Purchase Money Indebtedness that impose
restrictions of the nature described in clause (c) above on the property
acquired.
Designation of Unrestricted Subsidiaries. The Company may (A) organize one
or more Unrestricted Subsidiaries or (B) designate after the Issue Date any
Subsidiary of the Company as an "Unrestricted Subsidiary" under the Indenture (a
"Designation") only if:
(i) no Default or Event of Default shall have occurred and be
continuing at the time of or after giving effect to such Designation;
(ii) in the case of (B) only, at the time of and after giving effect
to the Designation of a Restricted Subsidiary as an Unrestricted
Subsidiary, the Company could Incur $1.00 of additional Indebtedness (other
than Permitted Indebtedness) under the Consolidated Coverage Ratio of the
first paragraph of "Limitation on Indebtedness" above; and
(iii) the Company would be permitted to make an Investment (including
a Permitted Investment) in the case of (B) only, at the time of Designation
(assuming the effectiveness of such Designation) or, in the case of (A)
only, at the time of an Investment in such Subsidiary, pursuant to the
first paragraph of "Limitation on Restricted Payments" above in an amount
(the "Designation Amount") equal to the Fair Market Value of the Company's
proportionate interest in the net worth of such Subsidiary on such date
calculated in accordance with GAAP.
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Neither the Company nor any Restricted Subsidiary shall at any time (x)
provide credit support for, subject any of its property or assets (other than
the Equity Interests of any Unrestricted Subsidiary) to the satisfaction of, or
guarantee, any Indebtedness of any Unrestricted Subsidiary (including any
undertaking, agreement or instrument evidencing such Indebtedness) or (y) be
directly or indirectly liable for any Indebtedness of any Unrestricted
Subsidiary, except for (i) any non-recourse guarantee given solely to support
the pledge by the Company or any Restricted Subsidiary of the capital stock of
any Unrestricted Subsidiary and (ii) any such guarantee that is otherwise a
Permitted Investment or would be permitted under the first paragraph of
"Limitation on Restricted Payments" above. For purposes of the foregoing, the
Designation of a Subsidiary of the Company as an Unrestricted Subsidiary shall
be deemed to include the Designation of all of the Subsidiaries of such
Subsidiary.
The Company may revoke any Designation of a Subsidiary as an Unrestricted
Subsidiary (a "Revocation") only if:
(i) no Default or Event of Default shall have occurred and be
continuing at the time of and after giving effect to such Revocation; and
(ii) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately following such Revocation would, if Incurred at
such time, have been permitted to be Incurred for all purposes of the
Indenture.
All Designations and Revocations must be evidenced by resolutions of the
Board of Directors of the Company, delivered to the Trustee certifying
compliance with the foregoing provisions.
Limitation on Liens. The Indenture will provide that the Company will not,
and will not cause or permit any Restricted Subsidiary to, directly or
indirectly, Incur any Liens of any kind against or upon any of their respective
properties or assets now owned or hereafter acquired, or any proceeds therefrom
or any income or profits therefrom, to secure any Indebtedness unless
contemporaneously therewith effective provision is made, in the case of the
Company, to secure the Notes and all other amounts due under the Indenture, and
in the case of a Restricted Subsidiary that is a Guarantor, to secure such
Restricted Subsidiary's Guarantee of the Notes and all other amounts due under
the Indenture, equally and ratably with such Indebtedness (or, in the event that
such Indebtedness is subordinated in right of payment to the Notes or such
Restricted Subsidiary's Guarantee, prior to such Indebtedness) with a Lien on
the same properties and assets securing such Indebtedness for so long as such
Indebtedness is secured by such Lien, except for (i) Liens securing Senior
Indebtedness of the Company or Indebtedness of any Restricted Subsidiary
permitted to be incurred under the Indenture by any Restricted Subsidiary and
(ii) Permitted Liens.
Disposition of Proceeds of Asset Sales. The Indenture will provide that
the Company will not, and will not cause or permit any Restricted Subsidiary to,
directly or indirectly, make any Asset Sale, unless (i) the Company or such
Restricted Subsidiary, as the case may be, receives consideration at the time of
such Asset Sale at least equal to the Fair Market Value of the assets sold or
otherwise disposed of and (ii) at least 75% of such consideration consists of
(A) cash or Cash Equivalents, or (B) properties and capital assets that replace
the properties and assets that were the subject of such Asset Sale or in
properties and capital assets that will be used in the business of the Company
and its Restricted Subsidiaries as existing on the Issue Date or in businesses
reasonably related thereto (as determined in good faith by the Company's Board
of Directors) ("Replacement Assets"); provided, that, an exchange or sale of
Equity Interests in any Subsidiary of the Company may be made without complying
with clause (ii)(A) above; provided, further, that after giving effect to any
such exchange or sale, the Company has a Consolidated Coverage Ratio of 2.50 to
1.0. The amount of any Indebtedness or other liabilities of the Company or any
Restricted Subsidiary that is actually assumed by the transferee in such Asset
Sale and from which the Company and the Restricted Subsidiaries are fully and
unconditionally released shall be deemed to be cash for purposes of determining
the percentage of cash consideration received by the Company or the Restricted
Subsidiaries.
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The Company or such Restricted Subsidiary, as the case may be, may (i)
apply the Net Cash Proceeds of any Asset Sale within 365 days of receipt thereof
to repay Senior Indebtedness or (ii) make an Investment in Replacement Assets.
To the extent all or part of the Net Cash Proceeds of any Asset Sale are
not applied within 365 days of such Asset Sale as described in clause (i) or
(ii) of the immediately preceding paragraph (such Net Cash Proceeds, the
"Unutilized Net Cash Proceeds"), the Company shall, within 20 days after such
365th day, make an Offer to Purchase all outstanding Notes up to a maximum
principal amount (expressed as a multiple of $1,000) of Notes equal to the Notes
Pro Rata Share, at a purchase price in cash equal to 100% of the principal
amount thereof, plus accrued and unpaid interest thereon, if any, to the
Purchase Date; provided, however, that the Offer to Purchase may be deferred
until there are aggregate Unutilized Net Cash Proceeds equal to or in excess of
$10 million, at which time the entire amount of such Unutilized Net Cash
Proceeds, and not just the amount in excess of $10 million, shall be applied as
required pursuant to this paragraph.
With respect to any Offer to Purchase effected pursuant to this covenant,
to the extent the aggregate principal amount of Notes tendered pursuant to such
Offer to Purchase exceeds the Unutilized Net Cash Proceeds to be applied to the
repurchase thereof, such Notes shall be purchased pro rata based on the
aggregate principal amount of such Notes tendered by each Holder. To the extent
the Unutilized Net Cash Proceeds exceed the aggregate amount of Notes tendered
by the Holders of the Notes pursuant to such Offer to Purchase, the Company may
retain and utilize any portion of the Unutilized Net Cash Proceeds not applied
to repurchase the Notes for any purpose consistent with the other terms of the
Indenture.
In the event that the Company makes an Offer to Purchase the Notes, the
Company shall comply with any applicable securities laws and regulations,
including any applicable requirements of Section 14(e) of, and Rule 14e-1 under,
the Exchange Act, and any violation of the provisions of the Indenture relating
to such Offer to Purchase occurring as a result of such compliance shall not be
deemed an Event of Default or an event that with the passing of time or giving
of notice, or both, would constitute an Event of Default.
Each Holder shall be entitled to tender all or any portion of the Notes
owned by such Holder pursuant to the Offer to Purchase, subject to the
requirement that any portion of a Note tendered must be tendered in an integral
multiple of $1,000 principal amount and subject to any proration among tendering
Holders as described above.
Merger, Sale of Assets, Etc. The Indenture will provide that the Company
will not consolidate with or merge with or into (whether or not the Company is
the Surviving Person) any other entity and the Company will not sell, convey,
assign, transfer, lease or otherwise dispose of all or substantially all of the
Company's and the Restricted Subsidiaries' properties and assets (determined on
a consolidated basis for the Company and the Restricted Subsidiaries) to any
entity in a single transaction or series of related transactions, unless: (i)
either (x) the Company shall be the Surviving Person or (y) the Surviving Person
(if other than the Company) shall be a corporation organized and validly
existing under the laws of the United States of America or any State thereof or
the District of Columbia, and shall, in any such case, expressly assume by a
supplemental indenture, the due and punctual payment of the principal of,
premium, if any, and interest on all the Notes and the performance and
observance of every covenant of the Indenture and the Registration Rights
Agreement to be performed or observed on the part of the Company; (ii)
immediately thereafter, no Default or Event of Default shall have occurred and
be continuing; and (iii) immediately after giving effect to any such transaction
involving the Incurrence by the Company or any Restricted Subsidiary, directly
or indirectly, of additional Indebtedness (and treating any Indebtedness not
previously an obligation of the Company or any Restricted Subsidiary in
connection with or as a result of such transaction as having been Incurred at
the time of such transaction), the Surviving Person (A) shall have a
Consolidated Net Worth equal to or greater than the Consolidated Net Worth of
the Company immediately prior to such transaction and (B) could Incur, on a pro
forma basis after giving effect to
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such transaction as if it had occurred at the beginning of the four quarter
period immediately preceding such transaction for which consolidated financial
statements of the Company are available, at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) under the Consolidated Coverage
Ratio of the first paragraph of "Limitation on Indebtedness" above; provided
that the Company will not be subject to the provisions of this clause (iii)(B)
in the case of a merger of the Company with a Subsidiary of the Company effected
for the sole purpose of creating a holding company for the Company.
Notwithstanding the foregoing clause (iii) of the immediately preceding
paragraph, any Restricted Subsidiary may consolidate with, merge into or
transfer all or part of its properties and assets to the Company or any other
Restricted Subsidiary.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of transactions) of all or
substantially all the properties and assets of one or more Restricted
Subsidiaries the Equity Interest of which constitutes all or substantially all
the properties and assets of the Company shall be deemed to be the transfer of
all or substantially all the properties and assets of the Company.
No Guarantor (other than a Guarantor whose Guarantee is to be released in
accordance with the terms of its Guarantee and the Indenture as provided in the
third paragraph under "Guarantees of the Notes" above) shall consolidate with or
merge with or into another Person, whether or not such Person is affiliated with
such Guarantor and whether or not such Guarantor is the Surviving Person, unless
(i) the Surviving Person (if other than such Guarantor) is a corporation
organized and validly existing under the laws of the United States, any State
thereof or the District of Columbia; (ii) the Surviving Person (if other than
such Guarantor) expressly assumes by a supplemental indenture all the
obligations of such Guarantor under its Guarantee of the Notes and the
performance and observance of every covenant of the Indenture and the
Registration Rights Agreement to be performed or observed by such Guarantor;
(iii) at the time of and immediately after such Disposition, no Default or Event
of Default shall have occurred and be continuing; and (iv) immediately after
giving effect to any such transaction involving the Incurrence by such
Guarantor, directly or indirectly, of additional Indebtedness (and treating any
Indebtedness not previously an obligation of such Guarantor in connection with
or as a result of such transaction as having been Incurred at the time of such
transaction), the Company could Incur, on a pro forma basis after giving effect
to such transaction as if it had occurred at the beginning of the latest fiscal
quarter for which consolidated financial statements of the Company are
available, at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) under the Consolidated Coverage Ratio of the first paragraph of
"Limitation of Indebtedness" above; provided, however, that clause (iv) of this
paragraph shall not be a condition to a merger or consolidation of a Guarantor
if such merger or consolidation only involves the Company and/or one or more
other Guarantors. Notwithstanding the foregoing, nothing in this covenant shall
prohibit the consolidation or merger with or into or the sale of all or
substantially all of the assets or properties of a Guarantor to any other
Restricted Subsidiary that is a Guarantor.
In the event of any transaction (other than a lease) described in and
complying with the conditions listed in the immediately preceding paragraphs in
which the Company or a Guarantor, as the case may be, is not the Surviving
Person and the Surviving Person is to assume all the Obligations of the Company
under the Notes, the Indenture and the Registration Rights Agreement or of such
Guarantor under its Guarantee, the Indenture and the Registration Rights
Agreement, as the case may be, pursuant to a supplemental indenture, such
Surviving Person shall succeed to, and be substituted for, and may exercise
every right and power of, the Company or such Guarantor, as the case may be, and
the Company, as the case may be, shall be discharged from its Obligations under
the Indenture and the Notes or such Guarantor shall be discharged from its
Obligations under the Indenture and its Guarantee.
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Transactions with Affiliates. The Indenture will provide that the Company
will not, and will not cause or permit any Restricted Subsidiary to, directly or
indirectly, conduct any business or enter into any transaction (or series of
related transactions) with or for the benefit of any of their respective
Affiliates or any officer, director or employee of the Company or any Restricted
Subsidiary (each an "Affiliate Transaction"), unless (i) such Affiliate
Transaction is on terms that are no less favorable to the Company or such
Restricted Subsidiary, as the case may be, than would be available in a
comparable transaction with an unaffiliated third party and (ii) if such
Affiliate Transaction (or series of related Affiliate Transactions) involves
aggregate payments or other consideration having a Fair Market Value in excess
of $10 million, such Affiliate Transaction is in writing and a majority of the
disinterested members of the Board of Directors of the Company shall have
approved such Affiliate Transaction and determined that such Affiliate
Transaction complies with the foregoing provisions. In addition, any Affiliate
Transaction involving aggregate payments or other consideration having a Fair
Market Value in excess of $25 million will also require a written opinion from
an Independent Financial Advisor (filed with the Trustee) stating that the terms
of such Affiliate Transaction are fair, from a financial point of view, to the
Company or the Restricted Subsidiary involved in such Affiliate Transaction, as
the case may be.
Notwithstanding the foregoing, the restrictions set forth in this covenant
shall not apply to (i) transactions with or among the Company and any Wholly
Owned Restricted Subsidiary or between or among Wholly Owned Restricted
Subsidiaries; (ii) reasonable fees and compensation paid to and indemnity
provided on behalf of, officers, directors, employees, consultants or agents of
the Company or any Restricted Subsidiary of the Company as determined in good
faith by the Company's Board of Directors; (iii) any transactions undertaken
pursuant to any contractual obligations in existence on the Issue Date (as in
effect on the Issue Date); (iv) any Restricted Payments made in compliance with
"Limitation on Restricted Payments" above; (v) loans, loan programs and advances
to officers, directors and employees of the Company or any Restricted
Subsidiary, in each case made in the ordinary course of business and approved by
the Company's Board of Directors or the Compensation Committee of the Board of
Directors; (vi) customary employment arrangements and benefit programs approved
in good faith by the Company's Board of Directors; and (vii) the grant of stock
options, stock grants, equity appreciation rights or similar rights to employees
and directors of the Company pursuant to plans approved by the Board of
Directors.
Limitation on the Sale or Issuance of Equity Interests of Restricted
Subsidiaries. The Indenture will provide that the Company will not sell any
Equity Interest of a Restricted Subsidiary, and will not cause or permit any
Restricted Subsidiary, directly or indirectly, to issue or sell any Equity
Interests, except: (i) to the Company or a Wholly Owned Restricted Subsidiary;
or (ii) in any other issuance or sale, provided such Restricted Subsidiary
remains a Restricted Subsidiary. The foregoing shall not apply to the sale by
the Company of all the Equity Interests of a Restricted Subsidiary as long as
the Company is in compliance with the terms of the covenant described under
"Disposition of Proceeds of Asset Sales" and, if applicable, "Merger, Sale of
Assets, Etc." above.
Limitation on Guarantees by Restricted Subsidiaries. The Indenture will
provide that in the event the Company (i) organizes or acquires any Domestic
Restricted Subsidiary after the Issue Date that is not a Guarantor or (ii)
causes or permits any Foreign Restricted Subsidiary that is not a Guarantor to,
directly or indirectly, guarantee the payment of any Indebtedness of the Company
or any Domestic Restricted Subsidiary ("Other Indebtedness") then, in each case
the Company shall cause such Restricted Subsidiary to simultaneously execute and
deliver a supplemental indenture to the Indenture pursuant to which it will
become a Guarantor under the Indenture; provided, however, that in the event a
Domestic Restricted Subsidiary is acquired in a transaction in which a merger
agreement is entered into, such Domestic Restricted Subsidiary shall not be
required to execute and deliver such supplemental indenture until the
consummation of the merger contemplated by any such merger agreement; provided,
further, that if such Other Indebtedness is (i) Indebtedness that is ranked pari
passu in right of payment with the Notes or the Guarantee of such Restricted
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Subsidiary, as the case may be, the Guarantee of such Subsidiary shall be pari
passu in right of payment with the guarantee of the Other Indebtedness; or (ii)
Subordinated Indebtedness, the Guarantee of such Subsidiary shall be senior in
right of payment to the guarantee of the Other Indebtedness (which guarantee of
such Subordinated Indebtedness shall provide that such guarantee is subordinated
to the Guarantees of such Subsidiary to the same extent and in the same manner
as the other Indebtedness is subordinated to the Notes or the Guarantee of such
Restricted Subsidiary, as the case may be); or (iii) Indebtedness that ranks
senior in right of payment to the Notes or the Guarantee of such Restricted
Subsidiary, as the case may be, the Guarantee of such Subsidiary shall be senior
in right of payment with the guarantee of the Other Indebtedness.
Provision of Financial Information. Whether or not the Company is subject
to Section 13(a) or 15(d) of the Exchange Act, or any successor provision
thereto, the Company shall file with the SEC (if permitted by SEC practice and
applicable law and regulations) the annual reports, quarterly reports and other
documents which the Company would have been required to file with the SEC
pursuant to such Section 13(a) or 15(d) or any successor provision thereto if
the Company were so subject, such documents to be filed with the SEC on or prior
to the respective dates (the "Required Filing Dates") by which the Company would
have been required so to file such documents if the Company were so subject. The
Company shall also in any event (a) within 15 days of each Required Filing Date
(whether or not permitted or required to be filed with the SEC) file with the
Trustee and provide by mail to all Holders copies of all reports and other
documents which the Company generally provides to its stockholders, or, if such
filing is not so permitted, information and data of a similar nature, and (b)
if, notwithstanding the preceding sentence, filing such documents by the Company
with the SEC is not permitted by SEC practice or applicable law or regulations,
promptly upon written request supply copies of such documents to any Holder. In
addition, for so long as any Notes remain outstanding, the Company will furnish
to the Holders and to securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act, and, to any beneficial holder of Notes, if not
obtainable from the SEC, information of the type that would be filed with the
SEC pursuant to the foregoing provisions, upon the request of any such holder.
EVENTS OF DEFAULT
The occurrence of any of the following will be defined as an "Event of
Default" under the Indenture: (a) failure to pay principal of (or premium, if
any, on) any Note when due (whether or not prohibited by the provisions of the
Indenture described under "Subordination of the Notes" above); (b) failure to
pay any interest on any Note when due, continued for 30 days or more (whether or
not prohibited by the provisions of the Indenture described under "Subordination
of the Notes" above); (c) default in the payment of principal of or interest on
any Note required to be purchased pursuant to any Offer to Purchase required by
the Indenture when due and payable or failure to pay on the Purchase Date the
Purchase Price for any Note validly tendered pursuant to any Offer to Purchase
(whether or not prohibited by the provisions of the Indenture described under
"Subordination of the Notes" above); (d) failure to perform or comply with any
of the provisions described under "Certain Covenants -- Merger, Sale of Assets,
Etc." above; (e) failure to perform any other covenant, warranty or agreement of
the Company under the Indenture or in the Notes or of the Guarantors under the
Indenture or in the Guarantees continued for 30 days or more after written
notice to the Company by the Trustee or Holders of at least 25% in aggregate
principal amount of the outstanding Notes; (f) default or defaults under the
terms of one or more instruments evidencing or securing Indebtedness of the
Company or any of its Restricted Subsidiaries having an outstanding principal
amount of $10.0 million or more individually or in the aggregate that has
resulted in the acceleration of the payment of such Indebtedness or failure by
the Company or any of its Restricted Subsidiaries to pay principal when due at
the stated maturity of any such Indebtedness and such default or defaults shall
have continued after any applicable grace period and shall not have been cured
or waived; (g) the rendering of a final judgment or judgments (not subject to
appeal) against the Company or any of its Restricted Subsidiaries in an amount
of $10.0
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million or more (net of any amounts covered by reputable and creditworthy
insurance companies) that remains undischarged or unstayed for a period of 60
days after the date on which the right to appeal has expired; (h) certain events
of bankruptcy, insolvency or reorganization affecting the Company or any of its
Significant Restricted Subsidiaries; or (i) other than as provided in or
pursuant to any Guarantee or the Indenture, any Guarantee ceases to be in full
force and effect or is declared null and void and unenforceable or found to be
invalid or any Guarantor denies its liability under its Guarantee (other than by
reason of a release of such Guarantor from its Guarantee in accordance with the
terms of the Indenture and such Guarantee).
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default shall occur and be continuing, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the Holders of Notes, unless
such Holders shall have offered to the Trustee reasonable indemnity. Subject to
such provisions for the indemnification of the Trustee, the Holders of a
majority in aggregate principal amount of the outstanding Notes will have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
such Trustee.
If an Event of Default with respect to the Notes (other than an Event of
Default with respect to the Company described in clause (h) of the preceding
paragraph) occurs and is continuing, the Trustee or the Holders of at least 25%
in aggregate principal amount of the outstanding Notes, by notice in writing to
the Company may declare the unpaid principal of (and premium, if any) and
accrued interest to the date of acceleration on all the outstanding Notes to be
due and payable immediately and, upon any such declaration, such principal
amount (and premium, if any) and accrued interest, notwithstanding anything
contained in the Indenture or the Notes to the contrary will become immediately
due and payable. If an Event of Default specified in clause (h) of the preceding
paragraph with respect to the Company occurs under the Indenture, the Notes will
ipso facto become immediately due and payable without any declaration or other
act on the part of the Trustee or any Holder of the Notes.
Any such declaration with respect to the Notes may be annulled by the
Holders of a majority in aggregate principal amount of the outstanding Notes
upon the conditions provided in the Indenture. For information as to waiver of
defaults, see "Modification and Waiver" below.
The Indenture provides that the Trustee shall, within 30 days after the
occurrence of any Default or Event of Default with respect to the Notes
outstanding, give the Holders of the Notes thereof notice of all uncured
Defaults or Events of Default thereunder known to it; provided, however, that,
except in the case of a Default or an Event of Default in payment with respect
to the Notes or a Default or Event of Default in complying with "Certain
Covenants -- Merger, Sale of Assets, Etc." above, the Trustee shall be protected
in withholding such notice if and so long as a committee of its trust officers
in good faith determines that the withholding of such notice is in the interest
of the Holders of the Notes.
No Holder of any Note will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless such Holder shall
have previously given to the Trustee written notice of a continuing Event of
Default thereunder and unless the Holders of at least 25% of the aggregate
principal amount of the outstanding Notes shall have made written request, and
offered reasonable indemnity, to the Trustee to institute such proceeding as the
Trustee, and the Trustee shall have not have received from the Holders of a
majority in aggregate principal amount of such outstanding Notes a direction
inconsistent with such request and shall have failed to institute such
proceeding within 60 days. However, such limitations do not apply to a suit
instituted by a Holder of such a Note for enforcement of payment of the
principal of and premium, if any, or interest on such Note on or after the
respective due dates expressed in such Note.
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The Company will be required to furnish to the Trustee annually a statement
as to the performance by it of certain of its obligations under the Indenture
and as to any default in such performance.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES, INCORPORATOR AND
STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the Company
or any of its Affiliates, as such, shall have any liability for any obligations
of the Company or any of its Affiliates under the Notes or the Indenture or for
any claim based on, in respect of, or by reason of, such obligations or their
creation. Each holder of Notes by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the Notes.
SATISFACTION AND DISCHARGE OF INDENTURE; DEFEASANCE
The Company may terminate its and the Guarantors' substantive obligations
in respect of the Notes by delivering all outstanding Notes to the Trustee for
cancellation and paying all sums payable by it on account of principal of,
premium, if any, and interest on all Notes or otherwise. In addition to the
foregoing, the Company may, provided that no Default or Event of Default has
occurred and is continuing or would arise therefrom (or, with respect to a
Default or Event of Default specified in clause (h) of "Events of Default"
above, occurs at any time on or prior to the 91st calendar day after the date of
such deposit (it being understood that this condition shall not be deemed
satisfied until after such 91st day)) under the Indenture and provided that no
default under any Senior Indebtedness would result therefrom, terminate its and
the Guarantors' substantive obligations in respect of the Notes (except for its
obligations to pay the principal of (and premium, if any, on) and the interest
on the Notes and the Guarantors' Guarantee thereof) by (i) depositing with the
Trustee, under the terms of an irrevocable trust agreement, money or United
States Government Obligations sufficient (without reinvestment) to pay all
remaining Indebtedness on such Notes; (ii) delivering to the Trustee either an
Opinion of Counsel or a ruling directed to the Trustee from the Internal Revenue
Service to the effect that the Holders of the Notes will not recognize income,
gain or loss for Federal income tax purposes as a result of such deposit and
termination of obligations; and (iii) complying with certain other requirements
set forth in the Indenture. In addition, the Company may, provided that no
Default or Event of Default has occurred and is continuing or would arise
therefrom (or, with respect to a Default or Event of Default specified in clause
(h) of "Events of Default" above, occurs at any time on or prior to the 91st
calendar day after the date of such deposit (it being understood that this
condition shall not be deemed satisfied until after such 91st day)) under the
Indenture and provided that no default under any Senior Indebtedness would
result therefrom, terminate all of its and the Guarantors' substantive
obligations in respect of the Notes (including its obligations to pay the
principal of (and premium, if any, on) and interest on the Notes and the
Guarantors' Guarantee thereof) by (i) depositing with the Trustee, under the
terms of an irrevocable trust agreement, money or United States Government
Obligations sufficient (without reinvestment) to pay all remaining Indebtedness
on the Notes; (ii) delivering to the Trustee either a ruling directed to the
Trustee from the Internal Revenue Service to the effect that the Holders of the
Notes will not recognize income, gain or loss for federal income tax purposes as
a result of such deposit and termination of obligations or an Opinion of Counsel
addressed to the Trustee based upon such a ruling or based on a change in the
applicable federal tax law since the date of the Indenture, to such effect; and
(iii) complying with certain other requirements set forth in the Indenture.
The Company may make an irrevocable deposit pursuant to this provision only
if at such time it is not prohibited from doing so under the subordination
provisions of the Indenture or certain covenants in the Senior Indebtedness and
the Company has delivered to the Trustee and any Paying Agent an Officers'
Certificate to that effect.
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GOVERNING LAW
The Indenture, the Notes and the Guarantees will be governed by the laws of
the State of New York without regard to principles of conflicts of laws.
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company,
the Guarantors, and the Trustee with the consent of the Holders of a majority in
aggregate principal amount of the outstanding Notes (including consents obtained
in connection with a tender offer or exchange offer for the Notes); provided,
however, that no such modification or amendment to the Indenture may, without
the consent of the Holder of each Note affected thereby, (a) change the maturity
of the principal of or any installment of interest on any such Note or alter the
optional redemption or repurchase provisions of any such Note or the Indenture
in a manner adverse to the Holders of the Notes; (b) reduce the principal amount
of (or the premium) of any such Note; (c) reduce the rate of or extend the time
for payment of interest on any such Note; (d) change the place or currency of
payment of principal of (or premium) or interest on any such Note; (e) modify
any provisions of the Indenture relating to the waiver of past defaults (other
than to add sections of the Indenture or the Notes subject thereto) or the right
of the Holders of Notes to institute suit for the enforcement of any payment on
or with respect to any such Note or any Guarantee in respect thereof or the
modification and amendment provisions of the Indenture and the Notes (other than
to add sections of the Indenture or the Notes which may not be amended,
supplemented or waived without the consent of each Holder therein affected); (f)
reduce the percentage of the principal amount of outstanding Notes necessary for
amendment to or waiver of compliance with any provision of the Indenture or the
Notes or for waiver of any Default in respect thereof; (g) waive a default in
the payment of principal of, interest on, or redemption payment with respect to,
the Notes (except a rescission of acceleration of the Notes by the Holders
thereof as provided in the Indenture and a waiver of the payment default that
resulted from such acceleration); (h) modify the ranking or priority of any Note
or the Guarantee in respect thereof of any Guarantor or modify the definition of
Senior Indebtedness or Guarantor Senior Indebtedness or amend or modify the
subordination provisions of the Indenture in any manner adverse to the Holders
of the Notes; (i) modify the provisions of any covenant (or the related
definitions) in the Indenture requiring the Company to make an Offer to Purchase
in a manner materially adverse to the Holders of Notes affected thereby
otherwise than in accordance with the Indenture; or (j) release any Guarantor
from any of its obligations under its Guarantee or the Indenture otherwise than
in accordance with the Indenture.
The Holders of a majority in aggregate principal amount of the outstanding
Notes, on behalf of all Holders of Notes, may waive compliance by the Company
and the Guarantors with certain restrictive provisions of the Indenture. Subject
to certain rights of the Trustee, as provided in the Indenture, the Holders of a
majority in aggregate principal amount of the Notes, on behalf of all Holders,
may waive any past default under the Indenture (including any such waiver
obtained in connection with a tender offer or exchange offer for the Notes),
except a default in the payment of principal, premium or interest or a default
arising from failure to purchase any Notes tendered pursuant to an Offer to
Purchase, or a default in respect of a provision that under the Indenture cannot
be modified or amended without the consent of the Holder of each Note that is
affected.
Without the consent of any Holder, the Company, the Guarantors and the
Trustee may amend the Indenture to cure any ambiguity, omission, defect or
inconsistency, to provide for the assumption by a successor corporation of the
obligations of the Company under the Indenture, to provide for uncertificated
Notes in addition to or in place of certificated Notes (provided that the
uncertificated Notes are issued in registered form for purposes of Section
163(f) of the Code, or in a manner such that the uncertificated Notes are
described in Section 163(f)(2)(B) of the Code), to add Guarantees with respect
to the Notes, to secure the Notes, to add to the covenants of the Company for
the benefit of the Holders or to surrender any right or power conferred upon the
Company, to make any change that does not adversely affect the rights of any
Holder or to comply
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with any requirement of the SEC in connection with the qualification of the
Indenture under the TIA. However, no amendment may be made to the subordination
provisions of the Indenture that adversely affects the rights of any holder of
Senior Indebtedness then outstanding unless the holders of such Senior
Indebtedness (or any group or representative thereof authorized to give a
consent) consent to such change.
The consent of the Holders is not necessary under the Indenture to approve
the particular form of any proposed amendment. It is sufficient if such consent
approves the substance of the proposed amendment.
THE TRUSTEE
Except during the continuance of a Default, the Trustee will perform only
such duties as are specifically set forth in the Indenture. During the existence
of a Default, the Trustee will exercise such rights and powers vested in it
under the Indenture and use the same degree of care and skill in its exercise as
a prudent person would exercise under the circumstances in the conduct of such
person's own affairs.
The Indenture and provisions of the Trust Indenture Act incorporated by
reference therein contain limitations on the rights of the Trustee, should it
become a creditor of the Company, any Guarantor or any other obligor upon the
Notes, to obtain payment of claims in certain cases or to realize on certain
property received by it in respect of any such claim as security or otherwise.
The Trustee is permitted to engage in other transactions with the Company or an
Affiliate of the Company; provided, however, that if it acquires any conflicting
interest (as defined in the Indenture or in the Trust Indenture Act), it must
eliminate such conflict or resign.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full definition of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"Acquired Indebtedness" means Indebtedness of a Person (a) assumed in
connection with an Acquisition from such Person or (b) existing at the time such
Person becomes a Restricted Subsidiary or is merged or consolidated with or into
the Company or any Restricted Subsidiary; in each case provided that such
Indebtedness is not incurred by such Person in connection with, or in
anticipation of or contemplation of, such Acquisition or such Person becoming a
Restricted Subsidiary of such merger or consolidation.
"Acquired Person" means, with respect to any specified Person, any other
Person that merges with or into or becomes a Subsidiary of such specified
Person.
"Acquisition" means (i) any acquisition or purchase of Equity Interests of
any other Person by the Company or any Restricted Subsidiary, in either case
pursuant to which such Person shall become a Restricted Subsidiary or shall be
consolidated with or merged into the Company or any Restricted Subsidiary or
(ii) any acquisition by the Company or any Restricted Subsidiary of the assets
of any Person which constitute substantially all of an operating unit or line of
business of such Person or which is otherwise outside of the ordinary course of
business.
"Affiliate" of any specified person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise.
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"Asset Sale" means any direct or indirect sale, conveyance, transfer, lease
(that has the effect of a disposition) or other disposition (including, without
limitation, any merger, consolidation or sale-leaseback transaction) to any
Person other than the Company or a Wholly Owned Restricted Subsidiary, in one
transaction or a series of related transactions, of (i) any Equity Interest of
any Restricted Subsidiary (other than directors' qualifying shares, to the
extent mandated by applicable law); (ii) any assets of the Company or any
Restricted Subsidiary (other than Equity Interests) that constitute
substantially all of an operating unit or line of business of the Company or any
Restricted Subsidiary; or (iii) any other property or asset of the Company or
any Restricted Subsidiary (other than Equity Interests) outside of the ordinary
course of business. For the purposes of this definition, the term "Asset Sale"
shall not include (a) any transaction consummated in compliance with "Certain
Covenants -- Merger, Sale of Assets, Etc." above and the creation of any Lien
not prohibited by "Certain Covenants -- Limitation on Liens" above; (b)sales of
property or equipment that has become worn out, obsolete or damaged or otherwise
unsuitable for use in connection with the business of the Company or any
Restricted Subsidiary, as the case may be; (c) any transaction consummated in
compliance with "Certain Covenants -- Limitation on Restricted Payments" above;
(d) any transfers of properties and assets between Wholly Owned Restricted
Subsidiaries; (e) sales of inventory or accounts receivable in the ordinary
course of business; and (f) sales of Equity Interests of the Company. In
addition, solely for purposes of "Certain Covenants -- Disposition of Proceeds
of Asset Sales" above, any sale, conveyance, transfer, lease or other
disposition of any property or asset, whether in one transaction or a series of
related transactions, involving assets with a Fair Market Value not in excess of
$1.0 million in any fiscal year shall be deemed not to be an Asset Sale.
"Board Resolution" means, with respect to any Person, a duly adopted
resolution of the Board of Directors of such Person.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be so required to be capitalized on the balance sheet in accordance
with GAAP.
"Cash Equivalents" means: (a) U.S. dollars; (b) securities issued or
directly and fully guaranteed or insured by the U.S. government or any agency or
instrumentality thereof having maturities of not more than six months from the
date of acquisition; (c) certificates of deposit and eurodollar time deposits
with maturities of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with any domestic commercial bank having capital and
surplus in excess of $500 million; (d) repurchase obligations with a term of not
more than seven days for underlying securities of the types described in clauses
(b) and (c) above entered into with any financial institution meeting the
qualifications specified in clause (c) above; (e) commercial paper rated P-1,
A-1 or the equivalent thereof by Moody's Investors Service, Inc. or Standard &
Poor's Corporation, respectively, and in each case maturing within six months
after the date of acquisition; and (f) in the case of any Foreign Restricted
Subsidiary, Investments: (i) in direct obligations of the sovereign nation (or
any agency thereof) in which such Foreign Restricted Subsidiary is organized and
is conducting business or in obligations fully and unconditionally guaranteed by
such sovereign nation (or any agency thereof) or (ii) of the type and maturity
described in clauses (b) and (c) above of foreign obligors, which Investments or
obligors (or the parents of such obligors) have ratings described in such
clauses or equivalent ratings or are indexed in U.S. dollar denominated
interests from comparable foreign rating agencies.
"Change of Control" means the occurrence of any of the following events:
(i) any Person (as such term is used in Sections 13(d) and 14(d) of the Exchange
Act, including any group acting for the purpose of acquiring, holding or
disposing of securities within the meaning of Rule 13d-5(b)(1) under the
Exchange Act), other than one or more Permitted Holders, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 and 13d-5 under the Exchange Act,
except that a Person shall be deemed to have "beneficial ownership" of all
shares that any such Person has the right to acquire,
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whether such right is exercisable immediately or only after the passage of time,
upon the happening of an event or otherwise), directly or indirectly, of more
than 40% of the total voting power of the then outstanding Voting Equity
Interests of the Company; (ii) the Company consolidates with, or merges with or
into, another Person (other than the Company or a Wholly Owned Restricted
Subsidiary) or the Company or any of its Subsidiaries sells, assigns, conveys,
transfers, leases or otherwise disposes of all or substantially all of the
assets of the Company and its Subsidiaries (determined on a consolidated basis)
to any Person (other than the Company or any Wholly Owned Restricted
Subsidiary), with the effect that the then existing holders of Voting Equity
Interests of the Company or Permitted Holders "beneficially own" (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person shall be
deemed to have "beneficial ownership" of all securities that such Person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, less than a majority of the total
voting power of the then outstanding Voting Equity Interests of the surviving or
transferee Person; (iii) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors of the
Company (together with any new directors whose election by such Board of
Directors or whose nomination for election by the shareholders of the Company
was approved by a vote of a majority of the directors of the Company then still
in office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors of the Company then in
office; or (iv) the Company is liquidated or dissolved or adopts a plan of
liquidation or dissolution other than in a transaction which complies with the
provisions described under "-- Merger, Sale of Assets, etc."
"Change of Control Date" has the meaning set forth under "Offer to Purchase
upon Change of Control" above.
"Consolidated Coverage Ratio" as of any date of determination means the
ratio of (i) the aggregate amount of Consolidated EBITDA for the most recent
four consecutive fiscal quarters ending prior to the date of such determination
for which financial statements are available (the "Four Quarter Period") to (ii)
Consolidated Fixed Charges for such Four Quarter Period; provided, however, that
(1) if the Company or any Restricted Subsidiary has incurred any Indebtedness
since the beginning of such Four Quarter Period that remains outstanding on such
date of determination or if the transaction giving rise to the need to calculate
the Consolidated Coverage Ratio is an Incurrence of Indebtedness, Consolidated
EBITDA and Consolidated Fixed Charges for such Four Quarter Period shall be
calculated after giving effect on a pro forma basis to such Indebtedness as if
such Indebtedness had been Incurred on the first day of such Four Quarter Period
and the discharge of any other Indebtedness repaid, repurchased or otherwise
discharged with the proceeds of such new Indebtedness as if such discharge had
occurred on the first day of such Four Quarter Period, (2) if since the
beginning of such Four Quarter Period the Company or any Restricted Subsidiary
shall have made any Asset Sale, the Consolidated EBITDA for such Four Quarter
Period shall be reduced by an amount equal to the Consolidated EBITDA (if
positive) directly attributable to the assets that are the subject of such Asset
Sale for such Four Quarter Period or increased by an amount equal to the
Consolidated EBITDA (if negative) directly attributable thereto for such Four
Quarter Period and Consolidated Fixed Charges for such Four Quarter Period shall
be reduced by an amount equal to the Consolidated Fixed Charges directly
attributable to any Indebtedness of the Company or any Restricted Subsidiary
repaid, repurchased or otherwise discharged with respect to the Company and its
continuing Restricted Subsidiaries in connection with such Asset Sale for such
Four Quarter Period (or, if the Equity Interests of any Restricted Subsidiary
are sold, the Consolidated Fixed Charges for such Four Quarter Period directly
attributable to the Indebtedness of such Restricted Subsidiary to the extent the
Company and its continuing Restricted Subsidiaries are no longer liable for such
Indebtedness after such sale), (3) if since the beginning of such Four Quarter
Period the Company or any Restricted Subsidiary (by merger or otherwise) shall
have made an Investment in any Restricted Subsidiary (or any Person that becomes
a Restricted Subsidiary) or an acquisition of assets, including any acquisition
of assets occurring in connection
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with a transaction causing a calculation to be made hereunder, which constitutes
all or substantially all of an operating unit of a business, Consolidated EBITDA
and Consolidated Fixed Charges for such Four Quarter Period shall be calculated
after giving pro forma effect to (x) such Investment or acquisition of assets
(including the Incurrence of any Indebtedness) as if such Investment or
acquisition occurred on the first day of such Four Quarter Period and (y) net
cost savings that the Company reasonably believes in good faith could have been
achieved during the Four Quarter Period as a result of such Investment or
acquisition and which cost savings could then be reflected in pro forma
financial statements under GAAP (provided that both (A) such cost savings were
identified and quantified in an Officer's Certificate delivered to the Trustee
at the date of determination and (B) with respect to each Investment or
acquisition completed prior to the 90th day preceding such date of
determination, actions were commenced or initiated by the Company within 90 days
of such Investment or acquisition to effect such cost savings identified in such
officer's certificate, and (4) if since the beginning of such Four Quarter
Period any Person (that subsequently became a Restricted Subsidiary or was
merged with or into the Company or any Restricted Subsidiary since the beginning
of such Four Quarter Period) shall have made any Asset Sale or any Investment or
acquisition of assets that would have required an adjustment pursuant to clause
(2) or (3) above if made by the Company or a Restricted Subsidiary during such
Four Quarter Period, Consolidated EBITDA and Consolidated Fixed Charges for such
Four Quarter Period shall be calculated after giving pro forma effect thereto as
if such Asset Sale, Investment or acquisition of assets occurred on, with
respect to any Investment or acquisition, the first day of such Four Quarter
Period and, with respect to any Asset Sale, the day prior to the first day of
such Four Quarter Period. Except as otherwise provided herein, for purposes of
this definition, whenever pro forma effect is to be given to an acquisition of
assets, the amount of income or earnings relating thereto and the amount of
Consolidated Fixed Charges associated with any Indebtedness Incurred in
connection therewith, the pro forma calculations shall be determined in
accordance with Regulation S-X under the Securities Act as in effect on the
Issue Date. If any Indebtedness bears a floating rate of interest and is being
given pro forma effect, the interest expense on such Indebtedness shall be
calculated as if the rate in effect on the date of determination had been the
applicable rate for the entire period (taking into account any agreement under
which Interest Rate Protection Obligations are outstanding applicable to such
Indebtedness if such agreement under which such Interest Rate Protection
Obligations are outstanding has a remaining term as at the date of determination
in excess of 12 months); provided, however, that the Consolidated Fixed Charges
of the Company attributable to interest on any Indebtedness Incurred under a
revolving credit facility computed on a pro forma basis shall be computed based
upon the average daily balance of such Indebtedness during the Four Quarter
Period.
"Consolidated EBITDA" means, for any period, the Consolidated Net Income
for such period, plus the following to the extent deducted in calculating such
Consolidated Net Income: (i) Consolidated Income Tax Expense for such period;
(ii) Consolidated Interest Expense for such period; and (iii) Consolidated
Non-cash Charges for such period less (A) all non-cash items increasing
Consolidated Net Income for such period and (B) all cash payments during such
period relating to non-cash charges that were added back in determining
Consolidated EBITDA in the most recent Four Quarter Period.
"Consolidated Fixed Charges" means, with respect to any Person for any
period, the sum, without duplication, of (i) Consolidated Interest Expense and
(ii) the product of (x) the amount of all cash dividend payments on any series
of Preferred Equity Interest and all non-cash dividend payments (other than
dividends paid solely in Qualified Equity Interests) on any series of Preferred
Equity Interest that has a mandatory redemption obligation prior to the Maturity
Date paid, accrued or scheduled to be paid or accrued during such period times
(y) a fraction, the numerator of which is one and the denominator of which is
one minus the then current effective consolidated federal, state and local tax
rate of such Person, expressed as a decimal.
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"Consolidated Income Tax Expense" means, with respect to the Company for
any period, the provision for Federal, state, local and foreign income taxes
payable by the Company and the Restricted Subsidiaries for such period as
determined on a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, with respect to the Company for any
period, without duplication, the sum of (i) the interest expense of the Company
and the Restricted Subsidiaries for such period as determined on a consolidated
basis in accordance with GAAP, including, without limitation, (a) any
amortization of debt discount, (b) the net cost under Interest Rate Agreements
(including any amortization of discounts), (c) the interest portion of any
deferred payment obligation, (d) all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance financing
and (e) all capitalized interest and all accrued interest and excluding (x)
amortization of deferred financing fees and (y) interest recorded as an
accretion in the carrying value of liabilities (other than Indebtedness)
recorded at a discounted value and (ii) the interest component of Capital Lease
Obligations paid, accrued and/or scheduled to be paid or accrued by the Company
and the Restricted Subsidiaries during such period as determined on a
consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, for any period, the consolidated net
income (loss) of the Company and the Restricted Subsidiaries; provided, however,
that there shall not be included in such Consolidated Net Income: (i) any net
income (loss) of any Person if such person is not a Restricted Subsidiary,
except (A) to the extent of cash actually distributed by such Person during such
period to the Company or a Restricted Subsidiary as a dividend or other
distribution and (B) the Company's equity in a net loss of any such Person
(other than an Unrestricted Subsidiary) for such period shall be included in
determining such Consolidated Net Income; (ii) any net income (loss) of any
Person acquired by the Company or a Restricted Subsidiary in a pooling of
interests transaction for any period prior to the date of such acquisition;
(iii) any net income (but not loss) of any Restricted Subsidiary if such
Restricted Subsidiary is subject to restrictions, directly or indirectly, on the
payment of dividends or the making of distributions by such Restricted
Subsidiary, directly or indirectly, to the Company to the extent of such
restrictions; (iv) any gain or loss realized upon an Asset Sale by the Company
or the Restricted Subsidiaries (including pursuant to any sale/leaseback
transaction); (v) any extraordinary gain or loss; (vi) the cumulative effect of
a change in accounting principles; and (vii) any restoration to income of any
contingency reserve of an extraordinary, non-recurring or unusual nature, except
to the extent that provision for such reserve was made out of Consolidated Net
Income accrued at any time following the Issue Date.
"Consolidated Net Worth" of any Person means the consolidated stockholders'
equity of such Person, determined on a consolidated basis in accordance with
GAAP, less (without duplication) amounts attributable to Disqualified Equity
Interests of such Person.
"Consolidated Non-cash Charges" means, with respect to any Person, for any
period (i) the sum of (A) depreciation, (B) amortization and (C) other non-cash
expenses or charges of such Person and its Restricted Subsidiaries reducing
Consolidated Net Income of such Person and its Restricted Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP.
"Consolidated Tangible Assets" means, as of any date of determination, the
total assets, less goodwill and other intangibles (determined in accordance with
Accounting Principles Board Opinion No. 17), shown on the balance sheet of the
Company and its Restricted Subsidiaries as of the most recent date for which
such a balance sheet is available, determined on a consolidated basis in
accordance with GAAP. At September 30, 1997, on a pro forma basis giving effect
to the Refinancing and the private placement of the Convertible Debenture in
November 1997, the Consolidated Tangible Assets of the Company was approximately
$421 million.
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"Currency Agreement" means the obligations of any person pursuant to any
foreign exchange contract, currency swap agreement or other similar agreement or
arrangement designed to protect such person or any of its subsidiaries against
fluctuations in currency values.
"Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"Designated Senior Indebtedness" means (a) any Indebtedness outstanding
under the Existing Credit Facility and (b) any other Senior Indebtedness that,
at the time of determination, has an aggregate principal amount outstanding,
together with any commitments to lend additional amounts, of at least $25.0
million, if the instrument governing such Senior Indebtedness expressly states
that such Indebtedness is "Designated Senior Indebtedness" for purposes of the
Indenture and a Board Resolution setting forth such designation by the Company
has been filed with the Trustee.
"Designation" has the meaning set forth under "Certain
Covenants -- Designation of Unrestricted Subsidiaries" above.
"Designation Amount" has the meaning set forth under "Certain
Covenants -- Designation of Unrestricted Subsidiaries" above.
"Disposition" means, with respect to any Person, any merger, consolidation
or other business combination involving such Person (whether or not such Person
is the Surviving Person) or the sale, assignment, transfer, lease, conveyance or
other disposition of all or substantially all of such Person's assets.
"Disqualified Equity Interest" means any Equity Interest that, by its terms
(or by the terms of any security into which it is convertible or for which it is
exchangeable at the option of the holder thereof), or upon the happening of any
event, matures (excluding any maturity as a result of optional redemption by the
issuer thereof) or is mandatorily redeemable (excluding, in each case, upon a
change of control; provided that the change of control provisions relating to
such Equity Interests (i) are no more favorable to the holders of the Equity
Interests than the provisions relating to the Notes and (ii) require that in the
event of any Change of Control the Notes are redeemed in accordance with the
terms of the Indenture prior to such Equity Interest), pursuant to a sinking
fund obligation or otherwise, or redeemable, at the option of the holder
thereof, in whole or in part, or exchangeable into Indebtedness on or prior to
the earlier of the maturity date of the Notes or the date on which no Notes
remain outstanding.
"Domestic Restricted Subsidiary" means a Restricted Subsidiary of the
Company organized under the laws of the United States or any political
subdivision thereof.
"Equity Interest" in any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) corporate stock or other equity
participations, including partnership interests, whether general or limited, in
such Person, including any Preferred Equity Interests.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the SEC thereunder.
"Existing Credit Facility" means the revolving credit facility dated as of
January 29, 1996 among American Bank Note Company, American Bank Note
Holographics, Inc. and The Chase Manhattan Bank (as successor to Chemical Bank),
including any deferrals, renewals, extension, replacements, refinancings or
refundings thereof, or amendments, modifications or supplements thereto and any
agreement providing therefor, whether or by or with the same or any other
lender, creditor, group of lenders or group of creditors, and including related
guarantee agreements, security agreements and mortgages and other instruments
and agreements executed in connection therewith.
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"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries in existence on the Issue Date, until such amounts are repaid.
"Existing Investments" means Investments existing on the Issue Date.
"Expiration Date" has the meaning set forth in the definition of "Offer to
Purchase" below.
"Fair Market Value" means, with respect to any asset, the price (after
taking into account any liabilities relating to such assets) that could be
negotiated in an arm's-length free market transaction, for cash, between a
willing seller and a willing and able buyer, neither of which is under any
compulsion to complete the transaction; provided, however, that the Fair Market
Value of any such asset or assets shall be determined conclusively by the Board
of Directors of the Company acting in good faith, and shall be evidenced by
resolutions of the Board of Directors of the Company delivered to the Trustee.
"Foreign Restricted Subsidiary" means a Restricted Subsidiary of the
Company not organized under the laws of the United States or any political
subdivision thereof.
"Four Quarter Period" has the meaning set forth in the definition of
"Consolidated Coverage Ratio" above.
"GAAP" means, at any date of determination, generally accepted accounting
principles in effect in the United States which are applicable at the date of
determination and which are consistently applied for all applicable periods.
"Guarantee" means the guarantee of the Notes by each Guarantor under the
Indenture.
"guarantee" means, as applied to any obligation, (i) a guarantee (other
than by endorsement of negotiable instruments for collection in the ordinary
course of business), direct or indirect, in any manner, of any part or all of
such obligation and (ii) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, the
payment of amounts drawn down by letters of credit.
"Guarantor" means (i) each of the direct and indirect domestic operating
Subsidiaries of the Company and their respective successors, and (ii) each other
Restricted Subsidiary, formed, created or acquired before or after the Issue
Date, required to become a Guarantor after the Issue Date pursuant to
"Guarantees of the Notes" above.
"Guarantor Senior Indebtedness" means, with respect to any Guarantor, at
any date, (a) all Interest Rate Agreements of such Guarantor; (b) all
Obligations of such Guarantor under stand-by letters of credit; and (c) all
other Indebtedness of such Guarantor for borrowed money, including principal,
premium, if any, and interest (including Post-Petition Interest) on such
Indebtedness unless the instrument under which such Indebtedness of such
Guarantor for money borrowed is Incurred expressly provides that such
Indebtedness for money borrowed is not senior or superior in right of payment to
such Guarantor's Guarantee of the Notes, and all renewals, extensions,
modifications, amendments or refinancings thereof. Notwithstanding the
foregoing, Guarantor Senior Indebtedness shall not include (a) to the extent
that it may constitute Indebtedness, any Obligation for federal, state, local or
other taxes; (b) any Indebtedness among or between such Guarantor and any
Subsidiary of such Guarantor or any Affiliate of such Guarantor or any of such
Affiliate's Subsidiaries; (c) to the extent that it may constitute Indebtedness,
any Obligation in respect of any trade payable Incurred for the purchase of
goods or materials, or for services obtained, in the ordinary course of
business; (d) that portion of any Indebtedness that is Incurred in violation of
the Indenture; (e) Indebtedness evidenced by such Guarantor's Guarantee of the
Notes; (f) Indebtedness of such Guarantor that is expressly subordinate or
junior in right of payment to any other Indebtedness of such Guarantor; (g) to
the extent that it may constitute Indebtedness, any obligation owing under
leases (other than Capital Lease Obligations) or management agreements;
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and (h) any obligation that by operation of law is subordinate to any general
unsecured obligations of such Guarantor.
"Holders" means the registered holders of the Notes.
"Incur" means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur (including by conversion, exchange or
otherwise), assume, guarantee or otherwise become liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to GAAP
or otherwise, of any such Indebtedness or other obligation on the balance sheet
of such Person (and "Incurrence," "Incurred" and "Incurring" shall have meanings
correlative to the foregoing). Indebtedness of any Acquired Person or any of its
Subsidiaries existing at the time such Acquired Person becomes a Restricted
Subsidiary (or is merged into or consolidated with the Company or any Restricted
Subsidiary), whether or not such Indebtedness was Incurred in connection with,
as a result of, or in contemplation of, such Acquired Person becoming a
Restricted Subsidiary (or being merged into or consolidated with the Company or
any Restricted Subsidiary), shall be deemed Incurred at the time any such
Acquired Person becomes a Restricted Subsidiary or merges into or consolidates
with the Company or any Restricted Subsidiary.
"Indebtedness" means (without duplication), with respect to any Person,
whether recourse is to all or a portion of the assets of such Person and whether
or not contingent, (a) every obligation of such Person for money borrowed; (b)
every obligation of such Person evidenced by bonds, debentures, notes or other
similar instruments, including obligations incurred in connection with the
acquisition of property, assets or businesses; (c) every reimbursement
obligation of such Person with respect to letters of credit, bankers'
acceptances or similar facilities issued for the account of such Person; (d)
every obligation of such Person issued or assumed as the deferred purchase price
of property or services (but excluding trade accounts payable incurred in the
ordinary course of business or other accrued liabilities arising in the ordinary
course of business); (e) every Capital Lease Obligation of such Person; (f)
every net obligation under interest rate swap or similar agreements or foreign
currency hedge, exchange or similar agreements of such Person; (g) every
obligation of the type referred to in clauses (a) through (f) of another Person
the payment of which such Person has guaranteed or is responsible or liable for,
directly or indirectly, as obligor, guarantor or otherwise; and (h) any and all
deferrals, renewals, extensions and refundings of, or amendments, modifications
or supplements to, any liability of the kind described in any of the preceding
clauses (a) through (g) above. Indebtedness (a) shall never be calculated taking
into account any cash and Cash Equivalents held by such Person; (b) shall not
include obligations of any Person (x) arising from the honoring by a bank or
other financial institution of a check, draft or similar instrument
inadvertently drawn against insufficient funds in the ordinary course of
business, provided that such obligations are extinguished within three Business
Days of their incurrence, (y) resulting from the endorsement of negotiable
instruments for collection in the ordinary course of business and consistent
with past business practices and (z) under stand-by letters of credit to the
extent collateralized by cash or Cash Equivalents; (c) which provides that an
amount less than the principal amount thereof shall be due upon any declaration
of acceleration thereof shall be deemed to be incurred or outstanding in an
amount equal to the accreted value thereof at the date of determination; (d)
shall include the liquidation preference and any mandatory redemption payment
obligations in respect of any Disqualified Equity Interests of the Company or
any Restricted Subsidiary; and (e) shall not include obligations under
performance bonds, performance guarantees, surety bonds and appeal bonds,
letters of credit or similar obligations, incurred in the ordinary course of
business.
"Independent Financial Advisor" means a nationally recognized, accounting,
appraisal, investment banking firm or consultant (i) which does not, and whose
directors, officers and employees or Affiliates do not, have a direct or
indirect financial interest in the Company and (ii) which, in the judgment of
the Board of Directors of the Company, is otherwise independent and qualified to
perform the task for which it is to be engaged.
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"Insolvency or Liquidation Proceeding" means, with respect to any Person,
any liquidation, dissolution or winding up of such Person, or any bankruptcy,
reorganization, insolvency, receivership or similar proceeding with respect to
such Person, whether voluntary or involuntary.
"interest" means, with respect to the Notes, the sum of any cash interest
and any Additional Interest (as defined under "Registration Rights Agreement"
below) on the Notes.
"Interest Rate Agreements" means the obligations of any person pursuant to
any interest rate swap agreement, interest rate collar agreement or other
similar agreement or arrangement designed to protect such person or any of its
subsidiaries against fluctuations in interest rates.
"Investment" means, with respect to any Person, any direct or indirect
loan, advance, guarantee or other extension of credit (other than any loan,
advance or extension of credit to any officers or directors of the Company or
any Restricted Subsidiary in compliance with the provisions of the covenant
"Transactions With Affiliates") or capital contribution to (by means of
transfers of cash or other property or assets to others or payments for property
or services for the account or use of others, or otherwise), or purchase or
acquisition of capital stock, bonds, notes, debentures or other securities or
evidences of Indebtedness issued by, any other Person. For purposes of the
"Limitation on Restricted Payments" covenant above, the amount of any Investment
shall be the original cost of such Investment, plus the cost of all additions
thereto, but without any other adjustments for increases or decreases in value,
or write-ups, write-downs or write-offs with respect to such Investment; reduced
by the payment of dividends or distributions in connection with such Investment
or any other amounts received in respect of such Investment; provided, however,
that no such payment of dividends or distributions or receipt of any such other
amounts shall reduce the amount of any Investment if such payment of dividends
or distributions or receipt of any such amounts would be included in
Consolidated Net Income. In determining the amount of any Investment involving a
transfer of any property or asset other than cash, such property shall be valued
at its fair market value at the time of such transfer, as determined in good
faith by the Board of Directors (or comparable body) of the Person making such
transfer. If the Company or any Restricted Subsidiary sells or otherwise
disposes of any Voting Equity Interests of any direct or indirect Restricted
Subsidiary such that, after giving effect to any such sale or disposition, the
Company no longer owns, directly or indirectly, greater than 50% of the
outstanding Voting Equity Interests of such Restricted Subsidiary, the Company
shall be deemed to have made an Investment on the date of any such sale or
disposition equal to the fair market value of Voting Equity Interests of such
former Restricted Subsidiary not sold or disposed of.
"Issue Date" means the original issue date of the Notes.
"Lien" means any lien, mortgage, charge, security interest, hypothecation,
assignment for security or encumbrance of any kind (including any conditional
sale or capital lease or other title retention agreement, any lease in the
nature thereof, and any agreement to give any security interest).
"Maturity Date" means the date, which is set forth on the face of the
Notes, on which the Notes will mature.
"Net Cash Proceeds" means the aggregate proceeds in the form of cash or
Cash Equivalents received by the Company or any Restricted Subsidiary in respect
of any Asset Sale, including all cash or Cash Equivalents received upon any
sale, liquidation or other exchange of proceeds of Asset Sales received in a
form other than cash or Cash Equivalents, net of (a) the direct costs relating
to such Asset Sale (including, without limitation, legal, accounting and
investment banking fees, sales commissions, title transfer fees, title insurance
premium, recording fees and appraiser fees and costs) and any relocation
expenses incurred as a result thereof; (b) taxes (including transfer taxes) paid
or payable as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements); (c) amounts required to
be applied to the repayment of Indebtedness secured by a Lien on the asset or
assets that were the subject of such
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Asset Sale; (d) amounts deemed, in good faith, appropriate by the Board of
Directors of the Company to be provided as a reserve, in accordance with GAAP,
against any liabilities associated with such assets which are the subject of
such Asset Sale; including, without limitation, pension and other
post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Sale (provided that the amount of any such reserves shall be deemed
to constitute Net Cash Proceeds at the time such reserves shall have been
reversed or are not otherwise required to be retained as a reserve); and (e)
with respect to Asset Sales by Restricted Subsidiaries, the portion of such cash
payments attributable to Persons holding a minority interest in such Restricted
Subsidiary.
"Notes Pro Rata Share" means the amount of the applicable Unutilized Net
Cash Proceeds obtained by multiplying the amount of such Unutilized Net Cash
Proceeds by a fraction, (i) the numerator of which is the aggregate principal
amount of Notes outstanding at the time of the applicable Asset Sale with
respect to which the Company is required to use Unutilized Net Cash Proceeds to
repay or make an Offer to Purchase or repay and (ii) the denominator of which is
the sum of (a) the aggregate accreted value and/or principal amount, as the case
may be, of all Other Pari Passu Debt outstanding at the time of the applicable
Asset Sale and (b) the aggregate principal amount of all Notes outstanding at
the time of the applicable Offer to Purchase with respect to which the Company
is required to use the applicable Unutilized Net Cash Proceeds to offer to repay
or make an Offer to Purchase or repay.
"Obligations" means any principal, interest (including, without limitation,
Post-Petition Interest), penalties, fees, indemnifications, reimbursement
obligations, damages and other liabilities payable under the documentation
governing any Indebtedness.
"Offer" has the meaning set forth in the definition of "Offer to Purchase"
below.
"Offer to Purchase" means a written offer (the "Offer") sent by or on
behalf of the Company by first-class mail, postage prepaid, to each holder at
his address appearing in the register for the Notes on the date of the Offer
offering to purchase up to the principal amount of Notes specified in such Offer
at the purchase price specified in such Offer (as determined pursuant to the
Indenture). Unless otherwise required by applicable law, the Offer shall specify
an expiration date (the "Expiration Date") of the Offer to Purchase, which shall
be not less than 20 Business Days nor more than 60 days after the date of such
Offer, and a settlement date (the "Purchase Date") for purchase of Notes to
occur no later than five Business Days after the Expiration Date. The Company
shall notify the Trustee at least 5 Business Days (or such shorter period as is
acceptable to the Trustee) prior to the mailing of the Offer of the Company's
obligation to make an Offer to Purchase, and the Offer shall be mailed by the
Company or, at the Company's request, by the Trustee in the name and at the
expense of the Company. The Offer shall contain all the information required by
applicable law to be included therein.
An Offer to Purchase shall be governed by and effected in accordance with
the provisions above pertaining to any Offer.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
"Other Pari Passu Debt" means Indebtedness of the Company or any Guarantor
that neither constitutes Senior Indebtedness or Guarantor Senior Indebtedness,
as applicable, or Subordinated Indebtedness.
"Permitted Holder" means Mr. Morris Weissman and members of his immediate
family and any trust of which he is the beneficiary and any officers and
directors of the Company.
"Permitted Indebtedness" has the meaning set forth in the second paragraph
of "Certain Covenants -- Limitation on Indebtedness" above.
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"Permitted Investments" means (a) Cash Equivalents; (b) Investments in
prepaid expenses, negotiable instruments held for collection and lease, utility
and workers' compensation, performance and other similar deposits; (c) Interest
Rate Agreements and Currency Agreements; (d) bonds, notes, debentures, other
securities or non-cash consideration received as a result of (x) Asset Sales
permitted under "Certain Covenants -- Disposition of Proceeds of Asset Sales"
above not to exceed 25% of the total consideration for such Asset Sales or (y) a
disposition of assets that does not constitute an Asset Sale; (e) Investments in
the Company and Investments in a Restricted Subsidiary or a Person that, as a
result of or in connection with such Investment, becomes a Restricted Subsidiary
or is merged with or into or consolidated with the Company or another Restricted
Subsidiary; (f) Investments existing as of the Issue Date; (g) any Investment
consisting of a guarantee by a Restricted Subsidiary of Senior Indebtedness or
any guarantee of Indebtedness otherwise permitted by the Indenture; (h)
Investments acquired in exchange for Equity Interests (other than Disqualified
Equity Interests) of the Company; and (i) Investments that, when taken together
with all other Investments made pursuant to this clause (i), do not exceed the
greater of $40 million and 10% of Consolidated Tangible Assets of the Company
determined in accordance with GAAP.
"Permitted Junior Securities" means (a) debt securities of the Company as
reorganized or readjusted, or debt securities of the Company (or any other
company, trust or organization provided for by a plan of reorganization or
readjustment succeeding to the assets and liabilities of the Company) that, in
each case, are subordinated, to at least the same extent as the Notes, to the
payment of all Senior Indebtedness that will be outstanding after giving effect
to such plan of reorganization or readjustment, so long as (i) the rate of
interest on such debt securities shall not exceed the effective rate of interest
on the Notes on the date hereof, (ii) such debt securities shall not be entitled
to the benefits of covenants or defaults materially more beneficial to the
holders of such debt securities than those in effect with respect to the Notes
on the date hereof (or the Senior Indebtedness, after giving effect to such plan
of reorganization or readjustment) and (iii) such debt securities shall not
provide for amortization (including sinking fund and mandatory prepayment
provisions) commencing prior to the date one year and one day following the
final scheduled maturity date of the Senior Indebtedness (as modified by such
plan of reorganization or readjustment) or (b) shares of stock of the Company as
reorganized or readjusted pursuant to a plan of reorganization or readjustment;
provided that, in each case with respect to clauses (a) and (b) above, (x) if a
new corporation results from any such reorganization or readjustment, such
corporation assumes all Senior Indebtedness that will be outstanding after
giving effect thereto and (y) the rights of the holders of the Senior
Indebtedness are not, without the consent of such holders, altered by any such
reorganization or readjustment, including, without limitation, such rights being
impaired within the meaning of Section 1124 of Title 11 of the United States
Code, or any impairment of the right to receive interest accruing during the
pendency of a bankruptcy or insolvency proceeding, including proceedings under
Title 11 of the United States Code.
"Permitted Liens" means (a) Liens on property of a Person existing at the
time such Person is merged into or consolidated with the Company or any
Restricted Subsidiary; provided, however, that such Liens were in existence
prior to the contemplation of such merger or consolidation and do not secure any
property or assets of the Company or any Restricted Subsidiary other than the
property or assets subject to the Liens prior to such merger or consolidation;
(b) Liens imposed by law such as carriers', warehousemen's and mechanics' Liens
and other similar Liens arising in the ordinary course of business; (c) Liens
existing on the Issue Date; (d) Liens securing only the Notes or the Guarantees;
(e) Liens in favor of the Company or any Restricted Subsidiary; (f) Liens for
taxes, assessments or governmental charges or claims that are not yet delinquent
or that are being contested in good faith by appropriate proceedings promptly
instituted and diligently concluded; provided, however, that any reserve or
other appropriate provision as shall be required in conformity with GAAP shall
have been made therefor; (g) encroachments, encumbrances, easements, reservation
of rights of way, restrictions and other similar easements, licenses,
restrictions on the use of properties (including zoning or other such
restrictions), or minor imperfections of title that do
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not materially detract from the properties subject thereto or interfere with the
ordinary conduct of the business of the Company and the Restricted Subsidiaries;
(h) Liens resulting from the deposit of cash or notes in connection with
contracts, tenders or expropriation proceedings, or to secure workers'
compensation, surety or appeal bonds, costs of litigation when required by law
and public and statutory obligations or obligations under franchise arrangements
entered into in the ordinary course of business; (i) Liens securing Indebtedness
consisting of Capital Lease Obligations, Purchase Money Indebtedness, mortgage
financings, industrial revenue bonds or other monetary obligations, in each case
incurred solely for the purpose of financing all or any part of the purchase
price or cost of construction or installation of assets used in the business of
the Company or the Restricted Subsidiaries, or repairs, additions or
improvements to such assets, provided, however, that (I) such Liens secure
Indebtedness in an amount not in excess of the original purchase price or the
original cost of any such assets or repair, addition or improvement thereto
(plus an amount equal to the reasonable fees and expenses in connection with the
incurrence of such Indebtedness), (II) such Liens do not extend to any other
assets of the Company or the Restricted Subsidiaries (and, in the case of
repair, addition or improvements to any such assets, such Lien extends only to
the assets (and improvements thereto or thereon) repaired, added to or
improved), (III) the Incurrence of such Indebtedness is permitted by "Certain
Covenants -- Limitation on Indebtedness" above and (IV) such Liens attach within
180 days of such purchase, construction, installation, repair, addition or
improvement; (j) Liens to secure any refinancings, renewals, extensions,
modifications or replacements (collectively, "refinancing") (or successive
refinancings), in whole or in part, of any Indebtedness secured by Liens
referred to in the clauses above so long as such Lien does not extend to any
other property (other than improvements thereto); and (k) Liens securing
Indebtedness of the Company or any Restricted Subsidiary permitted to be
Incurred under the Indenture in an aggregate amount not to exceed $10.0 million.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, limited liability
limited partnership, trust, unincorporated organization or government or any
agency or political subdivision thereof.
"Post-Petition Interest" means, with respect to any Indebtedness of any
Person, all interest accrued or accruing on such Indebtedness after the
commencement of any Insolvency or Liquidation Proceeding against such Person in
accordance with and at the contract rate (including, without limitation, any
rate applicable upon default) specified in the agreement or instrument creating,
evidencing or governing such Indebtedness, whether or not, pursuant to
applicable law or otherwise, the claim for such interest is allowed as a claim
in such Insolvency or Liquidation Proceeding.
"Preferred Equity Interest," in any Person, means an Equity Interest of any
class or classes (however designated) that is preferred as to the payment of
dividends or distributions, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person, over Equity
Interests of any other class in such Person.
"principal" of a debt security means the principal of the security plus,
when appropriate, the premium, if any, on the security.
"Public Equity Offering" means, with respect to the Company, an
underwritten public offering of Qualified Equity Interests of the Company
pursuant to an effective registration statement filed under the Securities Act
(excluding registration statements filed on Form S-8) or any similar provisions
under foreign law.
"Purchase Amount" has the meaning set forth in the definition of "Offer to
Purchase" above.
"Purchase Date" has the meaning set forth in the definition of "Offer to
Purchase" above.
"Purchase Money Indebtedness" means Indebtedness of the Company or any
Restricted Subsidiary Incurred for the purpose of financing all or any part of
the purchase price or the cost of construction or improvement of any property,
provided that the aggregate principal amount of such Indebtedness does not
exceed the lesser of the Fair Market Value of such property or such
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purchase price or cost, including any refinancing of such Indebtedness that does
not increase the aggregate principal amount (or accreted amount, if less)
thereof as of the date of refinancing.
"Purchase Price" has the meaning set forth in the definition of "Offer to
Purchase" above.
"Qualified Equity Interest" in any Person means any Equity Interest in such
Person other than any Disqualified Equity Interest.
"Replacement Assets" has the meaning set forth in the first paragraph under
"Certain Covenants -- Disposition of Proceeds of Asset Sales" above.
"Restricted Subsidiary" means any Subsidiary of the Company that has not
been designated by the Board of Directors of the Company, by a resolution of the
Board of Directors of the Company delivered to the Trustee, as an Unrestricted
Subsidiary pursuant to "Certain Covenants -- Designation of Unrestricted
Subsidiaries" above. Any such designation may be revoked by a resolution of the
Board of Directors of the Company delivered to the Trustee, subject to the
provisions of such covenant.
"SEC" means the Securities and Exchange Commission.
"Senior Indebtedness" means, at any date, (a) all Obligations of the
Company under the Existing Credit Facility; (b) all Interest Rate Protection
Obligations of the Company; (c) all Obligations of the Company under stand-by
letters of credit; and (d) all other Indebtedness of the Company for borrowed
money, including principal, premium, if any, and interest (including Post-
Petition Interest) on such Indebtedness, unless the instrument under which such
Indebtedness of the Company for money borrowed is Incurred expressly provides
that such Indebtedness for money borrowed is not senior or superior in right of
payment to the Notes, and all renewals, extensions, modifications, amendments or
refinancings thereof. Notwithstanding the foregoing, Senior Indebtedness shall
not include (a) to the extent that it may constitute Indebtedness, any
Obligation for Federal, state, local or other taxes; (b) any Indebtedness among
or between the Company and any Subsidiary of the Company or any Affiliate of the
Company or any of such Affiliate's Subsidiaries; (c) to the extent that it may
constitute Indebtedness, any Obligation in respect of any trade payable Incurred
for the purchase of goods or materials, or for services obtained, in the
ordinary course of business; (d) that portion of any Indebtedness that is
Incurred in violation of the Indenture; (e) Indebtedness evidenced by the Notes;
(f) Indebtedness of the Company that is expressly subordinate or junior in right
of payment to any other Indebtedness of the Company; (g) to the extent that it
may constitute Indebtedness, any obligation owing under leases (other than
Capital Lease Obligations) or management agreements; and (h) any obligation that
by operation of law is subordinate to any general unsecured obligations of the
Company.
"Significant Restricted Subsidiary" means, at any date of determination,
(a) any Restricted Subsidiary that, together with its Subsidiaries that
constitute Restricted Subsidiaries (i) for the most recent fiscal year of the
Company accounted for more than 10.0% of the consolidated revenues of the
Company and the Restricted Subsidiaries or (ii) as of the end of such fiscal
year, owned more than 10.0% of the consolidated assets of the Company and the
Restricted Subsidiaries, all as set forth on the consolidated financial
statements of the Company and the Restricted Subsidiaries for such year prepared
in conformity with GAAP, and (b) any Restricted Subsidiary which, when
aggregated with all other Restricted Subsidiaries that are not otherwise
Significant Restricted Subsidiaries and as to which any event described in
clause (h) of "Events of Default" above has occurred, would constitute a
Significant Restricted Subsidiary under clause (a) of this definition.
"Stated Maturity" means, when used with respect to any Note or any
installment of interest thereon, the date specified in such Note as the fixed
date on which the principal of such Note or such installment of interest is due
and payable.
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"Subordinated Indebtedness" means, with respect to the Company or any
Guarantor, any Indebtedness of the Company or such Guarantor, as the case may
be, which is expressly subordinated in right of payment to the Notes or such
Guarantor's Guarantee, as the case may be.
"Subsidiary" means, with respect to any Person, (a) any corporation of
which the outstanding Voting Equity Interests having at least a majority of the
votes entitled to be cast in the election of directors shall at the time be
owned, directly or indirectly, by such Person, or (b) any other Person of which
at least a majority of Voting Equity Interests are at the time, directly or
indirectly, owned by such first named Person.
"Surviving Person" means, with respect to any Person involved in or that
makes any Disposition, the Person formed by or surviving such Disposition or the
Person to which such Disposition is made.
"10 3/8% Notes" means the Company's 10 3/8% Senior Notes due 2002.
"United States Government Obligations" means direct non-callable
obligations of the United States of America for the payment of which the full
faith and credit of the United States is pledged.
"Unrestricted Subsidiary" means any Subsidiary of the Company designated as
such pursuant to "Certain Covenants -- Designation of Unrestricted Subsidiaries"
above. Any such designation may be revoked by a resolution of the Board of
Directors of the Company delivered to the Trustee, subject to the provisions of
such covenant.
"Unutilized Net Cash Proceeds" has the meaning set forth in the third
paragraph under "Certain Covenants -- Disposition of Proceeds of Asset Sales"
above.
"Voting Equity Interests" means Equity Interests in a corporation or other
Person with voting power under ordinary circumstances entitling the holders
thereof to elect the Board of Directors or other governing body of such
corporation or Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (a) the sum of the
products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required scheduled payment
of principal, including payment of final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (b) the then outstanding
aggregate principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary all of
the outstanding Voting Equity Interests (other than directors' qualifying
shares) of which are owned, directly or indirectly, by the Company.
BOOK-ENTRY; DELIVERY AND FORM
The Notes initially will be represented by one or more permanent global
certificates in definitive, duly registered form (the "Global Notes"). The
Global Notes will be deposited on the date of issuance with, or on behalf of,
The Depository Trust Company, New York, New York ("DTC") and registered in the
name of a nominee of DTC.
The Global Notes. The Company expects that pursuant to procedures
established by DTC (i) upon the issuance of the Global Notes, DTC or its
custodian will credit, on its internal system, the principal amount of Notes of
the individual beneficial interests represented by such Global Notes to the
respective accounts of persons who have accounts with such depositary and (ii)
ownership of beneficial interests in the Global Notes will be shown on, and the
transfer of such ownership will be effected only through, records maintained by
DTC or its nominee (with respect to interests of participants) and the records
of participants (with respect to interests of persons other than participants).
Such accounts initially will be designated by or on behalf of the Initial
Purchasers and ownership of beneficial interests in the Global Notes will be
limited to persons who have accounts
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with DTC ("participants") or persons who hold interests through participants.
Qualified institutional buyers ("QIBs") and institutional Accredited Investors
who are not QIB's may hold their interests in the Global Notes directly through
DTC if they are participants in such system, or indirectly through organizations
which are participants in such system.
So long as DTC, or its nominee, is the registered owner or holder of the
Notes, DTC or such nominee, as the case may be, will be considered the sole
owner or holder of the Notes represented by such Global Notes for all purposes
under the Indenture. No beneficial owner of an interest in the Global Notes will
be able to transfer that interest except in accordance with DTC's procedures, in
addition to those provided for under the Indenture with respect to the Notes.
Payments of the principal of, premium (if any) and interest on the Global
Notes will be made to DTC or its nominee, as the case may be, as the registered
owner thereof. None of the Company, the Trustee or any Paying Agent will have
any responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global Notes
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interest.
The Company expects that DTC or its nominee, upon receipt of any payment of
principal, premium, if any, and interest on the Global Notes, will credit
participants' accounts with payments in amount proportionate to their respective
beneficial interests in the principal amount of the Global Notes as shown on the
records of DTC or its nominee. The Company also expects that payments by
participants to owners of beneficial interests in the Global Notes held through
such participants will be governed by standing instructions and customary
practice, as is now the case, with securities held for the accounts of customers
registered in the names of nominees for such customers. Such payments will be
the responsibility of such participants.
Transfers between participants in DTC will be effected in the ordinary way
through DTC's same-day funds system in accordance with DTC rules and will be
settled in same-day funds. If a holder requires physical delivery of a
certificate in registered form (a "Certificated Security") for any reason,
including to sell Notes to persons in states which require physical delivery of
the Notes, or to pledge such securities, such holder must transfer its interest
in a Global Note in accordance with the normal procedures of DTC and with the
procedures set forth in the Indenture.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Notes (including the presentation of Notes for exchange as
described below) only at the direction of one or more participants to whose
account the DTC interests in the Global Notes are credited and only in respect
of such portion of the aggregate principal amount of Notes as to which such
participant or participants has or have given such direction. However, if there
is an Event of Default under the Indenture, DTC will exchange the Global Notes
for Certificated Securities, which it will distribute to its participants.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "Clearing Agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its participants and facilitate the clearance and settlement of
securities transactions between participants through electronic book-entry
changes in accounts of its participants, thereby eliminating the need for
physical movement of certificates. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations and certain other
organizations. Indirect access to the DTC system is available to others such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly
("indirect participants").
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Note among participants of DTC, it is under
no obligation to perform such procedures, and such procedures may be
discontinued at any time. Neither the Company nor the Trustee will
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have any responsibility for the performance by DTC or its participants or
indirect participants of their respective obligations under the rules and
procedures governing their operations.
Certificated Securities. If DTC is at any time unwilling or unable to
continue as a depositary for the Global Note and a successor depositary is not
appointed by the Company within 90 days, Certificated Securities will be issued
in exchange for the Global Notes.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Old Notes were originally sold by the Company on December 12, 1997 to
the Initial Purchasers pursuant to the Purchase Agreement as part of Units
consisting of $95,000,000 aggregate principal amount of Old Notes and 95,000
Warrants to purchase an aggregate of 1,185,790 shares of Common Stock. The
Initial Purchasers subsequently resold the Old Notes to qualified institutional
buyers in reliance on Rule 144A under the Securities Act and in offshore
transactions to Non U.S. persons in reliance on Regulation S under the
Securities Act. As a condition to the Purchase Agreement, the Company and the
Guarantors (collectively, the "Issuers") and the Initial Purchasers entered into
the Registration Rights Agreement on December 12, 1997, the date of the Initial
Offering (the "Issue Date").
Pursuant to the Registration Rights Agreement, the Company and the
Guarantors agreed that, unless the Exchange Offer is not permitted by applicable
law or Commission policy, they would (i) file with the Commission on or prior to
45 days after the Issue Date a registration statement on Form S-1 or Form S-4,
if the use of such form is then available under the Securities Act with respect
to the Exchange Notes, (ii) use its best efforts to cause such registration
statement to become effective under the Securities Act within 120 days after the
Issue Date (the "Effectiveness Date") and (iii) use its best efforts to
consummate the Exchange Offer as promptly as practicable, but in any event prior
to 160 days after the Issue Date. The Exchange Offer is being made to satisfy
certain of the contractual obligations of the Company and the Guarantors under
the Registration Rights Agreement and the Purchase Agreement.
If the Exchange Offer is not consummated on or prior to the fifth day after
the Expiration Date (subject to extension in certain circumstances), additional
interest, as liquidated damages ("Additional Interest"), shall accrue on the Old
Notes over and above the stated interest in an amount equal to $0.192 per week
(or any part thereof) per $1,000 principal amount of the Old Notes commencing on
the sixth day after the Expiration Date; provided, however, that upon the
exchange of Exchange Notes for all Old Notes validly tendered and not withdrawn,
Additional Interest on the Old Notes shall cease to accrue (but any accrued
amount shall be payable).
Following the consummation of the Exchange Offer, holders of the Old Notes
who were eligible to participate in the Exchange Offer but who did not tender
their Old Notes will not have any further registration rights and such Old Notes
will continue to be subject to certain restrictions on transfer. Accordingly,
the liquidity of the market for such Old Notes could be adversely affected.
If, (i) because of any change in law or in currently prevailing
interpretations of the Staff of the SEC, the Company is not permitted to effect
the Exchange Offer, (ii) the Exchange Offer is not commenced on or prior to the
Effectiveness Date, (iii) the Exchange Offer is not, for any reason, consummated
on or prior to the fifth day after the Expiration Date, (iv) any holder of
Private Exchange Notes (as defined in the Registration Rights Agreement) so
requests, or (v) in the case of any holder that participates in the Exchange
Offer, such holder does not receive Exchange Notes on the date of the exchange
that may be sold without restriction under Federal securities laws, then, in the
case of each of clauses (i) through (v) of this sentence, the Company shall
promptly deliver to the holders and the Trustee notice thereof and thereafter
the Company and each of the Guarantors shall file a Shelf Registration Statement
(as defined in the Registration Rights Agreement) pursuant to the terms of the
Registration Rights Agreement. If so required, the Company and the Guarantors
shall file with the SEC the Shelf Registration Statement on or prior to the
applicable Filing Date (as defined in the Registration Rights Agreement).
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all Old Notes
validly tendered and not withdrawn prior
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to 5:00 p.m., New York City time, on the Expiration Date. The Company will issue
$1,000 principal amount of Exchange Notes in exchange for each $1,000 principal
amount of outstanding Old Notes accepted in the Exchange Offer. Holders may
tender some or all of their Old Notes pursuant to the Exchange Offer. However,
Old Notes may be tendered only in integral multiples of $1,000.
The form and terms of the Exchange Notes are the same as the form and terms
of the Old Notes except that (i) the Exchange Notes bear a Series B designation
and a different CUSIP Number from the Old Notes, (ii) the Exchange Notes have
been registered under the Securities Act and hence will not bear legends
restricting the transfer thereof and (iii) the holders of the Exchange Notes
will not be entitled to certain rights under the Registration Rights Agreement,
including the provisions providing for an increase in the interest rate on the
Old Notes in certain circumstances relating to the timing of the Exchange Offer,
all of which rights will terminate when the Exchange Offer is terminated. The
Exchange Notes will evidence the same debt as the Old Notes and will be entitled
to the benefits of the Indenture.
The Exchange Offer is not conditioned upon any minimum principal amount of
Old Notes being tendered. As of the date of this Prospectus, $95,000,000
aggregate principal amount of Old Notes were outstanding.
Holders of Old Notes do not have any appraisal or dissenters' rights under
the General Corporation Law of Delaware or the Indenture in connection with the
Exchange Offer. The Company intends to conduct the Exchange Offer in accordance
with the applicable requirements of the Exchange Act and the rules and
regulations of the Commission thereunder.
The Company shall be deemed to have accepted validly tendered Old Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
for the purpose of receiving the Exchange Notes from the Company.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, the certificates for any such unaccepted Old Notes will be returned,
without expense, to the tendering holder thereof as promptly as practicable
after the Expiration Date.
Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the Letter
of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. The Company will pay all charges and expenses,
other than transfer taxes in certain circumstances, in connection with the
Exchange Offer. See "-- Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, 1998, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended.
The Company reserves the right, in its sole discretion, (i) to delay
accepting any Old Notes, to extend the Exchange Offer or to terminate the
Exchange Offer if any of the conditions set forth below under "-- Conditions"
shall not have been satisfied, by giving oral or written notice of such delay,
extension or termination to the Exchange Agent or (ii) to amend the terms of the
Exchange Offer in any manner. Any such delay in acceptance, extension,
termination or amendment will be followed as promptly as practicable by oral or
written notice thereof to the registered holders.
Any such extension, delay in acceptance, termination or amendment will be
followed promptly by oral (confirmed in writing) or written notice thereof to
the Exchange Agent and by making a public announcement thereof, and such
announcement in the case of an extension will be made no later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
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<PAGE> 101
Expiration Date. Without limiting the manner in which the Company may choose to
make any public announcement and subject to applicable law, the Company shall
have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by issuing a press release to an appropriate news
agency.
INTEREST ON THE EXCHANGE NOTES
The Exchange Notes will bear interest from their date of issuance. Holders
of Old Notes that are accepted for exchange will receive, in cash, accrued
interest thereon to, but not including, the date of issuance of the Exchange
Notes. Such interest will be paid with the first interest payment on the
Exchange Notes on June 1, 1998. Interest on the Old Notes accepted for exchange
will cease to accrue upon issuance of the Exchange Notes.
Interest on the Exchange Notes is payable semi-annually on each June 1 and
December 1, commencing on June 1, 1998.
PROCEDURES FOR TENDERING
Only a holder of Old Notes may tender such Old Notes in the Exchange Offer.
For a holder to validly tender Old Notes pursuant to the Exchange Offer, a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantee, or (in the case of a book-entry
transfer) an Agent's Message in lieu of the Letter of Transmittal, and any other
required documents must be received by the Exchange Agent at the address set
forth under "Exchange Agent" prior to 5:00 p.m., New York City time, on the
Expiration Date. In addition, prior to 5:00 p.m., New York City time, on the
Expiration Date, either (a) certificates for tendered Old Notes must be received
by the Exchange Agent at such address or (b) such Old Notes must be transferred
pursuant to the procedures for book-entry transfer described below (and a
confirmation of such tender received by the Exchange Agent, including an Agent's
Message if the tendering holder has not delivered a Letter of Transmittal). The
term "Agent's Message" means a message, transmitted by the book-entry transfer
facility, The Depository Trust Company (the "Book-Entry Transfer Facility"), to
and received by the Exchange Agent and forming a part of a book-entry
confirmation, which states that the Book-Entry Transfer Facility has received an
express acknowledgment from the tendering participant that such participant has
received and agrees to be bound by the Letter of Transmittal and that the
Company may enforce such Letter of Transmittal against such participant.
By tendering, each holder of Old Notes will represent to the Company that,
among other things, (i) the Exchange Notes to be acquired by such holder of Old
Notes in connection with the Exchange Offer are being acquired by such holder in
the ordinary course of business of such holder, (ii) such holder is not
participating, does not intend to participate, and has no arrangement or
understanding with any person to participate, in the distribution of the
Exchange Notes, (iii) except as otherwise disclosed in writing, such holder is
not an "affiliate," as defined in Rule 405 under the Securities Act, of the
Company, and (iv) such holder acknowledges and agrees that any person
participating in the Exchange Offer with the intention or for the purpose of
distributing the Exchange Notes must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with a secondary
resale of the Exchange Notes acquired by such person and cannot rely on the
position of the Staff of the Commission set forth in the no-action letters that
are discussed under "Resale of the Exchange Notes." In addition, by accepting
the Exchange Offer, such holder will (i) represent and warrant that, if such
holder is a Participating Broker-Dealer, such Participating Broker-Dealer
acquired the Old Notes for its own account as a result of market-making
activities or other trading activities and has not entered into any arrangement
or understanding with the Company or any "affiliate" of the Company (within the
meaning of Rule 405 under the Securities Act) to distribute the Exchange Notes
to be received in the Exchange Offer, and (ii) acknowledges that, by receiving
Exchange Notes for its own account in exchange for Old Notes, where such Old
Notes were acquired as a result of market-making activities or other trading
activities, such
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<PAGE> 102
Participating Broker-Dealer will deliver a prospectus meeting the requirements
of the Securities Act in connection with any resale of such Exchange Notes.
The tender by a holder and the acceptance thereof by the Company will
constitute agreement between such holder and the Company in accordance with the
terms and subject to the conditions set forth herein and in the Letter of
Transmittal.
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND SOLE RISK
OF THE HOLDER. AS AN ALTERNATIVE TO DELIVERY BY MAIL, HOLDERS MAY WISH TO
CONSIDER OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION
DATE. NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY.
HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST
COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf. See "Instructions
to Registered Holder and/or Book-Entry Transfer Facility Participant from
Beneficial Owner" included with the Letter of Transmittal.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by a recognized participant in the Securities
Transfer Agent Medallion Program, the New York Stock Exchange Medallion
Signature Program or the Stock Exchange Medallion Program (each a "Medallion
Signature Guarantor"), unless the Old Notes tendered pursuant thereto are
tendered (i) by a registered holder who has not completed the box entitled
"Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of a member firm of a registered national securities exchange, a member
of the NASD or a commercial bank or trust company having an office or
correspondent in the United States (each of the foregoing being an "Eligible
Institution").
If the Letter of Transmittal is signed by a person other than the
registered holder of any Old Notes listed therein, such Old Notes must be
endorsed or accompanied by a properly completed bond power, signed by such
registered holder as such registered holder's name appears on such Old Notes
with the signature thereon guaranteed by a Medallion Signature Guarantor.
If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, offices of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and evidence satisfactory to the
Company of their authority to so act must be submitted with the Letter of
Transmittal.
The Company understands that the Exchange Agent will make a request
promptly after the date of this Prospectus to establish accounts with respect to
the Old Notes at the Book-Entry Transfer Facility for the purpose of
facilitating the Exchange Offer, and subject to the establishment thereof, any
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of Old Notes by causing such
Book-Entry Transfer Facility to transfer such Old Notes into the Exchange
Agent's account with respect to the Old Notes in accordance with the Book-Entry
Transfer Facility's procedures for such transfer. Although delivery of the Old
Notes may be effected through book-entry transfer into the Exchange Agent's
account at the Book-Entry Transfer Facility, an appropriate Letter of
Transmittal properly completed and duly executed with any required signature
guarantee (or, in the case of book-entry transfer, an Agent's Message in lieu
thereof) and all other required documents must in each case be transmitted to
and received or confirmed by the Exchange Agent at its address set forth below
on or prior to the Expiration Date, or, if the guaranteed delivery procedures
described below are complied with, within the time period
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<PAGE> 103
provided under such procedures. Delivery of documents to the Book-Entry Transfer
Facility does not constitute delivery to the Exchange Agent.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Old Notes and withdrawal of tendered Old Notes
will be determined by the Company in its sole discretion, which determination
will be final and binding. The Company reserves the absolute right to reject any
and all Old Notes not properly tendered or any Old Notes the Company's
acceptance of which would, in the opinion of counsel for the Company, be
unlawful. The Company also reserves the right in its sole discretion to waive
any defects, irregularities or conditions of tender as to particular Old Notes.
The Company's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in the Letter of Transmittal) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Old Notes must be cured within such time as the
Company shall determine. Although the Company intends to notify holders of
defects or irregularities with respect to tenders of Old Notes, neither the
Company, the Exchange Agent nor any other person shall incur any liability for
failure to give such notification. Tenders of Old Notes will not be deemed to
have been made until such defects or irregularities have been cured or waived.
Any Old Notes received by the Exchange Agent that are not properly tendered and
as to which the defects or irregularities have not been cured or waived will be
returned by the Exchange Agent to the tendering holders, unless otherwise
provided in the Letter of Transmittal, as soon as practicable following the
Expiration Date.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available, (ii) who cannot deliver their Old Notes, the Letter of
Transmittal (or, in the case of book-entry transfer, an Agent's Message) or any
other required documents to the Exchange Agent or (iii) who cannot complete the
procedures for book-entry transfer (including delivery of an Agent's Message),
prior to the Expiration Date, may effect a tender if:
(a) the tender is made through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution (i) an Agent's Message with respect to guaranteed
delivery that is accepted by the Company, or (ii) a properly completed and
duly executed Notice of Guaranteed Delivery (by facsimile transmission,
mail or hand delivery) setting forth the name and address of the holder,
the certificate number(s) of such Old Notes and the principal amount of Old
Notes tendered, stating that the tender is being made thereby and
guaranteeing that, within three New York Stock Exchange trading days after
the Expiration Date, the Letter of Transmittal (or facsimile thereof)
together with the certificate(s) representing the Old Notes (or a
confirmation of book-entry transfer of such Notes into the Exchange Agent's
account at the Book-Entry Transfer Facility), and any other documents
required by the Letter of Transmittal will be deposited by the Eligible
Institution with the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal or
facsimile thereof (or, in the case of book-entry transfer, an Agent's
Message), as well as the certificate(s) representing all tendered Old Notes
in proper form for transfer (or a confirmation of book-entry transfer of
such Old Notes into the Exchange Agent's account at the Book-Entry Transfer
Facility), and all other documents required by the Letter of Transmittal
are received by the Exchange Agent within three New York Stock Exchange
trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Old Notes according to the guaranteed
delivery procedures set forth above.
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<PAGE> 104
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date.
To withdraw a tender of Old Notes in the Exchange Offer, a letter or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to 5:00 p.m., New York City time, on
the Expiration Date. Any such notice of withdrawal must (i) specify the name of
the person having deposited the Old Notes to be withdrawn (the "Depositor"),
(ii) identify the Old Notes to be withdrawn (including the certificate number(s)
and principal amount of such Old Notes, or, in the case of Old Notes transferred
by book-entry transfer, the name and number of the account at the Book-Entry
Transfer Facility to be credited), (iii) be signed by the holder in the same
manner as the original signature on the Letter of Transmittal by which such Old
Notes were tendered (including any required signature guarantees) or be
accompanied by documents of transfer sufficient to have the Trustee with respect
to the Old Notes register the transfer of such Old Notes into the name of the
person withdrawing the tender and (iv) specify the name in which any such Old
Notes are to be registered, if different from that of the Depositor. All
questions as to the validity, form and eligibility (including time of receipt)
of such notices will be determined by the Company, whose determination shall be
final and binding on all parties. Any Old Notes so withdrawn will be deemed not
to have been validly tendered for purposes of the Exchange Offer and no Exchange
Notes will be issued with respect thereto unless the Old Notes so withdrawn are
validly retendered. Any Old Notes which have been tendered but which are not
accepted for exchange will be returned to the holder thereof without cost to
such holder as soon as practicable after withdrawal, rejection of tender or
termination of the Exchange Offer. Properly withdrawn Old Notes may be
retendered by following one of the procedures described above under
"-- Procedures for Tendering" at any time prior to the Expiration Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Company shall not
be required to accept for exchange, or exchange Exchange Notes for, any Old
Notes, and may terminate or amend the Exchange Offer as provided herein before
the acceptance of such Old Notes, if:
(a) any action or proceeding is instituted or threatened in any court
or by or before any governmental agency with respect to the Exchange Offer
which, in the sole judgment of the Company, might materially impair the
ability of the Company to proceed with the Exchange Offer or any material
adverse development has occurred in any existing action or proceeding with
respect to the Company or any of its subsidiaries;
(b) any law, statute, rule, regulation or interpretation by the staff
of the Commission is proposed, adopted or enacted, which, in the sole
judgment of the Company, might materially impair the ability of the Company
to proceed with the Exchange Offer or materially impair the contemplated
benefits of the Exchange Offer to the Company; or
(c) any governmental approval has not been obtained, which approval
the Company shall, in its sole discretion, deem necessary for the
consummation of the Exchange Offer as contemplated hereby.
If the Company determines in its sole discretion that any of the conditions
are not satisfied, the Company may (i) refuse to accept any Old Notes and return
all tendered Old Notes to the tendering holders, (ii) extend the Exchange Offer
and retain all Old Notes tendered prior to the expiration of the Exchange Offer,
subject, however, to the rights of holders to withdraw such Old Notes (see
"-- Withdrawal of Tenders") or (iii) waive such unsatisfied conditions with
respect to the Exchange Offer and accept all properly tendered Old Notes which
have not been withdrawn.
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<PAGE> 105
EXCHANGE AGENT
The Bank of New York has been appointed as Exchange Agent for the Exchange
Offer. Questions and requests for assistance, requests for additional copies of
this Prospectus or of the Letter of Transmittal and requests for Notice of
Guaranteed Delivery should be directed to the Exchange Agent addressed as
follows:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
By Hand Or Overnight Delivery: By Registered Or Certified Mail:
The Bank of New York Facsimile Transmissions: The Bank of New York
101 Barclay Street (Eligible Institutions Only) 101 Barclay Street, 7E
Corporate Trust Services Window (212) 571-3080 New York, New York 10286
Ground Level Attention: Reorganization Section
Attention: Reorganization To Confirm by Telephone
Section or for Information Call:
(212) 815-6333
</TABLE>
DELIVERY TO AN ADDRESS OTHER THAN SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telecopy, telephone or in person by officers and
regular employees of the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers, or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company. Such expenses include fees and expenses of the Exchange
Agent and Trustee, accounting and legal fees and printing costs, among others.
ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the same carrying value as the Old
Notes, which is the original principal amount, less the original issue discount
representing the value of the Warrants, plus accretion thereon, as reflected in
the Company's accounting records on the date of exchange. Accordingly, no gain
or loss for accounting purposes will be recognized by the Company. Certain
expenses of the Exchange Offer will be amortized over the term of the Exchange
Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
The Old Notes that are not exchanged for Exchange Notes pursuant to the
Exchange Offer will remain restricted securities. Accordingly, such Old Notes
may be resold only (i) to the Company (upon redemption thereof or otherwise),
(ii) so long as the Old Notes are eligible for resale pursuant to Rule 144A, to
a person inside the United States whom the seller reasonably believes is a
qualified institutional buyer within the meaning of Rule 144A under the
Securities Act in a transaction meeting the requirements of Rule 144A, in
accordance with Rule 144 under the Securities Act, or pursuant to another
exemption from the registration requirements of the Securities Act (and based
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upon an opinion of counsel reasonably acceptable to the Company), (iii) outside
the United States to a foreign person in a transaction meeting the requirements
of Rule 904 under the Securities Act, or (iv) pursuant to an effective
registration statement under the Securities Act, in each case in accordance with
any applicable securities laws of any state of the United States.
RESALE OF THE EXCHANGE NOTES
With respect to resales of Exchange Notes, based on interpretations by the
staff of the Commission set forth in no-action letters issued to third parties,
the Company believes that a holder or other person who receives Exchange Notes,
whether or not such person is the holder (other than a person that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) who receives Exchange Notes in exchange for Old Notes in the ordinary
course of business and who is not participating, does not intend to participate,
and has no arrangement or understanding with any person to participate, in the
distribution of the Exchange Notes, will be allowed to resell the Exchange Notes
to the public without further registration under the Securities Act and without
delivering to the purchasers of the Exchange Notes a prospectus that satisfies
the requirements of Section 10 of the Securities Act. However, if any holder
acquires Exchange Notes in the Exchange Offer for the purpose of distributing or
participating in a distribution of the Exchange Notes, such holder cannot rely
on the position of the staff of the Commission enunciated in such no-action
letters or any similar interpretive letters, and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction, unless an exemption from registration is
otherwise available. Further, each Participating Broker-Dealer that receives
Exchange Notes for its own account in exchange for Old Notes, where such Old
Notes were acquired by such Participating Broker-Dealer as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of such Exchange Notes.
The Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a Participating Broker-Dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. For a description of
the procedures for such resales by Participating Broker-Dealers, see "Plan of
Distribution."
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following discussion describes the material U.S. federal income tax
consequences expected to result to holders whose Old Notes are exchanged for
Exchange Notes in the Exchange Offer. This discussion is based on the current
provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
applicable Treasury regulations, judicial authority and administrative rulings
and practice. There can be no assurance that the Internal Revenue Service (the
"Service") will not take a contrary view, and no ruling from the Service has
been or will be sought. Legislative, judicial or administrative changes or
interpretations may be forthcoming that could alter or modify the statements and
conditions set forth herein. Any such changes or interpretations may or may not
be retroactive and could affect the tax consequences to holders. Certain holders
(including insurance companies, tax-exempt organizations, financial
institutions, broker-dealers, foreign corporations and persons who are not
citizens or residents of the United States) may be subject to special rules not
discussed below.
The Company believes that the exchange of Old Notes for Exchange Notes
pursuant to the Exchange Offer will not be treated as a taxable transaction for
federal income tax purposes. As a result, there should be no federal income tax
consequences to holders exchanging Old Notes for Exchange Notes pursuant to the
Exchange Offer.
THE FOREGOING DISCUSSION IS BASED ON THE PROVISIONS OF THE CODE,
REGULATIONS, TREASURY REGULATIONS, RULING AND JUDICIAL DECISIONS NOW IN EFFECT,
ALL OF WHICH ARE SUBJECT TO CHANGE. ANY SUCH CHANGES MAY BE APPLIED
RETROACTIVELY IN A MANNER THAT COULD ADVERSELY AFFECT HOLDERS EXCHANGING NOTES.
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EACH HOLDER OF NOTES SHOULD CONSULT ITS OWN TAX ADVISOR WITH RESPECT TO THE TAX
CONSEQUENCES TO IT, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN
AND OTHER TAX LAWS, OF EXCHANGING OLD NOTES FOR EXCHANGE NOTES PURSUANT TO THE
EXCHANGE OFFER.
PLAN OF DISTRIBUTION
Each Participating Broker-Dealer that receives Exchange Notes for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Participating Broker-Dealer in connection with resales of Exchange Notes
received in exchange for Old Notes where such Old Notes were acquired as a
result of market-making activities or other trading activities. The Company has
agreed that for a period of 180 days after the Expiration Date, they will make
this Prospectus, as amended or supplemented, available to any Participating
Broker-Dealer for use in connection with any such resale. In addition, until
, 1998 (90 days after the commencement of the Exchange Offer),
all dealers effecting transactions in the Exchange Notes may be required to
deliver a prospectus.
The Company will not receive any proceeds from any sales of the Exchange
Notes by Participating Broker-Dealers. Exchange Notes received by Participating
Broker-Dealers for their own account pursuant to the Exchange Offer may be sold
from time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange Notes or
a combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such Participating Broker-Dealer and/or the purchasers of
any such Exchange Notes. Any Participating Broker-Dealer that resells the
Exchange Notes that were received by it for its own account pursuant to the
Exchange Offer and any broker or dealer that participates in a distribution of
such Exchange Notes may be deemed to be an "underwriter" within the meaning of
the Securities Act and any profit on any such resale of Exchange Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a Participating Broker-Dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any Participating Broker-Dealer that requests
such documents in the Letter of Transmittal.
LEGAL MATTERS
Certain legal matters with respect to the validity of the issuance of the
Exchange Notes offered hereby will be passed upon for the Company by Weil,
Gotshal & Manges LLP, New York, New York. Certain United States federal income
tax matters in connection with the Exchange Offer will be passed upon for the
Company by Weil, Gotshal & Manges LLP, New York, New York.
EXPERTS
The consolidated financial statements as of December 31, 1996 and 1995 and
for each of the three years in the period ended December 31, 1996 of American
Banknote Corporation included and incorporated by reference in this Prospectus
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their reports, which are included and incorporated by reference
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<PAGE> 108
herein, and have been so included and incorporated in reliance upon the report
of such firm given upon their authority as experts in accounting and auditing.
The special purpose financial statements of Leigh Mardon Security Division
included and incorporated in this Prospectus by reference from the Company's
Current Report on Form 8-K/A Amendment No. 1 dated August 14, 1996 have been
audited by KPMG, chartered accountants, as stated in their report, which is
included and incorporated herein by reference, and have been so included and
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
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<PAGE> 109
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements of American Banknote Corporation and
Subsidiaries
for the years ended December 31, 1996, 1995 and 1994:
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Independent Auditors' Report..................................................... F-2
Consolidated Statements of Operations............................................ F-3
Consolidated Balance Sheets...................................................... F-4
Consolidated Statement of Stockholders' Equity................................... F-5
Consolidated Statements of Cash Flows............................................ F-6
Notes to Consolidated Financial Statements....................................... F-7
</TABLE>
Unaudited Condensed Financial Statements of American Banknote Corporation and
Subsidiaries for the nine months ended September 30, 1997 and 1996:
<TABLE>
<S> <C>
Condensed Consolidated Statements of Operations -- Unaudited..................... F-26
Condensed Consolidated Balance Sheets -- Unaudited............................... F-27
Condensed Consolidated Statements of Cash Flows -- Unaudited..................... F-28
Condensed Consolidated Statement of Stockholders' Equity -- Unaudited............ F-29
Notes to Condensed Consolidated Financial Statements -- Unaudited................ F-30
</TABLE>
Special Purpose Financial Statements of Leigh Mardon Security Division for the
three
years ended in the period ended 30 June 1995 (in Australian dollars):
<TABLE>
<S> <C>
Report of Independent Auditors................................................... F-32
Profit and Loss Statements....................................................... F-33
Balance Sheets................................................................... F-34
Statement of Cash Flows.......................................................... F-35
Notes to Special Purpose Financial Statements.................................... F-36
</TABLE>
F-1
<PAGE> 110
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
American Banknote Corporation
New York, New York
We have audited the accompanying consolidated balance sheets of American
Banknote Corporation and subsidiaries as of December 31, 1996 and 1995, and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on the financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of American Banknote Corporation
and subsidiaries as of December 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1996 in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
February 21, 1997
New York, New York
F-2
<PAGE> 111
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Sales................................................... $309,450 $206,164 $208,133
-------- -------- --------
Costs and expenses:
Cost of goods sold.................................... 202,158 149,035 130,889
Selling and administrative............................ 48,263 39,851 38,974
Restructuring and idle equipment...................... 14,304 7,000
Depreciation and amortization......................... 20,042 14,824 13,094
-------- -------- --------
270,463 218,014 189,957
-------- -------- --------
38,987 (11,850) 18,176
Other (expense) income:
Interest expense...................................... (28,864) (23,147) (21,057)
Foreign translation losses, net....................... (255) (38) (7,037)
Provision for litigation.............................. (2,400)
Other, net............................................ 2,265 2,824 1,816
-------- -------- --------
(29,254) (20,361) (26,278)
-------- -------- --------
Income (loss) before taxes on income (benefit) and
minority interest.................................. 9,733 (32,211) (8,102)
Taxes on income (benefit)............................... 400 (11,359) (2,401)
-------- -------- --------
Income (loss) before minority interest................ 9,333 (20,852) (5,701)
Minority interest....................................... 5,234 1,563
-------- -------- --------
Income (loss) before extraordinary item............... 4,099 (22,415) (5,701)
Extraordinary item -- early extinguishment of debt...... (114)
-------- -------- --------
Net income (loss)....................................... $ 4,099 $(22,415) $ (5,815)
======== ======== ========
Net Income (loss) per share:
Before extraordinary item............................. $ 0.20 $ (1.17) $ (0.30)
Extraordinary item.................................... (0.01)
-------- -------- --------
$ 0.20 $ (1.17) $ (0.31)
======== ======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
F-3
<PAGE> 112
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31
---------------------
1996 1995
-------- --------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents.......................................... $ 14,256 $ 23,525
Marketable securities -- at market (cost $1,746)................... 2,133 2,952
Accounts receivable, net of allowance for doubtful accounts of $981
and $816........................................................ 47,501 32,058
Inventories........................................................ 35,622 23,243
Deferred income taxes.............................................. 4,261 5,983
Prepaid expenses and other......................................... 9,362 12,527
-------- --------
Total current assets....................................... 113,135 100,288
Property, plant and equipment, at cost, net of accumulated
depreciation and amortization...................................... 253,987 225,974
Other assets......................................................... 27,974 18,342
Excess of cost of investment in subsidiaries over net assets
acquired, net of accumulated amortization of $5,662 and $3,119..... 85,282 34,798
-------- --------
$480,378 $379,402
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Revolving credit................................................... $ 3,103
Current portion of long-term debt.................................. 14,450 $ 332
Accounts payable and accrued expenses.............................. 60,049 44,983
-------- --------
Total current liabilities.................................. 77,602 45,315
Long-term debt....................................................... 263,548 194,156
Other liabilities.................................................... 24,706 20,181
Deferred income taxes................................................ 47,456 60,579
Minority interest.................................................... 20,789 18,818
-------- --------
434,101 339,049
Commitments and Contingencies
Stockholders' equity
Preferred Stock, authorized 5,000,000 shares, no shares issued or
outstanding
Common Stock, par value $.01 per share, authorized 50,000,000
shares; issued 20,137,880 shares and 19,391,763 shares.......... 202 194
Capital surplus.................................................... 68,609 67,091
Retained-earnings (deficit)........................................ (21,362) (25,461)
Treasury stock, at cost (281,000 shares)........................... (1,253) (1,253)
Pension liability adjustment....................................... (218)
Cumulative currency translation adjustment......................... 81
-------- --------
Total stockholders' equity................................. 46,277 40,353
-------- --------
$480,378 $379,402
======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
F-4
<PAGE> 113
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
THREE YEARS ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
CUMULATIVE
COMMON STOCK RETAINED PENSION CURRENCY
--------------- CAPITAL EARNINGS TREAS. LIAB. TRANSLATION
SHARES AMOUNT SURPLUS (DEFICIT) STOCK ADJUST. ADJUSTMENT TOTAL
------ ------ ------- -------- ------- ------- ---------- --------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE --
JANUARY 1, 1994........ 19,102 $191 $66,604 $ 2,769 $ (821) $(413) $ 68,330
Purchase of common
shares................. (432) (432)
Exercise of warrants..... 43 -- --
Issuance in connection
with option plans and
other.................. 145 2 279 281
Pension liability
adjustment............. 413 413
Net loss................. (5,815) (5,815)
------ ---- ------- -------- ------- ----- -------
BALANCE --
DECEMBER 31, 1994...... 19,290 193 66,883 (3,046) (1,253) 62,777
Issuance in connection
with option plans...... 102 1 208 209
Pension liability
adjustment............. (218) (218)
Net loss................. (22,415) (22,415)
------ ---- ------- -------- ------- ----- -------
BALANCE --
DECEMBER 31, 1995...... 19,392 194 67,091 (25,461) (1,253) (218) 40,353
Issuance of common shares
in connection with
acquisitions........... 427 5 825 830
Issuance in connection
with option and
compensation plans..... 319 3 693 696
Foreign currency
translation
adjustment............. $ 81 81
Pension liability
adjustment............. 218 218
Net income............... 4,099 4,099
------ ---- ------- -------- ------- ----- --- -------
BALANCE --
DECEMBER 31, 1996...... 20,138 $202 $68,609 $(21,362) $(1,253) $ -- $ 81 $ 46,277
====== ==== ======= ======== ======= ===== === =======
</TABLE>
See Notes to Consolidated Financial Statements.
F-5
<PAGE> 114
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------------
1996 1995 1994
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Operating Activities:
Income (loss) before extraordinary item.......................... $ 4,099 $(22,415) $ (5,701)
Adjustments to reconcile income (loss) to net cash provided by
operating activities:
Depreciation and amortization.................................... 24,326 17,742 13,656
Unrealized loss (gain) on marketable securities.................. 819 (1,061) (104)
Extraordinary item............................................... (215)
Deferred taxes................................................... (10,395) (16,650) (3,057)
Minority interest................................................ 5,234 1,563
Provision for litigation......................................... 2,400
Restructuring and idle equipment................................. 14,223 6,075
Foreign translation losses, net.................................. 255 38 7,037
Changes in operating assets and liabilities, net of effects from
acquisitions:
Marketable securities.......................................... (1,253) (533)
Accounts receivable............................................ (15,203) 10,501 (10,894)
Inventories.................................................... (4,424) 1,734 (4,676)
Prepaid expenses and other..................................... 1,250 (7,466) (175)
Accounts payable and accrued expenses.......................... (788) (3,839) 7,447
Other.......................................................... 65 2,432 (2,670)
------- ------- -------
Net cash provided by (used in) operating activities................ 7,638 (4,451) 6,190
------- ------- -------
Investing Activities:
Acquisition of LM................................................ (2,491)
Capital expenditures............................................. (22,283) (10,378) (10,084)
Proceeds from sale of joint venture.............................. 4,718
Proceeds from sale of assets..................................... 699 211 1,694
Other............................................................ (385) (650)
------- ------- -------
Net cash used in investing activities.............................. (24,460) (6,099) (8,390)
------- ------- -------
Financing Activities:
Long-term borrowings............................................. 8,342 3,415
Revolving credit borrowings...................................... 3,103
Payment of long-term debt........................................ (1,076) (451) (537)
Proceeds from 11 5/8% Senior Notes, net of related costs......... 59,779
Repayment of bank financing...................................... (40,000)
Dividend to minority shareholder................................. (2,867)
Other............................................................ 20 (306)
------- ------- -------
Net cash provided by financing activities.......................... 7,502 2,984 18,936
------- ------- -------
Effect of foreign currency exchange rate changes on cash and cash
equivalents...................................................... 51 (567) (515)
------- ------- -------
(Decrease) increase in cash and cash equivalents................... (9,269) (8,133) 16,221
Cash and cash equivalents -- beginning of year..................... 23,525 31,658 15,437
------- ------- -------
Cash and cash equivalents -- end of year........................... $ 14,256 $ 23,525 $ 31,658
======= ======= =======
Supplemental cash payments:
Taxes............................................................ $ 9,490 $ 3,680 $ 1,604
Interest......................................................... $ 27,130 $ 21,857 $ 16,309
</TABLE>
See Notes to Consolidated Financial Statements.
F-6
<PAGE> 115
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A -- BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
American Banknote Corporation is a holding company (the "Company") and
through its subsidiaries in the United States, Brazil, Australia and New
Zealand, operates in a single industry, secured products and systems, with three
principal product lines: Transaction Cards & Systems; Printing Services &
Document Management; and Security Printing Solutions. The Company's principal
subsidiaries are: American Bank Note Company ("ABN"), American Bank Note
Holographics, Inc. ("ABNH"), American Bank Note Company Grafica e Servicos Ltda.
("ABNB"), a 77.5% owned Brazilian company, and American Banknote Australasia
Holdings, Inc. ("ABAH") and its Australian subsidiary, ABN Australasia Limited
("LM").
1. Principles of Consolidation: The accompanying consolidated financial
statements include the accounts of the Company and its subsidiaries. Certain
reclassifications have been made to the 1995 and 1994 balances to conform to the
1996 presentation. All significant intercompany items have been eliminated.
2. Pervasiveness of Estimates: The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
3. Translation of Financial Statements: LM's results of operations are
translated into US dollars using average exchange rates during the period, while
assets and liabilities are translated using current rates. Resulting translation
adjustments are accumulated as a separate component of stockholders' equity.
Foreign currency transaction gains and losses are included in earnings. ABNB
operates in a hyper-inflationary economy. Currently, gains and losses for ABNB
resulting from translation and transactions are determined using a combination
of current and historical rates. If inflation rates in Brazil remain at current
levels, the method of translating ABNB's financial statements will be changed to
the method used to translate LM's financial statements.
4. Cash and Cash Equivalents: All highly liquid investments with a
maturity of three months or less, when purchased, are considered to be cash
equivalents.
5. Marketable Securities: Such investments are held for trading purposes
and changes in the market value are reflected in earnings.
6. Inventories and Revenue Recognition: Inventories are stated at the
lower of cost or market with cost being determined on the first-in, first-out
(FIFO) method. Revenue is generally recognized when goods are shipped. However,
pursuant to terms with certain customers, completed items are sometimes stored
at the Company's premises and, in those instances, revenue is recognized when
the goods are transferred to the on-site storage location.
7. Depreciation and Amortization: Depreciation and amortization of
property, plant and equipment is computed principally by the straight-line
method over the estimated useful life of the asset as follows: buildings -- 25
to 40 years; rolls and dies -- 40 years; and machinery, equipment and
fixtures -- 5 to 22 years.
Amortization of leasehold improvements is computed by the straight-line
method based upon the remaining term of the applicable lease or the estimated
useful life of the asset, whichever is shorter.
F-7
<PAGE> 116
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
8. Intangible Assets: Patents and other intangibles are amortized over
their useful lives. The excess of cost of investment in subsidiaries over net
assets acquired is amortized over periods ranging from 20 to 30 years using the
straight-line method.
9. Research and Development: Research and development costs are expensed
as incurred (1996 -- $0.9 million, 1995 -- $0.4 million and 1994 -- $1.6
million).
10. Net Income (Loss) Per Share: Net income (loss) per share has been
computed based on the weighted average number of outstanding shares of common
stock and in 1996 common equivalent shares (approximately 20.5 million in 1996,
19.1 million in 1995 and 19.0 million in 1994).
11. Business Information: Sales to the United States government
(principally food coupons) were 7%, 15% and 26% of consolidated sales for the
years ended December 31, 1996, 1995 and 1994, respectively. Sales to a customer
in Brazil (national telephone company) were 24% and 13% of consolidated sales
for the years ended December 31, 1996 and 1995, respectively. The current
contract with the customer expires in May 1997 and the Company is presently
negotiating either a new contract or a renewal of its existing contract but the
value of either has not yet been determined. Sales to the ABNB minority owner
were 14% and 12% of consolidated sales in 1996 and 1995, respectively.
Stock and bond printing accounted for approximately 8%, 11% and 14% of
consolidated sales for the years ended December 31, 1996, 1995 and 1994,
respectively. The elimination of printed certificates continues to be advocated
by various organizations in favor of the use of book-entry systems for recording
security ownership. The complete elimination of or substantial reduction in the
domestic use of certificates or NYSE requirements would have a material adverse
effect on the sales and earnings of the Company.
Government sales, particularly to the United States government and state
and local governments, is principally dependent on successful competitive bids
which are generally awarded on the basis of price but may also include other
factors. Many of the Company's contracts are re-bid annually or on a multiple
year basis. Government sales are generally subject to provisions allowing
termination for the convenience of the government.
12. Supplemental Cash Flow Information: In 1996 the Company entered into a
contract payable in connection with the LM acquisition in the face amount of
$4.8 million. In 1996, 426,617 shares of Common Stock (valued at approximately
$0.8 million) were issued, in connection with the acquisition of an equity
interest in a privately held transaction card business.
13. Export Sales: US export sales were 6%, 7% and 12% of consolidated
sales for the years ended December 31, 1996, 1995 and 1994, respectively.
14. Impact of Accounting Pronouncements: Effective January 1, 1996, the
Company adopted Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-lived Assets and for Assets to be Disposed Of." The
adoption of this standard was not material.
In October 1996, the AICPA Accounting Standards Executive Committee issued
Statement of Position 96-1, "Environmental Remediation Liabilities," which
requires adoption in 1997. The adoption of this pronouncement will not have a
material effect on the Company's financial condition and results of operations.
NOTE B -- ACQUISITIONS
As of July 1, 1995, the Company acquired the security printing operations
of Grafica Bradesco Ltda. ("Bradesco") from Banco Bradesco S.A. (Brazil), in
exchange for a 22.5% interest in the
F-8
<PAGE> 117
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Company's Brazilian subsidiary, valued at approximately $17 million. Bradesco's
business included check printing, and other forms for financial institutions.
Approximately $2.3 million was recorded as the excess of cost of investment in
subsidiaries over net assets acquired.
In 1996, in a two step transaction, the Company acquired a 100% equity
interest in LM. The total purchase price of and the net assets acquired in the
acquisition follows (in thousands):
<TABLE>
<S> <C>
Net working capital deficiency................................... $ (2,124)
Property, plant and equipment.................................... 23,488
Excess of cost of investment over net assets acquired............ 52,885
Other long-term assets........................................... 3,914
Deferred debt expense............................................ 3,273
Long-term liabilities............................................ (2,239)
--------
Net purchase price............................................. 79,197
Acquisition financing............................................ (76,706)
--------
Net cash cost of acquisition................................... $ 2,491
========
</TABLE>
On an unaudited pro forma basis, assuming the above acquisitions had been
made as of January 1, 1995, the consolidated sales for the years ended December
31, 1996 and 1995 would have increased by approximately $33.5 million and $96.4
million, respectively, and net income (loss) would have increased (decreased) by
approximately $0.9 million ($.05 per share) and ($3.4 million) ($.17 per share),
respectively.
The above transactions were accounted under the purchase method. The
Company believes the unaudited pro forma results are not necessarily indicative
of the actual results of operations that would have occurred had the
acquisitions been made as of January 1, 1995 or of the results which will occur
in the future. The results of operations of the acquired entities are
consolidated in the Company's financial statements from the respective
acquisition dates.
NOTE C -- INVENTORIES
<TABLE>
<CAPTION>
DECEMBER 31
-------------------
1996 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Finished goods......................................... $ 6,288
Work in process........................................ 14,905 $10,505
Raw materials and supplies............................. 14,429 12,738
------- -------
$35,622 $23,243
======= =======
</TABLE>
F-9
<PAGE> 118
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE D -- PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
DECEMBER 31
---------------------
1996 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Land................................................. $ 2,852 $ 2,727
Buildings and improvements........................... 25,861 20,858
Rolls and dies....................................... 174,037 177,154
Machinery, equipment and fixtures.................... 136,309 70,368
Leasehold improvements............................... 4,905 1,522
Construction in progress............................. 6,408 260
-------- --------
350,372 272,889
Accumulated depreciation and amortization............ 96,385 46,915
-------- --------
$253,987 $225,974
======== ========
</TABLE>
NOTE E -- ACCOUNTS PAYABLE AND ACCRUED EXPENSES
<TABLE>
<CAPTION>
DECEMBER 31
-------------------
1996 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Accounts payable -- trade.............................. $23,967 $11,335
Accrued expenses....................................... 6,658 2,893
Customers' advances.................................... 2,120 7,026
Salaries and wages..................................... 9,431 5,666
Restructuring and acquisition related accruals......... 3,898 8,838
Interest payable....................................... 5,679 4,291
Other.................................................. 8,296 4,934
------- -------
$60,049 $44,983
======= =======
</TABLE>
NOTE F -- TAXES ON INCOME
Deferred income taxes arise from temporary differences between the tax
basis of assets and liabilities, and their reported amounts in the consolidated
financial statements.
The Company files a US corporate consolidated federal income tax return
which includes its domestic subsidiaries.
F-10
<PAGE> 119
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Taxes on income (benefit) for the years ended December 31, follows:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Current
Foreign............................... $ 10,624 $ 4,755
State and local....................... 443 536 $ 656
-------- -------- -------
11,067 5,291 656
-------- -------- -------
Deferred
Federal............................... (8,598) (14,209) (2,892)
Foreign............................... (914) (1,993) (31)
State and local....................... (1,155) (448) (134)
-------- -------- -------
(10,667) (16,650) (3,057)
-------- -------- -------
$ 400 $(11,359) $ (2,401)
======== ======== =======
</TABLE>
A reconciliation of the taxes on income (benefit) and the amount computed
by applying the federal income tax statutory rate follows:
<TABLE>
<CAPTION>
1996 1995 1994
------- -------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Statutory tax (benefit).................... $ 3,406 $(10,952) $(2,755)
Adjustments due to rate changes............ (2,837)
Difference between federal and foreign
statutory rates.......................... (1,311) 1,390
Non-deductible goodwill.................... 866
Brazil dividend deduction.................. (1,428) 601
State and local income taxes, net of
federal benefit.......................... (867) 58 345
Other...................................... (266) 381 9
------- -------- -------
$ 400 $(11,359) $(2,401)
======= ======== =======
</TABLE>
In 1995, the Company adjusted its deferred tax assets and liabilities for
the estimated effect of a decrease in Brazil's tax rates enacted in the fourth
quarter of 1995. The effect of this non-cash item was to decrease deferred
income taxes in 1995 by $2.8 million ($0.15 per share).
The Company has an alternative minimum tax credit carryforward of
approximately $0.8 million, which expires in 1999 and is available to offset
future taxable income. In addition, in 1996, 1995 and 1994, the Company
generated net operating loss carryforwards of approximately $23.8 million, $20.9
million and $2.8 million, respectively, which are scheduled to expire in 2011,
2010 and 2009, respectively.
As a result of Brazilian tax legislation, effective for 1996, the 15%
dividend withholding tax on earnings after 1995 was eliminated. Additionally, in
1996, tax legislation which permits Brazilian companies to elect, subject to
certain limitations, to deduct dividends in computing taxable income; however,
there is a 15% withholding tax on dividends distributed in this manner.
At December 31, 1996, the unrepatriated earnings of ABNB and LM are
approximately $21.5 million and $1.6, respectively, and are considered
permanently invested overseas. A portion of ABNB's earnings ($3.4 million) has
previously been subject to US tax.
F-11
<PAGE> 120
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The tax effects of the items comprising the Company's deferred income tax
assets and liabilities are as follows:
<TABLE>
<CAPTION>
DECEMBER 31
---------------------
1996 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Current deferred tax assets:
Accrued expenses........................................... $ 1,544 $ 2,945
Other...................................................... 2,717 3,038
-------- --------
$ 4,261 $ 5,983
======== ========
Long-term deferred tax assets included in other assets....... $ 1,108
========
Deferred tax liabilities:
Difference between book and tax basis of assets acquired in
acquisitions and mergers................................ $ 65,952 $ 68,837
Excess tax over book depreciation.......................... 6,524 5,882
Other...................................................... 2,780 2,036
-------- --------
75,256 76,755
-------- --------
Non-current deferred tax assets:
Operating loss carryforwards and tax credits............... (17,979) (8,929)
Restructuring expenses..................................... (4,114) (3,205)
Litigation................................................. (984)
Other...................................................... (4,723) (4,042)
-------- --------
(27,800) (16,176)
-------- --------
Net deferred tax liabilities............................ $ 47,456 $ 60,579
======== ========
</TABLE>
NOTE G -- REVOLVING CREDIT AND LONG-TERM DEBT
In 1996, the Company entered into a $20 million revolving credit facility
(the "Credit Agreement") which expires on October 30, 1998. At December 31,
1996, interest under the Credit Agreement, as defined was 9.25%. Effective
January 1, 1997, the interest rate as defined, decreased to 8.75%. The weighted
average interest expense on 1996 borrowings was approximately 9.25%. The Credit
Agreement is an asset-based facility secured by certain accounts receivable and
inventory (total carrying value of approximately $18.0 million at December 31,
1996). At December 31, 1996, approximately $14.0 million was available under the
Credit Agreement before reduction for outstanding letters of credit ($1.8
million) and borrowings ($3.1 million).
F-12
<PAGE> 121
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Long-Term Debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31
---------------------
1996 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
10 3/8% Senior Notes, due June 1, 2002(a).................... $126,500 $126,500
11 5/8% Senior Notes, due August 1, 2002, net of unamortized
discount of $1,005 and $1,120(b)........................... 63,995 63,880
9.35% Non-Recourse Senior Debt due May 31, 2001(c)........... 52,419
8.07% Non-Recourse Subordinated Debt due May 31, 2001(c)..... 18,337
BNDES financing(d)........................................... 10,277 3,223
Other, ranging from 8% to 9%................................. 6,470 885
Less current portion......................................... (14,450) (332)
-------- --------
Net long-term debt........................................... $263,548 $194,156
======== ========
</TABLE>
- ---------------
(a) The 10 3/8% Senior Notes are redeemable at the option of the Company, in
whole or in part, on or after June 1, 1997, at stated redemption prices.
Equal mandatory sinking fund payments on June 1, 2000 and June 1, 2001 are
required to retire an aggregate of 50% of the original principal amount.
The 10 3/8% Senior Notes are senior indebtedness of the Company and rank
equally in right of payment, on a pari passu basis, with all existing and
future senior indebtedness of the Company and are secured by a pledge of all
the issued and outstanding shares of capital stock of ABN and ABNH and by
65% of the shares of ABNB. ABN, ABNH and the 77.5% interest in ABNB
constitute a substantial portion of the assets of the Company.
(b) The 11 5/8% Senior Notes are redeemable at the option of the Company, in
whole or in part, on and after August 1, 1998, at stated redemption prices.
The 11 5/8% Senior Notes are unsecured senior indebtedness of the Company
and rank equally in right of payment, on a pari passu basis, with all
existing and future senior indebtedness of the Company. The 11 5/8% Senior
Notes are effectively subordinated to the 10 3/8% Senior Notes.
(c) LM's Non-Recourse Senior and Subordinated Debt are denominated in Australian
dollars, include various default, cross-default and acceleration of maturity
provisions and provide for mandatory principal prepayments in the event that
Surplus Cashflow of LM, as defined, is attained.
The LM Non-Recourse Senior Debt is a term loan of approximately $53.5
million and a $4.0 million working capital facility. The term loan is
secured by a fixed and floating charge on LM's assets and undertakings.
Approximately $0.6 million of letters of credit are outstanding under the
working capital facility which is subject to annual renewals. The first
renewal date is April 30, 1997. The working capital facility is supported by
a five-year committed letter of credit facility issued by the term-loan
lenders.
Interest on the Non-Recourse Subordinated Debt is generally payable
annually, or as permitted by the Non-Recourse Senior Debt, and accrues
interest at a rate of 8.07% per annum plus 4% upon amounts outstanding in
excess of $16.4 million.
(d) The BNDES financing (Brazilian Federal Government Development Bank debt) is
denominated in Brazilian reais and bears interest at 6.4% above the TJLP
(11.0% at December 31, 1996), which is a government administered long-term
interest rate. The borrowings are secured by an interest in equipment
(carrying value of approximately $6.1 million at December 31, 1996).
F-13
<PAGE> 122
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company's financing agreements contain covenants concerning interest
coverage ratios, EBITDA, sales of assets, sale and leaseback transactions,
liens, transactions with affiliates, distributions from subsidiaries,
indebtedness, capital expenditures, mergers and acquisitions, payment of cash
dividends, redemptions of capital stock and other matters. The Company's ability
to service its debt depends upon the future performance of the Company's
subsidiaries, which will be subject to prevailing economic and competitive
conditions and to other factors, including the continued ability to generate
cash, to distribute that cash to the Company for debt service and to repatriate
funds from foreign subsidiaries, particularly ABNB.
The fair value of the 10 3/8% Senior Notes and the 11 5/8% Senior Notes
based on market quotes at December 31, 1996 was approximately $124.6 million and
$62.4 million, respectively, and at December 31, 1995 was approximately $84.8
million and $39.0 million, respectively. The fair value of all other debt
approximates their carrying values.
Principal maturities of long-term debt follow:
<TABLE>
<CAPTION>
DOMESTIC ABNB LM
-------- ------- ------
(IN MILLIONS)
<S> <C> <C> <C>
1997........................................... $ 3.5 $ 3.4 $ 7.6
1998........................................... 1.3 3.1 6.0
1999........................................... .2 1.7 6.8
2000........................................... 31.8 1.7 8.4
2001........................................... 31.9 .4 41.9
2002 and thereafter............................ 129.3
</TABLE>
NOTE H -- CAPITAL STOCK
The Company is authorized to issue 5,000,000 shares of Preferred Stock,
with such terms as the Board of Directors may determine.
The Board of Directors, in 1994, adopted a Preferred Stock Purchase Rights
Plan pursuant to which it declared a dividend of one Preferred Stock Purchase
Right (the "Rights") for each outstanding share of Common Stock on March 24,
1994. Each Right entitles the registered holder to purchase from the Company one
one-hundredth ( 1/100) of a share of preferred stock, designated as Series A
Junior Preferred Stock, at a price of $15.50. The Rights will become exercisable
only in the event, with certain exceptions, an acquiring party accumulates 15
percent or more of the Company's voting stock or if a party announces an offer
to acquire 30 percent or more of the voting stock. The Rights expire on March
24, 2004. Upon the occurrence of certain events, holders of the Rights will be
entitled to purchase either the Company's stock or shares in an "acquiring
entity" at half of market value. The Company will generally be entitled to
redeem the Rights at $.01 per Right at any time until the tenth day following
the acquisition of 15 percent of its voting stock by an acquirer. The Rights are
not exercisable if redeemed.
At December 31, 1996, 176,500 warrants, issued to operating management in
1993 ("Warrants"), are outstanding and exercisable. The Warrants expire in 2000.
In 1994, Warrants for 43,000 common shares were exercised at $.011 per share.
At December 31, 1996, approximately 4,317,000 shares of Common Stock were
reserved for warrants and stock-based compensation plans.
F-14
<PAGE> 123
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE I -- STOCK-BASED COMPENSATION PLANS
The Company has four stock-based compensation plans, as follows: the 1990
Employee Stock Option Plan (the "1990 Plan"), the Long-Term Performance Plan
(the "LTP Plan"), the Executive Incentive Plan, and the Deferred Stock and
Compensation Plan for Non-Employee Directors (the "Directors Plan"). The terms
of option awards are determined on the date of grant, generally have an exercise
life of ten years, are granted at not less than the market price, and become
exercisable in equal amounts over a three-year period from the date of grant.
A summary of the option plans is presented below:
<TABLE>
<CAPTION>
1996 1995 1994
---------------------- --------------------- ---------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
---------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Options outstanding,
beginning of year.... 1,701,783 $4.55 1,771,783 $5.05 1,665,283 $5.09
Exercised............ (2,000) 1.88 (10,000) 1.81 (61,000) 2.11
Forfeited............ (38,200) 3.59 (345,000) 5.20 (252,000) 5.15
Granted.............. 1,083,750 2.06 285,000 2.19 419,500 4.51
Canceled............. (1,184,333) 5.38
---------- --------- ---------
Options outstanding,
end of year.......... 1,561,000 2.22 1,701,783 4.55 1,771,783 5.05
========== ========= =========
Option price range..... $1.38 to $1.81 to $1.81 to
at end of year....... $6.31 $6.63 $8.43
Option price range for
exercised shares..... $1.88 $1.81 $1.88 to
$2.11
Options available for
grant at end of
year................. 2,502,000 2,666,000 2,683,000
</TABLE>
<TABLE>
<CAPTION>
WEIGHTED-AVERAGE
-----------------------------
EXERCISE PRICE FAIR VALUE
-------------- ----------
<S> <C> <C>
Exercise price of options granted during 1996:
At market price.................................................. $ 1.61 $ 1.08
Above market price............................................... $ 2.24 $ 0.79
</TABLE>
The following table summarizes information about fixed-price stock options
outstanding at December 31, 1996:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
---------------------------------------------- -------------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
RANGE OF NUMBER REMAINING EXERCISE NUMBER EXERCISE
EXERCISE PRICES OUTSTANDING CONTRACTUAL LIFE PRICE EXERCISABLE PRICE
- --------------------------- ----------- ---------------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
$1.38 to 1.88.............. 349,667 9.1 years $1.50 1,667 $1.88
$2.00 to 2.94.............. 1,119,583 8.4 years $2.23 223,334 $2.20
$4.19 to 4.38.............. 63,750 7.4 years $4.35 33,750 $4.32
$6.00 to 6.31.............. 28,000 5.9 years $6.18 28,000 $6.18
--------- -------
$1.38 to 6.31.............. 1,561,000 8.5 years $2.22 286,751 $2.83
========= =======
</TABLE>
F-15
<PAGE> 124
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In 1996 and 1994, 317,500 and 90,000 shares of restricted stock were issued
under the LTP Plan that fully vest after four years and three years,
respectively. The market value of the shares on the date of grant was
approximately $1.63 and $2.87 per share, respectively, and the cost of the grant
based on the market price is being amortized over the vesting period. The
vesting for the restricted stock awards granted in 1996 may be accelerated if
certain performance goals are achieved.
In 1996, as part of a compensation review, 1,184,333 outstanding options
were canceled under the 1990 Plan and the LTP Plan and 705,750 options with a
weighted average exercise price of $2.24 were issued under the same plans.
In 1995, an award under the Executive Incentive Plan for 91,875 restricted
shares was issued in lieu of a cash bonus.
Under the Directors Plan, as approved and amended by shareholders in 1996,
a maximum of 200,000 shares of Common Stock may be issued. In 1996, 1995 and
1994, directors received rights to the equivalent of 66,000, 5,850 and 5,200
shares, respectively. The market value of the equivalent shares on the dates of
grant was approximately $4.00, $2.19 and $3.69 per share, respectively. The
aggregate cost is charged to operations. The equivalent shares are issuable to
the directors only following their service on the Board of Directors.
The Directors Plan further provides that directors may elect to defer
receiving directors' fees until after their service on the Board ceases. At that
time the deferred fees may be paid in cash plus interest, or in shares of Common
Stock issuable by converting the amounts deferred into Common Stock based on the
market price in the year following the year of deferral (approximately 11,000
shares at December 31, 1996).
The Company adopted the disclosure-only provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"). Had compensation cost for the Company's stock option
plans been determined based on the fair value at the grant date for awards in
1996 and 1995, consistent with the provisions of SFAS 123, net income (loss)
would have been reduced (increased) by approximately $0.3 million or $.02 per
share and ($0.1 million) or ($.01) per share, respectively. Because SFAS 123
method of accounting has not been applied to options granted prior to 1995, the
resulting pro forma compensation cost may not be representative of that expected
in future years.
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants in 1996 and 1995: no dividend yield; expected
volatility of 50%; risk-free interest rate of 7.0%; and expected lives of 7.5
years.
NOTE J -- EMPLOYEE BENEFITS PLANS
Postretirement Health Care and Life Insurance Plans. The Company provides
certain health care and life insurance benefits for certain eligible retired
employees. The Company's employees, including employees subject to certain
collective bargaining agreements, may become eligible for these benefits if they
reach normal retirement age, with certain service requirements.
The Company accrues the estimated cost of retiree benefit payments other
than pensions during the years an employee provides services. The plan is not
funded.
F-16
<PAGE> 125
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table sets forth the status of this obligation:
<TABLE>
<CAPTION>
DECEMBER 31
-------------------
1996 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees............................................. $ 7,965 $ 7,329
Eligible active plan participants.................... 361 419
Other active plan participants.................... 1,822 1,812
------- -------
Accumulated postretirement benefit obligation........ 10,148 9,560
Unrecognized transition obligation................... (2,944) (3,119)
Unrecognized net loss................................ (876) (1,018)
------- -------
Accrued postretirement benefit obligation......... $ 6,328 $ 5,423
======= =======
</TABLE>
Net postretirement benefit costs consisted of the following components:
<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost-benefits earned................. $ 160 $ 154 $ 190
Interest cost on accumulated postretirement
benefit obligation........................ 684 715 627
Partial plan termination(1).................. 430
Amortization of transition obligation........ 184 209 209
------ ------ ------
$1,028 $1,508 $1,026
====== ====== ======
</TABLE>
- ---------------
(1) In connection with the 1995 restructuring (see Note K), a portion of the
previously unrecognized transition obligation was charged to the restructuring
reserve.
The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation, as of January 1, 1996, was 12.0% for 1996
decreasing each successive year until it reaches 5.5%, after which it remains
constant. A one-percentage-point increase in the assumed health care cost trend
rate for each year would increase service cost plus interest on the accumulated
postretirement benefit obligation by approximately 13.3%. The assumed discount
rate used in determining the accumulated post-retirement benefit obligation was
7.5% at December 31, 1996 and 1995.
Pension Plans. ABN and ABNH are obligated to make regular defined
contributions to several multi-employer plans and contributions to a single
employer defined benefit pension fund, under the terms of various union
contracts. The aggregate contribution to such multi-employer plans for
retirement and welfare benefits was approximately $0.6 million, $1.7 million,
and $1.8 million for the years ended December 31, 1996, 1995 and 1994,
respectively. Retirement benefits are also provided by ABN and ABNH, to eligible
union and nonunion employees, through defined contributions to an employee's
retirement plan; the aggregate contribution to such plan and charged to
operations was $1.1 million, $1.2 million, and $1.5 million for the years ended
December 31, 1996, 1995 and 1994, respectively.
ABN and ABNH also have a trusteed noncontributory defined benefit pension
plan. Benefits under the noncontributory defined benefit plan which were frozen
in 1992 were based on years of service and average final compensation. The
funding policy is to pay at least the minimum amounts required by the Employee
Retirement Income Security Act of 1974. The net pension expense for this defined
benefit pension plan was approximately $0.1 million, $0.2 million, and $0.1
million in 1996, 1995 and 1994, respectively.
F-17
<PAGE> 126
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table sets forth the 1996 and 1995 funded status and amounts
recognized for the Company's defined benefit pension plan in the consolidated
balance sheets:
<TABLE>
<CAPTION>
1996 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Actuarial present value of accumulated plan benefits,
including vested benefits of $9,112 and $8,798......... $ 9,122 $ 8,862
====== ======
Projected benefit obligation for service rendered to
date................................................... $ 9,122 $ 8,862
Plan assets at fair value, primarily equity securities... 8,698 7,612
------ ------
Accrued pension liability.............................. $ 424 $ 1,250
====== ======
</TABLE>
The weighted average discount rate used in determining the actuarial
present value of the projected benefit obligation was 7.0% at December 31, 1996
and 1995. The expected long-term rate of return was 8.5% in 1996 and in 1995.
Subsidiaries of LM have participated in three multi-employer defined
contribution schemes throughout 1996 and in two defined benefit schemes operated
for employees of the previous owner up until November 30, 1996. Effective from
December 1, 1996, the subsidiaries ceased to participate in the previous owner's
defined benefit schemes and a new defined benefit scheme solely for the benefit
of certain employees of the subsidiaries was established. Relevant assets and
liabilities of the previous owner's schemes are to be transferred to the new
scheme and it is estimated that the liabilities transferred will approximate the
assets transferred. Certain schemes are required to be funded on a current
basis. In connection with superannuation schemes for 1996, the subsidiaries have
expensed and funded approximately $0.9 million. It is further estimated, though
actuarial evaluations of the new defined benefit scheme have not been prepared,
the current funding would approximate pension expense that would be incurred
using US Generally Accepted Accounting Principles.
The Company has a noncontributory supplemental executive retirement plan
("SERP") for certain senior management employees adopted, effective as of April
1, 1994. Benefits under the noncontributory plan are based on years of service
and average final compensation. The plan is unfunded and benefits will be paid
from the assets of the Company.
The following table sets forth the status of this obligation:
<TABLE>
<CAPTION>
DECEMBER 31
-----------------
1996 1995
------ ------
(IN THOUSANDS)
<S> <C> <C>
Accumulated benefit, including vested benefits of $1,935
and $735............................................... $2,153 $1,902
====== ======
Projected benefit obligation............................. $3,021 $2,706
Prior service cost....................................... (1,457) (1,558)
Unrecognized net loss.................................... (427) (362)
------ ------
Preliminary accrued pension costs........................ 1,137 786
Additional minimum liability*............................ 1,016 1,116
------ ------
Accrued pension cost for financial statements.......... $2,153 $1,902
====== ======
</TABLE>
- ---------------
* There is an intangible asset equal to the additional minimum liability.
F-18
<PAGE> 127
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Net periodic pension cost consisted of the following components:
<TABLE>
<CAPTION>
1996 1995 1994
----- ----- -----
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost-benefits earned........................ $ 146 $ 185 $ 124
Interest cost on projected benefit obligation....... 189 191 106
Amortization of prior service cost................ 107 103 77
---- ---- ----
$ 442 $ 479 $ 307
==== ==== ====
</TABLE>
The weighted average discount rate used in determining the actuarial
present value of the projected benefit obligation was 7.0% at December 31, 1996
and 1995.
NOTE K -- RESTRUCTURING AND IDLE EQUIPMENT
In 1995, the Company recorded a pre-tax restructuring charge of
approximately $14.3 million pursuant to a restructuring plan developed by
management for the Company's domestic security printing operations, including
the downsizing of its corporate offices. The plan was substantially completed in
the second quarter of 1996. Remaining obligations under this plan relate to
lease commitments. Restructuring activities prior to 1995 related primarily to
the closing of a plant by ABN.
The following presents the Company's restructuring activities:
<TABLE>
<CAPTION>
ASSET LEASES
SEVERANCE REVALUATIONS AND
AND RELATED AND OTHER
COSTS WRITEDOWNS OBLIGATIONS TOTAL
----------- ------------ ----------- -----
(IN MILLIONS)
<S> <C> <C> <C> <C>
Balance at January 1, 1994................... $ 0.3 $ 4.1 $ 4.4
Restructuring charge......................... 5.0 5.0
Imputed interest............................. 0.3 0.3
Cash payments................................ (0.3) (3.7) (4.0)
----- ----- -----
Balance at December 31, 1994................. 5.7 5.7
Restructuring charge......................... 2.9 $ 5.0 6.4 14.3
Imputed interest............................. 0.3 0.3
Noncash items................................ (1.8) (5.0) (6.8)
Cash payments................................ (0.1) (1.4) (1.5)
----- ----- ----- -----
Balance at December 31, 1995................. 1.0 11.0 12.0
Imputed interest............................. .4 .4
Noncash items................................ (1.6) (1.6)
Cash payments................................ (1.0) (4.8) (5.8)
----- ----- ----- -----
Balance at December 31, 1996................. $ -- $ -- $ 5.0 $ 5.0
===== ===== ===== =====
</TABLE>
Future cash outlays for the remaining restructuring activities are
anticipated to be $1.5 million in 1997, $1.2 million in 1998, $1.1 million in
1999, $1.1 million in 2000, and $0.1 million in 2001.
In January 1994, the Company was notified that it was not awarded any
portion of a contract by the United States Postal Service in response to a
competitive bid for postage stamp products. As a result, the Company
re-evaluated the net carrying value of equipment and the cost of operating
leases used for postage stamp production and recorded a $2 million provision for
the write-down of idle postal equipment.
F-19
<PAGE> 128
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE L -- CONDENSED FINANCIAL INFORMATION AND GEOGRAPHIC AREA DATA
ABNB is domiciled in Brazil, LM is domiciled in Australia and New Zealand,
and all other subsidiaries of the Company are predominately domiciled in the
United States.
The following condensed consolidating financial information (amounts in
millions) illustrates the composition of the pledged subsidiaries (See Note
G -- Revolving Credit and Long-Term Debt) and provides additional information
which is useful in assessing the financial composition of the pledged
subsidiaries. Investments in subsidiaries are accounted for by the parent on the
equity method. Intercompany investments and transactions are eliminated in
consolidation.
<TABLE>
<CAPTION>
CONDENSED BALANCE SHEETS
-----------------------------------------------
DOMESTIC ABNB LM CONSOLIDATED
-------- ------ ------ ------------
<S> <C> <C> <C> <C>
AS AT DECEMBER 31, 1996
Cash and cash equivalents....................... $ 2.8 $ 8.7 $ 2.7 $ 14.2
Marketable securities........................... 2.1 2.1
Accounts receivable, net........................ 24.3 14.4 8.8 47.5
Inventories..................................... 12.9 11.5 11.2 35.6
Deferred income taxes........................... 2.9 .3 1.0 4.2
Prepaid expenses and other...................... 5.0 2.5 1.9 9.4
Property, plant and equipment, net.............. 172.1 59.4 22.5 254.0
Other assets.................................... 98.0+ 8.4 6.1 28.0*
Excess of cost of investment in subs over net
assets acquired............................... 9.4 24.4 51.6 85.4
------ ------ ------ ------
Total assets.......................... $329.5 $129.6 $105.8 $480.4
====== ====== ====== ======
Total current liabilities....................... $ 38.0 $ 17.6 $ 22.0 $ 77.6
Long-term debt.................................. 189.6 6.9 67.0 263.5
Other liabilities............................... 14.8 7.4 2.5 24.7
Deferred income taxes........................... 40.8 6.7 47.5
Minority interest............................... 20.8 20.8
Total stockholders' equity............ 46.3 70.2 14.3 46.3*
------ ------ ------ ------
Total liabilities and stockholders'
equity.............................. $329.5 $129.6 $105.8 $480.4
====== ====== ====== ======
AS AT DECEMBER 31, 1995
Cash and cash equivalents....................... $ 16.5 $ 7.0 $ 23.5
Marketable securities........................... 3.0 3.0
Accounts receivable, net........................ 18.0 14.0 32.0
Inventories..................................... 12.3 10.9 23.2
Deferred income taxes........................... 5.7 0.3 6.0
Prepaid expenses and other...................... 9.9 2.7 12.6
Property, plant and equipment, net.............. 176.6 49.4 226.0
Other assets.................................... 72.9+ 8.8 18.3*
Excess of cost of investment in subs over net
assets acquired............................... 9.5 25.3 34.8
------ ------ ------
Total assets.......................... $324.4 $118.4 $379.4
====== ====== ======
Total current liabilities....................... $ 24.5 $ 20.8 $ 45.3
Long-term debt.................................. 191.1 3.0 194.1
Other liabilities............................... 14.5 5.7 20.2
Deferred income taxes........................... 53.9 6.7 60.6
Minority interest............................... 18.8 18.8
Total stockholders' equity............ 40.4 63.4 40.4*
------ ------ ------
Total liabilities and stockholders'
equity.............................. $324.4 $118.4 $379.4
====== ====== ======
</TABLE>
F-20
<PAGE> 129
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
CONDENSED STATEMENTS OF OPERATIONS
----------------------------------------------
DOMESTIC ABNB LM CONSOLIDATED
-------- ------ ----- ------------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996
Sales............................................ $ 98.1 $163.3 $48.1 $309.5
------ ------ ----- ------
Cost of goods sold............................... 62.9 109.1 30.1 202.1
Selling and administrative....................... 16.7 16.0 7.3 40.0
Depreciation and amortization.................... 8.3 8.4 3.3 20.0
------ ------ ----- ------
87.9 133.5 40.7 262.1
------ ------ ----- ------
10.2 29.8 7.4 47.4
Unallocated corporate overhead................... (8.3) (8.3)
Interest expense................................. (23.3) (1.9) (3.7) (28.9)
Foreign translation losses, net.................. (.3) (.3)
Provision for litigation......................... (2.4) (2.4)
Other income, net................................ 18.1+ 2.3 2.2*
------ ------ ----- ------
Income (loss) before taxes on income (benefit)
and minority interest.......................... (5.7) 29.9 3.7 9.7
Taxes on income (benefit)........................ (9.8) 8.5 1.7 .4
------ ------ ----- ------
Income before minority interest.................. 4.1 21.4 2.0 9.3
Minority interest................................ 4.8 .4 5.2
------ ------ ----- ------
Net income..................................... $ 4.1 $ 16.6 $ 1.6 $ 4.1
====== ====== ===== ======
YEAR ENDED DECEMBER 31, 1995
Sales............................................ $108.1 $ 98.1 $206.2
------ ------ ------
Cost of goods sold............................... 76.5 72.5 149.0
Selling and administrative....................... 17.7 9.9 27.6
Restructuring.................................... 14.3 14.3
Depreciation and amortization.................... 9.3 5.6 14.9
------ ------ ------
(9.7) 10.1 .4
Unallocated corporate overhead................... (12.3) (12.3)
Interest expense................................. (23.1) (23.1)
Other income, net................................ 8.5+ .2 2.8*
------ ------ ------
Income (loss) before taxes on income (benefit)
and minority interest.......................... (36.6) 10.3 (32.2)
Taxes on income (benefit)........................ (14.2) 2.8 (11.4)
------ ------ ------
Income (loss) before minority interest........... (22.4) 7.5 (20.8)
Minority interest................................ 1.6 1.6
------ ------ ------
Net income (loss).............................. $(22.4) $ 5.9 $(22.4)
====== ====== ======
</TABLE>
F-21
<PAGE> 130
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
CONDENSED STATEMENTS OF OPERATIONS
----------------------------------------------
DOMESTIC ABNB LM CONSOLIDATED
-------- ------ ----- ------------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1994
Sales............................................ $150.0 $ 58.1 $208.1
------ ------ ------
Cost of goods sold............................... 94.9 36.0 130.9
Selling and administrative....................... 20.3 9.2 29.5
Restructuring and idle equipment................. 7.0 7.0
Depreciation and amortization.................... 9.3 3.8 13.1
------ ------ ------
131.5 49.0 180.5
------ ------ ------
18.5 9.1 27.6
Unallocated corporate overhead................... (9.5) (9.5)
Interest expense................................. (21.0) (21.0)
Foreign translation losses, net.................. (7.0) (7.0)
Other income, net................................ 3.9+ .2 1.8*
------ ------ ------
Income (loss) before taxes on income (benefit)
and extraordinary item......................... (8.1) 2.3 (8.1)
Taxes on income (benefit)........................ (2.4) (2.4)
------ ------ ------
Income (loss) before extraordinary item.......... (5.7) 2.3 (5.7)
Extraordinary item............................... (.1) (.1)
------ ------ ------
Net income (loss).............................. $ (5.8) $ 2.3 $ (5.8)
====== ====== ======
YEAR ENDED DECEMBER 31, 1996
Net cash -- operating activities................. $(17.1) $ 25.2 $ (.5) $ 7.6
------ ------ ----- ------
Investing activities
Acquisition of LM.............................. (7.3) 4.8 (2.5)
Capital expenditures........................... (3.6) (17.9) (.8) (22.3)
Other.......................................... .2 .1 .3
------ ------ ----- ------
Net cash -- investing activities............... (10.7) (17.9) 4.1 (24.5)
------ ------ ----- ------
Financing activities
Proceeds from borrowings....................... 4.3 7.1 11.4
Repayments of borrowing........................ (.1) (1.0) (1.1)
Dividends...................................... 9.9 (12.7) (2.8)
------ ------ ----- ------
Net cash -- financing activities................. 14.1 (5.6) (1.0) 7.5
------ ------ ----- ------
Effect of foreign currency exchange rate changes
on cash and cash equivalents................... .1 0.1
------ ------ ----- ------
Net increase (decrease).......................... (13.7) 1.7 2.7 (9.3)
Cash and cash equivalents:
Beginning of period.............................. 16.5 7.0 23.5
------ ------ ----- ------
End of period.................................... $ 2.8 $ 8.7 $ 2.7 $ 14.2
====== ====== ===== ======
</TABLE>
- ---------------
+ Includes investment in subsidiaries, which is eliminated in consolidation.
* After elimination of intercompany investment.
F-22
<PAGE> 131
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
CONDENSED STATEMENTS OF CASH FLOWS
----------------------------------------------
DOMESTIC ABNB LM CONSOLIDATED
-------- ----- ------ ------------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1995
Net cash -- operating activities................. $(15.9) $11.4 $ (4.5)
------ ----- ------
Investing activities
Capital expenditures........................... (1.2) (9.2) (10.4)
Proceeds from sales of assets.................. 4.9 4.9
Other.......................................... (.6) (.6)
------ ----- ------
Net cash -- investing activities................. 3.1 (9.2) (6.1)
------ ----- ------
Financing activities
Proceeds from bank financings.................. 3.4 3.4
Other.......................................... (0.4) (0.4)
------ ----- ------
Net cash -- financing activities................. (0.4) 3.4 3.0
------ ----- ------
Effect of foreign currency exchange rate changes
on cash and cash equivalents................... (0.6) (0.6)
------ ----- ------
Net increase (decrease).......................... (13.2) 5.0 (8.2)
Cash and cash equivalents:
Beginning of period.............................. 29.7 2.0 31.7
------ ----- ------
End of period.................................... $ 16.5 $ 7.0 $ 23.5
====== ===== ======
YEAR ENDED DECEMBER 31, 1994
Net cash -- operating activities................. $ .4 $ 5.8 $ 6.2
------ ----- ------
Investing activities
Proceeds from sale of assets................... 1.7 1.7
Capital expenditures........................... (3.2) (6.9) (10.1)
------ ----- ------
Net cash -- investing activities................. (1.5) (6.9) (8.4)
------ ----- ------
Financing activities
Proceeds from 11 5/8% Senior Notes............. 59.8 59.8
Repayment of bank financings................... (40.0) (40.0)
Other.......................................... (0.8) (0.8)
------ ------
Net cash -- financing activities................. 19.0 19.0
------ ------
Effect of foreign currency exchange rate changes
on cash and cash equivalents................... (0.5) (0.5)
------ ----- ------
Net increase (decrease).......................... 17.9 (1.6) 16.3
Cash and cash equivalents:
Beginning of period.............................. 11.8 3.6 15.4
------ ----- ------
End of period.................................... $ 29.7 $ 2.0 $ 31.7
====== ===== ======
</TABLE>
F-23
<PAGE> 132
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE M -- COMMITMENTS AND CONTINGENCIES
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.
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
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.
On June 16, 1995, the Court approved certification of a class in the
Vladimir action consisting of all persons who purchased stock in the open market
from April 1, 1993 through January 6, 1994 and on February 26, 1996 dismissed
the Sinay action, without prejudice. On January 17, 1997, a jury verdict in
Vladimir was returned that found the Company's stock inflated by $0.79 per share
during the class period under Section 10(b) of the Securities Exchange Act of
1934 with respect to the Company with a finding of liability under Section 20(a)
to Mr. Weissman as a "control person" of the Company.
The Company and Mr. Weissman have filed Motions for Summary Judgment and
Motions for Judgment as a Matter of Law following the jury verdict and seeking a
new trial, which are pending.
The Atencio and Rosenberg actions 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 and Sinay actions and the annulment of the
1993 election of directors.
On November 1, 1994, the Company filed an action against De La Rue, AG
("DLR") and its parent, De La Rue Plc in New York State Supreme Court. The
complaint alleges breach of contract by DLR 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 liability and asserting counterclaims.
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 Banknote Corporation, et al. in the United States District Court for the
Southern District of New York. The complaint, as amended, alleges, among other
things, breach of contract and fraud by the Company in connection with the
Brazil purchase agreement 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 Common Stock paid to DLR expeditiously with the SEC. 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, plaintiff eliminated
all of the Company's directors and officers as defendants. Subsequent to the
verdict in Vladimir, DLR has asked the Court to rule that the verdict precludes
the Company from further contesting the breach of warranty claim of DLR.
During the year ended December 31, 1996, the Company recorded a $2.4
million ($0.07 per share after taxes) provision relating to its pending
litigation.
The Company and its subsidiaries are parties to various additional lawsuits
(as both plaintiff and defendant) related to various matters in the normal
course of business, including patent
F-24
<PAGE> 133
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONCLUDED)
infringement, contract, labor and environmental, which in the opinion of
management, are not anticipated to have a material impact on its consolidated
financial position or results of operations.
The Company has long-term operating leases for offices, manufacturing
facilities and equipment which expire through 2007. The Company has renewal
options on some locations, which provide for renewal rents based upon increases
tied to the consumer price index.
Net rental expense was $7.7 million, $8.0 million, and $8.1 million for the
years ended December 31, 1996, 1995 and 1994, respectively.
At December 31, 1996, future minimum lease payments under noncancelable
operating leases are as follows: $12.9 million in 1997; $10.9 million in 1998;
$9.5 million in 1999; $6.9 million in 2000; $3.6 million in 2001; and $6.2
million thereafter.
NOTE N -- QUARTERLY RESULTS OF OPERATIONS -- UNAUDITED
<TABLE>
<CAPTION>
1ST QTR 2ND QTR 3RD QTR 4TH QTR
------- ------- ------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE
DATA)
<S> <C> <C> <C> <C>
1996
Sales.................................. $59,917 $70,764 $86,879 $ 91,890
Cost of sales.......................... $42,004 $46,566 $54,223 $ 59,365
Net income (loss)(1)................... $ (802) $ 1,365 $ 2,228 $ 1,308
Net income (loss) per share............ $ (.04) $ .07 $ .11 $ .06
======= ======= ======= =======
1995
Sales.................................. $49,068 $47,591 $56,783 $ 52,722
Cost of sales.......................... $31,949 $38,149 $39,414 $ 39,523
Net income (loss)(2)................... $ (797) $(9,608) $ 53 $(12,063)
Net income (loss) per share............ $ (.04) $ (.50) $ .00 $ (.63)
======= ======= ======= =======
</TABLE>
- ---------------
(1) In the fourth quarter, pre-tax income was charged $2.4 million ($1.4 million
net of tax) in connection with certain litigation (see Note M).
(2) In the fourth quarter, pre-tax loss was charged $14.3 million ($11.1 million
net of tax) for restructuring charges (see Note J).
F-25
<PAGE> 134
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS -- UNAUDITED
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------- -------------------
1997 1996 1997 1996
-------- -------- ------- -------
<S> <C> <C> <C> <C>
Sales......................................... $248,416 $217,560 $88,152 $86,879
-------- -------- ------- -------
Costs and expenses:
Cost of goods sold.......................... 166,263 142,793 58,435 54,223
Selling and administrative.................. 34,881 33,327 11,962 14,099
Depreciation and amortization............... 17,799 14,731 6,346 6,034
-------- -------- ------- -------
218,943 190,851 76,743 74,356
-------- -------- ------- -------
29,473 26,709 11,409 12,523
Other (expense) income:
Interest expense............................ (24,353) (20,124) (8,451) (7,483)
Foreign translation losses, net............. (122) (201) (15) (65)
Other, net.................................. 2,519 711 860 331
-------- -------- ------- -------
(21,956) (19,614) (7,606) (7,217)
-------- -------- ------- -------
Income before taxes on income and minority
interest.................................... 7,517 7,095 3,803 5,306
Taxes on income............................... 371 877 807 1,378
-------- -------- ------- -------
Income before minority interest............. 7,146 6,218 2,996 3,928
Minority interest............................. (2,458) (3,427) (564) (1,700)
-------- -------- ------- -------
Net Income.................................. $ 4,688 $ 2,791 $ 2,432 $ 2,228
======== ======== ======= =======
Weighted average number of common and common
equivalent shares outstanding............... 21,430 20,300 21,720 20,420
======== ======== ======= =======
Net income per share........................ $ .22 $ .14 $ .11 $ .11
======== ======== ======= =======
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
F-26
<PAGE> 135
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS -- UNAUDITED
(DOLLARS IN THOUSANDS, EXCEPT FOR SHARE DATA)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents..................................... $ 3,611 $ 14,256
Marketable securities -- at market, (cost $1,746 in 1996)..... 2,133
Accounts receivable, net of allowance for doubtful accounts of
$767 and $981.............................................. 56,640 47,501
Inventories................................................... 41,130 35,622
Deferred income taxes......................................... 4,616 4,261
Prepaid expenses and other.................................... 16,161 9,362
-------- --------
Total current assets.................................. 122,158 113,135
Property, plant and equipment, at cost, net of accumulated
depreciation and amortization of $112,020 and $96,385......... 250,326 253,987
Other assets.................................................... 24,815 27,974
Excess of cost of investment in subsidiaries over net assets
acquired, net of accumulated amortization of $8,156 and
$5,662........................................................ 93,846 85,282
-------- --------
$ 491,145 $480,378
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Revolving credit.............................................. $ 3,191 $ 3,103
Current portion of long-term debt............................. 17,797 14,450
Accounts payable and accrued expenses......................... 63,922 60,049
-------- --------
Total current liabilities............................. 84,910 77,602
Long-term debt.................................................. 260,779 263,548
Other liabilities............................................... 25,623 24,706
Deferred income taxes........................................... 42,372 47,456
Minority interest............................................... 20,353 20,789
-------- --------
434,037 434,101
Commitments and Contingencies
Stockholders' equity
Preferred Stock, authorized 5,000,000 shares, no shares issued
or outstanding.............................................
Zero Coupon Convertible Subordinated Debenture................ 3,620
Common Stock, par value $.01 per share, authorized 50,000,000
shares; issued 21,134,717 shares and 20,137,880 shares..... 211 202
Capital surplus............................................... 73,173 68,609
Retained-earnings (deficit)................................... (16,739) (21,362)
Treasury stock, at cost (281,000 shares)...................... (1,253) (1,253)
Cumulative currency translation adjustment.................... (1,904) 81
-------- --------
Total stockholders' equity............................ 57,108 46,277
-------- --------
$ 491,145 $480,378
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
F-27
<PAGE> 136
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS -- UNAUDITED
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
<S> <C> <C>
Operating Activities:
Net cash from operations, after adjustments to reconcile
income to net cash provided by operating activities........ $21,829 $ 9,693
Marketable securities...................................... 2,077 (650)
Accounts receivables....................................... (3,075) (10,834)
Inventories................................................ (7,021) 1,426
Prepaid and other assets................................... (5,757) (535)
Accounts payable and accrued expenses...................... (5,198) (3,809)
Other...................................................... (975) (3,136)
------- --------
Net cash provided by (used in) operating activities........... 1,880 (7,845)
------- --------
Investing Activities:
Acquisitions.................................................. (5,546) 1,789
Capital expenditures.......................................... (7,491) (10,964)
------- --------
Net cash used in investing activities......................... (13,037) (9,175)
------- --------
Financing Activities:
Borrowings.................................................... 6,280 7,349
Zero Coupon Convertible Subordinated Debenture................ 4,700
Revolving credit borrowings................................... 88 1,920
Dividend to minority shareholder.............................. (2,587) (685)
Proceeds from exercise of options and warrants................ 626
Payment of long-term debt..................................... (8,813) --
------- --------
Net cash or provided by financing activities.................. 294 8,584
------- --------
Effect of foreign currency exchange rate changes
on cash and cash equivalents.................................. 218 (67)
------- --------
Decrease in cash and cash equivalents........................... (10,645) (8,503)
Cash and cash equivalents beginning of period................... 14,256 23,525
------- --------
Cash and cash equivalents end of period......................... $ 3,611 $ 15,022
======= ========
Supplemental cash payments:
Taxes......................................................... $ 3,400 $ 4,300
Interest...................................................... $14,200 $ 11,200
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
F-28
<PAGE> 137
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY -- UNAUDITED
NINE MONTHS ENDED SEPTEMBER 30, 1997
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
ZERO COUPON CUMULATIVE
COMMON STOCK CONVERTIBLE RETAINED CURRENCY
--------------- SUBORDINATED CAPITAL EARNINGS TREASURY TRANSL. TOTAL
SHARES AMOUNT DEBENTURE SURPLUS (DEFICIT) STOCK ADJUST. EQUITY
------ ------ ------------ ------- --------- -------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE --
JANUARY 1, 1997............. 20,138 $202 $68,609 $ (21,362) $(1,253) $ 81 $46,277
Issuances in connection with:
Options, warrants and
compensation plans........ 349 3 1,291 1,294
Sati Group acquisition...... 423 4 2,130 2,134
Sale of convertible debenture
and warrants net of
expenses.................... $4,455 245 4,700
Imputed interest on
debenture................... 65 (65)
Conversion of debenture....... 225 2 (900) 898
Foreign currency translation
adjustment for period....... (1,985) (1,985)
Net income.................... 4,688 4,688
------ ---- ------ ------- -------- ------- ------ -------
BALANCE -- SEPTEMBER 30,
1997........................ 21,135 $211 $3,620 $73,173 $ (16,739) $(1,253) $ (1,904) $57,108
====== ==== ====== ======= ======== ======= ====== =======
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
F-29
<PAGE> 138
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- UNAUDITED
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements do
not contain all disclosures required by generally accepted accounting
principles. Reference should be made to the Company's Annual Report on Form 10-K
for the year ended December 31, 1996. The accompanying unaudited condensed
consolidated financial statements reflect all adjustments (consisting of normal
recurring adjustments) which are, in the opinion of management, necessary for a
fair statement of the results of the interim periods presented and are not
necessarily indicative of the results which may be expected for a full fiscal
year.
Primary and fully-diluted income per share are the same and have been
computed after deducting from net income the imputed interest attributable to
the Zero Coupon Convertible Subordinated Debenture.
NOTE B -- ACQUISITION OF THE SATI GROUP
In August 1997, the Company acquired in France, the Sati Group's check
personalization, electronic printing and document management business. Sales of
the Sati Group for the seven months ended July 31, 1997 and for the year ended
December 31, 1996 were approximately $11.7 million and $22.2 million,
respectively. The results of the Sati Group from August 1, 1997 are reported
within the Company's Printing Services & Document Management product line. The
acquisition purchase price of $11.2 million was financed with approximately $9.1
million of non-recourse term loans in France and through the issuance of
approximately 423,000 shares of the Company's Common Stock. The acquisition was
accounted for by the purchase method of accounting. The purchase price was
allocated on a preliminary basis before final purchase accounting adjustments as
follows: assets acquired $13.2 million; liabilities assumed $7.8 million; and
excess cost of investment in subsidiaries over net assets acquired $5.8 million.
The Company has agreed to file a registration statement under the Securities Act
within 90 days following the acquisition date to register the shares of Common
Stock for resale.
NOTE C -- ZERO COUPON CONVERTIBLE SUBORDINATED DEBENTURE
On July 24, 1997, the Company sold in a private placement $5 million
principal amount of a Zero Coupon Subordinated Convertible Debenture, due August
2, 2002 (the "Security") plus warrants. At maturity, the outstanding Security is
automatically converted into Common Stock resulting in the Security being
treated as a component of stockholders' equity. In September 1997, $1.0 million
principal amount of the Security was converted into 224,688 shares of Common
Stock. Interest will accrete at 6% per annum on the Security.
Holders may convert the Security, from time to time, at 100% of the average
of the two consecutive trading days' closing prices yielding the lowest average
price during 25 trading days prior to conversion or $6.00, whichever is lower,
except during the 25 days following issuance when the conversion price is
$4.5625 (the closing price on the date of issuance). The Security may be
redeemed in cash at the election of the Company in lieu of issuing shares of
Common Stock if the closing price is below $3.50 per share and, at any time the
closing price during 10 consecutive days is greater than $6.50 per share.
Redemption prices vary depending on the type of redemption transaction from the
closing price on the date of conversion (or an average of 5 days prices)
multiplied by the number of shares that would have been issued upon conversion
to 110% of the principal amount called for redemption. No more than 20% of the
Security may be converted during the first 90-day period and each successive
60-day period until the 210th day, and 20% each 90 days thereafter following
closing unless the closing price exceeds $6.50 or is greater than 115% of the
prior day's closing price, whereupon full conversion is permitted on that day.
F-30
<PAGE> 139
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS -- UNAUDITED -- (CONCLUDED)
In connection with the Security, the Company issued 140,000 two-year
warrants exercisable at $5.70 (125% above the closing price on the date of
issuance), and 75,000 three-year warrants at $6.4125 (140% above the closing
price on the date of issuance), and the value of the warrants ($245,000) will be
accreted over the 5-year term of the Security. If the Company redeems the
Security, additional warrants for 21 shares for each $1,000 redeemed are
issuable with an exercise price equal to the closing price. The Security is
subordinated to all existing or future bank, institutional, financial
transaction or acquisition indebtedness.
NOTE D -- INVENTORIES
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
(IN THOUSANDS)
<S> <C> <C>
Finished goods.................................. $ 3,984 $ 6,288
Work in process................................. 17,766 14,905
Raw materials and supplies...................... 19,380 14,429
------- -------
$41,130 $ 35,622
======= =======
</TABLE>
NOTE E -- COMMITMENTS AND CONTINGENCIES
The Company is involved in various litigation, reference is made to
"Business -- Legal Proceedings."
The Company and its subsidiaries are parties to various additional lawsuits
(as both plaintiff and defendant) related to various matters in the normal
course of business, which in the opinion of management, are not anticipated to
have a material adverse impact on its consolidated financial position or results
of operation.
NOTE F -- ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards (SFAS) No. 128 "Earnings per
Share", was issued in February 1997 and is effective for interim and annual
periods ending after December 15, 1997. SFAS No. 128, establishes standards for
comparing and presenting earnings per share and will require the restatement of
all prior-period earnings-per-share data. The implementation of SFAS No. 128
will not have a material impact on the Company's earnings per share. SFAS No.
129, "Disclosure of Information about Capital Structure", was issued in February
1997 and is effective for periods ending after December 15, 1997. This statement
establishes standards for disclosing information about an entity's capital
structure by superseding and consolidating previously issued accounting
standards. The financial statements of the Company are prepared in accordance
with the requirements of SFAS No. 129.
In June 1997, SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information," was issued which will be effective for the Company
beginning January 1, 1998. SFAS No. 131 redefines how operating segments are
determined and requires disclosure of certain financial and descriptive
information about a company's operating segments. The Company does not currently
anticipate that the adoption of SFAS No. 131 will result in expanded
disclosures.
F-31
<PAGE> 140
REPORT OF INDEPENDENT AUDITORS
To the Directors of Amcor Limited
We have audited the accompanying financial statements of the Economic
Entity as defined in Note 1. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in Australia which do not differ in any significant respect from
auditing standards generally accepted in the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Economic Entity at 30
June 1995 and 30 June 1994 and the results of its operations and its cash flows
for each of the years in the three year period ended 30 June 1995, in conformity
with accounting principles generally accepted in Australia.
As discussed in Note 1 to the financial statements, the Economic Entity
changed its method of accounting for employee entitlement provisions effective
30 June 1994, and recorded the cumulative effect as an adjustment to beginning
retained profits in accordance with accounting principles generally accepted in
Australia.
Accounting principles generally accepted in Australia vary in certain
significant respects from accounting principles generally accepted in the United
States. The application of United States generally accepted accounting
principles would have affected the results of operations for each of the years
in the three year period ended 30 June 1995 and shareholders' equity at 30 June
1995 and 30 June 1994 to the extent summarised in Note 27 to the financial
statements.
KPMG
Chartered Accountants
Melbourne 14 August 1996
F-32
<PAGE> 141
LEIGH MARDON SECURITY DIVISION
PROFIT AND LOSS STATEMENTS
FOR THE THREE YEARS IN THE PERIOD ENDED 30 JUNE 1995
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- ----------
NOTE $A $A $A
----
<S> <C> <C> <C> <C>
REVENUE
Sales revenue............................. 2 104,844,693 102,628,356 67,330,627
Other revenue............................. 3 1,102,020 917,003 596,036
----------- ----------- ----------
TOTAL REVENUE............................. 105,946,713 103,545,359 67,926,663
OPERATING PROFIT BEFORE ABNORMAL ITEMS AND
INCOME TAX.............................. 4 15,960,957 15,743,994 8,169,191
Abnormal items............................ 5 (5,026,079) -- (1,800,000)
----------- ----------- ----------
OPERATING PROFIT BEFORE INCOME TAX........ 10,934,878 15,743,994 6,369,191
Income tax expense attributable to
operating profit........................ 6 (3,805,535) (5,436,186) (2,945,342)
----------- ----------- ----------
OPERATING PROFIT AFTER TAX................ 7,129,343 10,307,808 3,423,849
Retained profit/(loss) brought forward.... (6,342,732) (7,519,555) (5,230,784)
Adjustment due to initial adoption of
Accounting Standard AASB 1028,
Accounting for Employee Entitlements.... (781,584) -- --
----------- ----------- ----------
Total available for appropriation......... 5,027 2,788,253 (1,806,935)
Transfers (from)/to retained
profit/(loss)........................... 17 (5,849,555) (9,130,985) (5,712,620)
----------- ----------- ----------
Retained profit/(loss) at the end of the
period.................................. (5,844,528) (6,342,732) (7,519,555)
=========== =========== ==========
</TABLE>
The profit and loss statements are to be read in conjunction with the notes to
and forming part
of the special purpose financial statements set out on pages F-36 to F-50.
F-33
<PAGE> 142
LEIGH MARDON SECURITY DIVISION
BALANCE SHEETS
<TABLE>
<CAPTION>
1995 1994
----------- -----------
NOTE $A $A
----
<S> <C> <C> <C>
CURRENT ASSETS
Cash.................................................... 7 176,885 201,453
Receivables............................................. 8 12,830,264 13,481,553
Inventories............................................. 9 13,561,773 10,573,973
----------- -----------
TOTAL CURRENT ASSETS.................................... 26,568,922 24,256,979
----------- -----------
NON-CURRENT ASSETS
Property, plant and equipment........................... 10 20,573,248 21,586,776
Intangibles............................................. 11 59,913,665 60,542,806
Other................................................... 12 569,929 1,940,819
----------- -----------
TOTAL NON-CURRENT ASSETS................................ 81,056,842 84,070,401
----------- -----------
TOTAL ASSETS............................................ 107,625,764 108,327,380
----------- -----------
CURRENT LIABILITIES
Creditors and borrowings................................ 13 11,838,043 13,599,530
Provisions.............................................. 14 7,311,709 8,904,153
----------- -----------
TOTAL CURRENT LIABILITIES............................... 19,149,752 22,503,683
----------- -----------
NON-CURRENT LIABILITIES
Creditors and borrowings................................ 15 288,691 285,708
Provisions.............................................. 16 2,147,518 1,733,415
----------- -----------
TOTAL NON-CURRENT LIABILITIES........................... 2,436,209 2,019,123
----------- -----------
TOTAL LIABILITIES....................................... 21,585,961 24,522,806
----------- -----------
NET ASSETS.............................................. 86,039,803 83,804,574
=========== ===========
SHAREHOLDER'S EQUITY
Investors equity........................................ 17 90,594,665 89,111,812
Reserves (capital)...................................... 17 1,289,666 1,035,494
Retained profits/(losses)............................... 17 (5,844,528) (6,342,732)
----------- -----------
TOTAL SHAREHOLDER'S EQUITY.............................. 86,039,803 83,804,574
=========== ===========
</TABLE>
The balance sheets are to be read in conjunction with the notes to and forming
part
of the special purpose financial statements set out on pages F-36 to F-50.
F-34
<PAGE> 143
LEIGH MARDON SECURITY DIVISION
STATEMENT OF CASH FLOWS
FOR THE THREE YEARS IN THE PERIOD ENDED 30 JUNE 1995
<TABLE>
<CAPTION>
NOTE 1995 1994 1993
------- ----------- ----------- -----------
$A $A $A
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts in the course of
operations.......................... 105,380,818 99,171,716 67,673,755
Cash payments in the course of
operations.......................... (86,311,525) (76,794,577) (53,090,427)
Interest received..................... 19,337 41,231 15,019
Interest paid......................... (1,248,745) (1,156,856) (1,093,000)
Abnormal items........................ (5,026,079) -- --
----------- ----------- -----------
Net cash provided by operating
activities.......................... 23(iii) 12,813,806 21,261,514 13,505,347
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property, plant and
equipment........................... (3,921,534) (5,000,280) (5,382,755)
Proceeds from sale on non-current
assets.............................. 410,524 201,515 151,803
Payments for acquisition of
businesses.......................... -- (20,043,604) --
----------- ----------- -----------
Net cash used in investing
activities.......................... (3,511,010) (24,842,369) (5,230,952)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Advance/(repayments) of investors
equity.............................. (7,899,867) 3,462,614 (8,554,071)
Payment of finance leases............. (330,046) (651,163) --
----------- ----------- -----------
Net cash used by financing
activities.......................... (8,229,913) 2,811,451 (8,554,071)
----------- ----------- -----------
Net increase/(decrease) in cash
held................................ 1,072,883 (769,404) (279,676)
Cash at the beginning of the financial
year................................ 23(i) (853,789) (84,385) 195,291
----------- ----------- -----------
Cash at the end of the financial
year................................ 23(i) 219,094 (853,789) (84,385)
=========== =========== ===========
</TABLE>
The statements of cash flows are to be read in conjunction with the notes to and
forming part of
the special purpose financial statements set out on pages F-36 to F-50.
F-35
<PAGE> 144
LEIGH MARDON SECURITY DIVISION
NOTES TO AND FORMING PART OF THE
SPECIAL PURPOSE FINANCIAL STATEMENTS
FOR THE THREE YEARS IN THE PERIOD ENDED 30 JUNE 1995
1 ACCOUNTING POLICIES
The significant policies which have been adopted in the preparation of
these financial statements pursuant to Australian Generally Accepted Accounting
Principles are:
Basis of preparation
The financial statements have been drawn up as a special purpose financial
report as a result of sale agreements between certain Amcor Limited controlled
entities and the Purchaser, being certain controlled entities of American
Banknote Corporation.
The Economic Entity is the Leigh Mardon Security Division which comprises:
- Fortronic Technology Pty Ltd;
- The following divisions of Leigh Mardon Pty Ltd;
-- Datacard;
-- Security printing;
-- Barcodes;
- The Datacard division of Leigh Mardon (NZ) Limited;
- The Cheque print division of Containers Packaging (NZ) Limited; and
- The Echo Pacific division of Kiwi Packaging (Cartons) Limited.
All these entities are under the common control of Amcor Limited.
The financial statements have been drawn up in accordance with applicable
Australian Accounting Standards, Urgent Issues Group Consensus Views, and
Schedule 5 to the Corporations Regulations that have a material effect, with the
following exception:
- the financial statements are a combined set of accounts comprising a
number of entities and other financial information and do not satisfy the
definition of an economic entity as prescribed in AASB 1024 Consolidated
Accounts.
Reporting Currency
These financial statements have been prepared in Australian dollars ($A).
Taxation
The Economic Entity adopts the accounting policy for treatment of income
tax as set out in Accounting Standard AASB 1020 (Tax Effect Accounting) whereby
the taxation benefits or liabilities, calculated at the current rate of tax,
which arise due to differences between the time when items are taken up in the
entity's accounts and when they are to be taken up for income tax purposes are
shown either as a future tax benefit or as a deferred tax liability. Where
applicable, the future tax benefit relating to tax losses is not carried forward
as an asset unless the benefit can be regarded as being virtually certain of
realisation. These benefits will be brought to account as a reduction in income
tax expense in the period in which they are recouped.
F-36
<PAGE> 145
LEIGH MARDON SECURITY DIVISION
NOTES TO AND FORMING PART OF THE
SPECIAL PURPOSE FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE THREE YEARS IN THE PERIOD ENDED 30 JUNE 1995
Depreciation
Plant and equipment, are depreciated at rates based upon their expected
useful lives using the straight line method:
<TABLE>
<CAPTION>
RATE
----
<S> <C> <C>
- Computer equipment; 20%
- Motor vehicles; and 15%
- All other assets. 8%
</TABLE>
Leasehold improvements are amortised over the period of the lease or their
estimated useful lives, whichever is the shorter.
Employee benefits
Up to the period ended 30 June 1994, provisions for employee benefits such
as wages, salaries, sick leave, annual leave and long service leave, etc., were
calculated to cover accumulated entitlements at balance date.
From 1 July 1994, provisions for employee entitlements were calculated in
accordance with the new Accounting Standard AASB 1028 (Accounting for Employee
Entitlements). These employee entitlements include, where appropriate, forecast
future increases in wages and salaries, grossed up for on-costs, and based on
the Economic Entity's experience with staff departures. Provisions relating to
long service leave, related on-costs and WorkCover self-insurance have been
calculated to represent the present value of estimated future cash outflows
discounted to balance date. Liabilities for employee entitlements which are not
expected to be settled within 12 months are discounted using the rate attaching
to those national government securities at balance date which most closely match
the terms of maturity of the related liabilities.
The adjustment resulting from the initial adoption of AASB 1028 was booked
to retained earnings/accumulated losses.
Consolidated accounts
The financial statements are a combined set of accounts comprising a number
of entities (detailed above) and other financial information. The balances and
effects of transactions between these entities have been eliminated.
Property, plant and equipment
Depreciable property, plant and equipment are shown in the accounts at cost
or valuation less provisions for depreciation. Depreciation rates are based upon
expected useful lives using the straight line method.
The carrying amounts of all property, plant and equipment are reviewed
annually. If the carrying amount of an item of property, plant and equipment
exceeds recoverable amount, the asset is written down to the lesser amount. In
assessing recoverable amount, the relevant cash flows are not discounted to
their present value.
F-37
<PAGE> 146
LEIGH MARDON SECURITY DIVISION
NOTES TO AND FORMING PART OF THE
SPECIAL PURPOSE FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE THREE YEARS IN THE PERIOD ENDED 30 JUNE 1995
Inventories
Inventories on hand are valued at the lower of cost (including an
appropriate proportion of fixed and variable overheads) or net realisable value
in the normal course of business.
Foreign currency translation
The financial statements of overseas controlled entities which are
classified as being financially and operationally independent are converted to
the reporting currency at balance date using the current rate method as set out
in Accounting Standard AASB 1020 (Foreign Currency Translation). Any exchange
gains/losses arising from the effect of the translation of the balance sheets
are transferred to the exchange fluctuation reserve.
All material foreign currency transactions are subject to forward
cover/hedge contracts and any exchange gains/losses arising from the effect of
currency fluctuations on the underlying transactions are offset by the exchange
gains/losses on the forward cover/hedge contract.
The approximate rate of exchange as of the purchase date between the US$
and the $A was 0.79.
Leased assets
The Economic Entity adopts the provisions of Accounting Standard AASB 1008
(Accounting for Leases) in respect of those assets of the Economic Entity which
are the subject of finance leases.
Goodwill
The Economic Entity recognises goodwill on acquisitions of controlled
entities and businesses as required by Accounting Standard AASB 1013 (Accounting
for Goodwill). Substantially all of the Economic Entity's goodwill is
systematically amortised using the inverted-sum-of-the-digits method over the
period of time during which the benefits are expected to arise, but for a period
not exceeding twenty years. The unamortised balance of goodwill is reviewed
annually and adjusted where it is considered necessary.
Superannuation funds
The Economic Entity contributes to various superannuation funds.
Contributions are charged against profit as and when they are paid or are
payable.
2 SALES REVENUE
<TABLE>
<CAPTION>
NOTE 1995 1994 1993
---- ----------- ----------- ----------
$A $A $A
<S> <C> <C> <C> <C>
Net sales
-- external....................... 104,844,693 102,610,613 67,101,782
-- to controlled entities of Amcor
Limited........................ -- 17,743 228,845
----------- ----------- -----------
Total sales revenue............... 104,844,693 102,628,356 67,330,627
=========== =========== ===========
</TABLE>
F-38
<PAGE> 147
LEIGH MARDON SECURITY DIVISION
NOTES TO AND FORMING PART OF THE
SPECIAL PURPOSE FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE THREE YEARS IN THE PERIOD ENDED 30 JUNE 1995
3 OTHER REVENUE
<TABLE>
<CAPTION>
NOTE 1995 1994 1993
---- ----------- ----------- ----------
$A $A $A
<S> <C> <C> <C> <C>
Interest received
-- from other persons................ 19,937 41,231 15,019
Other income
-- Proceeds of disposal of property,
plant and equipment............... 410,524 201,515 151,803
-- Other revenue from
other persons..................... 671,559 674,257 429,214
----------- --------- ---------
Total other income................... 1,082,083 875,772 581,017
----------- --------- ---------
Total other revenue.................. 1,102,020 917,003 596,036
=========== ========= =========
</TABLE>
4 OPERATING PROFIT
<TABLE>
<S> <C> <C> <C> <C>
Operating profit is arrived at after
charging/(crediting):
Amortisation and depreciation of:
-- property, plant and equipment..... 4,553,593 3,475,290 3,471,708
-- leased plant and equipment........ 14,319 188,000 --
-- goodwill.......................... 677,991 446,409 214,947
Amounts received or due and
receivable by the auditors
-- KPMG (Australia)*
auditing the financial
statements........................... -- -- --
other services.................... -- -- --
-- other Auditors auditing the
financial statements.............. 21,395 8,671 2,135
other services.................... -- -- --
Interest paid
-- to divisions of Amcor Limited..... 1,244,601 1,112,965 1,093,000
-- to other persons.................. -- 411 --
-- finance charges leased assets..... 4,144 43,480 --
Provisions
-- employee benefits................. 2,462,947 1,966,143 1,254,439
-- doubtful debts.................... 66,237 56,022 2,880
-- diminution in inventories......... 307,587 58,370 201,000
-- other............................. -- 790,590 260,000
(Profit) on disposal of property,
plant and equipment................ (66,014) (221,083) (2,845)
Loss on disposal of property, plant
and equipment...................... 22,640 236,124 70,758
Rental charges -- operating leases... 2,392,373 2,525,710 1,867,507
Research and development costs....... 290,041 144,339 --
Foreign currency exchange
(gains)/losses -- realised......... (15,325) (23,121) 5,011
Foreign currency exchange
(gains)/losses -- unrealised....... (3,605) (2,916) (82,399)
</TABLE>
- ---------------
* KPMG audit fees in Australia are paid by Amcor Limited, the ultimate parent
entity.
F-39
<PAGE> 148
LEIGH MARDON SECURITY DIVISION
NOTES TO AND FORMING PART OF THE
SPECIAL PURPOSE FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE THREE YEARS IN THE PERIOD ENDED 30 JUNE 1995
5 ABNORMAL ITEMS
<TABLE>
<CAPTION>
NOTE 1995 1994 1993
---- ---------- --------- ----------
$A $A $A
<S> <C> <C> <C> <C>
The operating profit includes the following
abnormal gains/(losses)
Research and development costs written
off...................................... -- -- (1,800,000)
Supply contract termination payment........ (5,026,079) -- --
---------- --------- ----------
Total abnormal items before tax............ (5,026,079) -- (1,800,000)
---------- --------- ----------
Income tax expense on abnormal items
Research and development costs written
off...................................... -- -- 702,000
Supply contract termination payment........ 1,658,606 -- --
---------- --------- ----------
Total income tax expense/(benefit) on
abnormal items........................... 1,658,606 -- 702,000
---------- --------- ----------
Net (loss) on abnormal items after income
tax...................................... (3,367,473) -- (1,098,000)
========== ========= ==========
</TABLE>
6 INCOME TAX EXPENSE
<TABLE>
<S> <C> <C> <C> <C>
Prima facie tax expense calculated at the
standard rate of 33% (1993: 39%)......... 3,608,510 5,195,518 2,483,985
Add/(deduct) the tax effect of permanent
differences:
Goodwill amortisation...................... 223,737 147,315 83,829
Entertainment expenses..................... 36,653 86,855 40,554
Fringe benefits tax........................ -- 40,185 37,440
Research & development incentive........... (30,413) (61,752) (166,407)
Investment allowance....................... -- (39,553) --
Other permanent differences................ 10,375 67,618 28,706
Foreign tax rate differential.............. -- -- (19,638)
Effect of local tax rate change............ (21,900) -- 456,873
Over provision of tax in prior years....... (21,427) -- --
---------- --------- ----------
Total income tax expense................... 3,805,535 5,436,186 2,945,342
========== ========= ==========
</TABLE>
7 CURRENT ASSETS: CASH
<TABLE>
<CAPTION>
1995 1994
---------- ----------
$A $A
<S> <C> <C>
Petty cash................................................ 22,308 33,336
Cash at bank.............................................. 154,577 168,117
---------- ----------
Total cash................................................ 176,885 201,453
========== ==========
</TABLE>
F-40
<PAGE> 149
LEIGH MARDON SECURITY DIVISION
NOTES TO AND FORMING PART OF THE
SPECIAL PURPOSE FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE THREE YEARS IN THE PERIOD ENDED 30 JUNE 1995
8 CURRENT RECEIVABLES
<TABLE>
<CAPTION>
1995 1994
----------- -----------
$A $A
<S> <C> <C>
Trade debtors.......................................... 12,449,978 12,590,777
Less provision for doubtful debts...................... (197,522) (139,362)
----------- -----------
Debtors net of provision............................... 12,252,456 12,451,415
----------- -----------
Other debtors.......................................... 231,373 43,075
Prepayments............................................ 101,837 976,635
Short term deposits.................................... 244,598 10,428
----------- -----------
Total current receivables.............................. 12,830,264 13,481,553
=========== ===========
</TABLE>
9 CURRENT INVENTORIES
<TABLE>
<S> <C> <C>
Raw materials and stores............................... 4,635,915 3,271,099
Work in progress....................................... 5,044,397 4,077,161
Finished goods......................................... 5,586,489 5,514,323
Provision for obsolescence............................. (1,705,028) (2,288,610)
----------- -----------
Total current inventories.............................. 13,561,773 10,573,973
=========== ===========
</TABLE>
10 PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<S> <C> <C>
Leasehold buildings
At cost................................................ 322,380 316,380
Less: provision for amortisation....................... (151,612) (150,487)
----------- -----------
Total.................................................. 170,768 165,893
----------- -----------
Plant and equipment
At cost................................................ 47,679,269 43,958,618
Less: provision for depreciation....................... (27,276,789) (23,291,450)
----------- -----------
Total.................................................. 20,402,480 20,667,168
----------- -----------
Leased plant and equipment
Capitalised finance leases -- at cost.................. -- 973,087
Less: provision for amortisation....................... -- (219,372)
----------- -----------
Total.................................................. -- 753,715
----------- -----------
Total property, plant and equipment.................... 20,573,248 21,586,776
=========== ===========
</TABLE>
F-41
<PAGE> 150
LEIGH MARDON SECURITY DIVISION
NOTES TO AND FORMING PART OF THE
SPECIAL PURPOSE FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE THREE YEARS IN THE PERIOD ENDED 30 JUNE 1995
11 INTANGIBLES
<TABLE>
<CAPTION>
1995 1994
----------- -----------
$A $A
<S> <C> <C>
Goodwill -- at cost.................................... 61,253,597 61,204,161
Less: provision for amortisation....................... (1,339,932) (661,355)
----------- -----------
Total intangibles...................................... 59,913,665 60,542,806
=========== ===========
</TABLE>
12 OTHER NON-CURRENT ASSETS
<TABLE>
<S> <C> <C>
Future income tax benefits arising from:
-- accumulated timing differences...................... 372,205 227,690
-- accumulated tax losses.............................. -- 1,636,835
Other non-current assets............................... 197,724 76,294
----------- -----------
Total other non-current assets......................... 569,929 1,940,819
=========== ===========
</TABLE>
13 CURRENT CREDITORS AND BORROWINGS
<TABLE>
<S> <C> <C>
Bank overdraft......................................... 202,389 1,065,670
Trade creditors and accruals........................... 8,434,083 9,171,474
Deferred revenue....................................... 478,668 754,901
Lease liabilities...................................... -- 330,046
Other creditors........................................ 1,909,343 1,650,983
Amounts owing to:
-- controlled entities of Amcor Limited (trade
related)............................................. 813,560 626,456
----------- -----------
Total current creditors and borrowings................. 11,838,043 13,599,530
=========== ===========
</TABLE>
14 CURRENT PROVISIONS -- LIABILITY
<TABLE>
<S> <C> <C>
Income tax............................................. 3,839,489 5,183,172
Employee benefits...................................... 3,055,807 2,613,737
Other.................................................. 416,413 1,107,244
---------- ----------
Total current provisions -- liability.................. 7,311,709 8,904,153
========== ==========
</TABLE>
15 NON-CURRENT CREDITORS AND BORROWINGS
<TABLE>
<S> <C> <C>
Other creditors........................................ 288,691 285,708
---------- ----------
Total non-current creditors and borrowings............. 288,691 285,708
========== ==========
</TABLE>
16 NON-CURRENT PROVISIONS -- LIABILITY
<TABLE>
<S> <C> <C>
Employee benefits...................................... 1,953,712 1,671,078
Other.................................................. 193,806 62,337
---------- ----------
Total non-current provisions -- liability.............. 2,147,518 1,733,415
========== ==========
</TABLE>
F-42
<PAGE> 151
LEIGH MARDON SECURITY DIVISION
NOTES TO AND FORMING PART OF THE
SPECIAL PURPOSE FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE THREE YEARS IN THE PERIOD ENDED 30 JUNE 1995
17 SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
SHARE EXCHANGE
PREMIUM RETAINED FLUCTUATION
INVESTOR'S RESERVE PROFITS/ RESERVE
EQUITY (CAPITAL) (LOSSES) (CAPITAL) TOTAL
---------- --------- ---------- ----------- ----------
$A $A $A $A $A
<S> <C> <C> <C> <C> <C>
Balance -- 1 July 1992............ 74,929,664 1,031,862 (5,230,784) -- 70,730,742
Operating profit after tax........ 3,423,849 3,423,849
Profit transferred(1)............. 5,712,620 (5,712,620) --
Advance/(repayments) of investors
equity(2)....................... (8,554,071) (8,554,071)
---------- --------- ---------- --------- ----------
Balance -- 30 June 1993........... 72,088,213 1,031,862 (7,519,555) -- 65,600,520
Operating profit after tax........ 10,307,808 10,307,808
Profit transferred(1)............. 9,130,985 (9,130,985)
Fluctuation on translation of
foreign controlled entities..... 3,632 3,632
Advance/(repayments) of investors
equity(2)....................... 3,462,614 3,462,614
Tax liability transferred to
investors....................... 4,430,000 4,430,000
---------- --------- ---------- --------- ----------
Balance -- 30 June 1994........... 89,111,812 1,031,862 (6,342,732) 3,632 83,804,574
AASB 1028 Adjustment.............. (781,584) (781,584)
Operating profit after tax........ 7,129,343 7,129,343
Profit transferred(1)............. 5,849,555 (5,849,555) --
Fluctuation on translation of
foreign controlled entities..... 254,172 254,172
Advance/(repayments) of investors
equity(2)....................... (7,899,867) (7,899,867)
Tax liability transferred to
investors....................... 3,533,165 3,533,165
---------- --------- ---------- --------- ----------
Balance -- 30 June 1995........... 90,594,665 1,031,862 (5,844,528) 257,804 86,039,803
========== ========= ========== ========= ==========
</TABLE>
- ---------------
(1) The Datacard, Security Printing and Echo Pacific divisions transfer their
profits to their respective parent entity at the end of each year.
(2) Refer Note 23 (ii): financing facilities.
F-43
<PAGE> 152
LEIGH MARDON SECURITY DIVISION
NOTES TO AND FORMING PART OF THE
SPECIAL PURPOSE FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE THREE YEARS IN THE PERIOD ENDED 30 JUNE 1995
18 CAPITAL EXPENDITURE COMMITMENTS
<TABLE>
<CAPTION>
1995 1994
--------- ----------
$A $A
<S> <C> <C>
Contracted but not provided for:
- -- land and buildings.............................................. -- --
- -- plant and equipment............................................. -- --
- -- other........................................................... 84,000 --
--------- ----------
Total.............................................................. 84,000 --
Periods during which these commitments are payable:
- -- not later than one year......................................... 84,000 --
--------- ----------
Total.............................................................. 84,000 --
========= ==========
</TABLE>
19 LEASE COMMITMENTS
<TABLE>
<S> <C> <C>
FINANCE LEASES
Lease commitments payable and provided for:
- -- not later than one year......................................... -- 334,190
--------- ----------
Total minimum lease payments....................................... 334,190
Deduct: future finance charges..................................... -- 4,144
--------- ----------
Lease liability (current).......................................... -- 330,046
========= ==========
OPERATING LEASES
Lease and hire commitments payable but not provided for:
- -- not later than one year......................................... 2,160,609 2,465,213
- -- later than one year but not later than two years................ 1,929,292 1,839,344
- -- later than two years but not later than five years.............. 4,264,740 3,964,957
- -- later than five years........................................... 1,152,502 2,160,320
--------- ----------
Total minimum operating lease payments............................. 9,507,143 10,429,834
========= ==========
</TABLE>
20 CONTINGENT LIABILITIES
The Entity is a party to legal proceedings that are considered to be either
ordinary, routine litigation incidental to its business and not material to its
financial position.
Under the terms of the Class Order issued by the Australian Securities
Commission on 19 December 1991, which relieved certain wholly owned Australian
subsidiaries from the requirement to prepare audited financial statements, Amcor
Limited and certain subsidiaries have entered into approved deeds for the Gross
Guarantee of liabilities. Fortronic Technology Pty Ltd and Leigh Mardon Pty Ltd
have entered into these approved deeds. No liabilities subject to the Deeds of
Gross Guarantee are expected to arise.
F-44
<PAGE> 153
LEIGH MARDON SECURITY DIVISION
NOTES TO AND FORMING PART OF THE
SPECIAL PURPOSE FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE THREE YEARS IN THE PERIOD ENDED 30 JUNE 1995
21 PARENT AND ULTIMATE PARENT ENTITY
The parent entity of each legal entity in the Leigh Mardon Security
Division is:
<TABLE>
<S> <C>
PARENT ENTITY
----------------------------------------
Fortronic Technology Pty Ltd Leigh Mardon Pty Ltd
Leigh Mardon Pty Ltd Containers Pty Ltd
Leigh Mardon (NZ) Limited CPE Data Card Pty Ltd
Containers Packaging (NZ) Limited Amcor Packaging (New Zealand) Ltd
Kiwi Packaging (Cartons) Limited Containers Packaging (NZ) Limited
</TABLE>
The ultimate parent entity for the purpose of Schedule 5 of the
Corporations Regulations is Amcor Limited, a company incorporated in NSW.
22 SEGMENT REPORTING
The Economic Entity manufactures various security products.
GEOGRAPHIC SEGMENTS
<TABLE>
<CAPTION>
PROFIT BEFORE TAX SALES REVENUE
------------------------------------ --------------------------------------
1995 1994 1993 1995 1994 1993
---------- ---------- ---------- ----------- ----------- ----------
$A $A $A $A $A $A
<S> <C> <C> <C> <C> <C> <C>
Australia....... 16,147,072 15,659,911 8,910,015 98,052,681 96,763,227 64,579,832
New Zealand..... 1,042,693 1,199,708 337,157 7,243,072 6,233,725 3,069,950
---------- ---------- ---------- ----------- ----------- ----------
Profit before
interest and
tax........... 17,189,765 16,859,619 9,247,172
Net interest.... (1,228,808) (1,115,625) (1,077,981)
Abnormals....... (5,026,079) -- (1,800,000)
Inter-segment
sales......... (451,060) (368,596) (319,155)
---------- ---------- ---------- ----------- ----------- ----------
10,934,878 15,743,994 6,369,191 104,844,693 102,628,356 67,330,627
========== ========== ========== =========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
TOTAL ASSETS
----------------------------
1995 1994
------------ ------------
$A $A
<S> <C> <C>
Australia...................................................... 103,295,331 104,623,439
New Zealand.................................................... 4,330,433 3,703,941
----------- -----------
107,625,764 108,327,380
=========== ===========
</TABLE>
F-45
<PAGE> 154
LEIGH MARDON SECURITY DIVISION
NOTES TO AND FORMING PART OF THE
SPECIAL PURPOSE FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE THREE YEARS IN THE PERIOD ENDED 30 JUNE 1995
23 NOTES TO THE STATEMENTS OF CASH FLOWS
(i) Reconciliation of cash
For the purpose of the Statements of Cash Flows, cash includes cash on hand
and at bank and short term deposits at call, net of outstanding bank overdrafts.
Cash as at the end of the financial year as shown in the Statements of Cash
Flows is reconciled to the related items in the balance sheets as follows:
<TABLE>
<CAPTION>
NOTE 1995 1994
---- -------- ----------
$A $A
<S> <C> <C> <C>
Cash................................................ 7 176,885 201,453
Short term deposits................................. 8 244,598 10,428
Bank overdraft...................................... 13 (202,389) (1,065,670)
-------- ----------
219,094 (853,789)
======== ==========
</TABLE>
(ii) Financing facilities
The Economic Entity has no financing facilities. Cash balances are swept
daily to Amcor Limited and/or its controlled entities.
F-46
<PAGE> 155
LEIGH MARDON SECURITY DIVISION
NOTES TO AND FORMING PART OF THE
SPECIAL PURPOSE FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE THREE YEARS IN THE PERIOD ENDED 30 JUNE 1995
(iii) Reconciliation of operating profit after income tax to net cash provided
by operating activities
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
$A $A $A
<S> <C> <C> <C>
Operating profit after income tax.................. 7,129,343 10,307,808 3,423,849
Add/(less) items classified as investing/financing
activities:
(Profit)/loss on sale of non-current assets...... (43,374) 15,041 67,913
Add/(less) non-cash items:
Amortisation..................................... 692,310 634,409 214,947
Amounts set aside to provisions.................. 2,836,771 2,871,125 1,718,319
Depreciation..................................... 4,553,593 3,475,290 3,471,708
Notional tax charge.............................. 3,604,000 4,901,000 4,023,000
Research and development costs written off....... -- -- 1,800,000
---------- ---------- ----------
Net cash provided by operating activities before
change in assets and liabilities................. 18,772,643 22,204,673 14,719,736
Change in assets and liabilities adjusted for
effects of purchase and disposal of controlled
entities during the financial year:
(Increase)/decrease in inventories............... (3,295,387) (140,518) 1,667,513
(Increase)/decrease in other debtors and
prepayments................................... 686,500 925,771 (427,122)
(Increase)/decrease in trade debtors............. 140,799 (4,130,897) (86,086)
(Increase)/decrease in other assets.............. 83,892 (72,663) (196,145)
(Decrease)/increase in trade creditors........... (550,287) 4,436,189 1,177,251
(Decrease)/increase in deferred revenue.......... (276,233) -- --
(Decrease)/increase in provisions................ (3,087,266) (3,125,080) (1,195,722)
(Decrease)/increase in other creditors........... 261,343 946,940 (1,044,519)
(Decrease)/increase in income taxes payable...... 77,802 217,099 (1,109,559)
---------- ---------- ----------
Net cash provided by operating activities.......... 12,813,806 21,261,514 13,505,347
========== ========== ==========
</TABLE>
24 SUPERANNUATION COMMITMENTS
The Economic Entity participates in a number of superannuation funds which
were established to provide benefits for employees and their dependents. The
funds cover Amcor Limited (and/or its controlled entities) sponsored plans,
industry/union plans and government plans.
AMCOR LIMITED SPONSORED PLANS
The principal benefits are pensions or lump sums for members on
resignation, retirement, death or total permanent disablement. These benefits
are determined on either a defined benefit or accumulation benefit basis.
Employee contribution rates are either fixed by the rules of each fund or
selected by members from a specified range of dates. In addition to legislative
requirements, employer companies contribute to the balance of the cost required
to fund the defined benefits or, in the case of accumulation funds, the amounts
set out in the appropriate fund rules. There exists a legally
F-47
<PAGE> 156
LEIGH MARDON SECURITY DIVISION
NOTES TO AND FORMING PART OF THE
SPECIAL PURPOSE FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE THREE YEARS IN THE PERIOD ENDED 30 JUNE 1995
enforceable obligation on the employer companies to make such contributions as
are required under the rules.
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- -------
$A $A $A
<S> <C> <C> <C>
Employer contributions made to Defined Benefit Funds........ 882,402 986,436 429,392
======= ======= =======
</TABLE>
Following the sale agreement, members of the Amcor Limited (and/or its
controlled entities) sponsored plans will be transferred to the Purchaser's
fund(s). The transfer amounts will be determined by Actuaries. Following the
most recent actuarial review of each fund the actuary in each case concluded
that the assets of each fund were sufficient to cover the value of accrued
benefits.
25 RELATED PARTY DISCLOSURES
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
$A $A $A
<S> <C> <C> <C>
Transactions with Amcor Limited and/or its
controlled entities:
(1) Management fee paid to Containers Packaging
head office (Amcor Limited)(i)............... 474,000 418,000 313,000
(2) Management fee paid to Leigh Mardon Pty Ltd
head office(i)............................... 1,837,000 1,336,000 151,000
(3) Working capital interest paid to Containers
Packaging head office (Amcor Limited)(ii).... 1,212,572 1,112,965 1,093,000
(4) Paper products purchased from Amcor Limited
controlled entities(iii)..................... 4,703,117 3,323,666 3,111,571
(5) Sales by the Security division to Amcor
Limited controlled entities(iii)............. 84,758 17,743 228,845
(6) During the year ended 30 June 1995, $A1,625,363 of carried forward tax losses were
transferred at full consideration, to Leigh Mardon Pty Ltd group companies. The
transferee companies are not part of the Economic Entity.
</TABLE>
- ---------------
(i) Fees paid to respective head office to recover head office expenditure such
as administration, accounting, credit control, IT System support, audit,
business development etc. Charges based on proportional revenue basis.
(ii) Working capital interest is calculated monthly based on levels of stock,
trade debtors less trade creditors. Interest rate used is the Westpac
Reference Lending Rate.
(iii) These transactions are in the ordinary course of business and on normal
terms and conditions.
26 ACQUISITION OF BUSINESSES
In August 1993 the Security Printing business of John Sands was acquired
for cash consideration of $A19,025,253.
In May 1994 the Chequeprint business was acquired in New Zealand for cash
consideration of $A1,018,351.
27 INFORMATION FOR UNITED STATES INVESTORS
The special purpose financial statements of the Economic Entity are
prepared in accordance with Generally Accepted Accounting Principles applicable
in Australian ("Australian GAAP") (refer
F-48
<PAGE> 157
LEIGH MARDON SECURITY DIVISION
NOTES TO AND FORMING PART OF THE
SPECIAL PURPOSE FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE THREE YEARS IN THE PERIOD ENDED 30 JUNE 1995
Note 1), which differ in certain significant respects from Generally Accepted
Accounting Principles in the United States ("US GAAP").
The following is a summary of the major differences between Australian GAAP
and US GAAP that affect the Economic Entity which provides an expansion of
certain information included in the notes to and forming part of the accounts.
(a) The term "provisions" is used in Australian GAAP to designate accrued
expenses with no definitive payment date. This can include such items as
employee leave entitlements not yet taken. Classification between current
and non-current is generally based on management assessments.
Provisions disclosed in notes 14 and 16 comply in all material respects with
US GAAP.
(b) Goodwill amortisation
Under Australian GAAP goodwill is amortised using the inverse sum of the
digits method over periods not exceeding 20 years.
The Economic Entity has formally adopted for US GAAP purposes the policy of
straight line amortisation and a 25 year life for goodwill.
(c) Research and development
In the fiscal year ended 30 June 1993, the accounts include an abnormal
write-off of research and development costs of $A1,800,000. This amount
includes $A1,603,855 which was incurred prior to 30 June 1992. To comply
with US GAAP an adjustment has been made to expense the $A1,603,855 in the
fiscal years prior to 30 June 1993.
(d) Employee entitlements
As described in note 1, the Economic Entity adopted the accounting for
employee entitlements in accordance with Accounting Standard AASB 1028
"Accounting for Employee Entitlements". Under Australian GAAP, the
cumulative effect was recorded as an adjustment to beginning retained
profits at 1 July 1994. The cumulative effect of such adoption under
Australian GAAP is materially consistent with the requirements of SFAS 112,
"Employees' Accounting for Postemployment Benefits", which was effective for
fiscal 1995. However, under US GAAP the cumulative effect of such adoption
is required to be presented as a separate component of fiscal 1995's
statement of income.
(e) Pension Plans
As detailed in Note 24, contributions to defined benefit plans have resulted
in the plans, in respect of employees of the Economic Entity, being fully
funded and adequate to sustain the actuarially calculated obligations. As
the actuarial obligation entitlements will be transferred as part of the
sale agreement, the expense per Australian GAAP represents actual expenses
incurred by the entities during the periods reported. While it is not
practical to complete the detailed calculations required by SFAS 87 in
respect of the entities' employees -- in order to determine whether pension
expense disclosed in Note 24 would conform with US GAAP requirements, it is
estimated, based on the relationship of total Amcor SFAS 87 pension expense
to the total Australian GAAP pension expense of the Amcor Limited Group,
that the proportionately equivalent expense borne by these entities would
not be materially different.
F-49
<PAGE> 158
LEIGH MARDON SECURITY DIVISION
NOTES TO AND FORMING PART OF THE
SPECIAL PURPOSE FINANCIAL STATEMENTS -- (CONCLUDED)
FOR THE THREE YEARS IN THE PERIOD ENDED 30 JUNE 1995
RECONCILIATION OF ACCOUNTS TO US GAAP
<TABLE>
<CAPTION>
NOTE 1995 1994 1993
---- ----------- ----------- ----------
$A $A $A
<S> <C> <C> <C> <C>
Sales..................................... 104,844,693 102,628,356 67,330,627
----------- ----------- ----------
Costs & expenses
Cost of goods sold...................... 64,104,000 62,277,000 40,634,000
Selling & administrative................ 19,406,038 20,283,847 14,421,205
Depreciation & amortisation............. 5,245,903 4,109,699 3,686,655
----------- ----------- ----------
88,755,941 86,670,546 58,741,860
----------- ----------- ----------
Other (expense) income
Interest expense........................ (1,248,745) (1,156,856) (1,093,000)
Foreign exchange gains/(losses), net.... 18,930 26,037 77,388
Other (note 3).......................... 1,102,020 917,003 596,036
Abnormal items (note 5)................. (5,026,079) -- (1,800,000)
----------- ----------- ----------
(5,153,874) (213,816) (2,219,576)
Income before income taxes.............. 10,934,878 15,743,994 6,369,191
Income tax charge....................... (3,805,535) (5,436,186) (2,945,342)
----------- ----------- ----------
Net profit reported using Australian
GAAP.................................... 7,129,343 10,307,808 3,423,849
Adjustment for goodwill amortisation...... (b) (1,772,152) (2,041,758) (1,590,606)
Research and development written off...... (c) -- -- 1,603,855
Tax effect of above adjustments........... -- -- (625,503)
----------- ----------- ----------
Income according to US GAAP before changes
in accounting principles................ 5,357,191 8,266,050 2,811,595
----------- ----------- ----------
Cumulative effect of adoption of SFAS
112..................................... (781,584) -- --
----------- ----------- ----------
Net income according to US GAAP........... 4,575,607 8,266,050 2,811,595
=========== =========== ==========
Total assets reported using Australian
GAAP.................................... 107,625,764 108,327,380
Cumulative adjustment for goodwill
amortisation............................ (b) (5,404,516) (3,632,364)
----------- -----------
Total assets according to US GAAP......... 102,221,248 104,695,016
=========== ===========
Shareholders' equity at year end.......... 86,039,803 83,804,574
Cumulative adjustment for goodwill
amortisation............................ (b) (5,404,516) (3,632,364)
Restatement of beginning retained
profits................................. 781,584 --
Cumulative adjustment for adoption of SFAS
112..................................... (781,584) --
----------- -----------
80,635,287 80,172,210
=========== ===========
</TABLE>
F-50
<PAGE> 159
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR ANY OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY OFFER OR SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
- ------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
Available Information................. 2
Incorporation of Documents by
Reference........................... 3
Summary............................... 4
Risk Factors.......................... 17
The Refinancing....................... 25
Use of Proceeds....................... 26
Capitalization........................ 27
Unaudited Pro Forma Condensed
Consolidated Financial
Information......................... 28
Selected Historical Financial Data.... 35
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 37
Business.............................. 44
Management............................ 54
Certain Relationships and Related
Transactions........................ 57
Security Ownership.................... 58
Description of Certain Indebtedness... 59
Description of the Notes.............. 61
Book-Entry; Delivery and Form......... 91
The Exchange Offer.................... 94
Certain U.S. Federal Income Tax
Considerations...................... 101
Plan of Distribution.................. 102
Legal Matters......................... 102
Experts............................... 102
Index to Financial Statements......... F-1
</TABLE>
$95,000,000
AMERICAN BANKNOTE
CORPORATION
11 1/4% SENIOR SUBORDINATED NOTES
DUE 2007, SERIES B
[AMERICAN BANK NOTE LOGO]
- ------------------------
Prospectus
- ------------------------
, 1998
<PAGE> 160
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company and each of American Bank Note Holographics, Inc., American
Banknote Card Services, Inc., American Banknote Merchant Services, Inc., ABN
Investments, Inc., ABN Equities, Inc., American Banknote Australasia Holdings,
Inc., ABN Government Services, Inc., USBC Capital Corp. and ABN CBA, Inc. (the
"Delaware Corporate Guarantors") are incorporated under the laws of the State of
Delaware. Section 145 of the General Corporation Law of the State of Delaware
("Section 145") provides that a Delaware corporation may indemnify any persons
who are, or are threatened to be made, parties to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of such corporation), by
reason of the fact that such person is or was an officer, director, employee or
agent of such corporation, or is or was serving at the request of such
corporation as a director, officer, employee or agent of another corporation or
enterprise. The indemnity may include expenses (including attorney' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such action, suit or proceeding, provided such
person acted in good faith and in a manner he reasonably believed to be in or
not opposed to the corporation's best interests and, with respect to any
criminal action or proceeding, had no reasonable cause to believe that his
conduct was illegal. A Delaware corporation may indemnify any persons who are,
or are threatened to be made, a party to any threatened, pending or completed
action or suit by or in the right of the corporation by reason of the fact that
such person was a director, officer, employee or agent of such corporation, or
is or was serving at the request of such corporation as a director, officer,
employee or agent of another corporation or enterprise. The indemnity may
include expenses (including attorney's fees) actually and reasonably incurred by
such person in connection with the defense or settlement of such action or suit,
provided such person acted in good faith and in a manner he reasonably believed
to be in or not opposed to the corporation's best interests except that no
indemnification is permitted without judicial approval if the officer or
director is adjudged to be liable to the corporation. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him against the expenses which
such officer or director has actually and reasonably incurred.
The respective certificates of incorporation, as amended, of the Company
and each Delaware Corporate Guarantor, other than American Banknote Card
Services Inc., provide that no director of the corporation shall be liable to
such corporation or its stockholders for monetary damages arising from a breach
of fiduciary duty owed to the corporation or its stockholders. The certificate
of incorporation, as amended, of each such Delaware Corporate Guarantor excludes
from such provision liabilities arising (i) from breach of the director's duty
of loyalty to each such company, or its stockholders, (ii) from acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) pursuant to Section 174 of the Delaware General
Corporation Law, or (iv) from any transaction from which the director derived an
improper personal benefit.
The Certificate of Incorporation of each of American Banknote Card Services
Inc., ABN Equities Inc. and ABN Investments Inc. provide that each of these
companies will indemnify its directors, officers and agents to the full extent
permitted by law.
The respective by-laws of the Company and each Delaware Corporate
Guarantor, other than American Banknote Card Services, Inc., provide that the
Company shall indemnify, to the fullest extent permitted by the General
Corporation Law of the State of Delaware, any person who was or is a party or is
threatened to be made a party to or is involved in any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative by
II-1
<PAGE> 161
reason of the fact that he or she is or was a director or officer of such
corporation or other entity, or is or was serving at the request of such
corporation as a director, officer or member of another corporation, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding and that such indemnification shall continue as to an
indemnitee who has ceased to be a director or officer and shall inure to the
benefit of the indemnitee's heirs, executors and administrators. The by-laws of
the Company and each Delaware Corporate Guarantor, except American Banknote Card
Services Inc., further provide that any employee or agent of such corporation,
or any person serving at the request of the Company or such respective Delaware
Corporate Guarantor as an employee or agent of another corporation, partnership,
joint venture or other enterprise shall be indemnified in the same manner as a
director or officer of such entity.
Section 145 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation or enterprise,
against any liability asserted against him and incurred by him in any such
capacity, arising out of his status as such, whether or not the corporation
would otherwise have the power to indemnify him under Section 145.
The respective by-laws of the Company and American Banknote Holographics,
Inc. Guarantor provide that each such corporation may purchase and maintain
insurance on its own behalf and on behalf of any person who is or was a
director, officer, employee, fiduciary, or agent of such corporation or was
serving at the request of that corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him or her and incurred by him
or her in any such capacity, whether or not the corporation would have the power
to indemnify such person against such liability under its by-laws.
All of the directors and officers of the Company and each Delaware
Corporate Guarantor are covered by insurance policies maintained and held in
effect by either the Company or such corporation against certain liabilities for
actions taken in such capacities, including liabilities under the Securities Act
of 1933.
American Bank Note Company and ABN Securities Systems, Inc. are
incorporated under the laws of the State of New York. Sections 722 through 725
of the New York Business Corporation Law (the "Business Corporation Law")
provide that a corporation may indemnify, with certain limitations and
exceptions, a director or officer as follows: (1) in a derivative action,
against his reasonable expenses, including attorneys' fees but excluding certain
settlement costs, actually and necessarily incurred by him in connection with
the defense thereof, or an appeal therein, if such director or officer acted, in
good faith, for a purpose which he reasonably believed to be in (or in the case
of service for another corporation, not opposed to) the best interests of the
corporation; and (2) in a civil or criminal non-derivative action or proceeding
including a derivative action by another corporation, partnership or other
enterprise in which any director or officer of the indemnifying corporation
served in any capacity at the indemnifying corporation's request, against
judgments, fines, settlement payments and reasonable expenses, including
attorneys' fees, incurred as a result thereof, or any appeal therein, if such
director or officer acted in good faith, for a purpose which he reasonably
believed to be in (or, in the case of service for any other corporation, not
opposed to) the best interests of the corporation and, in criminal actions and
proceedings, in addition, had no reasonable cause to believe that his conduct
was unlawful. Such indemnification is a matter of right where the director or
officer has been successful on the merits or otherwise, and otherwise may be
granted upon corporate authorization or court award as provided in the statute.
Section 721 of the Business Corporation Law provides that indemnification
arrangements can be established for directors and officers, by contract, by-law,
charter provision, action of shareholders or board of directors, on terms other
than those specifically provided by Article 7 of the Business Corporation Law,
provided that no indemnification may be made to or on behalf of any director or
II-2
<PAGE> 162
officer if a judgment or other final adjudication adverse to the director or
officer establishes that his acts were committed in bad faith or were the result
of active and deliberate dishonesty and were material to the cause of action so
adjudicated, or that he personally gained in fact a financial profit or other
advantage to which he was not legally entitled. Article 6 of American Bank Note
Company's By-Laws provides for the indemnification, to the full extent
authorized by law, of any person made or threatened to be made a party in any
civil or criminal action or proceeding by reason of the fact that he is or was a
director or officer of American Bank Note Company. In addition, Article 10 of
American Banknote Company's Certificate of Incorporation provides that there
shall be no limit on the company's right to indemnify other than as set forth in
applicable law. Article VI of ABN Securities Systems, Inc.'s By-laws contains
extensive provisions pertaining to indemnification. In essence, subject to a
number of qualifications, ABN Securities Systems, Inc. may indemnify, to the
full extent authorized by law, of any person made or threatened to be made a
party in any civil or criminal action or proceeding by reason of the fact that
he is or was a director or officer of ABN Securities Systems, Inc.
Horsham Holding Company, Inc. is incorporated under the laws of the
Commonwealth of Pennsylvania. Sections 1741 and 1742 of the Pennsylvania
Business Corporation Law ("PBCL") provide that a business corporation shall have
the power to indemnify any person who was or is a party, or is threatened to be
made a party, to any proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such person is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation or other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such proceeding, if such person acted in good
faith and in a manner he reasonably believed to be in, or not opposed to, the
best interests of the corporation, and, with respect to any criminal proceeding,
had no reasonable cause to believe his conduct was unlawful. In the case of an
action by or in the right of the corporation, such indemnification is limited to
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection with the defense or settlement of such action, except that
no indemnification shall be made in respect of any claim, issue or matter as to
which such person has been adjudged to be liable to the corporation unless, and
only to the extent that, a court determines upon application that, despite the
adjudication of liability but in view of all the circumstances, such person is
fairly and reasonably entitled to indemnity for the expenses that the court
deems proper.
PBCL Section 1744 provides that, unless ordered by a court, any
indemnification referred to above shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification is
proper in the circumstances because the indemnitee has met the applicable
standard of conduct. Such determination shall be made:
(1) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to the proceeding; or
(2) if such a quorum is not obtainable, or if obtainable and a
majority vote of a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion; or
(3) by the shareholders.
Notwithstanding the above, PBCL Section 1743 provides that to the extent
that a director, officer, employee or agent of a business corporation is
successful on the merits or otherwise in defense of any proceeding referred to
above, or in defense of any claim, issue or matter therein, such person shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by such person in connection therewith.
PBCL Section 1745 provides that expenses (including attorneys' fees)
incurred by an officer, director, employee or agent of a business corporation in
defending any proceeding may be paid by the corporation in advance of the final
disposition of the proceeding upon receipt of an undertaking
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<PAGE> 163
to repay the amount advanced if it is ultimately determined that the indemnitee
is not entitled to be indemnified by the corporation.
PBCL Section 1746 provides that the indemnification and advancement of
expenses provided by, or granted pursuant to, the foregoing provisions is not
exclusive of any other rights to which a person seeking indemnification may be
entitled under any bylaw, agreement, vote of shareholders or directors or
otherwise, and that indemnification may be granted under any bylaw, agreement,
vote of shareholders or disinterested directors or otherwise for any action
taken or any failure to take any action whether or not the corporation would
have the power to indemnify the person under any other provision of law and
whether or not the indemnified liability arises or arose from any action by or
in the right of the corporation; provided, however, that no indemnification may
be made in any case where the act or failure to act giving rise to the claim for
indemnification is determined by a court to have constituted willful misconduct
or recklessness.
PBCL Section 1747 permits a Pennsylvania business corporation to purchase
and maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation or other enterprise, against any liability asserted against such
person and incurred by him in any such capacity, or arising out of his status as
such, whether or not the corporation would have the power to indemnify the
person against such liability under the provisions described above.
Article XVII of Horsham Holding Company Inc.'s By-Laws, as amended provide
that, to the fullest extent that the laws of Pennsylvania permit elimination or
limitation of the liability of directors, no director of the Corporation shall
be personally liable for monetary damages as such for any action taken, or any
failure to take any action, as a director. The PBCL provides that whenever the
by-laws of a corporation by a vote of the shareholders so provide, a director
shall not be personally liable for monetary damages as such for any action
taken, or failure to take any action, unless (i) the director has breached or
failed to perform the duties of his office under the standard of care and
justifiable reliance specified in the PBCL and (ii) the breach or failure to
perform constitutes self-dealing, willful misconduct or recklessness. These
provisions do not apply to (i) responsibility or liability of a director
pursuant to any criminal statute or (ii) the liability of a director for payment
of taxes.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS
<TABLE>
<S> <C> <C> <C>
3.1 (a)(i) -- Certificate of Incorporation of American Banknote Corporation (the
"Company"), including Amendment No. 1 thereto (filed as Exhibit 3.1 to the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1995)
(the "June 1995 10-Q").*
(a)(ii) -- Certificate of Designation of the Company authorizing Preferred Stock as
Series A (filed as Exhibit 4 to the Company's Report on Form 8-A filed April
6, 1994).*
(b) -- Certificate of Incorporation of American Bank Note Company, as amended.
(c) -- Certificate of Incorporation of ABN Securities Systems, Inc.
(d) -- Articles of Incorporation of Horsham Holding Company, Inc.
(e) -- Certificate of Incorporation of American Bank Note Holographics, Inc., as
amended.
(f) -- Certificate of Incorporation of American Banknote Card Services, Inc., as
amended.
(g) -- Certificate of Incorporation of American Banknote Merchant Services, Inc.
(h) -- Certificate of Incorporation of ABN Investments, Inc.
(i) -- Certificate of Incorporation of ABN Equities Inc.
</TABLE>
II-4
<PAGE> 164
<TABLE>
<S> <C> <C> <C>
(j) -- Certificate of Incorporation of American Banknote Australasia Holdings, Inc.
(k) -- Certificate of Incorporation of ABN Government Services, Inc.
(l) -- Certificate of Incorporation of USBC Capital Corp.
(m) -- Certificate of Incorporation of ABN CBA, Inc.
3.2 (a) -- By-laws of the Company (filed as Exhibit 3.2 to the June 1995 10-Q).*
(b) -- By-laws of American Bank Note Company.
(c) -- By-laws of ABN Securities Systems, Inc.
(d) -- By-laws of Horsham Holding Company, Inc.
(e) -- By-laws of American Bank Note Holographics, Inc.
(f) -- By-laws of American Banknote Card Services, Inc.
(g) -- By-laws of American Banknote Merchant Services, Inc.
(h) -- By-laws of ABN Investments, Inc.
(i) -- By-laws of ABN Equities Inc.
(j) -- By-laws of American Banknote Australasia Holdings, Inc.
(k) -- By-laws of ABN Government Services, Inc.
(l) -- By-laws of USBC Capital Corp.
(m) -- By-laws of ABN CBA, Inc.
4.1 -- Indenture for the 11 1/4% Senior Subordinated Notes due 2007, Series A (the
"Old Notes") and 11 1/4% Senior Subordinated Notes due 2007, Series B (the
"Exchange Notes"), dated as of December 12, 1997 among the Company, the
Guarantors and The Bank of New York, as trustee.
4.2 -- Form of Old Note (included in Exhibit 4.1).
4.3 -- Form of Exchange Note (included in Exhibit 4.1).
4.4 -- Forms of Guarantee k(included in Exhibits 4.2 and 4.3).
4.5 -- First Supplement dated as of October 8, 1997 to the Indenture dated as of May
1, 1994 between the Company and State Street Bank & Trust Company (as
successor to First National Bank of Boston), as Trustee, relating to the
11 5/8% Senior Notes due August 1, 2002, Series B.
4.6 -- Registration Rights Agreement dated as of December 12, 1997 among the
Company, the Guarantors and Chase Securities Inc., Bear, Stearns & Co. Inc.,
NationsBanc Montgomery Securities, Inc. and Societe Generale Securities
Corporation.
4.7 -- The Company undertakes to furnish the Securities and Exchange Commission,
upon request, a copy of all instruments with respect to long-term debt not
filed herewith.
5 -- Opinion of Weil, Gotshal & Manges LLP as to the validity of the Exchange
Notes to be issued by the Company.**
8 -- Opinion of Weil, Gotshal & Manges LLP as to certain federal income tax
matters.**
11 -- Computation of per share income (loss) (filed as Exhibit 11 to the 1996
10-K).*
12 -- Statement of Computation of Ratios of Earnings to Fixed Charges.
23.1 -- Consent of Deloitte & Touche LLP.
23.2 -- Consent of KPMG.
23.3 -- Consent of Weil, Gotshal & Manges LLP (included in the opinion filed as
Exhibit 5 to this Registration Statement).
23.4 -- Consent of Weil, Gotshal & Manges LLP (included in the opinion filed as
Exhibit 8 to this Registration Statement).
24 -- Power of Attorney (included on signature pages of this Part II).
25 -- Statement of Eligibility and Qualification of The Bank of New York, as
Trustee on Form T-1 with respect to the 11 1/4% Senior Subordinated Notes due
2007.
99.1 -- Form of Letter of Transmittal.
99.2 -- Form of Notice of Guaranteed Delivery.
</TABLE>
II-5
<PAGE> 165
<TABLE>
<S> <C> <C> <C>
99.3 -- Form of Instructions to Registered Holders and/or Book-Entry Facility
Participant from Beneficial Owner.
99.4 -- Form of Exchange Agent Agreement.
</TABLE>
- ---------------
* Incorporated herein by reference.
** To be filed by amendment.
ITEM 22. UNDERTAKINGS.
(a) Each of the undersigned registrants hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such posteffective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at the time shall be deemed to
be the initial bona fide offering thereof;
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) Each of the undersigned registrants hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of a registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrants pursuant to the provisions, or otherwise, each of the
registrants has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by a
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has
II-6
<PAGE> 166
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933 and will be governed by the
final adjudication of such issue.
(d) Each of the undersigned registrants hereby undertakes to respond to
requests for information that is incorporated by reference into the prospectus
pursuant to Item 4, 10(b), 11, or 13 of this form, within one business day of
receipt of such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration statement
through the date of responding to the request.
(e) Each of the undersigned registrants hereby undertakes to supply by
means of a post-effective amendment all information concerning a transaction,
and the company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-7
<PAGE> 167
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrants
named below have duly caused this Registration Statement to be signed on their
behalf by the undersigned, thereunto duly authorized, in the City and State of
New York, on this 12th day of January, 1998.
AMERICAN BANKNOTE CORPORATION
AMERICAN BANK NOTE COMPANY
ABN SECURITIES SYSTEMS, INC.
HORSHAM HOLDING COMPANY INC.
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
AMERICAN BANKNOTE CARD SERVICES, INC.
AMERICAN BANKNOTE MERCHANT
SERVICES, INC.
ABN INVESTMENTS, INC.
ABN EQUITIES INC.
AMERICAN BANKNOTE AUSTRALASIA
HOLDINGS, INC.
ABN GOVERNMENT SERVICES, INC.
USBC CAPITAL CORP.
ABN CBA, INC.
By: /s/ JOHN T. GORMAN
------------------------------------
JOHN T. GORMAN
EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Morris Weissman, John T. Gorman and Harvey J.
Kesner, and each of them, with full power to act without the other, his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments to this Registration Statement, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on behalf
of the Registrant named below and in the capacities indicated, on the dates
indicated.
II-8
<PAGE> 168
AMERICAN BANKNOTE CORPORATION
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------- -------------------------------- -------------------
<S> <C> <C>
/s/ MORRIS WEISSMAN Chairman of the Board and Chief January 12, 1998
- ------------------------------------- Executive Officer (Principal
(MORRIS WEISSMAN) Executive Officer)
/s/ JOHN T. GORMAN Executive Vice President and January 12, 1998
- ------------------------------------- Chief Financial Officer
(JOHN T. GORMAN) (Principal Financial and
Accounting Officer)
/s/ BETTE B. ANDERSON Director January 12, 1998
- -------------------------------------
(BETTE B. ANDERSON)
/s/ DR. OSCAR ARIAS S. Director January 12, 1998
- -------------------------------------
(DR. OSCAR ARIAS S.)
/s/ C. GERALD GOLDSMITH Director January 12, 1998
- -------------------------------------
(C. GERALD GOLDSMITH)
/s/ IRA J. HECHLER Director January 12, 1998
- -------------------------------------
(IRA J. HECHLER)
/s/ DAVID S. ROWE-BEDDOE Director January 12, 1998
- -------------------------------------
(DAVID S. ROWE-BEDDOE)
/s/ ALFRED TEO Director January 12, 1998
- -------------------------------------
(ALFRED TEO)
</TABLE>
II-9
<PAGE> 169
AMERICAN BANK NOTE COMPANY
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
HORSHAM HOLDING COMPANY, INC.
AMERICAN BANK NOTE AUSTRALASIA HOLDINGS, INC.
USBC CAPITAL CORP.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------- -------------------------------- -------------------
<C> <S> <C>
/s/ MORRIS WEISSMAN Chairman of the Board and Chief January 12, 1998
- ------------------------------------- Executive Officer (Principal
(MORRIS WEISSMAN) Executive Officer)
/s/ JOHN T. GORMAN Executive Vice President and January 12, 1998
- ------------------------------------- Chief Financial Officer
(JOHN T. GORMAN) (Principal Financial and
Accounting Officer) and Director
</TABLE>
ABN INVESTMENTS, INC.
ABN EQUITIES INC.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------- -------------------------------- -------------------
<S> <C> <C>
/s/ MORRIS WEISSMANN Chairman of the Board and Chief January 12, 1998
- ------------------------------------- Executive Officer (Principal
(MORRIS WEISSMANN) Executive Officer)
</TABLE>
II-10
<PAGE> 170
ABN SECURITIES SYSTEMS, INC.
AMERICAN BANKNOTE CARD SERVICES, INC.
AMERICAN BANKNOTE MERCHANT SERVICES, INC.
ABN GOVERNMENT SERVICES, INC.
ABN CBA, INC.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------- -------------------------------- -------------------
<S> <C> <C>
/s/ MORRIS WEISSMANN Chairman of the Board and Chief January 12, 1998
- ------------------------------------- Executive Officer (Principal
(MORRIS WEISSMANN) Executive Officer)
/s/ JOHN T. GORMAN Executive Vice President and January 12, 1998
- ------------------------------------- Chief Financial Officer
(JOHN T. GORMAN) (Principal Financial and
Accounting Officer) and Director
/s/ HARVEY J. KESNER Director January 12, 1998
- -------------------------------------
(HARVEY J. KESNER)
</TABLE>
II-11
<PAGE> 171
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT EXEMPTION
NUMBER DESCRIPTION INDICATION
- ----------- -------------------------------------------------------------------- ---------
<C> <S> <C> <C>
3.1(a)(i) -- Certificate of Incorporation of American Banknote Corporation (the
"Company"), including Amendment No. 1 thereto (filed as Exhibit 3.1
to the Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995) (the "June 1995 10-Q")*..............................
(a)(ii) -- Certificate of Designation of the Company authorizing Preferred
Stock as Series A (filed as Exhibit 4 to the Company's Report on
Form 8-A filed April 6, 1994)*......................................
(b) -- Certificate of Incorporation of American Bank Note Company, as
amended.............................................................
(c) -- Certificate of Incorporation of ABN Securities Systems, Inc. .......
(d) -- Articles of Incorporation of Horsham Holding Company, Inc. .........
(e) -- Certificate of Incorporation of American Bank Note Holographics,
Inc., as amended....................................................
(f) -- Certificate of Incorporation of American Banknote Card Services,
Inc., as amended....................................................
(g) -- Certificate of Incorporation of American Banknote Merchant Services,
Inc. ...............................................................
(h) -- Certificate of Incorporation of ABN Investments, Inc. ..............
(i) -- Certificate of Incorporation of ABN Equities Inc. ..................
(j) -- Certificate of Incorporation of American Banknote Australasia
Holdings, Inc. .....................................................
(k) -- Certificate of Incorporation of ABN Government Services, Inc. ......
(l) -- Certificate of Incorporation of USBC Capital Corp. .................
(m) -- Certificate of Incorporation of ABN CBA, Inc. ......................
3.2(a) -- By-laws of the Company (filed as Exhibit 3.2 to the June 1995
10-Q)*..............................................................
(b) -- By-laws of American Bank Note Company...............................
(c) -- By-laws of ABN Securities Systems, Inc. ............................
(d) -- By-laws of Horsham Holding Company, Inc. ...........................
(e) -- By-laws of American Bank Note Holographics, Inc. ...................
(f) -- By-laws of American Banknote Card Services, Inc. ...................
(g) -- By-laws of American Banknote Merchant Services, Inc. ...............
(h) -- By-laws of ABN Investments, Inc. ...................................
(i) -- By-laws of ABN Equities Inc. .......................................
(j) -- By-laws of American Banknote Australasia Holdings, Inc. ............
(k) -- By-laws of ABN Government Services, Inc. ...........................
(l) -- By-laws of USBC Capital Corp. ......................................
(m) -- By-laws of ABN CBA, Inc. ...........................................
4.1 -- Indenture for the 11 1/4% Senior Subordinated Notes due 2007, Series
A (the "Old Notes") and 11 1/4% Senior Subordinated Notes due 2007,
Series B (the "Exchange Notes"), dated as of December 12, 1997 among
the Company, the Guarantors and The Bank of New York, as trustee....
4.2 -- Form of Old Note (included in Exhibit 4.1)..........................
4.3 -- Form of Exchange Note (included in Exhibit 4.1).....................
4.4 -- Forms of Guarantee (included in Exhibits 4.2 and 4.3)...............
4.5 -- First Supplement dated as of October 8, 1997 to the Indenture dated
as of May 1, 1994 between the Company and State Street Bank & Trust
Company (as successor to First National Bank of Boston), as Trustee,
relating to the 11 5/8% Senior Notes due August 1, 2002, Series B...
</TABLE>
<PAGE> 172
<TABLE>
<CAPTION>
EXHIBIT EXEMPTION
NUMBER DESCRIPTION INDICATION
- ----------- -------------------------------------------------------------------- ---------
<C> <S> <C> <C>
4.6 -- Registration Rights Agreement dated as of December 12, 1997 among
the Company, the Guarantors and Chase Securities Inc., Bear, Stearns
& Co. Inc., NationsBanc Montgomery Securities, Inc. and Societe
Generale Securities Corporation.....................................
4.7 -- The Company undertakes to furnish the Securities and Exchange
Commission, upon request, a copy of all instruments with respect to
long-term debt not filed herewith...................................
5 -- Opinion of Weil, Gotshal & Manges LLP as to the validity of the
Exchange Notes to be issued by the Company**........................
8 -- Opinion of Weil, Gotshal & Manges LLP as to certain federal income
tax matters**.......................................................
11 -- Computation of per share income (loss) (filed as Exhibit 11 to the
1996 10-K)*.........................................................
12 -- Statement of Computation of Ratios of Earnings to Fixed Charges.....
23.1 -- Consent of Deloitte & Touche LLP....................................
23.2 -- Consent of KPMG.....................................................
23.3 -- Consent of Weil, Gotshal & Manges LLP (included in the opinion filed
as Exhibit 5 to this Registration Statement)........................
23.4 -- Consent of Weil, Gotshal & Manges LLP (included in the opinion filed
as Exhibit 8 to this Registration Statement)........................
24 -- Power of Attorney (included on signature pages of this Part II).....
25 -- Statement of Eligibility and Qualification of The Bank of New York,
as Trustee on Form T-1 with respect to the 11 1/4% Senior
Subordinated Notes due 2007.........................................
99.1 -- Form of Letter of Transmittal.......................................
99.2 -- Form of Notice of Guaranteed Delivery...............................
99.3 -- Form of Instructions to Registered Holders and/or Book-Entry
Facility Participant from Beneficial Owner..........................
99.4 -- Form of Exchange Agent Agreement....................................
</TABLE>
- ---------------
* Incorporated herein by reference.
** To be filed by amendment.
<PAGE> 1
Exhibit 3.1 (b)
CERTIFICATE OF INCORPORATION
OF
ABANCO INCORPORATED
UNDER
SECTION 402 OF THE BUSINESS CORPORATION LAW
The undersigned, being a natural person of at least 21 years of age
and acting as the Incorporator of the corporation hereby being formed under the
Business Corporation Law, certifies that:
FIRST: The name of the corporation is Abanco Incorporated.
SECOND: The purposes of the corporation are as follows:
To engage in and carry on the business of engraving, lithographing,
and printing banknotes, bonus, certificates of stock, municipal and other
securities, postage stamps and other evidences of value and of general
engraving, printing and lithographing; the manufacture of machinery in
connection with engraving and printing, either for its own use or for
sale, lease or other disposition; the manufacture, production, purchase
and sale of and the trafficking in, any and all kinds of papers and other
materials which may in any way be utilized in any business of the
corporation; to conduct the business of publishers, printers,
lithographers, electrotypers, stereotypers, engravers, die-sinkers,
stationery manufacturers, bookbinders and ticket and coupon manufacturers
and to transact any and all business which may be necessary or proper in
the exercise of any of the purposes of the corporation.
To engage in any manufacturing, mercantile or trading business,
domestic or foreign, of any kind or character whatever, and to do all
things incidental to such business.
To apply for, obtain, register, purchase, lease, license or
otherwise to acquire and to hold, use, own, operate and introduce, and to
sell, assign or otherwise to dispose of, any trademarks, trade names,
patents,
<PAGE> 2
inventions, improvements and processes used in connection with or secured
under letters patent of the United States or of other countries, or
otherwise, and to use, exercise, develop, grant licenses in respect of, or
otherwise, or otherwise turn to account any such trademarks, patents,
licenses, processes and the like, or any such property or rights.
To purchase or otherwise acquire and to hold, sell, assign or
otherwise dispose of the business, good-will, assets, franchises, rights
and properties of any individual, firm, partnership, association or
corporation, domestic or foreign; engaged in any manufacturing, mercantile
or trading business, domestic or foreign, of any kind or character
whatever, and to exercise all the rights, powers and privileges of
ownership thereof.
To invest in, purchase or otherwise acquire, and to hold, pledge,
mortgage, sell, assign or otherwise dispose of, the stocks, bonds,
debentures, notes or other securities of any individual, firm,
partnership, association or corporation, domestic or foreign, engaged in
any business of any kind of character whatever, and to exercise all the
rights, powers and privileges of ownership thereof.
To issue and to receive from others as consideration, and to
purchase and otherwise acquire, the stocks, bonds, securities and
obligations of this corporation, or of the vendors, lessors or other
parties, as the case may be, and to sell or otherwise dispose of the same,
all upon such terms, valuations and conditions as to the Board of
Directors may seem advisable.
To issue bonds, debentures or obligations of the corporation, from
time to time, for any of the objects or purposes thereof, and to secure
the same by mortgage or mortgagee, or deed or deeds of trust of pledge or
lien on any or all of the property, rights, privileges and franchisers of
the corporation, whosoever situated, acquired and to be acquired, and to
sell or otherwise dispose of any or all of the same, in such manner and
upon such terms as the Board of Directors may deem judicious
The foregoing clauses shall be construed both as objects and
purposes, and it is hereby provided that the foregoing enumeration of
specific powers shall not be held to limit or restrict in any manner the
powers of this corporation.
2
<PAGE> 3
THIRD: The principal office of the corporation is located in the
County of New York, City and State of New York.
FOURTH: The total number of shares of capital stock which the
corporation shall have authority to issue is 100 shares of Common Stock, par
value $5.00 per share.
FIFTH: The Secretary of State of the State of New York is designated
as the agent of the corporation upon whom process against the corporation may be
served. The post office address within the State of New York to which the
Secretary of State shall mail a copy of any process against the corporation
served upon him is American Bank Note Company, 70 Broad Street, New York, New
York 10004.
SIXTH: The duration of the corporation is to be perpetual.
SEVENTH: The corporation may establish and maintain offices, and
conduct its business or any portion thereof, and may own, hold, lease and
dispose of such lands and other property as the purposes of the corporation
shall require (subject to such limitations as may be prescribed by law), in
other States of the United States of America, and in the Territories and the
District of Columbia, and in any or all dependencies, colonies or possessions of
the United States of America, and in any or all foreign countries.
EIGHTH: Subject always to By-Laws made by the shareholders, the
Board of Directors shall have power to make, amend and repeal the By-Laws of the
corporation.
3
<PAGE> 4
The Board of Directors, by resolution adopted by a majority of the
entire Board, may designate three or more directors to constitute an Executive
Committee, which Committee, to the extent provided in the By-Laws of the
corporation, shall have and may exercise all of the delegable powers of the
Board of Directors in the management of the business and affairs of the
corporation.
NINTH: The number of directors is to be not less than three (3) nor
more than nineteen (19).
TENTH: Except as may otherwise be specifically provided in this
certificate of incorporation, no provision of this certificate of incorporation
is intended by the corporation to be construed as limiting, prohibiting,
denying, or abrogating any of the general or specific powers or rights conferred
under the Business Corporation Law upon the corporation, upon its shareholders,
bondholders, security holders, directors, officers, or other personnel,
including, in particular, the power of the corporation to furnish
indemnification to directors and officers in the capacities defined and
prescribed by the Business Corporation Law and the defined and prescribed rights
of said persons to indemnification as the same are conferred by the Business
Corporation Law.
Dated: December 22, 1972
/s/ George R. Mahoney, Jr.
--------------------------------------
George R. Mahoney, Jr., Incorporator
Room 3222
One Battery Park Plaza
New York, New York 10004
4
<PAGE> 5
STATE OF NEW YORK )
: ss:
COUNTY OF NEW YORK )
On this 22nd day of December, 1972, before me personally came GEORGE
R. MAHONEY, JR., to me known to me to be the person described in and who
executed the foregoing certificate, and he duly acknowledged to me that he
executed the same.
/s/ Paul S. Mazurkewitz
-------------------------------------
Notary Public
5
<PAGE> 6
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
ABANCO INCORPORATED
(Under Section 805 of the Business Corporation Law)
------------------
Pursuant to the provisions of Section 805 of the Business
Corporation Law, the undersigned, Eugene Jonas and Annabelle Model, being Vice
President and Secretary respectively, of Abanco Incorporated, hereby certify:
FIRST: The name of the corporation is Abanco Incorporated.
SECOND: That the Certificate of Incorporation of the Corporation was
filed by the Department of State of the State of New York on the 27th day of
December 1972.
THIRD: That the amendment of the Certificate of Incorporation
effected by this Certificate of Amendment is as follows:
Article FIRST of the Certificate of Incorporation relating to the
corporate name of Abanco Incorporated is hereby deleted and amended to read as
follows:
"FIRST": The name of the Corporation is American Bank Note Company."
FOURTH: That the foregoing amendment of the Certificate of
Incorporation was authorized by the vote of the holder of all the outstanding
shares at a meeting of such shareholder.
IN WITNESS WHEREOF, this Certificate of Amendment has been signed
this 8th day of February 1973.
/s/ Eugene Jones
---------------------------------------
Eugene Jones, Vice President
/s/ Annabelle Model
---------------------------------------
Annabelle Model, Secretary
<PAGE> 7
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
EUGENE JONAS AND ANNABELLE MODEL, being duly sworn, depose and say
that they are the Vice President and Secretary, respectively, of Abanco
Incorporated, the corporation mentioned and described in the foregoing
instrument, that they have read and signed the same and that the statements
contained therein are true.
/s/ Eugene Jones
----------------------------
Eugene Jonas, Vice President
/s/ Annabelle Model
----------------------------
Annabelle Model, Secretary
Sworn to before me this 8th day of February, 1973.
/s/ Patrick D. Reddy
- -------------------------------
Notary Public
2
<PAGE> 1
EXHIBIT 3.1(c)
CERTIFICATE OF INCORPORATION
OF
ABN SECURITIES SYSTEMS, INC.
(Under Section 402 of the Business Corporation Law)
THE UNDERSIGNED, a natural person at least 21 years of age, for the
purpose of forming a Corporation pursuant to Section 402 of the Business
Corporation Law of the State of New York, does hereby certify:
FIRST: The name of the Corporation is ABN Securities Systems, Inc.
SECOND: The purposes of the Corporation are as follows
To engage in any commercial, mercantile, industrial, manufacturing,
marine, exploration, mining, agricultural, research, licensing, servicing,
agency, securities or brokerage business not prohibited by law, and any, some or
all of the foregoing.
To acquire, hold, create interests in, or dispose of real or
personal property, tangible or intangible, of any kind in any manner.
THIRD: Its office in the State of New York is located in the City of
New York, County of New York.
FOURTH: The aggregate number of shares which the Corporation shall
have authority to issue is 400,000 shares of Common Stock of the par value of
one dollar per share.
<PAGE> 2
FIFTH: The Secretary of State of the State of New York is designated
as the agent of the Corporation upon whom any service in any action or
proceeding against it may be served. The address to which the Secretary of State
shall mail a copy of process in any action or proceeding against the Corporation
which may be served upon him is c/o CT Corporation System, 277 Park Avenue, New
York, N.Y. 10017.
IN WITNESS WHEREOF, I have made and signed this Certificate on the
2nd day of January, 1974, and I affirm the statements contained herein are true
under the penalties of perjury.
/s/ William J. Ivey
-----------------------------
William J. Ivey
48 Wall Street
New York, N.Y. 10005
2
<PAGE> 3
CERTIFICATE OF CHANGE
OF
ABN SECURITIES SYSTEMS, INC.
UNDER SECTION 805-A OF THE BUSINESS CORPORATION LAW
Pursuant to the provisions of Section 805-A of the Business Corporation
Law, the undersigned hereby certifies:
1. The name of the corporation is ABN SECURITIES SYSTEMS, INC.
2. The Certificate of Incorporation of the above corporation was filed by
the Department of State on 1/3/74.
3. The following change is hereby made to the Certificate of
Incorporation:
The post office address to which the Secretary of State shall mail a copy
of process in any action or proceeding against the corporation which may be
served on him is changed from c/o CT Corporation System, 277 Park Avenue, New
York, New York 10017 to c/o C T Corporation System, 1633 Broadway, New York, New
York 10019.
4. Notice of the proposed change was mailed to the corporation by the
undersigned not less than thirty days prior to the date of delivery of this
certificate to the Department of State, and such corporation has not objected
thereto.
5. The undersigned is the agent to whose address the Secretary of State is
required to mail copies of process.
IN WITNESS WHEREOF, the undersigned has executed this certificate and
affirms the statement contained therein as true under penalties of perjury on
11/7/88.
C T CORPORATION SYSTEM
By /s/ Donald Grella
-----------------------------------
Donald Grella
Assistant Secretary
<PAGE> 1
EXHIBIT 3.1(d)
Filed this 5th day of
------------
April , 1982
------------------ -----
Commonwealth of Pennsylvania
Department of State
SECRETARY OF THE COMMONWEALTH
(Box for Certification)
82-17 719
APPLICANT'S ACCT NO.
DSCB:BCL-204 (Rev. 8-72)
----------------------------------
(Line for numbering)
Filing Fee: $75
A18-7
ARTICLES OF COMMONWEALTH OF PENNSYLVANIA
INCORPORATION- DEPARTMENT OF STATE
DOMESTIC BUSINESS CORPORATION CORPORATION BUREAU
- --------------------------------------------------------------------------------
In compliance with the requirements of section 204 of the Business
Corporation Law, act of May 5, 1933 (P. L. 364) (15 P. S. Section 1204) the
undersigned, desiring to be incorporated as a business corporation, hereby
certifies (certify) that:
1. The name of the corporation is:
Horsham Holding Company, Inc.
- --------------------------------------------------------------------------------
2. The location and post office address of the initial registered office of
the corporation in this Commonwealth is:
680 Blair Mill Road
- --------------------------------------------------------------------------------
(NUMBER) (STREET)
Horsham Pennsylvania 19044
- --------------------------------------------------------------------------------
(CITY) (ZIP CODE)
3. The corporation is incorporated under the Business Corporation Law of the
Commonwealth of Pennsylvania for the following purpose or purposes:
To engage in and to do any lawful act concerning any or all
lawful business for which corporations may be incorporated
under the Business Corporation Law, Act of May 5, 1933, P.L.
364, as amended.
4. The term for which the corporation is to exist is: Perpetual
5. The aggregate number of shares which the corporation shall have authority
to issue is:
1,000 shares of common stock, par value $1.00 per share
<PAGE> 2
82-17 720
DSCB:BCL-204 (Rev. 8-72)-2
6. The name(s) and post office address(es) of each incorporator(s) and the
number and class of shares subscribed by such corporation(s) is(are):
<TABLE>
<CAPTION>
NAME ADDRESS NUMBER AND CLASS OF SHARES
(including street and number, if any)
<S> <C> <C>
Carol S. Gelembiuk 2001 Fidelity Building 1 share of common stock
- -----------------------------------------------------------------------------------
123 South Broad Street
- -----------------------------------------------------------------------------------
Philadelphia, PA 19109
- -----------------------------------------------------------------------------------
</TABLE>
7. Shareholders shall not be entitled to cumulative voting rights in the
election of directors.
IN TESTIMONY WHEREOF, the incorporator(s) has (have) signed and sealed
these Articles of Incorporation this 2nd day of April, 1982.
(SEAL) /s/ Carol S. Gelembiuk
- --------------------------------- --------------------------------
(SEAL)
(SEAL)
---------------------------
INSTRUCTIONS FOR COMPLETION OF FORM:
A. For general instructions relating to the incorporation of business
corporations see 19 Pa. Code Ch. 35 (relating to business corporations
generally). These instructions relate to such matters as corporate name,
stated purposes, term of existence, authorized share structure and related
authority of the board of directors, inclusion of names of first directors
in the Articles of Incorporation, optional provisions on cumulative voting
for election of directors, etc.
B. One or more corporations or natural persons of full age may incorporate a
business corporation.
C. Optional provisions required or authorized by law may be added as
Paragraphs 7, 8, 9 . . . etc.
D. The following shall accompany this form:
(1) The copies of Form DSCB:BCL-206 (Registry Statement Domestic or
Foreign Business Corporation).
(2) Any necessary copies of Form DSCB:17.2 (Consent to Appropriation of
Name) or Form DSCB:17.3 (Consent to Use of Similar Name).
(3) Any necessary governmental approvals.
E. BCL Section 205 (15 Pa. S. Section 1205) requires that the incorporators
shall advertise their intention to file or the corporation shall advertise
the filing of articles of incorporation. Proofs of publication of such
advertising should not be delivered to the Department, but should be filed
with the minutes of the corporation.
<PAGE> 3
82-17 721
COMMONWEALTH OF PENNSYLVANIA
Department of State
CERTIFICATE OF INCORPORATION
OFFICE OF THE SECRETARY OF THE COMMONWEALTH
TO ALL TO WHOM THESE PRESENTS SHALL COME, GREETING:
WHEREAS, Under the provisions of the Laws of the Commonwealth, the
Secretary of the Commonwealth is authorized and required to issue a "Certificate
of Incorporation" evidencing the incorporation of an entity.
WHEREAS, The stipulations and conditions of the Law have been fully
complied with by
HORSHAM HOLDING COMPANY, INC.
THEREFORE, KNOW YE, That subject to the Constitution of this Commonwealth,
and under the authority of the Laws thereof, I do by these presents, which I
have caused to be sealed with the Great Seal of the Commonwealth, declare and
certify the creation, erection and incorporation of the above in deed and in law
by the name chosen hereinbefore specified.
Such corporation shall have and enjoy and shall be subject to all the
powers, duties, requirements, and restrictions, specified and enjoined in and by
the applicable laws of this Commonwealth.
GIVEN under my Hand and the Great Seal of the
Commonwealth, at the City of Harrisburg,
this 5th day of April in the year of our
Lord one thousand nine hundred and
eighty-two and of the Commonwealth the two
hundred sixth
/s/ William R. Davis
--------------------------------------------
Secretary of the Commonwealth
<PAGE> 1
EXHIBIT 3.1(e)
CERTIFICATE OF INCORPORATION
of
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
FIRST: The name of the Corporation is American Bank Note
Holographics, Inc. (hereinafter the "Corporation").
SECOND: The address of the registered office of the Corporation in
the State of Delaware is 1209 Orange Street, Corporation Trust Center, in the
City of Wilmington, County of New Castle. The name of its registered agent at
the address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which a corporation may be organized under the General
Corporation Law of the State of Delaware as set forth in Title 8 of the Delaware
Code (the "GCL").
FOURTH: The total number of shares of stock which the Corporation
shall have authority to issue is 1000 shares of Common Stock at one dollar
($1.00) par value.
FIFTH: The name and mailing address of the Sole Incorporator is as
follows:
Name Mailing Address
---- ---------------
Perry Golkin One Battery Park Plaza
New York, New York 10004
<PAGE> 2
SIXTH: The following provisions are inserted for the management of
the business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
(1) The business and affairs of the Corporation shall be managed by
or under the direction of the Board of Directors.
(2) The directors shall have concurrent power with the stockholders
to make, alter, amend, change, add to or repeal the By-Laws of the
Corporation.
(3) The number of directors of the Corporation shall be as from time
to time fixed by, or in the manner provided in, the By-Laws of the
Corporation. Election of directors need not be by written ballot unless
the By-Laws so provide.
(4) In addition to the powers and authority hereinbefore or by
statute expressly conferred upon them, the directors are hereby empowered
to exercise all such powers and do all such acts and things as may be
exercised or done by the
-2-
<PAGE> 3
Corporation, subject, nevertheless, to the provisions of the GCL, this
Certificate of Incorporation, and any By-Laws adopted by the stockholders;
provided, however, that no By-Laws hereafter adopted by the stockholders
shall invalidate any prior act of the directors which would have been
valid if such By-Laws had not been adopted.
SEVENTH: Meetings of stockholders may be held within or without the
State of Delaware, as the By-Laws may provide. The books of the Corporation may
be kept (subject to any provision contained in the GCL) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the By-Laws of the Corporation.
EIGHTH: Whenever a compromise or arrangement is proposed between
this Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers of Section 291 of the GCL or on the
application of trustees in dissolution or of any receiver or
-3-
<PAGE> 4
receivers appointed by this Corporation under the provisions of Section 279 of
the GCL, order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case may be,
to be summoned in such manner as the said court directs. If a majority in number
representing three-fourths in value of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this Corporation, as the
case may be, agree to any compromise or arrangement and to any reorganization of
this Corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this Corporation, as the case may be, and also on this
Corporation.
NINTH: The Corporation reserves the right to amend, alter, change or
repeal any provisions contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
-4-
<PAGE> 5
I, THE UNDERSIGNED, being the Sole Incorporator hereinbefore named,
for the purpose of forming a corporation pursuant to the GCL, do make this
Certificate, hereby declaring and certifying that this is my act and deed and
the facts herein stated are true, and accordingly have hereunto set my hand this
12th day of August, 1985.
/s/ Perry Golkin
--------------------------------
Sole Incorporator
-5-
<PAGE> 6
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
* * * * *
Pursuant to Section 242 of
the General Corporation Law
of the State of Delaware
* * * * *
American Bank Note Holographics, Inc., a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware (hereinafter called the "Corporation"), DOES HEREBY CERTIFY that:
FIRST: Article Fourth of the Certificate of Incorporation of the
Corporation be, and it hereby is, amended to read as follows:
"FOURTH:
(1) The total number of shares of stock which the Corporation shall
have authority to issue is twenty million (20,000,000), of which fifteen
million (15,000,000) shares shall be Common Stock of the par value of
$0.01 per share, and five million (5,000,000) shares shall be Preferred
Stock without par value.
(2) Shares of Preferred Stock may be issued from time to time in one
or more series, each such series to have such distinctive designation or
title as may be fixed by the Board of Directors prior to the issuance of
any shares thereof. Each share of any series of
<PAGE> 7
2
Preferred Stock shall be identical with all other shares of such series,
except as to the date from which accumulated preferred dividends, if any,
shall be cumulative. Each such series shall have such voting powers, if
any, and such preferences and relative, participating, optional or other
special rights, with such qualifications, limitations or restrictions of
such preferences and/or rights as shall be stated in the resolution or
resolutions providing for the issue of such series of Preferred Stock as
may be adopted from time to time by the Board of Directors prior to the
issuance of any share thereof, in accordance with the laws of the State of
Delaware."
SECOND: Article Sixth of the Certificate of Incorporation be, and it
hereby is, amended by the addition of a new Section (5), said Section (5) to
read in its entirety as follows:
"(5) No director of the Corporation shall be personally liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director; provided, however, that the foregoing clause
shall not apply to any liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
General Corporation Law of the State of Delaware, or (iv) for any
transaction from which the director derived an improper personal benefit.
This Article shall not eliminate or limit the liability of a director for
any act or omission occurring prior to the time this Article became
effective."
THIRD: The amendment of the Certificate of Incorporation herein
certified has been duly adopted in accordance with the provisions of Sections
228 and 242 of the General Corporation Law of the State of Delaware.
<PAGE> 8
3
IN WITNESS WHEREOF, American Bank Note Holographics, Inc. has caused
this Certificate of Amendment to be signed by Salvatore F. D'Amato, its
President, and attested by Samuel E. Robinson, its Assistant Secretary, this
11th day of August, 1986.
/s/ Salvatore F. D'Amato
--------------------------------
Salvatore F. D'Amato
President
Attest:
/s/ Samuel E. Robinson
- ----------------------------------
Samuel E. Robinson
Assistant Secretary
<PAGE> 9
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
* * * * *
Pursuant to Section 242 of
the General Corporation Law
of the State of Delaware
* * * * *
American Bank Note Holographics, Inc., a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware (hereinafter called the "Corporation"), DOES HEREBY CERTIFY that:
FIRST: Article Fourth of the Certificate of Incorporation of the
Corporation be, and it hereby is, amended to read as follows:
"FOURTH: The total number of shares of stock which the
Corporation shall have authority to issue is ten thousand (10,000) shares
of Common Stock with the par value of $0.01 per share."
SECOND: The amendment of the Certificate of Incorporation herein
certified has been duly adopted in accordance with the provisions of Sections
228 and 242 of the General Corporation Law of the State of Delaware.
<PAGE> 10
IN WITNESS WHEREOF, American Bank Note Holographics, Inc. has caused
this Certificate of Amendment to be signed by Salvatore F. D'Amato, its
President, and attested by Robert F. Ivey, its Assistant Secretary, this 29th
day of June, 1988.
/s/ Salvatore F. D'Amato
--------------------------------
Salvatore F. D'Amato
President
Attest:
/s/ Robert F. Ivey
- ---------------------------------
Robert F. Ivey
Secretary
2
<PAGE> 1
EXHIBIT 3.1(f)
CERTIFICATE OF INCORPORATION
TRANSNET NETWORK PLUS, INC.
FIRST: The name of the corporation is TRANSNET NETWORK PLUS, INC.
SECOND: Its Registered Office is to be located at 1013 Centre Road,
Wilmington, Delaware 19805 in the county of New Castle. The Registered Agent in
charge thereof is W/K Corporate Services (DEL), INC.
THIRD: The purpose of the corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of Delaware.
FOURTH: The amount of the total authorized capital stock of this
corporation is Two Thousand, Five Hundred (2,500), common shares all of which
shall be without par value.
FIFTH: The name and mailing address of the incorporator is as
follows:
Lawrence A. Kirsch
90 State Street
Albany, New York 12207
I, THE UNDERSIGNED, for the purpose of forming a corporation under the laws of
the State of Delaware, do make, file and record this Certificate, and do certify
that the facts herein are true, and I have accordingly hereunto set my hand this
13th day of July, 1992.
/s/Lawrence A. Kirsch
------------------------------------
Incorporator
LAWRENCE A. KIRSCH
90 State Street
Albany, New York
<PAGE> 2
TRANSNET NETWORK PLUS, INC.
A corporation organized and existing under and by virtue of the General
Corporation Law of the State of Delaware.
DOES HEREBY CERTIFY as follows:
FIRST: That at a meeting of the Board of Directors of TRANSNET NETWORK PLUS INC.
resolutions were duly adopted setting forth a proposed amendment of the
Certificate of Incorporation of said Corporation declaring said amendment to be
advisable and calling a meeting of the stockholders of said Corporation for
consideration thereof. The resolution setting forth the proposed amendment is as
follows:
RESOLVED, That the Certificate of Incorporation of this Corporation
be amended by changing the Article thereof numbered "First" so that as
amended said Article shall be and read as follows: "The name of the
Corporation is TRANSACTION NETWORK PLUS, INC."
SECOND: That thereafter, pursuant to resolution of its Board of Directors, a
special meeting of the stockholders of said corporation was duly called and
held, upon notice in accordance with Section 228 of the General Corporation Law
of the State of Delaware at which meeting the necessary number of shares as
required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware.
FOURTH: That the capital of said corporation shall not be reduced under or by
reason of said amendment.
IN WITNESS WHEREOF, said Board of Directors and Shareholders has caused this
certificate to be signed by Howard Kesslin, its President and Judd Rothman, its
Secretary, this 26th day of August, 1992.
By /s/Howard Kesslin
----------------------------------
Attest /s/Judd Rothman
-------------------------------
Secretary
<PAGE> 3
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION
OF
TRANSACTION NETWORK PLUS, INC.
It is hereby certified that:
1. The name of the corporation (hereinafter called the "corporation") is
Transaction Network Plus, Inc.
2. The certificate of incorporation is hereby amendment as follows:
(a) By deleting Article FOURTH in its entirety and the by
substituting in lieu of said Article FOURTH the following:
"FOURTH: The aggregate number of shares of all classes of the
capital stock which the corporation shall have the authority to
issue is five million (5,000,000) of which three million (3,000,000)
shares shall be common stock, par value $.001 per share and two
million (2,000,000) shares shall be Undesignated Stock, par value
$.001 per share. Shares of Undesignated Stock may be issued from
time to time in one or more classes or one or more series, within
any class thereof, in any manner permitted by law, as determined
from time to time by the board of directors and stated in the
resolution of resolutions providing for the issuance of such shares
adopted by the board of directors pursuant to authority hereby
vested in it, each class or series to be appropriately designated,
prior to the issuance of any shares thereof, by some distinguishing
letter, number, designation or title. All shares of stock in such
classes or series may be issued for such consideration and have such
voting powers, full or limited, or no voting powers, and shall have
such designations, preferences and relative, participating, optional
or other special
<PAGE> 4
rights, and qualifications, limitations or restrictions thereof,
permitted by law, as shall be stated and expressed in the resolution
or resolutions providing for the issuance of such shares adopted by
the board of directors pursuant to authority hereby vested in it.
The number of shares of stock of any series, so set forth in such
resolution or resolutions may be increased (but not above the total
number of authorized shares) or decreased (but not below the number
of shares thereof then outstanding) by resolution or resolutions
adopted by the board of directors pursuant to authority hereby
vested in it. The board of directors of the corporation may
determine the times when, the terms under which and the
consideration for which the corporation shall issue, dispose of or
receive subscriptions for its shares, including treasury shares, or
acquire its own shares. The consideration for the issuance of the
shares shall be paid in full before their issuance and shall not be
less than the par value per share. Upon payment of such
consideration, such shares shall be deemed to be fully paid and
nonassessable by the corporation."
(b) By adding a new Article SIXTH which shall read as follows:
"SIXTH: The corporation is to have perpetual existence."
(c) By adding a new Article SEVENTH which shall read as follows:
"SEVENTH: Whenever a compromise or arrangement is proposed between
this corporation and its creditors or any class of them and/or
between this corporation and its stockholders or any class of them,
any court of equitable jurisdiction within the State of Delaware
may, on the application in a summary way of this corporation or of
any creditor or stockholder thereof or on the application of any
receiver or receivers appointed for this corporation under the
provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or
receivers appointed for this corporation under the provisions of
Section 279 of Title 8 of the Delaware Code order a meeting of the
creditors or class of creditors, and/or of the stockholders or class
of stockholders of this corporation, as the case may be, to be
summoned in such manner as the said court directs. If a majority in
number representing three fourths in
2
<PAGE> 5
value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this corporation, as the
case may be, agree to any compromise or arrangement and to any
reorganization of this corporation as consequence of such compromise
or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said
application has been made, be binding on all the creditors or class
of creditors, and/or on all the stockholders or class of
stockholders, of this corporation, as the case may be, and also on
this corporation."
(d) By adding a new Article EIGHTH which shall read as follows:
"EIGHTH: For the management of the business and for the conduct of
the affairs of the corporation, and in further definition,
limitation, and regulation of the powers of the corporation and of
its directors and of its stockholders or any class thereof, as the
case may be, it is further provided:
1. The management of the business and the conduct of the
affairs of the corporation shall be vested in its Board of
Directors. The number of directors which shall constitute the whole
Board of Directors shall be fixed by, or in the manner provided in,
the Bylaws. The phrase "whole Board" and the phrase "total number of
directors" shall be deemed to have the same meaning, to wit, the
total number of directors which the corporation would have if there
were no vacancies. No election of directors need be by written
ballot.
2. After the original or other Bylaws of the corporation have
been adopted, amended, or repeated, as the case may be, in
accordance with the provisions of Section 109 of the General
Corporation Law of the State of Delaware, and, after the corporation
has received any payment for any of its stock, the power to adopt,
amend, or repeal the Bylaws of the corporation may be exercised by
the Board of Directors of the corporation; provided, however, that
any provision for the classification of directors of the corporation
for staggered terms pursuant to the provisions of subsection (d) of
Section 141 of the General Corporation Law of the State of Delaware
shall be set forth in an initial bylaw
3
<PAGE> 6
or in a Bylaw adopted by the stockholders entitled to vote of the
corporation unless provisions for such classification shall be set
forth in this certificate of incorporation.
3. Whenever the corporation shall be authorized to issue only
one class of stock, each outstanding share shall entitle the holder
thereof to notice of, and the right to vote at, any meeting of
stockholders. Whenever the corporation shall be authorized to issue
more than one class of stock, no outstanding share of any class of
stock which is denied voting power under the provisions of the
certificate of incorporation shall entitle the holder thereof to the
right to vote at any meeting of stockholders except as the
provisions of paragraph (2) of subsection (b) of Section 242 of the
General Corporation Law of the State of Delaware shall otherwise
require; provided, that no share of any such class which is
otherwise denied voting power shall entitle the holder thereof to
vote upon the increase or decrease in the number of authorized
shares of said class."
(e) By adding a new Article NINTH which shall read as follows:
"NINTH: The personal liability of the directors of the corporation
is hereby eliminated to the fullest extent permitted by the
provisions of paragraph (7) of subsection (b) of Section 102 of the
General Corporation Law of the State of Delaware, as the same may be
amended and supplemented."
(f) By adding a new Article TENTH which shall read as follows:
"TENTH: The corporation shall, to the fullest extent permitted by
the provisions of Section 145 of the General Corporation Law of the
State of Delaware, as the same may be amended and supplemented,
indemnify any and all persons whom it shall have power to indemnify
under said section from and against any and all of the expenses,
liabilities, or other matters referred to in or covered by said
section, and the indemnification provided for herein shall not be
deemed exclusive of any other rights to which those indemnified may
be entitled under any Bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding
such office, and shall continue as to a
4
<PAGE> 7
person who has ceased to be a director, officer, employee, or agent
and shall inure to the benefit of the heirs, executors, and
administrators of such a person."
(g) By adding a new Article ELEVENTH which shall read as follows:
"ELEVENTH: From time to time any of the provisions of this
certificate of incorporation may be amended, altered, or repealed,
and other provisions authorized by the laws of the State of Delaware
at the time in force may be added or inserted in the manner and at
the time prescribed by said laws, and all rights at any time
conferred upon the stockholders of the corporation by this
certificate of incorporation are granted subject to the provisions
of this Article ELEVENTH."
3. The amendment of the certificate of incorporation herein
certified has been duly adopted in accordance within the provisions of Section
228 and 242 of the General Corporation Law of the State of Delaware.
4. The capital of the corporation will not be reduced under or by
reason of any amendment herein certified.
Executed at Edgewater, New Jersey on November 16, 1995.
Attest:
/s/ Philip S. Budin /s/ Charles B. Keil
- -------------------------------- -------------------------------
PHILIP S. BUDIN, Secretary CHARLES B. KEIL, President
5
<PAGE> 8
STATE OF NEW JERSEY :
:SS.:
COUNTY OF BERGEN :
BE IT REMEMBERED that on November 16, 1995, before me a Notary
Public duly authorized by law to take acknowledgment of deeds, personally came,
Charles B. Keil and Philip S. Budin, respectively the president and secretary of
Transaction Network Plus, Inc., and personally known by me to be such, duly
signed the foregoing Instruction before me and acknowledged that such signing is
their act and deed, and that such instrument as executed is the act and deed of
said corporation, and that the facts stated therein are true.
GIVEN under my hand on November 16, 1995
/s/ Kathleen L. Neal
--------------------------------------
Notary Public
6
<PAGE> 9
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION
OF
TRANSACTION NETWORK PLUS, INC.
It is hereby certified that:
1. The name of the corporation (hereinafter called the "corporation") is
Transaction Network Plus, Inc.
2. The certificate of incorporation is hereby amended as follows:
(a) By deleting Article FOURTH in its entirety and by substituting
in lieu of said Article FOURTH the following:
"FOURTH: The aggregate number of shares of all classes of the
capital stock which the corporation shall have the authority to
issue is ten million (10,000,000) of which six million (6,000,000)
shares shall be common stock, par value $.001 per share and four
million (4,000,000) shares shall be Undesignated Stock, par value
$.001 per share. Shares of Undesignated Stock may be issued from
time to time in one or more classes or one or more series, within
any class thereof, in any manner permitted by law, as determined
from time to time by the board of directors and stated in the
resolution or resolutions providing for the issuance of such shares
adopted by the board of directors pursuant to authority hereby
vested in it, each class or series to be appropriately designated,
prior to the issuance of any shares thereof, by some distinguishing
letter, number, designation or title. All shares of stock in such
classes or series may be issued for such consideration and have such
voting powers, full or limited, or no voting powers, and shall have
such designations, preferences and relative, participating, optional
or other special rights, and
<PAGE> 10
qualifications, limitations or restrictions thereof, permitted by
law, as shall be stated and expressed in the resolution or
resolutions providing for the issuance of such shares adopted by the
board of directors pursuant to authority hereby vested in it. The
number of shares of stock of any series, so set forth in such
resolution or resolutions may be increased (but not above the total
number of authorized shares) or decreased (but not below the number
of shares thereof then outstanding) by resolution or resolutions
adopted by the board of directors pursuant to authority hereby
vested in it. The board of directors of the corporation may
determine the times when, the terms under which and the
consideration for which the corporation shall issue, dispose of or
receive subscriptions for its shares, including treasury shares, or
acquire its own shares. The consideration for the issuance of the
shares shall be paid in full before their issuance and shall not be
less than the par value per share. Upon payment of such
consideration, such shares shall be deemed to be fully paid and
nonassessable by the corporation."
3. The amendment of the certificate of incorporation herein certified has
been duly adopted in accordance with the provisions of Section 228 and 242 of
the General Corporation Law of the State of Delaware.
4. The capital of the corporation will not be reduced under or by reason
of any amendment herein certified.
Executed at Edgewater, New Jersey on January 17, 1996.
Attest:
/s/ Philip S. Budin /s/ Charles B. Keil
- -------------------------------- --------------------------------
PHILIP S. BUDIN, Secretary CHARLES B. KEIL, President
2
<PAGE> 11
STATE OF NEW JERSEY :
:SS.:
COUNTY OF BERGEN :
BE IT REMEMBERED that on January 17, 1996, before me a Notary Public duly
authorized by law to take acknowledgment of deeds, personally came, Charles B.
Keil and Philip S. Budin, respectively the president and secretary of
Transaction Network Plus, Inc., and personally known by me to be such, duly
signed the foregoing instrument before me and acknowledged that such signing is
their act and deed, and that such instrument as executed is the act and deed of
said corporation, and that the facts stated therein are true.
GIVEN under my hand on January 17, 1996
/s/ Kathleen L. Neal
--------------------------------------
Notary Public
3
<PAGE> 12
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION
OF
TRANSACTION NETWORK PLUS, INC.
It is hereby certified that:
1. The name of the corporation (hereinafter called the "corporation") is
Transaction Network Plus, Inc.
2. The certificate of incorporation is hereby amended as follows:
(a) By deleting Article FOURTH in its entirety and by substituting
in lieu of said Article FOURTH the following:
"FOURTH: The aggregate number of shares of all classes of the
capital stock which the corporation shall have the authority to
issue is ten million (10,000,000) of which six million (6,000,000)
shares shall be common stock, par value $.001 per share and four
million (4,000,000) shares shall be Class A Stock, par value $.001
per share. Shares of Class A Stock may be issued from time to time
in one or more series, in any manner permitted by law, as determined
from time to time by the board of directors and stated in the
resolution or resolutions providing for the issuance of such shares
adopted by the board of directors pursuant to authority hereby
vested in it, each series to be appropriately designated, prior to
the issuance of any shares thereof, by some distinguishing letter,
number, designation or title. All shares of stock in such series may
be issued for such consideration and have such voting powers, full
or limited, or no voting powers, and shall have such designations,
preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions thereof,
permitted by
<PAGE> 13
law, as shall be stated and expressed in the resolution or
resolutions providing for the issuance of such shares adopted by the
board of directors pursuant to authority hereby vested in it. The
number of shares of stock of any series, so set forth in such
resolution or resolutions may be increased (but not above the total
number of authorized shares) or decreased (but not below the number
of shares thereof then outstanding) by resolution or resolutions
adopted by the board of directors pursuant to authority hereby
vested in it. The board of directors of the corporation may
determine the times when, the terms under which and the
consideration for which the corporation shall issue, dispose of or
receive subscriptions for its shares, including treasury shares, or
acquire its own shares. The consideration for the issuance of the
shares shall be paid in full before their issuance and shall not be
less than the par value per share. Upon payment of such
consideration, such shares shall be deemed to be fully paid and
nonassessable by the corporation."
3. The amendment of the certificate of incorporation herein certified has
been duly adopted in accordance with the provisions of Section 228 and 242 of
the General Corporation Law of the State of Delaware.
4. The capital of the corporation will not be reduced under or by reason
of any amendment herein certified.
Executed at Edgewater, New Jersey on January 30, 1996.
Attest:
/s/ Philip S. Budin /s/ Charles B. Keil
- --------------------------------- --------------------------------
PHILIP S. BUDIN, Secretary CHARLES B. KEIL, President
2
<PAGE> 14
STATE OF NEW JERSEY :
:SS.:
COUNTY OF BERGEN :
BE IT REMEMBERED that on January 30, 1996, before me a Notary Public duly
authorized by law to take acknowledgment of deeds, personally came, Charles B.
Keil and Philip S. Budin, respectively the president and secretary of
Transaction Network Plus, Inc., and personally known by me to be such, duly
signed the foregoing instrument before me and acknowledged that such signing is
their act and deed, and that such instrument as executed is the act and deed of
said corporation, and that the facts stated therein are true.
GIVEN under my hand on January 30, 1996
/s/ Kathleen L. Neal
--------------------------------------
Notary Public
3
<PAGE> 15
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
TRANSACTION NETWORK PLUS, INC.
-------------------------------
ADOPTED IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 242 OF THE
DELAWARE GENERAL CORPORATION LAW
--------------------------------
It is hereby certified that:
1. The present name of the corporation (the "Corporation") is
TRANSACTION NETWORK PLUS, INC.
2. The Certificate of Incorporation of the Corporation was filed
with the Secretary of State of Delaware on July 13, 1992.
3. Article FIRST of the Certificate of Incorporation of the
Corporation is hereby amended to read in its entirety as follows:
FIRST: The name of this corporation (hereinafter called the
"Corporation") is AMERICAN BANKNOTE CARD SERVICES, INC.
4. The foregoing amendment was declared advisable by the directors
of the Corporation pursuant to a resolution duly adopting the amendment as of
July 29, 1997, and
<PAGE> 16
was duly adopted in accordance with the provisions of Section 242 of the
Delaware General Corporation Law by the affirmative vote of the stockholders of
the Corporation.
5. The foregoing amendment is to become effective immediately.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to
be signed by John T. Gorman, its Executive Vice President, and Harvey J. Kesner,
its Secretary, this 30th day of July 1997.
TRANSACTION NETWORK PLUS, INC.
By: /s/ John T. Gorman
-----------------------------------------
John T. Gorman
Executive Vice President
Attest:
/s/ Harvey J. Kesner
- --------------------------------
Harvey J. Kesner
Secretary
2
<PAGE> 1
Exhibit 3.1(g)
CERTIFICATE OF INCORPORATION
OF
AMERICAN BANKNOTE MERCHANT SERVICES, INC.
FIRST: The name of the corporation is AMERICAN BANKNOTE MERCHANT SERVICES, INC.
SECOND: The address of its registered office in the State of Delaware and the
name of the registered agent at such address is The Prentice-Hall Corporation
System, Inc., 1013 Centre Road, Wilmington, Delaware 19805, City of Wilmington,
County of New Castle.
THIRD: The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
FOURTH: The total number of shares of common stock which the corporation shall
have authority to issue is Three Thousand (3,000), each with a par value of
$.01 per share.
FIFTH: The name and mailing address of the Sole Incorporator is Naina L.
Prasad, 200 Park Avenue, 49th Floor, New York, NY 10166.
SIXTH: No director shall be personally liable to the corporation or any of its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to
the corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) pursuant to Section 174 of the Delaware General Corporation Law or
(iv) for any transaction from which the director derived an improper personal
benefit. Any repeal or modification of this Article Sixth by the stockholders
of the corporation shall not adversely affect any right or protection of a
director of the corporation existing at the time of such repeal or modification
with respect to acts or omissions occurring prior to such repeal or
modification.
<PAGE> 2
I, being the sole incorporator hereinbefore named, hereby sign this certificate
for the purpose of forming a corporation pursuant to the General Corporation
Law of the State of Delaware this 15th day of July, 1997.
/s/ Naina L. Prasad
------------------------------------
Naina L. Prasad, Sole Incorporator
2
<PAGE> 1
EXHIBIT 3.1(h)
CERTIFICATE OF INCORPORATION
OF
ABN INVESTMENTS INC.
(PURSUANT TO SECTION 102
OF THE DELAWARE GENERAL CORPORATION LAW)
THE UNDERSIGNED, in order to form a corporation for the
purposes hereinafter stated, under and pursuant to the provisions of the General
Corporation Law of the State of Delaware, does hereby certify as follows:
FIRST: The name of the Corporation is ABN Investments Inc.
SECOND: The address of its registered office in the State of
Delaware is c/o Corporation Trust Center, 1209 Orange Street, Wilmington,
Delaware 19801, county of New Castle. The name of its registered agent at such
address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any
lawful act or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
<PAGE> 2
-2-
FOURTH: The total number of shares which the Corporation is
authorized to issue is 10 shares of Common Stock all of which are to have a par
value of one dollar ($1.00) per share.
FIFTH: The name and mailing address of the sole incorporator
are:
Ross Kaufman, Esq.
Coudert Brothers
1114 Avenue of the Americas
New York, New York 10036-7794
SIXTH: For the management of the business and for the conduct
of the affairs of the Corporation, and in further definition, limitation and
regulation of the powers of the Corporation, its directors and its stockholders,
it is further provided that (a) the Board of Directors of the Corporation is
expressly authorized and empowered to adopt, amend or repeal by-laws subject to
the power of the stockholders to amend or repeal by-laws made by the Board of
Directors and (b) elections of directors of the Corporation need not be by
written ballot.
SEVENTH: To the full extent permitted by law, the Corporation
shall (a) indemnify any person or such person's heirs, distributees, next of
kin, successors, appointees, executors, administrators, legal representatives or
assigns who was or is a party or is threatened to be made a party to any
threatened, pending or completed
<PAGE> 3
-3-
action, suit or proceeding, whether civil, criminal, administrative or
investigative by reason of the fact that such person is or was a director,
officer, employee or agent of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, domestic or
foreign, against expenses, attorneys' fees, court costs, judgments, fines,
amounts paid in settlement and other losses actually and reasonably incurred by
such person in connection with such action, suit or proceeding and (b) advance
expenses incurred by an officer or director in defending such civil or criminal
action, suit or proceeding to the full extent authorized or permitted by the
laws of the State of Delaware upon receipt of an undertaking by or on behalf of
such director or officer to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the Corporation as
authorized by Section 145 of the Delaware General Corporation Law.
EIGHTH: A director shall have no personal liability to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director; provided, however, that the foregoing provision shall not
eliminate the liability of a director (i) for any breach of the director's duty
of loyalty to the Corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) for any transaction from which the
<PAGE> 4
-4-
director derived an improper personal benefit or (iv) under Section 174 of the
General Corporation Law of the State of Delaware.
NINTH: Whenever a compromise or arrangement is proposed
between this Corporation and its creditors or any class of them and/or between
this Corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application in a
summary way of this Corporation or of any creditor or stockholder thereof or on
the application of any receiver or receivers appointed for this Corporation
under the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all
<PAGE> 5
-5-
the creditors or class of creditors, and/or on all the stockholders or class of
stockholders, as the case may be, and also on this Corporation.
TENTH: The Corporation reserves the right to amend, alter,
change or repeal any provision contained in this Certificate of Incorporation in
the manner now or hereafter prescribed by law, and all rights and powers
conferred herein on stockholders, directors, officers or others are subject to
this reserved power.
IN WITNESS WHEREOF, I have hereunto set my hand this 16th day
of June, 1993.
/s/ Ross Kaufman
-----------------------------
Ross Kaufman
Incorporator
<PAGE> 1
EXHIBIT 3.1(i)
CERTIFICATE OF INCORPORATION
OF
ABN EQUITIES INC.
(PURSUANT TO SECTION 102
OF THE DELAWARE GENERAL CORPORATION LAW)
THE UNDERSIGNED, in order to form a corporation for the
purposes hereinafter stated, under and pursuant to the provisions of the General
Corporation Law of the State of Delaware, does hereby certify as follows:
FIRST: The name of the Corporation is ABN Equities Inc.
SECOND: The address of its registered office in the State of
Delaware is c/o Corporation Trust Center, 1209 Orange Street, Wilmington,
Delaware 19801, county of New Castle. The name of its registered agent at such
address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any
lawful act or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
<PAGE> 2
-2-
FOURTH: The total number of shares which the Corporation is
authorized to issue is 10 shares of Common Stock all of which are to have a par
value of one dollar ($1.00) per share.
FIFTH: The name and mailing address of the sole incorporator
are:
Ross Kaufman, Esq.
Coudert Brothers
1114 Avenue of the Americas
New York, New York 10036-7794
SIXTH: For the management of the business and for the conduct
of the affairs of the Corporation, and in further definition, limitation and
regulation of the powers of the Corporation, its directors and its stockholders,
it is further provided that (a) the Board of Directors of the Corporation is
expressly authorized and empowered to adopt, amend or repeal by-laws subject to
the power of the stockholders to amend or repeal by-laws made by the Board of
Directors and (b) elections of directors of the Corporation need not be by
written ballot.
SEVENTH: To the full extent permitted by law, the Corporation
shall (a) indemnify any person or such person's heirs, distributees, next of
kin, successors, appointees, executors, administrators, legal representatives or
assigns who was or is a party
<PAGE> 3
-3-
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative by reason of the fact that such person is or was a director,
officer, employee or agent of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, domestic or
foreign, against expenses, attorneys' fees, court costs, judgments, fines,
amounts paid in settlement and other losses actually and reasonably incurred by
such person in connection with such action, suit or proceeding and (b) advance
expenses incurred by an officer or director in defending such civil or criminal
action, suit or proceeding to the full extent authorized or permitted by the
laws of the State of Delaware upon receipt of an undertaking by or on behalf of
such director or officer to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the Corporation as
authorized by Section 145 of the Delaware General Corporation Law.
EIGHTH: A director shall have no personal liability to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director; provided, however, that the foregoing provision shall not
eliminate the liability of a director (i) for any breach of the director's duty
of loyalty to the Corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
<PAGE> 4
-4-
of law, (iii) for any transaction from which the director derived an improper
personal benefit or (iv) under Section 174 of the General Corporation Law of the
State of Delaware.
NINTH: Whenever a compromise or arrangement is proposed
between this Corporation and its creditors or any class of them and/or between
this Corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application in a
summary way of this Corporation or of any creditor or Corporation under the
provisions of Section 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for this
Corporation under the provisions of Section 279 of Title 8 of the Delaware Code
order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case may be,
to be summoned in such manner as the said court directs. If a majority in number
representing three-fourths in value of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this Corporation, as the
case may be, agree to any compromise or arrangement and to any reorganization of
this Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, as the case may be, and also on this Corporation.
<PAGE> 5
-5-
TENTH: The Corporation reserves the right to amend, alter,
change or repeal any provision contained in this Certificate of Incorporation in
the manner now or hereafter prescribed by law, and all rights and powers
conferred herein on stockholders, directors, officers or others are subject to
this reserved power.
IN WITNESS WHEREOF, I have hereunto set my hand this 16th day
of June, 1993.
/s/ Ross Kaufman
---------------------------
Ross Kaufman
Incorporator
<PAGE> 1
EXHIBIT 3.1(j)
CERTIFICATE OF INCORPORATION
OF
AMERICAN BANKNOTE AUSTRALASIA HOLDINGS, INC.
FIRST: The name of the corporation is AMERICAN BANKNOTE AUSTRALASIA HOLDINGS,
INC.
SECOND: The address of its registered office in the State of Delaware and the
name of the registered agent at such address is National Corporate Research,
Ltd., 9 East Loockerman Street, Dover, DE 19901, City of Dover, County of Kent.
THIRD: The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
FOURTH: The total number of shares of common stock which the corporation shall
have authority to issue is One Thousand (1,000), each with a par value of One
Dollar ($1.00).
FIFTH: The name and mailing address of the Sole Incorporator is Fran Wagner,
National Corporate Research, Ltd., 225 West 34th Street, New York, New York
10122-0032.
SIXTH: No director shall be personally liable to the corporation or any of its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
pursuant to Section 174 of the Delaware General Corporation Law or (iv) for any
transaction from which the director derived an improper personal benefit. Any
repeal or modification of this Article Sixth by the stockholders of the
corporation shall not adversely affect any right or protection of a director of
the corporation existing at the time of such repeal or modification with respect
to acts or omissions occurring prior to such repeal or modification.
I, being the sole incorporator hereinbefore named, hereby sign this certificate
for the purpose of forming a corporation pursuant to the General Corporation Law
of the State of Delaware this 15th day of February, 1996.
/s/ Fran Wagner
----------------------------------
Fran Wagner, Sole Incorporator
<PAGE> 1
EXHIBIT 3.1(k)
CERTIFICATE OF INCORPORATION
OF
ABN GOVERNMENT SERVICES, INC.
FIRST: The name of the corporation is ABN GOVERNMENT SERVICES, INC.
SECOND: The address of its registered office in the State of Delaware and the
name of the registered agent at such address is National Corporate Research,
Ltd., 9 East Loockerman Street, Dover, DE 19901, City of Dover, County of Kent.
THIRD: The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
FOURTH: The total number of shares of stock which the corporation shall have
authority to issue is Three Thousand (3,000) common each with a par value of
$.01 per share.
FIFTH: The name and mailing address of the Sole Incorporator is Fran Wagner,
National Corporate Research, Ltd., 225 West 34th Street, New York, New York
10122-0032.
SIXTH: No director shall be personally liable to the corporation or any of its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
pursuant to Section 174 of the Delaware General Corporation Law or (iv) for any
transaction from which the director derived an improper personal benefit. Any
repeal or modification of this Article Sixth by the stockholders of the
corporation shall not adversely affect any right or protection of a director of
the corporation existing at the time of such repeal or modification with respect
to acts or omissions occurring prior to such repeal or modification.
I, being the sole incorporator hereinbefore named, hereby sign this certificate
for the purpose of forming a corporation pursuant to the General Corporation Law
of the State of Delaware this 8th day of August, 1995.
/s/ Fran Wagner
----------------------------------
Fran Wagner, Sole Incorporator
<PAGE> 1
EXHIBIT 3.1(l)
CERTIFICATE OF INCORPORATION
OF
USBC CAPITAL CORP.
The undersigned, a natural person, for the purpose of
organizing a corporation for conducting the business and promoting the purposes
hereinafter stated, under the provisions and subject to the requirements of the
laws of the State of Delaware (particularly Chapter 1, Title 8 of the Delaware
Code and the acts amendatory thereof and supplemental thereto, and known,
identified and referred to as the "General Corporation Law of the State of
Delaware") hereby certifies that:
FIRST: The name of this Corporation (hereinafter call the
"Corporation") is USBC Capital Corp.
SECOND: The address, including street, number, city and
county, of the registered office of the Corporation in the State of Delaware is
National Corporate Research, Ltd., 9 East Loockerman St., City of Dover, County
of Kent, Delaware, 19901; and the name of the registered agent of the
Corporation in the State of Delaware at such address is National Corporate
Research, Ltd.
THIRD: The nature of the business and of the purposes to be
conducted and promoted by the Corporation are
<PAGE> 2
to conduct any lawful business, to promote any lawful purpose, and to engage in
any lawful act or activity for which corporations may be organized under the
General Corporation Law of the State of Delaware.
FOURTH: The total number of shares of stock which the
Corporation shall have authority to issue is three thousand (3,000) shares, all
of which are of a par value of $0.01 per share each, and all of which are of one
class and are designated as Common Stock.
FIFTH: The name and mailing address of the incorporator are as
follows: Harvey J. Kesner, 51 West 52nd Street, New York, NY 10019, c/o United
States Banknote Corporation.
SIXTH: Whenever a compromise or arrangement is proposed
between this Corporation and its creditors or any class of them and/or between
this Corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application in a
summary way of this Corporation or any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation
2
<PAGE> 3
under the provisions of Section 279 of Title 8 of the Delaware Code order a
meeting of the creditors of class of creditors, and/or of the stockholders or
class of stockholders, of this Corporation, as the case may be, to be summoned
in such manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholder, of this Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this Corporation, as the case may be, and also on this
Corporation.
SEVENTH: The original By-Laws of the Corporation shall be
adopted by the incorporator. Thereafter, the power to make, alter, or repeal the
By-Laws, and to adopt any new By-Law, shall be vested in the Board of Directors.
EIGHTH: To the fullest extent that the General Corporation Law
of the State of Delaware, as it exists on the date hereof or as it may hereafter
be amended, permits
3
<PAGE> 4
the limitation or elimination of the liability of directors, no director of this
Corporation shall be personally liable to this Corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director. Notwithstanding
the foregoing, a director shall be liable to the extent provided by applicable
law (1) for any breach of the directors' duty of loyalty to the Corporation or
its stockholders, (2) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (3) under section 174 of
the General Corporation Law of the State of Delaware, (4) for any transaction
from which the director derived any improper personal benefit. Neither the
amendment or repeal of this Article, nor the adoption of any provision of this
Certificate of Incorporation inconsistent with this Article shall adversely
affect any right or protection of a director of the Corporation existing at the
time of such amendment or repeal.
NINTH: The Corporation shall, to the fullest extent permitted
by Section 145 of the General Corporation Law of the State of Delaware, as the
same may be amended and supplemented, or by any successor thereto, indemnify any
and all persons whom it shall have power to indemnify under said section from
and against any and all of the expenses, liabilities or other matters referred
to in or covered by
4
<PAGE> 5
said section. The Corporation shall advance expenses to the fullest extent
permitted by said section. Such right to indemnification and advancement of
expenses shall continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person. The indemnification and advancement of expenses
provided for herein shall not be deemed exclusive of any other rights to which
those seeking indemnification or advancement of expenses may be entitled under
any By-Law, agreement, vote of stockholders or disinterested directors or
otherwise.
Executed at New York, New York on June 27, 1994.
/s/ Harvey J. Kesner
---------------------
Harvey J. Kesner,
Incorporator
5
<PAGE> 1
EXHIBIT 3.1(m)
CERTIFICATE OF INCORPORATION
OF
ABN CBA, INC.
FIRST: The name of the corporation is ABN CBA, INC.
SECOND: The address of its registered office in the State of Delaware and the
name of the registered agent at such address is Corporation Trust Center, 1209
Orange Street, Wilmington, Delaware 19801, City of Wilmington, County of New
Castle.
THIRD: The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
FOURTH: The total number of shares of common stock which the corporation shall
have authority to issue is Three Thousand (3,000), each with a par value of $.01
per share.
FIFTH: The name and mailing address of the Sole Incorporator is Naina L. Prasad,
200 Park Avenue, 49th Floor, New York, NY 10166.
SIXTH: No director shall be personally liable to the corporation or any of its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
pursuant to Section 174 of the Delaware General Corporation Law or (iv) for any
transaction from which the director derived an improper personal benefit. Any
repeal or modification of this Article Sixth by the stockholders of the
corporation shall not adversely affect any right or protection of a director of
the corporation existing at the time of such repeal or modification with respect
to acts or omissions occurring prior to such repeal or modification.
I, being the sole incorporator hereinbefore named, hereby sign this certificate
for the purpose of forming a corporation pursuant to the General Corporation Law
of the State of Delaware this 8th day of December, 1997.
/s/ Naina L. Prasad
----------------------------------
Naina L. Prasad, Sole Incorporator
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Exhibit 3.2(b)
BY-LAWS
OF
AMERICAN BANK NOTE COMPANY
Incorporated under the laws of the State of New York -- December 27, 1972
As amended through October 23, 1985
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BY-LAWS
OF
AMERICAN BANK NOTE COMPANY
(a New York Corporation)
ARTICLE I.
MEETINGS.
SECTION 1. ANNUAL MEETING. An annual meeting of the stockholders of record
having the right to vote shall be held at the office of the Company in The City
of New York on the fourth Tuesday in April in each year (or if said day be a
legal holiday, then on the next succeeding day not a legal holiday), at eleven
o'clock in the forenoon, for the purpose of electing directors and transacting
such other business as may properly be brought before the meeting.
SECTION 2. SPECIAL MEETINGS. Special meetings of the stockholders may be held at
the office of the Company in The City of New York upon order of the Board of
Directors or upon call of the holders of record of a majority of shares having
the right to vote or of the holders of record of shares entitled to a majority
of votes which could at the time be cast by the stock as a whole, at such time
and for such lawful purposes as may be specified by the Board of Directors or
such stockholders, as the case may be, and duly notified to the stockholder.
SECTION 3. NOTICE OF MEETINGS. Notice of each meeting of stockholders shall be
in writing and shall state the place, date and hour of the meeting and the
purpose or purposes for which the meeting is called. In the case of special
meetings, the notice shall also state that it is being issued by or at the
direction of the person or persons calling the meeting.
If, at any meeting, action is proposed to be taken which would, if taken,
entitle stockholders fulfilling the requirements of Section 623 of the Business
Corporation Law to receive payment for their shares, the notice shall include a
statement of that purpose and to that effect.
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A copy of the notice of any meeting shall be given, personally or by mail,
not less than ten or more than fifty days before the date of the meeting, to
each stockholder entitled to vote at such meeting. If mailed, such notice is
given when deposited in the United States mail, with postage thereon prepaid,
directed to the stockholder at his address as it appears on the record of
stockholders, or, if he shall have filed with the Secretary of the Company a
written request that notices to him be mailed to some other address, then
directed to him at such other address.
When a meeting is adjourned to another time or place, it shall not be
necessary to give any notice of the adjourned meeting if the time and place to
which the meeting is adjourned are announced at the meeting at which the
adjournment is taken, and at the adjourned meeting any business may be
transacted that might have been transacted on the original date of the meeting.
However, if after the adjournment the Board of Directors fixes a new record date
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record on a new record date entitled to notice under the
preceding paragraphs of this Section.
Notice of meeting need not be given to any stockholder who submits a signed
waiver of notice, in person or by proxy, whether before or after the meeting.
The attendance of any stockholder at a meeting, in person or by proxy, without
protesting prior to the conclusion of the meeting the lack of notice of such
meeting, shall constitute a waiver of notice by him.
SECTION 4. QUORUM. At every meeting of the stockholders the number of
shares present in person or by proxy necessary to constitute a quorum shall be
either a majority of such shares or the shares entitled to a majority of the
votes which could at the time be cast by the stock as a whole; provided that
when a specified item of business is required to be voted on by a class or
series of stock, voting as a class, the holders of a majority of shares of such
class or series shall constitute a quorum for the transaction of such specified
item or business.
When a quorum is once present to organize a meeting, it is not broken by
the subsequent withdrawal of any stockholders.
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The stockholders present, in person or by proxy, and entitled to vote may,
by a majority of votes cast, adjourn the meeting despite the absence of a
quorum.
SECTION 5. Inspectors of Election. The Board of Directors, in advance of any
stockholders' meeting, may appoint one or more inspectors to act at the meeting
or any adjournment thereof. If inspectors are not so appointed, the person
presiding at a shareholders' meeting may, and on the request of any stockholder
entitled to vote thereat shall, appoint two inspectors. In case any person
appointed fails to appear or act, the vacancy may be filled by appointment made
by the Board in advance of the meeting or at the meeting by the person
presiding thereat. Each inspector, before entering upon the discharge of his
duties, shall take and sign an oath faithfully to execute the duties of
inspector at such meeting with strict impartiality and according to the best of
his ability.
The inspectors shall determine the number of shares outstanding and the
voting power of each, the shares represented at the meeting, the existence of a
quorum, and the validity and effect of proxies, and shall receive votes,
ballots, or consents, hear and determine all challenges and questions arising
in connection with the right to vote, count and tabulate all votes, ballots or
consents, determine the result, and do such acts as are proper to conduct the
election or vote with fairness to all stockholders. On request of the person
presiding at the meeting or any stockholder entitled to vote thereat, the
inspectors shall make a report in writing of any challenge, question or matter
determined by them and execute a certificate of any fact found by them. Any
report or certificate made by them shall be prima facie evidence of the facts
stated and of the vote as certified by them.
SECTION 6. Fixing Record Date. For the purpose of determining the stockholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or to express consent to or dissent from any proposal
without a meeting, or for the purpose of determining stockholders entitled to
receive payment of any dividend or the allotment of any rights, or for the
purpose of any other action, the Board of Directors may fix, in advance, a date
as the record date for any such determination of stockholders. Such date shall
not be more than fifty or less than ten days before the date of such meeting,
nor more than fifty days prior to any other action.
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When a determination of stockholders of record entitled to notice of or to
vote at any meeting of stockholders has been made as provided in this section,
such determination shall apply to any adjournment thereof, unless the Board of
Directors fixes a new record date for the adjourned meeting.
SECTION 7. List of stockholders at meetings. A list of stockholders as of the
record date, certified by the Secretary or any Assistant Secretary or by a
transfer agent, if any, shall be produced at any meeting of stockholders upon
the request thereat or prior thereto of any stockholder. If the right to vote
at any meeting is challenged, the inspectors of election, or person presiding
thereat, shall require such list of stockholders to be produced as evidence of
the right of the persons challenged to vote at such meeting, and all persons
who appear from such list to be stockholders entitled to vote thereat may vote
at such meetings.
SECTION 8. Shares Not Entitled to Vote. Treasury shares as of the record date
and shares held as of the record date by another domestic or foreign
corporation of any type or kind, if a majority of the shares entitled to vote
in the election of directors of such other corporation is held as of the record
date by the Company, shall not be shares entitled to vote or to be counted in
determining the total number of outstanding shares.
SECTION 9. Proxies. Every stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent without a meeting may authorize
another person or persons to act for him by proxy.
Every proxy must be signed by the stockholder or his attorney-in-fact. No
proxy shall be valid after the expiration of eleven months from the date
thereof unless otherwise provided in the proxy. Every proxy shall be revocable
at the pleasure of the stockholder executing it, except as otherwise provided
by law.
The authority of the holder of a proxy to act shall not be revoked by the
incompetency or death of the stockholder who executed the proxy unless, before
the authority is exercised, written notice of an adjudication of such
incompetency or of such death is received by the Secretary or any Assistant
Secretary.
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SECTION 10. Vote or Consent of Shareholders. Directors shall, except as
otherwise required by law, be elected by a plurality of the votes cast at a
meeting of stockholders by the holders of shares entitled to vote in the
election.
Whenever any corporation action, other than the election of directors, is
to be taken by vote of the stockholders, it shall, except as otherwise required
by law, be authorized by a majority of the votes cast at a meeting of
stockholders by the holders of shares entitled to vote thereon.
Whenever stockholders are required or permitted to take any action by
vote, such action may be taken without a meeting on written consent, setting
forth the action so taken, signed by the holders of all outstanding shares
entitled to vote thereon. Written consent thus given by the holders of all
outstanding shares entitled to vote shall have the same effect as a unanimous
vote of stockholder.
ARTICLE II.
Board of Directors.
SECTION 1. Number and Qualifications. The number of directors within the
maximum and minimum limits provided for in the Certificate of Incorporation may
be fixed and changed from time to time by the stockholders or by the Board of
Directors.
SECTION 2. Meetings of the Board. An annual meeting of the Board of Directors
shall be held in each year as soon as convenient after the annual meeting of
stockholders. Regular meetings of the Board shall be held at such times as may
from time to time be fixed by resolution of the Board. Special meetings of the
Board may be held at any time upon the call of the Chairman of the Board, the
President, the Executive Committee or any two directors.
Meetings of the Board of Directors shall be held at such place, within or
without the State of New York, as from time to time may be fixed by resolution
of the Board of annual and regular meetings and in the notice of meeting for
special meetings. If no place is so fixed, meetings of the Board shall be held
at the office of the Company in The City of New York.
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No notice need be given of regular meetings of the Board of Directors or
of any annual meeting which is held at a time fixed for a regular meeting.
Notice of other meetings of the Board shall be given by oral, telegraphic or
written notice, duly given or sent or mailed to each director not less than
forty-eight hours before the meeting in the case of a mailed notice or
twenty-four hours before the meeting in the case of a notice given orally, by
telegraph or by personal delivery.
Notice of a meeting of the Board of Directors need not be given to any
director who submits a signed waiver of notice whether before or after the
meeting, or who attends the meeting without protesting, prior thereto or at its
commencement, the lack of notice to him.
A notice, or waiver of notice, need not specify the purpose of any meeting
of the Board of Directors.
A majority of the directors present, whether or not a quorum is present,
may adjourn any meeting to another time and place. Notice of any adjournment of
a meeting to another time or place shall be given, in the manner described
above, to the directors who were not present at the time of the adjournment
and, unless such time and place are announced at the meeting, to the other
directors.
SECTION 3. QUORUM. At meetings of the Board of Directors, the attendance of not
less than one-third of the total number of directors shall be necessary and
sufficient to constitute a quorum for the transaction of business. The vote of
a majority of the directors present at the time of such vote, if a quorum is
then present, shall be the act of the Board.
SECTION 4. RESIGNATIONS. Any director may resign at any time by giving written
notice to the Board of Directors or to the Chairman of the Board, the President
or the Secretary. Such resignation shall take effect at the time specified
therein; and unless otherwise specified therein the acceptance of such
resignation shall not be necessary to make it effective.
SECTION 5. TERM OF OFFICE AND VACANCIES. The term of office of all directors
shall be until the next annual election of directors by the stockholders, or
the earlier vacating of their office. Vacancies in the Board of Directors, and
newly created directorships resulting from an increase in the number of
directors, may be filled by the Board by a vote of
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a majority of the directors then in office, although less than a quorum exists.
SECTION 6. COMPENSATION AND INDEMNIFICATION. Each director shall be entitled to
a reasonable fee for attendance at meetings of the Board of Directors and of
committees thereof. To the full extent authorized by law, the Company shall
indemnify any person made, or threatened to be made, a party to any action or
proceeding, whether criminal or civil, by reason of the fact that he, his
testator or intestate is or was a director or officer of the Company or, at the
request of the Company, serves or served any other corporation in any capacity.
ARTICLE III.
Officers.
SECTION 1. OFFICERS AND AGENTS. Officers of the Company to be elected by the
Board of Directors shall consist of a Chairman of the Board, a Deputy Chairman
of the Board, a President, a Vice-Chairman for the Board, a First
Vice-President, a Comptroller, a Secretary and a Treasurer. The Board may,
however, allow one or more of such offices to remain vacant if, in the
judgement of the Board this is consistent with the proper transaction of the
Company's business. The Board may elect from time to time one or more other
Vice-Presidents and from time to time may appoint such Assistant Comptroller,
Assistant Secretaries, Assistant Treasurers and other officers, agents and
employees as it may deem proper. The Chairman of the Board, the Deputy Chairman
of the Board, the President and the Vice-Chairman of the Board shall be elected
by the directors from their number. The same person may hold two or more
offices, except that the President shall not hold the office of Secretary and
neither the Comptroller nor any Assistant Comptroller shall hold the office of
Treasurer or Assistant Treasurer.
SECTION 2. TERM OF OFFICE. The term of office of all officers elected or
appointed by the Board of Directors shall be until the election of officers at
the next annual meeting of the Board unless some shorter term is specified at
the time of the election or appointment; but the Board may remove any such
officer at pleasure.
The Board may at any time fill vacancies occurring in the offices of the
Company.
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SECTION 3. POWERS AND DUTIES OF THE CHAIRMAN OF THE BOARD. The Chairman of the
Board shall be ex officio a member of the Executive Committee and, if present,
shall preside at all meetings of stockholders, of the Board and of the
Executive Committee. He shall be the chief executive officer of the Company and
shall have such powers and duties as are usually incident to the position of
chief executive officer of a corporation, as well as such other powers and
duties as the Board of Directors may from time to time prescribe.
SECTION 4. POWERS AND DUTIES OF THE DEPUTY CHAIRMAN OF THE BOARD. The Deputy
Chairman of the Board shall have authority to sign, on behalf of the Company,
contracts, deeds, mortgages, bonds, notes, and other instruments, in the manner
and forms customary for other officers of the Company and subject to the
limitations and restrictions customarily applicable to the authority of such
other officers. In addition, the Deputy Chairman of the Board shall perform
such other duties as may be delegated to him from time to time by the Chairman
of the Board or by the Board of Directors.
SECTION 5. POWERS AND DUTIES OF THE PRESIDENT. The President shall be ex
officio a member of the Executive Committee. In the absence or disability of
the Chairman of the Board, the President shall preside at all meetings of
stockholders, of the Board and of the Executive Committee. Under the direction
of the Chairman of the Board, the President shall have general control and
management of the business and affairs of the Company. The President shall also
have such other powers and duties as may be assigned to him by the Chairman of
the Board or by the Board of Directors.
SECTION 6. POWERS AND DUTIES OF THE VICE-CHAIRMAN OF THE BOARD. The
Vice-Chairman of the Board shall act in an advisory and consultative capacity
to the Board of Directors and the President, subject to the control of the
Board, and shall perform such other duties as the Board may from time to time
prescribe.
SECTION 7. POWERS AND DUTIES OF OTHER OFFICERS. The other officers, agents and
employees of the Company shall each have such powers and duties in the
management of the property and affairs of the Company, subject to the control
of the Board of Directors, as generally pertain to their respective offices, as
well as such powers and duties as from time to time may be prescribed by the
Board of Directors. Securities of other corporations held by the Company may be
voted by any
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officer designated by the Board and, in the absence of any such designation,
by the Chairman of the Board, the President, any Vice-President, the Secretary
or the Treasurer. The Board may require any officer, agent or employee to give
security for the faithful performance of his duties.
ARTICLE IV.
COMMITTEES.
SECTION 1. EXECUTIVE COMMITTEE. The Board of Directors, by resolution adopted
by a majority of the entire Board, may designate an Executive Committee to
consist of the Chairman of the Board, the President and not less than three and
not more than six other Directors. The Executive Committee shall have and may
exercise, when the Board is not in session, so far as may be permitted by law,
all of the powers of the Board in the management of the business and affairs of
the Company; but the Executive Committee shall not have the power to (i) fill
vacancies in the Board, (ii) change the membership of, or to fill vacancies in,
the Executive Committee or any other committee, (iii) declare dividends on the
Common Stock except at rates theretofore established by action of the Board,
(iv) make, amend or repeal by-laws of the Company, (v) provide for the
submission to stockholders of any proposed action as to which stockholders'
authorization is required by law, (vi) fix the compensation of directors for
serving on the Board or on any committee, or (vii) amend or repeal any
resolution of the Board which by its terms shall not be amendable or repealable.
SECTION 2. OTHER COMMITTEES. The Board of Directors, in its discretion, may, by
resolution adopted by a majority of the entire Board, designate other
committees which shall and may exercise such delegable powers as shall be
conferred or authorized by the resolution designating them, but no such
committee may take any action which the Executive Committee is prohibited from
taking by reason of the restrictions contained in Section 1 of this Article IV.
SECTION 3. COMMITTEE PROCEDURE. Each Committee may make rules for the conduct
of its business. Unless a greater proportion is required by the resolution of
the Board of Directors designating such committee, one-half of the entire
authorized number of members of a committee shall constitute a quorum for the
transaction of business, and the vote of a
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majority of the members present at the time of such vote, if a quorum is
present at such time, shall be the act of such committee. Each committee shall
serve at the pleasure of the Board of Directors, and the Board shall have power
at any time to fill vacancies in, or to change, the membership of any
committee. The Board of Directors may designate one or more directors as
alternate members of any committee, and such alternate members may replace any
absent member or members at any meeting of such committee.
ARTICLE V.
CAPITAL STOCK.
SECTION 1. FORM OF STOCK CERTIFICATES. The interest of each stockholder shall
be evidenced by a certificate or certificates for shares of stock of the
Company in such form as the Board of Directors may from time to time prescribe.
Each such certificate shall contain the statements required by law. The
certificates of stock shall be signed by the Chairman of the Board or the
President or First Vice-President and the Treasurer or an Assistant Treasurer
or the Secretary or an Assistant Secretary and sealed with the seal of the
Company, which may be a facsimile, engraved or printed, and shall be
countersigned and registered in such manner, if any, as the Board may be
resolution prescribe. The signatures of the officers upon a certificate may be
facsimiles if the certificate is countersigned by a transfer agent or
registered by a registrar other than the Company or its employee. In case any
officer who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer before such certificate is
issued, it may be issued by the Company with the same effect as if he were such
officer at the date of issue.
SECTION. 2. TRANSFERS. Shares in the capital stock of the Company shall be
transferable on the books of the Company, by the holder thereof in person or by
duly authorized attorney, upon surrender for cancellation of the certificates
therefor, with an assignment and power of transfer endorsed thereon or attached
thereto, duly executed, with such proof or guarantees of authenticity as the
Company or its transfer agents may in their discretion require.
SECTION 3. LOST OR DESTROYED STOCK CERTIFICATES. Certificates for shares of
stock of the Company may be issued in
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place of any certificates alleged to have been lost, stolen or destroyed, but
only upon production of such evidence of the loss, theft or destruction as the
Company or its agents may deem sufficient and upon such indemnification and
payment of costs of the Company and its agents as the Board of Directors may
from time to time prescribe generally or specially.
ARTICLE VI.
BOOKS AND RECORDS.
The Company shall keep (a) correct and complete books and records of account,
(b) minutes of the proceedings of the shareholders, Board of Directors and any
committees of directors, and (c) a current list of the directors and officers
and their residence addresses; and the Company shall also keep at its office in
the State of New York or at the office of its transfer agent or registrar in
the State of New York, if any a record containing the names and addresses of
all shareholders, the number and class of shares held by each and the dates when
they respectively became the owners of record thereof.
The Board of Directors from time to time shall determine whether and to what
extent and at what times and places and under what conditions and regulations
any accounts, books, records or other documents of the Company shall be open to
inspection, and no creditor or security holder or other person shall have any
right to inspect any accounts, books, records or other documents of the Company
except as conferred by statute, or as authorized by the Board.
ARTICLE VII.
CHECKS, NOTES, ETC.
All checks and drafts on the Company's bank accounts and all bills of exchange
and promissory notes and all acceptances, obligations and other instruments for
the payment of money shall be signed by such officer or officers or agent or
agents as may be thereunto authorized from time to time by the Board of
Directors, and such signatures may be facsimile signatures to the extent
authorized by the Board of Directors.
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ARTICLE VII.
MAILING ADDRESS.
The Company and its officers are authorized to mail all notices or other
communications, dividend checks or other distributions to stockholders directed
to them at their respective addresses as they appear in the stock book, except
as a stockholder shall have filed with the Secretary of the Company a written
request that mail intended for him be otherwise addressed, in which case the
address designated in such request shall be used.
ARTICLE VIII.
AMENDMENTS.
By-Laws of the Company may be amended, repealed or adopted by vote of the
Stockholders. By-Laws may also be amended, repealed or adopted by the Board of
Directors but any By-Laws adopted by the Board may be amended or repealed by the
stockholders.
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Exhibit 3.2(c)
BY-LAWS
OF
ABN SECURITIES SYSTEMS, INC.
Incorporated under the laws of the State of New York - January 3, 1974
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BY-LAWS
OF
ABN SECURITIES SYSTEMS, INC.
(A New York Corporation)
Article I.
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK.
Every holder of stock in the corporation shall be entitled to
have a certificate signed by, or in the name of, the corporation by the Chairman
or Vice-Chairman of the Board of Directors, if any, or by the President or a
Vice-President and by the Treasurer or an Assistant Treasurer or the Secretary
or an Assistant Secretary of the corporation representing the number of shares
owned by him in the corporation. If such certificate is countersigned by a
transfer agent other than the corporation or its employee or by a registrar
other than the corporation or its employee, any other signature on the
certificate may be a facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent, or registrar
before such certificate is issued, it may be issued
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by the corporation with the same effect as if he were such officer, transfer
agent, or registrar at the date of issue.
Whenever the corporation shall be authorized to issue more
than one class of stock or more than one series of any class of stock, and
whenever the corporation shall issue any shares of its stock as partly paid
stock, the certificates representing shares of any such class or series or of
any such partly paid stock shall set forth thereon the statements prescribed by
the Business Corporation Law. Any restrictions on the transfer or registration
of transfer of any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares.
The corporation may issue a new certificate of stock in place
of any certificate theretofore issued by it, alleged to have been lost, stolen,
or destroyed, and the Board of Directors may require the owner of any lost,
stolen, or destroyed certificate, or his legal representative, to give the
corporation a bond sufficient to indemnify the corporation against any claim
that may be made against it on account of the alleged loss, theft, or
destruction of any such certificate or the issuance of any such new certificate.
2. FRACTIONAL SHARE INTERESTS.
The corporation may, but shall not be required to, issue
fractions of a share.
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3. STOCK TRANSFERS.
Upon compliance with provisions restricting the transfer or
registration of transfer of shares of stock, if any, transfers or registration
of transfer of shares of stock of the corporation shall be made only on the
stock ledger of the corporation by the registered holder thereof, or by his
attorney thereunto authorized by power of attorney duly executed and filed with
the Secretary of corporation or with a transfer agent or a registrar, if any,
and on surrender of the certificate or certificates for such shares of stock
properly endorsed and the payment of all taxes due thereon.
4. RECORD DATE FOR STOCKHOLDERS.
In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the board of directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the board of directors, and which record date shall not be more
than sixty nor less than ten days before the date of such meeting. If no record
date has been fixed by the board of directors, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the day next preceding the day on which notice is
given, or, if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held. A
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determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting;
providing, however, that the board of directors may fix a new record date for
the adjourned meeting.
In order that the corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the board of directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty days prior to such
action. If no record date has been fixed, the record date for determining
stockholders for any such purpose shall be at the close of business on the day
on which the board of directors adopts the resolution relating thereto.
5. MEANING OF CERTAIN TERMS.
As used herein in respect of the right to notice of a meeting
of stockholders or a waiver thereof or to participate or vote thereat or to
consent or dissent in writing in lieu of a meeting, as the case may be, the term
"share" or "shares" or "share of stock" or "shares of stock" or "stockholder" or
"stockholders" refers to an outstanding share or shares of stock
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and to a holder or holders of record of outstanding shares of stock when the
corporation is authorized to issue only one class of shares of stock, and said
reference is also intended to include any outstanding share or shares of stock
and any holder or holders of record of outstanding shares of stock of any class
upon which or upon whom the Certificate of Incorporation confers such rights
where there are two or more classes or series of shares of stock or upon which
or upon whom the Business Corporation Law confers such rights notwithstanding
that the Certificate of Incorporation may provide for more than one class or
series of shares of stock, one or more of which are limited or denied such
rights thereunder; provided, however, that no such right shall vest in the event
of an increase or a decrease in the authorized number of shares of stock of any
class or series which is otherwise denied voting rights under the provisions of
the Certificate of Incorporation, including any Preferred Stock which is denied
voting rights under the provisions of the resolution or resolutions adopted by
the Board of Directors with respect to the issuance thereof.
6. STOCKHOLDER MEETINGS.
TIME. The annual meeting shall be held on the date and at the
time fixed, from time to time, by the directors. A special meeting shall be held
on the date and at the time fixed by the directors.
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PLACE. Annual meetings and special meetings shall be held at
such place, within or without the State of New York, as the directors may, from
time to time, fix. Whenever the directors shall fail to fix such place, the
meeting shall be held at the registered office of the corporation in the State
of New York.
CALL. Annual meetings and special meetings may be
called by the directors or by any officer instructed by the
directors to call the meeting.
NOTICE OR WAIVER OF NOTICE. Written notice of all meetings
shall be given, stating the place, date, and hour of the meeting. The notice of
an annual meeting shall state that the meeting is called for the election of
directors and for the transaction of other business which may properly come
before the meeting, and shall (if any other action which could be taken at a
special meeting is to be taken at such annual meeting), state such other action
or actions as are known at the time of such notice. The notice of a special
meeting shall in all instances state the purpose or purposes for which the
meeting is called. If any action is proposed to be taken which would, if taken,
entitle stockholders to receive payment for their shares of stock, the notice
shall include a statement of that purpose and to that effect. Except as
otherwise provided by the Business Corporation Law, a copy of the notice of any
meeting shall be given, personally or by mail, not less than ten days nor more
than sixty days before the date of the meeting, unless the lapse of the
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<PAGE> 8
prescribed period of time shall have been waived, and directed to each
stockholder at his address as it appears on the records of the corporation.
Notice by mail shall be deemed to be given when deposited, with postage thereon
prepaid, in the United States mail. If a meeting is adjourned to another time,
not more than thirty days hence, and/or to another place, and if an announcement
of the adjourned time and place is made at the meeting, it shall not be
necessary to give notice of the adjourned meeting unless the directors, after
adjournment, fix a new record date for the adjourned meeting. Notice need not be
given to any stockholder who submits a written waiver of notice by him before or
after the time stated therein. Attendance of a person at a meeting of
stockholders shall constitute a waiver of notice of such meeting, except when
the stockholder attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the stockholders need be
specified in any written waiver of notice.
STOCKHOLDER LIST. There shall be prepared and made, at least
ten days before every meeting of stockholders, a complete list of the
stockholders, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
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germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by this
section or the books of the corporation, or to vote at any meeting of
stockholders.
CONDUCT OF MEETING. Meetings of the stockholders shall be
presided over by one of the following officers in the order of seniority and if
present and acting: the Chairman of the Board, if any, the Vice-Chairman of the
Board, if any, the President, a Vice President, a chairman for the meeting
chosen by the Board of Directors, or, if none of the foregoing is in office and
present and acting, by a chairman to be chosen by the stockholders. The
Secretary of the corporation, or, in his absence, an Assistant Secretary, shall
act as secretary of every meeting, but if neither the Secretary nor an Assistant
Secretary is present the Chairman for the meeting shall appoint a secretary of
the meeting.
PROXY REPRESENTATION. Every stockholder may authorize
another person or persons to act for him by proxy in all matters
in which a stockholder is entitled to participate, whether by
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waiving notice of any meeting, voting or participating at a meeting, or
expressing consent or dissent without a meeting. Every proxy must be signed by
the stockholder or by his attorney-in-fact. No proxy shall be voted or acted
upon after three years from its date unless such proxy provides for a longer
period. A duly executed proxy shall be irrevocable if it states that it is
irrevocable and, if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power. A proxy may be made
irrevocable regardless of whether the interest with which it is coupled is an
interest in the stock itself or an interest in the corporation generally.
INSPECTORS AND JUDGES. The directors, in advance of any
meeting, may, but need not, appoint one or more inspectors of election or judges
of the vote, as the case may be, to act at the meeting or any adjournment
thereof. If an inspector or inspectors or judge or judges are not appointed, the
person presiding at the meeting may, but need not, appoint one or more
inspectors or judges. In case any person who may be appointed as an inspector or
judge fails to appear or act, the vacancy may be filled by appointment made by
the person presiding thereat. Each inspector or judge, if any, before entering
upon the discharge of his duties, shall take and sign an oath faithfully to
execute the duties of inspector or judge at such meeting with strict
impartiality and according to the best of his ability. The inspectors or judges,
if any, shall determine the number of shares
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of stock outstanding and the voting power of each, the shares of stock
represented at the meeting, the existence of a quorum, the validity and effect
of proxies, and shall receive votes, ballots or consents, hear and determine all
challenges and questions arising in connection with the right to vote, count and
tabulate all votes, ballots or consents, determine the result, and do such acts
as are proper to conduct the election or vote with fairness to all stockholders.
On request of the person presiding at the meeting, the inspector or inspectors
or judge or judges, if any, shall make a report in writing of any challenge,
question or matter determined by him or them and execute a certificate of any
fact found by him or them.
QUORUM. Except as the Business Corporation Law or these
By-Laws may otherwise provide, the holders of a majority of the outstanding
shares of stock entitled to vote shall constitute a quorum at a meeting of
stockholders for the transaction of any business. The stockholders present may
adjourn the meeting despite the absence of a quorum. When a quorum is once
present to organize a meeting, it is not broken by the subsequent withdrawal of
any shareholders.
VOTING. Each stockholder entitled to vote in accordance with
the terms of the Certificate of Incorporation and of these By-Laws, or, with
respect to the issuance of Preferred Stock, in accordance with the terms of a
resolution or resolutions of the Board of Directors, shall be entitled to one
vote, in person or by
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proxy, for each share of stock entitled to vote held by such stockholder. In the
election of directors, a plurality of the votes present at the meeting shall
elect. Any other action shall be authorized by a majority of the votes cast
except where the Certificate of Incorporation or the Business Corporation Law
prescribes a different percentage of votes and/or a different exercise of voting
power.
Voting by ballot shall not be required for corporate action
except as otherwise provided by the Business Corporation Law.
7. STOCKHOLDER ACTION WITHOUT MEETINGS.
Any action required to be taken, or any action which may be
taken, at any annual or special meeting of stockholders, may be taken without a
meeting, without prior notice and without a vote, if a consent or consents in
writing, setting forth the action so taken, shall be signed by the holders of
the outstanding stock having not less than the minimum number of votes that
would be necessary to authorize or take such action at a meeting at which all
shares entitled to vote thereon were present and voted. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing
and shall be delivered to the corporation by delivery to its registered office
in New York, its principal place of business, or an officer or agent of the
corporation having custody of the book in which
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proceedings of meetings of stockholders are recorded. Delivery made to a
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested.
ARTICLE II.
DIRECTORS
1. FUNCTIONS AND DEFINITION.
The business and affairs of the corporation shall be managed
by or under the direction of the Board of Directors of the corporation. The use
of the 3phrase "whole board" herein refers to the total number of directors
which the corporation would have if there were no vacancies.
2. QUALIFICATIONS AND NUMBER.
A director need not be a stockholder, a citizen of the United
States, or a resident of the State of New York. The initial Board of Directors
shall consist of ____ persons. Thereafter the number of directors constituting
the whole board shall be at least one. Subject to the foregoing limitation and
except for the first Board of Directors, such number may be fixed from time to
time by action of the stockholders or of the directors, or, if the number is not
fixed, the number shall be three. The number of directors may be increased or
decreased by action of the stockholders or of the directors.
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3. ELECTION AND TERM.
The first Board of Directors, unless the members thereof shall
have been named in the Certificate of Incorporation, shall be elected by the
incorporator or incorporators and shall hold office until the first annual
meeting of stockholders and until their successors have been elected and
qualified or until their earlier resignation or removal. Any director may resign
at any time upon written notice to the corporation. Thereafter, directors who
are elected at an annual meeting of stockholders, and directors who are elected
in the interim to fill vacancies and newly created directorships, shall hold
office until the next annual meeting of stockholders and until their successors
have been elected and qualified or until their earlier resignation or removal.
In the interim between annual meetings of stockholders or of special meetings of
stockholders called for the election of directors and/or for the removal of one
or more directors and for the filling of any vacancies in the Board of
Directors, including vacancies resulting from the removal of directors for cause
or without cause, any vacancy in the Board of Directors may be filled by the
vote of a majority of the remaining directors then in office, although less than
a quorum, or by the sole remaining director.
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4. MEETINGS.
TIME. Meetings shall be held at such time as the Board
shall fix.
FIRST MEETING. The first meeting of each newly elected Board
may be held immediately after each annual meeting of the stockholders at the
same place at which the meeting is held, and no notice of such meeting shall be
necessary to call the meeting, provided a quorum shall be present. In the event
such first meeting is not so held immediately after the annual meeting of the
stockholders, it may be held at such time and place as shall be specified in the
notice given as hereinafter provided for special meetings of the Board of
Directors, or at such time and place as shall be fixed by the consent in writing
of all of the directors.
PLACE. Meetings, both regular and special, shall be
held at such place within or without the State of New York as
shall be fixed by the Board.
CALL. No call shall be required for regular meetings for which
the time and place have been fixed. Special meetings may be called by or at the
direction of the Chairman of the Board, if any, the Vice-Chairman of the Board,
if any, or the President, or of a majority of the directors in office.
NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be
required for regular meetings for which the time and place have been fixed.
Written, oral, or any other mode of notice of the time and place shall be given
for special meetings at least
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twenty-four hours prior to the meeting. The notice of any meeting need not
specify the purpose of the meeting. Any requirement of furnishing a notice shall
be waived by any director who signs a written waiver of such notice before or
after the time stated therein.
Attendance of a director at a meeting of the Board shall
constitute a waiver of notice of such meeting, except when the director attends
a meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called or
convened.
QUORUM AND ACTION. A majority of the whole Board shall
constitute a quorum except when a vacancy or vacancies prevents such majority,
whereupon a majority of the directors in office shall constitute a quorum,
provided that such majority shall constitute at least one-third (1/3) of the
whole Board. Any director may participate in a meeting of the Board by means of
a conference telephone or similar communications equipment by means of which all
directors participating in the meeting can hear each other, and such
participation in a meeting of the Board shall constitute presence in person at
such meeting. A majority of the directors present, whether or not a quorum is
present, may adjourn a meeting to another time and place. Except as herein
otherwise provided, and except as otherwise provided by the Business Corporation
Law, the act of the Board shall be the act by vote of a majority of the
directors present at a meeting, a quorum being
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present. The quorum and voting provisions herein stated shall not be construed
as conflicting with any provisions of the Business Corporation Law and these
By-Laws which govern a meeting of directors held to fill vacancies and newly
created directorships in the Board.
CHAIRMAN OF THE MEETING. The Chairman of the Board, if
any and if present and acting, shall preside at all meetings.
Otherwise, the Vice-Chairman of the Board, if any and if present
and acting, or the President, if present and acting, or any other
director chosen by the Board, shall preside.
5. REMOVAL OF DIRECTORS.
Any or all of the directors may be removed for cause or
without cause by the stockholders.
6. COMMITTEES.
The Board of Directors may, by resolution passed by a majority
of the whole Board, designate one or more committees, each committee to consist
of one or more of the directors of the corporation. The Board may designate one
or more directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee. Any such
committee, to the extent provided in the resolution of the Board, shall have and
may exercise the powers of the Board of Directors in the management of the
business and affairs of the corporation, and may authorize the seal of the
corporation to be affixed to all
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papers which may require it. In the absence or disqualification
of any member of any such committee or committees, the member or
members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to
act at the meeting in the place of any such absent or disqualified
member.
7. ACTION IN WRITING.
Any action required or permitted to be taken at any meeting of
the Board of Directors or any committee thereof may be taken without a meeting
if all members of the Board or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board or committee.
ARTICLE III.
OFFICERS
1. EXECUTIVE OFFICERS.
The directors may elect or appoint a Chairman of the Board of
Directors, a President, one or more Vice Presidents (one or more of whom may be
denominated "Executive Vice President"), a Secretary, one or more Assistant
Secretaries, a Treasurer, one or more Assistant Treasurers, and such other
officers as they may determine. Any number of offices may be held by the same
person.
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2. TERM OF OFFICE: REMOVAL.
Unless otherwise provided in the resolution of election or
appointment, each officer shall hold office until the meeting of the Board of
Directors following the next annual meeting of stockholders and until his
successor has been elected and qualified or until his earlier resignation or
removal. The Board of Directors may remove any officer for cause or without
cause.
3. AUTHORITY AND DUTIES.
All officers, as between themselves and the corporation, shall
have such authority and perform such duties in the management of the corporation
as may be provided in these By-Laws, or, to the extent not so provided, by the
Board of Directors.
4. THE CHAIRMAN OF THE BOARD OF DIRECTORS.
The Chairman of the Board of Directors, if present and
acting, shall preside at all meetings of the Board of Directors,
otherwise, the President, if present, shall preside, or if the
President does not so preside, any other director chosen by the
Board shall preside.
5. THE PRESIDENT.
The President shall be the chief executive officer of the
corporation.
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6. VICE PRESIDENTS.
Any Vice President that may have been appointed, in the
absence or disability of the President, shall perform the duties and exercise
the powers of the President, in the order of their seniority, and shall perform
such other duties as the Board of Directors shall prescribe.
7. THE SECRETARY.
The Secretary shall keep in safe custody the seal of the
corporation and affix it to any instrument when authorized by the Board of
Directors, and shall perform such other duties as may be prescribed by the Board
of Directors. The Secretary (or in his absence, an Assistant Secretary, but if
neither is present another person selected by the Chairman for the meeting)
shall have the duty to record the proceedings of the meetings of the
stockholders and directors in a book to be kept for that purpose.
8. THE TREASURER.
The Treasurer shall have the care and custody of the corporate
funds, and other valuable effects, including securities, and shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
corporation and shall deposit all moneys and other valuable effects in the name
and to the credit of the corporation in such depositories as may be designated
by the Board of Directors. The Treasurer shall disburse the funds of the
corporation as may be ordered by the
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Board, taking proper vouchers for such disbursements, and shall render to the
President and directors, at the regular meetings of the Board, or whenever they
may require it, an account of all his transactions as Treasurer and of the
financial condition of the corporation. If required by the Board of Directors,
the Treasurer shall give the corporation a bond for such term, in such sum and
with such surety or sureties as shall be satisfactory to the Board for the
faithful performance of the duties of his office and for the restoration to the
corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
ARTICLE IV.
CORPORATE SEAL
AND
CORPORATE BOOKS
The corporate seal shall be in such form as the Board of
Directors shall prescribe.
The books of the corporation may be kept within or without the
State of New York, at such place or places as the Board of Directors may, from
time to time, determine.
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ARTICLE V.
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall
be subject to change, by the Board of Directors.
ARTICLE VI.
INDEMNITY
Any person who was or is a party or threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation) by reason of the fact that he or she is
or was a director, officer, employee or agent of the corporation or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise (including employee benefit plans) (hereinafter an "indemnitee"),
shall be indemnified and held harmless by the corporation to the fullest extent
authorized by the Business Corporation Law, as the same exists or may hereafter
be amended (but, in the case of any such amendment, only to the extent that such
amendment permits the corporation to provide broader indemnification than
permitted prior thereto), against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such indemnitee in connection with such action, suit or
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proceeding, if the indemnitee acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe such conduct was unlawful. The termination of the
proceeding, whether by judgment, order, settlement, conviction or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a presumption
that the person did not act in good faith and in a manner which he or she
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, had
reasonable cause to believe such conduct was unlawful.
Any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the right
of the corporation to procure a judgment in its favor by reason of the fact that
he or she is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise (including employee benefit plans) shall be indemnified and
held harmless by the corporation to the fullest extent authorized by the
Business Corporation Law, as the same exists or may hereafter be amended (but,
in the case of any such amendment, only to the extent that such amendment
permits the corporation to provide broader
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indemnification than permitted prior thereto), against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation and except that no indemnification shall be made in respect of
any claim, issue or matter as to which such person shall have been adjudged to
be liable to the corporation unless and only to the extent that the Court in
which such suit or action was brought, shall determine upon application, that
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which such Court shall deem proper.
All reasonable expenses incurred by or on behalf of the
indemnitee in connection with any suit, action or proceeding, shall be advanced
to the indemnitee by the corporation.
The rights to indemnification and to advancement of expenses
conferred in this section shall not be exclusive of any other right which any
person may have or hereafter acquire under any statute, the certificate of
incorporation, by-law, agreement, vote of stockholders or disinterested
directors or otherwise.
The indemnification and advancement of expenses provided by
this section shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the
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benefit of the heirs, executors and administrators of such a person.
ARTICLE VII.
AMENDMENTS
The By-Laws may be amended, added to, rescinded or repealed at
any meeting of the Board of Directors or of the stockholders, provided that
notice of the proposed change was given in the notice of the meeting.
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Exhibit 3.2(d)
BY-LAWS
OF
HORSHAM HOLDING COMPANY, INC.
Incorporated under the laws of the Commonwealth of Pennsylvania
April 5, 1982
<PAGE> 2
HORSHAM HOLDING COMPANY, INC.
B Y - L A W S
ARTICLE I
OFFICES
Section 1.1. The registered office shall be located at 680
Blair Mill road, Horsham, Pennsylvania.
Section 1.2. The corporation may also have offices at such
other places as the board of directors may from time to time determine or the
business of the corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 2.1. All meetings of the shareholders shall be held at
the registered office or such other places, either within or without the
Commonwealth of Pennsylvania, as the board of directors may from time to time
determine.
Section 2.2. A meeting of shareholders shall be held in each
calendar year for the election of directors at such time and place as the board
of directors shall determine. If the annual meeting shall not be called and held
during such calendar year, any shareholder may call such meeting at any time
thereafter. Elections for directors need
<PAGE> 3
not be by written ballot, except upon demand by a shareholder at the election
and before the voting begins.
Section 2.3. Unless a greater period of notice is required by
statute in a particular case, written notice of the annual meeting specifying
the place, date and hour of the annual meeting shall be served upon or mailed,
postage prepaid, at least five days prior to the meeting, to each shareholder of
record on the date fixed as a record date entitled to vote thereat, or if no
record date be fixed, then of record ten days next preceding the date of the
meeting, at such address as appears on the transfer books of The corporation.
Section 2.4. Special meetings of the shareholders, for any
purpose or purposes, other than those regulated by statute or by the articles of
incorporation, may be called at any time by the president, or the board of
directors, or the holders of not less than one-fifth of all the shares issued
and outstanding and entitled to vote at the particular meeting, upon written
request delivered to the secretary of the corporation. Such request shall state
the purpose or purposes of the proposed meeting. Upon receipt of any such
request, it shall be the duty of the secretary to notice a special meeting of
the shareholders to be held at such time, not less than ten nor more than sixty
days
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thereafter as the secretary may fix. If the secretary shall neglect or refuse to
fix the date of the meeting and give notice thereof, the person or persons
calling the meeting may do so.
Section 2.5. Written notice of any special meeting of
shareholders, stating the place, the date and hour and the general nature of the
business to be transacted thereat, shall be served upon or mailed, postage
prepaid, to each shareholder entitled to vote thereat at such address as appears
on the transfer books of the corporation, at least five days before such
meeting, unless a greater period of notice is required by statute in a
particular case.
Section 2.6. Business transacted at all special meetings shall
be confined to the business stated in the call.
Section 2.7. The holders, present in person or represented by
proxy, of a majority of the issued and outstanding shares entitled to vote,
shall be necessary to constitute a quorum at all meetings of the shareholders
for the transaction of business, except as otherwise provided by statute or by
the articles of incorporation or by these by-laws. If, however, any meeting of
shareholders cannot be organized because a quorum has not attended, the
shareholders entitled to vote thereat, present in person or by proxy,
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shall have power, except as otherwise provided by statute, to adjourn the
meeting to such time and place as they may determine, but in the case of any
meeting called for the election of directors, such meeting may be adjourned only
from day to day or for such longer periods not exceeding fifteen days each as
the holders of a majority of the shares present in person or by proxy shall
direct, and those who attend or participate at the second of such adjourned
meetings, although less than a quorum, shall nevertheless constitute a quorum
for the purpose of electing directors. At any adjourned meeting at which a
quorum shall be present or represented any business may be transacted which
might have been transacted at the meeting as originally noticed.
Section 2.8. When a quorum is present or represented at any
meeting, the vote of the holders of a majority of the stock having voting
powers, present in person or represented by proxy, shall decide any question
brought before such meeting, unless the question is one which, by express
provision of the statutes or of the articles of incorporation or of these
by-laws, a different vote is required in which case such express provision shall
govern and control the decision of such question.
Section 2.9. Except as otherwise provided by statute or the
articles of incorporation, at every
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shareholders' meeting every shareholder entitled to vote shall have the right to
one vote for every share having voting power standing in his name on the books
of the corporation. Except as otherwise provided in the articles of
incorporation, in each election of directors every shareholder entitled to vote
shall have the right to multiply the number of votes to which he may be entitled
by the total number of directors to be elected in the same election by the
holders of the class or classes of shares of which his shares are a part, and he
may cast the whole number of such votes for one candidate or he may distribute
them among any two or more candidates. The candidates receiving the highest
number of votes from each class or group of classes entitled to elect directors
separately up to the number of directors to be elected in the same election by
such class or group of classes shall be elected.
Section 2.10. Every shareholder entitled to vote at a meeting
of shareholders or to express consent or dissent to corporate actions in writing
without a meeting may authorize another person or persons to act for him by
proxy. Every proxy shall be executed in writing by the shareholder, or by his
duly authorized attorney in fact, and filed with the secretary of the
corporation. A proxy, unless coupled with an interest, shall be revocable at
will, notwithstanding
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any other agreement or any provision in the proxy to the contrary, but the
revocation of a proxy shall not be effective until notice thereof has been given
to the secretary of the corporation. No unrevoked proxy shall be valid after
eleven months from the date of its execution, unless a longer time is expressly
provided therein, but in no event shall a proxy, unless coupled with an
interest, be voted on after three years from the date of its execution. A proxy
shall not be revoked by the death or incapacity of the maker unless before the
vote is counted or the authority is exercised written notice of such death or
incapacity is given to the secretary of the corporation.
Section 2.11. The officer or agent having charge of the
transfer books for shares of the corporation shall make, at least five days
before each meeting of shareholders, a complete list of the shareholders
entitled to vote at the meeting, arranged in alphabetical order, with the
address of and the number of shares held by each, which list shall be kept on
file at the registered office of the corporation and shall be subject to
inspection by any shareholder at any time during usual business hours. Such list
shall also be produced and kept open at the time and place of the meeting and
shall be subject to the inspection of any shareholder during the whole time of
the meeting.
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Section 2.12. In advance of any meeting of shareholders, the
board of directors may appoint judges of election, who need not be shareholders,
to act at such meeting or any adjournment thereof. If judges of election be not
so appointed, the chairman of any such meeting may, and on the request of any
shareholder or his proxy shall, make such appointment at the meeting. The number
of judges shall be one or three. If appointed at a meeting on the request of one
or more shareholders or proxies, the holders of a majority of shares present and
entitled to vote shall determine whether one or three judges are to be
appointed. No person who is a candidate for office shall act as a judge. The
judges of election shall do all such acts as may be proper to conduct the
election or vote with fairness to all shareholders, and shall make a written
report of any matter determined by them and execute a certificate of any fact
found by them, if requested by the chairman of the meeting or any shareholder or
his proxy. If there be three judges of election, the decision, act or
certificate of a majority shall be effective in all respects as the decision,
act or certificate of all.
PARTICIPATION IN MEETING BY TELEPHONE
Section 2.13. One or more shareholders may participate in a
meeting of the shareholders by means of
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conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and all shareholders
so participating shall be deemed present in person at the meeting.
ARTICLE III
INFORMAL ACTION BY SHAREHOLDERS
Section 3.1. Except as otherwise provided in the articles of
incorporation any action required to be taken at a meeting of the shareholders
or of a class of shareholders 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 shareholders who would be entitled to vote at a meeting for such purpose
and shall be filed with the secretary of the corporation.
ARTICLE IV
DIRECTORS
Section 4.1. The number of directors which shall constitute
the whole board shall be such number as the board of directors may determine but
not less than three, except that if all shares of the corporation are owned
beneficially and of record by either one or two shareholders, the number of
directors may be less than three but not less than the number of shareholders.
Directors shall be natural persons of full age and need not be residents of
Pennsylvania or
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shareholders in the corporation. Except as hereinafter provided in the case of
vacancies, directors, other than those constituting the first board of
directors, shall be elected by the shareholders, and each director shall be
elected to serve until the next annual meeting of the shareholders and until his
successor is elected by the shareholders.
Section 4.2. Vacancies in the board of directors, including
vacancies resulting from an increase in the number of directors, shall be filled
by a majority of the remaining members of the board, though less than a quorum,
and each person so elected shall be a director until his successor is elected by
the shareholders, who may make such election at the next annual meeting of the
shareholders or at any special meeting duly called for that purpose and held
prior thereto.
Section 4.3. The business and affairs of the corporation shall
be managed by its board of directors which may exercise all such powers of the
corporation and do all such lawful acts and things as are not by statute or by
the articles of incorporation or by these by-laws directed or required to be
exercised and done by the shareholders.
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MEETINGS OF THE BOARD
Section 4.4. The meetings of the board of directors may be held
at such place within the Commonwealth of Pennsylvania or elsewhere as a majority
of the directors may from time to time appoint, or as may be designated in the
notice calling the meeting.
Section 4.5. The first meeting of each newly elected board may
be held at the same place and immediately after the meeting at which such
directors were elected and no notice need be given to the newly elected
directors in order legally to constitute the meeting; or it may convene at such
time and place as may be fixed by the consent or consents in writing of all the
directors.
Section 4.6. Regular meetings of the board may be held at such
time and places as shall be determined from time to time, by resolution of at
least a majority of the board at a duly convened meeting, or by unanimous
written consent. Notice of each regular meeting of the board shall specify the
date, place and hour of the meeting and shall be given each director at least 24
hours before the meeting either personally or by mail or telegram.
Section 4.7. Special meetings of the board may be called by the
president on 24 hours notice to each director, either personally or by mail or
by telegram; special
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meetings shall be called by the president or secretary in like manner and on
like notice on the written request of two directors. Notice of each special
meeting of the board shall specify the date, place and hour of the meeting. The
notice need not state the general nature of the business to be conducted at such
special meeting.
Section 4.8. At all meetings of the board a majority of the
directors in office shall be necessary to constitute a quorum for the
transaction of business, and the acts of a majority of the directors present at
a meeting at which a quorum is present shall be the acts of the board of
directors, except as may be otherwise specifically provided by statute or by the
articles of incorporation or by these by-laws. If a quorum shall not be present
at any meeting of directors, the directors present thereat may adjourn the
meeting. It shall not be necessary to give any notice of the adjourned meeting
or of the business to be transacted thereat other than by announcement at the
meeting at which such adjournment is taken.
COMMITTEES OF DIRECTORS
Section 4.9. The board of directors may, by resolution adopted
by a majority of the whole board, designate one or more committees, each
committee to consist of two or more of the directors of the corporation. The
board
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may designate one or more directors as alternate members of any committee, who
may replace any absent or disqualified member at any meeting of the committee.
Any such committee to the extent provided in such resolution or in the by-laws,
shall have and exercise the authority of the board of directors in the
management of the business and affairs of the corporation. In the absence or
disqualification of any member of such committee or committees, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not he or they constitute a quorum, may unanimously appoint another director
to act at the meeting in the place of any such absent or disqualified member.
PARTICIPATION IN MEETING BY TELEPHONE
Section 4.10. One or more directors may participate in a
meeting of the board or of a committee of the board by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and all directors so
participating shall be deemed present at the meeting.
INFORMAL ACTION BY DIRECTORS OR COMMITTEES
Section 4.11. Any action which may be taken at a meeting of
the directors or of the members of a committee of
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the board 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 directors or the
members of the committee, as the case may be, and shall be filed with the
secretary of the corporation.
COMPENSATION OF DIRECTORS
Section 4.12. The board of directors may, by resolution of the
board, fix the compensation of directors for their services. A director may also
serve the corporation in any other capacity and receive compensation therefor.
ARTICLE V
OFFICERS
Section 5.1. The officers of the corporation shall be chosen
by the directors and shall be a president, a secretary and a treasurer. The
president and secretary shall be natural persons of full age; the treasurer may
be a corporation, but if a natural person, shall be of full age. Any number of
offices may be held by the same person.
Section 5.2. The board of directors, immediately after each
annual meeting of shareholders, shall elect a president, a secretary and a
treasurer, none of whom need be members of the board.
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Section 5.3. The board of directors may also choose one or
more vice presidents and such other officers and assistant officers and agents
as the needs of the corporation may require who shall hold their offices for
such terms and shall have such authority and shall perform such duties as from
time to time shall be determined by resolution of the board.
Section 5.4. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
Section 5.5. The officers of the corporation shall hold office
until their successors are chosen and have qualified. Any officer or agent
elected or appointed by the board of directors, may be removed by the board of
directors whenever in its judgment the best interests of the corporation will be
served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. If the office of any officer becomes
vacant for any reason, the vacancy shall be filled by the board of directors.
THE PRESIDENT
Section 5.6. The president shall be the chief executive
officer of the corporation; he shall preside at all meetings of the shareholders
and directors, shall have
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general and active management of the business of the corporation and shall see
that all orders and resolutions of the board are carried into effect.
Section 5.7. He shall execute bonds, mortgages and other
contracts requiring a seal, under the seal of the corporation, except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly delegated by the
board of directors to some other officer or agent of the corporation.
THE VICE-PRESIDENTS
Section 5.8. The vice-president, or if there shall be more
than one, the vice-presidents, in the order designated by the Board of
Directors, shall, in the absence or disability of the president, perform the
duties and exercise the powers of the president, and shall perform such other
duties as the board of directors may prescribe or the president may delegate to
them.
THE SECRETARY
Section 5.9. The secretary shall attend all sessions of the
board and all meetings of the shareholders and record all the votes of the
corporation and the minutes of all the transactions in a book to be kept for
that purpose, and shall perform like duties for the committees of
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the board of directors when required. He shall give, or cause to be given,
notice of all meetings of the shareholders and of special meetings of the board
of directors, and shall perform such other duties as may be prescribed by the
board of directors or president, under whose supervision he shall be. He shall
keep in safe custody the corporate seal of the corporation, and, when authorized
by the board, affix the same to any instrument requiring it, and, when so
affixed, it shall be attested by his signature or by the signature of the
treasurer or an assistant secretary.
THE TREASURER
Section 5.10. The treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation, and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as shall be designated by the board of
directors.
Section 5.11. He shall disburse the funds of the corporation
as may be ordered by the board, taking proper vouchers for such disbursements,
and shall render to the president and directors, at the regular meetings of the
board, or whenever they may require it, an account of all
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his transactions as treasurer and of the financial condition
of the corporation.
Section 5.12. If required by the board of directors, he shall
give the corporation a bond in such sum, and with such surety or sureties as may
be satisfactory to the board of directors, for the faithful discharge of the
duties of his office and for the restoration to the corporation, in the case of
his death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the corporation.
ARTICLE VI
CERTIFICATES OF SHARES
Section 6.1. The certificates of shares of the corporation
shall be numbered and registered in a share register as they are issued. They
shall exhibit the name of the registered holder and the number and class of
shares and the series, if any, represented thereby and the par value of each
share or a statement that such shares are without par value, as the case may be.
Section 6.2. Every share certificate shall be signed by the
president or a vice-president and the secretary or an assistant secretary or the
treasurer or an assistant treasurer and shall be sealed with the corporate
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seal which may be a facsimile, engraved or printed, but where such certificate
is signed by a transfer agent or by a transfer clerk of the corporation or a
registrar, the signature of any corporate officer upon such certificate may be a
facsimile, engraved or printed. In case any officer who has signed or whose
facsimile signature has been placed upon any share certificate shall have ceased
to be such officer because of death, resignation or otherwise, before the
certificate is issued, it may be issued by the corporation with the same effect
as if the officer had not ceased to be such at the time of its issue.
ARTICLE VII
TRANSFER OF SHARES
Section 7.1. Upon presentment to the corporation of a share
certificate duly endorsed or accompanied by proper evidence of succession,
assignment or authority to transfer, a new certificate shall be issued to the
person entitled thereto and the old certificate cancelled and the transfer
registered upon the books of the corporation, unless the corporation has a duty
to inquire as to adverse claims with respect to such transfer which has not been
discharged. The corporation shall have no duty to inquire into adverse claims
with respect to such transfer unless (a) the corporation has received a written
notification of an
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adverse claim at a time and in a manner which affords the corporation a
reasonable opportunity to act on it prior to the issuance of a new, reissued or
re-registered share certificate and the notification identifies the claimant,
the registered owner and the issue of which the share or shares is a part and
provides an address for communications directed to the claimant; or (b) the
corporation has required and obtained, with respect to a fiduciary, a copy of a
will, trust, indenture, articles of co-partnership, by-laws or other controlling
instruments, for a purpose other than to obtain appropriate evidence of the
appointment or incumbency of the fiduciary, and such documents indicate, upon
reasonable inspection, the existence of an adverse claim.
Section 7.2. The corporation may discharge any duty of inquiry
by any reasonable means, including notifying an adverse claimant by registered
or certifIed mail at the address furnished by him or, if there be no such
address, at his residence or regular place of business that the security has
been presented for registration of transfer by a named person, and that the
transfer will be registered unless within thirty days from the date of mailing
the notification, either (a) an appropriate restraining order, injunction or
other process issues from a court of competent
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jurisdiction; or (b) an indemnity bond, sufficient in the corporation's judgment
to protect the corporation and any transfer agent, registrar or other agent of
the corporation involved from any loss which it or they may suffer by complying
with the adverse claim, is filed with the corporation.
ARTICLE VIII
FIXING RECORD DATE
Section 8.1. The board of directors may fix a time, not more
than fifty days prior to the date of any meeting of shareholders or the date
fixed for the payment of any dividend or distribution, or the date for the
allotment of rights, or the date when any change or conversion or exchange of
shares will be made or go into effect, as a record date for the determination of
the shareholders entitled to notice of, and to vote at, any such meeting, or
entitled to receive payment of any such dividend or distribution, or to receive
any such allotment or rights, or to exercise the rights in respect to any such
change, conversion or exchange of shares. In such case only such shareholders as
shall be shareholders of record on the date so fixed shall be entitled to notice
of, and to vote at, such meeting or to receive payment of such dividend or to
receive such allotments of rights or to exercise such
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rights, as the case may be, notwithstanding any transfer of any shares on the
books of the corporation after any record date so fixed. The board of directors
may close the books of the corporation against transfers of shares during the
whole or any part of such period and in such case written or printed notice
thereof shall be mailed at least ten days before the closing thereof to each
shareholder of record at the address appearing on the records of the corporation
or supplied by him to the corporation for the purpose of notice.
ARTICLE IX
REGISTERED SHAREHOLDERS
Section 9.1. Prior to due presentment for transfer of any
share or shares, the corporation shall treat the registered owner thereof as the
person exclusively entitled to vote, to receive notifications and to all other
benefits of ownership with respect to such share or shares, and shall not be
bound to recognize any equitable or other claim or interest in such share or
shares, whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Pennsylvania.
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ARTICLE X
LOST CERTIFICATES
Section 10.1. If the owner of a share certificate claims that
it has been lost, destroyed, or wrongfully taken, the corporation shall issue a
new certificate in place of the original certificate if the owner so requests
before the corporation has notice that the certificate has been acquired by a
bona fide purchaser, has filed with the corporation an indemnity bond and an
affidavit of the facts satisfactory to the board of directors, and has complied
with such other reasonable requirements, if any, as the board of directors may
deem appropriate.
ARTICLE XI
DIVIDENDS
Section 11.1. Dividends upon the capital stock of the
corporation, subject to the provisions of the articles of incorporation relating
thereto, if any, may be declared by the board of directors at any regular or
special meeting pursuant to law. Dividends may be paid in cash, in property, or
in shares of the corporation.
Section 11.2. Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion, think
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proper as a reserve fund to meet contingencies, or for equalizing dividends, or
for repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interests of the
corporation, and the directors may abolish any such reserve in the manner in
which it was created.
ARTICLE XII
GENERAL PROVISIONS
FINANCIAL REPORT TO SHAREHOLDERS
Section 12.1. The directors of the corporation shall not be
required at any time to send to the shareholders financial statements or reports
of the financial condition of the corporation.
CHECKS AND NOTES
Section 12.2. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers as the board of
directors may from time to time designate.
FISCAL YEAR
Section 12.3. The fiscal year of the corporation shall be the
calendar year.
SEAL
Section 12.4. The corporate seal shall have inscribed thereon
the name of the corporation, the year of
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its organization and the words "Corporate Seal, Pennsylvania". Said seal may be
used by causing it or a facsimile thereof to be impressed or affixed or in any
manner reproduced.
NOTICES
Section 12.5. Whenever, under the provisions of the statutes
or of the articles of incorporation or of these by-laws, notice is required to
be given to any person, it may be given to such person either personally or by
sending a copy thereof through the mail or by telegram, charges prepaid, to his
address appearing on the books of the corporation or supplied by him to the
corporation for the purpose of notice. If the notice is sent by mail or by
telegram, it shall be deemed to have been given to the person entitled thereto
when deposited in the United States mail or with a telegraph office for
transmission to such person.
Section 12.6. Whenever any written notice is required to be
given by statute or by the articles of incorporation or by these by-laws, a
waiver thereof in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated therein, shall be deemed the
equivalent of the giving of such notice. Except in the case of a special meeting
of shareholders, neither the business to be transacted nor the purpose of the
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meeting need be specified in the waiver of notice of such meeting. Attendance of
any person entitled to notice, either in person or by proxy, at any meeting
shall constitute a waiver of notice of such meeting, except where any person
attends a meeting for the express purpose of objecting to the transaction of any
business because the meeting was not lawfully called or convened.
ARTICLE XIII
AMENDMENTS
Section 13.1. The by-laws may be altered, amended or repealed
by a majority vote of the shareholders entitled to vote thereon at any regular
or special meeting duly convened after notice to the shareholders of that
purpose, or by a majority vote of the members of the board of directors at any
regular or special meeting duly convened, subject always to the power of the
shareholders to change such action by the directors.
ARTICLE XIV
INDEMNIFICATION
Section 14.1. The corporation shall indemnify to the extent
permitted under these by-laws, any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative
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(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in, or not opposed
to, the best interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in, or not opposed to,
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was unlawful.
Section 14.2. The corporation shall have power to indemnify
any person who was or is a party, or is threatened
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to be made a party to any threatened, pending or completed action or suit by or
in the right of the corporation to procure a judgment in its favor by reason of
the fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
corporation unless and only to the extent that the court of common pleas of the
county in which the registered office of the corporation is located or the court
in which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which court of common pleas or such other court shall deem proper.
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Section 14.3. To the extent that a director, officer, employee
or agent of the corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in sections 14.1 or 14.2
of this Article or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
Section 14.4. Any indemnification under sections 14.1 or 14.2
of this Article (unless ordered by a court) shall be made by the corporation
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth in
such section. Such determination shall be made:
1. By the board of directors by a majority
vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or
2. If such a quorum is not obtainable, or,
even if obtainable a majority vote of a quorum of
disinterested directors so directs, by independent legal
counsel in a written opinion, or
3. By the shareholders.
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Section 14.5. Expenses incurred in defending a civil or
criminal action, suit or proceeding may be paid by the corporation in advance of
the final disposition of such action, suit or proceeding as authorized in the
manner provided in section 14.4 of this Article upon receipt of an undertaking
by or on behalf of the director, officer, employee or agent to repay such amount
unless it shall ultimately be determined that he is entitled to be indemnified
by the corporation as authorized in this Article.
Section 14.6. The indemnification provided by this Article
shall not be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any by-law, agreement, vote of
shareholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
Section 14.7. The corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
cor-
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poration as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of this Article.
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EXHIBIT 3.2(e)
BY-LAWS
OF
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
Incorporated under the laws of the State of Delaware - August 19, 1985
As amended through July 17, 1990
<PAGE> 2
BY-LAWS
OF
AMERICAN BANK NOTE HOL0GRAPHICS, INC.
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the
Corporation shall be in the City of Wilmington, County of New Castle, State of
Delaware.
Section 2. Other Offices. The Corporation may also have offices at
such other places both within and without the State of Delaware as the Board of
Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. Meetings of the stockholders for the
election of directors or for any other purpose shall be held at such time and
place, either within or without the State of Delaware as shall be designated
from time to time by the Board of Directors and stated in the notice of the
meeting or in a duly executed waiver of notice thereof.
Section 2. Annual Meetings. The Annual Meetings of Stockholders
shall be held on such date and at such time
<PAGE> 3
as shall be designated from time to time by the Board of Directors and stated in
the notice of the meeting, at which meetings the stockholders shall elect by a
plurality vote a Board of Directors, and transact such other business as may
properly be brought before the meeting. Written notice of the Annual Meeting
stating the place, date and hour of the meeting shall be given to each
stockholder entitled to vote at such meeting not less than ten nor more than
sixty days before the date of the meeting.
Section 3. Special Meeting. Unless otherwise prescribed by law or by
the Certificate of Incorporation, Special Meetings of Stockholders, for any
purpose or purposes, may be called by either the Chairman of the Board or the
President, and shall be called by any such officer at the request in writing of
a majority of the Board of Directors or at the request in writing of
stockholders owning a majority of the capital stock of the Corporation issued
and outstanding and entitled to vote. Such request shall state the purpose or
purposes of the proposed meeting.
Section 4. Notice of Meetings. Written notice of an Annual Meeting
or Special Meeting stating the place, date and hour of the meeting and in the
case of a Special Meeting, the purpose or purposes for which the meeting is
called shall be given not less than ten nor more than sixty days before
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the date of the meeting to each stockholder entitled to vote at such meeting.
Section 5. Waiver of Notice. Notice of the time, place, and purpose
or purposes of any meeting of stockholders may be waived by a written waiver
thereof, signed by the person entitled to notice, such waiver whether before or
after the time stated therein, shall be deemed equivalent to notice. Attendance
of a person at a meeting shall constitute a waiver of notice of such meeting,
except when the person attends a meeting for the express purpose of objecting,
at the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular of special meeting of the
stockholders, directors, or members of a committee of directors need be
specified in any written notice unless so required by the certificate of
incorporation or the by-laws.
Section 6. Quorum. Except as otherwise provided by law or by the
Certificate of Incorporation, the holders of a majority of the capital stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business. If, however, such quorum shall not
be present or represented at any
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meeting of the stockholders, the stockholders entitled to vote thereat, present
in person or represented by proxy, shall have power to adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum shall be present or represented. At such adjourned meeting at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally noticed. If the
adjournment is for more than sixty days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder entitled to vote at the meeting.
Section 7. Voting. Any questions brought before any meeting of
stockholders shall be decided by the vote of the holders of a majority of the
stock issued and outstanding and entitled to vote thereat. Each stockholder
represented at a meeting of stockholders shall be entitled to cast one vote for
each share of the capital stock entitled to vote thereat held by such
stockholder. Such votes may be cast in person or by proxy but no proxy shall be
voted on or after three years from its date, unless such proxy provides for a
longer period. The Board of Directors, in its discretion, or the officer of the
Corporation presiding at a meeting of
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stockholders, in his discretion, may require that any votes cast at such meeting
shall be cast by written ballot.
Section 8. List of Stockholders Entitled to Vote. The officer of the
Corporation who has charge of the stock ledger of the Corporation shall prepare
and make, at least ten days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder of the Corporation who is
present.
Section 9. Stock Ledger. The stock ledger of the Corporation shall
be the only evidence as to who are the stockholders entitled to examine the
stock ledger, the list required by Section 8 of this Article II or the books of
the
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Corporation, or to vote in person or by proxy at any meeting of stockholders.
ARTICLE III
Section 1. Number and Election of Directors. The Board of Directors
shall consist of not less than three (3) and not more than twenty (20) members
the number of which shall be determined from time to time by resolution of the
Board of Directors. Except as provided in Section 2 of this article, directors
shall be elected by a plurality of the votes cast at Annual Meetings of
Stockholders, and each director so elected shall hold office until the next
Annual Meeting and until his successor is duly elected and qualified, or until
his earlier resignation or removal. Any director may resign at any time upon
notice to the Corporation. Directors need not be stockholders.
Section 2. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
(i) by the affirmative vote of the holders of a majority of the outstanding
stock of the corporation, and if not so filled, then by (ii) a majority of the
directors then in office, though less than a quorum, or by a sole remaining
director, and the directors so chosen shall hold office until the next annual
election and until
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their successors are duly elected and qualified, or until their earlier
resignation or removal.
Section 3. Duties and Powers. The business of the Corporation shall
be managed by or under the direction of the Board of Directors which may
exercise all such powers of the Corporation and do all such lawful acts and
things as are not by statute or by the Certificate of Incorporation or by these
By-Laws directed or required to be exercised or done by the stockholders.
Section 4. Meetings. The Board of Directors of the Corporation may
hold meetings, both regular and special, either within or without the State of
Delaware. Regular meetings of the Board of Directors may be held without notice
at such time and at such place as may from time to time be determined by the
Board of Directors. Special meetings of the Board of Directors may be called by
the Chairman, if there be one, the President, or any two directors. Notice
thereof stating the place, date and hour of the meeting shall be given to each
director either by mail not less than forty-eight (48) hours before the date of
the meeting, by telephone or telegram on twenty-four (24) hours' notice, or on
such shorter notice as the person or persons calling such meeting may deem
necessary or appropriate in the circumstances.
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Section 5. Quorum; Board Action. Except as may be otherwise
specifically provided by the law, the Certificate of Incorporation or these
By-Laws, at all meetings of the Board of Directors, a majority of the entire
Board of Directors shall constitute a quorum for the transaction of business and
the act of a majority of the entire Board of Directors shall be the act of the
Board of Directors. If a quorum shall not be present at any meeting of the Board
of Directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
Section 6. Actions of Board. Unless otherwise provided by the
Certificate of Incorporation or these ByLaws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all the members of the Board of Directors or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.
Section 7. Meetings by Means of Conference Telephone. Unless
otherwise provided by the Certificate of Incorporation or these By-Laws, members
of the Board of Directors of the Corporation, or any committee designated by
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the Board of Directors, may participate in a meeting of the Board of Directors
or such committee by means of a conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting pursuant to this Section 7 shall
constitute presence in person at such meeting.
Section 8. Compensation. The directors may be paid their expenses,
if any, of attendance at each meeting of the Board of Directors and may be paid
a fixed sum for attendance at each meeting of the Board of Directors or a stated
salary as director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
Section 9. Interested Directors. No contract or transaction between
the Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
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participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because his or their votes are
counted for such purposes if (i) the material facts as to his or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board of Directors or the committee, and the Board of Directors
or committee in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested directors
be less than a quorum; or (ii) the material facts as to this or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the shareholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of the shareholders;
or (iii) the contract or transaction is fair as to the Corporation as of the
time it is authorized, approved or ratified, by the Board of Directors, a
committee thereof or the shareholders. Common or interested directors may be
counted in determining the presence of a quorum at a meeting of the Board of
Directors or of a committee which authorizes the contract or transactions.
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Section 10. Executive Committee. The Directors shall appoint not
less than three of their body as Executive Committee. During the intervals
between the meetings of the Board of Directors, the Executive Committee shall
possess and may exercise (subject to any regulations which the Directors may
from time to time make) all the powers of the Board of Directors in the
management and direction of the operations of the Corporation (except only such
acts as must by law be performed by the Directors themselves) in such manner as
the Executive Committee may deem best for the interests of the Corporation in
all cases in which specific directions shall not have been given by the Board of
Directors. A majority of the members of the Executive Committee shall constitute
a quorum. The Board of Directors shall have the power at any time to fill
vacancies in, change the membership of, or to dissolve the Executive Committee.
ARTICLE IV
OFFICERS
Section 1. General. The officers of the Corporation shall be chosen
by the Board of Directors and shall be a President, a Secretary and a Treasurer.
The Board of Directors, in its discretion, may also choose a Chairman and a Vice
Chairman of the Board of Directors (both of whom
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must be directors) and one or more Vice-Presidents (including Executive
Vice-Presidents), Assistant Secretaries, Assistant Treasurers and other
officers. Any number of offices may be held by the same person, unless otherwise
prohibited by law, the Certificate of Incorporation or these By-Laws. The
officers of the Corporation need not be stockholders of the Corporation nor,
except in the case of the Chairman and the Vice Chairman of the Board of
Directors, need such officers be directors of the Corporation.
Section 2. Election. The Board of Directors at its first meeting
held after each Annual Meeting of Stockholders shall elect the officers of the
Corporation who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by the
Board of Directors; and all officers of the Corporation shall hold office until
their successors are chosen and qualified, or until their earlier resignation or
removal. Any officer elected by the Board of Directors may be removed at any
time by the affirmative vote of a majority of the Board of Directors. Any
vacancy occurring in any office of the Corporation shall be filled by the Board
of Directors. The salaries of all officers of the Corporation shall be fixed by
the Board of Directors.
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Section 3. Voting Securities Owned by the Corporation.
Notwithstanding anything to the contrary contained herein, powers of attorney,
proxies, waivers of notice of meeting, consents and other instruments relating
to securities owned by the Corporation may be executed in the name of and on
behalf of and such securities, and if voting securities, may be voted on behalf
of, the Corporation (i) by such officer or officers as are specifically
delegated to do so in any particular instance by the Board of Directors of the
Corporation in the case of stock of any subsidiary of the Corporation and (ii)
the President or any Vice-President, in any other case, and any such office may,
in the name of and on behalf of the Corporation, take all such action as such
officer may deem advisable to vote such securities in person or by proxy at any
meeting of security holders of any corporation in which the Corporation may own
securities and at any such meeting shall possess and may exercise any and all
rights and power incident to the owner-ship of such securities and which, as the
owner thereof, the Corporation might have exercised and possessed if present.
The Board of Directors may, by resolution, from time to time confer like powers
upon any other person or persons.
Section 4. Chairman of the Board of Directors. The Chairman of the
Board of Directors, if there be one,
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shall preside at all meetings of the stockholders and of the Board of Directors.
He shall be the Chief Executive Officer of the Corporation, and except where by
law the signature of the President is required, the Chairman of the Board of
Directors shall possess the same power as the President to sign all contracts,
certificates and other instruments of the Corporation which may be authorized by
the Board of Directors. During the absence or disability of the President, the
Chairman of the Board of Directors shall exercise all the powers and discharge
all the duties of the President. The Chairman of the Board of Directors shall
also perform such other duties and may exercise such other powers as from time
to time may be assigned to him by these By-Laws or by the Board of Directors.
Section 5. Vice Chairman of the Board of Directors. The Vice
Chairman of the Board shall have authority to sign, on behalf of the Company,
contracts, deeds, mortgages, bonds, notes, and other instruments, in the manner
and forms customary for other officers of the Company and subject to the
limitations and restrictions customarily applicable to the authority of such
other officers. In the absence or disability of the Chairman of the Board of
Directors, or if there be none, the Vice Chairman of the Board of Directors
shall preside at all meetings of the
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stockholders and the Board of Directors. If there be no Chairman of the Board of
Directors, the Vice Chairman of the Board of Directors shall be the Chief
Executive Officer of the Corporation.
Section 6. President. The President shall, subject to the control of
the Board of Directors and, if there be one, the Chairman of the Board of
Directors, have general supervision of the business of the Corporation and shall
see that all orders and resolutions of the Board of Directors are carried into
effect. He shall execute all bonds, mortgages, contracts and other instruments
of the Corporation requiring a seal, under the seal of the Corporation, except
where required or permitted by law to be otherwise signed and executed and
except that the other officers of the Corporation may sign and execute documents
when so authorized by these By-Laws, the Board of Directors or the President. In
the absence or disability of the Chairman and the Vice Chairman of the Board of
Directors, or if there be none, the President shall preside at all meetings of
the stockholders and the Board of Directors. If there be no Chairman or Vice
Chairman of the Board of Directors, the President shall be the Chief Executive
Officer of the Corporation. The President shall also perform such other duties
and may exercise such other powers as from time to
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time may be assigned to him by these By-Laws or by the Board of Directors.
Section 7. Vice-Presidents. At the request of the President or in
his absence or in the event of his inability or refusal to act (and if there be
no Chairman of the Board of Directors), the Vice-President or the
Vice-Presidents if there is more than one (in the order designated by the Board
of Directors) shall perform the duties of the President, and when so acting,
shall have all the powers of and be subject to all the restrictions upon the
President. Each Vice-President shall perform such other duties and have such
other powers as the Board of Directors from time to time may prescribe. If there
be no Chairman or Vice Chairman of the Board of Directors and no Vice-President,
the Board of Directors shall designate the officer of the Corporation who, in
the absence of the President or in the event of the inability or refusal of the
president to act, shall perform the duties of the President, and when so acting,
shall have all the powers of and be subject to all the restrictions upon the
President.
Section 8. Secretary. The Secretary shall attend all meetings of the
Board of Directors and all meetings of stockholders and record all the
proceedings thereat in a book or books to be kept for that purpose; the
Secretary shall
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also perform like duties for the standing committees when required. The
Secretary shall give, or cause to be given, notice of all meetings of the
stockholders and special meetings of the Board of Directors, and shall perform
such other duties as may be prescribed by the Board of Directors or President,
under whose supervision he shall be. If the Secretary shall be unable or shall
refuse to cause to be given notice of all meetings of the stockholders and
special meetings of the Board of Directors, if there be no Assistant Secretary,
then either the Board of Directors or the President may choose another officer
to cause such notice to be given. The Secretary shall have custody of the seal
of the Corporation and the Secretary or any Assistant Secretary, if there be
one, shall have authority to affix the same to any instrument requiring it and
when so affixed, it may be attested by the signature of the Secretary or by the
signature of any such Assistant Secretary. The Board of Directors may give
general authority to any other officer to affix the seal of the Corporation and
to attest the affixing by his signature. The Secretary shall see that all books,
reports, statements, certificates and other documents and records required by
law to be kept or filed are properly kept or filed, as the case may be.
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Section 9. Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as Treasurer and of the financial condition of the
Corporation. If required by the Board of Directors, the Treasurer shall give the
Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of his office and for the restoration to the Corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the Corporation.
Section 10. Assistant Secretaries. Except as may be otherwise
provided in these By-Laws, Assistant
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Secretaries, if there by any, shall perform such duties and have such powers as
from time to time may be assigned to them by the Board of Directors, the
President, any Vice-President, if there be one, or the Secretary, and in the
absence of the Secretary or in the event of his disability or refusal to act,
shall perform the duties of the Secretary, and when so acting, shall have all
the powers of and be subject to all the restrictions upon the Secretary.
Section 11. Assistant Treasurers. Assistant Treasurers, if there be
any, shall perform such duties and have such powers as from time to time may be
assigned to them by the Board of Directors, the President, any Vice-President,
if there be one, or the Treasurer, and in the absence of the Treasurer or in the
event of his disability or refusal to act, shall perform the duties of the
Treasurer, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the Treasurer. If required by the Board of Directors,
an Assistant Treasurer shall give the Corporation a bond in such sum and with
such surety or sureties as shall be satisfactory to the Board of Directors for
the faithful performance of the duties of his office and for the restoration to
the Corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind
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in his possession or under his control belonging to the Corporation.
Section 12. Other Officers. Such other officers as the Board of
Directors may choose shall perform such duties and have such powers as from time
to time may be assigned to them by the Board of Directors. The Board of
Directors may delegate to any other officer of the Corporation the power to
choose such other officers and to prescribe their respective duties and powers.
ARTICLE V
STOCK
Section 1. Form of Certificates. Every holder of stock in the
Corporation shall be entitled to have a certificate signed, in the name of the
Corporation (i) by the Chairman of the Board of Directors, the President or a
Vice-President and (ii) by the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary of the Corporation, certifying the number of
shares owned by him in the Corporation.
Section 2. Signatures. Where a certificate is countersigned by (i) a
transfer agent other than the Corporation or its employee, or (ii) a register
other than the Corporation or its employee, any other signature on the
certificate may be a facsimile. In case any officer,
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transfer agent or registrar who has signed or whose facsimile signature has been
placed upon a certificate shall have ceased to be such officer, transfer agent
or registrar before such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such officer, transfer agent or
registrar at the date of issue.
Section 3. Lost Certificates. The Board of Directors may direct a
new certificate to be issued in place of any certificate theretofore issued by
the Corporation alleged to have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the person claiming the certificate of stock to
be lost, stolen or destroyed. When authorizing such issue of a new certificate,
the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or destroyed
certificate, or his legal representative, to advertise the same in such manner
as the Board of Directors shall require and/or to give the Corporation a bond in
such sum as it may direct as indemnity against any claim that may be made
against the Corporation with respect to the certificate alleged to have been
lost, stolen or destroyed.
Section 4. Transfers. Stock of the Corporation shall be transferable
in the manner prescribed by law and in
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these By-Laws. Transfers of stock shall be made on the books of the Corporation
only by the person named in the certificate or by his attorney lawfully
constituted in writing and upon the surrender of the certificate therefor, which
shall be cancelled before a new certificate shall be issued.
Section 5. Record Date. In order that the Corporation may determine
the stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock, or for the
purpose of any other lawful action, the Board of Directors may fix, in advance,
a record date, which shall not be more than sixty days nor less than ten days
before the date of such meeting, nor more than sixty days prior to any other
action. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
Section 6. Beneficial Owners. The Corporation shall be entitled to
recognize the exclusive right of a
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person registered on its books as the owner of shares to receive dividends, and
to vote as such owner, and to hold liable for calls and assessments a person
registered on its books as the owner of shares, and shall not be bound to
recognize any equitable or other claim to or interest in such share or shares on
the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by law.
ARTICLE VI
NOTICES
Section 1. Notices. Whenever written notice is required by law, the
Certificate of Incorporation or these By-Laws, to be given to any director,
member of a committee or stockholder, such notice may be given by mail,
addressed to such director, member of a committee or stockholder, at his address
as it appears on the records of the Corporation, with postage thereon prepaid,
and such notice shall be deemed to be given at the time when the same shall be
deposited in the United States mail. Written notice may also be given personally
or by telegram, telex or cable.
Section 2. Waivers of Notice. Whenever any notice is required by
law, the Certificate of Incorporation or these By-Laws, to be given to any
director, member of a committee or stockholder, a waiver thereof in writing,
signed, by the
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person or after the time stated therein, shall be deemed equivalent thereto.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, and may be paid in cash, in property, or in shares of the capital
stock. Before payment of any dividend, there may be set aside out of any funds
of the Corporation available for dividends such sum or sums as the Board of
Directors from time to time, in its absolute discretion, deems proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for any proper
purpose, and the Board of Directors may modify or abolish any such reserve.
Section 2. Disbursements. All checks or demands for money and notes
of the Corporation shall be signed by the Treasurer or such officer or officers
or such other person or persons as the Board of Directors may from time to time
designate.
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Section 3. Fiscal Year. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.
Section 4. Corporate Seal. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its organization and the words
"Corporate Seal, Delaware". The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE VIII
INDEMNIFICATION
Section 1. Power to Indemnify in Actions, Suits or Proceedings other
Than Those by or in the Right of the Corporation. Subject to Section 3 of this
Article VIII, the Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
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fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best interest
of the Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
Section 2. Power to Indemnify in Actions, Suits or Proceedings by or
in the Right of the Corporation. Subject to Section 3 of this Article VIII, the
Corporation shall indemnify any person who was or is a party or is threatened,
pending or completed action or suit by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact that he is or was a
director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation, as a director, officer, employee or agent
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of another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation; except that no indemnification
shall be made in respect to any claim, issue or matter as to which such person
shall have been adjudged to be liable for negligence or misconduct in the
performance of his duty to the Corporation unless and only to the extent that
the Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnify for such expenses which the Court of Chancery
or such other court shall deem proper.
Section 3. Authorization of Indemnification. Any indemnification
under this Article VIII (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth in
Section 1 or Section 2 of this Article
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VIII, as the case may be. Such determination shall be made (i) by the Board of
Directors by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (ii) if such a quorum is not
obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (iii) by the
stockholders. To the extent, however, that a director, officer, employee or
agent of the Corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding described above, or in defense of any
claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith, without the necessity of authorization in the specific
case.
Section 4. Good Faith Defined. For purposes of any determination
under Section 3 of this Article VIII, a person shall be deemed to have acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interest of the Corporation, or, with respect to any criminal action or
proceeding, to have had no reasonable cause to believe his conduct was unlawful,
if his action is based on the records or books of account of the Corporation or
another enterprise, or on information supplied to him by
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the officers of the Corporation or another enterprise in the course of their
duties, or on the advice of legal counsel for the Corporation or another
enterprise or on information or records given or reports made to the Corporation
or another enterprise by an independent certified public accountant or by an
appraiser or other expert selected with reasonable care by the Corporation or
another enterprise. The term "another enterprise" as used in this Section 4
shall mean any other corporation or any partnership, joint venture, trust or
other enterprise which such person is or was serving at the request of the
Corporation as a director, officer, employee or agent. The provisions of this
Section 4 shall not be deemed to be exclusive or to limit in any way the
circumstances in which a person may be deemed to have met the applicable
standard of conduct set forth in Sections 1 or 2 of this Article VIII, as the
case may be.
Section 5. Indemnification by a Court. Notwithstanding any contrary
determination in the specific case under Section 3 of this Article VIII, and
notwithstanding the absence of any determination thereunder, any director,
officer, employee or agent may apply to any court of competent jurisdiction in
the State of Delaware for indemnification to the extent otherwise permissible
under Sections 1 and 2 of this Article VIII. The basis of such
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indemnification by a court shall be a determination by such court that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he has met the applicable standards of conduct set forth
in Sections 1 or 2 of this Article VIII, as the case may be. Notice of any
application for indemnification pursuant to this Section 5 shall be given to the
Corporation promptly upon the filing of such application.
Section 6. Expenses Payable in Advance. Expenses incurred in
defending or investigating a threatened or pending action, suit or proceeding
may be paid by the Corporation in advance of the final disposition of such
action, suit or proceeding as authorized by the Board of Directors in the
specific case upon receipt of an undertaking by or on behalf of the director,
officer, employee or agent to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the Corporation as
authorized in this Article VIII.
Section 7. Non-exclusivity and Survival of Indemnification. The
indemnification provided by this Article VIII shall not be deemed exclusive of
any other rights to which those seeking indemnification may be entitled under
any By-Laws, agreement, contract, vote of stockholders or disinterested
directors or pursuant to the direction
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(howsoever embodied) of any court of competent jurisdiction or otherwise, both
as to action in his official capacity and as to action in another capacity while
holding such office, it being the policy of the Corporation that indemnification
of the persons specified in Sections 1 and 2 of this Article VIII shall be made
to the fullest extent permitted by law. The provisions of this Article VIII
shall not be deemed to preclude the indemnification of any person who is not
specified in Sections 1 or 2 of this Article VIII but whom the Corporation has
the power or obligation to indemnify under the provisions of the General
Corporation Law of the State of Delaware, or otherwise. The indemnification
provided by this Article VIII shall continue as to a person who has ceased to be
a director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such person.
Section 8. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity, or arising out of
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his status as such, whether or not the Corporation would have the power or the
obligation to indemnify him against such liability under the provisions of this
Article VIII.
Section 9. Meaning of "Corporation" for Purposes of Article VIII.
For purposes of this Article VIII, references to "the Corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under the provisions of this Article VIII with respect to the resulting
or surviving corporation as he would have with respect to such constituent
corporation if its separate existence had continued.
32
<PAGE> 34
ARTICLE IX
AMENDMENTS
Section 1. The Board of Directors shall have the power to make,
amend and repeal the By-Laws of the Corporation as provided by law.
Section 2. The stockholders may make, alter, amend and repeal the
By-Laws of the Corporation, at the annual meeting or at a special meeting called
for such purpose, and all By-Laws made by the directors may be altered or
repealed by the stockholders.
33
<PAGE> 1
EXHIBIT 3.2(f)
BY-LAWS
OF
AMERICAN BANKNOTE CARD SERVICES, INC.
Incorporated under the laws of the State of Delaware - July 15, 1992
As amended through August 11, 1997
<PAGE> 2
BYLAWS
OF
AMERICAN BANKNOTE CARD SERVICES, INC.
(a Delaware corporation)
-------------------
ARTICLE I
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Certificates representing stock
in the corporation shall be signed by, or in the name of, the corporation by the
Chairman or Vice-Chairman of the Board of Directors, if any, or by the President
or a Vice-President and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary of the corporation. Any or all the
signatures on any such certificate may be a facsimile. In case any officer,
transfer agent, or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent, or registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer, transfer agent, or
registrar at the date of issue.
Whenever the corporation shall be authorized to issue more than one
class of stock or more than one series of any class of stock, and whenever the
corporation shall issue any shares of its stock as partly paid stock, the
certificates representing shares of any such class or series or of any such
partly paid stock shall set forth thereon the statements prescribed by the
General Corporation Law. Any restrictions on the transfer or registration of
transfer of any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares.
The corporation may issue a new certificate of stock or
uncertificated shares in place of any certificate theretofore issued by it,
alleged to have been lost, stolen, or destroyed, and the Board of Directors may
require the owner of the lost, stolen, or destroyed certificate, or his legal
representative, to give the corporation a bond sufficient to indemnify the
corporation against any claim that may be made against it on account of the
alleged loss, theft,
<PAGE> 3
or destruction of any such certificate or the issuance of any such new
certificate or uncertificated shares.
2. UNCERTIFICATED SHARES. Subject to any conditions imposed by the
General Corporation Law, the Board of Directors of the corporation may provide
by resolution or resolutions that some or all of any or all classes or series of
the stock of the corporation shall be uncertificated shares. Within a reasonable
time after the issuance or transfer of any uncertificated shares, the
corporation shall send to the registered owner thereof any written notice
prescribed by the General Corporation Law.
3. FRACTIONAL SHARE INTERESTS. The corporation may, but shall not be
required to, issue fractions of a share. If the corporation does not issue
fractions of a share, it shall (1) arrange for the disposition of fractional
interests by those entitled thereto, (2) pay in cash the fair value of fractions
of a share as of the time when those entitled to receive such fractions are
determined, or (3) issue scrip or warrants in registered form (either
represented by a certificate or uncertificated) or bearer form (represented by a
certificate) which shall entitle the holder to receive a full share upon the
surrender of such scrip or warrants aggregating a full share. A certificate for
a fractional share or an uncertificated fractional share shall, but scrip or
warrants shall not unless otherwise provided therein, entitle the holder to
exercise voting rights, to receive dividends thereon, and to participate in any
of the assets of the corporation in the event of liquidation. The Board of
Directors may cause scrip or warrants to be issued subject to the conditions
that they shall become void if not exchanged for certificates representing the
full shares or uncertificated full shares before a specified date, or subject to
the conditions that the shares for which scrip or warrants are exchangeable may
be sold by the corporation and the proceeds thereof distributed to the holders
of scrip or warrants, or subject to any other conditions which the Board of
Directors may impose.
4. STOCK TRANSFERS. Upon compliance with provisions restricting the
transfer or registration of transfer of shares of stock, if any, transfers or
registration of transfers of shares of stock of the corporation shall be made
only on the stock ledger of the corporation by the registered holder thereof, or
by his attorney thereunto authorized by power of attorney duly executed and
filed with the Secretary of the corporation or with a transfer agent or a
registrar, if any, and, in the case of shares represented by certificates, on
surrender of the certificate or certificates for such shares of stock properly
endorsed and the payment of all taxes due thereon.
5. RECORD DATE FOR STOCKHOLDERS. In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders
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<PAGE> 4
or any adjournment thereof, the Board of Directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors, and which record date shall
not be more than sixty nor less than ten days before the date of such meeting.
If no record date is fixed by the Board of Directors, the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
In order that the corporation may determine the stockholders entitled to consent
to corporate action in writing without a meeting, the Board of Directors may fix
a record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the Board of Directors. If no
record date has been fixed by the Board of Directors, the record date for
determining the stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is required by
the General Corporation Law, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the corporation by delivery to its registered office in the State of Delaware,
its principal place of business, or an officer or agent of the corporation
having custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the corporation's registered office shall be by hand
or by certified or registered mail, return receipt requested. If no record date
has been fixed by the Board of Directors and prior action by the Board of
Directors is required by the General Corporation Law, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the day on which the
Board of Directors adopts the resolution taking such prior action. In order that
the corporation may determine the stockholders entitled to receive payment of
any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion, or exchange of stock, or for the purpose of any other lawful action,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which record date shall be not more than sixty days prior to such action. If
no record date is fixed, the record date for determining stockholders for any
such purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
6. MEANING OF CERTAIN TERMS. As used herein in respect of the right
to notice of a meeting of stockholders or a waiver thereof or to participate or
vote thereat
3
<PAGE> 5
or to consent or dissent in writing in lieu of a meeting, as the case may be,
the term "share" or "shares" or "share of stock" or "shares of stock" or
"stockholder" or "stockholders" refers to an outstanding share or shares of
stock and to a holder or holders of record of outstanding shares of stock when
the corporation is authorized to issue only one class of shares of stock, and
said reference is also intended to include any outstanding share or shares of
stock and any holder or holders of record of outstanding shares of stock of any
class upon which or upon whom the certificate of incorporation confers such
rights where there are two or more classes or series of shares of stock or upon
which or upon whom the General Corporation Law confers such rights
notwithstanding that the certificate of incorporation may provide for more than
one class or series of shares of stock, one or more of which are limited or
denied such rights thereunder; provided, however, that no such right shall vest
in the event of an increase or a decrease in the authorized number of shares of
stock of any class or series which is otherwise denied voting rights under the
provisions of the certificate of incorporation, except as any provision of law
may otherwise require.
7. STOCKHOLDER MEETINGS.
- TIME. The annual meeting shall be held on the date and at the time
fixed, from time to time, by the directors, provided, that the first annual
meeting shall be held on a date within thirteen months after the organization of
the corporation, and each successive annual meeting shall be held on a date
within thirteen months after the date of the preceding annual meeting. A special
meeting shall he held on the date and at the time fixed by the directors.
- PLACE. Annual meetings and special meetings shall be held at such
place, within or without the State of Delaware, as the directors may, from time
to time, fix. Whenever the directors shall fail to fix such place, the meeting
shall be held at the registered office of the corporation in the State of
Delaware.
- CALL. Annual meetings and special meetings may be called by the
directors or by any officer instructed by the directors to call the meeting.
- NOTICE OR WAIVER OF NOTICE. Written notice of all meetings shall
he given, stating the place, date, and hour of the meeting and stating the place
within the city or other municipality or community at which the list of
stockholders of the corporation may be examined. The notice of an annual meeting
shall state that the meeting is called for the election of directors and for the
transaction of other business which may properly come before the meeting, and
shall (if any other action which could be taken at a special meeting is to be
taken at such annual meeting) state the purpose or purposes. The notice of a
special meeting
4
<PAGE> 6
shall in all instances state the purpose or purposes for which the meeting is
called. The notice of any meeting shall also include, or be accompanied by, any
additional statements, information, or documents prescribed by the General
Corporation Law. Except as otherwise provided by the General Corporation Law, a
copy of the notice of any meeting shall be given, personally or by mail, not
less than ten days nor more than sixty days before the date of the meeting,
unless the lapse of the prescribed period of time shall have been waived, and
directed to each stockholder at his record address or at such other address
which he may have furnished by request in writing to the Secretary of the
corporation. Notice by mail shall be deemed to be given when deposited, with
postage thereon prepaid, in the United States Mail. If a meeting is adjourned to
another time, not more than thirty days hence, and/or to another place, and if
an announcement of the adjourned time and/or place is made at the meeting, it
shall not be necessary to give notice of the adjourned meeting unless the
directors, after adjournment, fix a new record date for the adjourned meeting.
Notice need not be given to any stockholder who submits a written waiver of
notice signed by him before or after the time stated therein. Attendance of a
stockholder at a meeting of stockholders shall constitute a waiver of notice of
such meeting, except when the stockholder attends the meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the stockholders need be specified in any written waiver of notice.
- STOCKHOLDER LIST. The officer who has charge of the stock ledger
of the corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city or other municipality or community
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by this
section or the books of the corporation, or to vote at any meeting of
stockholders.
- CONDUCT OF MEETING. Meetings of the stockholders shall be presided
over by one of the following officers in the order of seniority and if present
and acting - the Chairman of the Board, if any, the Vice-Chairman of the Board,
if any, the President, a Vice-President, or, if none of the foregoing is in
office and present and acting, by a chairman to be
5
<PAGE> 7
chosen by the stockholders. The Secretary of the corporation, or in his absence,
an Assistant Secretary, shall act as secretary of every meeting, but if neither
the Secretary nor an Assistant Secretary is present the Chairman of the meeting
shall appoint a secretary of the meeting.
- PROXY REPRESENTATION. Every stockholder may authorize another
person or persons to act for him by proxy in all matters in which a stockholder
is entitled to participate, whether by waiving notice of any meeting, voting or
participating at a meeting, or expressing consent or dissent without a meeting.
Every proxy must be signed by the stockholder or by his attorney-in-fact. No
proxy shall be voted or acted upon after three years from its date unless such
proxy provides for a longer period. A duly executed proxy shall be irrevocable
if it states that it is irrevocable and, if, and only as long as, it is coupled
with an interest sufficient in law to support an irrevocable power. A proxy may
be made irrevocable regardless of whether the interest with which it is coupled
is an interest in the stock itself or an interest in the corporation generally.
- INSPECTORS. The directors, in advance of any meeting, may, but
need not, appoint one or more inspectors of election to act at the meeting or
any adjournment thereof. If an inspector or inspectors are not appointed, the
person presiding at the meeting may, but need not, appoint one or more
inspectors. In case any person who may be appointed as an inspector fails to
appear or act, the vacancy may be filled by appointment made by the directors in
advance of the meeting or at the meeting by the person presiding thereat. Each
inspector, if any, before entering upon the discharge of his duties, shall take
and sign an oath faithfully to execute the duties of inspectors at such meeting
with strict impartiality and according to the best of his ability. The
inspectors, if any, shall determine the number of shares of stock outstanding
and the voting power of each, the shares of stock represented at the meeting,
the existence of a quorum, the validity and effect of proxies, and shall receive
votes, ballots, or consents, hear and determine all challenges and questions
arising in connection with the right to vote, count and tabulate all votes,
ballots, or consents, determine the result, and do such acts as are proper to
conduct the election or vote with fairness to all stockholders. On request of
the person presiding at the meeting, the inspector or inspectors, if any, shall
make a report in writing of any challenge, question, or matter determined by him
or them and execute a certificate of any fact found by him or them. Except as
otherwise required by subsection (e) of Section 231 of the General Corporation
Law, the provisions of that Section shall not apply to the corporation.
- QUORUM. The holders of a majority of the outstanding shares of
stock shall constitute a quorum at a meeting of stockholders for the transaction
of any business. The stockholders present may adjourn the meeting despite the
absence of a quorum.
6
<PAGE> 8
- VOTING. Each share of stock shall entitle the holder thereof to
one vote. Directors shall be elected by a plurality of the votes of the shares
present in person or represented by proxy at the meeting and entitled to vote on
the election of directors. Any other action shall be authorized by a majority of
the votes cast except where the General Corporation Law prescribes a different
percentage of votes and/or a different exercise of voting power, and except as
may be otherwise prescribed by the provisions of the certificate of
incorporation and these Bylaws. In the election of directors, and for any other
action, voting need not be by ballot.
8. STOCKHOLDER ACTION WITHOUT MEETINGS. Any action required by the
General Corporation Law to be taken at any annual or special meeting of
stockholders, or any action which may be taken at any annual or special meeting
of stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing. Action taken pursuant to this paragraph shall be
subject to the provisions of Section 228 of the General Corporation Law.
ARTICLE II
DIRECTORS
1. FUNCTIONS AND DEFINITION. The business and affairs of the
corporation shall be managed by or under the direction of the Board of Directors
of the corporation. The Board of Directors shall have the authority to fix the
compensation of the members thereof. The use of the phrase "whole board" herein
refers to the total number of directors which the corporation would have if
there were no vacancies.
2. QUALIFICATIONS AND NUMBER. A director need not be a stockholder,
a citizen of the United States, or a resident of the State of Delaware. The
initial Board of Directors shall consist of one person. Thereafter the number of
directors constituting the whole board shall be at least one. Subject to the
foregoing limitation and except for the first Board of Directors, such number
may be fixed from time to time by action of the stockholders or of the
directors, or, if the number is not fixed, the number shall be one. The number
of directors may be increased or decreased by action of the stockholders or of
the directors.
7
<PAGE> 9
3. ELECTION AND TERM. The first Board of Directors, unless the
members thereof shall have been named in the certificate of incorporation, shall
be elected by the incorporator or incorporators and shall hold office until the
first annual meeting of stockholders and until their successors are elected and
qualified or until their earlier resignation or removal. Any director may resign
at any time upon written notice to the corporation. Thereafter, directors who
are elected at an annual meeting of stockholders, and directors who are elected
in the interim to fill vacancies and newly created directorships, shall hold
office until the next annual meeting of stockholders and until their successors
are elected and qualified or until their earlier resignation or removal. Except
as the General Corporation Law may otherwise require, in the interim between
annual meetings of stockholders or of special meetings of stockholders called
for the election of directors and/or for the removal of one or more directors
and for the filling of any vacancy in that connection, newly created
directorships and any vacancies in the Board of Directors, including unfilled
vacancies resulting from the removal of directors for cause, or without cause,
may be filled by the vote of a majority of the remaining directors then in
office, although less than a quorum, or by the sole remaining director.
4. MEETINGS.
- TIME. Meetings shall be held at such time as the Board shall fix,
except that the first meeting of a newly elected Board shall be held as soon
after its election as the directors may conveniently assemble.
- PLACE. Meetings shall be held at such place within or without the
State of Delaware as shall be fixed by the Board.
- CALL. No call shall be required for regular meetings for which the
time and place have been fixed. Special meetings may be called by or at the
direction of the Chairman of the Board, if any, the Vice-Chairman of the Board,
if any, or the President, or of a majority of the directors in office.
- NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be
required for regular meetings for which the time and place have been fixed.
Written, oral, or any other mode of notice of the time and place shall be given
for special meetings in sufficient time for the convenient assembly of the
directors thereat. Notice need not be given to any director or to any member of
a committee of directors who submits a written waiver of notice signed by him
before or after the time stated therein. Attendance of any such person at a
meeting shall constitute a waiver of notice of such meeting, except when be
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any
8
<PAGE> 10
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the directors need be specified in any written waiver of notice.
- QUORUM AND ACTION. A majority of the whole Board shall constitute
a quorum except when a vacancy or vacancies prevents such majority, whereupon a
majority of the directors in office shall constitute a quorum, provided, that
such majority shall constitute at least one-third of the whole Board. A majority
of the directors present, whether or not a quorum is present, may adjourn a
meeting to another time and place. Except as herein otherwise provided, and
except as otherwise provided by the General Corporation Law, the vote of the
majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board. The quorum and voting provisions herein stated
shall not be construed as conflicting with any provisions of the General
Corporation Law and these Bylaws which govern a meeting of directors held to
fill vacancies and newly created directorships in the Board or action of
disinterested directors.
Any member or members of the Board of Directors or of any committee
designated by the Board, may participate in a meeting of the Board, or any such
committee, as the case may be, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other.
- CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and if
present and acting, shall preside at all meetings. Otherwise, the Vice-Chairman
of the Board, if any and if present and acting, or the President, if present and
acting, or any other director chosen by the Board, shall preside.
5. REMOVAL OF DIRECTORS. Except as may otherwise be provided by the
General Corporation Law, any director or the entire Board of Directors may be
removed, with or without cause, by the holders of a majority of the shares then
entitled to vote at an election of directors.
6. COMMITTEES. The Board of Directors may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation. The Board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. In
the absence or disqualification of any member of any such committee or
committees, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the
9
<PAGE> 11
place of any such absent or disqualified member. Any such committee, to the
extent provided in the resolution of the Board, shall have and may exercise the
powers and authority of the Board of Directors in the management of the business
and affairs of the corporation with the exception of any authority the
delegation of which is prohibited by Section 141 of the General Corporation Law,
and may authorize the seal of the corporation to be affixed to all papers which
may require it.
7. WRITTEN ACTION. Any action required or permitted to be taken at
any meeting of the Board of Directors or any committee thereof may be taken
without a meeting if all members of the Board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committee.
ARTICLE III
OFFICERS
The officers of the corporation shall consist of a President, a
Secretary, a Treasurer, and, if deemed necessary, expedient, or desirable by the
Board of Directors, a Chairman of the Board, a Vice-Chairman of the Board, an
Executive Vice-President, one or more other Vice-Presidents, one or more
Assistant Secretaries, one or more Assistant Treasurers, and such other officers
with such titles as the resolution of the Board of Directors choosing them shall
designate. Except as may otherwise be provided in the resolution of the Board of
Directors choosing him, no officer other than the Chairman or Vice-Chairman of
the Board, if any, need be a director. Any number of offices may be held by the
same person, as the directors may determine.
Unless otherwise provided in the resolution choosing him, each
officer shall be chosen for a term which shall continue until the meeting of the
Board of Directors following the next annual meeting of stockholders and until
his successor shall have been chosen and qualified.
All officers of the corporation shall have such authority and
perform such duties in the management and operation of the corporation as shall
be prescribed in the resolutions of the Board of Directors designating and
choosing such officers and prescribing their authority and duties, and shall
have such additional authority and duties as are incident to their office except
to the extent that such resolutions may be inconsistent therewith. The Secretary
or an Assistant Secretary of the corporation shall record all of the proceedings
of all meetings and actions in writing of stockholders, directors, and
committees of directors, and shall exercise
10
<PAGE> 12
such additional authority and perform such additional duties as the Board shall
assign to him. Any officer may be removed, with or without cause, by the Board
of Directors. Any vacancy in any office may be filled by the Board of Directors.
ARTICLE IV
CORPORATE SEAL
The corporate seal shall be in such form as the Board of Directors
shall prescribe.
ARTICLE V
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall be
subject to change, by the Board of Directors.
ARTICLE VI
CONTROL OVER BYLAWS
Subject to the provisions of the certificate of incorporation and
the provisions of the General Corporation Law, the power to amend, alter, or
repeal these Bylaws and to adopt new Bylaws may be exercised by the Board of
Directors or by the stockholders.
11
<PAGE> 1
EXHIBIT 3.2(g)
BY-LAWS
OF
AMERICAN BANKNOTE MERCHANT SERVICES, INC.
Incorporated under the laws of the State of Delaware - August 11, 1997
<PAGE> 2
BY-LAWS
OF
AMERICAN BANKNOTE MERCHANT SERVICES, INC.
(A Delaware Corporation)
Article I.
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK.
Every holder of stock in the corporation shall be entitled to
have a certificate signed by, or in the name of, the corporation by the Chairman
or Vice-Chairman of the Board of Directors, if any, or by the President or a
Vice-President and by the Treasurer or an Assistant Treasurer or the Secretary
or an Assistant Secretary of the corporation representing the number of shares
owned by him in the corporation. If such certificate is countersigned by a
transfer agent other than the corporation or its employee or by a registrar
other than the corporation or its employee, any other signature on the
certificate may be a facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent, or registrar
before such certificate is issued, it may be issued by the corporation with the
same effect as if he were such officer, transfer agent, or registrar at the date
of issue.
<PAGE> 3
Whenever the corporation shall be authorized to issue more
than one class of stock or more than one series of any class of stock, and
whenever the corporation shall issue any shares of its stock as partly paid
stock, the certificates representing shares of any such class or series or of
any such partly paid stock shall set forth thereon the statements prescribed by
the General Corporation Law. Any restrictions on the transfer or registration of
transfer of any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares.
The corporation may issue a new certificate of stock in place
of any certificate theretofore issued by it, alleged to have been lost, stolen,
or destroyed, and the Board of Directors may require the owner of any lost,
stolen, or destroyed certificate, or his legal representative, to give the
corporation a bond sufficient to indemnify the corporation against any claim
that may be made against it on account of the alleged loss, theft, or
destruction of any such certificate or the issuance of any such new certificate.
2. FRACTIONAL SHARE INTERESTS.
The corporation may, but shall not be required to, issue
fractions of a share.
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<PAGE> 4
3. STOCK TRANSFERS.
Upon compliance with provisions restricting the transfer or
registration of transfer of shares of stock, if any, transfers or registration
of transfer of shares of stock of the corporation shall be made only on the
stock ledger of the corporation by the registered holder thereof, or by his
attorney thereunto authorized by power of attorney duly executed and filed with
the Secretary of corporation or with a transfer agent or a registrar, if any,
and on surrender of the certificate or certificates for such shares of stock
properly endorsed and the payment of all taxes due thereon.
4. RECORD DATE FOR STOCKHOLDERS.
In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the board of directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the board of directors, and which record date shall not be more
than sixty nor less than ten days before the date of such meeting. If no record
date has been fixed by the board of directors, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of General on the day next preceding the day on which notice is
given, or, if notice is waived, at the close of General on the day next
preceding the day on which the meeting is held. A
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<PAGE> 5
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting;
providing, however, that the board of directors may fix a new record date for
the adjourned meeting.
In order that the corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the board of directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty days prior to such
action. If no record date has been fixed, the record date for determining
stockholders for any such purpose shall be at the close of General on the day on
which the board of directors adopts the resolution relating thereto.
5. MEANING OF CERTAIN TERMS.
As used herein in respect of the right to notice of a meeting
of stockholders or a waiver thereof or to participate or vote thereat or to
consent or dissent in writing in lieu of a meeting, as the case may be, the term
"share" or "shares" or "share of stock" or "shares of stock" or "stockholder" or
"stockholders" refers to an outstanding share or shares of stock
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<PAGE> 6
and to a holder or holders of record of outstanding shares of stock when the
corporation is authorized to issue only one class of shares of stock, and said
reference is also intended to include any outstanding share or shares of stock
and any holder or holders of record of outstanding shares of stock of any class
upon which or upon whom the Certificate of Incorporation confers such rights
where there are two or more classes or series of shares of stock or upon which
or upon whom the General Corporation Law confers such rights notwithstanding
that the Certificate of Incorporation may provide for more than one class or
series of shares of stock, one or more of which are limited or denied such
rights thereunder; provided, however, that no such right shall vest in the event
of an increase or a decrease in the authorized number of shares of stock of any
class or series which is otherwise denied voting rights under the provisions of
the Certificate of Incorporation, including any Preferred Stock which is denied
voting rights under the provisions of the resolution or resolutions adopted by
the Board of Directors with respect to the issuance thereof.
6. STOCKHOLDER MEETINGS.
TIME. The annual meeting shall be held on the date and at the
time fixed, from time to time, by the directors. A special meeting shall be held
on the date and at the time fixed by the directors.
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<PAGE> 7
PLACE. Annual meetings and special meetings shall be held at
such place, within or without the State of Delaware, as the directors may, from
time to time, fix. Whenever the directors shall fail to fix such place, the
meeting shall be held at the registered office of the corporation in the State
of Delaware.
CALL. Annual meetings and special meetings may be called by
the directors or by any officer instructed by the directors to call the meeting.
NOTICE OR WAIVER OF NOTICE. Written notice of all meetings
shall be given, stating the place, date, and hour of the meeting. The notice of
an annual meeting shall state that the meeting is called for the election of
directors and for the transaction of other General which may properly come
before the meeting, and shall (if any other action which could be taken at a
special meeting is to be taken at such annual meeting), state such other action
or actions as are known at the time of such notice. The notice of a special
meeting shall in all instances state the purpose or purposes for which the
meeting is called. If any action is proposed to be taken which would, if taken,
entitle stockholders to receive payment for their shares of stock, the notice
shall include a statement of that purpose and to that effect. Except as
otherwise provided by the General Corporation Law, a copy of the notice of any
meeting shall be given, personally or by mail, not less than ten days nor more
than sixty days before the date of the meeting, unless the lapse of the
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<PAGE> 8
prescribed period of time shall have been waived, and directed to each
stockholder at his address as it appears on the records of the corporation.
Notice by mail shall be deemed to be given when deposited, with postage thereon
prepaid, in the United States mail. If a meeting is adjourned to another time,
not more than thirty days hence, and/or to another place, and if an announcement
of the adjourned time and place is made at the meeting, it shall not be
necessary to give notice of the adjourned meeting unless the directors, after
adjournment, fix a new record date for the adjourned meeting. Notice need not be
given to any stockholder who submits a written waiver of notice by him before or
after the time stated therein. Attendance of a person at a meeting of
stockholders shall constitute a waiver of notice of such meeting, except when
the stockholder attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any General because the meeting
is not lawfully called or convened. Neither the General to be transacted at, nor
the purpose of, any regular or special meeting of the stockholders need be
specified in any written waiver of notice.
STOCKHOLDER LIST. There shall be prepared and made, at least
ten days before every meeting of stockholders, a complete list of the
stockholders, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
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<PAGE> 9
germane to the meeting, during ordinary General hours, for a period of at least
ten days prior to the meeting either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by this
section or the books of the corporation, or to vote at any meeting of
stockholders.
CONDUCT OF MEETING. Meetings of the stockholders shall be
presided over by one of the following officers in the order of seniority and if
present and acting: the Chairman of the Board, if any, the Vice-Chairman of the
Board, if any, the President, a Vice President, a chairman for the meeting
chosen by the Board of Directors, or, if none of the foregoing is in office and
present and acting, by a chairman to be chosen by the stockholders. The
Secretary of the corporation, or, in his absence, an Assistant Secretary, shall
act as secretary of every meeting, but if neither the Secretary nor an Assistant
Secretary is present the Chairman for the meeting shall appoint a secretary of
the meeting.
PROXY REPRESENTATION. Every stockholder may authorize another
person or persons to act for him by proxy in all matters in which a stockholder
is entitled to participate, whether by
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<PAGE> 10
waiving notice of any meeting, voting or participating at a meeting, or
expressing consent or dissent without a meeting. Every proxy must be signed by
the stockholder or by his attorney-in-fact. No proxy shall be voted or acted
upon after three years from its date unless such proxy provides for a longer
period. A duly executed proxy shall be irrevocable if it states that it is
irrevocable and, if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power. A proxy may be made
irrevocable regardless of whether the interest with which it is coupled is an
interest in the stock itself or an interest in the corporation generally.
INSPECTORS AND JUDGES. The directors, in advance of any
meeting, may, but need not, appoint one or more inspectors of election or judges
of the vote, as the case may be, to act at the meeting or any adjournment
thereof. If an inspector or inspectors or judge or judges are not appointed, the
person presiding at the meeting may, but need not, appoint one or more
inspectors or judges. In case any person who may be appointed as an inspector or
judge fails to appear or act, the vacancy may be filled by appointment made by
the person presiding thereat. Each inspector or judge, if any, before entering
upon the discharge of his duties, shall take and sign an oath faithfully to
execute the duties of inspector or judge at such meeting with strict
impartiality and according to the best of his ability. The inspectors or judges,
if any, shall determine the number of shares
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<PAGE> 11
of stock outstanding and the voting power of each, the shares of stock
represented at the meeting, the existence of a quorum, the validity and effect
of proxies, and shall receive votes, ballots or consents, hear and determine all
challenges and questions arising in connection with the right to vote, count and
tabulate all votes, ballots or consents, determine the result, and do such acts
as are proper to conduct the election or vote with fairness to all stockholders.
On request of the person presiding at the meeting, the inspector or inspectors
or judge or judges, if any, shall make a report in writing of any challenge,
question or matter determined by him or them and execute a certificate of any
fact found by him or them.
QUORUM. Except as the General Corporation Law or these By-Laws
may otherwise provide, the holders of a majority of the outstanding shares of
stock entitled to vote shall constitute a quorum at a meeting of stockholders
for the transaction of any General. The stockholders present may adjourn the
meeting despite the absence of a quorum. When a quorum is once present to
organize a meeting, it is not broken by the subsequent withdrawal of any
shareholders.
VOTING. Each stockholder entitled to vote in accordance with
the terms of the Certificate of Incorporation and of these By-Laws, or, with
respect to the issuance of Preferred Stock, in accordance with the terms of a
resolution or resolutions of the Board of Directors, shall be entitled to one
vote, in person or by
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<PAGE> 12
proxy, for each share of stock entitled to vote held by such stockholder. In the
election of directors, a plurality of the votes present at the meeting shall
elect. Any other action shall be authorized by a majority of the votes cast
except where the Certificate of Incorporation or the General Corporation Law
prescribes a different percentage of votes and/or a different exercise of voting
power. Voting by ballot shall not be required for corporate action except as
otherwise provided by the General Corporation Law.
7. STOCKHOLDER ACTION WITHOUT MEETINGS.
Any action required to be taken, or any action which may be
taken, at any annual or special meeting of stockholders, may be taken without a
meeting, without prior notice and without a vote, if a consent or consents in
writing, setting forth the action so taken, shall be signed by the holders of
the outstanding stock having not less than the minimum number of votes that
would be necessary to authorize or take such action at a meeting at which all
shares entitled to vote thereon were present and voted. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing
and shall be delivered to the corporation by delivery to its registered office
in Delaware, its principal place of General, or an officer or agent of the
corporation having custody of the book in which
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<PAGE> 13
proceedings of meetings of stockholders are recorded. Delivery made to a
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested.
ARTICLE II.
DIRECTORS
1. FUNCTIONS AND DEFINITION.
The General and affairs of the corporation shall be managed by
or under the direction of the Board of Directors of the corporation. The use of
the phrase "whole board" herein refers to the total number of directors which
the corporation would have if there were no vacancies.
2. QUALIFICATIONS AND NUMBER.
A director need not be a stockholder, a citizen of the United
States, or a resident of the State of Delaware. The initial Board of Directors
shall consist of ____ persons. Thereafter the number of directors constituting
the whole board shall be at least one. Subject to the foregoing limitation and
except for the first Board of Directors, such number may be fixed from time to
time by action of the stockholders or of the directors, or, if the number is not
fixed, the number shall be three. The number of directors may be increased or
decreased by action of the stockholders or of the directors.
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<PAGE> 14
3. ELECTION AND TERM.
The first Board of Directors, unless the members thereof shall
have been named in the Certificate of Incorporation, shall be elected by the
incorporator or incorporators and shall hold office until the first annual
meeting of stockholders and until their successors have been elected and
qualified or until their earlier resignation or removal. Any director may resign
at any time upon written notice to the corporation. Thereafter, directors who
are elected at an annual meeting of stockholders, and directors who are elected
in the interim to fill vacancies and newly created directorships, shall hold
office until the next annual meeting of stockholders and until their successors
have been elected and qualified or until their earlier resignation or removal.
In the interim between annual meetings of stockholders or of special meetings of
stockholders called for the election of directors and/or for the removal of one
or more directors and for the filling of any vacancies in the Board of
Directors, including vacancies resulting from the removal of directors for cause
or without cause, any vacancy in the Board of Directors may be filled by the
vote of a majority of the remaining directors then in office, although less than
a quorum, or by the sole remaining director.
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4. MEETINGS.
TIME. Meetings shall be held at such time as the Board shall
fix.
FIRST MEETING. The first meeting of each newly elected Board
may be held immediately after each annual meeting of the stockholders at the
same place at which the meeting is held, and no notice of such meeting shall be
necessary to call the meeting, provided a quorum shall be present. In the event
such first meeting is not so held immediately after the annual meeting of the
stockholders, it may be held at such time and place as shall be specified in the
notice given as hereinafter provided for special meetings of the Board of
Directors, or at such time and place as shall be fixed by the consent in writing
of all of the directors.
PLACE. Meetings, both regular and special, shall be held at
such place within or without the State of Delaware as shall be fixed by the
Board.
CALL. No call shall be required for regular meetings for which
the time and place have been fixed. Special meetings may be called by or at the
direction of the Chairman of the Board, if any, the Vice-Chairman of the Board,
if any, or the President, or of a majority of the directors in office.
NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be
required for regular meetings for which the time and place have been fixed.
Written, oral, or any other mode of notice of the time and place shall be given
for special meetings at least
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<PAGE> 16
twenty-four hours prior to the meeting. The notice of any meeting need not
specify the purpose of the meeting. Any requirement of furnishing a notice shall
be waived by any director who signs a written waiver of such notice before or
after the time stated therein.
Attendance of a director at a meeting of the Board shall
constitute a waiver of notice of such meeting, except when the director attends
a meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any General because the meeting is not lawfully called or
convened.
QUORUM AND ACTION. A majority of the whole Board shall
constitute a quorum except when a vacancy or vacancies prevents such majority,
whereupon a majority of the directors in office shall constitute a quorum,
provided that such majority shall constitute at least one-third (1/3) of the
whole Board. Any director may participate in a meeting of the Board by means of
a conference telephone or similar communications equipment by means of which all
directors participating in the meeting can hear each other, and such
participation in a meeting of the Board shall constitute presence in person at
such meeting. A majority of the directors present, whether or not a quorum is
present, may adjourn a meeting to another time and place. Except as herein
otherwise provided, and except as otherwise provided by the General Corporation
Law, the act of the Board shall be the act by vote of a majority of the
directors present at a meeting, a quorum being
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present. The quorum and voting provisions herein stated shall not be construed
as conflicting with any provisions of the General Corporation Law and these
By-Laws which govern a meeting of directors held to fill vacancies and newly
created directorships in the Board.
CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and
if present and acting, shall preside at all meetings. Otherwise, the
Vice-Chairman of the Board, if any and if present and acting, or the President,
if present and acting, or any other director chosen by the Board, shall preside.
5. REMOVAL OF DIRECTORS.
Any or all of the directors may be removed for cause or
without cause by the stockholders.
6. COMMITTEES.
The Board of Directors may, by resolution passed by a majority
of the whole Board, designate one or more committees, each committee to consist
of one or more of the directors of the corporation. The Board may designate one
or more directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee. Any such
committee, to the extent provided in the resolution of the Board, shall have and
may exercise the powers of the Board of Directors in the management of the
General and affairs of the corporation, and may authorize the seal of the
corporation to be affixed to all
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papers which may require it. In the absence or disqualification of any member of
any such committee or committees, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the Board of Directors to act
at the meeting in the place of any such absent or disqualified member.
7. ACTION IN WRITING.
Any action required or permitted to be taken at any meeting of
the Board of Directors or any committee thereof may be taken without a meeting
if all members of the Board or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board or committee.
ARTICLE III.
OFFICERS
1. EXECUTIVE OFFICERS.
The directors may elect or appoint a Chairman of the Board of
Directors, a President, one or more Vice Presidents (one or more of whom may be
denominated "Executive Vice President"), a Secretary, one or more Assistant
Secretaries, a Treasurer, one or more Assistant Treasurers, and such other
officers as they may determine. Any number of offices may be held by the same
person.
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2. TERM OF OFFICE: REMOVAL.
Unless otherwise provided in the resolution of election or
appointment, each officer shall hold office until the meeting of the Board of
Directors following the next annual meeting of stockholders and until his
successor has been elected and qualified or until his earlier resignation or
removal. The Board of Directors may remove any officer for cause or without
cause.
3. AUTHORITY AND DUTIES.
All officers, as between themselves and the corporation, shall
have such authority and perform such duties in the management of the corporation
as may be provided in these By-Laws, or, to the extent not so provided, by the
Board of Directors.
4. THE CHAIRMAN OF THE BOARD OF DIRECTORS.
The Chairman of the Board of Directors, if present and acting,
shall preside at all meetings of the Board of Directors, otherwise, the
President, if present, shall preside, or if the President does not so preside,
any other director chosen by the Board shall preside.
5. THE PRESIDENT.
The President shall be the chief executive officer of the
corporation.
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6. VICE PRESIDENTS.
Any Vice President that may have been appointed, in the
absence or disability of the President, shall perform the duties and exercise
the powers of the President, in the order of their seniority, and shall perform
such other duties as the Board of Directors shall prescribe.
7. THE SECRETARY.
The Secretary shall keep in safe custody the seal of the
corporation and affix it to any instrument when authorized by the Board of
Directors, and shall perform such other duties as may be prescribed by the Board
of Directors. The Secretary (or in his absence, an Assistant Secretary, but if
neither is present another person selected by the Chairman for the meeting)
shall have the duty to record the proceedings of the meetings of the
stockholders and directors in a book to be kept for that purpose.
8. THE TREASURER.
The Treasurer shall have the care and custody of the corporate
funds, and other valuable effects, including securities, and shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
corporation and shall deposit all moneys and other valuable effects in the name
and to the credit of the corporation in such depositories as may be designated
by the Board of Directors. The Treasurer shall disburse the funds of the
corporation as may be ordered by the
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Board, taking proper vouchers for such disbursements, and shall render to the
President and directors, at the regular meetings of the Board, or whenever they
may require it, an account of all his transactions as Treasurer and of the
financial condition of the corporation. If required by the Board of Directors,
the Treasurer shall give the corporation a bond for such term, in such sum and
with such surety or sureties as shall be satisfactory to the Board for the
faithful performance of the duties of his office and for the restoration to the
corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
ARTICLE IV.
CORPORATE SEAL
AND
CORPORATE BOOKS
The corporate seal shall be in such form as the Board of
Directors shall prescribe.
The books of the corporation may be kept within or without the
State of Delaware, at such place or places as the Board of Directors may, from
time to time, determine.
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ARTICLE V.
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall
be subject to change, by the Board of Directors.
ARTICLE VI.
INDEMNITY
Any person who was or is a party or threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation) by reason of the fact that he or she is
or was a director, officer, employee or agent of the corporation or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise (including employee benefit plans) (hereinafter an "indemnitee"),
shall be indemnified and held harmless by the corporation to the fullest extent
authorized by the General Corporation Law, as the same exists or may hereafter
be amended (but, in the case of any such amendment, only to the extent that such
amendment permits the corporation to provide broader indemnification than
permitted prior thereto), against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such indemnitee in connection with such action, suit or
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proceeding, if the indemnitee acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe such conduct was unlawful. The termination of the
proceeding, whether by judgment, order, settlement, conviction or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a presumption
that the person did not act in good faith and in a manner which he or she
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, had
reasonable cause to believe such conduct was unlawful.
Any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the right
of the corporation to procure a judgment in its favor by reason of the fact that
he or she is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise (including employee benefit plans) shall be indemnified and
held harmless by the corporation to the fullest extent authorized by the General
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
corporation to provide broader
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indemnification than permitted prior thereto), against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation and except that no indemnification shall be made in respect of
any claim, issue or matter as to which such person shall have been adjudged to
be liable to the corporation unless and only to the extent that the Court in
which such suit or action was brought, shall determine upon application, that
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which such Court shall deem proper.
All reasonable expenses incurred by or on behalf of the
indemnitee in connection with any suit, action or proceeding, shall be advanced
to the indemnitee by the corporation.
The rights to indemnification and to advancement of expenses
conferred in this section shall not be exclusive of any other right which any
person may have or hereafter acquire under any statute, the certificate of
incorporation, by-law, agreement, vote of stockholders or disinterested
directors or otherwise.
The indemnification and advancement of expenses provided by
this section shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the
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benefit of the heirs, executors and administrators of such a person.
ARTICLE VII.
AMENDMENTS
The By-Laws may be amended, added to, rescinded or repealed at
any meeting of the Board of Directors or of the stockholders, provided that
notice of the proposed change was given in the notice of the meeting.
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<PAGE> 1
EXHIBIT 3.2(h)
BY-LAWS
OF
ABN INVESTMENTS INC.
Incorporated under the laws of the State of Delaware - June 17, 1993
<PAGE> 2
BY-LAWS
OF
ABN INVESTMENTS INC.
(a Delaware corporation)
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office shall be
established and maintained at c/o Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801, county of New Castle. The Corporation Trust Company
shall be the registered agent of this corporation in charge thereof.
SECTION 2. OTHER OFFICES. The corporation may have other
offices, either within or without the State of Delaware, at such place or places
as the Board of Directors may from time to time determine or the business of the
corporation may require.
ARTICLE I
MEETINGS OF STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS. Annual meetings of stockholders
for the election of directors and for such other business as may be stated in
the notice of the meeting shall be held at such place, either within or without
the State of Delaware, and at such time and date as the Board of
<PAGE> 3
Directors, by resolution, shall determine and as set forth in the notice of the
meeting.
SECTION 2. OTHER MEETINGS. Meetings of stockholders for any
purpose other than the election of directors may be held at such time and place,
within or without the State of Delaware, as shall be stated in the notice of the
meeting.
SECTION 3. VOTING. Each stockholder entitled to vote in
accordance with the terms of the Certificate of Incorporation and in accordance
with the provisions of these By-Laws shall be entitled to one vote, in person or
by proxy, for each share of stock entitled to vote held by such stockholder, but
no proxy shall be voted after three years from its date unless such proxy
provides for a longer period. Upon the demand of any stockholder, the vote for
directors, and the vote upon any question before the meeting, shall be by
ballot. All elections for directors shall be decided by plurality vote; all
other questions shall be decided by majority vote except as otherwise provided
by the Certificate of Incorporation or the laws of the State of Delaware.
A complete list of the stockholders entitled to vote at the
ensuing election, arranged in alphabetical order, with the address of each, and
the number of shares held by each, shall be opened to the examination of any
stockholder for any purpose germane to the meeting, during ordinary business
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<PAGE> 4
hours, for a period of at least ten days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be specified
in the notice of the meeting, or, if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time and
place of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
SECTION 4. QUORUM. Except as otherwise required by law, by the
Certificate of Incorporation or by these By-Laws, the presence, in person or by
proxy, of stockholders holding a majority of the stock of the corporation
entitled to vote shall constitute a quorum at all meetings of the stockholders.
In case a quorum shall not be present at any meeting, a majority in interest of
the stockholders entitled to vote thereat, present in person or by proxy, shall
have the power to adjourn the meeting from time to time, without notice other
than announcement at the meeting, until the requisite amount of stock entitled
to vote shall be present. At such adjourned meeting at which the requisite
amount of stock entitled to vote shall be represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed; but only those stockholders entitled
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<PAGE> 5
to vote at the meeting as originally noticed shall be entitled to vote at any
adjournment or adjournments thereof.
SECTION 5. SPECIAL MEETINGS. Special meetings of the
stockholders for any purpose or purposes may be called by the Chairman and Chief
Executive Officer or Secretary, or by resolution of the directors.
SECTION 6. NOTICE OF MEETINGS. Written notice, stating the
place, date and time of the meeting, and the general nature of the business to
be considered, shall be given to each stockholder entitled to vote thereat at
his address as it appears on the records of the corporation, not less than ten
nor more than sixty days before the date of the meeting. No business other than
that stated in the notice shall be transacted at any meeting without the
unanimous consent of all the stockholders entitled to vote thereat.
SECTION 7. ACTION WITHOUT MEETING. Unless otherwise provided
by the Certificate of Incorporation, any action required to be taken at any
annual or special meeting of stockholders, or any action which may be taken at
any annual or special meeting, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take
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such action at a meeting at which all shares entitled to vote thereon were
present and voted. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE II
DIRECTORS
SECTION 1. NUMBER AND TERM. The number of directors shall be
one (1). The Director shall be elected at the annual meeting of the stockholders
and shall be elected to serve until his successor shall be elected and
qualified. The Director need not be a stockholder.
SECTION 2. REMOVAL. The Director may be removed either for or
without cause at any time by the affirmative vote of the holders of a majority
of all the shares of stock outstanding and entitled to vote, at a special
meeting of the stockholders called for the purpose, and the vacancy thus created
may be filled, at the meeting held for the purpose of removal, by the
affirmative vote of a majority in interest of the stockholders entitled to vote.
SECTION 3. INCREASE OF NUMBER. The number of directors may be
increased by amendment of these By-Laws by the affirmative vote of the Board of
Directors or by the
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affirmative vote of a majority in interest of the stockholders, at the annual
meeting or at a special meeting called for that purpose, and by like vote the
additional directors may be chosen at such meeting to hold office until the next
annual election and until their successors shall have been elected and
qualified.
SECTION 4. POWERS. The Board of Directors shall exercise all
of the powers of the corporation except such as are by law or by the Certificate
of Incorporation of the corporation or by these By-Laws conferred upon or
reserved to the stockholders.
SECTION 5. COMMITTEES. The Board of Directors may, by
resolution or resolutions passed by a majority of the whole Board, designate one
or more committees, each committee to consist of two or more of the directors of
the corporation. The Board may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of such committee or committees. The member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent or disqualified
member.
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Any such committee, to the extent provided in the resolution
of the Board of Directors, or in these By-Laws, shall have and may exercise all
the powers and authority of the Board of Directors in the management of the
business and affairs of the corporation, and may authorize the seal of the
corporation to be affixed to all papers which may require it; but no such
committee shall have the power or authority to amend the Certificate of
Incorporation, to adopt an agreement of merger or consolidation, to recommend to
the stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, to recommend to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or to amend the
By-Laws of the corporation; and, unless the resolution, these By-Laws, or the
Certificate of Incorporation expressly so provide, no such committee shall have
the power or authority to declare a dividend or to authorize the issuance of
stock.
SECTION 6. MEETINGS. The newly elected directors shall hold
their first meeting for the purpose of organization and the transaction of
business, if a quorum be present, immediately after the annual meeting of the
stockholders; or the time and place of such meeting may be fixed by consent in
writing of all the directors.
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Regular meetings of the directors may be held without notice
at such places and times as shall be determined from time to time by resolution
of the directors.
Special meetings of the Board may be called by the Chairman
and Chief Executive Officer or by the Secretary on the written request of any
director on at least two days' notice to each director and shall be held at such
place or places as may be determined by the directors, or as shall be stated in
the call of the meeting.
SECTION 7. QUORUM. One (1) director shall constitute a quorum,
provided, that if the number of directors is increased as provided in Section 3
of this Article III, a majority of the total number of directors shall
constitute a quorum for the transaction of business. If at any meeting of the
Board of Directors there shall be less than a quorum present, a majority of
those present may adjourn the meeting from time to time until a quorum is
obtained, and no further notice thereof need be given other than by announcement
at the meeting which shall be so adjourned.
SECTION 8. COMPENSATION. Directors shall not receive any
stated salary for their services as directors or as members of committees, but
by resolution of the Board of Directors a fixed fee and expenses of attendance
may be allowed for attendance at each meeting. Nothing herein
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contained shall be construed to preclude any director from serving the
corporation in any other capacity as an officer, agent or otherwise, and
receiving compensation therefor.
SECTION 9. ACTION WITHOUT MEETING. Any action required or
permitted to be taken at any meeting of the Board of Directors, or of any
committee thereof, may be taken without a meeting, if a written consent thereto
is signed by all members of the Board of Directors, or of such committee as the
case may be, and such written consent is filed with the minutes of proceedings
of the Board of Directors or committee.
SECTION 10. PARTICIPATION BY CONFERENCE TELEPHONE. Members of
the Board of Directors of the corporation, or any committee designated by such
Board, may participate in a meeting of such Board or committee by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in a
meeting shall constitute presence in person at such meeting.
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ARTICLE III
OFFICERS
SECTION 1. OFFICERS. The officers of the corporation shall be
a Chairman and Chief Executive Officer and a Secretary, both of whom shall be
elected by the Board of Directors and who shall hold office until their
successors are elected and qualified. In addition, the Board of Directors may
elect one or more Vice Presidents and such Assistant Secretaries, Treasurers and
Assistant Treasurers as they may deem proper. None of the officers of the
corporation need be directors. The officers shall be elected at the first
meeting of the Board of Directors after each annual meeting. More than two
offices may be held by the same person.
SECTION 2. OTHER OFFICERS AND AGENTS. The Board of Directors
may appoint such other officers and agents as it may deem advisable, who shall
hold their offices for such terms and shall exercise such powers and perform
such duties as shall be determined from time to time by the Board of Directors.
SECTION 3. CHAIRMAN. The Chairman of the Board of Directors,
if one be elected, shall preside at all meetings of the Board of Directors and
he shall have and perform such
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other duties as from time to time may be assigned to him by the Board of
Directors.
SECTION 4. CHAIRMAN AND CHIEF EXECUTIVE OFFICER. The Chairman
and Chief Executive Officer shall be the chief executive officer of the
corporation and shall have the general powers and duties of supervision and
management usually vested in the office of president of a corporation. He shall
preside at all meetings of the stockholders if present thereat, and, in the
absence or non-election of the Chairman of the Board of Directors, at all
meetings of the Board of Directors, and shall have general supervision,
direction and control of the business of the corporation. Except as the Board of
Directors shall authorize the execution thereof in some other manner, he shall
execute bonds, mortgages and other contracts on behalf of the corporation, and
shall cause the seal to be affixed to any instrument requiring it and when so
affixed the seal shall be attested by the signature of the Secretary or the
Treasurer or an Assistant Secretary or an Assistant Treasurer, if any.
SECTION 5. VICE PRESIDENT. Each Vice President, if any, shall
have such powers and shall perform such duties as shall be assigned to him by
the directors.
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SECTION 6. TREASURER. The Treasurer, if any, shall have the
custody of the corporate funds and securities and shall keep full and accurate
account of receipts and disbursements in books belonging to the corporation. He
shall deposit all moneys and other valuables in the name and to the credit of
the corporation in such depositaries as may be designated by the Board of
Directors.
The Treasurer shall disburse the funds of the corporation as
may be ordered by the Board of Directors, or the Chairman and Chief Executive
Officer, taking proper vouchers for such disbursements. He shall render to the
Chairman and Chief Executive Officer and to the Board of Directors at the
regular meetings of the Board of Directors, or whenever they may request it, an
account of all his transactions as Treasurer and of the financial condition of
the corporation. If required by the Board of Directors, he shall give the
corporation a bond for the faithful discharge of his duties in such amount and
with such surety as the Board of Directors shall prescribe.
SECTION 7. SECRETARY. The Secretary shall give, or cause to be
given, notice of all meetings of stockholders and directors, and all other
notices required by law or by these By-Laws, and in case of his absence or
refusal or neglect so to do, any such notice may be given by any person
thereunto
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directed by the Chairman and Chief Executive Officer, or by the directors, or
stockholders, upon whose requisition the meeting is called as provided in these
By-Laws. He shall record all the proceedings of the meetings of the corporation
and of the directors in a book to be kept for that purpose, and shall perform
such other duties as may be assigned to him by the directors or the Chairman and
Chief Executive Officer. He shall have the custody of the seal of the
corporation and shall affix the same to all instruments requiring it, when
authorized by the directors or the Chairman and Chief Executive Officer, and
attest the same.
SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES.
Assistant Treasurers and Assistant Secretaries, if any, shall be elected and
shall have such powers and shall perform such duties as shall be assigned to
them, respectively, by the directors.
ARTICLE IV
MISCELLANEOUS
SECTION 1. RESIGNATIONS. Any director, member of a committee
or corporate officer may, provided the same would not result in a breach of any
contract to which said person is a party, resign at any time. Such resignation
shall be made in writing, and shall take effect at the time specified
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therein, and if no time be specified, at the time of its receipt by the Chairman
and Chief Executive Officer or Secretary. The acceptance of a resignation shall
not be necessary to make it effective.
SECTION 2. VACANCIES. If the office of any director, member of
a committee or corporate officer becomes vacant, by reason of death, disability
or otherwise, the remaining directors in office, though less than a quorum, by a
majority vote may appoint any qualified person to fill such vacancy, who shall
hold office for the unexpired term and until his successor shall be duly chosen.
SECTION 3. CERTIFICATES OF STOCK. Certificates of stock,
signed by the Chairman of the Board of Directors, or the Chairman and Chief
Executive Officer or any Vice President and the Treasurer or an Assistant
Treasurer, or Secretary or an Assistant Secretary, shall be issued to each
stockholder certifying the number of shares owned by him in the corporation.
When such certificates are countersigned (1) by a transfer agent other than the
corporation or its employee, or (2) by a registrar other than the corporation or
its employee, the signatures of such officers may be facsimiles.
SECTION 4. LOST CERTIFICATES. A new certificate of stock may
be issued in the place of any certificate
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theretofore issued by the corporation, alleged to have been lost or destroyed,
and the directors may, in their discretion, require the owner of the lost or
destroyed certificate, or his legal representatives, to give the corporation a
bond, in such sum as they may direct, not exceeding double the value of the
stock represented by such certificate, to indemnify the corporation against any
claim that may be made against it on account of the alleged loss of any such
certificate, or the issuance of any such new certificate.
SECTION 5. TRANSFER OF SHARES. The shares of stock of the
corporation shall be transferable only upon its books by the holders thereof in
person or by their duly authorized attorneys or legal representatives, and upon
such transfer the old certificates shall be surrendered to the corporation by
the delivery thereof to the person in charge of the stock transfer books and
ledgers, or to such other person as the directors may designate, by whom they
shall be cancelled, and new certificates shall thereupon be issued. A record
shall be made of each transfer and whenever a transfer shall be made for
collateral security, and not absolutely, it shall be so expressed in the entry
of the transfer.
SECTION 6. STOCKHOLDERS RECORD DATE. In order that the
corporation may determine the stockholders entitled to notice
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of or to vote at any meeting of stockholders or any adjournment thereof, or to
express consent to corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of stock or for the purpose of any other lawful action, the Board of
Directors may fix, in advance, a record date, which shall not be more than sixty
nor less than ten days before the date of such meeting, nor more than sixty days
prior to any other action. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any adjournment
of the meeting; provided, however, that the Board of Directors may fix a new
record date for the adjourned meeting.
SECTION 7. DIVIDENDS. Subject to the provisions of the
Certificate of Incorporation, the Board of Directors may, out of funds legally
available therefor at any regular or special meeting, declare dividends upon the
capital stock of the corporation as and when they deem expedient. Before
declaring any dividend there may be set apart out of any funds of the
corporation available for dividends, such sum or sums as the directors from time
to time in their discretion deem proper for working capital or as a reserve fund
to meet
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contingencies or for equalizing dividends or for such other purposes as the
directors shall deem conducive to the interests of the corporation.
SECTION 8. SEAL. The corporate seal shall be circular in form
and shall contain the name of the corporation, the year of its creation and the
words "CORPORATE SEAL DELAWARE." Said seal may be used by causing it or a
facsimile thereof to be impressed or affixed or otherwise reproduced.
SECTION 9. FISCAL YEAR. The fiscal year of the corporation
shall be determined by resolution of the Board of Directors. In the absence of
such determination, the fiscal year shall be the calendar year.
SECTION 10. CHECKS. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the corporation shall be signed by such officer or officers, agent or agents of
the corporation, and in such manner as shall be determined from time to time by
resolution of the Board of Directors.
SECTION 11. NOTICE AND WAIVER OF NOTICE. Whenever any notice
is required by these By-Laws to be given, personal notice is not meant unless
expressly so stated, and any notice so required shall be deemed to be sufficient
if given by depositing the same in the United States mail, postage prepaid,
addressed to the person entitled thereto at his
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address as it appears on the records of the corporation, and such notice shall
be deemed to have been given on the day of such mailing. Stockholders not
entitled to vote shall not be entitled to receive notice of any meetings except
as otherwise provided by statute.
Whenever any notice whatever is required to be given under the
provisions of any law, or under the provisions of the Certificate of
Incorporation of the corporation or these By-Laws, a waiver thereof in writing,
signed by the person or persons entitled to said notice, whether before or after
the time stated therein, shall be deemed equivalent thereto.
ARTICLE V
INDEMNIFICATION
To the full extent permitted by law, the corporation may
indemnify any person, or his heirs, distributees, next of kin, successors,
appointees, executors, administrators, legal representatives and assigns, who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of
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another corporation, partnership, joint venture, trust or other enterprise,
domestic or foreign, against expenses, attorneys' fees, court costs, judgments,
fines, amounts paid in settlement and other losses actually and reasonably
incurred by him in connection with such action, suit or proceeding.
ARTICLE VI
AMENDMENTS
These By-Laws may be altered or repealed and new By-Laws may
be made at any annual meeting of the stockholders or at any special meeting
thereof by the affirmative vote of a majority of the stock issued and
outstanding and entitled to vote thereat, or by the affirmative vote of a
majority of the Board of Directors, at any regular meeting of the Board of
Directors, or at any special meeting of the Board of Directors.
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Exhibit 3.2(i)
BY-LAWS
OF
ABN EQUITIES INC.
Incorporated under the laws of the State of Delaware - June 17, 1993
As amended through July 17, 1995
<PAGE> 2
BY-LAWS
OF
ABN EQUITIES INC.
(A Delaware Corporation)
Article I.
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK.
Every holder of stock in the corporation shall be entitled to have a
certificate signed by, or in the name of, the corporation by the Chairman or
Vice-Chairman of the Board of Directors, if any, or by the President or a
Vice-President and by the Treasurer or an Assistant Treasurer or the Secretary
or an Assistant Secretary of the corporation representing the number of shares
owned by him in the corporation. If such certificate is countersigned by a
transfer agent other than the corporation or its employee or by a registrar
other than the corporation or its employee, any other signature on the
certificate may be a facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent, or registrar
before such certificate is issued, it may be issued by the corporation with the
same effect as if he were such officer, transfer agent, or registrar at the date
of issue.
<PAGE> 3
Whenever the corporation shall be authorized to issue more than one
class of stock or more than one series of any class of stock, and whenever the
corporation shall issue any shares of its stock as partly paid stock, the
certificates representing shares of any such class or series or of any such
partly paid stock shall set forth thereon the statements prescribed by the
General Corporation Law. Any restrictions on the transfer or registration of
transfer of any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares.
The corporation may issue a new certificate of stock in place of any
certificate theretofore issued by it, alleged to have been lost, stolen, or
destroyed, and the Board of Directors may require the owner of any lost, stolen,
or destroyed certificate, or his legal representative, to give the corporation a
bond sufficient to indemnify the corporation against any claim that may be made
against it on account of the alleged loss, theft, or destruction of any such
certificate or the issuance of any such new certificate.
2. FRACTIONAL SHARE INTERESTS.
The corporation may, but shall not be required to, issue fractions
of a share.
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3. STOCK TRANSFERS.
Upon compliance with provisions restricting the transfer or
registration of transfer of shares of stock, if any, transfers or registration
of transfer of shares of stock of the corporation shall be made only on the
stock ledger of the corporation by the registered holder thereof, or by his
attorney thereunto authorized by power of attorney duly executed and filed with
the Secretary of corporation or with a transfer agent or a registrar, if any,
and on surrender of the certificate or certificates for such shares of stock
properly endorsed and the payment of all taxes due thereon.
4. RECORD DATE FOR STOCKHOLDERS.
In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the board of directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the board of directors, and which record date shall not be more
than sixty nor less than ten days before the date of such meeting. If no record
date has been fixed by the board of directors, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of General on the day next preceding the day on which notice is
given, or, if notice is waived, at the close of General on the day next
preceding the day on which the meeting is held. A
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determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting;
providing, however, that the board of directors may fix a new record date for
the adjourned meeting.
In order that the corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the board of directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty days prior to such
action. If no record date has been fixed, the record date for determining
stockholders for any such purpose shall be at the close of General on the day on
which the board of directors adopts the resolution relating thereto.
5. MEANING OF CERTAIN TERMS.
As used herein in respect of the right to notice of a meeting of
stockholders or a waiver thereof or to participate or vote thereat or to consent
or dissent in writing in lieu of a meeting, as the case may be, the term "share"
or "shares" or "share of stock" or "shares of stock" or "stockholder" or
"stockholders" refers to an outstanding share or shares of stock
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and to a holder or holders of record of outstanding shares of stock when the
corporation is authorized to issue only one class of shares of stock, and said
reference is also intended to include any outstanding share or shares of stock
and any holder or holders of record of outstanding shares of stock of any class
upon which or upon whom the Certificate of Incorporation confers such rights
where there are two or more classes or series of shares of stock or upon which
or upon whom the General Corporation Law confers such rights notwithstanding
that the Certificate of Incorporation may provide for more than one class or
series of shares of stock, one or more of which are limited or denied such
rights thereunder; provided, however, that no such right shall vest in the event
of an increase or a decrease in the authorized number of shares of stock of any
class or series which is otherwise denied voting rights under the provisions of
the Certificate of Incorporation, including any Preferred Stock which is denied
voting rights under the provisions of the resolution or resolutions adopted by
the Board of Directors with respect to the issuance thereof.
6. STOCKHOLDER MEETINGS.
TIME. The annual meeting shall be held on the date and at the time
fixed, from time to time, by the directors. A special meeting shall be held on
the date and at the time fixed by the directors.
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PLACE. Annual meetings and special meetings shall be held at such
place, within or without the State of Delaware, as the directors may, from time
to time, fix. Whenever the directors shall fail to fix such place, the meeting
shall be held at the registered office of the corporation in the State of
Delaware.
CALL. Annual meetings and special meetings may be called by the
directors or by any officer instructed by the directors to call the meeting.
NOTICE OR WAIVER OF NOTICE. Written notice of all meetings shall be
given, stating the place, date, and hour of the meeting. The notice of an annual
meeting shall state that the meeting is called for the election of directors and
for the transaction of other General which may properly come before the meeting,
and shall (if any other action which could be taken at a special meeting is to
be taken at such annual meeting), state such other action or actions as are
known at the time of such notice. The notice of a special meeting shall in all
instances state the purpose or purposes for which the meeting is called. If any
action is proposed to be taken which would, if taken, entitle stockholders to
receive payment for their shares of stock, the notice shall include a statement
of that purpose and to that effect. Except as otherwise provided by the General
Corporation Law, a copy of the notice of any meeting shall be given, personally
or by mail, not less than ten days nor more than sixty days before the date of
the meeting, unless the lapse of the
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prescribed period of time shall have been waived, and directed to each
stockholder at his address as it appears on the records of the corporation.
Notice by mail shall be deemed to be given when deposited, with postage thereon
prepaid, in the United States mail. If a meeting is adjourned to another time,
not more than thirty days hence, and/or to another place, and if an announcement
of the adjourned time and place is made at the meeting, it shall not be
necessary to give notice of the adjourned meeting unless the directors, after
adjournment, fix a new record date for the adjourned meeting. Notice need not be
given to any stockholder who submits a written waiver of notice by him before or
after the time stated therein. Attendance of a person at a meeting of
stockholders shall constitute a waiver of notice of such meeting, except when
the stockholder attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any General because the meeting
is not lawfully called or convened. Neither the General to be transacted at, nor
the purpose of, any regular or special meeting of the stockholders need be
specified in any written waiver of notice.
STOCKHOLDER LIST. There shall be prepared and made, at least ten
days before every meeting of stockholders, a complete list of the stockholders,
arranged in alphabetical order, and showing the address of each stockholder and
the number of shares registered in the name of each stockholder. Such list shall
be open to the examination of any stockholder, for any purpose
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germane to the meeting, during ordinary General hours, for a period of at least
ten days prior to the meeting either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by this
section or the books of the corporation, or to vote at any meeting of
stockholders.
CONDUCT OF MEETING. Meetings of the stockholders shall be presided
over by one of the following officers in the order of seniority and if present
and acting: the Chairman of the Board, if any, the Vice-Chairman of the Board,
if any, the President, a Vice President, a chairman for the meeting chosen by
the Board of Directors, or, if none of the foregoing is in office and present
and acting, by a chairman to be chosen by the stockholders. The Secretary of the
corporation, or, in his absence, an Assistant Secretary, shall act as secretary
of every meeting, but if neither the Secretary nor an Assistant Secretary is
present the Chairman for the meeting shall appoint a secretary of the meeting.
PROXY REPRESENTATION. Every stockholder may authorize another person
or persons to act for him by proxy in all matters in which a stockholder is
entitled to participate, whether by
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waiving notice of any meeting, voting or participating at a meeting, or
expressing consent or dissent without a meeting. Every proxy must be signed by
the stockholder or by his attorney-in-fact. No proxy shall be voted or acted
upon after three years from its date unless such proxy provides for a longer
period. A duly executed proxy shall be irrevocable if it states that it is
irrevocable and, if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power. A proxy may be made
irrevocable regardless of whether the interest with which it is coupled is an
interest in the stock itself or an interest in the corporation generally.
INSPECTORS AND JUDGES. The directors, in advance of any meeting,
may, but need not, appoint one or more inspectors of election or judges of the
vote, as the case may be, to act at the meeting or any adjournment thereof. If
an inspector or inspectors or judge or judges are not appointed, the person
presiding at the meeting may, but need not, appoint one or more inspectors or
judges. In case any person who may be appointed as an inspector or judge fails
to appear or act, the vacancy may be filled by appointment made by the person
presiding thereat. Each inspector or judge, if any, before entering upon the
discharge of his duties, shall take and sign an oath faithfully to execute the
duties of inspector or judge at such meeting with strict impartiality and
according to the best of his ability. The inspectors or judges, if any, shall
determine the number of shares
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of stock outstanding and the voting power of each, the shares of stock
represented at the meeting, the existence of a quorum, the validity and effect
of proxies, and shall receive votes, ballots or consents, hear and determine all
challenges and questions arising in connection with the right to vote, count and
tabulate all votes, ballots or consents, determine the result, and do such acts
as are proper to conduct the election or vote with fairness to all stockholders.
On request of the person presiding at the meeting, the inspector or inspectors
or judge or judges, if any, shall make a report in writing of any challenge,
question or matter determined by him or them and execute a certificate of any
fact found by him or them.
QUORUM. Except as the General Corporation Law or these By-Laws may
otherwise provide, the holders of a majority of the outstanding shares of stock
entitled to vote shall constitute a quorum at a meeting of stockholders for the
transaction of any General. The stockholders present may adjourn the meeting
despite the absence of a quorum. When a quorum is once present to organize a
meeting, it is not broken by the subsequent withdrawal of any shareholders.
VOTING. Each stockholder entitled to vote in accordance with the
terms of the Certificate of Incorporation and of these By-Laws, or, with respect
to the issuance of Preferred Stock, in accordance with the terms of a resolution
or resolutions of the Board of Directors, shall be entitled to one vote, in
person or by
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proxy, for each share of stock entitled to vote held by such stockholder. In the
election of directors, a plurality of the votes present at the meeting shall
elect. Any other action shall be authorized by a majority of the votes cast
except where the Certificate of Incorporation or the General Corporation Law
prescribes a different percentage of votes and/or a different exercise of voting
power. Voting by ballot shall not be required for corporate action except as
otherwise provided by the General Corporation Law.
7. STOCKHOLDER ACTION WITHOUT MEETINGS.
Any action required to be taken, or any action which may be taken,
at any annual or special meeting of stockholders, may be taken without a
meeting, without prior notice and without a vote, if a consent or consents in
writing, setting forth the action so taken, shall be signed by the holders of
the outstanding stock having not less than the minimum number of votes that
would be necessary to authorize or take such action at a meeting at which all
shares entitled to vote thereon were present and voted. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing
and shall be delivered to the corporation by delivery to its registered office
in Delaware, its principal place of General, or an officer or agent of the
corporation having custody of the book in which
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proceedings of meetings of stockholders are recorded. Delivery made to a
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested.
ARTICLE II.
DIRECTORS
1. FUNCTIONS AND DEFINITION.
The General and affairs of the corporation shall be managed by or
under the direction of the Board of Directors of the corporation. The use of
the phrase "whole board" herein refers to the total number of directors which
the corporation would have if there were no vacancies.
2. QUALIFICATIONS AND NUMBER.
A director need not be a stockholder, a citizen of the United
States, or a resident of the State of Delaware. The initial Board of Directors
shall consist of ____ persons. Thereafter the number of directors constituting
the whole board shall be at least one. Subject to the foregoing limitation and
except for the first Board of Directors, such number may be fixed from time to
time by action of the stockholders or of the directors, or, if the number is not
fixed, the number shall be three. The number of directors may be increased or
decreased by action of the stockholders or of the directors.
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<PAGE> 14
3. ELECTION AND TERM.
The first Board of Directors, unless the members thereof shall have
been named in the Certificate of Incorporation, shall be elected by the
incorporator or incorporators and shall hold office until the first annual
meeting of stockholders and until their successors have been elected and
qualified or until their earlier resignation or removal. Any director may resign
at any time upon written notice to the corporation. Thereafter, directors who
are elected at an annual meeting of stockholders, and directors who are elected
in the interim to fill vacancies and newly created directorships, shall hold
office until the next annual meeting of stockholders and until their successors
have been elected and qualified or until their earlier resignation or removal.
In the interim between annual meetings of stockholders or of special meetings of
stockholders called for the election of directors and/or for the removal of one
or more directors and for the filling of any vacancies in the Board of
Directors, including vacancies resulting from the removal of directors for cause
or without cause, any vacancy in the Board of Directors may be filled by the
vote of a majority of the remaining directors then in office, although less than
a quorum, or by the sole remaining director.
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<PAGE> 15
4. MEETINGS.
TIME. Meetings shall be held at such time as the Board shall fix.
FIRST MEETING. The first meeting of each newly elected Board may be
held immediately after each annual meeting of the stockholders at the same place
at which the meeting is held, and no notice of such meeting shall be necessary
to call the meeting, provided a quorum shall be present. In the event such first
meeting is not so held immediately after the annual meeting of the stockholders,
it may be held at such time and place as shall be specified in the notice given
as hereinafter provided for special meetings of the Board of Directors, or at
such time and place as shall be fixed by the consent in writing of all of the
directors.
PLACE. Meetings, both regular and special, shall be held at such
place within or without the State of Delaware as shall be fixed by the Board.
CALL. No call shall be required for regular meetings for which the
time and place have been fixed. Special meetings may be called by or at the
direction of the Chairman of the Board, if any, the Vice-Chairman of the Board,
if any, or the President, or of a majority of the directors in office.
NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be required
for regular meetings for which the time and place have been fixed. Written,
oral, or any other mode of notice of the time and place shall be given for
special meetings at least
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twenty-four hours prior to the meeting. The notice of any meeting need not
specify the purpose of the meeting. Any requirement of furnishing a notice shall
be waived by any director who signs a written waiver of such notice before or
after the time stated therein.
Attendance of a director at a meeting of the Board shall constitute
a waiver of notice of such meeting, except when the director attends a meeting
for the express purpose of objecting, at the beginning of the meeting, to the
transaction of any General because the meeting is not lawfully called or
convened.
QUORUM AND ACTION. A majority of the whole Board shall constitute a
quorum except when a vacancy or vacancies prevents such majority, whereupon a
majority of the directors in office shall constitute a quorum, provided that
such majority shall constitute at least one-third (1/3) of the whole Board. Any
director may participate in a meeting of the Board by means of a conference
telephone or similar communications equipment by means of which all directors
participating in the meeting can hear each other, and such participation in a
meeting of the Board shall constitute presence in person at such meeting. A
majority of the directors present, whether or not a quorum is present, may
adjourn a meeting to another time and place. Except as herein otherwise
provided, and except as otherwise provided by the General Corporation Law, the
act of the Board shall be the act by vote of a majority of the directors present
at a meeting, a quorum being
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present. The quorum and voting provisions herein stated shall not be construed
as conflicting with any provisions of the General Corporation Law and these
By-Laws which govern a meeting of directors held to fill vacancies and newly
created directorships in the Board.
CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and if
present and acting, shall preside at all meetings. Otherwise, the Vice-Chairman
of the Board, if any and if present and acting, or the President, if present and
acting, or any other director chosen by the Board, shall preside.
5. REMOVAL OF DIRECTORS.
Any or all of the directors may be removed for cause or without
cause by the stockholders.
6. COMMITTEES.
The Board of Directors may, by resolution passed by a majority of
the whole Board, designate one or more committees, each committee to consist of
one or more of the directors of the corporation. The Board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. Any such committee, to
the extent provided in the resolution of the Board, shall have and may exercise
the powers of the Board of Directors in the management of the General and
affairs of the corporation, and may authorize the seal of the corporation to be
affixed to all
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papers which may require it. In the absence or disqualification of any member of
any such committee or committees, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the Board of Directors to act
at the meeting in the place of any such absent or disqualified member.
7. ACTION IN WRITING.
Any action required or permitted to be taken at any meeting of the
Board of Directors or any committee thereof may be taken without a meeting if
all members of the Board or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board or committee.
ARTICLE III.
OFFICERS
1. EXECUTIVE OFFICERS.
The directors may elect or appoint a Chairman of the Board of
Directors, a President, one or more Vice Presidents (one or more of whom may be
denominated "Executive Vice President"), a Secretary, one or more Assistant
Secretaries, a Treasurer, one or more Assistant Treasurers, and such other
officers as they may determine. Any number of offices may be held by the same
person.
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2. TERM OF OFFICE: REMOVAL.
Unless otherwise provided in the resolution of election or
appointment, each officer shall hold office until the meeting of the Board of
Directors following the next annual meeting of stockholders and until his
successor has been elected and qualified or until his earlier resignation or
removal. The Board of Directors may remove any officer for cause or without
cause.
3. AUTHORITY AND DUTIES.
All officers, as between themselves and the corporation, shall have
such authority and perform such duties in the management of the corporation as
may be provided in these By-Laws, or, to the extent not so provided, by the
Board of Directors.
4. THE CHAIRMAN OF THE BOARD OF DIRECTORS.
The Chairman of the Board of Directors, if present and acting, shall
preside at all meetings of the Board of Directors, otherwise, the President, if
present, shall preside, or if the President does not so preside, any other
director chosen by the Board shall preside.
5. THE PRESIDENT.
The President shall be the chief executive officer of the
corporation.
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<PAGE> 20
6. VICE PRESIDENTS.
Any Vice President that may have been appointed, in the absence or
disability of the President, shall perform the duties and exercise the powers of
the President, in the order of their seniority, and shall perform such other
duties as the Board of Directors shall prescribe. 7. THE SECRETARY.
7. THE SECRETARY.
The Secretary shall keep in safe custody the seal of the corporation
and affix it to any instrument when authorized by the Board of Directors, and
shall perform such other duties as may be prescribed by the Board of Directors.
The Secretary (or in his absence, an Assistant Secretary, but if neither is
present another person selected by the Chairman for the meeting) shall have the
duty to record the proceedings of the meetings of the stockholders and directors
in a book to be kept for that purpose.
8. THE TREASURER.
The Treasurer shall have the care and custody of the corporate
funds, and other valuable effects, including securities, and shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
corporation and shall deposit all moneys and other valuable effects in the name
and to the credit of the corporation in such depositories as may be designated
by the Board of Directors. The Treasurer shall disburse the funds of the
corporation as may be ordered by the
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Board, taking proper vouchers for such disbursements, and shall render to the
President and directors, at the regular meetings of the Board, or whenever they
may require it, an account of all his transactions as Treasurer and of the
financial condition of the corporation. If required by the Board of Directors,
the Treasurer shall give the corporation a bond for such term, in such sum and
with such surety or sureties as shall be satisfactory to the Board for the
faithful performance of the duties of his office and for the restoration to the
corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
ARTICLE IV.
CORPORATE SEAL
AND
CORPORATE BOOKS
The corporate seal shall be in such form as the Board of Directors
shall prescribe.
The books of the corporation may be kept within or without the State
of Delaware, at such place or places as the Board of Directors may, from time to
time, determine.
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ARTICLE V.
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall be
subject to change, by the Board of Directors.
ARTICLE VI.
INDEMNITY
Any person who was or is a party or threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that he or she is or was a
director, officer, employee or agent of the corporation or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
(including employee benefit plans) (hereinafter an "indemnitee"), shall be
indemnified and held harmless by the corporation to the fullest extent
authorized by the General Corporation Law, as the same exists or may hereafter
be amended (but, in the case of any such amendment, only to the extent that such
amendment permits the corporation to provide broader indemnification than
permitted prior thereto), against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such indemnitee in connection with such action, suit or
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proceeding, if the indemnitee acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe such conduct was unlawful. The termination of the
proceeding, whether by judgment, order, settlement, conviction or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a presumption
that the person did not act in good faith and in a manner which he or she
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, had
reasonable cause to believe such conduct was unlawful.
Any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he or
she is or was a director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise (including employee benefit plans) shall be indemnified and
held harmless by the corporation to the fullest extent authorized by the General
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
corporation to provide broader
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indemnification than permitted prior thereto), against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation and except that no indemnification shall be made in respect of
any claim, issue or matter as to which such person shall have been adjudged to
be liable to the corporation unless and only to the extent that the Court in
which such suit or action was brought, shall determine upon application, that
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which such Court shall deem proper.
All reasonable expenses incurred by or on behalf of the indemnitee
in connection with any suit, action or proceeding, shall be advanced to the
indemnitee by the corporation.
The rights to indemnification and to advancement of expenses
conferred in this section shall not be exclusive of any other right which any
person may have or hereafter acquire under any statute, the certificate of
incorporation, by-law, agreement, vote of stockholders or disinterested
directors or otherwise.
The indemnification and advancement of expenses provided by this section
shall continue as to a person who has ceased to be a director, officer, employee
or agent and shall inure to the
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benefit of the heirs, executors and administrators of such a person.
ARTICLE VII.
AMENDMENTS
The By-Laws may be amended, added to, rescinded or repealed at any
meeting of the Board of Directors or of the stockholders, provided that notice
of the proposed change was given in the notice of the meeting.
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<PAGE> 1
Exhibit 3.2(j)
BY-LAWS
OF
AMERICAN BANKNOTE AUSTRALASIA HOLDINGS, INC.
Incorporated under the laws of the State of Delaware
February 16, 1996
<PAGE> 2
BY-LAWS
OF
AMERICAN BANKNOTE AUSTRALASIA HOLDINGS, INC.
(A Delaware Corporation)
Article I.
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK.
Every holder of stock in the corporation shall be entitled to have a
certificate signed by, or in the name of, the corporation by the Chairman or
Vice-Chairman of the Board of Directors, if any, or by the President or a
Vice-President and by the Treasurer or an Assistant Treasurer or the Secretary
or an Assistant Secretary of the corporation representing the number of shares
owned by him in the corporation. If such certificate is countersigned by a
transfer agent other than the corporation or its employee or by a registrar
other than the corporation or its employee, any other signature on the
certificate may be a facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent, or registrar
before such certificate is issued, it may
<PAGE> 3
be issued by the corporation with the same effect as if he were such officer,
transfer agent, or registrar at the date of issue.
Whenever the corporation shall be authorized to issue more than one
class of stock or more than one series of any class of stock, and whenever the
corporation shall issue any shares of its stock as partly paid stock, the
certificates representing shares of any such class or series or of any such
partly paid stock shall set forth thereon the statements prescribed by the
General Corporation Law. Any restrictions on the transfer or registration of
transfer of any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares.
The corporation may issue a new certificate of stock in place of any
certificate theretofore issued by it, alleged to have been lost, stolen, or
destroyed, and the Board of Directors may require the owner of any lost, stolen,
or destroyed certificate, or his legal representative, to give the corporation a
bond sufficient to indemnify the corporation against any claim that may be made
against it on account of the alleged loss, theft, or destruction of any such
certificate or the issuance of any such new certificate.
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2. FRACTIONAL SHARE INTERESTS.
The corporation may, but shall not be required to, issue fractions
of a share.
3. STOCK TRANSFERS.
Upon compliance with provisions restricting the transfer or
registration of transfer of shares of stock, if any, transfers or registration
of transfer of shares of stock of the corporation shall be made only on the
stock ledger of the corporation by the registered holder thereof, or by his
attorney thereunto authorized by power of attorney duly executed and filed with
the Secretary of corporation or with a transfer agent or a registrar, if any,
and on surrender of the certificate or certificates for such shares of stock
properly endorsed and the payment of all taxes due thereon.
4. RECORD DATE FOR STOCKHOLDERS.
In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the board of directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the board of directors, and which record date shall not be not
more than sixty nor less than ten days
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<PAGE> 5
before the date of such meeting. If no record date has been fixed by the board
of directors, the record date for determining stockholders entitled to notice of
or to vote at a meeting of stockholders shall be at the close of business on the
day next preceding the day on which notice is given, or, if notice is waived, at
the close of business on the day next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
providing, however, that the board of directors may fix a new record date for
the adjourned meeting.
In order that the corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the board of directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty days prior to such
action. If no record date has been fixed, the record date for determining
stockholders for any such purpose shall be at the close of business on the day
on which
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the board of directors adopts the resolution relating thereto.
5. MEANING OF CERTAIN TERMS.
As used herein in respect of the right to notice of a meeting of
stockholders or a waiver thereof or to participate or vote thereat or to consent
or dissent in writing in lieu of a meeting, as the case may be, the term "share"
or "shares" or "share of stock" or "shares of stock" or "stockholder" or
"stockholders" refers to an outstanding share or shares of stock and to a holder
or holders of record of outstanding shares of stock when the corporation is
authorized to issue only one class of shares of stock, and said reference is
also intended to include any outstanding share or shares of stock and any holder
or holders of record of outstanding shares of stock of any class upon which or
upon whom the Certificate of Incorporation confers such rights where there are
two or more classes or series of shares of stock or upon which or upon whom the
General Corporation Law confers such rights notwithstanding that the Certificate
of Incorporation may provide for more than one class or series of shares of
stock, one or more of which are limited or denied such rights thereunder;
provided, however, that no such right shall vest in the event of an increase or
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<PAGE> 7
a decrease in the authorized number of shares of stock of any class or series
which is otherwise denied voting rights under the provisions of the Certificate
of Incorporation, including any Preferred Stock which is denied voting rights
under the provisions of the resolution or resolutions adopted by the Board of
Directors with respect to the issuance thereof.
6. STOCKHOLDER MEETINGS.
TIME. The annual meeting shall be held on the date and at the time fixed,
from time to time, by the directors. A special meeting shall be held on the date
and at the time fixed by the directors.
PLACE. Annual meetings and special meetings shall be held at such place,
within or without the State of Delaware, as the directors may, from time to
time, fix. Whenever the directors shall fail to fix such place, the meeting
shall be held at the registered office of the corporation in the State of
Delaware.
CALL. Annual meetings and special meetings may be called by the directors
or by any officer instructed by the directors to call the meeting.
NOTICE OR WAIVER OF NOTICE. Written notice of all meetings shall be given,
stating the place, date, and hour of the meeting. The notice of an annual
meeting shall state
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<PAGE> 8
that the meeting is called for the election of directors and for the transaction
of other business which may properly come before the meeting, and shall (if any
other action which could be taken at a special meeting is to be taken at such
annual meeting), state such other action or actions as are known at the time of
such notice. The notice of a special meeting shall in all instances state the
purpose or purposes for which the meeting is called. If any action is proposed
to be taken which would, if taken, entitle stockholders to receive payment for
their shares of stock, the notice shall include a statement of that purpose and
to that effect. Except as otherwise provided by the General Corporation Law, a
copy of the notice of any meeting shall be given, personally or by mail, not
less than ten days nor more than sixty days before the date of the meeting,
unless the lapse of the prescribed period of time shall have been waived, and
directed to each stockholder at his address as it appears on the records of the
corporation. Notice by mail shall be deemed to be given when deposited, with
postage thereon prepaid, in the United States mail. If a meeting is adjourned to
another time, not more than thirty days hence, and/or to another place, and if
an announcement of the adjourned time and place is made at the meeting, it shall
not be necessary to give notice of the adjourned meeting unless
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<PAGE> 9
the directors, after adjournment, fix a new record date for the adjourned
meeting. Notice need not be given to any stockholder who submits a written
waiver of notice by him before or after the time stated therein. Attendance of a
person at a meeting of stockholders shall constitute a waiver of notice of such
meeting, except when the stockholder attends a meeting for the express purpose
of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the stockholders need be specified in any written waiver of notice.
STOCKHOLDER LIST. There shall be prepared and made, at least ten days
before every meeting of stockholders, a complete list of the stockholders,
arranged in alphabetical order, and showing the address of each stockholder and
the number of shares registered in the name of each stockholder. Such list shall
be open to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least ten days prior
to the meeting either at a place within the city where the meeting is to be
held, which place shall be specified in the notice of the meeting, or if not so
specified, at the
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<PAGE> 10
place where the meeting is to be held. The list shall also be produced and kept
at the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present. The stock ledger shall be the only
evidence as to who are the stockholders entitled to examine the stock ledger,
the list required by this section or the books of the corporation, or to vote at
any meeting of stockholders.
CONDUCT OF MEETING. Meetings of the stockholders shall be presided over by
one of the following officers in the order of seniority and if present and
acting: the Chairman of the Board, if any, the Vice-Chairman of the Board, if
any, the President, a Vice President, a chairman for the meeting chosen by the
Board of Directors, or, if none of the foregoing is in office and present and
acting, by a chairman to be chosen by the stockholders. The Secretary of the
corporation, or, in his absence, an Assistant Secretary, shall act as secretary
of every meeting, but if neither the Secretary nor an Assistant Secretary is
present the Chairman for the meeting shall appoint a secretary of the meeting.
PROXY REPRESENTATION. Every stockholder may authorize another person or
persons to act for him by proxy in all matters in which a stockholder is
entitled to participate, whether by waiving notice of any meeting, voting or
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participating at a meeting, or expressing consent or dissent without a meeting.
Every proxy must be signed by the stockholder or by his attorney-in-fact. No
proxy shall be voted or acted upon after three years from its date unless such
proxy provides for a longer period. A duly executed proxy shall be irrevocable
if it states that it is irrevocable and, if, and only as long as, it is coupled
with an interest sufficient in law to support an irrevocable power. A proxy may
be made irrevocable regardless of whether the interest with which it is coupled
is an interest in the stock itself or an interest in the corporation generally.
INSPECTORS AND JUDGES. The directors, in advance of any meeting, may, but
need not, appoint one or more inspectors of election or judges of the vote, as
the case may be, to act at the meeting or any adjournment thereof. If an
inspector or inspectors or judge or judges are not appointed, the person
presiding at the meeting may, but need not, appoint one or more inspectors or
judges. In case any person who may be appointed as an inspector or judge fails
to appear or act, the vacancy may be filled by appointment made by the person
presiding thereat. Each inspector or judge, if any, before entering upon the
discharge of his duties, shall take and sign an oath faithfully to execute the
duties of inspector or judge at such meeting with strict impartiality and
according
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<PAGE> 12
to the best of his ability. The inspectors or judges, if any, shall determine
the number of shares of stock outstanding and the voting power of each, the
shares of stock represented at the meeting, the existence of a quorum, the
validity and effect of proxies, and shall receive votes, ballots or consents,
hear and determine all challenges and questions arising in connection with the
right to vote, count and tabulate all votes, ballots or consents, determine the
result, and do such acts as are proper to conduct the election or vote with
fairness to all stockholders. On request of the person presiding at the meeting,
the inspector or inspectors or judge or judges, if any, shall make a report in
writing of any challenge, question or matter determined by him or them and
execute a certificate of any fact found by him or them.
QUORUM. Except as the General Corporation Law or these By-Laws may
otherwise provide, the holders of a majority of the outstanding shares of stock
entitled to vote shall constitute a quorum at a meeting of stockholders for the
transaction of any business. The stockholders present may adjourn the meeting
despite the absence or a quorum. When a quorum is once present to organize a
meeting, it is not broken by the subsequent withdrawal of any shareholders.
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VOTING. Each stockholder entitled to vote in accordance with the terms of
the Certificate of Incorporation and of these By-Laws, or, with respect to the
issuance of Preferred Stock, in accordance with the terms of a resolution or
resolutions of the Board of Directors, shall be entitled to one vote, in person
or by proxy, for each share of stock entitled to vote held by such stockholder.
In the election of directors, a plurality of the votes present at the meeting
shall elect. Any other action shall be authorized by a majority of the votes
cast except where the Certificate of Incorporation or the General Corporation
Law prescribes a different percentage of votes and/or a different exercise of
voting power. Voting by ballot shall not be required for corporate action except
as otherwise provided by the General Corporation Law.
7. STOCKHOLDER ACTION WITHOUT MEETINGS.
Any action required to be taken, or any action which may be taken,
at any annual or special meeting of stockholders, may be taken without a
meeting, without prior notice and without a vote, if a consent or consents in
writing, setting forth the action so taken, shall be signed by the holders of
the outstanding stock having not less than the minimum number of votes that
would be necessary to
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<PAGE> 14
authorize or take such action at a meeting at which all shares entitled to vote
thereon were present and voted. Prompt notice of the taking of the corporate
action without a meeting by less than unanimous written consent shall be given
to those stockholders who have not consented in writing and shall be delivered
to the corporation by delivery to its registered office in Delaware, its
principal place of business, or an officer or agent of the corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to a corporation's registered office shall be by hand or
by certified or registered mail, return receipt requested.
ARTICLE II.
DIRECTORS
1. FUNCTIONS AND DEFINITION.
The business and affairs of the corporation shall be managed by or
under the direction of the Board of Directors of the corporation. The use of the
phrase "whole board" herein refers to the total number of directors which the
corporation would have if there were no vacancies.
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<PAGE> 15
2. QUALIFICATIONS AND NUMBER.
A director need not be a stockholder, a citizen of the United
States, or a resident of the State of Delaware. The initial Board of Directors
shall consist of ____ persons. Thereafter the number of directors constituting
the whole board shall be at least one. Subject to the foregoing limitation and
except for the first Board of Directors, such number may be fixed from time to
time by action of the stockholders or of the directors, or, if the number is not
fixed, the number shall be three. The number of directors may be increased or
decreased by action of the stockholders or of the directors.
3. ELECTION AND TERM.
The first Board of Directors, unless the members thereof shall have
been named in the Certificate of Incorporation, shall be elected by the
incorporator or incorporators and shall hold office until the first annual
meeting of stockholders and until their successors have been elected and
qualified or until their earlier resignation or removal. Any director may resign
at any time upon written notice to the corporation. Thereafter, directors who
are elected at an annual meeting of stockholders, and directors who are elected
in the interim to fill vacancies and newly
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<PAGE> 16
created directorships, shall hold office until the next annual meeting of
stockholders and until their successors have been elected and qualified or until
their earlier resignation or removal. In the interim between annual meetings of
stockholders or of special meetings of stockholders called for the election of
directors and/or for the removal of one or more directors and for the filling of
any vacancies in the Board of Directors, including vacancies resulting from the
removal of directors for cause or without cause, any vacancy in the Board of
Directors may be filled by the vote of a majority of the remaining directors
then in office, although less than a quorum, or by the sole remaining director.
4. MEETINGS.
TIME. Meetings shall be held at such time as the Board shall fix.
FIRST MEETING. The first meeting of each newly elected Board may be held
immediately after each annual meeting of the stockholders at the same place at
which the meeting is held, and no notice of such meeting shall be necessary to
call the meeting, provided a quorum shall be present. In the event such first
meeting is not so held immediately after the annual meeting of the stockholders,
it may be held at such
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<PAGE> 17
time and place as shall be specified in the notice given as hereinafter provided
for special meetings of the Board of Directors, or at such time and place as
shall be fixed by the consent in writing of all of the directors.
PLACE. Meetings, both regular and special, shall be held at such place
within or without the State of Delaware as shall be fixed by the Board.
CALL. No call shall be required for regular meetings for which the time
and place nave been fixed. Special meetings may be called by or at the direction
of the Chairman of the Board, if any, the Vice-Chairman of the Board, if any, or
the President, or of a majority of the directors in office.
NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be required for
regular meetings for which the time and place have been fixed. Written, oral, or
any other mode of notice of the time and place shall be given for special
meetings at least twenty-four hours prior to the meeting. The notice of any
meeting need not specify the purpose of the meeting. Any requirement of
furnishing a notice shall be waived by any director who signs a written waiver
of such notice before or after the time stated therein.
Attendance of a director at a meeting of the Board shall constitute
a waiver of notice of such meeting, except
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<PAGE> 18
when the director attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened.
QUORUM AND ACTION. A majority of the whole Board shall constitute a quorum
except when a vacancy or vacancies prevents such majority, whereupon a majority
of the directors in office shall constitute a quorum, provided that such
majority shall constitute at least one-third (1/3) of the whole Board. Any
director may participate in a meeting of the Board by means of a conference
telephone or similar communications equipment by means of which all directors
participating in the meeting can hear each other, and such participation in a
meeting of the Board shall constitute presence in person at such meeting. A
majority of the directors present, whether or not a quorum is present, may
adjourn a meeting to another time and place. Except as herein otherwise
provided, and except as otherwise provided by the General Corporation Law, the
act of the Board shall be the act by vote of a majority of the directors present
at a meeting, a quorum being present. The quorum and voting provisions herein
stated shall not be construed as conflicting with any provisions of the General
Corporation Law and these By-Laws which govern a meeting of directors
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<PAGE> 19
held to fill vacancies and newly created directorships in the Board.
CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and if present
and acting, shall preside at all meetings. Otherwise, the Vice-Chairman of the
Board, if any and if present and acting, or the President, if present and
acting, or any other director chosen by the Board, shall preside.
5. REMOVAL OF DIRECTORS.
Any or all of the directors may be removed for cause or without
cause by the stockholders.
6. COMMITTEES.
The Board of Directors may, by resolution passed by a majority of
the whole Board, designate one or more committees, each committee to consist of
one or more of the directors of the corporation. The Board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. Any such committee, to
the extent provided in the resolution of the Board, shall have and may exercise
the powers of the Board of Directors in the management of the business and
affairs of the corporation, and may authorize the seal of the corporation to be
affixed to all papers which
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<PAGE> 20
may require it. In the absence or disqualification of any member of any such
committee or committees, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they constitute a quorum,
may unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member.
7. ACTION IN WRITING.
Any action required or permitted to be taken at any meeting of the
Board of Directors or any committee thereof may be taken without a meeting if
all members of the Board or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board or committee.
ARTICLE III.
OFFICERS
1. EXECUTIVE OFFICERS.
The directors may elect or appoint a Chairman of the Board of
Directors, a President, one or more Vice Presidents (one or more of whom may be
denominated "Executive Vice President"), a Secretary, one or more Assistant
Secretaries, a Treasurer, one or more Assistant Treasurers,
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<PAGE> 21
and such other officers as they may determine. Any number of offices may be held
by the same person.
2. TERM OF OFFICE: REMOVAL.
Unless otherwise provided in the resolution of election or
appointment, each officer shall hold office until the meeting of the Board of
Directors following the next annual meeting of stockholders and until his
successor has been elected and qualified or until his earlier resignation or
removal. The Board of Directors may remove any officer for cause or without
cause.
3. AUTHORITY AND DUTIES.
All officers, as between themselves and the corporation, shall have
such authority and perform such duties in the management of the corporation as
may be provided in these By-Laws, or, to the extent not so provided, by the
Board of Directors.
4. THE CHAIRMAN OF THE BOARD OF DIRECTORS.
The Chairman of the Board of Directors, if present and acting, shall
preside at all meetings of the Board of Directors, otherwise, the President, if
present, shall
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<PAGE> 22
preside, or if the President does not so preside, any other director chosen by
the Board shall preside.
5. THE PRESIDENT.
The President shall be the chief executive officer of the
corporation.
6. VICE PRESIDENTS.
Any Vice President that may have been appointed, in the absence or
disability of the President, shall perform the duties and exercise the powers of
the President, in the order of their seniority, and shall perform such other
duties as the Board of Directors shall prescribe.
7. THE SECRETARY.
The Secretary shall keep in safe custody the seal of the corporation
and affix it to any instrument when authorized by the Board of Directors, and
shall perform such other duties as may be prescribed by the Board of Directors.
The Secretary (or in his absence, an Assistant Secretary, but if neither is
present another person selected by the Chairman for the meeting) shall have the
duty to record the proceedings of the meetings of the stockholders and directors
in a book to be kept for that purpose.
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<PAGE> 23
8. THE TREASURER.
The Treasurer shall have the care and custody of the corporate
funds, and other valuable effects, including securities, and shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
corporation and shall deposit all moneys and other valuable effects in the name
and to the credit of the corporation in such depositories as may be designated
by the Board of Directors. The Treasurer shall disburse the funds of the
corporation as may be ordered by the Board, taking proper vouchers for such
disbursements, and shall render to the President and directors, at the regular
meetings of the Board, or whenever they may require it, an account of all his
transactions as Treasurer and of the financial condition of the corporation. If
required by the Board of Directors, the Treasurer shall give the corporation a
bond for such term, in such sum and with such surety or sureties as shall be
satisfactory to the Board for the faithful performance of the duties of his
office and for the restoration to the corporation, in case of his death,
resignation, retirement or removal from office, of all books, papers, vouchers,
money and other property of whatever kind in his possession or under his control
belonging to the corporation.
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<PAGE> 24
ARTICLE IV.
CORPORATE SEAL
AND
CORPORATE BOOKS
The corporate seal shall be in such form as the Board of Directors
shall prescribe.
The books of the corporation may be kept within or without the State
of Delaware, at such place or places as the Board of Directors may, from time to
time, determine.
ARTICLE V.
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall be
subject to change, by the Board of Directors.
ARTICLE VI.
INDEMNITY
Any person who was or is a party or threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that he or she is or was a
director, officer, employee or agent of the corporation or is or was serving at
the request of the corporation as a director, officer, employee or agent of
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<PAGE> 25
another corporation, partnership, joint venture, trust or other enterprise
(including employee benefit plans) (hereinafter an "indemnitee"), shall be
indemnified and held harmless by the corporation to the fullest extent
authorized by the General Corporation Law, as the same exists or may hereafter
be amended (but, in the case of any such amendment, only to the extent that such
amendment permits the corporation to provide broader indemnification than
permitted prior thereto), against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such indemnitee in connection with such action, suit or proceeding, if the
indemnitee acted in good faith and in a manner he or she reasonably believed to
be in or not opposed to the best interests of the corporation, and with respect
to any criminal action or proceeding, had no reasonable cause to believe such
conduct was unlawful. The termination of the proceeding, whether by judgment,
order, settlement, conviction or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he or she reasonably believed to be in
or not opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had reasonable cause to believe such conduct was
unlawful.
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<PAGE> 26
Any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he or
she is or was a director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise (including employee benefit plans) shall be indemnified and
held harmless by the corporation to the fullest extent authorized by the General
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
corporation to provide broader indemnification than permitted prior thereto),
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court in which such suit or action was
brought, shall determine upon
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<PAGE> 27
application, that despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which such Court shall deem proper.
All reasonable expenses incurred by or on behalf of the indemnitee
in connection with any suit, action or proceeding, shall be advanced to the
indemnitee by the corporation.
The rights to indemnification and to advancement of expenses
conferred in this section shall not be exclusive of any other right which any
person may have or hereafter acquire under any statute, the certificate of
incorporation, by-law, agreement, vote of stockholders or disinterested
directors or otherwise.
The indemnification and advancement of expenses provided by this
section shall continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
ARTICLE VII.
AMENDMENTS
The By-Laws may be amended, added to, rescinded or repealed at any
meeting of the Board of Directors or of the
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stockholders, provided that notice of the proposed change was given in the
notice of the meeting.
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<PAGE> 1
Exhibit 3.2(k)
BY-LAWS
OF
ABN GOVERNMENT SERVICES, INC.
Incorporated under the laws of the State of Delaware - August 8, 1995
<PAGE> 2
BY-LAWS
OF
ABN GOVERNMENT SERVICES, INC.
(A Delaware Corporation)
ARTICLE I.
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK.
Every holder of stock in the corporation shall be entitled to
have a certificate signed by, or in the name of, the corporation by the Chairman
or Vice-Chairman of the Board of Directors, if any, or by the President or a
Vice-President and by the Treasurer or an Assistant Treasurer or the Secretary
or an Assistant Secretary of the corporation representing the number of shares
owned by him in the corporation. If such certificate is countersigned by a
transfer agent other than the corporation or its employee or by a registrar
other than the corporation or its employee, any other signature on the
certificate may be a facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent, or registrar
before such certificate is issued, it may be issued by the corporation with the
same effect as if he were such officer, transfer agent, or registrar at the date
of issue.
<PAGE> 3
Whenever the corporation shall be authorized to issue more
than one class of stock or more than one series of any class of stock, and
whenever the corporation shall issue any shares of its stock as partly paid
stock, the certificates representing shares of any such class or series or of
any such partly paid stock shall set forth thereon the statements prescribed by
the General Corporation Law. Any restrictions on the transfer or registration of
transfer of any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares.
The corporation may issue a new certificate of stock in place
of any certificate theretofore issued by it, alleged to have been lost, stolen,
or destroyed, and the Board of Directors may require the owner of any lost,
stolen, or destroyed certificate, or his legal representative, to give the
corporation a bond sufficient to indemnify the corporation against any claim
that may be made against it on account of the alleged loss, theft, or
destruction of any such certificate or the issuance of any such new certificate.
2. FRACTIONAL SHARE INTERESTS.
The corporation may, but shall not be required to, issue
fractions of a share.
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<PAGE> 4
3. STOCK TRANSFERS.
Upon compliance with provisions restricting the transfer or
registration of transfer of shares of stock, if any, transfers or registration
of transfer of shares of stock of the corporation shall be made only on the
stock ledger of the corporation by the registered holder thereof, or by his
attorney thereunto authorized by power of attorney duly executed and filed with
the Secretary of the corporation or with a transfer agent or a registrar, if
any, and on surrender of the certificate or certificates for such shares of
stock properly endorsed and the payment of all taxes due thereon.
4. RECORD DATE FOR STOCKHOLDERS.
In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the board of directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the board of directors, and which record date shall not be more
than sixty nor less than ten days before the date of such meeting. If no record
date has been fixed by the board of directors, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the day next preceding the day on which notice is
given, or, if notice is waived, at the close of business on the
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<PAGE> 5
day next preceding the day on which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; providing, however,
that the board of directors may fix a new record date for the adjourned meeting.
In order that the corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the board of directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty days prior to such
action. If no record date has been fixed, the record date for determining
stockholders for any such purpose shall be at the close of business on the day
on which the board of directors adopts the resolution relating thereto.
5. MEANING OF CERTAIN TERMS.
As used herein in respect of the right to notice of a meeting
of stockholders or a waiver thereof or to participate or vote thereat or to
consent or dissent in writing in lieu of a meeting, as the case may be, the term
"share" or "shares" or "share of stock" or "shares of stock" or "stockholder" or
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<PAGE> 6
"stockholders" refers to an outstanding share or shares of stock and to a holder
or holders of record of outstanding shares of stock when the corporation is
authorized to issue only one class of shares of stock, and said reference is
also intended to include any outstanding share or shares of stock and any holder
or holders of record of outstanding shares of stock of any class upon which or
upon whom the Certificate of Incorporation confers such rights where there are
two or more classes or series of shares of stock or upon which or upon whom the
General Corporation Law confers such rights notwithstanding that the Certificate
of Incorporation may provide for more than one class or series of shares of
stock, one or more of which are limited or denied such rights thereunder;
provided, however, that no such right shall vest in the event of an increase or
a decrease in the authorized number of shares of stock of any class or series
which is otherwise denied voting rights under the provisions of the Certificate
of Incorporation, including any Preferred Stock which is denied voting rights
under the provisions of the resolution or resolutions adopted by the Board of
Directors with respect to the issuance thereof.
6. STOCKHOLDER MEETINGS.
TIME. The annual meeting shall be held on the date and at the
time fixed, from time to time, by the directors. A special meeting shall be held
on the date and at the time fixed by the directors.
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<PAGE> 7
PLACE. Annual meetings and special meetings shall be held at
such place, within or without the State of Delaware, as the directors may, from
time to time, fix. Whenever the directors shall fail to fix such place, the
meeting shall be held at the registered office of the corporation in the State
of Delaware.
CALL. Annual meetings and special meetings may be called by
the directors or by any officer instructed by the directors to call the meeting.
NOTICE OR WAIVER OF NOTICE. Written notice of all meetings
shall be given, stating the place, date, and hour of the meeting. The notice of
an annual meeting shall state that the meeting is called for the election of
directors and for the transaction of other business which may properly come
before the meeting, and shall (if any other action which could be taken at a
special meeting is to be taken at such annual meeting), state such other action
or actions as are known at the time of such notice. The notice of a special
meeting shall in all instances state the purpose or purposes for which the
meeting is called. If any action is proposed to be taken which would, if taken,
entitle stockholders to receive payment for their shares of stock, the notice
shall include a statement of that purpose and to that effect. Except as
otherwise provided by the General Corporation Law, a copy of the notice of any
meeting shall be given, personally or by mail, not less than ten days nor more
than sixty days before the date of the meeting, unless the lapse of the
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<PAGE> 8
prescribed period of time shall have been waived, and directed to each
stockholder at his address as it appears on the records of the corporation.
Notice by mail shall be deemed to be given when deposited, with postage thereon
prepaid, in the United States mail. If a meeting is adjourned to another time,
not more than thirty days hence, and/or to another place, and if an announcement
of the adjourned time and place is made at the meeting, it shall not be
necessary to give notice of the adjourned meeting unless the directors, after
adjournment, fix a new record date for the adjourned meeting. Notice need not be
given to any stockholder who submits a written waiver of notice by him before or
after the time stated therein. Attendance of a person at a meeting of
stockholders shall constitute a waiver of notice of such meeting, except when
the stockholder attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the stockholders need be
specified in any written waiver of notice.
STOCKHOLDER LIST. There shall be prepared and made, at least
ten days before every meeting of stockholders, a complete list of the
stockholders, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
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<PAGE> 9
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by this
section or the books of the corporation, or to vote at any meeting of
stockholders.
CONDUCT OF MEETING. Meetings of the stockholders shall be
presided over by one of the following officers in the order of seniority and if
present and acting: the Chairman of the Board, if any, the Vice-Chairman of the
Board, if any, the President, a Vice President, a chairman for the meeting
chosen by the Board of Directors, or, if none of the foregoing is in office and
present and acting, by a chairman to be chosen by the stockholders. The
Secretary of the corporation, or, in his absence, an Assistant Secretary, shall
act as secretary of every meeting, but if neither the Secretary nor an Assistant
Secretary is present the Chairman for the meeting shall appoint a secretary of
the meeting.
PROXY REPRESENTATION. Every stockholder may authorize another
person or persons to act for him by proxy in all matters in which a stockholder
is entitled to participate, whether by
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<PAGE> 10
waiving notice of any meeting, voting or participating at a meeting, or
expressing consent or dissent without a meeting. Every proxy must be signed by
the stockholder or by his attorney-in-fact. No proxy shall be voted or acted
upon after three years from its date unless such proxy provides for a longer
period. A duly executed proxy shall be irrevocable if it states that it is
irrevocable and, if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power. A proxy may be made
irrevocable regardless of whether the interest with which it is coupled is an
interest in the stock itself or an interest in the corporation generally.
INSPECTORS AND JUDGES. The directors, in advance of any
meeting, may, but need not, appoint one or more inspectors of election or judges
of the vote, as the case may be, to act at the meeting or any adjournment
thereof. If an inspector or inspectors or judge or judges are not appointed, the
person presiding at the meeting may, but need not, appoint one or more
inspectors or judges. In case any person who may be appointed as an inspector or
judge fails to appear or act, the vacancy may be filled by appointment made by
the person presiding thereat. Each inspector or judge, if any, before entering
upon the discharge of his duties, shall take and sign an oath faithfully to
execute the duties of inspector or judge at such meeting with strict
impartiality and according to the best of his ability. The inspectors or judges,
if any, shall determine the number of shares
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<PAGE> 11
of stock outstanding and the voting power of each, the shares of stock
represented at the meeting, the existence of a quorum, the validity and effect
of proxies, and shall receive votes, ballots or consents, hear and determine all
challenges and questions arising in connection with the right to vote, count and
tabulate all votes, ballots or consents, determine the result, and do such acts
as are proper to conduct the election or vote with fairness to all stockholders.
On request of the person presiding at the meeting, the inspector or inspectors
or judge or judges, if any, shall make a report in writing of any challenge,
question or matter determined by him or them and execute a certificate of any
fact found by him or them.
QUORUM. Except as the General Corporation Law or these By-Laws
may otherwise provide, the holders of a majority of the outstanding shares of
stock entitled to vote shall constitute a quorum at a meeting of stockholders
for the transaction of any business. The stockholders present may adjourn the
meeting despite the absence of a quorum. When a quorum is once present to
organize a meeting, it is not broken by the subsequent withdrawal of any
shareholders.
VOTING. Each stockholder entitled to vote in accordance with
the terms of the Certificate of Incorporation and of these By-Laws, or, with
respect to the issuance of Preferred Stock, in accordance with the terms of a
resolution or resolutions of the Board of Directors, shall be entitled to one
vote, in person or by
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<PAGE> 12
proxy, for each share of stock entitled to vote held by such stockholder. In the
election of directors, a plurality of the votes present at the meeting shall
elect. Any other action shall be authorized by a majority of the votes cast
except where the Certificate of Incorporation or the General Corporation Law
prescribes a different percentage of votes and/or a different exercise of voting
power. Voting by ballot shall not be required for corporate action except as
otherwise provided by the General Corporation Law.
7. STOCKHOLDER ACTION WITHOUT MEETINGS.
Any action required to be taken, or any action which may be
taken, at any annual or special meeting of stockholders, may be taken without a
meeting, without prior notice and without a vote, if a consent or consents in
writing, setting forth the action so taken, shall be signed by the holders of
the outstanding stock having not less than the minimum number of votes that
would be necessary to authorize or take such action at a meeting at which all
shares entitled to vote thereon were present and voted. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing
and shall be delivered to the corporation by delivery to its registered office
in Delaware, its principal place of business, or an officer or agent of the
corporation having custody of the book in which
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<PAGE> 13
proceedings of meetings of stockholders are recorded. Delivery made to a
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested.
ARTICLE II.
DIRECTORS
1. FUNCTIONS AND DEFINITION.
The business and affairs of the corporation shall be managed
by or under the direction of the Board of Directors of the corporation. The use
of the phrase "whole board" herein refers to the total number of directors which
the corporation would have if there were no vacancies.
2. QUALIFICATIONS AND NUMBER.
A director need not be a stockholder, a citizen of the United
States, or a resident of the State of Delaware. The initial Board of Directors
shall consist of ____ persons. Thereafter the number of directors constituting
the whole board shall be at least one. Subject to the foregoing limitation and
except for the first Board of Directors, such number may be fixed from time to
time by action of the stockholders or of the directors, or, if the number is not
fixed, the number shall be three. The number of directors may be increased or
decreased by action of the stockholders or of the directors.
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<PAGE> 14
3. ELECTION AND TERM.
The first Board of Directors, unless the members thereof shall
have been named in the Certificate of Incorporation, shall be elected by the
incorporator or incorporators and shall hold office until the first annual
meeting of stockholders and until their successors have been elected and
qualified or until their earlier resignation or removal. Any director may resign
at any time upon written notice to the corporation. Thereafter, directors who
are elected at an annual meeting of stockholders, and directors who are elected
in the interim to fill vacancies and newly created directorships, shall hold
office until the next annual meeting of stockholders and until their successors
have been elected and qualified or until their earlier resignation or removal.
In the interim between annual meetings of stockholders or of special meetings of
stockholders called for the election of directors and/or for the removal of one
or more directors and for the filling of any vacancies in the Board of
Directors, including vacancies resulting from the removal of directors for cause
or without cause, any vacancy in the Board of Directors may be filled by the
vote of a majority of the remaining directors then in office, although less than
a quorum, or by the sole remaining director.
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<PAGE> 15
4. MEETINGS.
TIME. Meetings shall be held at such time as the Board shall
fix.
FIRST MEETING. The first meeting of each newly elected Board
may be held immediately after each annual meeting of the stockholders at the
same place at which the meeting is held, and no notice of such meeting shall be
necessary to call the meeting, provided a quorum shall be present. In the event
such first meeting is not so held immediately after the annual meeting of the
stockholders, it may be held at such time and place as shall be specified in the
notice given as hereinafter provided for special meetings of the Board of
Directors, or at such time and place as shall be fixed by the consent in writing
of all of the directors.
PLACE. Meetings, both regular and special, shall be held at
such place within or without the State of Delaware as shall be fixed by the
Board.
CALL. No call shall be required for regular meetings for which
the time and place have been fixed. Special meetings may be called by or at the
direction of the Chairman of the Board, if any, the Vice-Chairman of the Board,
if any, or the President, or of a majority of the directors in office.
NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be
required for regular meetings for which the time and place have been fixed.
Written, oral, or any other mode of notice of the time and place shall be given
for special meetings at least
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<PAGE> 16
twenty-four hours prior to the meeting. The notice of any meeting need not
specify the purpose of the meeting. Any requirement of furnishing a notice shall
be waived by any director who signs a written waiver of such notice before or
after the time stated therein.
Attendance of a director at a meeting of the Board shall
constitute a waiver of notice of such meeting, except when the director attends
a meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called or
convened.
QUORUM AND ACTION. A majority of the whole Board shall
constitute a quorum except when a vacancy or vacancies prevents such majority,
whereupon a majority of the directors in office shall constitute a quorum,
provided that such majority shall constitute at least one-third (1/3) of the
whole Board. Any director may participate in a meeting of the Board by means of
a conference telephone or similar communications equipment by means of which all
directors participating in the meeting can hear each other, and such
participation in a meeting of the Board shall constitute presence in person at
such meeting. A majority of the directors present, whether or not a quorum is
present, may adjourn a meeting to another time and place. Except as herein
otherwise provided, and except as otherwise provided by the General Corporation
Law, the act of the Board shall be the act by vote of a majority of the
directors present at a meeting, a quorum being
15
<PAGE> 17
present. The quorum and voting provisions herein stated shall not be construed
as conflicting with any provisions of the General Corporation Law and these
By-Laws which govern a meeting of directors held to fill vacancies and newly
created directorships in the Board.
CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and
if present and acting, shall preside at all meetings. Otherwise, the
Vice-Chairman of the Board, if any and if present and acting, or the President,
if present and acting, or any other director chosen by the Board, shall preside.
5. REMOVAL OF DIRECTORS.
Any or all of the directors may be removed for cause or
without cause by the stockholders.
6. COMMITTEES.
The Board of Directors may, by resolution passed by a majority
of the whole Board, designate one or more committees, each committee to consist
of one or more of the directors of the corporation. The Board may designate one
or more directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee. Any such
committee, to the extent provided in the resolution of the Board, shall have and
may exercise the powers of the Board of Directors in the management of the
business and affairs of the corporation, and may authorize the seal of the
corporation to be affixed to all
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<PAGE> 18
papers which may require it. In the absence or disqualification of any member of
any such committee or committees, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the Board of Directors to act
at the meeting in the place of any such absent or disqualified member.
7. ACTION IN WRITING.
Any action required or permitted to be taken at any meeting of
the Board of Directors or any committee thereof may be taken without a meeting
if all members of the Board or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board or committee.
ARTICLE III.
OFFICERS
1. EXECUTIVE OFFICERS.
The directors may elect or appoint a Chairman of the Board of
Directors, a President, one or more Vice Presidents (one or more of whom may be
denominated "Executive Vice President"), a Secretary, one or more Assistant
Secretaries, a Treasurer, one or more Assistant Treasurers, and such other
officers as they may determine. Any number of offices may be held by the same
person.
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<PAGE> 19
2. TERM OF OFFICE: REMOVAL.
Unless otherwise provided in the resolution of election or
appointment, each officer shall hold office until the meeting of the Board of
Directors following the next annual meeting of stockholders and until his
successor has been elected and qualified or until his earlier resignation or
removal. The Board of Directors may remove any officer for cause or without
cause.
3. AUTHORITY AND DUTIES.
All officers, as between themselves and the corporation, shall
have such authority and perform such duties in the management of the corporation
as may be provided in these By-Laws, or, to the extent not so provided, by the
Board of Directors.
4. THE CHAIRMAN OF THE BOARD OF DIRECTORS.
The Chairman of the Board of Directors, if present and acting,
shall preside at all meetings of the Board of Directors, otherwise, the
President, if present, shall preside, or if the President does not so preside,
any other director chosen by the Board shall preside.
5. THE PRESIDENT.
The President shall be the chief executive officer of the corporation.
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<PAGE> 20
6. VICE PRESIDENTS.
Any Vice President that may have been appointed, in the
absence or disability of the President, shall perform the duties and exercise
the powers of the President, in the order of their seniority, and shall perform
such other duties as the Board of Directors shall prescribe.
7. THE SECRETARY.
The Secretary shall keep in safe custody the seal of the
corporation and affix it to any instrument when authorized by the Board of
Directors, and shall perform such other duties as may be prescribed by the Board
of Directors. The Secretary (or in his absence, an Assistant Secretary, but if
neither is present another person selected by the Chairman for the meeting)
shall have the duty to record the proceedings of the meetings of the
stockholders and directors in a book to be kept for that purpose.
8. THE TREASURER.
The Treasurer shall have the care and custody of the corporate
funds, and other valuable effects, including securities, and shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
corporation and shall deposit all moneys and other valuable effects in the name
and to the credit of the corporation in such depositories as may be designated
by the Board of Directors. The Treasurer shall disburse the funds of the
corporation as may be ordered by the
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<PAGE> 21
Board, taking proper vouchers for such disbursements, and shall render to the
President and directors, at the regular meetings of the Board, or whenever they
may require it, an account of all his transactions as Treasurer and of the
financial condition of the corporation. If required by the Board of Directors,
the Treasurer shall give the corporation a bond for such term, in such sum and
with such surety or sureties as shall be satisfactory to the Board for the
faithful performance of the duties of his office and for the restoration to the
corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
ARTICLE IV.
CORPORATE SEAL
AND
CORPORATE BOOKS
The corporate seal shall be in such form as the Board of
Directors shall prescribe.
The books of the corporation may be kept within or without the
State of Delaware, at such place or places as the Board of Directors may, from
time to time, determine.
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<PAGE> 22
ARTICLE V.
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall
be subject to change, by the Board of Directors.
ARTICLE VI.
INDEMNITY
Any person who was or is a party or threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation) by reason of the fact that he or she is
or was a director, officer, employee or agent of the corporation or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise (including employee benefit plans) (hereinafter an "indemnitee"),
shall be indemnified and held harmless by the corporation to the fullest extent
authorized by the General Corporation Law, as the same exists or may hereafter
be amended (but, in the case of any such amendment, only to the extent that such
amendment permits the corporation to provide broader indemnification than
permitted prior thereto), against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such indemnitee in connection with such action, suit or
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<PAGE> 23
proceeding, if the indemnitee acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe such conduct was unlawful. The termination of the
proceeding, whether by judgment, order, settlement, conviction or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a presumption
that the person did not act in good faith and in a manner which he or she
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, had
reasonable cause to believe such conduct was unlawful.
Any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the right
of the corporation to procure a judgment in its favor by reason of the fact that
he or she is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise (including employee benefit plans) shall be indemnified and
held harmless by the corporation to the fullest extent authorized by the General
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
corporation to provide broader
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<PAGE> 24
indemnification than permitted prior thereto), against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation and except that no indemnification shall be made in respect of
any claim, issue or matter as to which such person shall have been adjudged to
be liable to the corporation unless and only to the extent that the Court in
which such suit or action was brought, shall determine upon application, that
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which such Court shall deem proper.
All reasonable expenses incurred by or on behalf of the
indemnitee in connection with any suit, action or proceeding, shall be advanced
to the indemnitee by the corporation.
The rights to indemnification and to advancement of expenses
conferred in this section shall not be exclusive of any other right which any
person may have or hereafter acquire under any statute, the certificate of
incorporation, by-law, agreement, vote of stockholders or disinterested
directors or otherwise.
The indemnification and advancement of expenses provided by
this section shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the
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<PAGE> 25
benefit of the heirs, executors and administrators of such a person.
ARTICLE VII.
AMENDMENTS
The By-Laws may be amended, added to, rescinded or repealed at
any meeting of the Board of Directors or of the stockholders, provided that
notice of the proposed change was given in the notice of the meeting.
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<PAGE> 1
Exhibit 3.2(l)
BY-LAWS
OF
USBC CAPITAL CORP.
Incorporated under the laws of the State of Delaware - June 27, 1994
<PAGE> 2
BY-LAWS
OF
USBC CAPITAL CORP.
(A Delaware Corporation)
ARTICLE I.
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK.
Every holder of stock in the corporation shall be entitled to
have a certificate signed by, or in the name of, the corporation by the Chairman
or Vice-Chairman of the Board of Directors, if any, or by the President or a
Vice-President and by the Treasurer or an Assistant Treasurer or the Secretary
or an Assistant Secretary of the corporation representing the number of shares
owned by him in the corporation. If such certificate is countersigned by a
transfer agent other than the corporation or its employee or by a registrar
other than the corporation or its employee, any other signature on the
certificate may be a facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent, or registrar
before such certificate is issued, it may be issued by the corporation with the
same effect as if he were such officer, transfer agent, or registrar at the date
of issue.
<PAGE> 3
Whenever the corporation shall be authorized to issue more
than one class of stock or more than one series of any class of stock, and
whenever the corporation shall issue any shares of its stock as partly paid
stock, the certificates representing shares of any such class or series or of
any such partly paid stock shall set forth thereon the statements prescribed by
the General Corporation Law. Any restrictions on the transfer or registration of
transfer of any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares.
The corporation may issue a new certificate of stock in place
of any certificate theretofore issued by it, alleged to have been lost, stolen,
or destroyed, and the Board of Directors may require the owner of any lost,
stolen, or destroyed certificate, or his legal representative, to give the
corporation a bond sufficient to indemnify the corporation against any claim
that may be made against it on account of the alleged loss, theft, or
destruction of any such certificate or the issuance of any such new certificate.
2. FRACTIONAL SHARE INTERESTS.
The corporation may, but shall not be required to, issue
fractions of a share.
2
<PAGE> 4
3. STOCK TRANSFERS.
Upon compliance with provisions restricting the transfer or
registration of transfer of shares of stock, if any, transfers or registration
of transfer of shares of stock of the corporation shall be made only on the
stock ledger of the corporation by the registered holder thereof, or by his
attorney thereunto authorized by power of attorney duly executed and filed with
the Secretary of the corporation or with a transfer agent or a registrar, if
any, and on surrender of the certificate or certificates for such shares of
stock properly endorsed and the payment of all taxes due thereon.
4. RECORD DATE FOR STOCKHOLDERS.
In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the board of directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the board of directors, and which record date shall not be more
than sixty nor less than ten days before the date of such meeting. If no record
date has been fixed by the board of directors, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the day next preceding the day on which notice is
given, or, if notice is waived, at the close of business on the
3
<PAGE> 5
day next preceding the day on which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; providing, however,
that the board of directors may fix a new record date for the adjourned meeting.
In order that the corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the board of directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty days prior to such
action. If no record date has been fixed, the record date for determining
stockholders for any such purpose shall be at the close of business on the day
on which the board of directors adopts the resolution relating thereto.
5. MEANING OF CERTAIN TERMS.
As used herein in respect of the right to notice of a meeting
of stockholders or a waiver thereof or to participate or vote thereat or to
consent or dissent in writing in lieu of a meeting, as the case may be, the term
"share" or "shares" or "share of stock" or "shares of stock" or "stockholder" or
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<PAGE> 6
"stockholders" refers to an outstanding share or shares of stock and to a holder
or holders of record of outstanding shares of stock when the corporation is
authorized to issue only one class of shares of stock, and said reference is
also intended to include any outstanding share or shares of stock and any holder
or holders of record of outstanding shares of stock of any class upon which or
upon whom the Certificate of Incorporation confers such rights where there are
two or more classes or series of shares of stock or upon which or upon whom the
General Corporation Law confers such rights notwithstanding that the Certificate
of Incorporation may provide for more than one class or series of shares of
stock, one or more of which are limited or denied such rights thereunder;
provided, however, that no such right shall vest in the event of an increase or
a decrease in the authorized number of shares of stock of any class or series
which is otherwise denied voting rights under the provisions of the Certificate
of Incorporation, including any Preferred Stock which is denied voting rights
under the provisions of the resolution or resolutions adopted by the Board of
Directors with respect to the issuance thereof.
6. STOCKHOLDER MEETINGS.
TIME. The annual meeting shall be held on the date and at the
time fixed, from time to time, by the directors. A special meeting shall be held
on the date and at the time fixed by the directors.
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<PAGE> 7
PLACE. Annual meetings and special meetings shall be held at
such place, within or without the State of Delaware, as the directors may, from
time to time, fix. Whenever the directors shall fail to fix such place, the
meeting shall be held at the registered office of the corporation in the State
of Delaware.
CALL. Annual meetings and special meetings may be called by
the directors or by any officer instructed by the directors to call the meeting.
NOTICE OR WAIVER OF NOTICE. Written notice of all meetings
shall be given, stating the place, date, and hour of the meeting. The notice of
an annual meeting shall state that the meeting is called for the election of
directors and for the transaction of other business which may properly come
before the meeting, and shall (if any other action which could be taken at a
special meeting is to be taken at such annual meeting), state such other action
or actions as are known at the time of such notice. The notice of a special
meeting shall in all instances state the purpose or purposes for which the
meeting is called. If any action is proposed to be taken which would, if taken,
entitle stockholders to receive payment for their shares of stock, the notice
shall include a statement of that purpose and to that effect. Except as
otherwise provided by the General Corporation Law, a copy of the notice of any
meeting shall be given, personally or by mail, not less than ten days nor more
than sixty
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<PAGE> 8
days before the date of the meeting, unless the lapse of the prescribed period
of time shall have been waived, and directed to each stockholder at his address
as it appears on the records of the corporation. Notice by mail shall be deemed
to be given when deposited, with postage thereon prepaid, in the United States
mail. If a meeting is adjourned to another time, not more than thirty days
hence, and/or to another place, and if an announcement of the adjourned time and
place is made at the meeting, it shall not be necessary to give notice of the
adjourned meeting unless the directors, after adjournment, fix a new record date
for the adjourned meeting. Notice need not be given to any stockholder who
submits a written waiver of notice by him before or after the time stated
therein. Attendance of a person at a meeting of stockholders shall constitute a
waiver of notice of such meeting, except when the stockholder attends a meeting
for the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders need be specified in any written
waiver of notice.
STOCKHOLDER LIST. There shall be prepared and made, at least
ten days before every meeting of stockholders, a complete list of the
stockholders, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares
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<PAGE> 9
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or if not so specified, at the
place where the meeting is to be held. The list shall also be produced and kept
at the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present. The stock ledger shall be the only
evidence as to who are the stockholders entitled to examine the stock ledger,
the list required by this section or the books of the corporation, or to vote at
any meeting of stockholders.
CONDUCT OF MEETING. Meetings of the stockholders shall be
presided over by one of the following officers in the order of seniority and if
present and acting: the Chairman of the Board, if any, the Vice-Chairman of the
Board, if any, the President, a Vice President, a chairman for the meeting
chosen by the Board of Directors, or, if none of the foregoing is in office and
present and acting, by a chairman to be chosen by the stockholders. The
Secretary of the corporation, or, in his absence, an Assistant Secretary, shall
act as secretary of every meeting, but if neither the Secretary nor an Assistant
Secretary is present the Chairman for the meeting shall appoint a secretary of
the meeting.
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<PAGE> 10
PROXY REPRESENTATION. Every stockholder may authorize another
person or persons to act for him by proxy in all matters in which a stockholder
is entitled to participate, whether by waiving notice of any meeting, voting or
participating at a meeting, or expressing consent or dissent without a meeting.
Every proxy must be signed by the stockholder or by his attorney-in-fact. No
proxy shall be voted or acted upon after three years from its date unless such
proxy provides for a longer period. A duly executed proxy shall be irrevocable
if it states that it is irrevocable and, if, and only as long as, it is coupled
with an interest sufficient in law to support an irrevocable power. A proxy may
be made irrevocable regardless of whether the interest with which it is coupled
is an interest in the stock itself or an interest in the corporation generally.
INSPECTORS AND JUDGES. The directors, in advance of any
meeting, may, but need not, appoint one or more inspectors of election or judges
of the vote, as the case may be, to act at the meeting or any adjournment
thereof. If an inspector or inspectors or judge or judges are not appointed, the
person presiding at the meeting may, but need not, appoint one or more
inspectors or judges. In case any person who may be appointed as an inspector or
judge fails to appear or act, the vacancy may be filled by appointment made by
the person presiding thereat. Each inspector or judge, if any, before entering
upon the discharge of his
9
<PAGE> 11
duties, shall take and sign an oath faithfully to execute the duties of
inspector or judge at such meeting with strict impartiality and according to the
best of his ability. The inspectors or judges, if any, shall determine the
number of shares of stock outstanding and the voting power of each, the shares
of stock represented at the meeting, the existence of a quorum, the validity and
effect of proxies, and shall receive votes, ballots or consents, hear and
determine all challenges and questions arising in connection with the right to
vote, count and tabulate all votes, ballots or consents, determine the result,
and do such acts as are proper to conduct the election or vote with fairness to
all stockholders. On request of the person presiding at the meeting, the
inspector or inspectors or judge or judges, if any, shall make a report in
writing of any challenge, question or matter determined by him or them and
execute a certificate of any fact found by him or them.
QUORUM. Except as the General Corporation Law or these By-Laws
may otherwise provide, the holders of a majority of the outstanding shares of
stock entitled to vote shall constitute a quorum at a meeting of stockholders
for the transaction of any business. The stockholders present may adjourn the
meeting despite the absence of a quorum. When a quorum is once present to
organize a meeting, it is not broken by the subsequent withdrawal of any
shareholders.
10
<PAGE> 12
VOTING. Each stockholder entitled to vote in accordance with
the terms of the Certificate of Incorporation and of these By-Laws, or, with
respect to the issuance of Preferred Stock, in accordance with the terms of a
resolution or resolutions of the Board of Directors, shall be entitled to one
vote, in person or by proxy, for each share of stock entitled to vote held by
such stockholder. In the election of directors, a plurality of the votes present
at the meeting shall elect. Any other action shall be authorized by a majority
of the votes cast except where the Certificate of Incorporation or the General
Corporation Law prescribes a different percentage of votes and/or a different
exercise of voting power. Voting by ballot shall not be required for corporate
action except as otherwise provided by the General Corporation Law.
7. STOCKHOLDER ACTION WITHOUT MEETINGS.
Any action required to be taken, or any action which may be
taken, at any annual or special meeting of stockholders, may be taken without a
meeting, without prior notice and without a vote, if a consent or consents in
writing, setting forth the action so taken, shall be signed by the holders of
the outstanding stock having not less than the minimum number of votes that
would be necessary to authorize or take such action at a meeting at which all
shares entitled to vote thereon were present and voted. Prompt notice of the
taking of the corporate action without a
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<PAGE> 13
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing and shall be delivered to the
corporation by delivery to its registered office in Delaware, its principal
place of business, or an officer or agent of the corporation having custody of
the book in which proceedings of meetings of stockholders are recorded. Delivery
made to a corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested.
ARTICLE II.
DIRECTORS
1. FUNCTIONS AND DEFINITION.
The business and affairs of the corporation shall be managed
by or under the direction of the Board of Directors of the corporation. The use
of the phrase "whole board" herein refers to the total number of directors which
the corporation would have if there were no vacancies.
2. QUALIFICATIONS AND NUMBER.
A director need not be a stockholder, a citizen of the United
States, or a resident of the State of Delaware. The initial Board of Directors
shall consist of ____ persons. Thereafter the number of directors constituting
the whole board shall be at least one. Subject to the foregoing limitation and
except for the first Board of Directors, such number may be fixed
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<PAGE> 14
from time to time by action of the stockholders or of the directors, or, if the
number is not fixed, the number shall be three. The number of directors may be
increased or decreased by action of the stockholders or of the directors.
3. ELECTION AND TERM.
The first Board of Directors, unless the members thereof shall
have been named in the Certificate of Incorporation, shall be elected by the
incorporator or incorporators and shall hold office until the first annual
meeting of stockholders and until their successors have been elected and
qualified or until their earlier resignation or removal. Any director may resign
at any time upon written notice to the corporation. Thereafter, directors who
are elected at an annual meeting of stockholders, and directors who are elected
in the interim to fill vacancies and newly created directorships, shall hold
office until the next annual meeting of stockholders and until their successors
have been elected and qualified or until their earlier resignation or removal.
In the interim between annual meetings of stockholders or of special meetings of
stockholders called for the election of directors and/or for the removal of one
or more directors and for the filling of any vacancies in the Board of
Directors, including vacancies resulting from the removal of directors for cause
or without cause, any vacancy in the Board of Directors may be filled by the
vote of a majority of the remaining directors then in
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<PAGE> 15
office, although less than a quorum, or by the sole remaining director.
4. MEETINGS.
TIME. Meetings shall be held at such time as the Board shall
fix.
FIRST MEETING. The first meeting of each newly elected Board
may be held immediately after each annual meeting of the stockholders at the
same place at which the meeting is held, and no notice of such meeting shall be
necessary to call the meeting, provided a quorum shall be present. In the event
such first meeting is not so held immediately after the annual meeting of the
stockholders, it may be held at such time and place as shall be specified in the
notice given as hereinafter provided for special meetings of the Board of
Directors, or at such time and place as shall be fixed by the consent in writing
of all of the directors.
PLACE. Meetings, both regular and special, shall be held at
such place within or without the State of Delaware as shall be fixed by the
Board.
CALL. No call shall be required for regular meetings for which
the time and place have been fixed. Special meetings may be called by or at the
direction of the Chairman of the Board, if any, the Vice-Chairman of the Board,
if any, or the President, or of a majority of the directors in office.
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<PAGE> 16
NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be
required for regular meetings for which the time and place have been fixed.
Written, oral, or any other mode of notice of the time and place shall be given
for special meetings at least twenty-four hours prior to the meeting. The notice
of any meeting need not specify the purpose of the meeting. Any requirement of
furnishing a notice shall be waived by any director who signs a written waiver
of such notice before or after the time stated therein.
Attendance of a director at a meeting of the Board shall
constitute a waiver of notice of such meeting, except when the director attends
a meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called or
convened.
QUORUM AND ACTION. A majority of the whole Board shall
constitute a quorum except when a vacancy or vacancies prevents such majority,
whereupon a majority of the directors in office shall constitute a quorum,
provided that such majority shall constitute at least one-third (1/3) of the
whole Board. Any director may participate in a meeting of the Board by means of
a conference telephone or similar communications equipment by means of which all
directors participating in the meeting can hear each other, and such
participation in a meeting of the Board shall constitute presence in person at
such meeting. A majority of the
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<PAGE> 17
directors present, whether or not a quorum is present, may adjourn a meeting to
another time and place. Except as herein otherwise provided, and except as
otherwise provided by the General Corporation Law, the act of the Board shall be
the act by vote of a majority of the directors present at a meeting, a quorum
being present. The quorum and voting provisions herein stated shall not be
construed as conflicting with any provisions of the General Corporation Law and
these By-Laws which govern a meeting of directors held to fill vacancies and
newly created directorships in the Board.
CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and
if present and acting, shall preside at all meetings. Otherwise, the
Vice-Chairman of the Board, if any and if present and acting, or the President,
if present and acting, or any other director chosen by the Board, shall preside.
5. REMOVAL OF DIRECTORS.
Any or all of the directors may be removed for cause or
without cause by the stockholders.
6. COMMITTEES.
The Board of Directors may, by resolution passed by a majority
of the whole Board, designate one or more committees, each committee to consist
of one or more of the directors of the corporation. The Board may designate one
or more directors as
16
<PAGE> 18
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee. Any such committee, to the extent
provided in the resolution of the Board, shall have and may exercise the powers
of the Board of Directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers which may require it. In the absence or disqualification of any member of
any such committee or committees, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the Board of Directors to act
at the meeting in the place of any such absent or disqualified member.
7. ACTION IN WRITING.
Any action required or permitted to be taken at any meeting of
the Board of Directors or any committee thereof may be taken without a meeting
if all members of the Board or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board or committee.
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<PAGE> 19
ARTICLE III.
OFFICERS
1. EXECUTIVE OFFICERS.
The directors may elect or appoint a Chairman of the Board of
Directors, a President, one or more Vice Presidents (one or more of whom may be
denominated "Executive Vice President"), a Secretary, one or more Assistant
Secretaries, a Treasurer, one or more Assistant Treasurers, and such other
officers as they may determine. Any number of offices may be held by the same
person.
2. TERM OF OFFICE: REMOVAL.
Unless otherwise provided in the resolution of election or
appointment, each officer shall hold office until the meeting of the Board of
Directors following the next annual meeting of stockholders and until his
successor has been elected and qualified or until his earlier resignation or
removal. The Board of Directors may remove any officer for cause or without
cause.
3. AUTHORITY AND DUTIES.
All officers, as between themselves and the corporation, shall
have such authority and perform such duties in the management of the corporation
as may be provided in these By-Laws, or, to the extent not so provided, by the
Board of Directors.
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<PAGE> 20
4. THE CHAIRMAN OF THE BOARD OF DIRECTORS.
The Chairman of the Board of Directors, if present and acting,
shall preside at all meetings of the Board of Directors, otherwise, the
President, if present, shall preside, or if the President does not so preside,
any other director chosen by the Board shall preside.
5. THE PRESIDENT.
The President shall be the chief executive officer of the
corporation.
6. VICE PRESIDENTS.
Any Vice President that may have been appointed, in the
absence or disability of the President, shall perform the duties and exercise
the powers of the President, in the order of their seniority, and shall perform
such other duties as the Board of Directors shall prescribe.
7. THE SECRETARY.
The Secretary shall keep in safe custody the seal of the corporation
and affix it to any instrument when authorized by the Board of Directors, and
shall perform such other duties as may be prescribed by the Board of Directors.
The Secretary (or in his absence, an Assistant Secretary, but if neither is
present another person selected by the Chairman for the meeting) shall have the
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<PAGE> 21
duty to record the proceedings of the meetings of the stockholders and directors
in a book to be kept for that purpose.
8. THE TREASURER.
The Treasurer shall have the care and custody of the corporate
funds, and other valuable effects, including securities, and shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
corporation and shall deposit all moneys and other valuable effects in the name
and to the credit of the corporation in such depositories as may be designated
by the Board of Directors. The Treasurer shall disburse the funds of the
corporation as may be ordered by the Board, taking proper vouchers for such
disbursements, and shall render to the President and directors, at the regular
meetings of the Board, or whenever they may require it, an account of all his
transactions as Treasurer and of the financial condition of the corporation. If
required by the Board of Directors, the Treasurer shall give the corporation a
bond for such term, in such sum and with such surety or sureties as shall be
satisfactory to the Board for the faithful performance of the duties of his
office and for the restoration to the corporation, in case of his death,
resignation, retirement or removal from office, of all books, papers, vouchers,
money and other property of whatever kind in his possession or under his control
belonging to the corporation.
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<PAGE> 22
ARTICLE IV.
CORPORATE SEAL
AND
CORPORATE BOOKS
The corporate seal shall be in such form as the Board of
Directors shall prescribe.
The books of the corporation may be kept within or without the
State of Delaware, at such place or places as the Board of Directors may, from
time to time, determine.
ARTICLE V.
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall
be subject to change, by the Board of Directors.
ARTICLE VI.
INDEMNITY
Any person who was or is a party or threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation) by reason of the fact that he or she is
or was a director, officer, employee or agent of the corporation or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership,
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<PAGE> 23
joint venture, trust or other enterprise (including employee benefit plans)
(hereinafter an "indemnitee"), shall be indemnified and held harmless by the
corporation to the fullest extent authorized by the General Corporation Law, as
the same exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the corporation to
provide broader indemnification than permitted prior thereto), against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such indemnitee in connection with such
action, suit or proceeding, if the indemnitee acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the corporation, and with respect to any criminal action or
proceeding, had no reasonable cause to believe such conduct was unlawful. The
termination of the proceeding, whether by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he or she reasonably believed to be in or not opposed to the best
interests of the corporation and, with respect to any criminal action or
proceeding, had reasonable cause to believe such conduct was unlawful.
Any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or
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<PAGE> 24
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he or she is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise (including employee benefit plans)
shall be indemnified and held harmless by the corporation to the fullest extent
authorized by the General Corporation Law, as the same exists or may hereafter
be amended (but, in the case of any such amendment, only to the extent that such
amendment permits the corporation to provide broader indemnification than
permitted prior thereto), against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation and
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court in which such suit or
action was brought, shall determine upon application, that despite the
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses which
such Court shall deem proper.
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<PAGE> 25
All reasonable expenses incurred by or on behalf of the
indemnitee in connection with any suit, action or proceeding, shall be advanced
to the indemnitee by the corporation.
The rights to indemnification and to advancement of expenses
conferred in this section shall not be exclusive of any other right which any
person may have or hereafter acquire under any statute, the certificate of
incorporation, by-law, agreement, vote of stockholders or disinterested
directors or otherwise.
The indemnification and advancement of expenses provided by
this section shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
ARTICLE VII.
AMENDMENTS
The By-Laws may be amended, added to, rescinded or repealed at
any meeting of the Board of Directors or of the stockholders, provided that
notice of the proposed change was given in the notice of the meeting.
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<PAGE> 1
EXHIBIT 3.2 (m)
BY-LAWS
OF
ABN CBA, INC.
Incorporated under the laws of the State of Delaware - December 8, 1997
<PAGE> 2
BY-LAWS
OF
ABN CBA, INC.
(A Delaware Corporation)
Article I.
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK.
Every holder of stock in the corporation shall be entitled to have a
certificate signed by, or in the name of, the corporation by the Chairman or
Vice-Chairman of the Board of Directors, if any, or by the President or a
Vice-President and by the Treasurer or an Assistant Treasurer or the Secretary
or an Assistant Secretary of the corporation representing the number of shares
owned by him in the corporation. If such certificate is countersigned by a
transfer agent other than the corporation or its employee or by a registrar
other than the corporation or its employee, any other signature on the
certificate may be a facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent, or registrar
before such certificate is issued, it may be issued by the corporation with the
same effect as if he were such officer, transfer agent, or registrar at the date
of issue.
<PAGE> 3
Whenever the corporation shall be authorized to issue more than one
class of stock or more than one series of any class of stock, and whenever the
corporation shall issue any shares of its stock as partly paid stock, the
certificates representing shares of any such class or series or of any such
partly paid stock shall set forth thereon the statements prescribed by the
General Corporation Law. Any restrictions on the transfer or registration of
transfer of any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares.
The corporation may issue a new certificate of stock in place of any
certificate theretofore issued by it, alleged to have been lost, stolen, or
destroyed, and the Board of Directors may require the owner of any lost, stolen,
or destroyed certificate, or his legal representative, to give the corporation a
bond sufficient to indemnify the corporation against any claim that may be made
against it on account of the alleged loss, theft, or destruction of any such
certificate or the issuance of any such new certificate.
2. FRACTIONAL SHARE INTERESTS.
The corporation may, but shall not be required to, issue fractions
of a share.
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<PAGE> 4
3. STOCK TRANSFERS.
Upon compliance with provisions restricting the transfer or
registration of transfer of shares of stock, if any, transfers or registration
of transfer of shares of stock of the corporation shall be made only on the
stock ledger of the corporation by the registered holder thereof, or by his
attorney thereunto authorized by power of attorney duly executed and filed with
the Secretary of corporation or with a transfer agent or a registrar, if any,
and on surrender of the certificate or certificates for such shares of stock
properly endorsed and the payment of all taxes due thereon.
4. RECORD DATE FOR STOCKHOLDERS.
In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the board of directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the board of directors, and which record date shall not be more
than sixty nor less than ten days before the date of such meeting. If no record
date has been fixed by the board of directors, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of General on the day next preceding the day on which notice is
given, or, if notice is waived, at the close of General on the day next
preceding the day on which the meeting is held. A
3
<PAGE> 5
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting;
providing, however, that the board of directors may fix a new record date for
the adjourned meeting.
In order that the corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the board of directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty days prior to such
action. If no record date has been fixed, the record date for determining
stockholders for any such purpose shall be at the close of General on the day on
which the board of directors adopts the resolution relating thereto.
5. MEANING OF CERTAIN TERMS.
As used herein in respect of the right to notice of a meeting of
stockholders or a waiver thereof or to participate or vote thereat or to consent
or dissent in writing in lieu of a meeting, as the case may be, the term "share"
or "shares" or "share of stock" or "shares of stock" or "stockholder" or
"stockholders" refers to an outstanding share or shares of stock
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<PAGE> 6
and to a holder or holders of record of outstanding shares of stock when the
corporation is authorized to issue only one class of shares of stock, and said
reference is also intended to include any outstanding share or shares of stock
and any holder or holders of record of outstanding shares of stock of any class
upon which or upon whom the Certificate of Incorporation confers such rights
where there are two or more classes or series of shares of stock or upon which
or upon whom the General Corporation Law confers such rights notwithstanding
that the Certificate of Incorporation may provide for more than one class or
series of shares of stock, one or more of which are limited or denied such
rights thereunder; provided, however, that no such right shall vest in the event
of an increase or a decrease in the authorized number of shares of stock of any
class or series which is otherwise denied voting rights under the provisions of
the Certificate of Incorporation, including any Preferred Stock which is denied
voting rights under the provisions of the resolution or resolutions adopted by
the Board of Directors with respect to the issuance thereof.
6. STOCKHOLDER MEETINGS.
TIME. The annual meeting shall be held on the date and at the time
fixed, from time to time, by the directors. A special meeting shall be held on
the date and at the time fixed by the directors.
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<PAGE> 7
PLACE. Annual meetings and special meetings shall be held at such
place, within or without the State of Delaware, as the directors may, from time
to time, fix. Whenever the directors shall fail to fix such place, the meeting
shall be held at the registered office of the corporation in the State of
Delaware.
CALL. Annual meetings and special meetings may be called by the
directors or by any officer instructed by the directors to call the meeting.
NOTICE OR WAIVER OF NOTICE. Written notice of all meetings shall be
given, stating the place, date, and hour of the meeting. The notice of an annual
meeting shall state that the meeting is called for the election of directors and
for the transaction of other General which may properly come before the meeting,
and shall (if any other action which could be taken at a special meeting is to
be taken at such annual meeting), state such other action or actions as are
known at the time of such notice. The notice of a special meeting shall in all
instances state the purpose or purposes for which the meeting is called. If any
action is proposed to be taken which would, if taken, entitle stockholders to
receive payment for their shares of stock, the notice shall include a statement
of that purpose and to that effect. Except as otherwise provided by the General
Corporation Law, a copy of the notice of any meeting shall be given, personally
or by mail, not less than ten days nor more than sixty days before the date of
the meeting, unless the lapse of the
6
<PAGE> 8
prescribed period of time shall have been waived, and directed to each
stockholder at his address as it appears on the records of the corporation.
Notice by mail shall be deemed to be given when deposited, with postage thereon
prepaid, in the United States mail. If a meeting is adjourned to another time,
not more than thirty days hence, and/or to another place, and if an announcement
of the adjourned time and place is made at the meeting, it shall not be
necessary to give notice of the adjourned meeting unless the directors, after
adjournment, fix a new record date for the adjourned meeting. Notice need not be
given to any stockholder who submits a written waiver of notice by him before or
after the time stated therein. Attendance of a person at a meeting of
stockholders shall constitute a waiver of notice of such meeting, except when
the stockholder attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any General because the meeting
is not lawfully called or convened. Neither the General to be transacted at, nor
the purpose of, any regular or special meeting of the stockholders need be
specified in any written waiver of notice.
STOCKHOLDER LIST. There shall be prepared and made, at least ten
days before every meeting of stockholders, a complete list of the stockholders,
arranged in alphabetical order, and showing the address of each stockholder and
the number of shares registered in the name of each stockholder. Such list shall
be open to the examination of any stockholder, for any purpose
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<PAGE> 9
germane to the meeting, during ordinary General hours, for a period of at least
ten days prior to the meeting either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by this
section or the books of the corporation, or to vote at any meeting of
stockholders.
CONDUCT OF MEETING. Meetings of the stockholders shall be presided
over by one of the following officers in the order of seniority and if present
and acting: the Chairman of the Board, if any, the Vice-Chairman of the Board,
if any, the President, a Vice President, a chairman for the meeting chosen by
the Board of Directors, or, if none of the foregoing is in office and present
and acting, by a chairman to be chosen by the stockholders. The Secretary of the
corporation, or, in his absence, an Assistant Secretary, shall act as secretary
of every meeting, but if neither the Secretary nor an Assistant Secretary is
present the Chairman for the meeting shall appoint a secretary of the meeting.
PROXY REPRESENTATION. Every stockholder may authorize another person
or persons to act for him by proxy in all matters in which a stockholder is
entitled to participate, whether by
8
<PAGE> 10
waiving notice of any meeting, voting or participating at a meeting, or
expressing consent or dissent without a meeting. Every proxy must be signed by
the stockholder or by his attorney-in-fact. No proxy shall be voted or acted
upon after three years from its date unless such proxy provides for a longer
period. A duly executed proxy shall be irrevocable if it states that it is
irrevocable and, if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power. A proxy may be made
irrevocable regardless of whether the interest with which it is coupled is an
interest in the stock itself or an interest in the corporation generally.
INSPECTORS AND JUDGES. The directors, in advance of any meeting,
may, but need not, appoint one or more inspectors of election or judges of the
vote, as the case may be, to act at the meeting or any adjournment thereof. If
an inspector or inspectors or judge or judges are not appointed, the person
presiding at the meeting may, but need not, appoint one or more inspectors or
judges. In case any person who may be appointed as an inspector or judge fails
to appear or act, the vacancy may be filled by appointment made by the person
presiding thereat. Each inspector or judge, if any, before entering upon the
discharge of his duties, shall take and sign an oath faithfully to execute the
duties of inspector or judge at such meeting with strict impartiality and
according to the best of his ability. The inspectors or judges, if any, shall
determine the number of shares
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<PAGE> 11
of stock outstanding and the voting power of each, the shares of stock
represented at the meeting, the existence of a quorum, the validity and effect
of proxies, and shall receive votes, ballots or consents, hear and determine all
challenges and questions arising in connection with the right to vote, count and
tabulate all votes, ballots or consents, determine the result, and do such acts
as are proper to conduct the election or vote with fairness to all stockholders.
On request of the person presiding at the meeting, the inspector or inspectors
or judge or judges, if any, shall make a report in writing of any challenge,
question or matter determined by him or them and execute a certificate of any
fact found by him or them.
QUORUM. Except as the General Corporation Law or these By-Laws may
otherwise provide, the holders of a majority of the outstanding shares of stock
entitled to vote shall constitute a quorum at a meeting of stockholders for the
transaction of any General. The stockholders present may adjourn the meeting
despite the absence of a quorum. When a quorum is once present to organize a
meeting, it is not broken by the subsequent withdrawal of any shareholders.
VOTING. Each stockholder entitled to vote in accordance with the
terms of the Certificate of Incorporation and of these By-Laws, or, with respect
to the issuance of Preferred Stock, in accordance with the terms of a resolution
or resolutions of the Board of Directors, shall be entitled to one vote, in
person or by
10
<PAGE> 12
proxy, for each share of stock entitled to vote held by such stockholder. In the
election of directors, a plurality of the votes present at the meeting shall
elect. Any other action shall be authorized by a majority of the votes cast
except where the Certificate of Incorporation or the General Corporation Law
prescribes a different percentage of votes and/or a different exercise of voting
power. Voting by ballot shall not be required for corporate action except as
otherwise provided by the General Corporation Law. 7. STOCKHOLDER ACTION WITHOUT
MEETINGS.
Any action required to be taken, or any action which may be taken,
at any annual or special meeting of stockholders, may be taken without a
meeting, without prior notice and without a vote, if a consent or consents in
writing, setting forth the action so taken, shall be signed by the holders of
the outstanding stock having not less than the minimum number of votes that
would be necessary to authorize or take such action at a meeting at which all
shares entitled to vote thereon were present and voted. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing
and shall be delivered to the corporation by delivery to its registered office
in Delaware, its principal place of General, or an officer or agent of the
corporation having custody of the book in which
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<PAGE> 13
proceedings of meetings of stockholders are recorded. Delivery made to a
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested.
ARTICLE II.
DIRECTORS
1. FUNCTIONS AND DEFINITION.
The General and affairs of the corporation shall be
managed by or under the direction of the Board of Directors of the
corporation. The use of the phrase "whole board" herein refers to
the total number of directors which the corporation would have if
there were no vacancies.
2. QUALIFICATIONS AND NUMBER.
A director need not be a stockholder, a citizen of the United
States, or a resident of the State of Delaware. The initial Board of Directors
shall consist of 3 persons. Thereafter the number of directors constituting the
whole board shall be at least one. Subject to the foregoing limitation and
except for the first Board of Directors, such number may be fixed from time to
time by action of the stockholders or of the directors, or, if the number is not
fixed, the number shall be three. The number of directors may be increased or
decreased by action of the stockholders or of the directors.
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<PAGE> 14
3. ELECTION AND TERM.
The first Board of Directors, unless the members thereof shall have
been named in the Certificate of Incorporation, shall be elected by the
incorporator or incorporators and shall hold office until the first annual
meeting of stockholders and until their successors have been elected and
qualified or until their earlier resignation or removal. Any director may resign
at any time upon written notice to the corporation. Thereafter, directors who
are elected at an annual meeting of stockholders, and directors who are elected
in the interim to fill vacancies and newly created directorships, shall hold
office until the next annual meeting of stockholders and until their successors
have been elected and qualified or until their earlier resignation or removal.
In the interim between annual meetings of stockholders or of special meetings of
stockholders called for the election of directors and/or for the removal of one
or more directors and for the filling of any vacancies in the Board of
Directors, including vacancies resulting from the removal of directors for cause
or without cause, any vacancy in the Board of Directors may be filled by the
vote of a majority of the remaining directors then in office, although less than
a quorum, or by the sole remaining director.
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<PAGE> 15
4. MEETINGS.
TIME. Meetings shall be held at such time as the Board shall fix.
FIRST MEETING. The first meeting of each newly elected Board may be
held immediately after each annual meeting of the stockholders at the same place
at which the meeting is held, and no notice of such meeting shall be necessary
to call the meeting, provided a quorum shall be present. In the event such first
meeting is not so held immediately after the annual meeting of the stockholders,
it may be held at such time and place as shall be specified in the notice given
as hereinafter provided for special meetings of the Board of Directors, or at
such time and place as shall be fixed by the consent in writing of all of the
directors.
PLACE. Meetings, both regular and special, shall be held at such
place within or without the State of Delaware as shall be fixed by the Board.
CALL. No call shall be required for regular meetings for which the
time and place have been fixed. Special meetings may be called by or at the
direction of the Chairman of the Board, if any, the Vice-Chairman of the Board,
if any, or the President, or of a majority of the directors in office.
NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be required
for regular meetings for which the time and place have been fixed. Written,
oral, or any other mode of notice of the time and place shall be given for
special meetings at least
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<PAGE> 16
twenty-four hours prior to the meeting. The notice of any meeting need not
specify the purpose of the meeting. Any requirement of furnishing a notice shall
be waived by any director who signs a written waiver of such notice before or
after the time stated therein.
Attendance of a director at a meeting of the Board shall constitute
a waiver of notice of such meeting, except when the director attends a meeting
for the express purpose of objecting, at the beginning of the meeting, to the
transaction of any General because the meeting is not lawfully called or
convened.
QUORUM AND ACTION. A majority of the whole Board shall constitute a
quorum except when a vacancy or vacancies prevents such majority, whereupon a
majority of the directors in office shall constitute a quorum, provided that
such majority shall constitute at least one-third (1/3) of the whole Board. Any
director may participate in a meeting of the Board by means of a conference
telephone or similar communications equipment by means of which all directors
participating in the meeting can hear each other, and such participation in a
meeting of the Board shall constitute presence in person at such meeting. A
majority of the directors present, whether or not a quorum is present, may
adjourn a meeting to another time and place. Except as herein otherwise
provided, and except as otherwise provided by the General Corporation Law, the
act of the Board shall be the act by vote of a majority of the directors present
at a meeting, a quorum being
15
<PAGE> 17
present. The quorum and voting provisions herein stated shall not be construed
as conflicting with any provisions of the General Corporation Law and these
By-Laws which govern a meeting of directors held to fill vacancies and newly
created directorships in the Board.
CHAIRMAN OF THE MEETING. The Chairman of the Board, if
any and if present and acting, shall preside at all meetings.
Otherwise, the Vice-Chairman of the Board, if any and if present
and acting, or the President, if present and acting, or any other
director chosen by the Board, shall preside.
5. REMOVAL OF DIRECTORS.
Any or all of the directors may be removed for cause or without
cause by the stockholders.
6. COMMITTEES.
The Board of Directors may, by resolution passed by a majority of
the whole Board, designate one or more committees, each committee to consist of
one or more of the directors of the corporation. The Board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. Any such committee, to
the extent provided in the resolution of the Board, shall have and may exercise
the powers of the Board of Directors in the management of the General and
affairs of the corporation, and may authorize the seal of the corporation to be
affixed to all
16
<PAGE> 18
papers which may require it. In the absence or disqualification of any member of
any such committee or committees, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the Board of Directors to act
at the meeting in the place of any such absent or disqualified member.
7. ACTION IN WRITING.
Any action required or permitted to be taken at any meeting of the
Board of Directors or any committee thereof may be taken without a meeting if
all members of the Board or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board or committee.
ARTICLE III.
OFFICERS
1. EXECUTIVE OFFICERS.
The directors may elect or appoint a Chairman of the Board of
Directors, a President, one or more Vice Presidents (one or more of whom may be
denominated "Executive Vice President"), a Secretary, one or more Assistant
Secretaries, a Treasurer, one or more Assistant Treasurers, and such other
officers as they may determine. Any number of offices may be held by the same
person.
17
<PAGE> 19
2. TERM OF OFFICE: REMOVAL.
Unless otherwise provided in the resolution of election or
appointment, each officer shall hold office until the meeting of the Board of
Directors following the next annual meeting of stockholders and until his
successor has been elected and qualified or until his earlier resignation or
removal. The Board of Directors may remove any officer for cause or without
cause.
3. AUTHORITY AND DUTIES.
All officers, as between themselves and the corporation, shall have
such authority and perform such duties in the management of the corporation as
may be provided in these By-Laws, or, to the extent not so provided, by the
Board of Directors.
4. THE CHAIRMAN OF THE BOARD OF DIRECTORS.
The Chairman of the Board of Directors, if present and acting, shall
preside at all meetings of the Board of Directors, otherwise, the President, if
present, shall preside, or if the President does not so preside, any other
director chosen by the Board shall preside.
5. THE PRESIDENT.
The President shall be the chief executive officer of the
corporation.
18
<PAGE> 20
6. VICE PRESIDENTS.
Any Vice President that may have been appointed, in the absence or
disability of the President, shall perform the duties and exercise the powers of
the President, in the order of their seniority, and shall perform such other
duties as the Board of Directors shall prescribe. 7. THE SECRETARY.
The Secretary shall keep in safe custody the seal of the corporation
and affix it to any instrument when authorized by the Board of Directors, and
shall perform such other duties as may be prescribed by the Board of Directors.
The Secretary (or in his absence, an Assistant Secretary, but if neither is
present another person selected by the Chairman for the meeting) shall have the
duty to record the proceedings of the meetings of the stockholders and directors
in a book to be kept for that purpose.
8. THE TREASURER.
The Treasurer shall have the care and custody of the corporate
funds, and other valuable effects, including securities, and shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
corporation and shall deposit all moneys and other valuable effects in the name
and to the credit of the corporation in such depositories as may be designated
by the Board of Directors. The Treasurer shall disburse the funds of the
corporation as may be ordered by the
19
<PAGE> 21
Board, taking proper vouchers for such disbursements, and shall render to the
President and directors, at the regular meetings of the Board, or whenever they
may require it, an account of all his transactions as Treasurer and of the
financial condition of the corporation. If required by the Board of Directors,
the Treasurer shall give the corporation a bond for such term, in such sum and
with such surety or sureties as shall be satisfactory to the Board for the
faithful performance of the duties of his office and for the restoration to the
corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
ARTICLE IV.
CORPORATE SEAL
AND
CORPORATE BOOKS
The corporate seal shall be in such form as the Board of Directors
shall prescribe.
The books of the corporation may be kept within or without the State
of Delaware, at such place or places as the Board of Directors may, from time to
time, determine.
20
<PAGE> 22
ARTICLE V.
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall be
subject to change, by the Board of Directors.
ARTICLE VI.
INDEMNITY
Any person who was or is a party or threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that he or she is or was a
director, officer, employee or agent of the corporation or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
(including employee benefit plans) (hereinafter an "indemnitee"), shall be
indemnified and held harmless by the corporation to the fullest extent
authorized by the General Corporation Law, as the same exists or may hereafter
be amended (but, in the case of any such amendment, only to the extent that such
amendment permits the corporation to provide broader indemnification than
permitted prior thereto), against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such indemnitee in connection with such action, suit or
21
<PAGE> 23
proceeding, if the indemnitee acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe such conduct was unlawful. The termination of the
proceeding, whether by judgment, order, settlement, conviction or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a presumption
that the person did not act in good faith and in a manner which he or she
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, had
reasonable cause to believe such conduct was unlawful.
Any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he or
she is or was a director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise (including employee benefit plans) shall be indemnified and
held harmless by the corporation to the fullest extent authorized by the General
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
corporation to provide broader
22
<PAGE> 24
indemnification than permitted prior thereto), against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation and except that no indemnification shall be made in respect of
any claim, issue or matter as to which such person shall have been adjudged to
be liable to the corporation unless and only to the extent that the Court in
which such suit or action was brought, shall determine upon application, that
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which such Court shall deem proper.
All reasonable expenses incurred by or on behalf of the indemnitee
in connection with any suit, action or proceeding, shall be advanced to the
indemnitee by the corporation.
The rights to indemnification and to advancement of expenses
conferred in this section shall not be exclusive of any other right which any
person may have or hereafter acquire under any statute, the certificate of
incorporation, by-law, agreement, vote of stockholders or disinterested
directors or otherwise.
The indemnification and advancement of expenses provided by this
section shall continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the
23
<PAGE> 25
benefit of the heirs, executors and administrators of such a person.
ARTICLE VII.
AMENDMENTS
The By-Laws may be amended, added to, rescinded or repealed at any
meeting of the Board of Directors or of the stockholders, provided that notice
of the proposed change was given in the notice of the meeting.
24
<PAGE> 1
EXHIBIT 4.1
INDENTURE
DATED AS OF DECEMBER 12, 1997
AMONG
AMERICAN BANKNOTE CORPORATION, AS ISSUER,
THE GUARANTORS NAMED HEREIN
AND
THE BANK OF NEW YORK, AS TRUSTEE
__________________
$95,000,000
11 1/4% SENIOR SUBORDINATED NOTES DUE 2007, SERIES A
11 1/4% SENIOR SUBORDINATED NOTES DUE 2007, SERIES B
<PAGE> 2
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TRUST INDENTURE INDENTURE
ACT SECTION SECTION
- ----------- -------
<S> <C>
Section 310(a)(1)............ 7.10
(a)(2)....................... 7.10
(a)(3)....................... N.A.
(a)(4)....................... N.A.
(a)(5)....................... 7.08, 7.10.
(b).......................... 7.08; 7.10; 13.02
(c).......................... N.A.
Section 311(a)............... 7.11
(b).......................... 7.11
(c).......................... N.A.
Section 312(a)............... 2.05
(b).......................... 13.03
(c).......................... 13.03
Section 313(a)................ 7.06
(b)(1)....................... 7.06
(b)(2)....................... 7.06
(c).......................... 7.06; 13.02
(d).......................... 7.06
Section 314(a)............... 4.11; 4.12; 13.02
(b).......................... N.A.
(c)(1)....................... 13.04
(c)(2)....................... 13.04
(c)(3)....................... N.A.
(d).......................... N.A.
(e).......................... 13.05
(f).......................... N.A.
Section 315(a)............... 7.01(b)
(b).......................... 7.05; 13.02
(c).......................... 7.01(a)
(d).......................... 7.01(c)
(e).......................... 6.11
Section 316(a)(last sentence) 2.09
(a)(1)(A).................... 6.05
(a)(1)(B).................... 6.04
(a)(2)....................... N.A.
(b).......................... 6.07
(c).......................... 10.04
Section 317(a)(1)............ 6.08
(a)(2)....................... 6.09
(b).......................... 2.04
Section 318(a)............... 13.01
</TABLE>
N.A. means Not Applicable.
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
<TABLE>
<S> <C>
SECTION 1.01. Definitions. 1
SECTION 1.02. Incorporation by Reference of Trust Indenture Act. 18
SECTION 1.03. Rules of Construction. 19
</TABLE>
ARTICLE TWO
THE SECURITIES
<TABLE>
<S> <C>
SECTION 2.01. Form and Dating. 19
SECTION 2.02. Execution and Authentication. 20
SECTION 2.03. Registrar and Paying Agent. 20
SECTION 2.04. Paying Agent To Hold Assets in Trust. 21
SECTION 2.05. Holder Lists. 21
SECTION 2.06. Transfer and Exchange. 21
SECTION 2.07. Replacement Securities. 22
SECTION 2.08. Outstanding Securities. 22
SECTION 2.09. Treasury Securities. 23
SECTION 2.10. Temporary Securities. 23
SECTION 2.11. Cancellation. 23
SECTION 2.12. Defaulted Interest. 23
SECTION 2.13. CUSIP Number. 24
SECTION 2.14. Deposit of Moneys. 24
SECTION 2.15. Book-Entry Provisions for Global Securities. 24
SECTION 2.16. Registration of Transfers and Exchanges. 25
</TABLE>
ARTICLE THREE
REDEMPTION
<TABLE>
<S> <C>
SECTION 3.01. Notices to Trustee. 28
SECTION 3.02. Selection of Securities To Be Redeemed. 29
SECTION 3.03. Notice of Redemption. 29
SECTION 3.04. Effect of Notice of Redemption. 30
SECTION 3.05. Deposit of Redemption Price. 30
SECTION 3.06. Securities Redeemed in Part. 30
</TABLE>
ARTICLE FOUR
COVENANTS
<TABLE>
<S> <C>
SECTION 4.01. Payment of Securities. 30
SECTION 4.02. Maintenance of Office or Agency. 31
SECTION 4.03. Transactions with Affiliates. 31
SECTION 4.04. Limitation on Indebtedness. 31
SECTION 4.05. Disposition of Proceeds of Asset Sales. 33
SECTION 4.06. Limitation on Restricted Payments. 35
</TABLE>
-I-
<PAGE> 4
<TABLE>
<S> <C>
SECTION 4.07. Corporate Existence. 37
SECTION 4.08. [Intentionally Omitted] 37
SECTION 4.09. Notices of Default. 37
SECTION 4.10. [Intentionally Omitted] 38
SECTION 4.11. Compliance Certificate. 38
SECTION 4.12. Provision of Financial Information. 38
SECTION 4.13. [Intentionally Omitted] 38
SECTION 4.14. Change of Control. 38
SECTION 4.15. Limitation on Senior Subordinated Indebtedness. 40
SECTION 4.16. Limitations on Dividend and Other Payment
Restrictions Affecting Restrictee Subsidiaries. 40
SECTION 4.17. Designation of Unrestricted Subsidiaries. 41
SECTION 4.18. Limitation on Liens. 42
SECTION 4.19. Limitation on Guarantees by Restricted Subsidiaries. 42
SECTION 4.20. Limitation on the Sale or Issuance of
Equity Interests of Restricted Subsidiaries. 42
</TABLE>
ARTICLE FIVE
MERGERS; SUCCESSOR CORPORATION
<TABLE>
<S> <C>
SECTION 5.01. Mergers, Sales of Assets, etc. 43
SECTION 5.02. Successor Corporation Substituted. 44
</TABLE>
ARTICLE SIX
DEFAULT AND REMEDIES
<TABLE>
<S> <C>
SECTION 6.01. Events of Default. 44
SECTION 6.02. Acceleration. 46
SECTION 6.03. Other Remedies. 46
SECTION 6.04. Waiver of Past Default. 46
SECTION 6.05. Control by Majority. 47
SECTION 6.06. Limitation on Suits. 47
SECTION 6.07. Rights of Holders To Receive Payment. 48
SECTION 6.08. Collection Suit by Trustee. 48
SECTION 6.09. Trustee May File Proofs of Claim. 48
SECTION 6.10. Priorities. 48
SECTION 6.11. Undertaking for Costs. 49
</TABLE>
ARTICLE SEVEN
TRUSTEE
<TABLE>
<S> <C>
SECTION 7.01. Duties of Trustee. 49
SECTION 7.02. Rights of Trustee. 50
SECTION 7.03. Individual Rights of Trustee. 51
SECTION 7.04. Trustee's Disclaimer. 51
SECTION 7.05. Notices of Default. 51
SECTION 7.06. Reports by Trustee to Holders. 52
SECTION 7.07. Compensation and Indemnity. 52
SECTION 7.08. Replacement of Trustee. 53
SECTION 7.09. Successor Trustee by Merger, etc. 54
SECTION 7.10. Eligibility; Disqualification. 54
</TABLE>
-II-
<PAGE> 5
<TABLE>
<S> <C>
SECTION 7.11. Preferential Collection of Claims Against Company. 54
</TABLE>
ARTICLE EIGHT
SUBORDINATION OF SECURITIES
<TABLE>
<S> <C>
SECTION 8.01. Securities Subordinated to Senior Indebtedness. 54
SECTION 8.02. No Payment on Securities in Certain Circumstances. 54
SECTION 8.03. Payment Over of Proceeds upon Dissolution, etc. 55
SECTION 8.04. Subrogation. 56
SECTION 8.05. Obligations of Company Unconditional. 57
SECTION 8.06. Notice to Trustee. 57
SECTION 8.07. Reliance on Judicial Order or Certificate of
Liquidating Agent. 58
SECTION 8.08. Trustee's Relation to Senior Indebtedness. 58
SECTION 8.09. Subordination Rights Not Impaired by Acts or Omissions
of the Company or Holders of Senior Indebtedness. 58
SECTION 8.10. Holders Authorize Trustee To Effectuate
Subordination of Securities. 58
SECTION 8.11. This Article Not To Prevent Events of Default. 59
SECTION 8.12. Trustee's Compensation Not Prejudiced. 59
SECTION 8.13. No Waiver of Subordination Provisions. 59
SECTION 8.14. Subordination Provisions Not Applicable to
Money Held in Trust for Holders;
Payments May Be Paid Prior to Dissolution. 59
SECTION 8.15. Acceleration of Securities. 60
</TABLE>
ARTICLE NINE
DISCHARGE OF INDENTURE
<TABLE>
<S> <C>
SECTION 9.01. Termination of Company's Obligations. 60
SECTION 9.02. Application of Trust Money. 61
SECTION 9.03. Repayment to Company. 61
SECTION 9.04. Reinstatement. 61
</TABLE>
ARTICLE TEN
AMENDMENTS, SUPPLEMENTS AND WAIVERS
<TABLE>
<S> <C>
SECTION 10.01. Without Consent of Holders. 62
SECTION 10.02. With Consent of Holders. 63
SECTION 10.03. Compliance with Trust Indenture Act. 64
SECTION 10.04. Record Date for Consents and Effect of Consents. 64
SECTION 10.05. Notation on or Exchange of Securities. 64
SECTION 10.06. Trustee To Sign Amendments, etc. 64
</TABLE>
ARTICLE ELEVEN
GUARANTEE
<TABLE>
<S> <C>
SECTION 11.01. Unconditional Guarantee. 65
SECTION 11.02. Severability. 66
SECTION 11.03. Release of a Guarantor. 66
SECTION 11.04. Limitation of Guarantor's Liability. 66
SECTION 11.05. Contribution. 67
SECTION 11.06. Execution of Security Guarantee. 67
SECTION 11.07. Subordination of Subrogation and Other Rights. 67
</TABLE>
-III-
<PAGE> 6
ARTICLE TWELVE
SUBORDINATION OF GUARANTEE
<TABLE>
<S> <C>
SECTION 12.01. Guarantee Obligations Subordinated to Guarantor
Senior Indebtedness. 67
SECTION 12.02. No Payment on Guarantees in Certain Circumstances. 68
SECTION 12.03. Payment Over of Proceeds upon Dissolution, etc. 69
SECTION 12.04. Subrogation. 70
SECTION 12.05. Obligations of Guarantors Unconditional. 70
SECTION 12.06. Notice to Trustee. 71
SECTION 12.07. Reliance on Judicial Order or Certificate of
Liquidating Agent. 71
SECTION 12.08. Trustee's Relation to Guarantor Senior Indebtedness. 72
SECTION 12.09. Subordination Rights Not Impaired by Acts or
Omissions of the Guarantors or Holders of
Guarantor Senior Indebtedness. 72
SECTION 12.10. Holders Authorize Trustee To Effectuate
Subordination of Guarantee. 72
SECTION 12.11. This Article Not To Prevent Events of Default. 72
SECTION 12.12. Trustee's Compensation Not Prejudiced. 72
SECTION 12.13. No Waiver of Guarantee Subordination Provisions. 73
SECTION 12.14. Payments May Be Paid Prior to Dissolution. 73
</TABLE>
ARTICLE THIRTEEN
MISCELLANEOUS
<TABLE>
<S> <C>
SECTION 13.01. Trust Indenture Act Controls. 73
SECTION 13.02. Notices. 73
SECTION 13.03. Communications by Holders with Other Holders. 75
SECTION 13.04. Certificate and Opinion as to Conditions Precedent. 75
SECTION 13.05. Statements Required in Certificate. 75
SECTION 13.06. Rules by Trustee, Paying Agent, Registrar. 75
SECTION 13.07. Governing Law. 75
SECTION 13.08. No Recourse Against Others. 76
SECTION 13.09. Successors. 76
SECTION 13.10. Counterpart Originals. 76
SECTION 13.11. Severability. 76
SECTION 13.12. No Adverse Interpretation of Other Agreements. 76
SECTION 13.13. Legal Holidays. 76
</TABLE>
<TABLE>
<S> <C> <C>
SIGNATURES S-1
EXHIBIT A Form of Series A Security A-1
EXHIBIT B Form of Series B Security B-1
EXHIBIT C Form of Legend for Global Securities C-1
EXHIBIT D Form of Transfer Certificate D-1
EXHIBIT E Form of Transfer Certificate for Institutional
Accredited Investors E-1
</TABLE>
_________________
NOTE: This Table of Contents shall not, for any purpose, be deemed to be a
part of the Indenture.
-IV-
<PAGE> 7
INDENTURE dated December 12, 1997, among AMERICAN BANKNOTE CORPORATION, a
Delaware corporation (the "Company"), the GUARANTORS named herein and THE BANK
OF NEW YORK, as trustee (the "Trustee"). The Securities (as defined below) to
which this Indenture relates are being offered as part of an offering of 95,000
units, each unit consisting of $1,000 principal amount of the Initial
Securities (as defined below) and one warrant to purchase 12.482 shares of
common stock, par value $0.01 per share, of the Company.
Each party hereto agrees as follows for the benefit of each other party
and for the equal and ratable benefit of the Holders of the Securities:
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Acquired Indebtedness" means Indebtedness of a Person (a) assumed in
connection with an Acquisition from such Person or (b) existing at the time
such Person becomes a Restricted Subsidiary or is merged or consolidated with
or into the Company or any Restricted Subsidiary; in each case provided that
such Indebtedness is not incurred by such Person in connection with, or in
anticipation of or contemplation of, such Acquisition or such Person becoming a
Restricted Subsidiary of such merger or consolidation.
"Acquired Person" means, with respect to any specified Person, any other
Person that merges with or into or becomes a Subsidiary of such specified
Person.
"Acquisition" means (i) any acquisition or purchase of Equity Interests of
any other Person by the Company or any Restricted Subsidiary, in either case
pursuant to which such Person shall become a Restricted Subsidiary or shall be
consolidated with or merged into the Company or any Restricted Subsidiary or
(ii) any acquisition by the Company or any Restricted Subsidiary of the assets
of any Person which constitute substantially all of an operating unit or line
of business of such Person or which is otherwise outside of the ordinary course
of business.
"Additional Interest" has the meaning provided in Section 4(a) of the
Registration Rights Agreement.
"Affiliate" of any specified person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise.
"Affiliate Transaction" has the meaning provided in Section 4.03.
"Agent" means any Registrar, Paying Agent or co-Registrar.
<PAGE> 8
"Asset Sale" means any direct or indirect sale, conveyance, transfer,
lease (that has the effect of a disposition) or other disposition (including,
without limitation, any merger, consolidation or sale-leaseback transaction) to
any Person other than the Company or a Wholly Owned Restricted Subsidiary, in
one transaction or a series of related transactions of (i) any Equity Interest
of any Restricted Subsidiary (other than directors' qualifying shares, to the
extent mandated by applicable law), (ii) any assets of the Company or any
Restricted Subsidiary (other than Equity Interests) that constitute
substantially all of an operating unit or line of business of the Company or
any Restricted Subsidiary or (iii) any other property or asset of the Company
or any Restricted Subsidiary (other than Equity Interests) outside of the
ordinary course of business. For the purposes of this definition, the term
"Asset Sale" shall not include (a) any transaction consummated in compliance
with Section 5.01 and the creation of any Lien not prohibited by Section 4.18,
(b) sales of property or equipment that has become worn out, obsolete or
damaged or otherwise unsuitable for use in connection with the business of the
Company or any Restricted Subsidiary, as the case may be, (c) any transaction
consummated in compliance with Section 4.06, (d) any transfers of properties
and assets between Wholly Owned Restricted Subsidiaries, (e) sales of inventory
or accounts receivable in the ordinary course of business and (f) sales of
Equity Interests of the Company. In addition, solely for purposes of Section
4.05, any sale, conveyance, transfer, lease or other disposition of any
property or asset, whether in one transaction or a series of related
transactions, involving assets with a Fair Market Value not in excess of $1
million in any fiscal year shall be deemed not to be an Asset Sale.
"Bankruptcy Law" has the meaning provided in Section 6.01.
"Board of Directors" means the Board of Directors of the Company or any
Guarantor, as the case may be, or any authorized committee thereof.
"Board Resolution" means, with respect to any Person, a duly adopted
resolution of the Board of Directors of such Person.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that
would at such time be so required to be capitalized on the balance sheet in
accordance with GAAP.
"Cash Equivalents" means: (a) U.S. dollars; (b) securities issued or
directly and fully guaranteed or insured by the U.S. government or any agency
or instrumentality thereof having maturities of not more than six months from
the date of acquisition; (c) certificates of deposit and eurodollar time
deposits with maturities of six months or less from the date of acquisition,
bankers' acceptances with maturities not exceeding six months and overnight
bank deposits, in each case with any domestic commercial bank having capital
and surplus in excess of $500 million; (d) repurchase obligations with a term
of not more than seven days for underlying securities of the types described in
clauses (b) and (c) above entered into with any financial institution meeting
the qualifications specified in clause (c) above; (e) commercial paper rated
P-1, A-1 or the equivalent thereof by Moody's Investors Service, Inc. or
Standard & Poor's Corporation, respectively, and in each case maturing within
six months after the date of acquisition; and (f) in the case of any Foreign
Restricted Subsidiary, Investments: (i) in direct obligations of the sovereign
nation (or any agency thereof) in which such Foreign Restricted Subsidiary is
organized and is conducting business or in obligations fully and
unconditionally guaranteed by such sovereign nation (or any agency thereof) or
(ii) of the type and maturity described in clauses (b) and (c) above of foreign
obligors, which Investments or obligors (or the parents of such obligors) have
ratings described in such clauses or equivalent ratings or are indexed in U.S.
dollar denominated interests from comparable foreign rating agencies.
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"Change of Control" means the occurrence of any of the following events:
(i) any Person (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act, including any group acting for the purpose of acquiring, holding
or disposing of securities within the meaning of Rule 13d-5(b) (1) under the
Exchange Act), other than one or more Permitted Holders, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 and 13d-5 under the Exchange Act,
except that a Person shall be deemed to have "beneficial ownership" of all
shares that any such Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time, upon the happening
of an event or otherwise), directly or indirectly, of more than 40% of the
total voting power of the then outstanding Voting Equity Interests of the
Company; (ii) the Company consolidates with, or merges with or into, another
Person (other than the Company or a Wholly Owned Restricted Subsidiary) or the
Company or any of its Subsidiaries sells, assigns, conveys, transfers, leases
or otherwise disposes of all or substantially all of the assets of the Company
and its Subsidiaries (determined on a consolidated basis) to any Person (other
than the Company or any Wholly Owned Restricted Subsidiary), with the effect
that the then existing holders of Voting Equity Interests of the Company or
Permitted Holders "beneficially own" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act, except that a Person shall be deemed to have "beneficial
ownership" of all securities that such Person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time),
directly or indirectly, less than a majority of the total voting power of the
then outstanding Voting Equity Interests of the surviving or transferee Person;
(iii) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors (together with any
new directors whose election by such Board of Directors or whose nomination for
election by the shareholders of the Company was approved by a vote of a
majority of the directors of the Company then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors then in office; or (iv) the Company is
liquidated or dissolved or adopts a plan of liquidation or dissolution other
than in a transaction which complies with the provisions described in Section
5.01.
"Change of Control Date" has the meaning provided in Section 4.14.
"Company" means the Person named as the "Company" in the first paragraph
of this Indenture until a successor shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its President, a Vice President or its Treasurer, and by
an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered
to the Trustee.
"Consolidated Coverage Ratio" as of any date of determination means the
ratio of (i) the aggregate amount of Consolidated EBITDA for the most recent
four consecutive fiscal quarters ending prior to the date of such determination
for which financial statements are available (the "Four Quarter Period") to
(ii) Consolidated Fixed Charges for such Four Quarter Period; provided,
however, that (1) if the Company or any Restricted Subsidiary has incurred any
Indebtedness since the beginning of such Four Quarter Period that remains
outstanding on such date of determination or if the transaction giving rise to
the need to calculate the Consolidated Coverage Ratio is an Incurrence of
Indebtedness, Consolidated EBITDA and Consolidated Fixed Charges for such Four
Quarter Period shall be calculated after giving effect on a pro forma basis to
such Indebtedness as if such Indebtedness had been Incurred on the first day of
such Four Quarter Period and the discharge of any other Indebtedness repaid,
repurchased or otherwise discharged with the proceeds of such new Indebtedness
as if such discharge had occurred on the first day of such Four Quarter Period,
(2) if since the beginning of such Four Quarter Period the Company or any
Restricted Subsidiary shall have made any Asset Sale, the Consolidated EBITDA
for such Four Quarter Period shall be reduced by an amount equal to the
Consolidated EBITDA (if
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<PAGE> 10
positive) directly attributable to the assets that are the subject of such
Asset Sale for such Four Quarter Period or increased by an amount equal to the
Consolidated EBITDA (if negative) directly attributable thereto for such Four
Quarter Period and Consolidated Fixed Charges for such Four Quarter Period
shall be reduced by an amount equal to the Consolidated Fixed Charges directly
attributable to any Indebtedness of the Company or any Restricted Subsidiary
repaid, repurchased or otherwise discharged with respect to the Company and its
continuing Restricted Subsidiaries in connection with such Asset Sale for such
Four Quarter Period (or, if the Equity Interests of any Restricted Subsidiary
are sold, the Consolidated Fixed Charges for such Four Quarter Period directly
attributable to the Indebtedness of such Restricted Subsidiary to the extent
the Company and its continuing Restricted Subsidiaries are no longer liable for
such Indebtedness after such sale), (3) if since the beginning of such Four
Quarter Period the Company or any Restricted Subsidiary (by merger or
otherwise) shall have made an Investment in any Restricted Subsidiary (or any
Person that becomes a Restricted Subsidiary) or an acquisition of assets,
including any acquisition of assets occurring in connection with a transaction
causing a calculation to be made hereunder, which constitutes all or
substantially all of an operating unit of a business, Consolidated EBITDA and
Consolidated Fixed Charges for such Four Quarter Period shall be calculated
after giving pro forma effect to (x) such Investment or acquisition of assets
(including the Incurrence of any Indebtedness) as if such Investment or
acquisition occurred on the first day of such Four Quarter Period and (y) net
cost savings that the Company reasonably believes in good faith could have been
achieved during the Four Quarter Period as a result of such Investment or
acquisition and which cost savings could then be reflected in pro forma
financial statements under GAAP (provided that both (A) such cost savings were
identified and quantified in an Officers' Certificate delivered to the Trustee
at the date of determination and (B) with respect to each Investment or
acquisition completed prior to the 90th day preceding such date of
determination, actions were commenced or initiated by the Company within 90
days of such Investment or acquisition to effect such cost savings identified
in such Officers' Certificate, and (4) if since the beginning of such Four
Quarter Period any Person (that subsequently became a Restricted Subsidiary or
was merged with or into the Company or any Restricted Subsidiary since the
beginning of such Four Quarter Period) shall have made any Asset Sale or any
Investment or acquisition of assets that would have required an adjustment
pursuant to clause (2) or (3) above if made by the Company or a Restricted
Subsidiary during such Four Quarter Period, Consolidated EBITDA and
Consolidated Fixed Charges for such Four Quarter Period shall be calculated
after giving pro forma effect thereto as if such Asset Sale, Investment or
acquisition of assets occurred on, with respect to any Investment or
acquisition, the first day of such Four Quarter Period and, with respect to any
Asset Sale, the day prior to the first day of such Four Quarter Period. Except
as otherwise provided herein, for purposes of this definition, whenever pro
forma effect is to be given to an acquisition of assets, the amount of income
or earnings relating thereto and the amount of Consolidated Fixed Charges
associated with any Indebtedness Incurred in connection therewith, the pro
forma calculations shall be determined in accordance with Regulation S-X under
the Securities Act as in effect on the Issue Date. If any Indebtedness bears a
floating rate of interest and is being given pro forma effect, the interest
expense on such Indebtedness shall be calculated as if the rate in effect on
the date of determination had been the applicable rate for the entire period
(taking into account any agreement under which Interest Rate Protection
Obligations are outstanding applicable to such Indebtedness if such agreement
under which such Interest Rate Protection Obligations are outstanding has a
remaining term as at the date of determination in excess of 12 months);
provided, however, that the Consolidated Fixed Charges of the Company
attributable to interest on any Indebtedness Incurred under a revolving credit
facility computed on a pro forma basis shall be computed based upon the average
daily balance of such Indebtedness during the Four Quarter Period.
"Consolidated EBITDA" means, for any period, the Consolidated Net Income
for such period, plus the following to the extent deducted in calculating such
Consolidated Net Income: (i) Consolidated Income Tax Expense for such period;
(ii) Consolidated Interest Expense for such period; and (iii) Consolidated
Non-cash Charges for such period less (A) all non-cash items increasing
Consolidated Net Income for such period
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<PAGE> 11
and (B) all cash payments during such period relating to non-cash charges that
were added back in determining Consolidated EIBITDA in the most recent Four
Quarter Period.
"Consolidated Fixed Charges" means, with respect to any Person for any
period, the sum, without duplication, of (i) Consolidated Interest Expense and
(ii) the product of (x) the amount of all cash dividend payments on any series
of Preferred Equity Interest and all non-cash dividend payments (other than
dividends paid solely in Qualified Equity Interests) on any series of Preferred
Equity Interest that has a mandatory redemption obligation prior to the
Maturity Date paid, accrued or scheduled to be paid or accrued during such
period times (y) a fraction, the numerator of which is one and the denominator
of which is one minus the then current effective consolidated federal, state
and local tax rate of such Person, expressed as a decimal.
"Consolidated Income Tax Expense" means, with respect to the Company for
any period, the provision for Federal, state, local and foreign income taxes
payable by the Company and the Restricted Subsidiaries for such period as
determined on a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, with respect to the Company for any
period, without duplication, the sum of (i) the interest expense of the Company
and the Restricted Subsidiaries for such period as determined on a consolidated
basis in accordance with GAAP, including, without limitation, (a) any
amortization of debt discount, (b) the net cost under Interest Rate Agreements
(including any amortization of discounts), (c) the interest portion of any
deferred payment obligation, (d) all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing and (e) all capitalized interest and all accrued interest and
excluding (x) amortization of deferred financing fees and (y) interest recorded
as an accretion in the carrying value of liabilities (other than Indebtedness)
recorded at a discounted value and (ii) the interest component of Capitalized
Lease Obligations paid, accrued and/or scheduled to be paid or accrued by the
Company and the Restricted Subsidiaries during such period as determined on a
consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, for any period, the consolidated net
income (loss) of the Company and the Restricted Subsidiaries; provided,
however, that there shall not be included in such Consolidated Net Income: (i)
any net income (loss) of any Person if such person is not a Restricted
Subsidiary, except (A) to the extent of cash actually distributed by such
Person during such period to the Company or a Restricted Subsidiary as a
dividend or other distribution and (B) the Company's equity in a net loss of
any such Person (other than an Unrestricted Subsidiary) for such period shall
be included in determining such Consolidated Net Income; (ii) any net income
(loss) of any Person acquired by the Company or a Restricted Subsidiary in a
pooling of interests transaction for any period prior to the date of such
acquisition; (iii) any net income (but not loss) of any Restricted Subsidiary
if such Restricted Subsidiary is subject to restrictions, directly or
indirectly, on the payment of dividends or the making of distributions by such
Restricted Subsidiary, directly or indirectly, to the Company to the extent of
such restrictions; (iv) any gain or loss realized upon an Asset Sale by the
Company or the Restricted Subsidiaries (including pursuant to any
sale/leaseback transaction); (v) any extraordinary gain or loss; (vi) the
cumulative effect of a change in accounting principles; and (vii) any
restoration to income of any contingency reserve of an extraordinary,
non-recurring or unusual nature, except to the extent that provision for such
reserve was made out of Consolidated Net Income accrued at any time following
the Issue Date.
"Consolidated Net Worth" of any Person means the consolidated
stockholders' equity of such Person, determined on a consolidated basis in
accordance with GAAP, less (without duplication) amounts attributable to
Disqualified Equity Interests of such Person.
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<PAGE> 12
"Consolidated Non-cash Charges" means, with respect to any Person, for any
period, the sum of (A) depreciation, (B) amortization and (C) other non-cash
expenses or charges of such Person and its Restricted Subsidiaries reducing
Consolidated Net Income of such Person and its Restricted Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP.
"Consolidated Tangible Assets" means, as of any date of determination, the
total assets, less goodwill and other intangibles (determined in accordance
with Accounting Principles Board Opinion No. 17), shown on the balance sheet of
the Company and its Restricted Subsidiaries as of the most recent date for
which such a balance sheet is available, determined on a consolidated basis in
accordance with GAAP.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 13.02 or such other address as the Trustee may
give notice to the Company.
"Currency Agreement" means the obligations of any person pursuant to any
foreign exchange contract, currency swap agreement or other similar agreement
or arrangement designed to protect such person or any of its subsidiaries
against fluctuations in currency values.
"Custodian" has the meaning provided in Section 6.01.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Defeasance Trust Payment" has the meaning provided in Section 8.02.
"Depositary" means, with respect to the Securities issued in the form of
one or more Global Securities, The Depository Trust Company or another Person
designated as Depositary by the Company, which must be a clearing agency
registered under the Exchange Act.
"Designated Senior Indebtedness" means (a) any Indebtedness outstanding
under the Existing Facility and (b) any other Senior Indebtedness that, at the
time of determination, has an aggregate principal amount outstanding, together
with any commitments to lend additional amounts, of at least $25.0 million, if
the instrument governing such Senior Indebtedness expressly states that such
Indebtedness is "Designated Senior Indebtedness" for purposes of this Indenture
and a Board Resolution setting forth such designation by the Company has been
filed with the Trustee.
"Designated Guarantor Senior Indebtedness" means, with respect to any
Guarantor, (a) all Obligations of such Guarantor under the Existing Credit
Facility and (b) any other Guarantor Senior Indebtedness that, at the time of
determination, has an aggregate principal amount outstanding, together with any
commitments to lend additional amounts of at least $25.0 million, if the
instrument governing such Guarantor Senior Indebtedness expressly states that
such Indebtedness is "Designated Guarantor Senior Indebtedness" for purposes of
this Indenture and a Board Resolution setting forth such designation by such
Guarantor has been filed with the Trustee.
"Designation" has the meaning provided in Section 4.17.
"Designation Amount" has the meaning provided in Section 4.17.
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<PAGE> 13
"Disposition" means, with respect to any Person, any merger, consolidation
or other business combination involving such Person (whether or not such Person
is the Surviving Person) or the sale, assignment, transfer, lease, conveyance
or other disposition of all or substantially all of such Person's assets.
"Disqualified Equity Interest" means any Equity Interest that, by its
terms (or by the terms of any security into which it is convertible or for
which it is exchangeable at the option of the holder thereof), or upon the
happening of any event, matures (excluding any maturity as a result of optional
redemption by the issuer thereof) or is mandatorily redeemable (excluding, in
each case, upon a change of control; provided that the change of control
provisions relating to such Equity Interests (i) are no more favorable to the
holders of the Equity Interests than the provisions relating to the Notes and
(ii) require that in the event of any Change of Control the Notes are redeemed
in accordance with the terms of the Indenture prior to such Equity Interest),
pursuant to a sinking fund obligation or otherwise, or redeemable, at the
option of the holder thereof, in whole or in part, or exchangeable into
Indebtedness on or prior to the earlier of the maturity date of the Notes or
the date on which no Notes remain outstanding.
"Domestic Restricted Subsidiary" means a Restricted Subsidiary of the
Company organized under the laws of the United States or any political
subdivision thereof.
"Equity Interest" in any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of
or interests in (however designated) corporate stock or other equity
participations, including partnership interests, whether general or limited, in
such Person, including any Preferred Equity Interests.
"Event of Default" see Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the SEC thereunder.
"Exchange Securities" means the 11 1/4% Senior Subordinated Notes due
2007, Series B, of the Company to be issued in exchange for the Initial
Securities pursuant to the Registration Rights Agreement.
"Existing Credit Facility" means the Company's revolving credit facility
dated as of January 29, 1996 among American Banknote Company, American Bank
Note Holographics, Inc. and The Chase Manhattan Bank (as successor to Chemical
Bank), including any deferrals, renewals, extension, replacements, refinancings
or refundings thereof, or amendments, modifications or supplements thereto and
any agreement providing therefor, whether or by or with the same or any other
lender, creditor, group of lenders or group of creditors, and including related
guarantee agreements, security agreements and mortgages and other instruments
and agreements executed in connection therewith.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries in existence on the Issue Date, until such amounts are repaid.
"Existing Investments" means Investments existing on the Issue Date.
"Expiration Date" has the meaning set forth in the definition of "Offer to
Purchase" below.
"Fair Market Value" means, with respect to any asset, the price (after
taking into account any liabilities relating to such assets) that could be
negotiated in an arm's-length free market transaction, for cash,
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<PAGE> 14
between a willing seller and a willing and able buyer, neither of which is
under any compulsion to complete the transaction; provided, however, that the
Fair Market Value of any such asset or assets shall be determined conclusively
by the Board of Directors acting in good faith, and shall be evidenced by
resolutions of the Board of Directors delivered to the Trustee.
"Final Maturity Date" means December 1, 2007.
"Foreign Restricted Subsidiary" means a Restricted Subsidiary of the
Company not organized under the laws of the United States or any political
subdivision thereof.
"Four Quarter Period" has the meaning set forth in the definition of
"Consolidated Coverage Ratio" above.
"Funding Guarantor" has the meaning provided in Section 11.05.
"GAAP" means, at any date of determination, generally accepted accounting
principles in effect in the United States which are applicable at the date of
determination and which are consistently applied for all applicable periods.
"Global Securities" means one or more 144A Global Securities and
Regulations S Global Securities.
"guarantee" means, as applied to any obligation, (i) a guarantee (other
than by endorsement of negotiable instruments for collection in the ordinary
course of business), direct or indirect, in any manner, of any part or all of
such obligation and (ii) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, the
payment of amounts drawn down by letters of credit.
"Guarantee" means the guarantee of the Securities by each Guarantor under
the Indenture.
"Guarantor" means (i) each of the direct and indirect domestic operating
Subsidiaries of the Company and their respective successors and (ii) each other
Restricted Subsidiary, formed, created or acquired before or after the Issue
Date, required to become a Guarantor after the Issue Date pursuant to Section
4.19.
"Guarantor Blockage Period" has the meaning provided in Section 12.02(a).
"Guarantor Payment Blockage Notice" has the meaning provided in Section
12.02(a).
"Guarantor Senior Indebtedness" means, with respect to any Guarantor, at
any date, (a) all Interest Rate Agreements of such Guarantor, (b) all
Obligations of such Guarantor under stand-by letters of credit and (c) all
other Indebtedness of such Guarantor for borrowed money, including principal,
premium, if any, and interest (including Post-Petition Interest) on such
Indebtedness unless the instrument under which such Indebtedness of such
Guarantor for money borrowed is Incurred expressly provides that such
Indebtedness for money borrowed is not senior or superior in right of payment
to such Guarantor's Guarantee of the Notes, and all renewals, extensions,
modifications, amendments or refinancings thereof. Notwithstanding the
foregoing, Guarantor Senior Indebtedness shall not include (a) to the extent
that it may constitute Indebtedness, any Obligation for federal, state, local
or other taxes, (b) any Indebtedness among or between such Guarantor and any
Subsidiary
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<PAGE> 15
of such Guarantor or any Affiliate of such Guarantor or any of such Affiliate's
Subsidiaries, (c) to the extent that it may constitute Indebtedness, any
Obligation in respect of any trade payable Incurred for the purchase of goods
or materials, or for services obtained, in the ordinary course of business, (d)
that portion of any Indebtedness that is Incurred in violation of the
Indenture, (e) Indebtedness evidenced by such Guarantor's Guarantee of the
Notes, (f) Indebtedness of such Guarantor that is expressly subordinate or
junior in right of payment to any other Indebtedness of such Guarantor, (g) to
the extent that it may constitute Indebtedness, any obligation owing under
leases (other than Capital Lease Obligations) or management agreements and (h)
any obligation that by operation of law is subordinate to any general unsecured
obligations of such Guarantor.
"Holders" means the registered holders of the Securities.
"Incur" means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur (including by conversion, exchange or
otherwise), assume, guarantee or otherwise become liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to GAAP
or otherwise, of any such Indebtedness or other obligation on the balance sheet
of such Person (and "Incurrence," "Incurred" and "Incurring" shall have
meanings correlative to the foregoing). Indebtedness of any Acquired Person or
any of its Subsidiaries existing at the time such Acquired Person becomes a
Restricted Subsidiary (or is merged into or consolidated with the Company or
any Restricted Subsidiary), whether or not such Indebtedness was Incurred in
connection with, as a result of, or in contemplation of, such Acquired Person
becoming a Restricted Subsidiary (or being merged into or consolidated with the
Company or any Restricted Subsidiary), shall be deemed Incurred at the time any
such Acquired Person becomes a Restricted Subsidiary or merges into or
consolidates with the Company or any Restricted Subsidiary.
"Indebtedness" means (without duplication), with respect to any Person,
whether recourse is to all or a portion of the assets of such Person and
whether or not contingent, (a) every obligation of such Person for money
borrowed; (b) every obligation of such Person evidenced by bonds, debentures,
notes or other similar instruments, including obligations incurred in
connection with the acquisition of property, assets or businesses; (c) every
reimbursement obligation of such Person with respect to letters of credit,
bankers' acceptances or similar facilities issued for the account of such
Person; (d) every obligation of such Person issued or assumed as the deferred
purchase price of property or services (but excluding trade accounts payable
incurred in the ordinary course of business or other accrued liabilities
arising in the ordinary course of business); (e) every Capital Lease Obligation
of such Person; (f) every net obligation under interest rate swap or similar
agreements or foreign currency hedge, exchange or similar agreements of such
Person; (g) every obligation of the type referred to in clauses (a) through (f)
of another Person the payment of which such Person has guaranteed or is
responsible or liable for, directly or indirectly, as obligor, guarantor or
otherwise; and (h) any and all deferrals, renewals, extensions and refundings
of, or amendments, modifications or supplements to, any liability of the kind
described in any of the preceding clauses (a) through (g) above. Indebtedness
(a) shall never be calculated taking into account any cash and Cash Equivalents
held by such Person, (b) shall not include obligations of any Person (x)
arising from the honoring by a bank or other financial institution of a check,
draft or similar instrument inadvertently drawn against insufficient funds in
the ordinary course of business, provided that such obligations are
extinguished within three Business Days of their incurrence, (y) resulting from
the endorsement of negotiable instruments for collection in the ordinary course
of business and consistent with past business practices and (z) under stand-by
letters of credit to the extent collateralized by cash or Cash Equivalents, (c)
which provides that an amount less than the principal amount thereof shall be
due upon any declaration of acceleration thereof shall be deemed to be incurred
or outstanding in an amount equal to the accreted value thereof at the date of
determination, (d) shall include the liquidation preference and any mandatory
redemption payment obligations in respect of any Disqualified Equity Interests
of the Company or any Restricted Subsidiary and (e) shall not include
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<PAGE> 16
obligations under performance bonds, performance guarantees, surety bonds and
appeal bonds, letters of credit or similar obligations, incurred in the
ordinary course of business.
"Indenture" means this Indenture, as amended or supplemented from time to
time.
"Independent Financial Advisor" means a nationally recognized, accounting,
appraisal, investment banking firm or consultant (i) which does not, and whose
directors, officers and employees or Affiliates do not, have a direct or
indirect financial interest in the Company and (ii) which, in the judgment of
the Board of Directors, is otherwise independent and qualified to perform the
task for which it is to be engaged.
"Initial Securities" means the 11 1/4% Senior Subordinated Notes due 2007,
Series A, of the Company.
"Initial Purchasers" means Chase Securities Inc., Bear, Stearns & Co.
Inc., NationsBanc Montgomery Securities, Inc. and Societe Generale Securities
Corporation.
"Insolvency or Liquidation Proceeding" means, with respect to any Person,
any liquidation, dissolution or winding up of such Person, or any bankruptcy,
reorganization, insolvency, receivership or similar proceeding with respect to
such Person, whether voluntary or involuntary.
"interest" means, with respect to the Securities, the sum of any cash
interest and any Additional Interest on the Securities.
"Interest Payment Date" means each semiannual interest payment date on
December 1 and June 1 of each year, commencing June 1, 1998.
"Interest Rate Agreements" means the obligations of any person pursuant to
any interest rate swap agreement, interest rate collar agreement or other
similar agreement or arrangement designed to protect such person or any of its
subsidiaries against fluctuations in interest rates.
"Interest Record Date" for the interest payable on any Interest Payment
Date (except a date for payment of defaulted interest) means the November 15 or
May 15, as the case may be, immediately preceding such Interest Payment Date.
"Investment" means, with respect to any Person, any direct or indirect
loan, advance, guarantee or other extension of credit (other than any loan,
advance or extension of credit to any officers or directors of the Company or
any Restricted Subsidiary in compliance with the provisions of Section 4.03) or
capital contribution to (by means of transfers of cash or other property or
assets to others or payments for property or services for the account or use of
others, or otherwise), or purchase or acquisition of capital stock, bonds,
notes, debentures or other securities or evidences of Indebtedness issued by,
any other Person. For purposes of Section 4.06, the amount of any Investment
shall be the original cost of such Investment, plus the cost of all additions
thereto, but without any other adjustments for increases or decreases in value,
or write-ups, write-downs or write-offs with respect to such Investment;
reduced by the payment of dividends or distributions in connection with such
Investment or any other amounts received in respect of such Investment;
provided, however, that no such payment of dividends or distributions or
receipt of any such other amounts shall reduce the amount of any Investment if
such payment of dividends or distributions or receipt of any such amounts would
be included in Consolidated Net Income. In determining the amount of any
Investment involving a transfer of any property or asset other than cash, such
property shall be valued at its fair market value at the time of such transfer,
as determined in
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good faith by the board of directors (or comparable body) of the Person making
such transfer. If the Company or any Restricted Subsidiary sells or otherwise
disposes of any Voting Equity Interests of any direct or indirect Restricted
Subsidiary such that, after giving effect to any such sale or disposition, the
Company no longer owns, directly or indirectly, greater than 50% of the
outstanding Voting Equity Interests of such Restricted Subsidiary, the Company
shall be deemed to have made an Investment on the date of any such sale or
disposition equal to the fair market value of Voting Equity Interests of such
former Restricted Subsidiary not sold or disposed of.
"Issue Date" means the original issue date of the Securities.
"Lien" means any lien, mortgage, charge, security interest, hypothecation,
assignment for security or encumbrance of any kind (including any conditional
sale or capital lease or other title retention agreement, any lease in the
nature thereof, and any agreement to give any security interest).
"Maturity Date" means the date, set forth on the face of the Securities,
on which the Notes will mature.
"Net Cash Proceeds" means the aggregate proceeds in the form of cash or
Cash Equivalents received by the Company or any Restricted Subsidiary in
respect of any Asset Sale, including all cash or Cash Equivalents received upon
any sale, liquidation or other exchange of proceeds of Asset Sales received in
a form other than cash or Cash Equivalents, net of (a) the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, sales commissions, title transfer fees, title
insurance premium, recording fees and appraiser fees and costs) and any
relocation expenses incurred as a result thereof, (b) taxes (including transfer
taxes) paid or payable as a result thereof (after taking into account any
available tax credits or deductions and any tax sharing arrangements), (c)
amounts required to be applied to the repayment of Indebtedness secured by a
Lien on the asset or assets that were the subject of such Asset Sale, (d)
amounts deemed, in good faith, appropriate by the Board of Directors to be
provided as a reserve, in accordance with GAAP, against any liabilities
associated with such assets which are the subject of such Asset Sale,
including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities under
any indemnification obligations associated with such Asset Sale (provided that
the amount of any such reserves shall be deemed to constitute Net Cash Proceeds
at the time such reserves shall have been reversed or are not otherwise
required to be retained as a reserve) and (e) with respect to Asset Sales by
Restricted Subsidiaries, the portion of such cash payments attributable to
Persons holding a minority interest in such Restricted Subsidiary.
"Notes Pro Rata Share" means the amount of the applicable Unutilized Net
Cash Proceeds obtained by multiplying the amount of such Unutilized Net Cash
Proceeds by a fraction, (i) the numerator of which is the aggregate principal
amount of Notes outstanding at the time of the applicable Asset Sale with
respect to which the Company is required to use Unutilized Net Cash Proceeds to
repay or make an Offer to Purchase or repay and (ii) the denominator of which
is the sum of (a) the aggregate accreted value and/or principal amount, as the
case may be, of all Other Pari Passu Debt outstanding at the time of the
applicable Asset Sale and (b) the Aggregate principal amount of all Notes
outstanding at the time of the applicable Offer to Purchase with respect to
which the Company is required to use the applicable Unutilized Net Cash
Proceeds to offer to repay or make an Offer to Purchase or repay.
"Obligations" means any principal, interest (including, without
limitation, Post-Petition Interest), penalties, fees, indemnifications,
reimbursement obligations, damages and other liabilities payable under the
documentation governing any Indebtedness.
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"Offer" has the meaning set forth in the definition of "Offer to Purchase"
below.
"Offer to Purchase" means a written offer (the "Offer") sent by or on
behalf of the Company by first-class mail, postage prepaid, to each holder at
his address appearing in the register for the Securities on the date of the
Offer offering to purchase up to the principal amount of Securities specified
(the "Purchase Amount") in such Offer at the purchase price specified in such
Offer (as determined pursuant to the Indenture) (the "Purchase Price"). Unless
otherwise required by applicable law, the Offer shall specify an expiration
date (the "Expiration Date") of the Offer to Purchase, which shall be not less
than 20 Business Days nor more than 60 days after the date of such Offer, and a
settlement date (the "Purchase Date") for purchase of Securities to occur no
later than five Business Days after the Expiration Date. The Company shall
notify the Trustee at least five Business Days (or such shorter period as is
acceptable to the Trustee) prior to the mailing of the Offer of the Company's
obligation to make an Offer to Purchase, and the Offer shall be mailed by the
Company or, at the Company's request, by the Trustee in the name and at the
expense of the Company. The Offer shall contain all the information required
by applicable law to be included therein. An Offer to Purchase shall be
governed by and effected in accordance with the provisions above pertaining to
any Offer.
"Officer" means the Chairman, any Vice Chairman, the President, any Vice
President, the Chief Financial Officer, the Treasurer, or the Secretary of the
Company.
"Officers' Certificate" means a certificate signed by two Officers or by
an Officer and an Assistant Treasurer or Assistant Secretary of the Company
complying with Sections 13.04 and 13.05.
"144A Global Security" means a permanent global security in registered
form representing the aggregate principal amount of Securities sold in reliance
on Rule 144A.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
"Other Indebtedness" has the meaning provided in Section 4.19.
"Other Pari Passu Debt" means Indebtedness of the Company or any Guarantor
that neither constitutes Senior Indebtedness or Guarantor Senior Indebtedness,
as applicable, or Subordinated Indebtedness.
"Participant" has the meaning provided in Section 2.15.
"Paying Agent" has the meaning provided in Section 2.03.
"Payment Blockage Notice" has the meaning provided in Section 8.02(a).
"Payment Blockage Period" has the meaning provided in Section 8.02(a).
"Permitted Holder" means Mr. Morris Weissman and members of his immediate
family and any trust of which he is the beneficiary and any officers and
directors of the Company.
"Permitted Indebtedness" has the meaning provided in Section 4.04.
"Permitted Investments" means (a) Cash Equivalents; (b) Investments in
prepaid expenses, negotiable instruments held for collection and lease, utility
and workers' compensation, performance and other
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similar deposits; (c) Interest Rate Agreements and Currency Agreements; (d)
bonds, notes, debentures, other securities or non-cash consideration received
as a result of (x) Asset Sales permitted under Section 4.05 not to exceed 25%
of the total consideration for such Asset Sales or (y) a disposition of assets
that does not constitute an Asset Sale; (e) Investments in the Company and
Investments in a Restricted Subsidiary or a Person that, as a result of or in
connection with such Investment, becomes a Restricted Subsidiary or is merged
with or into or consolidated with the Company or another Restricted Subsidiary;
(f) Investments existing as of the Issue Date; (g) any Investment consisting of
a guarantee by a Restricted Subsidiary of Senior Indebtedness or any guarantee
of Indebtedness otherwise permitted by the Indenture; (h) Investments acquired
in exchange for Equity Interests (other than Disqualified Equity Interests) of
the Company; and (i) Investments that, when taken together with all other
Investments made pursuant to this clause (i), do not exceed the greater of $40
million and 10% of Consolidated Tangible Assets of the Company determined in
accordance with GAAP.
"Permitted Junior Securities" means (a) debt securities of the Company as
reorganized or readjusted, or debt securities of the Company (or any other
company, trust or organization provided for by a plan of reorganization or
readjustment succeeding to the assets and liabilities of the Company) that, in
each case, are subordinated, to at least the same extent as the Securities, to
the payment of all Senior Indebtedness that will be outstanding after giving
effect to such plan of reorganization or readjustment, so long as (i) the rate
of interest on such debt securities shall not exceed the effective rate of
interest on the Securities on the date hereof, (ii) such debt securities shall
not be entitled to the benefits of covenants or defaults materially more
beneficial to the holders of such debt securities than those in effect with
respect to the Securities on the date hereof (or the Senior Indebtedness, after
giving effect to such plan of reorganization or readjustment) and (iii) such
debt securities shall not provide for amortization (including sinking fund and
mandatory prepayment provisions) commencing prior to the date one year and one
day following the final scheduled maturity date of the Senior Indebtedness (as
modified by such plan of reorganization or readjustment) or (b) shares of stock
of the Company as reorganized or readjusted pursuant to a plan of
reorganization or readjustment; provided that, in each case with respect to
clauses (a) and (b) above, (x) if a new corporation results from any such
reorganization or readjustment, such corporation assumes all Senior
Indebtedness that will be outstanding after giving effect thereto and (y) the
rights of the holders of the Senior Indebtedness are not, without the consent
of such holders, altered by any such reorganization or readjustment, including,
without limitation, such rights being impaired within the meaning of Section
1124 of Title 11 of the United States Code, or any impairment of the right to
receive interest accruing during the pendency of a bankruptcy or insolvency
proceeding, including proceedings under Title 11 of the United States Code.
"Permitted Liens" means (a) Liens on property of a Person existing at the
time such Person is merged into or consolidated with the Company or any
Restricted Subsidiary; provided, however, that such Liens were in existence
prior to the contemplation of such merger or consolidation and do not secure
any property or assets of the Company or any Restricted Subsidiary other than
the property or assets subject to the Liens prior to such merger or
consolidation, (b) Liens imposed by law such as carriers', warehousemen's and
mechanics' Liens and other similar Liens arising in the ordinary course of
business, (c) Liens existing on the Issue Date, (d) Liens securing only the
Notes or the Guarantees, (e) Liens in favor of the Company or any Restricted
Subsidiary, (f) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded; provided,
however, that any reserve or other appropriate provision as shall be required
in conformity with GAAP shall have been made therefor, (g) encroachments,
encumbrances, easements, reservation of rights of way, restrictions and other
similar easements, licenses, restrictions on the use of properties (including
zoning or other such restrictions), or minor imperfections of title that do not
materially detract from the properties subject thereto or interfere with the
ordinary conduct of the business of the Company and the Restricted
Subsidiaries, (h) Liens resulting from the deposit of cash or notes in
connection with contracts, tenders or expropriation proceedings, or to secure
workers'
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compensation, surety or appeal bonds, costs of litigation when required by law
and public and statutory obligations or obligations under franchise
arrangements entered into in the ordinary course of business, (i) Liens
securing Indebtedness consisting of Capital Lease Obligations, Purchase Money
Indebtedness, mortgage financings, industrial revenue bonds or other monetary
obligations, in each case incurred solely for the purpose of financing all or
any part of the purchase price or cost of construction or installation of
assets used in the business of the Company or the Restricted Subsidiaries, or
repairs, additions or improvements to such assets; provided, however, that (I)
such Liens secure Indebtedness in an amount not in excess of the original
purchase price or the original cost of any such assets or repair, addition or
improvement thereto (plus an amount equal to the reasonable fees and expenses
in connection with the incurrence of such Indebtedness), (II) such Liens do not
extend to any other assets of the Company or the Restricted Subsidiaries (and,
in the case of repair, addition or improvements to any such assets, such Lien
extends only to the assets (and improvements thereto or thereon) repaired,
added to or improved), (III) the Incurrence of such Indebtedness is permitted
by Section 4.04 above and (IV) such Liens attach within 180 days of such
purchase, construction, installation, repair, addition or improvement, (j)
Liens to secure any refinancings, renewals, extensions, modifications or
replacements (collectively, "refinancing") (or successive refinancings), in
whole or in part, of any Indebtedness secured by Liens referred to in the
clauses above so long as such Lien does not extend to any other property (other
than improvements thereto) and (k) Liens securing Indebtedness of the Company
or any Restricted Subsidiary permitted to be Incurred under the Indenture in an
aggregate amount not to exceed $10 million.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, limited liability
limited partnership, trust, unincorporated organization or government or any
agency or political subdivision thereof.
"Physical Securities" means one or more certificated Securities in
registered form.
"Post-Petition Interest" means, with respect to any Indebtedness of any
Person, all interest accrued or accruing on such Indebtedness after the
commencement of any Insolvency or Liquidation Proceeding against such Person in
accordance with and at the contract rate (including, without limitation, any
rate applicable upon default) specified in the agreement or instrument
creating, evidencing or governing such Indebtedness, whether or not, pursuant
to applicable law or otherwise, the claim for such interest is allowed as a
claim in such Insolvency or Liquidation Proceeding.
"Preferred Equity Interest" in any Person, means an Equity Interest of any
class or classes (however designated) that is preferred as to the payment of
dividends or distributions, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person, over Equity
Interests of any other class in such Person.
"principal" of a debt security means the principal of the security plus,
when appropriate, the premium, if any, on the security.
"Private Exchange Securities" have the meaning provided in Sections 2(b)
of the Registration Rights Agreement.
"Private Placement Legend" means the legend initially set forth on the
Initial Securities in the form set forth on Exhibit A hereto.
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"Public Equity Offering" means, with respect to the Company, an
underwritten public offering of Qualified Equity Interests of the Company
pursuant to an effective registration statement filed under the Securities Act
(excluding registration statements filed on Form S-8) or any similar provisions
under foreign law.
"Purchase Amount" has the meaning set forth in the definition of "Offer to
Purchase" above.
"Purchase Agreement" means the Purchase Agreement dated December 5, 1997
by and among the Company, the Guarantors and the Initial Purchasers.
"Purchase Date" has the meaning set forth in the definition of "Offer to
Purchase" above.
"Purchase Money Indebtedness" means Indebtedness of the Company or any
Restricted Subsidiary Incurred for the purpose of financing all or any part of
the purchase price or the cost of construction or improvement of any property,
provided that the aggregate principal amount of such Indebtedness does not
exceed the lesser of the Fair Market Value of such property or such purchase
price or cost, including any refinancing of such Indebtedness that does not
increase the aggregate principal amount (or accreted amount, if less) thereof
as of the date of refinancing.
"Purchase Price" has the meaning set forth in the definition of "Offer to
Purchase" above.
"Qualified Equity Interest" in any Person means any Equity Interest in
such Person other than any Disqualified Equity Interest.
"Qualified Institutional Buyer" or "QIB" means a "qualified institutional
buyer" as that term is defined in Rule 144A under the Securities Act.
"Redemption Date" has the meaning provided in paragraph 5 of the form of
the Initial Security.
"redemption price," when used with respect to any Security to be redeemed,
means the price fixed for such redemption pursuant to this Indenture as set
forth in the form of Security annexed hereto as Exhibit A.
"Registrar" has the meaning provided in Section 2.03.
"Registration" means a registered exchange offer for the Securities by the
Company or other registration of the Securities under the Securities Act
pursuant to and in accordance with the terms of the Registration Rights
Agreement.
"Registration Rights Agreement" means the Registration Rights Agreement
dated , 1997 by and among the Company, the Guarantors and the Initial
Purchasers.
"Required Filing Dates" has the meaning provided in Section 4.12.
"Regulation S Global Securities" means a permanent global security in
registered form representing the aggregate principal amount of Securities sold
pursuant to Regulation S under the Securities Act.
"Replacement Assets" has the meaning provided in Section 4.05.
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"Restricted Investment" means any Investment other than a Permitted
Investment.
"Restricted Payments" has the meaning provided in Section 4.06.
"Restricted Security" has the meaning set forth in Rule 144(a)(3) under
the Securities Act; provided, however, that the Trustee shall be entitled to
request and conclusively rely upon an Opinion of Counsel with respect to
whether any Security is a Restricted Security.
"Restricted Subsidiary" means any Subsidiary of the Company that has not
been designated by the Board of Directors of the Company, by a resolution of
the Board of Directors of the Company delivered to the Trustee, as an
Unrestricted Subsidiary pursuant to Section 4.17. Any such designation may be
revoked by a resolution of the Board of Directors delivered to the Trustee,
subject to the provisions of such covenant.
"Revocation" has the meaning provided in Section 4.17.
"Rule 144A" means Rule 144A under the Securities Act.
"SEC" or "Commission" means the Securities and Exchange Commission.
"Securities" means, collectively, the Initial Securities, the Private
Exchange Securities and the Unrestricted Securities treated as a single class
of securities, as amended or supplemented from time to time in accordance with
the terms of this Indenture.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated by the SEC thereunder.
"Senior Indebtedness" means, at any date, (a) all Obligations of the
Company under the Existing Credit Facility, (b) all Interest Rate Protection
Obligations of the Company, (c) all Obligations of the Company under stand-by
letters of credit and (d) all other Indebtedness of the Company for borrowed
money, including principal, premium, if any, and interest (including
Post-Petition Interest) on such Indebtedness, unless the instrument under which
such Indebtedness of the Company for money borrowed is Incurred expressly
provides that such Indebtedness for money borrowed is not senior or superior in
right of payment to the Securities, and all renewals, extensions,
modifications, amendments or refinancings thereof. Notwithstanding the
foregoing, Senior Indebtedness shall not include (a) to the extent that it may
constitute Indebtedness, any Obligation for Federal, state, local or other
taxes, (b) any Indebtedness among or between the Company and any Subsidiary of
the Company or any Affiliate of the Company or any of such Affiliate's
Subsidiaries, (c) to the extent that it may constitute Indebtedness, any
Obligation in respect of any trade payable Incurred for the purchase of goods
or materials, or for services obtained, in the ordinary course of business, (d)
that portion of any Indebtedness that is Incurred in violation of this
Indenture, (e) Indebtedness evidenced by the Securities, (f) Indebtedness of
the Company that is expressly subordinate or junior in right of payment to any
other Indebtedness of the Company, (g) to the extent that it may constitute
Indebtedness, any obligation owing under leases (other than Capital Lease
Obligations) or management agreements and (h) any obligation that by operation
of law is subordinate to any general unsecured obligations of the Company.
"Senior Subordinated Indebtedness" means the Securities and any other
Indebtedness of the Company that specifically provides that such Indebtedness
is to rank pari passu in right of payment with the Securities and is not
subordinated by its terms in right of payment to any Indebtedness or other
obligation of the Company which is not Senior Indebtedness.
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"Significant Restricted Subsidiary" means, at any date of determination,
(a) any Restricted Subsidiary that, together with its Subsidiaries that
constitute Restricted Subsidiaries (i) for the most recent fiscal year of the
Company accounted for more than 10% of the consolidated revenues of the Company
and the Restricted Subsidiaries or (ii) as of the end of such fiscal year,
owned more than 10% of the consolidated assets of the Company and the
Restricted Subsidiaries, all as set forth on the consolidated financial
statements of the Company and the Restricted Subsidiaries for such year
prepared in conformity with GAAP, and (b) any Restricted Subsidiary which, when
aggregated with all other Restricted Subsidiaries that are not otherwise
Significant Restricted Subsidiaries and as to which any event described in
clause (h) of Section 6.01 has occurred, would constitute a Significant
Restricted Subsidiary under clause (a) of this definition.
"Stated Maturity" means, when used with respect to any Security or any
installment of interest thereon, the date specified in such Security as the
fixed date on which the principal of such Security or such installment of
interest is due and payable.
"Subordinated Indebtedness" means, with respect to the Company or any
Guarantor, any Indebtedness of the Company or such Guarantor, as the case may
be, which is expressly subordinated in right of payment to the Securities or
such Guarantor's Guarantee, as the case may be.
"Subsidiary" means, with respect to any Person, (a) any corporation of
which the outstanding Voting Equity Interests having at least a majority of the
votes entitled to be cast in the election of directors shall at the time be
owned, directly or indirectly, by such Person, or (b) any other Person of which
at least a majority of Voting Equity Interests are at the time, directly or
indirectly, owned by such first named Person.
"Surviving Person" means, with respect to any Person involved in or that
makes any Disposition, the Person formed by or surviving such Disposition or
the Person to which such Disposition is made.
"10-3/8% Notes" means the Company's 10-3/8% Senior Notes due 2002.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Section Section
77aaa-77bbbb), as amended, as in effect on the date of this Indenture (except
as provided in Section 10.03) until such time as the Indenture is qualified
under the TIA, and thereafter as in effect on the date on which the Indenture
is qualified under the TIA, except as provided by Section 10.03.
"Trustee" means the party named as such in the first paragraph of this
Indenture until a successor replaces it in accordance with the provisions of
this Indenture and thereafter means such successor.
"Trust Officer" means any officer within the corporate trust department
(or any successor group of the Trustee) including any vice president, assistant
vice president, assistant secretary or any other officer or assistant officer
of the Trustee customarily performing functions similar to those performed by
the persons who at that time shall be such officers, and also means, with
respect to a particular corporate trust matter, any other officer to whom such
trust matter is referred because of his knowledge of and familiarity with the
particular subject.
"United States Government Obligations" means direct non-callable
obligations of the United States of America for the payment of which the full
faith and credit of the United States is pledged.
"Unrestricted Securities" means one or more Securities that do not and are
not required to bear the Private Placement Legend in the form set forth in
Exhibit A hereto, including, without limitation, the
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Exchange Securities and any Securities registered under the Securities Act
pursuant to and in accordance with the Registration Rights Agreement.
"Unrestricted Subsidiary" means any Subsidiary of the Company designated,
as such pursuant to Section 4.17. Any such designation may be revoked by a
resolution of the Board of Directors delivered to the Trustee, subject to the
provisions of such covenant.
"Unutilized Net Cash Proceeds" has the meaning provided in Section 4.05.
"Voting Equity Interests" means Equity Interests in a corporation or other
Person with voting power under ordinary circumstances entitling the holders
thereof to elect the Board of Directors or other governing body of such
corporation or Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the sum
of the products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required scheduled payment
of principal, including payment of final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (b) the then outstanding
aggregate principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary all
of the outstanding Voting Equity Interests (other than directors' qualifying
shares) of which are owned, directly or indirectly, by the Company.
SECTION 1.02. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Securities.
"indenture security holder" means a Holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company or any other
obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them therein.
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SECTION 1.03. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles in effect from time to time, and any other reference in this
Indenture to "generally accepted accounting principles" refers to GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the
plural include the singular;
(5) provisions apply to successive events and transactions; and
(6) "herein," "hereof" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or
other subdivision.
ARTICLE TWO
THE SECURITIES
SECTION 2.01. Form and Dating.
The Initial Securities and the Trustee's certificate of authentication
thereof shall be substantially in the form of Exhibit A hereto, which is hereby
incorporated in and expressly made a part of this Indenture. The Exchange
Securities and the Trustee's certificate of authentication thereof shall be
substantially in the form of Exhibit B hereto, which is hereby incorporated in
and expressly made a part of this Indenture. The Securities may have
notations, legends or endorsements (including the Guarantee) required by law,
stock exchange rule or usage. The Company and the Trustee shall approve the
form of the Securities and any notation, legend or endorsement (including the
Guarantee) on them. Each Security shall be dated the date of its issuance and
shall show the date of its authentication.
Securities offered and sold in reliance on Rule 144A shall be issued
initially in the form of one or more Global Securities, substantially in the
form set forth in Exhibit A hereto, deposited with the Trustee, as custodian
for the Depositary, duly executed by the Company and authenticated by the
Trustee as hereinafter provided with the Guarantees of the Guarantors endorsed
thereon and shall bear the legend set forth in Exhibit C hereto. The aggregate
principal amount of the Global Securities may from time to time be increased or
decreased by adjustments made on the records of the Trustee, as custodian for
the Depositary, as hereinafter provided.
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SECTION 2.02. Execution and Authentication.
Two Officers, or an Officer and an Assistant Secretary, shall sign, or one
Officer shall sign and one Officer or an Assistant Secretary (each of whom
shall, in each case, have been duly authorized by all requisite corporate
actions) shall attest to, the Securities for the Company by manual or facsimile
signature.
If an Officer or an Assistant Secretary whose signature is on a Security
was an Officer or an Assistant Secretary, as the case may be, at the time of
such execution but no longer holds that office at the time the Trustee
authenticates the Security, the Security shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
The Trustee shall authenticate (i) Initial Securities for original issue
in an aggregate principal amount not to exceed $95,000,000, (ii) Private
Exchange Securities from time to time only in exchange for a like principal
amount of Initial Securities and (iii) Unrestricted Securities from time to
time only in exchange for (A) a like principal amount of Initial Securities or
(B) a like principal amount of Private Exchange Securities, in each case upon a
written order of the Company in the form of an Officers' Certificate. Each
such written order shall specify the amount of Securities to be authenticated
and the date on which the Securities are to be authenticated, whether the
Securities are to be Initial Securities, Private Exchange Securities or
Unrestricted Securities and whether the Securities are to be issued as Physical
Securities or Global Securities and such other information as the Trustee may
reasonably request. The aggregate principal amount of Securities outstanding
at any time may not exceed $95,000,000, except as provided in Sections 2.07 and
2.08.
Notwithstanding the foregoing, all Securities issued under this Indenture
shall vote and consent together on all matters (as to which any of such
Securities may vote or consent) as one class and no series of Securities will
have the right to vote or consent as a separate class on any matter.
The Trustee may appoint an authenticating agent reasonably acceptable to
the Company to authenticate Securities. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent shall
have the same rights as an Agent to deal with the Company and Affiliates of the
Company.
The Securities shall be issuable only in registered form without coupons
in denominations of $1,000 and any integral multiple thereof.
SECTION 2.03. Registrar and Paying Agent.
The Trustee shall maintain an office or agency where (a) Securities may be
presented or surrendered for registration of transfer or for exchange (the
"Registrar"), (b) Securities may be presented or surrendered for payment (the
"Paying Agent") and (c) notices and demands in respect of the Securities and
this Indenture may be served. The Registrar shall keep a register of the
Securities and of their transfer and exchange. The Company, upon notice to the
Trustee, may appoint one or more co-Registrars and one or more additional
Paying Agents. The term "Paying Agent" includes any additional Paying Agent.
Except as provided herein, the Company or any Guarantor may act as Paying
Agent, Registrar or co-Registrar.
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The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture, which shall incorporate the provisions of
the TIA. The agreement shall implement the provisions of this Indenture that
relate to such Agent. The Company shall notify the Trustee of the name and
address of any such Agent. If the Company fails to maintain a Registrar or
Paying Agent, or fails to give the foregoing notice, the Trustee shall act as
such and shall be entitled to appropriate compensation in accordance with
Section 7.07.
The Company initially appoints the Trustee as Registrar and Paying Agent
until such time as the Trustee has resigned or a successor has been appointed.
SECTION 2.04. Paying Agent To Hold Assets in Trust.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that each Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all assets held by the Paying Agent for the payment of
principal of, or interest on, the Securities, and shall notify the Trustee of
any Default by the Company in making any such payment. The Company at any time
may require a Paying Agent to distribute all assets held by it to the Trustee
and account for any assets disbursed and the Trustee may at any time during the
continuance of any payment Default, upon written request to a Paying Agent,
require such Paying Agent to distribute all assets held by it to the Trustee
and to account for any assets distributed. Upon distribution to the Trustee of
all assets that shall have been delivered by the Company to the Paying Agent
(if other than the Company), the Paying Agent shall have no further liability
for such assets. If the Company, any Guarantor or any of their respective
Affiliates acts as Paying Agent, it shall, on or before each due date of the
principal of or interest on the Securities, segregate and hold in trust for the
benefit of the Persons entitled thereto a sum sufficient to pay the principal
or interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and will promptly notify the Trustee
of its action or failure so to act.
SECTION 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders. If the Trustee is not the Registrar, the Company shall furnish to
the Trustee before each Interest Record Date and at such other times as the
Trustee may request in writing a list as of such date and in such form as the
Trustee may reasonably require of the names and addresses of Holders, which
list may be conclusively relied upon by the Trustee.
SECTION 2.06. Transfer and Exchange.
Subject to the provisions of Sections 2.15 and 2.16, when Securities are
presented to the Registrar or a co-Registrar with a request to register the
transfer of such Securities or to exchange such Securities for an equal
principal amount of Securities of other authorized denominations of the same
series, the Registrar or co-Registrar shall register the transfer or make the
exchange as requested if its requirements for such transaction are met;
provided, however, that the Securities surrendered for transfer or exchange
shall be duly endorsed or accompanied by a written instrument of transfer in a
form satisfactory to the Company and the Registrar or co-Registrar, duly
executed by the Holder thereof or his attorney duly authorized in writing. To
permit registrations of transfers and exchanges, the Company shall execute and
the Trustee shall authenticate Securities at the Registrar's or co-Registrar's
written request. No service charge shall be made for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient
to cover any transfer tax or similar governmental charge payable in connection
therewith (other than any such transfer taxes or other governmental charge
payable upon exchanges or transfers pursuant to Section 2.02, 2.10, 3.06, 4.05,
4.14, or 10.05). The Registrar or
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co-Registrar shall not be required to register the transfer or exchange of any
Security (i) during a period beginning at the opening of business 15 days
before the mailing of a notice of redemption of Securities and ending at the
close of business on the day of such mailing and (ii) selected for redemption
in whole or in part pursuant to Article Three hereof, except the unredeemed
portion of any Security being redeemed in part.
Prior to the registration of any transfer by a Holder as provided herein,
the Company, the Trustee and any Agent of the Company shall treat the person in
whose name the Security is registered as the owner thereof for all purposes
whether or not the Security shall be overdue, and neither the Company, the
Trustee nor any such Agent shall be affected by notice to the contrary. Any
Holder of a beneficial interest in a Global Security shall, by acceptance of
such beneficial interest in a Global Security, agree that transfers of
beneficial interests in such Global Security may be effected only through a
book-entry system maintained by the Depositary (or its agent), and that
ownership of a beneficial interest in a Global Security shall be required to be
reflected in a book entry.
SECTION 2.07. Replacement Securities.
If a mutilated Security is surrendered to the Trustee or if the Holder of
a Security claims that the Security has been lost, destroyed or wrongfully
taken, the Company shall issue and the Trustee shall authenticate a replacement
Security if the Trustee's requirements for replacement of Securities are met.
Such Holder must provide an indemnity bond or other indemnity, sufficient in
the judgment of both the Company and the Trustee, to protect the Company, the
Trustee and any Agent from any loss which any of them may suffer if a Security
is replaced The Company may charge such Holder for its reasonable
out-of-pocket expenses in replacing a Security, including reasonable fees and
expenses of counsel.
Every replacement Security is an additional obligation of the Company.
SECTION 2.08. Outstanding Securities.
Securities outstanding at any time are all the Securities that have been
authenticated by the Trustee except those canceled by it, those delivered to it
for cancellation and those described in this Section 2.08 as not outstanding.
Subject to Section 2.09, a Security does not cease to be outstanding because
the Company or any of its Affiliates holds the Security.
If a Security is replaced pursuant to Section 2.07 (other than a mutilated
Security surrendered for replacement), it ceases to be outstanding unless the
Trustee receives proof satisfactory to it that the replaced Security is held by
a bona fide purchaser. A mutilated Security ceases to be outstanding upon
surrender of such Security and replacement thereof pursuant to Section 2.07.
If on a Redemption Date, Purchase Date or the Final Maturity Date the
Paying Agent holds money sufficient to pay all of the principal and interest
due on the Securities payable on that date, and is not prohibited from paying
such money to the Holders pursuant to the terms of this Indenture, then on and
after that date such Securities cease to be outstanding and interest on them
ceases to accrue.
SECTION 2.09. Treasury Securities.
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, waiver or consent, Securities owned
by the Company, the Guarantors or any of their respective Affiliates shall be
disregarded, except that, for the purposes of determining whether the Trustee
shall
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be protected in relying on any such direction, waiver or consent, only
Securities that a Trust Officer of the Trustee actually knows are so owned
shall be disregarded.
The Company shall notify the Trustee, in writing, when it, any Guarantor
or any of its Affiliates repurchases or otherwise acquires Securities, of the
aggregate principal amount of such Securities so repurchased or otherwise
acquired.
SECTION 2.10. Temporary Securities.
Until definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Securities upon receipt of
a written order of the Company in the form of an Officers' Certificate. The
Officers' Certificate shall specify the amount of temporary Securities to be
authenticated and the date on which the temporary Securities are to be
authenticated.
Temporary Securities shall be substantially in the form of definitive
Securities but may have variations that the Company considers appropriate for
temporary Securities. Without unreasonable delay, the Company shall prepare
and the Trustee shall authenticate upon receipt of a written order of the
Company pursuant to Section 2.02 definitive Securities in exchange for
temporary Securities.
SECTION 2.11. Cancellation.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to them for transfer, exchange or payment. The
Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent,
and no one else, shall cancel all Securities surrendered for transfer,
exchange, payment or cancellation and return them to the Company. Subject to
Section 2.07, the Company may not issue new Securities to replace Securities
that it has paid or delivered to the Trustee for cancellation. If the Company
or any Guarantor shall acquire any of the Securities, such acquisition shall
not operate as a redemption or satisfaction of the Indebtedness represented by
such Securities unless and until the same are surrendered to the Trustee for
cancellation pursuant to this Section 2.11.
SECTION 2.12. Defaulted Interest.
The Company shall pay interest on overdue principal from time to time on
demand at the rate of interest then borne by the Securities. The Company
shall, to the extent lawful, pay interest on overdue installments of interest
(without regard to any applicable grace periods) from time to time on demand at
the rate of interest then borne by the Securities.
If the Company defaults in a payment of interest on the Securities, it
shall pay the defaulted interest, plus (to the extent lawful) any interest
payable on the defaulted interest to the Persons who are Holders on a
subsequent special record date, which date shall be the fifteenth day preceding
the date fixed by the Company for the payment of defaulted interest or the next
succeeding Business Day if such date is not a Business Day. At least 15 days
before the subsequent special record date, the Company shall mail to each
Holder, with a copy to the Trustee, a notice that states the subsequent special
record date, the payment date and the amount of defaulted interest, and
interest payable on such defaulted interest, if any, to be paid.
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Notwithstanding the foregoing, any interest which is paid prior to the
expiration of the 30-day period set forth in Section 6.01(b) shall be paid to
Holders as of the Interest Record Date for the Interest Payment Date for which
interest has not been paid.
SECTION 2.13. CUSIP Number.
The Company in issuing the Securities will use "CUSIP" numbers and the
Trustee shall use such CUSIP numbers in notices of redemption or exchange as a
convenience to Holders; provided, however, that any such notice may state that
no representation is made as to the correctness or accuracy of any CUSIP number
printed in the notice or on the Securities, and that reliance may be placed
only on the other identification numbers printed on the Securities. The
Company shall promptly notify the Trustee of any changes in CUSIP numbers.
SECTION 2.14. Deposit of Moneys.
Prior to 11:00 a.m. New York City time on each Interest Payment Date,
Redemption Date, Purchase Date and the Final Maturity Date, the Company shall
deposit with the Paying Agent in immediately available funds money sufficient
to make cash payments, if any, due on such Interest Payment Date, Redemption
Date, Purchase Date or Final Maturity Date, as the case may be, in a timely
manner which permits the Paying Agent to remit payment to the Holders on such
Interest Payment Date, Redemption Date, Purchase Date or Final Maturity Date,
as the case may be.
SECTION 2.15. Book-Entry Provisions for Global Securities.
(a) The Global Securities initially shall (i) be registered in the name
of the Depositary or the nominee of such Depositary, (ii) be delivered to the
Trustee as custodian for such Depositary and (iii) bear legends as set forth in
Exhibit C.
Members of, or participants in, the Depositary ("Participants") shall have
no rights under this Indenture with respect to any Global Security held on
their behalf by the Depositary, or the Trustee as its custodian, or under the
Global Security, and the Depositary may be treated by the Company, the Trustee
and any agent of the Company or the Trustee as the absolute owner of the Global
Security for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any agent of the Company or
the Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or impair, as between the Depositary
and Participants, the operation of customary practices governing the exercise
of the rights of a Holder of any Security.
(b) Transfers of Global Securities shall be limited to transfers in
whole, but not in part, to the Depositary, its successors or their respective
nominees. Interests of beneficial owners in the Global Securities may be
transferred or exchanged for Physical Securities in accordance with the rules
and procedures of the Depositary and the provisions of Section 2.16; provided,
however, that Physical Securities shall be transferred to all beneficial owners
in exchange for their beneficial interests in Global Securities if (i) the
Depositary notifies the Company that it is unwilling or unable to continue as
Depositary for any Global Security and a successor Depositary is not appointed
by the Company within 90 days of such notice or (ii) an Event of Default has
occurred and is continuing and the Registrar has received a request from the
Depositary to issue Physical Securities.
(c) In connection with the transfer of Global Securities as an entirety
to beneficial owners pursuant to paragraph (b) of this Section 2.15, the Global
Securities shall be deemed to be surrendered to the
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Trustee for cancellation, and the Company shall execute, and the Trustee shall
upon written instructions from the Company authenticate and make available for
delivery, to each beneficial owner identified by the Depositary in exchange for
its beneficial interest in the Global Securities, an equal aggregate principal
amount of Physical Securities of authorized denominations.
(d) Any Physical Security constituting a Restricted Security delivered in
exchange for an interest in a Global Security pursuant to paragraph (c) of this
Section 2.15 shall, except as otherwise provided by Section 2.16, bear the
Private Placement Legend.
(e) The Holder of any Global Security may grant proxies and otherwise
authorize any Person, including Participants and Persons that may hold
interests through Participants, to take any action which a Holder is entitled
to take under this Indenture or the Securities and the Trustee is entitled to
rely upon any electronic instructions from beneficial owners to the Holder of
any Global Security.
SECTION 2.16. Registration of Transfers and Exchanges.
(a) Transfer and Exchange of Physical Securities. When Physical
Securities are presented to the Registrar or co-Registrar with a request:
(i) to register the transfer of the Physical Securities; or
(ii) to exchange such Physical Securities for an equal principal
amount of Physical Securities of other authorized denominations,
the Registrar or co-Registrar shall register the transfer or make the exchange
as requested if the requirements under this Indenture as set forth in this
Section 2.16 for such transactions are met; provided, however, that the
Physical Securities presented or surrendered for Registration of transfer or
exchange:
(I) shall be duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Registrar or co-Registrar, duly
executed by the Holder thereof or his attorney duly authorized in
writing; and
(II) in the case of Physical Securities the offer and sale of which
have not been registered under the Securities Act, such Physical
Securities shall be accompanied, in the sole discretion of the Company,
by the following additional information and documents, as applicable:
(A) if such Physical Security is being delivered to
the Registrar or co-Registrar by a Holder for Registration in
the name of such Holder, without transfer, a certification
from such Holder to that effect (substantially in the form of
Exhibit D hereto); or
(B) if such Physical Security is being transferred
to a QIB in accordance with Rule 144A, a certification to
that effect (substantially in the form of Exhibit D hereto);
or
(C) if such Physical Security is being transferred
in reliance on Rule 144 under the Securities Act, delivery of
a certification to that effect (substantially in the form of
Exhibit D hereto) and, at the option of the Company, an
Opinion of Counsel reasonably satisfactory to the Company to
the effect that such transfer is in compliance with the
Securities Act; or
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(D) if such Physical Security is being transferred
in reliance on another exemption from the registration
requirements of the Securities Act, a certification to that
effect (substantially in the form of Exhibit D hereto) and,
at the option of the Company, an Opinion of Counsel
reasonably acceptable to the Company to the effect that such
transfer is in compliance with the Securities Act.
(b) Restrictions on Transfer of a Physical Security for a Beneficial
Interest in a Global Security. A Physical Security the offer and sale of which
has not been registered under the Securities Act may not be exchanged for a
beneficial interest in a Global Security except upon satisfaction of the
requirements set forth below. Upon receipt by the Registrar or co-Registrar of
a Physical Security, duly endorsed or accompanied by appropriate instruments of
transfer, in form satisfactory to the Registrar or co-Registrar, together with:
(A) certification, substantially in the form of
Exhibit D hereto, that such Physical Security is being
transferred (I) to a QIB or (II) to an Accredited Investor
and, with respect to (II), at the option of the Company, an
Opinion of Counsel reasonably acceptable to the Company to
the effect that such transfer is in compliance with the
Securities Act; and
(B) written instructions directing the Registrar or
co-Registrar to make, or to direct the Depositary to make, an
endorsement on the applicable Global Security to reflect an
increase in the aggregate amount of the Securities
represented by the Global Security,
then the Registrar or co-Registrar shall cancel such Physical Security and
cause, or direct the Depositary to cause, in accordance with the standing
instructions and procedures existing between the Depositary and the Registrar
or co-Registrar, the principal amount of Securities represented by the
applicable Global Security to be increased accordingly. If no 144A Global
Security or Regulation S Global Security, as the case may be, is then
outstanding, the Company shall, unless either of the events in the proviso to
Section 2.15(b) have occurred and are continuing, issue and the Trustee shall,
upon written instructions from the Company in accordance with Section 2.02,
authenticate such a Global Security in the appropriate principal amount.
(c) Transfer and Exchange of Global Securities. The transfer and
exchange of Global Securities or beneficial interests therein shall be effected
through the Depositary in accordance with this Indenture (including the
restrictions on transfer set forth herein) and the procedures of the Depositary
therefor. Upon receipt by the Registrar or Co-Registrar of written
instructions, or such other instruction as is customary for the Depositary,
from the Depositary or its nominee, requesting the Registration of transfer of
an interest in a 144A Global Security or a Regulation S Global Security, as the
case may be, to another type of Global Security, together with the applicable
Global Securities (or, if the applicable type of Global Security required to
represent the interest as requested to be obtained is not then outstanding,
only the Global Security representing the interest being transferred), the
Registrar or Co-Registrar shall reflect on its books and records (and the
applicable Global Security) the applicable increase and decrease of the
principal amount of Securities represented by such types of Global Securities,
giving effect to such transfer. If the applicable type of Global Security
required to represent the interest as requested to be obtained is not
outstanding at the time of such request, the Company shall issue and the
Trustee shall, upon written instructions from the Company in accordance with
Section 2.02, authenticate a new Global Security of such type in principal
amount equal to the principal amount of the interest requested to be
transferred.
(d) Transfer of a Beneficial Interest in a Global Security for a Physical
Security.
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(i) If the Depositary is at any time unwilling or unable to continue
as a depositary for the Global Securities and a successor depositary is
not appointed by the Company within 90 days, Physical Securities will be
issued in exchange for the Global Securities. Upon receipt by the
Registrar or co-Registrar of written instructions, or such other form of
instructions as is customary for the Depositary, from the Depositary or
its nominee on behalf of any Person (subject to the previous sentence)
having a beneficial interest in a Global Security and upon receipt by the
Trustee of a written order or such other form of instructions as is
customary for the Depositary or the Person designated by the Depositary as
having such a beneficial interest containing registration instructions
and, in the case of any such transfer or exchange of a beneficial interest
in Securities the offer and sale of which have not been registered under
the Securities Act, the following additional information and documents:
(A) if such beneficial interest is being
transferred in reliance on Rule 144 under the Securities Act,
delivery of a certification to that effect (substantially in
the form of Exhibit D hereto) and, at the option of the
Company, an Opinion of Counsel reasonably satisfactory to the
Company to the effect that such transfer is in compliance
with the Securities Act; or
(B) if such beneficial interest is being
transferred in reliance on another exemption from the
registration requirements of the Securities Act, a
certification to that effect (substantially in the form of
Exhibit D hereto) and, at the option of the Company, an
Opinion of Counsel reasonably satisfactory to the Company to
the effect that such transfer is in compliance with the
Securities Act,
then the Registrar or co-Registrar will cause, in accordance with the
standing instructions and procedures existing between the Depositary and
the Registrar or co-Registrar, the aggregate principal amount of the
applicable Global Security to be reduced and, following such reduction,
the Company will execute and, upon receipt of an authentication order in
the form of an Officers' Certificate in accordance with Section 2.02,
the Trustee will authenticate and make available for delivery to the
transferee a Physical Security in the appropriate principal amount.
(ii) Securities issued in exchange for a beneficial interest in a
Global Security pursuant to this Section 2.16(d) shall be registered in
such names and in such authorized denominations as the Depositary,
pursuant to instructions from its direct or indirect participants or
otherwise, shall instruct the Registrar or co-Registrar in writing. The
Registrar or co-Registrar shall deliver such Physical Securities to the
Persons in whose names such Physical Securities are so registered.
(e) Restrictions on Transfer and Exchange of Global Securities.
Notwithstanding any other provisions of this Indenture, a Global Security may
not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(f) Private Placement Legend. Upon the transfer, exchange or replacement
of Securities not bearing the Private Placement Legend, the Registrar or
co-Registrar shall deliver Securities that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Securities bearing the
Private Placement Legend, the Registrar or co-Registrar shall deliver only
Securities that bear the Private Placement Legend unless, and the Trustee is
hereby authorized to deliver Securities without the Private Placement Legend if
(i) there is delivered to the Trustee an Opinion of Counsel reasonably
satisfactory to the Company and the Trustee to the effect that neither such
legend nor the related restrictions on transfer are required in order to
maintain
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compliance with the provisions of the Securities Act, (ii) such Security has
been sold pursuant to an effective registration statement under the Securities
Act (including pursuant to a Registration) or (iii) the date of such transfer,
exchange or replacement is two years after the later of (x) the Issue Date and
(y) the last date that the Company or any affiliate (as defined in Rule 144
under the Securities Act) of the Company was the owner of such Securities (or
any predecessor thereto).
(g) General. By its acceptance of any Security bearing the Private
Placement Legend, each Holder of such a Security acknowledges the restrictions
on transfer of such Security set forth in this Indenture and in the Private
Placement Legend and agrees that it will transfer such Security only as
provided in this Indenture.
The Trustee shall have no obligation or duty to monitor, determine or
inquire as to compliance with any restrictions on transfer imposed under this
Indenture or under applicable law with respect to any transfer of any interest
in any Security (including any transfers between or among Participants or
beneficial owners of interest in any Global Security) other than to require
delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly required by the terms
of, this Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.
Each Holder of a Security agrees to indemnify the Company and the Trustee
against any liability resulting from such Holder's transfer, exchange or
assignment of such Holder's Security in violation of this Indenture and/or
applicable U.S. Federal or state securities laws.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.15 or this Section 2.16.
The Company shall have the right to inspect and make copies of all such
letters, notices or other written communications at any reasonable time upon
the giving of reasonable written notice to the Registrar
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee.
If the Company wants to redeem Securities pursuant to paragraph 5 or 6 of
the Securities at the applicable redemption price set forth thereon, it shall
notify the Trustee in writing of the Redemption Date and the principal amount
of Securities to be redeemed. The Company shall give such notice to the Trustee
at least 30 days before the Redemption Date (unless a shorter notice shall be
agreed to by the Trustee in writing), together with an Officers' Certificate
stating that such redemption will comply with the conditions contained herein.
SECTION 3.02. Selection of Securities To Be Redeemed.
If less than all of the Securities are to be redeemed pursuant to
paragraph 5 of the Securities, the Trustee shall select the Securities to be
redeemed in compliance with the requirements of the national securities
exchange, if any, on which the Securities are listed or, if the Securities are
not then listed on a national securities exchange, on a pro rata basis, by lot
or in such other manner as the Trustee shall deem fair and appropriate.
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ate. Selection of the Securities to be redeemed pursuant to paragraph 6 of the
Securities shall be made by the Trustee only on a pro rata basis or on as
nearly a pro rata basis as is practicable (subject to the procedures of the
Depositary) based on the aggregate principal amount of Securities held by each
Holder. The Trustee shall make the selection from the Securities then
outstanding, subject to redemption and not previously called for redemption.
The Trustee may select for redemption pursuant to paragraph 5 or 6 of the
Securities portions of the principal amount of Securities that have
denominations equal to or larger than $1,000 principal amount. Securities and
portions of them the Trustee so selects shall be in amounts of $1,000 principal
amount or integral multiples thereof. Provisions of this Indenture that apply
to Securities called for redemption also apply to portions of Securities called
for redemption.
SECTION 3.03. Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption Date, the
Company shall mail a notice of redemption by first-class mail to each Holder
whose Securities are to be redeemed at such Holder's registered address;
provided, however, that notice of a redemption pursuant to paragraph 6 of the
Securities shall be mailed to each Holder whose Securities are to be redeemed
no later than 60 days after the date of the Closing of the relevant Public
Equity Offering of the Company.
Each notice of redemption shall identify the Securities to be redeemed
(including the CUSIP number thereon) and shall state:
(1) the Redemption Date;
(2) the redemption price;
(3) the name and address of the Paying Agent to which the Securities
are to be surrendered for redemption;
(4) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(5) that, unless the Company defaults in making the redemption
payment, interest on Securities called for redemption ceases to accrue on
and after the Redemption Date and the only remaining right of the Holders
is to receive payment of the redemption price upon surrender to the
Paying Agent; and
(6) in the case of any redemption pursuant to paragraph 5 or 6 of
the Securities, if any Security is being redeemed in part, the portion of
the principal amount of such Security to be redeemed and that, after the
Redemption Date, upon surrender of such Security, a new Security or
Securities in principal amount equal to the unredeemed portion thereof
will be issued.
At the Company's written request, the Trustee shall give the notice of
redemption on behalf of the Company, in the Company's name and at the Company's
expense.
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SECTION 3.04. Effect of Notice of Redemption.
Once a notice of redemption is mailed, Securities called for redemption
become due and payable on the Redemption Date and at the redemption price. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price, plus accrued interest thereon, if any, to the Redemption Date, but
interest installments whose maturity is on or prior to such Redemption Date
shall be payable to the Holders of record at the close of business on the
relevant Interest Record Date.
SECTION 3.05. Deposit of Redemption Price.
At least one Business Day before the Redemption Date, the Company shall
deposit with the Paying Agent (or if the Company is its own Paying Agent,
shall, on or before the Redemption Date, segregate and hold in trust) money
sufficient to pay the redemption price of and accrued interest, if any, on all
Securities to be redeemed on that date other than Securities or portions
thereof called for redemption on that date which have been delivered by the
Company to the Trustee for cancellation.
If any Security surrendered for redemption in the manner provided in the
Securities shall not be so paid on the Redemption Date due to the failure of
the Company to deposit with the Paying Agent money sufficient to pay the
redemption price thereof, the principal and accrued and unpaid interest, if
any, thereon shall, until paid or duly provided for, bear interest as provided
in Sections 2.12 and 4.01 with respect to any payment default.
SECTION 3.06. Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the Trustee shall
authenticate for the Holder a new Security equal in principal amount to the
unredeemed portion of the Security surrendered.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Securities.
The Company shall pay the principal of and interest on the Securities in
the manner provided in the Securities and the Registration Rights Agreement. An
installment of principal or interest shall be considered paid on the date due
if the Trustee or Paying Agent (other than the Company, a Guarantor or any of
their respective Affiliates) holds on that date money designated for and
sufficient to pay the installment in full and is not prohibited from paying
such money to the Holders of the Securities pursuant to the terms of this
Indenture.
The Company shall pay cash interest on overdue principal at the same rate
per annum borne by the Securities. The Company shall pay cash interest on
overdue installments of interest at the same rate per annum borne by the
Securities, to the extent lawful, as provided in Section 2.12.
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SECTION 4.02. Maintenance of Office or Agency.
The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the address of the
Trustee set forth in Section 13. The Company hereby initially designates the
Trustee at its address set forth in Section 13.02 as its office or agency in
The Borough of Manhattan, The City of New York, for such purposes.
SECTION 4.03. Transactions with Affiliates.
The Company shall not, and shall not cause or permit any Restricted
Subsidiary to, directly or indirectly, conduct any business or enter into any
transaction (or series of related transactions) with or for the benefit of any
of their respective Affiliates or any officer, director or employee of the
Company or any Restricted Subsidiary (each an "Affiliate Transaction"), unless
(i) such Affiliate Transaction is on terms that are no less favorable to the
Company or such Restricted Subsidiary, as the case may be, than would be
available in a comparable transaction with an unaffiliated third party and (ii)
if such Affiliate Transaction (or series of related Affiliate Transactions)
involves aggregate payments or other consideration having a Fair Market Value
in excess of $10 million, such Affiliate Transaction is in writing and a
majority of the disinterested members of the Board of Directors shall have
approved such Affiliate Transaction and determined that such Affiliate
Transaction complies with the foregoing provisions. In addition, any Affiliate
Transaction involving aggregate payments or other consideration having a Fair
Market Value in excess of $25 million shall also require a written opinion from
an Independent Financial Advisor, filed with the Trustee, stating that the
terms of such Affiliate Transaction are fair, from a financial point of view,
to the Company or the Restricted Subsidiary involved in such Affiliate
Transaction, as the case may be.
Notwithstanding the foregoing, the restrictions set forth in this covenant
shall not apply to (i) transactions with or among the Company and any Wholly
Owned Restricted Subsidiary or between or among Wholly Owned Restricted
Subsidiaries, (ii) reasonable fees and compensation paid to and indemnity
provided on behalf of, officers, directors, employees, consultants or agents of
the Company or any Restricted Subsidiary of the Company as determined in good
faith by the Company's Board of Directors, (iii) any transactions undertaken
pursuant to any contractual obligations in existence on the Issue Date (as in
effect on the Issue Date), (iv) any Restricted Payments made in compliance with
Section 4.06, (v) loans, loan programs and advances to officers, directors and
employees of the Company or any Restricted Subsidiary, in each case made in the
ordinary course of business and approved by the Company's Board of Directors or
the Compensation Committee of the Board of Directors, (vi) customary employment
arrangements and benefit programs approved in good faith by the Company's Board
of Directors and (vii) the grant of stock options, stock grants, equity
appreciation rights or similar rights to employees and directors of the Company
pursuant to plans approved by the Board of Directors.
SECTION 4.04. Limitation on Indebtedness.
The Company shall not, and shall not cause or permit any Restricted
Subsidiary to, directly or indirectly, Incur any Indebtedness (including
Acquired Indebtedness), except for Permitted Indebtedness; provided, however,
that the Company may Incur Indebtedness (including Acquired Indebtedness), and
any Restricted Subsidiary may Incur Indebtedness (including Acquired
Indebtedness), if, at the time of and immediately after giving pro forma effect
to such Incurrence of Indebtedness and the application of the proceeds
therefrom, the Consolidated Coverage Ratio would be greater than 2.00 to 1.0.
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The foregoing limitations will not apply to the Incurrence by the Company
or any Restricted Subsidiary of any of the following (collectively, "Permitted
Indebtedness"), each of which shall be given independent effect:
(a) Indebtedness under the Securities, the Indenture and the
Guarantees;
(b) Indebtedness Incurred under a credit facility (including the
Existing Credit Facility) or credit facilities in an aggregate principal
amount at any one time outstanding not to exceed $80 million or the
non-U.S. denominated equivalent thereof;
(c) Indebtedness under the 10-3/8% Notes;
(d) intercompany Indebtedness permitted under Section 4.06;
(e) Interest Rate Agreements and Currency Agreements of the Company
relating to Indebtedness of the Company (which Indebtedness is otherwise
permitted to be Incurred under this covenant);
(f) Existing Indebtedness (other than Indebtedness under the
Existing Credit Facility);
(g) Indebtedness to the extent representing a replacement, renewal,
refinancing or extension (collectively, a "refinancing") of outstanding
Indebtedness Incurred in compliance with the Consolidated Coverage Ratio
of the first paragraph of this covenant or clauses (a), (c) and (f) of
this paragraph of this covenant; provided, however, that (i) any such
refinancing shall not exceed the sum of the principal amount (or accreted
amount (determined in accordance with GAAP), if less) of the Indebtedness
being refinanced, plus the amount of accrued interest thereon, plus the
amount of any reasonably determined prepayment premium necessary to
accomplish such refinancing and such reasonable fees and expenses
incurred in connection therewith, (ii) Indebtedness representing a
refinancing of Indebtedness other than Senior Indebtedness shall have a
Weighted Average Life to Maturity equal to or greater than the Weighted
Average Life to Maturity of the Indebtedness being refinanced, (iii)
Indebtedness that is pari passu with the Securities may only be
refinanced with Indebtedness that is made pari passu with or subordinate
in right of payment to the Securities and Subordinated Indebtedness may
only be refinanced with Subordinated Indebtedness and (iv) Indebtedness
of a Restricted Subsidiary may only be refinanced by Indebtedness of such
Restricted Subsidiary or the Company;
(h) the Guarantees and guarantees by any Guarantor of any
Indebtedness of the Company;
(i) Indebtedness arising from agreements providing for
indemnification, adjustment of purchase price or similar obligations, or
from guarantees or letters of credit, surety bonds or performance bonds
securing any obligations of the Company or any Restricted Subsidiary
pursuant to such agreements, incurred or assumed in connection with the
acquisition or disposition of any business, assets or Restricted
Subsidiary of the Company, other than guarantees or similar credit
support by the Company of Indebtedness incurred by any person acquiring
all or any portion of such business, assets or Restricted Subsidiary for
the purpose of financing such acquisition;
(j) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument
inadvertently (except in the case of daylight overdrafts) drawn against
insufficient funds in the ordinary course of business, provided that such
Indebtedness referred to in this clause (j) is extinguished within three
Business Days of its incurrence; and
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(k) In addition to the items referred to in clauses (a) through (j)
above, Indebtedness of the Company and the Restricted Subsidiaries
(including any Indebtedness under the Existing Credit Facility, any
Purchase Money Indebtedness and/or any Capital Lease Obligations that
utilizes this subparagraph (k)) having an aggregate principal amount
and/or attributable indebtedness not to exceed $25 million at any one
time outstanding.
SECTION 4.05. Disposition of Proceeds of Asset Sales.
(a) The Company shall not, and shall not cause or permit any Restricted
Subsidiary to, directly or indirectly, make any Asset Sale, unless (i) the
Company or such Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the Fair Market
Value of the assets sold or otherwise disposed of and (ii) at least 75% of such
consideration consists of (A) cash or Cash Equivalents, or (B) properties and
capital assets that replace the properties and assets that were the subject of
such Asset Sale or in properties and capital assets that will be used in the
business of the Company and its Restricted Subsidiaries as existing on the
Issue Date or in businesses reasonably related thereto (as determined in good
faith by the Company's Board of Directors) ("Replacement Assets"); provided,
that, an exchange or sale of Equity Interests in any Subsidiary of the Company
may be made without complying with clause (ii) (A) above; provided, further,
that after giving effect to any such exchange or sale, the Company has a
Consolidated Coverage Ratio of 2.50 to 1.0. The amount of any Indebtedness or
other liabilities of the Company or any Restricted Subsidiary that is actually
assumed by the transferee in such Asset Sale and from which the Company and the
Restricted Subsidiaries are fully and unconditionally released shall be deemed
to be cash for purposes of determining the percentage of cash consideration
received by the Company or the Restricted Subsidiaries.
The Company or such Restricted Subsidiary, as the case may be, may (i)
apply the Net Cash Proceeds of any Asset Sale within 365 days of receipt
thereof to repay Senior Indebtedness or (ii) make an Investment in Replacement
Assets.
To the extent all or part of the Net Cash Proceeds of any Asset Sale are
not applied within 365 days of such Asset Sale as described in clause (i) or
(ii) of the immediately preceding paragraph (such Net Cash Proceeds, the
"Unutilized Net Cash Proceeds"), the Company shall, within 20 days after such
365th day, make an Offer to Purchase all outstanding Securities up to a maximum
principal amount (expressed as a multiple of $1,000) of Securities equal to the
Notes Pro Rata Share, at a purchase price in cash equal to 100% of the
principal amount thereof, plus accrued and unpaid interest thereon, if any, to
the Purchase Date; provided, however, that the Offer to Purchase may be
deferred until there are aggregate Unutilized Net Cash Proceeds equal to or in
excess of $10 million, at which time the entire amount of such Unutilized Net
Cash Proceeds, and not just the amount in excess of $10 million, shall be
applied as required pursuant to this paragraph.
With respect to any Offer to Purchase effected pursuant to this covenant,
to the extent the aggregate principal amount of Securities tendered pursuant to
such Offer to Purchase exceeds the Unutilized Net Cash Proceeds to be applied
to the repurchase thereof, such Securities shall be purchased pro rata based on
the aggregate principal amount of such Securities tendered by each Holder. To
the extent the Unutilized Net Cash Proceeds exceed the aggregate amount of
Securities tendered by the Holders of the Securities pursuant to such Offer to
Purchase, the Company may retain and utilize any portion of the Unutilized Net
Cash Proceeds not applied to repurchase the Securities for any purpose
consistent with the other terms of this Indenture.
(b) Not less than 30 nor more than 60 days before the Purchase Date, the
Company shall send, by first class mail, a notice to each Holder of Securities,
with a copy to the Trustee and the Paying Agent. The
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notice, which shall govern the terms of the Offer to Purchase, shall include
such disclosures as are required by law and shall state:
(i) that the Offer to Purchase is being made pursuant to this
Section 4.05;
(ii) the purchase price (including the amount of accrued
interest, if any) to be paid for Securities purchased pursuant to the
Offer to Purchase and the Purchase Date;
(iii) that any Security not tendered for payment will continue to
accrue interest in accordance with the terms thereof;
(iv) that, unless the Company defaults on making the payment, any
Security accepted for payment pursuant to the Offer to Purchase shall
cease to accrue interest after the Purchase Date;
(v) that Holders accepting the offer to have their Securities
purchased pursuant to the Offer to Purchase will be required to
surrender their Securities to the Paying Agent at the address
specified in the notice prior to the close of business on the Purchase
Date;
(vi) that Holders will be entitled to withdraw their acceptance
if the Paying Agent receives, not later than the close of business on
the second Business Day prior to the Purchase Date, a facsimile
transmission or letter setting forth the name of the Holder, the
principal amount of the Securities the Holder delivered for purchase
and a statement that such Holder is withdrawing his election to have
such Securities purchased;
(vii) that Holders whose Securities are purchased only in part
will be issued new Securities in a principal amount equal to the
unpurchased portion of the Securities surrendered; provided that each
Security purchased and each such new Security issued shall be in an
original principal amount in denominations of $1,000 and integral
multiples thereof;
(viii) any other procedures that a Holder must follow to accept
an Offer to Purchase or effect withdrawal of such acceptance; and
(ix) the name and address of the Paying Agent.
On the Purchase Date, the Company shall (i) accept for payment Securities
or portions thereof tendered pursuant to the Offer to Purchase in accordance
with this Section 4.05, (ii) deposit with the Paying Agent U.S. legal tender
sufficient to pay the purchase price, plus accrued interest, if any, of all
Securities to be purchased in accordance with this Section 4.05 and (iii)
deliver to the Trustee Securities so accepted together with an Officers'
Certificate stating the Securities or portions thereof tendered to and accepted
for payment by the Company.
For purposes of this Section 4.05, the Trustee shall act as the Paying
Agent. The Paying Agent shall promptly (but in any case no later than 10
calendar days after the Purchase Date) mail or deliver to the Holders of
Securities so accepted payment in an amount equal to the purchase price for
such Securities, and the Company shall execute and issue, and the Trustee shall
promptly authenticate and mail to such Holders, a new Security equal in
principal amount to any unpurchased portion of the Security surrendered;
provided that each such new Security shall be issued in an original principal
amount in denominations of $1,000 and integral multiples thereof. The Company
will send to the Trustee and the Holders of Securities on or as soon as
practicable
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after the Purchase Date a notice setting forth the results of the Offer to
Purchase. Any Securities not so accepted shall be promptly mailed or delivered
by the Company to the Holder thereof.
(c) In the event that the Company makes an Offer to Purchase the
Securities, the Company shall comply with any applicable securities laws and
regulations, including any applicable requirements of Section 14(e) of, and
Rule 14e-1 under, the Exchange Act, and any violation of the provisions of this
Indenture relating to such Offer to Purchase occurring as a result of such
compliance shall not be deemed an Event of Default or an event that with the
passing of time or giving of notice, or both, would constitute an Event of
Default.
Each Holder shall be entitled to tender all or any portion of the
Securities owned by such Holder pursuant to the Offer to Purchase, subject to
the requirement that any portion of a Security tendered must be tendered in an
integral multiple of $1,000 principal amount and subject to any proration among
tendering Holders as described above.
SECTION 4.06. Limitation on Restricted Payments.
The Company shall not, and shall not cause or permit any Restricted
Subsidiary to, directly or indirectly,
(i) declare or pay any dividend or any other distribution on any
Equity Interests of the Company or any Restricted Subsidiary or make any
payment or distribution to the direct or indirect holders (in their
capacities as such) of Equity Interests of the Company or any Restricted
Subsidiary (other than any dividends, distributions and payments made to
the Company or any Restricted Subsidiary and dividends or distributions
payable to any Person solely in Qualified Equity Interests of the Company
or in options, warrants or other rights to purchase Qualified Equity
Interests of the Company);
(ii) purchase, redeem or otherwise acquire or retire for value any
Equity Interests of the Company or any Restricted Subsidiary (other than
any such Equity Interests owned by the Company or any Restricted
Subsidiary);
(iii) purchase, redeem, defease or retire for value, or make any
principal payment on, prior to any scheduled maturity, scheduled
repayment or scheduled sinking fund payment, any Subordinated
Indebtedness; or
(iv) make any Investment in any Person (other than Permitted
Investments)
(any such payment or any other action (other than any exception thereto)
described in (i), (ii), (iii) or (iv) each, a "Restricted Payment"), unless
(a) no Default or Event of Default shall have occurred and be
continuing at the time or immediately after giving effect to such
Restricted Payment;
(b) immediately after giving effect to such Restricted Payment, the
Company would be able to Incur $1.00 of additional Indebtedness (other
than Permitted Indebtedness) under the Consolidated Coverage Ratio of the
first paragraph of Section 4.04; and
(c) immediately after giving effect to such Restricted Payment, the
aggregate amount of all Restricted Payments declared or made on or after
the Issue Date does not exceed an amount equal to the sum of (1) 50% of
cumulative Consolidated Net Income determined for the period (taken as
one period)
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from the beginning of the first fiscal quarter commencing after the Issue
Date and ending on the last day of the most recent fiscal quarter
immediately preceding the date of such Restricted Payment for which
consolidated financial information of the Company is available (or if
such cumulative Consolidated Net Income shall be a loss, minus 100% of
such loss), plus (2) 100% of the aggregate net cash proceeds received by
the Company either (x) as capital contributions to the Company after the
Issue Date or (y) from the issue and sale (other than to a Restricted
Subsidiary) of its Qualified Equity Interests after the Issue Date
(excluding the net proceeds from any issuance and sale of Qualified
Equity Interests financed, directly or indirectly, using funds borrowed
from the Company or any Restricted Subsidiary until and to the extent
such borrowing is repaid), plus (3) the principal amount (or accreted
amount (determined in accordance with GAAP), if less) of any Indebtedness
of the Company or any Restricted Subsidiary Incurred after the Issue Date
that has been converted into or exchanged for Qualified Equity Interests
of the Company, plus (4) so long as the Designation thereof was treated
as a Restricted Payment made after the Issue Date, with respect to any
Unrestricted Subsidiary that has been redesignated as a Restricted
Subsidiary after the Issue Date in accordance with "Designation of
Unrestricted Subsidiaries" below, the Company's proportionate interest in
an amount equal to the excess of (x) the total assets of such Subsidiary,
valued on an aggregate basis at Fair Market Value, over (y) the total
liabilities of such Subsidiary, determined in accordance with GAAP (and
provided that such amount shall not in any case exceed the Designation
Amount with respect to such Restricted Subsidiary upon its Designation),
minus (5) the Designation Amount (measured as of the date of Designation)
with respect to any Subsidiary of the Company that has been designated as
an Unrestricted Subsidiary after the Issue Date in accordance with
"Designation of Unrestricted Subsidiaries" below, plus (6) $10 million.
The foregoing provisions will not prevent (i) the payment of any dividend
or distribution on, or redemption of, Equity Interests within 60 days after the
date of declaration of such dividend or distribution or the giving of formal
notice of such redemption, if at the date of such declaration or giving of such
formal notice such payment or redemption would comply with the provisions of
the Indenture, (ii) the purchase, redemption, retirement or other acquisition
of any Equity Interests of the Company in exchange for, or out of the net cash
proceeds of the substantially concurrent issue and sale (other than to a
Restricted Subsidiary) of, Qualified Equity Interests of the Company; provided,
however, that any such net cash proceeds and the value of any Qualified Equity
Interests issued in exchange for such retired Equity Interests are excluded
from clause (c)(2) of the preceding paragraph (and were not included therein at
any time) and are not used to redeem the Securities pursuant to paragraphs 5 or
6 of the Security, (iii) the purchase, redemption, retirement, defeasance or
other acquisition of Subordinated Indebtedness, or any other payment thereon,
made in exchange for, or out of the net cash proceeds of, a substantially
concurrent issue and sale (other than to a Restricted Subsidiary) of (x)
Qualified Equity Interests of the Company; provided, however, that any such net
cash proceeds and the value of any Qualified Equity Interests issued in
exchange for Subordinated Indebtedness are excluded from clauses (c)(2) and
(c)(3) of the preceding paragraph (and were not included therein at any time)
and are not used to redeem the Securities pursuant to 5 or 6 of the Security or
(y) Subordinated Indebtedness permitted to be Incurred pursuant to clause (g)
of the second paragraph under Section 4.04, (iv) the purchase of Equity
Interests from officers and directors of the Company or any Restricted
Subsidiary in an amount not to exceed $1 million, (v) the redemption of the
Company's zero coupon convertible subordinated debenture due 2002 and (vi) the
declaration and payment of pro rata dividends or pro rata redemptions with
respect to holders of minority interests in the common stock of a Restricted
Subsidiary of the Company; provided, however, that in the case of each of
clauses (ii), (iii), (iv), (v) and (vi), no Default or Event of Default shall
have occurred and be continuing or would arise therefrom.
In determining the amount of Restricted Payments permissible under the
immediately preceding paragraph of this covenant, amounts expended pursuant to
clauses (i), (iv) and, to the extent the redemption
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contemplated by clause (v) is in cash, (v) of the immediately preceding
paragraph shall be included as Restricted Payments. The amount of any non-cash
Restricted Payment shall be deemed to be equal to the Fair Market Value thereof
at the date of the making of such Restricted Payment.
SECTION 4.07. Corporate Existence.
Subject to Article Five, the Company shall do or shall cause to be done
all things necessary to preserve and keep in full force and effect its
corporate existence and the corporate, partnership or other existence of each
Restricted Subsidiary in accordance with the respective organizational
documents of each such Restricted Subsidiary and the rights (charter and
statutory) and material franchises of the Company and the Restricted
Subsidiaries; provided, however, that the Company shall not be required to
preserve any such right or franchise, or the corporate existence of any
Restricted Subsidiary, if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and the Restricted Subsidiaries, taken as a whole; provided,
further, however, that a determination of the Board of Directors shall not be
required in the event of a merger of one or more Wholly Owned Restricted
Subsidiaries of the Company with or into another Wholly Owned Restricted
Subsidiary of the Company or another Person, if the surviving Person is a
Wholly Owned Restricted Subsidiary of the Company organized under the laws of
the United States or a State thereof or of the District of Columbia or, in the
case of a Foreign Restricted Subsidiary, the jurisdiction of incorporation or
organization of such Foreign Restricted Subsidiary. This Section 4.07 shall
not prohibit the Company from taking any other action otherwise permitted by,
and made in accordance with, the provisions of this Indenture.
SECTION 4.08. [Intentionally Omitted]
SECTION 4.09. Notices of Default.
(a) In the event that any Indebtedness of the Company or any of its
Subsidiaries is declared due and payable before its maturity because of the
occurrence of any default (or any event which, with notice or lapse of time, or
both, would constitute such a default) under such Indebtedness, the Company
shall promptly give written notice to the Trustee of such declaration, the
status of such default or event and what action the Company is taking or
proposes to take with respect thereto.
(b) Upon becoming aware of any Default or Event of Default, the Company
shall promptly deliver an Officers' Certificate to the Trustee specifying the
Default or Event of Default.
SECTION 4.10. [Intentionally Omitted]
SECTION 4.11. Compliance Certificate.
The Company shall deliver to the Trustee within 120 days after the close
of each fiscal year a certificate signed by the principal executive officer,
principal financial officer or principal accounting officer stating that a
review of the activities of the Company has been made under the supervision of
the signing officers with a view to determining whether a Default or Event of
Default has occurred and whether or not the signers know of any Default or
Event of Default by the Company that occurred during such fiscal year. If they
do know of such a Default or Event of Default, the certificate shall describe
all such Defaults or Events of Default, their status and the action the Company
is taking or proposes to take with respect thereto. The first certificate to be
delivered by the Company pursuant to this Section 4.11 shall be for the fiscal
year ending December 31, 1997.
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SECTION 4.12. Provision of Financial Information.
Whether or not the Company is subject to Section 13(a) or 15(d) of the
Exchange Act, or any successor provision thereto, the Company shall file with
the SEC (if permitted by SEC practice and applicable law and regulations) the
annual reports, quarterly reports and other documents which the Company would
have been required to file with the SEC pursuant to such Section 13(a) or 15(d)
or any successor provision thereto if the Company were so subject, such
documents to be filed with the SEC on or prior to the respective dates (the
"Required Filing Dates") by which the Company would have been required so to
file such documents if the Company were so subject. The Company shall also in
any event (a) within 15 days of each Required Filing Date (whether or not
permitted or required to be filed with the SEC) file with the Trustee and
provide by mail to all Holders copies of all reports and other documents which
the Company generally provides to its stockholders, or, if such filing is not
so permitted, information and data of a similar nature, and (b) if,
notwithstanding the preceding sentence, filing such documents by the Company
with the SEC is not permitted by SEC practice or applicable law or regulations,
promptly upon written request supply copies of such documents to any Holder.
In addition, for so long as any Notes remain outstanding, the Company will
furnish to the Holders and to securities analysts and prospective investors,
upon their request, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act, and, to any beneficial holder of Notes,
if not obtainable from the SEC, information of the type that would be filed
with the SEC pursuant to the foregoing provisions, upon the request of any such
holder.
Delivery of such reports, information and documents to the Trustee is for
informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 4.13. [Intentionally Omitted]
SECTION 4.14. Change of Control.
(a) Following the occurrence of a Change of Control (the date of such
occurrence being the "Change of Control Date"), the Company shall notify the
Holders of the Securities of such occurrence in the manner prescribed by this
Indenture and shall, within 20 days after the Change of Control Date, make an
Offer to Purchase all Securities then outstanding at a purchase price in cash
equal to 101% of the aggregate principal amount thereof, plus accrued and
unpaid interest thereon, if any, to the Purchase Date (subject to the right of
Holders of record on the relevant Interest Record Date to receive interest due
on the relevant Interest Payment Date). The Company's obligations may be
satisfied if a third party makes the Offer to Purchase in the manner, at the
times and otherwise in compliance with the requirements of this Indenture
applicable to an Offer to Purchase made by the Company and purchases all
Securities validly tendered and not withdrawn under such Offer to Purchase.
Each Holder shall be entitled to tender all or any portion of the Securities
owned by such Holder pursuant to the Offer to Purchase, subject to the
requirement that any portion of a Security tendered must be tendered in an
integral multiple of $1,000 principal amount.
(b) Not less than 30 days nor more than 60 days before the Purchase Date,
the Company shall send, by first class mail, a notice to each Holder of
Securities, with a copy to the Trustee and the Paying Agent. The notice, which
shall govern the terms of the Offer to Purchase, shall include such disclosures
as are required by law and shall state:
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(i) that an Offer to Purchase is being made pursuant to this
Section 4.14 and that all Securities tendered will be accepted for
payment;
(ii) the purchase price (including the amount of accrued
interest, if any) for each Security and the Purchase Date;
(iii) that any Security not tendered for payment will continue to
accrue interest in accordance with the terms thereof;
(iv) that, unless the Company defaults on making the payment, any
Security accepted for payment pursuant to the Offer to Purchase shall
cease to accrue interest after the Purchase Date;
(v) that Holders accepting the offer to have their Securities
purchased pursuant to an Offer to Purchase will be required to
surrender their Securities to the Paying Agent at the address
specified in the notice prior to the close of business on the Business
Day preceding the Purchase Date;
(vi) that Holders will be entitled to withdraw their acceptance
if the Paying Agent receives, not later than the close of business on
the third Business Day preceding the Purchase Date, a facsimile
transmission or letter setting forth the name of the Holder, the
principal amount of Securities the Holder delivered for purchase and a
statement that such Holder is withdrawing his election to have such
Securities purchased;
(vii) that Holders whose Securities are purchased only in part
will be issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered, provided that each
Security purchased and each such new Security issued shall be in an
original principal amount in denominations of $1,000 and integral
multiples thereof;
(viii) any other procedures that a Holder must follow to accept
an Offer to Purchase or effect withdrawal of such acceptance; and
(ix) the name and address of the Paying Agent.
(c) On or prior to the Purchase Date specified in the Offer to Purchase,
the Company shall (i) accept for payment all Securities or portions thereof
validly tendered pursuant to the Offer, (ii) deposit with the Paying Agent or,
if the Company is acting as its own Paying Agent, segregate and hold in trust
as provided in Section 2.04, money sufficient to pay the Purchase Price of all
Securities or portions thereof so accepted and (iii) deliver or cause to be
delivered to the Trustee for cancellation all Securities so accepted together
with an Officers' Certificate stating the Securities or portions thereof
accepted for payment by the Company. The Paying Agent (or the Company, if so
acting) shall promptly mail or deliver to Holders of Securities so accepted,
payment in an amount equal to the Purchase Price for such Securities, and the
Trustee shall promptly authenticate and mail or deliver to each Holder of
Securities a new Security or Securities equal in principal amount to any
unpurchased portion of the Security surrendered as requested by the Holder. Any
Security not accepted for payment shall be promptly mailed or delivered by the
Company to the Holder thereof. The Company shall publicly announce the results
of the Offer on or as soon as practicable after the Purchase Date.
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(d) If the Company makes an Offer to Purchase, the Company shall comply
with all applicable tender offer laws and regulations and any violation of the
provisions of this Indenture relating to such Offer to Purchase occurring as a
result of such compliance shall not be deemed a Default or an Event of Default.
SECTION 4.15. Limitation on Senior Subordinated Indebtedness.
The Company shall not, directly or indirectly, Incur any Indebtedness that
by its terms would expressly rank senior in right of payment to the Securities
and subordinate in right of payment to any other Indebtedness of the Company.
The Company shall not permit any Guarantor to, and no Guarantor shall,
directly or indirectly, Incur any Indebtedness that by its terms would
expressly rank senior in right of payment to the Guarantee of such Guarantor
and subordinate in right of payment to any other Indebtedness of such
Guarantor.
SECTION 4.16. Limitations on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries.
The Company shall not, and shall not cause or permit any Restricted
Subsidiary to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (a) pay dividends or make any other distributions to
the Company or any other Restricted Subsidiary on its Equity Interests or with
respect to any other interest or participation in, or measured by, its profits,
or pay any Indebtedness owed to the Company or any other Restricted Subsidiary,
(b) make loans or advances to, or guarantee any Indebtedness or other
obligations of, or make any Investment in, the Company or any other Restricted
Subsidiary or (c) transfer any of its properties or assets to the Company or
any other Restricted Subsidiary, except for such encumbrances or restrictions
existing under or by reason of (i) the Existing Credit Facility, or any other
agreement of the Company or the Restricted Subsidiaries outstanding on the
Issue Date, in each case as in effect on the Issue Date, and any amendments,
restatements, renewals, replacements or refinancings thereof; provided,
however, that any such amendment, restatement, renewal, replacement or
refinancing is not materially more restrictive in the aggregate with respect to
such encumbrances or restrictions than those contained in the agreement being
amended, restated, reviewed, replaced or refinanced, (ii) applicable law, (iii)
any instrument governing Indebtedness or Equity Interests of an Acquired Person
acquired by the Company or any Restricted Subsidiary as in effect at the time
of such acquisition (except to the extent such Indebtedness was Incurred by
such Acquired Person in connection with, as a result of or in contemplation of
such acquisition); provided, however, that such encumbrances and restrictions
are not applicable to the Company or any Restricted Subsidiary, or the
properties or assets of the Company or any Restricted Subsidiary, other than
the Acquired Person, (iv) customary non-assignment provisions in leases,
licenses or other agreements entered into in the ordinary course of business
and consistent with past practices, (v) any agreement for the sale or
disposition of the Equity Interests or assets of any Restricted Subsidiary;
provided, however, that such encumbrances and restrictions described in this
clause (v) are only applicable to such Restricted Subsidiary or assets, as
applicable, and any such sale or disposition is made in compliance with Section
4.05 to the extent applicable thereto, (vi) refinancing indebtedness permitted
under clause (g) of the second paragraph of Section 4.04; provided, however,
that such encumbrances and restrictions contained in the agreements governing
such Indebtedness are not materially more restrictive in the aggregate than
those contained in the agreements governing the Indebtedness being refinanced
immediately prior to such refinancing, (vii) the Indenture and the Securities
and (viii) Purchase Money Indebtedness that imposes restrictions of the nature
described in clause (c) above on the property acquired.
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SECTION 4.17. Designation of Unrestricted Subsidiaries.
The Company may (A) organize one or more Unrestricted Subsidiaries or (B)
designate after the Issue Date any Subsidiary of the Company as an
"Unrestricted Subsidiary" under the Indenture (a "Designation") only if:
(i) no Default or Event of Default shall have occurred and be
continuing at the time of or after giving effect to such Designation;
(ii) in the case of (B) only, at the time of and after giving effect
to the Designation of a Restricted Subsidiary as an Unrestricted
Subsidiary, the Company could Incur $1.00 of additional Indebtedness
(other than Permitted Indebtedness) under the Consolidated Coverage Ratio
of the first paragraph of Section 4.04; and
(iii) the Company would be permitted to make an Investment
(including a Permitted Investment) in the case of (B) only, at the time
of Designation (assuming the effectiveness of such Designation) or, in
the case of (A) only, at the time of an Investment in such Subsidiary,
pursuant to the first paragraph of Section 4.06 in an amount (the
"Designation Amount") equal to the Fair Market Value of the Company's
proportionate interest in the net worth of such Subsidiary on such date
calculated in accordance with GAAP.
Neither the Company nor any Restricted Subsidiary shall at any time (x)
provide credit support for, subject any of its property or assets (other than
the Equity Interests of any Unrestricted Subsidiary) to the satisfaction of, or
guarantee, any Indebtedness of any Unrestricted Subsidiary (including any
undertaking, agreement or instrument evidencing such Indebtedness) or (y) be
directly or indirectly liable for any Indebtedness of any Unrestricted
Subsidiary, except for (i) any non-recourse guarantee given solely to support
the pledge by the Company or any Restricted Subsidiary of the capital stock of
any Unrestricted Subsidiary and (ii) any such guarantee that is otherwise a
Permitted Investment or would be permitted under the first paragraph of Section
4.06. For purposes of the foregoing, the Designation of a Subsidiary of the
Company as an Unrestricted Subsidiary shall be deemed to include the
Designation of all of the Subsidiaries of such Subsidiary.
The Company may revoke any Designation of a Subsidiary as an Unrestricted
Subsidiary (a "Revocation") only if:
(i) no Default or Event of Default shall have occurred and be
continuing at the time of and after giving effect to such Revocation; and
(ii) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately following such Revocation would, if Incurred at
such time, have been permitted to be Incurred for all purposes of the
Indenture.
All Designations and Revocations must be evidenced by resolutions of the
Board of Directors, delivered to the Trustee certifying compliance with the
foregoing provisions.
SECTION 4.18. Limitation on Liens.
The Company shall not, and shall not cause or permit any Restricted
Subsidiary to, directly or indirectly, Incur any Liens of any kind against or
upon any of their respective properties or assets now owned or hereafter
acquired, or any proceeds therefrom or any income or profits therefrom, to
secure any Indebtedness unless contemporaneously therewith effective provision
is made, in the case of the Company, to secure the Securities and all other
amounts due under this Indenture, and in the case of a Restricted Subsidiary
that is a Guarant-
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or, to secure such Restricted Subsidiary's Guarantee of the
Securities and all other amounts due under this Indenture, equally and ratably
with such Indebtedness (or, in the event that such Indebtedness is subordinated
in right of payment to the Securities or such Restricted Subsidiary's
Guarantee, prior to such Indebtedness) with a Lien on the same properties and
assets securing such Indebtedness for so long as such Indebtedness is secured
by such Lien, except for (i) Liens securing Senior Indebtedness of the Company
or Indebtedness of any Restricted Subsidiary permitted to be incurred under
this Indenture by any Restricted Subsidiary and (ii) Permitted Liens.
SECTION 4.19. Limitation on Guarantees by Restricted Subsidiaries.
In the event the Company (i) organizes or acquires any Domestic Restricted
Subsidiary after the Issue Date that is not a Guarantor or (ii) causes or
permits any Foreign Restricted Subsidiary that is not a Guarantor to, directly
or indirectly, guarantee the payment of any Indebtedness of the Company or any
Domestic Restricted Subsidiary ("Other Indebtedness") then, in each case the
Company shall cause such Restricted Subsidiary to simultaneously execute and
deliver a supplemental indenture to this Indenture pursuant to which it will
become a Guarantor under the Indenture; provided, however, that in the event a
Domestic Restricted Subsidiary is acquired in a transaction in which a merger
agreement is entered into, such Domestic Restricted Subsidiary shall not be
required to execute and deliver such supplemental indenture until the
consummation of the merger contemplated by any such merger agreement; provided,
further, that if such Other Indebtedness is (i) Indebtedness that is ranked pari
passu in right of payment with the Securities or the Guarantee of such
Restricted Subsidiary, as the case may be, the Guarantee of such Subsidiary
shall be pari passu in right of payment with the guarantee of the Other
Indebtedness; or (ii) Subordinated Indebtedness, the Guarantee of such
Subsidiary shall be senior in right of payment to the guarantee of the Other
Indebtedness (which guarantee of such Subordinated Indebtedness shall provide
that such guarantee is subordinated to the Guarantees of such Subsidiary to the
same extent and in the same manner as the other Indebtedness is subordinated to
the Securities or the Guarantee of such Restricted Subsidiary, as the case may
be); or (iii) Indebtedness that ranks senior in right of payment to the
Securities or the Guarantee of such Restricted Subsidiary, as the case may be,
the Guarantee of such Subsidiary shall be senior in right of payment with the
guarantee of the Other Indebtedness.
SECTION 4.20. Limitation on the Sale or Issuance of Equity Interests of
Restricted Subsidiaries.
The Company shall not sell any Equity Interest of a Restricted Subsidiary,
and shall not cause or permit any Restricted Subsidiary, directly or
indirectly, to issue or sell any Equity Interests, except (i) to the Company or
a Wholly Owned Restricted Subsidiary or (ii) in any other issuance or sale;
provided, however, that such Restricted Subsidiary remains a Restricted
Subsidiary. The foregoing shall not apply to the sale by the Company of all
the Equity Interests of a Restricted Subsidiary as long as the Company is in
compliance with the terms of Section 4.05 and, if applicable, Section 5.01.
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ARTICLE FIVE
MERGERS; SUCCESSOR CORPORATION
SECTION 5.01. Mergers, Sales of Assets, etc.
The Company shall not consolidate with or merge with or into (whether or
not the Company is the Surviving Person) any other entity and the Company shall
not sell, convey, assign, transfer, lease or otherwise dispose of all or
substantially all of the Company's and the Restricted Subsidiaries' properties
and assets (determined on a consolidated basis for the Company and the
Restricted Subsidiaries) to any entity in a single transaction or series of
related transactions, unless (i) either (x) the Company shall be the Surviving
Person or (y) the Surviving Person (if other than the Company) shall be a
corporation organized and validly existing under the laws of the United States
of America or any State thereof or the District of Columbia, and shall, in any
such case, expressly assume by a supplemental indenture, the due and punctual
payment of the principal of, premium, if any, and interest on all the
Securities and the performance and observance of every covenant of this
Indenture and the Registration Rights Agreement to be performed or observed on
the part of the Company, (ii) immediately thereafter, no Default or Event of
Default shall have occurred and be continuing and (iii) immediately after
giving effect to any such transaction involving the Incurrence by the Company
or any Restricted Subsidiary, directly or indirectly, of additional
Indebtedness (and treating any Indebtedness not previously an obligation of the
Company or any Restricted Subsidiary in connection with or as a result of such
transaction as having been Incurred at the time of such transaction), the
Surviving Person (A) shall have a Consolidated Net Worth equal to or greater
than the Consolidated Net Worth of the Company immediately prior to such
transaction and (B) could Incur, on a pro forma basis after giving effect to
such transaction as if it had occurred at the beginning of the four-quarter
period immediately preceding such transaction for which consolidated financial
statements of the Company are available, at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) under the Consolidated
Coverage Ratio of the first paragraph of Section 4.04; provided that the
Company will not be subject to the provisions of this clause (iii) (B) in the
case of a merger of the Company with a Subsidiary of the Company effected for
the sole purpose of creating a holding company for the Company.
Notwithstanding the foregoing clause (iii) of the immediately preceding
paragraph, any Restricted Subsidiary may consolidate with, merge into or
transfer all or part of its properties and assets to the Company or any other
Restricted Subsidiary.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of transactions) of all or
substantially all the properties and assets of one or more Restricted
Subsidiaries the Equity Interest of which constitutes all or substantially all
the properties and assets of the Company shall be deemed to be the transfer of
all or substantially all the properties and assets of the Company.
No Guarantor (other than a Guarantor whose Guarantee is to be released in
accordance with the terms of its Guarantee and Section 11.03) shall consolidate
with or merge with or into another Person, whether or not such Person is
affiliated with such Guarantor and whether or not such Guarantor is the
Surviving Person, unless (i) the Surviving Person (if other than such
Guarantor) is a corporation organized and validly existing under the laws of
the United States, any State thereof or the District of Columbia, (ii) the
Surviving Person (if other than such Guarantor) expressly assumes by a
supplemental indenture all the obligations of such Guarantor under its
Guarantee of the Securities and the performance and observance of every
covenant of this Indenture and the Registration Rights Agreement to be
performed or observed by such Guarantor, (iii) at the time of and immediately
after such Disposition, no Default or Event of Default shall have occurred and
be continuing
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and (iv) immediately after giving effect to any such transaction
involving the Incurrence by such Guarantor, directly or indirectly, of
additional Indebtedness (and treating any Indebtedness not previously an
obligation of such Guarantor in connection with or as a result of such
transaction as having been Incurred at the time of such transaction), the
Company could Incur, on a pro forma basis after giving effect to such
transaction as if it had occurred at the beginning of the latest
fiscal quarter for which consolidated financial statements of the Company are
available, at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) under the Consolidated Coverage Ratio of the first paragraph of
Section 4.04; provided, however, that clause (iv) of this paragraph shall not
be a condition to a merger or consolidation of a Guarantor if such merger or
consolidation only involves the Company and/or one or more other Guarantors.
Notwithstanding the foregoing, nothing in this covenant shall prohibit the
consolidation or merger with or into or the sale of all or substantially all of
the assets or properties of a Guarantor to any other Restricted Subsidiary that
is a Guarantor.
SECTION 5.02 Successor Corporation Substituted.
In the event of any transaction (other than a lease) described in and
complying with the conditions listed in Section 5.01 in which the Company or a
Guarantor, as the case may be, is not the Surviving Person and the Surviving
Person is to assume all the Obligations of the Company under the Securities,
this Indenture and the Registration Rights Agreement or of such Guarantor under
its Guarantee, this Indenture and the Registration Rights Agreement, as the
case may be, pursuant to a supplemental indenture, such Surviving Person shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company or such Guarantor, as the case may be, and the Company, as the case
may be, shall be discharged from its Obligations under this Indenture and the
Securities or such Guarantor shall be discharged from its Obligations under
this Indenture and its Guarantee.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.
Each of the following shall be an "Event of Default" for purposes of this
Indenture:
(a) failure to pay principal of (or premium, if any, on) any
Security when due (whether or not prohibited by the provisions of Article
Eight);
(b) failure to pay any interest on any Security when due, continued
for 30 days or more (whether or not prohibited by the provisions of
Article Eight);
(c) default in the payment of principal of or interest on any
Security required to be purchased pursuant to any Offer to Purchase
required by this Indenture when due and payable or failure to pay on the
Purchase Date the Purchase Price for any Security validly tendered
pursuant to any Offer to Purchase (whether or not prohibited by the
provisions of Article Eight);
(d) failure to perform or comply with any of the provisions of
Section 5.01;
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(e) failure to perform any other covenant, warranty or agreement of
the Company under this Indenture or in the Securities or of the
Guarantors under this Indenture or in the Guarantees continued for 30
days or more after written notice to the Company by the Trustee or the
Holders of at least 25% in aggregate principal amount of the outstanding
Securities;
(f) default or defaults under the terms of one or more instruments
evidencing or securing Indebtedness of the Company or any of its
Restricted Subsidiaries having an outstanding principal amount of $10
million or more individually or in the aggregate that has resulted in the
acceleration of payment of such Indebtedness or failure by the Company or
any of its Restricted Subsidiaries to pay principal when due at the
stated maturity of any such Indebtedness and such default or defaults
shall have continued after any applicable grace period and shall not have
been cured or waived;
(g) the rendering of a final judgment or judgments (not subject to
appeal) against the Company or any of its Restricted Subsidiaries in an
amount of $10 million or more (net of any amounts covered by reputable
and creditworthy insurance companies) that remains undischarged or
unstayed for a period of 60 days after the date on which the right to
appeal has expired;
(h) the Company or any of its Significant Restricted Subsidiaries
pursuant to or within the meaning of any Bankruptcy Law (i) admits in
writing its inability to pay its debts generally as they become due, (ii)
commences a voluntary case or proceeding, (iii) consents to the entry of
an order for relief against it in an involuntary case or proceeding, (iv)
consents or acquiesces in the institution of a bankruptcy or insolvency
proceeding against it, (v) consents to the appointment of a Custodian of
it or for all or substantially all of its property or (vi) makes a
general assignment for the benefit of its creditors, or any of them takes
any action to authorize or effect any of the foregoing;
(i) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that (i) is for relief against the Company or any
Significant Restricted Subsidiary in an involuntary case or proceeding,
(ii) appoints a Custodian of the Company or any Significant Restricted
Subsidiary for all or substantially all of its property or (iii) orders
the liquidation of the Company or any Significant Restricted Subsidiary;
and in each case the order or decree remains unstayed and in effect for 60
days; provided, however, that if the entry of such order or decree is
appealed and dismissed on appeal, then the Event of Default hereunder by
reason of the entry of such order or decree shall be deemed to have been
cured;
(j) other than as provided in or pursuant to any Guarantee or this
Indenture, any Guarantee ceases to be in full force and effect or is
declared null and void and unenforceable or found to be invalid or any
Guarantor denies its liability under its Guarantee (other than by reason
of a release of such Guarantor from its Guarantee in accordance with the
terms of this Indenture and such Guarantee).
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal, state or foreign law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, sequestrator or similar
official under any Bankruptcy Law.
SECTION 6.02. Acceleration.
If an Event of Default with respect to the Notes (other than an Event of
Default specified in clause (h) or (i) of Section 6.01) occurs and is
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of the outstanding Securities, by notice in writing to the Company (and
to the Trustee if given
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by the Holders), may declare the unpaid principal of (and premium, if any) and
accrued interest to the date of acceleration on all outstanding Securities to be
due and payable immediately and, upon any such declaration, such principal
amount (and premium, if any) and accrued interest, notwithstanding anything
contained in this Indenture or the Securities to the contrary, will become
immediately due and payable.
If an Event of Default specified in clause (h) or (i) of Section 6.01 with
respect to the Company occurs, all unpaid principal of and accrued interest on
all outstanding Securities shall ipso facto become immediately due and payable
without any declaration or other act on the part of the Trustee or any Holder.
After a declaration of acceleration, but before a judgment or decree of
the money due in respect of the Securities has been obtained, the Holders of
not less than a majority in aggregate principal amount of the Securities then
outstanding by written notice to the Trustee may rescind an acceleration and
its consequences if all existing Events of Default (other than the nonpayment
of principal of and interest on the Securities which has become due solely by
virtue of such acceleration) have been cured or waived and if the rescission
would not conflict with any judgment or decree. No such rescission shall affect
any subsequent Default or impair any right consequent thereto.
SECTION 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy by proceeding at law or in equity to collect the payment
of principal of or interest on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy
maturing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law.
SECTION 6.04. Waiver of Past Default.
Subject to Sections 2.09, 6.07 and 10.02, prior to the declaration of
acceleration of the Securities, the Holders of not less than a majority in
aggregate principal amount of the outstanding Securities by written notice to
the Trustee may waive an existing Default or Event of Default and its
consequences, except a Default in the payment of principal of or interest on
any Security as specified in clauses (a), (b) and (c) of Section 6.01 or a
Default in respect of any term or provision of this Indenture that may not be
amended or modified without the consent of each Holder affected as provided in
Section 10.02. The Company shall deliver to the Trustee an Officers'
Certificate stating that the requisite percentage of Holders have consented to
such waiver and attaching copies of such consents. In case of any such waiver,
the Company, the Trustee and the Holders shall be restored to their former
positions and rights hereunder and under the Securities, respectively. This
paragraph of this Section 6.04 shall be in lieu of Section 316(a)(1)(B) of the
TIA and such Section 316(a)(1)(B) of the TIA is hereby expressly excluded from
this Indenture and the Securities, as permitted by the TIA.
Upon any such waiver, such Default shall cease to exist and be deemed to
have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred for every
purpose of this Indenture and the Securities, but no such waiver shall extend
to any subsequent or other Default or Event of Default or impair any right
consequent thereon.
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SECTION 6.05. Control by Majority.
Subject to Section 2.09, the Holders of a majority in principal amount of
the outstanding Securities may direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or exercising any trust
or power conferred on it. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture that the Trustee determines
may be unduly prejudicial to the rights of another Holder, it being understood
that the Trustee shall have no duty (subject to Section 7.01) to ascertain
whether or not such actions or forbearances are unduly prejudicial to such
holders, or that may involve the Trustee in personal liability; provided,
however, that the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction. In the event the Trustee
takes any action or follows any direction pursuant to this Indenture, the
Trustee shall be entitled to indemnification satisfactory to it in its sole
discretion against any loss or expense caused by taking such action or
following such direction. This Section 6.05 shall be in lieu of Section
316(a)(1)(A) of the TIA, and such Section 316(a)(1)(A) of the TIA is hereby
expressly excluded from this Indenture and the Securities, as permitted by the
TIA.
SECTION 6.06. Limitation on Suits.
No Holder of any Security will have any right to institute any proceeding
with respect to this Indenture or for any remedy thereunder unless:
(i) such Holder shall have previously given to the Trustee written
notice of a continuing Event of Default;
(ii) the Holders of at least 25% of the aggregate principal amount
of the outstanding Securities shall have made a written request to the
Trustee to institute such proceedings in its capacity as the Trustee;
(iii) such Holder or Holders offer and, if requested, provide to the
Trustee indemnity satisfactory to the Trustee against any loss, liability
or expense;
(iv) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the
provision of indemnity; and
(v) during such 60-day period the Holders of a majority in principal
amount of the outstanding Securities do not give the Trustee a direction
which, in the opinion of the Trustee, is inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over such other Holder.
SECTION 6.07. Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, but subject in any
event to the provisions of Articles Eight and Twelve, the right of any Holder
to receive payment of principal of or interest on a Security, on or after the
respective due dates expressed in the Security, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of the Holder.
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SECTION 6.08. Collection Suit by Trustee.
If an Event of Default in payment of principal or interest specified in
Section 6.01(a), (b) or (c) occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Company
or any other obligor on the Securities for the whole amount of principal and
accrued interest remaining unpaid, together with interest overdue on principal
and to the extent that payment of such interest is lawful, interest on overdue
installments of interest, in each case at the rate per annum borne by the
Securities and such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel) and the Holders allowed in
any judicial proceedings relative to the Company (or any other obligor upon the
Securities), its creditors or its property and shall be entitled and empowered
to collect and receive any monies or other property payable or deliverable on
any such claims and to distribute the same, and any Custodian in any such
judicial proceedings is hereby authorized by each Holder to make such payments
to the Trustee and, in the event that the Trustee shall consent to the making
of such payments directly to the Holders, to pay to the Trustee any amount due
to it for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agent and counsel, and any other amounts due the Trustee under
Section 7.07. Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof, or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding; provided,
however, that the Trustee may, on behalf of the Holders, vote for the election
of a trustee in bankruptcy or similar official and may be a member of the
creditors' committee.
SECTION 6.10. Priorities.
If the Trustee collects any money or property pursuant to this Article
Six, it shall pay out the money or property in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: to Holders for amounts due and unpaid on the Securities for
principal and interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Securities for
principal and interest, respectively; and
Third: to the Company.
The Trustee, upon prior written notice to the Company, may fix a record
date and payment date for any payment to the Holders pursuant to this Section
6.10.
SECTION 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing
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by any party litigant in the suit of an undertaking to pay the costs of the
suit, and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees and expenses, against any party litigant in the suit,
having due regard to the merits and good faith of the claims or defenses made by
the party litigant. This Section 6.11 shall not apply to a suit by the Trustee,
a suit by a Holder or group of Holders of more than 10% in aggregate principal
amount of the outstanding Securities, or to any suit instituted by any Holder
for the enforcement or the payment of the principal or interest on any
Securities on or after the respective due dates expressed in the Security.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee.
(a) If a Default has occurred and is continuing, the Trustee shall
exercise such of the rights and powers vested in it by this Indenture and use
the same degree of care and skill in their exercise as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of a Default:
(1) the Trustee shall not be liable except for the performance of
such duties as are specifically set forth herein; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions conforming to the requirements of this Indenture; however, in
the case of any such certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, the
Trustee shall examine such certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) The Trustee shall not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b) of
this Section 7.01;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder or to take or omit to take any action under this
Indenture or take any action at the request or direction of Holders if it shall
have reasonable grounds for believing that repayment of such funds is not
assured to it or it does not receive from such
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Holders an indemnity satisfactory to it in its sole discretion against such
risk, liability, loss, fee or expense which might be incurred by it in
compliance with such request or direction.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section 7.01.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 7.02. Rights of Trustee.
Subject to Section 7.01:
(a) The Trustee may conclusively rely on any document believed by it to
be genuine and to have been signed or presented by the proper person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate and/or an Opinion of Counsel, which shall conform to the
provisions of Section 13.05. The Trustee shall not be liable for any action it
takes or omits to take in good faith in reliance on such certificate or
opinion.
(c) The Trustee may act through attorneys and agents of its selection and
shall not be responsible for the misconduct or negligence of any agent or
attorney (other than an agent who is an employee of the Trustee) appointed with
due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it reasonably believes to be authorized or within its
rights or powers.
(e) Before the Trustee acts or refrains from acting, it may consult with
counsel of its selection and the advice or opinion of such counsel as to
matters of law shall be full and complete authorization and protection from
liability in respect of any action taken, omitted or suffered by it hereunder
in good faith and in accordance with the advice or opinion of such counsel.
(f) Any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution.
(g) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction.
(h) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee
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shall determine to make such further inquiry or investigation, it shall be
entitled to examine the books, records and premises of the Company, personally
or by agent or attorney.
(i) The Trustee shall not be deemed to have notice of any Event of
Default unless a Trust Officer of the Trustee has actual knowledge thereof or
unless the Trustee shall have received written notice thereof at the Corporate
Trust Office of the Trustee, and such notice references the Securities and this
Indenture. As used herein, the term "actual knowledge" means the actual fact
or statement of knowing, without any duty to make any investigation with regard
thereto.
(j) The Trustee shall not be required to give any bond or surety in
respect of the performance of its powers and duties hereunder.
(k) The permissive rights of the Trustee to do things enumerated in this
Indenture shall not be construed as a duty and the Trustee shall not be
answerable for other than its negligence or willful misconduct.
SECTION 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner
or pledgee of Securities and may otherwise deal with the Company or its
Affiliates with the same rights it would have if it were not Trustee, subject
to Section 7.10 hereof. Any Agent may do the same with like rights. However,
the Trustee is subject to Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture or the Securities, it shall not be
accountable for the Company's use of the proceeds from the Securities, and it
shall not be responsible for any statement of the Company in this Indenture or
any document issued in connection with the sale of Securities or any statement
in the Securities other than the Trustee's certificate of authentication.
SECTION 7.05. Notices of Default.
If a Default or an Event of Default occurs and is continuing and the
Trustee has actual knowledge of such Defaults or Events of Default, the Trustee
shall mail to each Holder notice of the Default or Event of Default within 30
days after the occurrence thereof; provided, however, that except in the case
of a Default or an Event of Default in payment of principal of or interest on
any Security or a Default or Event of Default in complying with Section 5.01,
the Trustee shall be protected in withholding such notice if and so long as a
committee of its trust officers in good faith determines that the withholding
of such notice is in the interest of Holders of the Notes. This Section 7.05
shall be in lieu of the proviso to Section 315(b) of the TIA and such proviso
to Section 315(b) of the TIA is hereby expressly excluded from this Indenture
and the Securities, as permitted by the TIA.
SECTION 7.06. Reports by Trustee to Holders.
If required by TIA Section 313(a), within 60 days after each May 15
beginning with the May 15 following the date of this Indenture, the Trustee
shall mail to each Holder a report dated as of such May 15 that complies with
TIA Section 313(a). The Trustee also shall comply with TIA Section 313(b),
(c) and (d).
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A copy of each such report at the time of its mailing to Holders shall be
filed with the SEC and each stock exchange, if any, on which the Securities are
listed.
The Company shall promptly notify the Trustee in writing if the Securities
become listed on any stock exchange or of any delisting thereof.
SECTION 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time, and the Trustee
shall be entitled to, such compensation as the Company and the Trustee shall
from time to time agree in writing for its services. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Company shall reimburse the Trustee upon request for all reasonable
disbursements, expenses and advances, including all costs and expenses of
collection (including reasonable fees, disbursements and expenses of its agents
and outside counsel) incurred or made by it in addition to the compensation for
its services except any such disbursements, expenses and advances as may be
attributable to the Trustee's negligence or willful misconduct. Such expenses
shall include the reasonable compensation, disbursements and expenses of the
Trustee's agents, accountants, experts and outside counsel and any taxes or
other expenses incurred by a trust created pursuant to Section 9.01 hereof.
The Company shall indemnify the Trustee for, and hold it harmless against
any and all loss, damage, claims, liability or expense, including taxes (other
than franchise taxes imposed on the Trustee and taxes based upon, measured by
or determined by the income of the Trustee), arising out of or in connection
with the acceptance or administration of the trust or trusts hereunder,
including the costs and expenses of defending itself against or investigating
any claim or liability in connection with the exercise or performance of any of
its powers or duties hereunder, except to the extent that such loss, damage,
claim, liability or expense is due to its own negligence or willful misconduct.
The Trustee shall notify the Company promptly of any claim asserted against the
Trustee for which it may seek indemnity. However, the failure by the Trustee to
so notify the Company shall not relieve the Company of its obligations
hereunder. The Company shall defend the claim and the Trustee shall cooperate
in the defense (and may employ its own counsel) at the Company's expense;
provided, however, that the Company's reimbursement obligation with respect to
counsel employed by the Trustee will be limited to the reasonable fees and
expenses of such counsel.
The Company need not pay for any settlement made without its written
consent, which consent shall not be unreasonably withheld. The Company need not
reimburse any expense or indemnify against any loss or liability incurred by
the Trustee as a result of its own negligence or willful misconduct.
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a Lien prior to the Securities against all money or property
held or collected by the Trustee, in its capacity as Trustee, except money or
property held in trust to pay principal of or interest on particular Securities
or the Purchase Price or redemption price of any Securities to be purchased
pursuant to an Offer to Purchase or redeemed.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(h) or (i) occurs, the expenses (including the
reasonable fees and expenses of its agents and counsel) and the compensation for
the services shall be preferred over the status of the Holders in a proceeding
under any Bankruptcy Law and are intended to constitute expenses of
administration under any Bankruptcy Law. The Company's obligations under this
Section 7.07 and any claim arising hereunder shall survive the resignation or
removal of any Trustee, the discharge of the Company's obligations pursuant to
Article Nine and any rejection or termination under any Bankruptcy Law.
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SECTION 7.08. Replacement of Trustee.
The Trustee may resign at any time by so notifying the Company in writing.
The Holders of a majority in principal amount of the outstanding Securities may
remove the Trustee by so notifying the Trustee and the Company in writing and
may appoint a successor Trustee with the Company's consent. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged a bankrupt or an insolvent under any
Bankruptcy Law;
(c) a custodian or other public officer takes charge of the Trustee or
its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason (the Trustee in such event being referred to herein
as the retiring Trustee), the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the Securities may appoint a successor
Trustee to replace the successor Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. As promptly as practicable after
that, the retiring Trustee shall transfer, after payment of all sums then owing
to the Trustee pursuant to Section 7.07, all property held by it as Trustee to
the successor Trustee, subject to the Lien provided in Section 7.07, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have the rights, powers and duties of the Trustee under
this Indenture. A successor Trustee shall mail notice of its succession to each
Holder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or
the Holders of at least 10% in principal amount of the outstanding Securities
may petition, at the expense of the Company, any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Holder may petition
any court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section 7.08,
the Company's obligations under Section 7.07 shall continue for the benefit of
the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates with, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation or banking corporation, the resulting, surviving or transferee
corporation or banking corporation without any further act shall be the
successor Trustee.
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SECTION 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee which shall be eligible to act
as Trustee under TIA Sections 310(a)(1) and 310(a)(2). The Trustee shall have a
combined capital and surplus of at least $50 million as set forth in its most
recent published annual report of condition. If the Trustee has or shall acquire
any "conflicting interest" within the meaning of TIA Section 310(b), the Trustee
and the Company shall comply with the provisions of TIA Section 310(b);
provided, however, that there shall be excluded from the operation of TIA
Section 310(b)(1) any indenture or indentures under which other securities or
certificates of interest or participation in other securities of the Company are
outstanding if the requirements for such exclusion set forth in TIA Section
310(b)(1) are met. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 7.10, the Trustee shall resign
immediately in the manner and with the effect hereinbefore specified in this
Article Seven.
SECTION 7.11. Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated
therein.
ARTICLE EIGHT
SUBORDINATION OF SECURITIES
SECTION 8.01. Securities Subordinated to Senior Indebtedness.
The Company covenants and agrees, and the Trustee and each Holder of the
Securities by his acceptance thereof likewise covenant and agree, that all
Securities shall be issued subject to the provisions of this Article Eight; and
each person holding any Security, whether upon original issue or upon transfer,
assignment or exchange thereof, accepts and agrees that all payments of the
principal of and interest on the Securities by the Company shall, to the extent
and in the manner set forth in this Article Eight, be subordinated and junior
in right of payment to the prior payment in full in cash of all amounts payable
under Senior Indebtedness.
SECTION 8.02. No Payment on Securities in Certain Circumstances.
(a) No direct or indirect payment (excluding any payment or distribution
of Permitted Junior Securities and excluding any payment from funds held in
trust for the benefit of Holders pursuant to Article Nine (a "Defeasance Trust
Payment")) by or on behalf of the Company of principal of or interest on the
Securities, whether pursuant to the terms of the Securities, upon acceleration,
pursuant to an Offer to Purchase or otherwise, shall be made if, at the time of
such payment, there exists a default in the payment of all or any portion of
the obligations on any Designated Senior Indebtedness, whether at maturity, on
account of mandatory redemption or prepayment, acceleration or otherwise, and
such default shall not have been cured or waived or the benefits of this
sentence waived by or on behalf of the holders of such Designated Senior
Indebtedness. In addition, during the continuance of any non-payment event of
default with respect to any Designated Senior Indebtedness pursuant to which
the maturity thereof may be immediately accelerated, and upon receipt by the
Trustee of written notice (a "Payment Blockage Notice") from the holder or
holders of such Designated Senior Indebtedness or the trustee or agent acting
on behalf of such Designated Senior Indebtedness, then, unless and until such
non-payment event of default has been cured or waived or has ceased to exist or
such Designated Senior
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Indebtedness has been discharged or repaid in full in cash or the benefits of
these provisions have been waived by the holders of such Designated Senior
Indebtedness, no direct or indirect payment (excluding any payment or
distribution of Permitted Junior Securities and excluding any Defeasance Trust
Payment) shall be made by or on behalf of the Company of principal of or
interest on the Securities, to such Holders, during a period (a "Payment
Blockage Period") commencing on the date of receipt of such notice by the
Trustee and ending 179 days thereafter.
Notwithstanding anything herein or in the Securities to the contrary, (x)
in no event shall a Payment Blockage Period extend beyond 179 days from the
date the Payment Blockage Notice in respect thereof was given, (y) there shall
be a period of at least 181 consecutive days in each 360-day period when no
Payment Blockage Period is in effect and (z) not more than one Payment Blockage
Period may be commenced with respect to the Securities during any period of 360
consecutive days. No non-payment event of default that existed or was
continuing on the date of commencement of any Payment Blockage Period with
respect to the Designated Senior Indebtedness initiating such Payment Blockage
Period (to the extent the holder of Designated Senior Indebtedness, or trustee
or agent, giving notice commencing such Payment Blockage Period had knowledge
of such existing or continuing event of default) may be, or be made, the basis
for the commencement of any other Payment Blockage Period by the holder or
holders of such Designated Senior Indebtedness or the trustee or agent acting
on behalf of such Designated Senior Indebtedness, whether or not within a
period of 360 consecutive days, unless such non-payment event of default has
been cured or waived for a period of not less than 90 consecutive days.
(b) In the event that, notwithstanding the foregoing, the Company shall
have made payment to the Trustee or any Holder when such payment is prohibited
by Section 8.02(a), such payment shall be held in trust for the benefit of, and
shall be paid over or delivered by the Trustee (if the Notice required by
Section 8.06 has been received by the Trustee) or the Holder to, the holders of
Designated Senior Indebtedness or their respective representatives, or to the
trustee or trustees under any indenture pursuant to which any of such
Designated Senior Indebtedness may have been issued, as their respective
interests may appear, but only to the extent that, upon notice from the Trustee
to the holders of Designated Senior Indebtedness that such prohibited payment
has been made, the holders of the Designated Senior Indebtedness (or their
representative or representatives or a trustee or trustees) notify the Trustee
in writing of the amounts then due and owing on the Designated Senior
Indebtedness, if any, and only the amounts specified in such notice to the
Trustee shall be paid to the holders of Designated Senior Indebtedness.
SECTION 8.03. Payment Over of Proceeds upon Dissolution, etc.
(a) Upon any payment or distribution of assets or securities of the
Company of any kind or character, whether in cash, property or securities
(excluding any payment or distribution of Permitted Junior Securities and
excluding any Defeasance Trust Payment), upon any dissolution or winding-up or
total liquidation or reorganization of the Company, whether voluntary or
involuntary or in bankruptcy, insolvency, receivership or other proceedings,
all Senior Indebtedness shall first be paid in full in cash before the Holders
of the Securities or the Trustee on behalf of such Holders shall be entitled to
receive any payment by the Company of the principal of or interest on the
Securities, or any payment by the Company to acquire any of the Securities for
cash, property or securities, or any distribution with respect to the
Securities of any cash, property or securities (excluding any payment or
distribution of Permitted Junior Securities and excluding any Defeasance Trust
Payment). Before any payment may be made by, or on behalf of, the Company of
the principal of or interest on the Securities upon any such dissolution or
winding-up or total liquidation or reorganization, any payment or distribution
of assets or securities of the Company of any kind or character, whether in
cash, property or securities (excluding any payment or distribution of
Permitted Junior Securities and excluding any Defeasance Trust
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Payment), to which the Holders of the Securities or the Trustee on their behalf
would be entitled, but for the subordination provisions of this Indenture, shall
be made by the Company or by any receiver, trustee in bankruptcy, liquidation
trustee, agent or other Person making such payment or distribution, directly to
the holders of the Senior Indebtedness (pro rata to such holders on the basis of
the respective amounts of Senior Indebtedness held by such holders) or their
representatives or to the trustee or trustees or agent or agents under any
agreement or indenture pursuant to which any of such Senior Indebtedness may
have been issued, as their respective interests may appear, to the extent
necessary to pay all such Senior Indebtedness in full in cash after giving
effect to any prior or concurrent payment, distribution or provision therefor to
or for the holders of such Senior Indebtedness.
(b) In the event that, notwithstanding the foregoing provision
prohibiting such payment or distribution, any payment or distribution of assets
or securities of the Company of any kind or character, whether in cash,
property or securities (excluding any payment or distribution of Permitted
Junior Securities and excluding any Defeasance Trust Payment), shall be paid by
the Company to the Trustee or any Holder of Securities at a time when such
payment or distribution is prohibited by Section 8.03(a) and before all
obligations in respect of Senior Indebtedness are paid in full in cash, such
payment or distribution shall be received and held in trust for the benefit of,
and shall be paid over or delivered by the Trustee (if the Notice required by
Section 8.06 has been received by the Trustee) or the Holder to, the holders of
Senior Indebtedness (pro rata to such holders on the basis of the respective
amounts of Senior Indebtedness held by such holders) or their respective
representatives, or to the trustee or trustees or agent or agents under any
indenture pursuant to which any of such Senior Indebtedness may have been
issued, as their respective interests may appear, for application to the
payment of Senior Indebtedness remaining unpaid until all such Senior
Indebtedness has been paid in full in cash after giving effect to any prior or
concurrent payment, distribution or provision therefor to or for the holders of
such Senior Indebtedness.
The consolidation of the Company with, or the merger of the Company with
or into, another corporation or the liquidation or dissolution of the Company
following the conveyance or transfer of its property as an entirety, or
substantially as an entirety, to another corporation upon the terms and
conditions provided in Article Five shall not be deemed a dissolution,
winding-up, liquidation or reorganization for the purposes of this Section 8.03
if such other corporation shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions stated in Article Five.
SECTION 8.04. Subrogation.
Upon the payment in full in cash of all Senior Indebtedness, or provision
for payment, the Holders of the Securities shall be subrogated to the rights of
the holders of Senior Indebtedness to receive payments or distributions of
cash, property or securities of the Company made on such Senior Indebtedness
until the principal of and interest on the Securities shall be paid in full in
cash; and, for the purposes of such subrogation, no payments or distributions
to the holders of the Senior Indebtedness of any cash, property or securities
to which the Holders of the Securities or the Trustee on their behalf would be
entitled except for the provisions of this Article Eight, and no payment over
pursuant to the provisions of this Article Eight to the holders of Senior
Indebtedness by Holders of the Securities or the Trustee on their behalf shall,
as between the Company, its creditors other than holders of Senior
Indebtedness, and the Holders of the Securities, be deemed to be a payment by
the Company to or on account of the Senior Indebtedness. It is understood that
the provisions of this Article Eight are and are intended solely for the
purpose of defining the relative rights of the Holders of the Securities, on
the one hand, and the holders of the Senior Indebtedness, on the other hand.
If any payment or distribution to which the Holders of the Securities
would otherwise have been entitled but for the provisions of this Article Eight
shall have been applied, pursuant to the provisions of
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this Article Eight, to the payment of all amounts payable under Senior
Indebtedness, then and in such case, the Holders of the Securities shall be
entitled to receive from the holders of such Senior Indebtedness any payments or
distributions received by such holders of Senior Indebtedness in excess of the
amount required to make payment in full in cash of such Senior Indebtedness.
SECTION 8.05. Obligations of Company Unconditional.
Nothing contained in this Article Eight or elsewhere in this Indenture or
in the Securities is intended to or shall impair, as among the Company and the
Holders of the Securities, the obligation of the Company, which is absolute and
unconditional, to pay to the Holders of the Securities the principal of and
interest on the Securities as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the Holders of the Securities and creditors of the Company other than
the holders of the Senior Indebtedness, nor shall anything herein or therein
prevent the Holder of any Security or the Trustee on their behalf from
exercising all remedies otherwise permitted by applicable law upon default
under this Indenture, subject to the rights, if any, under this Article Eight
of the holders of the Senior Indebtedness in respect of cash, property or
securities of the Company received upon the exercise of any such remedy.
Without limiting the generality of the foregoing, nothing contained in
this Article Eight shall restrict the right of the Trustee or the Holders of
Securities to take any action to declare the Securities to be due and payable
prior to their stated maturity pursuant to Section 6.01 or to pursue any rights
or remedies hereunder; provided, however, that all Senior Indebtedness then due
and payable shall first be paid in full in cash before the Holders of the
Securities or the Trustee are entitled to receive any direct or indirect
payment from the Company of principal of or interest on the Securities.
SECTION 8.06. Notice to Trustee.
The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by
the Trustee in respect of the Securities pursuant to the provisions of this
Article Eight. The Trustee shall not be charged with knowledge of the existence
of any event of default with respect to any Senior Indebtedness or of any other
facts which would prohibit the making of any payment to or by the Trustee
unless and until the Trustee shall have received notice in writing at its
Corporate Trust Office to that effect signed by an Officer of the Company, or
by a holder of Senior Indebtedness or trustee or agent therefor; and prior to
the receipt of any such written notice, the Trustee shall, subject to Article
Seven, be entitled to assume that no such facts exist; provided, however, that
if the Trustee shall not have received the notice provided for in this Section
8.06 at least two Business Days prior to the date upon which by the terms of
this Indenture any moneys shall become payable for any purpose (including,
without limitation, the payment of the principal of or interest on any
Security), then, regardless of anything herein to the contrary, the Trustee
shall have full power and authority to receive any moneys from the Company and
to apply the same to the purpose for which they were received, and shall not be
affected by any notice to the contrary which may be received by it on or after
such prior date. Nothing contained in this Section 8.06 shall limit the right
of the holders of Senior Indebtedness to recover payments as contemplated by
Section 8.03. The Trustee shall be entitled to rely on the delivery to it of a
written notice by a Person representing himself or itself to be a holder of any
Senior Indebtedness (or a trustee on behalf of, or other representative of,
such holder) to establish that such notice has been given by a holder of such
Senior Indebtedness or a trustee or representative on behalf of any such
holder.
In the event that the Trustee determines in good faith that any evidence
is required with respect to the right of any Person as a holder of Senior
Indebtedness to participate in any payment or distribution pursu-
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ant to this Article Eight, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article Eight, and if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
SECTION 8.07. Reliance on Judicial Order or Certificate of Liquidating
Agent.
Upon any payment or distribution of assets or securities referred to in
this Article Eight, the Trustee and the Holders of the Securities shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction in which bankruptcy, dissolution, winding-up, liquidation or
reorganization proceedings are pending, or upon a certificate of the receiver,
trustee in bankruptcy, liquidating trustee, agent or other person making such
payment or distribution, delivered to the Trustee or to the Holders of the
Securities for the purpose of ascertaining the persons entitled to participate
in such distribution, the holders of the Senior Indebtedness and other
indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article Eight.
SECTION 8.08. Trustee's Relation to Senior Indebtedness.
The Trustee and any Paying Agent shall be entitled to all the rights set
forth in this Article Eight with respect to any Senior Indebtedness which may
at any time be held by it in its individual or any other capacity to the same
extent as any other holder of Senior Indebtedness, and nothing in this
Indenture shall deprive the Trustee or any Paying Agent of any of its rights as
such holder.
With respect to the holders of Senior Indebtedness, the Trustee undertakes
to perform or to observe only such of its covenants and obligations as are
specifically set forth in this Article Eight, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness (except as provided in
Section 8.03(b)). The Trustee shall not be liable to any such holders if the
Trustee shall in good faith mistakenly pay over or distribute to Holders of
Securities or to the Company or to any other person cash, property or
securities to which any holders of Senior Indebtedness shall be entitled by
virtue of this Article Eight or otherwise.
SECTION 8.09. Subordination Rights Not Impaired by Acts or Omissions of
the Company or Holders of Senior Indebtedness.
No right of any present or future holders of any Senior Indebtedness to
enforce subordination as provided herein shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms of this Indenture, regardless of
any knowledge
thereof which any such holder may have or otherwise be charged with. The
provisions of this Article Eight are intended to be for the benefit of, and
shall be enforceable directly by, the holders of Senior Indebtedness.
SECTION 8.10. Holders Authorize Trustee To Effectuate Subordination of
Securities.
Each Holder of Securities by his acceptance of such Securities authorizes
and expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article Eight, and appoints the Trustee his attorney-in-fact for such purposes,
including, in the
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event of any dissolution, winding-up, total liquidation or reorganization of
the Company (whether in bankruptcy, insolvency, receivership, reorganization or
similar proceedings or upon an assignment for the benefit of creditors or
otherwise) tending towards liquidation of the business and assets of the
Company, the filing of a claim for the unpaid balance of its or his Securities
in the form required in those proceedings.
SECTION 8.11. This Article Not To Prevent Events of Default.
The failure to make a payment on account of principal of or interest on
the Securities by reason of any provision of this Article Eight shall not be
construed as preventing the occurrence of an Event of Default specified in
clauses (a), (b) or (c) of Section 6.01.
SECTION 8.12. Trustee's Compensation Not Prejudiced.
Nothing in this Article Eight shall apply to amounts due to the Trustee
pursuant to other sections in this Indenture.
SECTION 8.13. No Waiver of Subordination Provisions.
Without in any way limiting the generality of Section 8.09, the holders of
Senior Indebtedness may, at any time and from time to time, without the consent
of or notice to the Trustee or the Holders of the Securities, without incurring
responsibility to the Holders of the Securities and without impairing or
releasing the subordination provided in this Article Eight or the obligations
hereunder of the Holders of the Securities to the holders of Senior
Indebtedness, do any one or more of the following: (a) change the manner,
place or terms of payment or extend the time of payment of, or renew or alter,
Senior Indebtedness or any instrument evidencing the same or any agreement
under which Senior Indebtedness is outstanding or secured; (b) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing Senior Indebtedness; (c) release any Person liable in any manner for
the collection of Senior Indebtedness; and (d) exercise or refrain from
exercising any rights against the Company and any other Person.
SECTION 8.14. Subordination Provisions Not Applicable to Money Held in
Trust for Holders; Payments May Be Paid Prior to Dissolution.
All money and United States Government Obligations deposited in trust with
the Trustee pursuant to and in accordance with Article Nine shall be for the
sole benefit of the Holders and shall not be subject to this Article Eight.
Nothing contained in this Article Eight or elsewhere in this Indenture
shall prevent (i) the Company, except under the conditions described in Section
8.02, from making payments of principal of and interest on the Securities or
from depositing with the Trustee any moneys for such payments or from effecting
a termination of the Company's and the Guarantors' obligations under the
Securities and this Indenture as provided in Article Nine, or (ii) the
application by the Trustee of any moneys deposited with it for the purpose of
making such payments of principal of and interest on the Securities, to the
holders entitled thereto unless at least two Business Days prior to the date
upon which such payment becomes due and payable, the Trustee shall have
received the written notice provided for in Section 8.02(b) or in Section 8.06.
The Company shall give prompt written notice to the Trustee of any dissolution,
winding-up, liquidation or reorganization of the Company.
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SECTION 8.15. Acceleration of Securities.
If payment of the Securities is accelerated because of an Event of
Default, the Company shall promptly notify holders of the Senior Indebtedness
of the acceleration.
ARTICLE NINE
DISCHARGE OF INDENTURE
SECTION 9.01. Termination of Company's Obligations.
Subject to the provisions of Article Eight, the Company may terminate its
and the Guarantors' substantive obligations in respect of the Securities by
delivering all outstanding Securities to the Trustee for cancellation and paying
all sums payable by it on account of principal of, premium, if any, and interest
on all Securities or otherwise. In addition to the foregoing, subject to the
provisions of Article Eight with respect to the creation of the defeasance trust
provided for in the following clause (i), the Company may, provided that no
Default or Event of Default has occurred and is continuing or would arise
therefrom (or, with respect to a Default or Event of Default specified in
Section 6.01(h) or (i), occurs at any time on or prior to the 91st calendar day
after the date of such deposit (it being understood that this condition shall
not be deemed satisfied until after such 91st day)) and provided that no default
under any Senior Indebtedness would result therefrom, terminate its and the
Guarantors' substantive obligations in respect of Article Four (other than
Sections 4.01, 4.02, 4.07, 4.11 and 4.12) and Article Five hereof and any Event
of Default specified in Section 6.01 (d) or (e) by (i) depositing with the
Trustee, under the terms of an irrevocable trust agreement, money or United
States Government Obligations sufficient (without reinvestment) to pay all
remaining Indebtedness on the Securities, (ii) delivering to the Trustee either
an Opinion of Counsel or a ruling directed to the Trustee from the Internal
Revenue Service to the effect that the Holders will not recognize income, gain
or loss for federal income tax purposes as a result of such deposit and
termination of obligations, and (iii) delivering to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating compliance with all
conditions precedent provided for herein. In addition, subject to the provisions
of Article Eight with respect to the creation of the defeasance trust provided
for in the following clause (i), the Company may, provided that no Default or
Event of Default has occurred and is continuing or would arise therefrom (or,
with respect to a Default or Event of Default specified in Section 6.01(h) or
(i), occurs at any time on or prior to the 91st calendar day after the date of
such deposit (it being understood that this condition shall not be deemed
satisfied until after such 91st day)) and provided that no default under any
Senior Indebtedness would arise therefrom, terminate all of its and the
Guarantors' substantive obligations in respect of the Securities (including its
obligations to pay the principal of and interest on the Securities and the
Guarantors' Guarantee thereof) by (i) depositing with the Trustee, under the
terms of an irrevocable trust agreement, money or United States Government
Obligations sufficient (without reinvestment) to pay all remaining Indebtedness
on the Securities, (ii) delivering to the Trustee either a ruling directed to
the Trustee from the Internal Revenue Service to the effect that the Holders of
the Securities will not recognize income, gain or loss for Federal income tax
purposes as a result of such deposit and termination of obligations or an
Opinion of Counsel addressed to the Trustee based upon such a ruling or based on
a change in the applicable Federal tax law since the date of this Indenture to
such effect and (iii) delivering to the Trustee an Officers' Certificate and an
Opinion of Counsel each stating compliance with all conditions precedent
provided for herein.
Notwithstanding the foregoing paragraph, the Company's obligations in
Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.10, 2.13 and 4.01 (but not with
respect to termination of substantive obligations pursu-
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ant to the third sentence of the foregoing paragraph), 4.02, 7.07, 7.08, 9.03
and 9.04 shall survive until the Securities are no longer outstanding.
Thereafter the Company's obligations in Sections 7.07, 9.03 and 9.04 shall
survive.
After such delivery or irrevocable deposit and delivery of an Officers'
Certificate and Opinion of Counsel, the Trustee upon request shall acknowledge
in writing the discharge of the Company's and the Guarantors' obligations under
the Securities and this Indenture except for those surviving obligations
specified above.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the United States Government
Obligations deposited pursuant to this Section 9.01 or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of outstanding
Securities.
SECTION 9.02. Application of Trust Money.
The Trustee shall hold in trust money or United States Government
Obligations deposited with it pursuant to Section 9.01, and shall apply the
deposited money and the money from United States Government Obligations in
accordance with this Indenture solely to the payment of principal of and
interest on the Securities.
SECTION 9.03. Repayment to Company.
Subject to Sections 7.07 and 9.01, the Trustee shall promptly pay to the
Company upon written request any excess money held by it at any time. The
Trustee shall pay to the Company upon written request any money held by it for
the payment of principal or interest that remains unclaimed for two years;
provided, however, that the Trustee before being required to make any payment
may at the expense of the Company cause to be published once in a newspaper of
general circulation in The City of New York or mail to each Holder entitled to
such money notice that such money remains unclaimed and that, after a date
specified therein which shall be at least 30 days from the date of such
publication or mailing, any unclaimed balance of such money then remaining
shall be repaid to the Company. After payment to the Company, Holders entitled
to money must look solely to the Company for payment as general creditors
unless an applicable abandoned property law designates another person and all
liability of the Trustee or Paying Agent with respect to such money shall
thereupon cease.
SECTION 9.04. Reinstatement.
If the Trustee is unable to apply any money or United States Government
Obligations in accordance with Section 9.01 by reason of any legal proceeding
or by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, the Company's
and the Guarantors' obligations under this Indenture and the Securities shall
be revived and reinstated as though no deposit had occurred pursuant to Section
9.01 until such time as the Trustee is permitted to apply all such money or
United States Government Obligations in accordance with Section 9.01; provided,
however, that if the Company has made any payment of interest on or principal
of any Securities because of the reinstatement of its obligations, the Company
shall be subrogated to the rights of the Holders of such Securities to receive
such payment from the money or United States Government Obligations held by the
Trustee.
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ARTICLE TEN
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 10.01. Without Consent of Holders.
The Company and the Guarantors, when authorized by a resolution of their
respective Boards of Directors, and the Trustee may amend or supplement this
Indenture or the Securities without notice to or consent of any Holder:
(a) to cure any ambiguity, omission, defect or inconsistency;
provided, however, that such amendment or supplement does not adversely
affect the rights of any Holder;
(b) to effect the assumption by a successor Person of all
obligations of the Company under the Securities and this Indenture in
connection with any transaction complying with Article Five of this
Indenture;
(c) to provide for uncertificated Securities in addition to or in
place of certificated Securities (provided that the uncertificated
Securities are issued in registered form for purposes of Section 163(f)
of the Internal Revenue Code of 1986, as amended, or in a manner such
that the uncertificated Securities are described in Section 163(f)(2)(B)
of the Internal Revenue Code of 1986 as amended);
(d) to comply with any requirements of the SEC in order to effect
or maintain the qualification of this Indenture under the TIA;
(e) to add Guarantees with respect to the Securities;
(f) to make any change that would provide any additional benefit or
rights to the Holders;
(g) to make any other change that does not adversely affect the
rights of any Holder under this Indenture;
(h) to evidence the succession of another Person to any Guarantor
and the assumption by any such successor of the covenants of such
Guarantor herein and in the Guarantee in connection with any transaction
complying with Article Five of this Indenture;
(i) to add to the covenants of the Company or the Guarantors for
the benefit of the Holders, or to surrender any right or power herein
conferred upon the Company or any Guarantor;
(j) to secure the Securities pursuant to the requirements of
Section 4.18 or otherwise; or
(k) to reflect the release of a Guarantor from its obligations with
respect to its Guarantee in accordance with the provisions of Section
11.03 and to add a Guarantor pursuant to the requirements of Section
4.19;
provided, however, that the Company has delivered to the Trustee an Opinion of
Counsel stating that such amendment or supplement complies with the provisions
of this Section 10.01.
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SECTION 10.02. With Consent of Holders.
Subject to Section 6.07, the Company and the Guarantors, when authorized
by a resolution of their respective Boards of Directors, and the Trustee may
amend or supplement this Indenture or the Securities with the written consent
of the Holders of at least a majority in principal amount of the outstanding
Securities. Subject to Section 6.07, the Holders of a majority in principal
amount of the outstanding Securities may waive compliance by the Company or any
Guarantor with any provision of this Indenture or the Securities. However,
without the consent of each Holder affected, an amendment, supplement or
waiver, including a waiver pursuant to Section 6.04, may not:
(a) change the Stated Maturity of the principal of or any
installment of interest on such Security or alter the optional redemption
or repurchase provisions of any Security or this Indenture in a manner
adverse to the Holders of the Securities;
(b) reduce the principal amount of (or the premium) of any
Security;
(c) reduce the rate of or extend the time for payment of interest
on any Security;
(d) change the place or currency of payment of principal of (or
premium) or interest on any Security;
(e) modify any provisions of Section 6.04 (other than to add
sections of this Indenture or the Securities subject thereto) or 6.07 or
this Section 10.02 (other than to add sections of this Indenture or the
Securities which may not be amended, supplemented or waived without the
consent of each Holder affected);
(f) reduce the percentage of the principal amount of outstanding
Securities necessary for amendment to or waiver of compliance with any
provision of this Indenture or the Securities or for waiver of any
Default in respect thereof;
(g) waive a Default in the payment of principal of, interest on, or
redemption payment with respect to, the Securities (except a rescission
of acceleration of the Securities by the Holders thereof as provided in
Section 6.02 and a waiver of the payment default that resulted from such
acceleration);
(h) modify the ranking or priority of any Security or the Guarantee
in respect thereof of any Guarantor or modify the definition of Senior
Indebtedness or Guarantor Senior Indebtedness or amend or modify any of
the provisions of Article Eight or Article Twelve in any manner adverse
to the Holders of the Securities;
(i) release any Significant Restricted Subsidiary that is a
Guarantor from any of its obligations under its Guarantee or this
Indenture otherwise than in accordance with this Indenture; or
(j) modify the provisions of Section 4.05 or Section 4.14, the
definitions of any of the terms used therein or the provisions relating
to any Offer to Purchase required pursuant to Section 4.05 or Section
4.14 in a manner materially adverse to the Holders of Securities affected
thereby otherwise than in accordance with this Indenture.
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An amendment under this Section 10.02 may not make any change under
Article Eight or Article Twelve hereof that adversely affects in any material
respect the rights of any holder of Senior Indebtedness or Guarantor Senior
Indebtedness, as the case may be, then outstanding unless the holders of such
Senior Indebtedness or Guarantor Senior Indebtedness, as the case may be, (or
any representative thereof authorized to give a consent) shall have consented
to such change.
It shall not be necessary for the consent of the Holders under this
Section 10.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 10.02 becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such amendment, supplement or waiver.
SECTION 10.03. Compliance with Trust Indenture Act.
Every amendment to or supplement of this Indenture or the Securities shall
comply with the TIA as then in effect.
SECTION 10.04. Record Date for Consents and Effect of Consents.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders of Securities entitled to consent to any
amendment, supplement or waiver. If a record date is fixed, then those persons
who were Holders of Securities at such record date (or their duly designated
proxies), and only those persons, shall be entitled to consent to such
amendment, supplement or waiver or to revoke any consent previously given,
whether or not such persons continue to be Holders of such Securities after
such record date. No such consent shall be valid or effective for more than 90
days after such record date. The Trustee is entitled to rely upon any
electronic instruction from beneficial owners to the Holders of any Global
Security.
After an amendment, supplement or waiver becomes effective, it shall bind
every Holder, unless it makes a change described in any of clauses (a) through
(j) of Section 10.02. In that case the amendment, supplement or waiver shall
bind each Holder of a Security who has consented to it and every subsequent
Holder of a Security or portion of a Security that evidences the same debt as
the consenting Holder's Security.
SECTION 10.05. Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a Security, the
Trustee may require the Holder of the Security to deliver it to the Trustee.
The Trustee may place an appropriate notation on the Security about the changed
terms and return it to the Holder. Alternatively, if the Company or the Trustee
so determines, the Company in exchange for the Security shall issue and the
Trustee shall authenticate a new Security that reflects the changed terms.
Failure to make the appropriate notation or issue a new Security shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 10.06. Trustee To Sign Amendments, etc.
The Trustee shall be entitled to receive, and shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of any
amendment, supplement or waiver authorized pursuant to this
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Article Ten is authorized or permitted by this Indenture and that such
amendment, supplement or waiver constitutes the legal, valid and binding
obligation of the Company and the Guarantors, enforceable in accordance with its
terms (subject to customary exceptions). The Trustee may, but shall not be
obligated to, execute any such amendment, supplement or waiver which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise. In
signing any amendment, supplement or waiver, the Trustee shall be entitled to
receive an indemnity reasonably satisfactory to it.
ARTICLE ELEVEN
GUARANTEE
SECTION 11.01. Unconditional Guarantee.
Each Guarantor hereby unconditionally, jointly and severally, guarantees
(each, a "Guarantee") to each Holder of a Security authenticated by the Trustee
and to the Trustee and its successors and assigns that: the principal of and
interest on the Securities will be promptly paid in full when due, subject to
any applicable grace period, whether at maturity, by acceleration or otherwise,
and interest on the overdue principal and interest on any overdue interest on
the Securities, to the extent lawful, and all other obligations of the Company
to the Holders or the Trustee hereunder or under the Securities will be
promptly paid in full or performed, all in accordance with the terms hereof and
thereof; subject, however, to the limitations set forth in Section 11.04. Each
Guarantor hereby agrees that its obligations hereunder shall be unconditional,
irrespective of the validity, regularity or enforceability of the Securities or
this Indenture, the absence of any action to enforce the same, any waiver or
consent by any Holder of the Securities with respect to any provisions hereof
or thereof, the recovery of any judgment against the Company, any action to
enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a Guarantor. Each Guarantor hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands
whatsoever and covenants that the Guarantee will not be discharged except by
complete performance of the obligations contained in the Securities, this
Indenture, and this Guarantee. If any Holder or the Trustee is required by any
court or otherwise to return to the Company, any Guarantor, or any custodian,
trustee, liquidator or other similar official acting in relation to the Company
or any Guarantor, any amount paid by the Company or any Guarantor to the
Trustee or such Holder, this Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect. Each Guarantor further agrees
that, as between each Guarantor, on the one hand, and the Holders and the
Trustee, on the other hand, (x) the maturity of the obligations guaranteed
hereby may be accelerated as provided in Article Six for the purpose of this
Guarantee, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the obligations guaranteed hereby, and (y) in
the event of any acceleration of such obligations as provided in Article Six,
such obligations (whether or not due and payable) shall forth become due and
payable by each Guarantor for the purpose of this Guarantee.
SECTION 11.02. Severability.
In case any provision of this Guarantee shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
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SECTION 11.03. Release of a Guarantor.
If the Securities are defeased in accordance with the terms of this
Indenture, or if Section 5.01(b) is complied with, or if, subject to the
requirements of Section 5.01(a), all or substantially all of the assets of any
Guarantor or all of the Equity Interests of any Guarantor are sold (including
by issuance or otherwise) by the Company in a transaction constituting an Asset
Sale and (x) the Net Cash Proceeds from such Asset Sale are used in accordance
with Section 4.05 or (y) the Company delivers to the Trustee an Officers'
Certificate to the effect that the Net Cash Proceeds from such Asset Sale shall
be used in accordance with Section 4.05 and within the time limits specified by
Section 4.05, then each Guarantor (in the case of defeasance) or such Guarantor
(in the case of compliance with Section 5.01(b) or in the event of a sale or
other disposition of all of the Equity Interests of such Guarantor) or the
corporation acquiring such assets (in the event of a sale or other disposition
of all or substantially all of the assets of such Guarantor) shall be released
and discharged from all obligations under this Article Eleven without any
further action required on the part of the Trustee or any Holder. The Trustee
shall, at the sole cost and expense of the Company and upon receipt at the
reasonable request of the Trustee of an Opinion of Counsel that the provisions
of this Section 11.03 have been complied with, deliver an appropriate
instrument evidencing such release upon receipt of a request by the Company
accompanied by an Officers' Certificate certifying as to the compliance with
this Section 11.03. Any Guarantor not so released remains liable for the full
amount of principal of and interest on the Securities and the other obligations
of the Company hereunder as provided in this Article Eleven.
SECTION 11.04. Limitation of Guarantor's Liability.
Each Guarantor, and by its acceptance hereof each Holder and the Trustee,
hereby confirms that it is the intention of all such parties that the guarantee
by such Guarantor pursuant to its Guarantee not constitute a fraudulent
transfer or conveyance for purposes of title 11 of the United States Code, as
amended, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer
Act or any similar U.S. Federal or state or other applicable law. To effectuate
the foregoing intention, the Holders and each Guarantor hereby irrevocably
agree that the obligations of each Guarantor under its Guarantee shall be
limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities of such Guarantor (including any Senior
Indebtedness Incurred after the Issue Date) and after giving effect to any
collections from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Guarantor under its Guarantee or
pursuant to Section 11.05, result in the obligations of such Guarantor under
its Guarantee not constituting such a fraudulent transfer or conveyance under
Federal or State law.
SECTION 11.05. Contribution.
In order to provide for just and equitable contribution among the
Guarantors, the Guarantors agree, inter se, that in the event any payment or
distribution is made by any Guarantor (a "Funding Guarantor") under the
Guarantee, such Funding Guarantor shall be entitled to a contribution from all
other Guarantors in a pro rata amount, based on the net assets of each
Guarantor (including the Funding Guarantor), determined in accordance with
GAAP, subject to Section 11.04, for all payments, damages and expenses incurred
by such Funding Guarantor in discharging the Company's obligations with respect
to the Securities or any other Guarantor's obligations with respect to the
Guarantee.
SECTION 11.06. Execution of Security Guarantee.
To further evidence their Guarantee to the Holders, each of the Guarantors
hereby agree to execute a Guarantee to be endorsed on each Security ordered to
be authenticated and delivered by the Trustee.
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Each Guarantor hereby agrees that its Guarantee set forth in Section 11.01
shall remain in full force and effect notwithstanding any failure to endorse on
each Security a Guarantee. Each such Guarantee shall be signed on behalf of
each Guarantor by its Chairman of the Board, its President or one of its Vice
Presidents prior to the authentication of the Security on which it is endorsed,
and the delivery of such Security by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of such Guarantee on behalf of
such Guarantor. Such signature upon the Guarantee may be manual or facsimile
signature of such officer and may be imprinted or otherwise reproduced on the
Guarantee, and in case such officer who shall have signed the Guarantee shall
cease to be such officer before the Security on which such Guarantee is
endorsed shall have been authenticated and delivered by the Trustee or disposed
of by the Company, such Security nevertheless may be authenticated and
delivered or disposed of as though the Person who signed the Guarantee had not
ceased to be such officer of such Guarantor.
SECTION 11.07. Subordination of Subrogation and Other Rights.
Each Guarantor hereby agrees that any claim against the Company that
arises from the payment, performance or enforcement of such Guarantor's
obligations under its Guarantee or this Indenture, including, without
limitation, any right of subrogation, shall be subject and subordinate to, and
no payment with respect to any such claim of such Guarantor shall be made
before, the payment in full in cash of all outstanding Securities in accordance
with the provisions provided therefor in this Indenture.
ARTICLE TWELVE
SUBORDINATION OF GUARANTEE
SECTION 12.01. Guarantee Obligations Subordinated to Guarantor Senior
Indebtedness.
Each Guarantor covenants and agrees, and the Trustee and each Holder of
the Securities by his acceptance thereof likewise covenant and agree, that the
Guarantee of such Guarantor shall be issued subject to the provisions of this
Article Twelve; and each person holding any Security, whether upon original
issue or upon transfer, assignment or exchange thereof, accepts and agrees that
all payments of the principal of and interest on the Securities pursuant to the
Guarantee made by or on behalf of any Guarantor shall, to the extent and in the
manner set forth in this Article Twelve, be subordinated and junior in right of
payment to the prior payment in full in cash of all amounts payable under
Guarantor Senior Indebtedness of such Guarantor.
SECTION 12.02. No Payment on Guarantees in Certain Circumstances.
(a) No direct or indirect payment (excluding any payment or distribution
of Permitted Junior Securities) by or on behalf of any Guarantor of principal
of or interest on the Securities pursuant to such Guarantor's Guarantee,
whether pursuant to the terms of the Securities, upon acceleration or
otherwise, shall be made if, at the time of such payment, there exists a
default in the payment of all or any portion of the obligations on any
Designated Guarantor Senior Indebtedness of such Guarantor, whether at
maturity, on account of mandatory redemption or prepayment, acceleration or
otherwise, and such default shall not have been cured or waived or the benefits
of this sentence waived by or on behalf of the holders of such Designated
Guarantor Senior Indebtedness. In addition, during the continuance of any
non-payment event of default with respect to any Designated Guarantor Senior
Indebtedness pursuant to which the maturity thereof may be immediately
accelerated, and upon receipt by the Trustee of written notice (the "Guarantor
Payment Blockage Notice") from the holder or
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holders of such Designated Guarantor Senior Indebtedness or the trustee or
agent acting on behalf of such Designated Guarantor Senior Indebtedness, then,
unless and until such non-payment event of default has been cured or waived or
has ceased to exist or such Designated Guarantor Senior Indebtedness has been
discharged or paid in full in cash or the benefits of these provisions have
been waived by the holders of such Designated Guarantor Senior Indebtedness, no
direct or indirect payment (excluding any payment or distribution of Permitted
Junior Securities) shall be made by or on behalf of such Guarantor of principal
or interest on the Securities during a period (a "Guarantor Blockage Period")
commencing on the date of receipt of such notice by the Trustee and ending 179
days thereafter.
Notwithstanding anything herein or in the Securities to the contrary, (x)
in no event shall a Guarantor Blockage Period extend beyond 179 days from the
date the Guarantor Payment Blockage Notice in respect thereof was given, (y)
there shall be a period of at least 181 consecutive days in each 360-day period
when no Guarantor Blockage Period is in effect and (z) not more than one
Guarantor Blockage Period may be commenced with respect to any Guarantor during
any period of 360 consecutive days. No non-payment event of default that
existed or was continuing on the date of commencement of any Guarantor Blockage
Period with respect to the Designated Guarantor Senior Indebtedness initiating
such Guarantor Blockage Period (to the extent the holder of Designated
Guarantor Senior Indebtedness, or trustee or agent, giving notice commencing
such Guarantor Blockage Period had knowledge of such existing or continuing
event of default) may be, or be made, the basis for the commencement of any
other Guarantor Blockage Period by the holder or holders of such Designated
Guarantor Senior Indebtedness or the trustee or agent acting on behalf of such
Designated Guarantor Senior Indebtedness, whether or not within a period of 360
consecutive days, unless such non-payment event of default has been cured or
waived for a period of not less than 90 consecutive days.
(b) In the event that, notwithstanding the foregoing, any payment shall
be made directly to the Trustee or any Holder when such payment is prohibited
by Section 12.02(a), such payment shall be held in trust for the benefit of,
and shall be paid over or delivered by the Trustee (if the Notice required by
Section 12.06 has been received by the Trustee) or the Holder to, the holders
of such Designated Guarantor Senior Indebtedness or their respective
representatives, or to the trustee or trustees under any indenture pursuant to
which any of such Designated Guarantor Senior Indebtedness may have been
issued, as their respective interests may appear, but only to the extent that,
upon notice from the Trustee to the holders of such Designated Guarantor Senior
Indebtedness that such prohibited payment has been made, the holders of such
Designated Guarantor Senior Indebtedness (or their representative or
representatives or a trustee or trustees) notify the Trustee in writing of the
amounts then due and owing on such Designated Guarantor Senior Indebtedness, if
any, and only the amounts specified in such notice to the Trustee shall be paid
to the holders of such Designated Guarantor Senior Indebtedness.
SECTION 12.03. Payment Over of Proceeds upon Dissolution, etc.
(a) Upon any payment or distribution of assets or securities of any
Guarantor of any kind or character, whether in cash, property or securities
(excluding any payment or distribution of Permitted Junior Securities), upon
any dissolution or winding-up or total liquidation or reorganization of such
Guarantor, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all Guarantor Senior Indebtedness of such
Guarantor shall first be paid in full in cash before the Holders of the
Securities or the Trustee on behalf of such Holders shall be entitled to
receive any payment by such Guarantor of the principal of or interest on the
Securities pursuant to such Guarantor's Guarantee, or any payment to acquire
any of the Securities for cash, property or securities, or any distribution
with respect to the Securities of any cash, property or securities (excluding
any payment or distribution of Permitted Junior Securities). Before any
payment may be made by, or on behalf of, any Guarantor of the principal of or
interest on the Securities upon any such dissolu-
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tion or winding-up or total liquidation or reorganization, any payment or
distribution of assets or securities of such Guarantor of any kind or
character, whether in cash, property or securities (excluding any payment or
distribution of Permitted Junior Securities), to which the Holders of the
Securities or the Trustee on their behalf would be entitled, but for the
subordination provisions of this Indenture, shall be made by such Guarantor or
by any receiver, trustee in bankruptcy, liquidating trustee, agent or other
Person making such payment or distribution, directly to the holders of the
Guarantor Senior Indebtedness of such Guarantor (pro rata to such holders on
the basis of the respective amounts of such Guarantor Senior Indebtedness held
by such holders) or their representatives or to the trustee or trustees or
agent or agents under any agreement or indenture pursuant to which any of such
Guarantor Senior Indebtedness may have been issued, as their respective
interests may appear, to the extent necessary to pay all such Guarantor Senior
Indebtedness in full in cash after giving effect to any prior or concurrent
payment, distribution or provision therefor to or for the holders of such
Guarantor Senior Indebtedness.
(b) In the event that, notwithstanding the foregoing provision
prohibiting such payment or distribution, any payment or distribution of assets
or securities of any Guarantor of any kind or character, whether in cash,
property or securities (excluding any payment or distribution of Permitted
Junior Securities), shall be made directly to the Trustee or any Holder of
Securities at a time when such payment or distribution is prohibited by Section
12.03(a) and before all obligations in respect of the Guarantor Senior
Indebtedness of such Guarantor are paid in full in cash, such payment or
distribution shall be received and held in trust for the benefit of, and shall
be paid over or delivered by the Trustee (if the Notice required by Section
12.06 has been received by the Trustee) or the Holder to, the holders of such
Guarantor Senior Indebtedness (pro rata to such holders on the basis of the
respective amounts of such Guarantor Senior Indebtedness held by such holders)
or their respective representatives, or to the trustee or trustees or agent or
agents under any indenture pursuant to which any of such Guarantor Senior
Indebtedness may have been issued, as their respective interests may appear,
for application to the payment of such Guarantor Senior Indebtedness remaining
unpaid until all such Guarantor Senior Indebtedness has been paid in full in
cash after giving effect to any prior or concurrent payment, distribution or
provision therefor to or for the holders of such Guarantor Senior Indebtedness.
The consolidation of any Guarantor with, or the merger of any Guarantor
with or into, another corporation or the liquidation or dissolution of any
Guarantor following the conveyance or transfer of its property as an entirety,
or substantially as an entirety, to another corporation upon the terms and
conditions provided in Article Five shall not be deemed a dissolution,
winding-up, liquidation or reorganization for the purposes of this Section
12.03 if such other corporation shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions stated in Article Five.
SECTION 12.04. Subrogation.
Upon the payment in full in cash of all Guarantor Senior Indebtedness of a
Guarantor, or provision for payment, the Holders of the Securities shall be
subrogated to the rights of the holders of such Guarantor Senior Indebtedness
to receive payments or distributions of cash, property or securities of such
Guarantor made on such Guarantor Senior Indebtedness until the principal of and
interest on the Securities shall be paid in full in cash; and, for the purposes
of such subrogation, no payments or distributions to the holders of such
Guarantor Senior Indebtedness of any cash, property or securities to which the
Holders of the Securities or the Trustee on their behalf would be entitled
except for the provisions of this Article Twelve, and no payment over pursuant
to the provisions of this Article Twelve to the holders of such Guarantor
Senior Indebtedness by Holders of the Securities or the Trustee on their behalf
shall, as between such Guarantor, its creditors other than holders of such
Guarantor Senior Indebtedness, and the Holders of the Securities, be deemed to
be a payment by such Guarantor to or on account of such Guarantor Senior
Indebtedness. It is understood that the provisions of this
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Article Twelve are and are intended solely for the purpose of defining the
relative rights of the Holders of the Securities, on the one hand, and the
holders of Guarantor Senior Indebtedness of each Guarantor, on the other hand.
If any payment or distribution to which the Holders of the Securities
would otherwise have been entitled but for the provisions of this Article
Twelve shall have been applied, pursuant to the provisions of this Article
Twelve, to the payment of all amounts payable under Guarantor Senior
Indebtedness, then and in such case, the Holders of the Securities shall be
entitled to receive from the holders of such Guarantor Senior Indebtedness any
payments or distributions received by such holders of Guarantor Senior
Indebtedness in excess of the amount required to make payment in full in cash
of such Guarantor Senior Indebtedness.
SECTION 12.05. Obligations of Guarantors Unconditional.
Nothing contained in this Article Twelve or elsewhere in this Indenture or
in the Securities or the Guarantees is intended to or shall impair, as among
each of the Guarantors and the Holders of the Securities, the obligation of
each Guarantor, which is absolute and unconditional, to pay to the Holders of
the Securities the principal of and interest on the Securities as and when the
same shall become due and payable in accordance with the terms of the Guarantee
of such Guarantor, or is intended to or shall affect the relative rights of the
Holders of the Securities and creditors of any Guarantor other than the holders
of Guarantor Senior Indebtedness of such Guarantor, nor shall anything herein
or therein prevent the Holder of any Security or the Trustee on their behalf
from exercising all remedies otherwise permitted by applicable law upon default
under this Indenture, subject to the rights, if any, under this Article Twelve
of the holders of Guarantor Senior Indebtedness in respect of cash, property or
securities of any Guarantor received upon the exercise of any such remedy.
Without limiting the generality of the foregoing, nothing contained in
this Article Twelve shall restrict the right of the Trustee or the Holders of
Securities to take any action to declare the Securities to be due and payable
prior to their stated maturity pursuant to Section 6.01 or to pursue any rights
or remedies hereunder; provided, however, that all Guarantor Senior
Indebtedness of any Guarantor then due and payable shall first be paid in full
before the Holders of the Securities or the Trustee are entitled to receive any
direct or indirect payment from such Guarantor of principal of or interest on
the Securities pursuant to such Guarantor's Guarantee.
SECTION 12.06. Notice to Trustee.
The Company and each Guarantor shall give prompt written notice to the
Trustee of any fact known to the Company or such Guarantor which would prohibit
the making of any payment to or by the Trustee in respect of the Securities
pursuant to the provisions of this Article Twelve. The Trustee shall not be
charged with knowledge of the existence of any event of default with respect to
any Guarantor Senior Indebtedness or of any other facts which would prohibit
the making of any payment to or by the Trustee unless and until the Trustee
shall have received notice in writing at its Corporate Trust Office to that
effect signed by an Officer of the Company or such Guarantor, or by a holder of
Guarantor Senior Indebtedness or trustee or agent therefor; and prior to the
receipt of any such written notice, the Trustee shall, subject to Article
Seven, be entitled to assume that no such facts exist; provided, however, that
if the Trustee shall not have received the notice provided for in this Section
12.06 at least two Business Days prior to the date upon which by the terms of
this Indenture any moneys shall become payable for any purpose (including,
without limitation, the payment of the principal of or interest on any
Security), then, regardless of anything herein to the contrary, the Trustee
shall have full power and authority to receive any moneys from any Guarantor
and to apply the same to the purpose for which they were received, and shall
not be affected by any notice to the contrary which may be received by it on or
after such prior date. Nothing contained in this Section 12.06 shall limit the
right of the holders of Guarantor Senior
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Indebtedness to recover payments as contemplated by Section 12.03. The Trustee
shall be entitled to rely on the delivery to it of a written notice by a Person
representing himself or itself to be a holder of any Guarantor Senior
Indebtedness (or a trustee on behalf of, or other representative of, such
holder) to establish that such notice has been given by a holder of such
Guarantor Senior Indebtedness or a trustee or representative on behalf of any
such holder.
In the event that the Trustee determines in good faith that any evidence
is required with respect to the right of any Person as a holder of Guarantor
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article Twelve, the Trustee may request such Person to furnish evidence to
the reasonable satisfaction of the Trustee as to the amount of Guarantor Senior
Indebtedness held by such Person, the extent to which such Person is entitled
to participate in such payment or distribution and any other facts pertinent to
the rights of such Person under this Article Twelve, and if such evidence is
not furnished, the Trustee may defer any payment to such Person pending
judicial determination as to the right of such Person to receive such payment.
SECTION 12.07. Reliance on Judicial Order or Certificate of Liquidating
Agent.
Upon any payment or distribution of assets or securities of a Guarantor
referred to in this Article Twelve, the Trustee and the Holders of the
Securities shall be entitled to rely upon any order or decree made by any court
of competent jurisdiction in which bankruptcy, dissolution, winding-up,
liquidation or reorganization proceedings are pending, or upon a certificate of
the receiver, trustee in bankruptcy, liquidating trustee, agent or other person
making such payment or distribution, delivered to the Trustee or to the Holders
of the Securities for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of Guarantor Senior Indebtedness
of such Guarantor and other indebtedness of such Guarantor, the amount thereof
or payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article Twelve.
SECTION 12.08. Trustee's Relation to Guarantor Senior Indebtedness.
The Trustee and any Paying Agent shall be entitled to all the rights set
forth in this Article Twelve with respect to any Guarantor Senior Indebtedness
which may at any time be held by it in its individual or any other capacity to
the same extent as any other holder of Guarantor Senior Indebtedness, and
nothing in this Indenture shall deprive the Trustee or any Paying Agent of any
of its rights as such holder.
With respect to the holders of Guarantor Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article Twelve, and no implied covenants
or obligations with respect to the holders of Guarantor Senior Indebtedness
shall be read into this Indenture against the Trustee. The Trustee shall not be
deemed to owe any fiduciary duty to the holders of Guarantor Senior
Indebtedness (except as provided in Section 12.03(b)). The Trustee shall not
be liable to any such holders if the Trustee shall in good faith mistakenly pay
over or distribute to Holders of Securities or to the Company or to any other
person cash, property or securities to which any holders of Guarantor Senior
Indebtedness shall be entitled by virtue of this Article Twelve or otherwise.
SECTION 12.09. Subordination Rights Not Impaired by Acts or Omissions of
the Guarantors or Holders of Guarantor Senior Indebtedness.
No right of any present or future holders of any Guarantor Senior
Indebtedness to enforce subordination as provided herein shall at any time in
any way be prejudiced or impaired by any act or failure to
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act on the part of any Guarantor or by any act or failure to act, in good
faith, by any such holder, or by any noncompliance by any Guarantor with the
terms of this Indenture, regardless of any knowledge thereof which any such
holder may have or otherwise be charged with. The provisions of this Article
Twelve are intended to be for the benefit of, and shall be enforceable directly
by, the holders of Guarantor Senior Indebtedness.
SECTION 12.10. Holders Authorize Trustee To Effectuate Subordination of
Guarantee.
Each Holder of Securities by his acceptance of such Securities authorizes
and expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article Twelve, and appoints the Trustee his attorney-in-fact for such
purposes, including, in the event of any dissolution, winding-up, total
liquidation or reorganization of any Guarantor (whether in bankruptcy,
insolvency, receivership, reorganization or similar proceedings or upon an
assignment for the benefit of creditors or otherwise) tending towards
liquidation of the business and assets of such Guarantor, the filing of a claim
for the unpaid balance of its or his Securities in the form required in those
proceedings.
SECTION 12.11. This Article Not To Prevent Events of Default.
The failure to make a payment on account of principal of or interest on
the Securities by reason of any provision of this Article Twelve shall not be
construed as preventing the occurrence of an Event of Default specified in
clauses (a), (b) or (c) of Section 6.01.
SECTION 12.12. Trustee's Compensation Not Prejudiced.
Nothing in this Article Twelve shall apply to amounts due to the Trustee
pursuant to other sections in this Indenture.
SECTION 12.13. No Waiver of Guarantee Subordination Provisions.
Without in any way limiting the generality of Section 12.09, the holders
of Guarantor Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article
Twelve or the obligations hereunder of the Holders of the Securities to the
holders of Guarantor Senior Indebtedness, do any one or more of the following:
(a) change the manner, place or terms of payment or extend the time of payment
of, or renew or alter, Guarantor Senior Indebtedness or any instrument
evidencing the same or any agreement under which Guarantor Senior Indebtedness
is outstanding or secured; (b) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing Guarantor Senior
Indebtedness; (c) release any Person liable in any manner for the collection of
Guarantor Senior Indebtedness; and (d) exercise or refrain from exercising any
rights against any Guarantor and any other Person.
SECTION 12.14. Payments May Be Paid Prior to Dissolution.
Nothing contained in this Article Twelve or elsewhere in this Indenture
shall prevent (i) a Guarantor, except under the conditions described in Section
12.02, from making payments of principal of and interest on the Securities, or
from depositing with the Trustee any moneys for such payments, or (ii) the
application by the Trustee of any moneys deposited with it for the purpose of
making such payments of principal of and interest on the Securities, to the
holders entitled thereto unless at least two Business Days prior to the date
upon which such payment becomes due and payable, the Trustee shall have
received the written notice provided for in
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Section 12.02(b) or in Section 12.06. The Guarantors shall give prompt written
notice to the Trustee of any dissolution, winding-up, liquidation or
reorganization of such Guarantor.
ARTICLE THIRTEEN
MISCELLANEOUS
SECTION 13.01. Trust Indenture Act Controls.
This Indenture is subject to the provisions of the TIA that are required
to be a part of this Indenture, and shall, to the extent applicable, be
governed by such provisions. If any provision of this Indenture modifies any
TIA provision that may be so modified, such TIA provision shall be deemed to
apply to this Indenture as so modified. If any provision of this Indenture
excludes any TIA provision that may be so excluded, such TIA provision shall be
excluded from this Indenture.
The provisions of TIA Sections 310 through 317 that impose duties on any
Person (including the provisions automatically deemed included unless expressly
excluded by this Indenture) are a part of and govern this Indenture, whether
or not physically contained herein.
SECTION 13.02. Notices.
Any notice or communication shall be sufficiently given if in writing and
delivered in person, by facsimile and confirmed by overnight courier, or mailed
by first-class mail addressed as follows:
if to the Company or to the Guarantors:
American Banknote Corporation
200 Park Avenue
New York, NY 10166-4999
Attention: Chief Financial Officer
Facsimile: (212) 338-0740
Telephone: (212) 557-9100
with a copy, which shall not constitute notice, to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention: Dennis J. Block, Esq.
Facsimile: (212) 310-8007
Telephone: (212) 310-8000
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if to the Trustee:
The Bank of New York
101 Barclay Street, 21W
New York, NY 10286
Attention: Corporate Trust Trustee Administration
Facsimile: (212) 815-5915
Telephone: (212) 815-5783
The Company or the Trustee by notice to the other may designate additional
or different addresses for subsequent notices or communications.
Any notice or communication mailed, first-class, postage prepaid, to a
Holder including any notice delivered in connection with TIA Section 310(b),
TIA Section 313(c), TIA Section 314(a) and TIA Section 315(b), shall be
mailed to him at his address as set forth on the Security Register and shall be
sufficiently given to him if so mailed within the time prescribed. To the
extent required by the TIA, any notice or communication shall also be mailed to
any Person described in TIA Section 313(c).
Failure to mail a notice or communication to a Holder or any defect in it
shall not affect its sufficiency with respect to other Holders. Except for a
notice to the Trustee, which is deemed given only when received, if a notice or
communication is mailed in the manner provided above, it is duly given, whether
or not the addressee receives it.
SECTION 13.03. Communications by Holders with Other Holders.
Holders may communicate pursuant to TIA Section 312(b) with other Holders
with respect to their rights under this Indenture or the Securities. The
Company, the Trustee, the Registrar and any other person shall have the
protection of TIA Section 312(c).
SECTION 13.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take or
refrain from taking any action under this Indenture, the Company shall furnish
to the Trustee at the request of the Trustee:
(1) an Officers' Certificate in form and substance satisfactory
to the Trustee stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance satisfactory to
the Trustee stating that, in the opinion of such counsel, all such
conditions precedent have been complied with; provided, however, that
with respect to matters of fact an Opinion of Counsel may rely on an
Officers' Certificate or certificates of public officials.
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SECTION 13.05. Statements Required in Certificate.
Each certificate with respect to compliance with a condition or covenant
provided for in this Indenture shall include:
(1) a statement that the person making such certificate has read
such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements contained in
such certificate are based;
(3) a statement that, in the opinion of such person, he has made
such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
SECTION 13.06. Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Paying Agent or Registrar may make reasonable rules for its
functions.
SECTION 13.07. Governing Law.
The laws of the State of New York shall govern this Indenture, the
Securities and the Guarantees without regard to principles of conflicts of law.
SECTION 13.08. No Recourse Against Others.
A director, officer, employee or stockholder, as such, of the Company or
any of its Affiliates shall not have any liability for any obligations of the
Company or any of its Affiliates under the Securities, the Guarantee of such
Guarantor or this Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder by accepting a
Security waives and releases all such liability. The waiver and release are
part of the consideration for the issuance of the Securities and the
Guarantees.
SECTION 13.09. Successors.
All agreements of the Company in this Indenture and the Securities shall
bind its successor. All agreements of each Guarantor in this Indenture and such
Guarantor's Guarantee shall bind its successor. All agreements of the Trustee
in this Indenture shall bind its successor.
SECTION 13.10. Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
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SECTION 13.11. Severability.
In case any provision in this Indenture, in the Securities or in the
Guarantee shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby, and a Holder shall have no claim therefor against any
party hereto.
SECTION 13.12. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or a Subsidiary. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
SECTION 13.13. Legal Holidays.
If a payment date is a not a business day at a place of payment, payment
may be made at that place on the next succeeding business day, and no interest
shall accrue for the intervening period.
[Signature Pages Follow]
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the date first written above.
AMERICAN BANKNOTE CORPORATION
By: /s/ Harvey J. Kesner
Name: Harvey J. Kesner
Title: Executive Vice President
AMERICAN BANK NOTE COMPANY
ABN SECURITIES SYSTEMS, INC.
HORSHAM HOLDING COMPANY, INC.
AMERICAN BANKNOTE CARD SERVICES, INC.
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
AMERICAN BANKNOTE MERCHANT SERVICES,
INC.
ABN INVESTMENTS, INC.
ABN EQUITIES, INC.
AMERICAN BANKNOTE AUSTRALASIA
HOLDINGS, INC.
ABN GOVERNMENT SERVICES, INC.
ABN CBA, INC.
USBC CAPITAL CORP.
By: /s/ Harvey J. Kesner
Name: Harvey J. Kesner
Title: Executive Vice President
THE BANK OF NEW YORK, as Trustee
By: /s/ Mary LaGumina
Name: Mary LaGumina
Title: Assistant Vice President
S-1
<PAGE> 84
EXHIBIT A
[FORM OF SERIES A SECURITY]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL
OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION
TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE
HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS
THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO
THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS
A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE
MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS
ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF
THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR
FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUER'S AND THE
TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D)
OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR
OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN THE CASE OF THE FOREGOING
CLAUSE (D), A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF
THIS SECURITY COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE ISSUER AND THE
TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE
RESALE RESTRICTION TERMINATION DATE.
A-1
<PAGE> 85
AMERICAN BANKNOTE CORPORATION
11 1/4% Senior Subordinated Note
due December 1, 2007, Series A
CUSIP No.:[ ]
No. [ ] $[ ]
AMERICAN BANKNOTE CORPORATION, a Delaware corporation (the "Company",
which term includes any successor corporation), for value received promises to
pay to [ ] or registered assigns, the principal sum of [ ]
Dollars, on December 1, 2007.
Interest Payment Dates: June 1 and December 1, commencing on June 1,
1998.
Interest Record Dates: November 15 and May 15.
Reference is made to the further provisions of this Security contained
herein, which will for all purposes have the same effect as if set forth at
this place.
IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officers.
AMERICAN BANKNOTE CORPORATION
By:
Name:
Title:
By:
Name:
Title:
Dated: December 12, 1997
A-2
<PAGE> 86
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the 11 1/4% Senior Subordinated Notes due December 1, 2007,
Series A, described in the within-mentioned Indenture.
Dated: December 12, 1997
THE BANK OF NEW YORK,
as Trustee
By:
Authorized Signatory
A-3
<PAGE> 87
(REVERSE OF SECURITY)
AMERICAN BANKNOTE CORPORATION
11 1/4% Senior Subordinated Note
due December 1, 2007, Series A
1. Interest.
AMERICAN BANKNOTE CORPORATION, a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Security at the rate
per annum shown above. Cash interest on the Securities will accrue from the
most recent date to which interest has been paid or, if no interest has been
paid, from December 12, 1997. The Company will pay interest semi-annually in
arrears on each Interest Payment Date, commencing June 1, 1998. Interest will
be computed on the basis of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal from time to time on
demand and on overdue installments of interest (without regard to any
applicable grace periods) to the extent lawful from time to time on demand, in
each case at the rate borne by the Securities.
2. Method of Payment.
The Company shall pay interest on the Securities (except defaulted
interest) to the persons who are the registered Holders at the close of
business on the Interest Record Date immediately preceding the Interest Payment
Date even if the Securities are canceled on registration of transfer or
registration of exchange after such Interest Record Date. Holders must
surrender Securities to a Paying Agent to collect principal payments. The
Company shall pay principal and interest in money of the United States that at
the time of payment is legal tender for payment of public and private debts
("U.S. Legal Tender"). However, the Company may pay principal and interest by
wire transfer of Federal funds (provided that the Paying Agent shall have
received wire instructions on or prior to the relevant Interest Record Date),
or interest by check payable in such U.S. Legal Tender. The Company may
deliver any such interest payment to the Paying Agent or to a Holder at the
Holder's registered address.
3. Paying Agent and Registrar.
Initially, The Bank of New York (the "Trustee") will act as Paying Agent
and Registrar. The Company may change any Paying Agent or Registrar without
notice to the Holders. The Company or any of its Subsidiaries may, subject to
certain exceptions, act as Registrar.
4. Indenture and Guarantees.
The Company issued the Securities under an Indenture, dated as of December
12, 1997 (the "Indenture"), by and among the Company, the Guarantors and the
Trustee. Capitalized terms herein are used as defined in the Indenture unless
otherwise defined herein. This Security is one of a duly authorized issue of
Securities of the Company designated as its 11 1/4% Senior Subordinated Notes
due 2007, Series A (the "Initial Securities"), limited (except as otherwise
provided in the Indenture) in aggregate principal amount to $95,000,000, which
may be issued under the Indenture. The Securities include the Initial
Securities, the Private Exchange
A-4
<PAGE> 88
Securities (as defined in the Indenture) and the Unrestricted Securities (as
defined below) issued in exchange for the Initial Securities pursuant to the
Registration Rights Agreement. The Initial Securities and the Unrestricted
Securities are treated as a single class of securities under the Indenture.
The terms of the Securities include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939 (15
U.S.C. Sections 77aaa-77bbbb) (the "TIA"), as in effect on the date of
the Indenture (except as otherwise indicated in the Indenture) until such time
as the Indenture is qualified under the TIA, and thereafter as in effect on the
date on which the Indenture is qualified under the TIA. Notwithstanding
anything to the contrary herein, the Securities are subject to all such terms,
and holders of Securities are referred to the Indenture and the TIA for a
statement of them. The Securities are general unsecured obligations of the
Company. The Securities are subordinated in right of payment to all Senior
Indebtedness of the Company to the extent and in the manner provided in the
Indenture. Each Holder of a Security, by accepting a Security, agrees to such
subordination, authorizes the Trustee to give effect to such subordination and
appoints the Trustee as attorney-in-fact for such purpose.
Payment on the Securities is guaranteed (each, a "Guarantee"), on a senior
subordinated basis, jointly and severally, by each Restricted Subsidiary of the
Company existing on the Issue Date (each, a "Guarantor") pursuant to Article
Eleven and Article Twelve of the Indenture. In addition, in certain
circumstances subject to certain exceptions, the Indenture requires the Company
to cause each Restricted Subsidiary formed, created or acquired after the Issue
Date to become a party to the Indenture as a Guarantor and guarantee payment on
the Securities pursuant to Article Eleven and Article Twelve of the Indenture.
In certain circumstances, the Guarantees may be released.
5. Optional Redemption.
The Securities will be redeemable at the option of the Company, in whole
or in part, at any time on or after December 1, 2002, at the redemption prices
(expressed as a percentage of principal amount) set forth below, plus accrued
and unpaid interest thereon, if any, to the Redemption Date (subject to the
right of holders of record on the relevant Interest Record Date to receive
interest due on the relevant Interest Payment Date) if redeemed during the
12-month period commencing on December 1 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
- ---- ----------
<S> <C>
2002 105.625%
2003 103.750%
2004 101.875%
2005 and thereafter 100.000%
</TABLE>
6. Optional Redemption upon Public Equity Offerings.
In addition, at any time and from time to time on or prior to December 1,
2000, the Company may redeem in the aggregate up to 35% of the originally
issued aggregate principal amount of the Securities with the net cash proceeds
of one or more Public Equity Offerings by the Company at a redemption price in
cash equal to 111.25% of the principal amount thereof, plus accrued and unpaid
interest thereon, if any, to the Redemption Date (subject to the right of
Holders of record on the relevant Interest Record Date to receive interest due
on the relevant Interest Payment Date); provided, however, that at least 65% of
the originally issued aggregate principal amount of the Securities must remain
outstanding immediately after giving effect to each such redemption (excluding
any Securities held by the Company or any of its Affiliates). Notice of any
such redemption must be given within 60 days after the date of the closing of
the relevant Public Equity Offering of the Company.
A-5
<PAGE> 89
7. Notice of Redemption.
Notice of redemption will be mailed by first-class mail at least 30 days
but not more than 60 days before the Redemption Date to each Holder of
Securities to be redeemed at its registered address. The Trustee may select
for redemption portions of the principal amount of Securities that have
denominations equal to or larger than $1,000 principal amount. Securities and
portions of them the Trustee so selects shall be in amounts of $1,000 principal
amount or integral multiples thereof.
If any Security is to be redeemed in part only, the notice of redemption
that relates to such Security shall state the portion of the principal amount
thereof to be redeemed. A new Security in a principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof
upon cancellation of the original Security. On and after the Redemption Date,
interest will cease to accrue on Securities or portions thereof called for
redemption so long as the Company has deposited with the Paying Agent for the
Securities funds in satisfaction of the redemption price pursuant to the
Indenture and the Paying Agent is not prohibited from paying such funds to the
Holders pursuant to the terms of the Indenture.
8. Change of Control Offer.
Following the occurrence of a Change of Control (the date of such
occurrence being the "Change of Control Date"), the Company shall, within 45
days after the Change of Control Date, make an Offer to Purchase all Securities
then outstanding at a purchase price in cash equal to 101% of the aggregate
principal amount thereof, plus accrued and unpaid interest thereon, if any, to
the Purchase Date (subject to the right of Holders of record on the relevant
Interest Record Date to receive interest due on the relevant Interest Payment
Date).
9. Limitation on Disposition of Assets.
The Company is, subject to certain conditions and certain exceptions,
obligated to make an Offer to Purchase Securities at a purchase price equal to
100% of the principal amount thereof, plus accrued and unpaid interest thereon,
if any, to the Purchase Date (subject to the right of Holders of record on the
relevant Interest Record Date to receive interest due on the relevant Interest
Payment Date) with the proceeds of certain asset dispositions.
10. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in denominations
of $1,000 and integral multiples of $1,000. A Holder shall register the
transfer of or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay certain transfer taxes or
similar governmental charges payable in connection therewith as permitted by
the Indenture. The Registrar need not register the transfer of or exchange any
Securities or portions thereof selected for redemption, except the unredeemed
portion of any security being redeemed in part.
A-6
<PAGE> 90
11. Persons Deemed Owners.
The registered Holder of a Security shall be treated as the owner of it
for all purposes.
12. Unclaimed Funds.
If funds for the payment of principal or interest remain unclaimed for two
years, the Trustee and the Paying Agent will repay the funds to the Company at
its written request. After that, all liability of the Trustee and such Paying
Agent with respect to such funds shall cease.
13. Legal Defeasance and Covenant Defeasance.
The Company and the Guarantors may be discharged from their obligations
under the Indenture, the Securities and the Guarantees, except for certain
provisions thereof, and may be discharged from obligations to comply with
certain covenants contained in the Indenture, the Securities and the
Guarantees, in each case upon satisfaction of certain conditions specified in
the Indenture.
14. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture, the Securities and the
Guarantees may be amended or supplemented with the written consent of the
Holders of at least a majority in aggregate principal amount of the Securities
then outstanding, and any existing Default or Event of Default or noncompliance
with any provision may be waived with the consent of the Holders of a majority
in aggregate principal amount of the Securities then outstanding. Without
notice to or consent of any Holder, the parties thereto may amend or supplement
the Indenture, the Securities and the Guarantees to, among other things, cure
any ambiguity, omission, defect or inconsistency, provide for uncertificated
Securities in addition to or in place of certificated Securities or comply with
any requirements of the SEC in connection with the qualification of the
Indenture under the TIA or make any other change that does not materially
adversely affect the rights of any Holder of a Security.
15. Restrictive Covenants.
The Indenture contains certain covenants that, among other things, limit
the ability of the Company and the Restricted Subsidiaries to make restricted
payments, to incur indebtedness, to create liens, to sell assets, to permit
restrictions on dividends and other payments by Restricted Subsidiaries to the
Company, to consolidate, merge or sell all or substantially all of its assets,
to engage in transactions with affiliates or certain other related persons.
The limitations are subject to a number of important qualifications and
exceptions. The Company must report annually to the Trustee on compliance with
such limitations.
16. Defaults and Remedies.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of Securities then
outstanding may declare all the Securities to be due and payable immediately in
the manner and with the effect provided in the Indenture. Holders of
Securities may not enforce the Indenture, the Securities or the Guarantees
except as provided in the Indenture. The Trustee is not obligated to enforce
the Indenture, the Securities or the Guarantees unless it has received
indemnity satisfactory to it. The Indenture permits, subject to certain
limitations therein provided, Holders of a majority in aggregate principal
amount of the Securities then outstanding to direct the Trustee in its exercise
of any trust or power. The Trustee may withhold from Holders of Securities
notice of certain continuing Defaults or Events of Default if it determines
that withholding notice is in their interest.
A-7
<PAGE> 91
17. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other capacity,
may become the owner or pledgee of Securities and may otherwise deal with the
Company, its Subsidiaries or their respective Affiliates as if it were not the
Trustee.
18. No Recourse Against Others.
No director, officer, employee or stockholder, as such, of the Company or
any of its Affiliates shall have any liability for any obligation of the
Company or any of its Affiliates under the Securities, the Guarantee of such
Guarantor or the Indenture or for any claim based on, in respect of or by
reason of, such obligations or their creation. Each Holder by accepting a
Security waives and releases all such liability. The waiver and release are
part of the consideration for the issuance of the Securities and the
Guarantees.
19. Authentication.
This Security shall not be valid until the Trustee or authenticating agent
signs the certificate of authentication on this Security.
20. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a Security
or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by
the entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities.
No representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
22. Registration Rights.
Pursuant to the Registration Rights Agreement, the Company will be
obligated upon the occurrence of certain events to consummate an exchange offer
pursuant to which the Holder of this Security shall have the right to exchange
this Security for a 11 1/4% Senior Subordinated Note due 2007, Series B, of the
Company (an "Unrestricted Security") which have been registered under the
Securities Act, in like principal amount and having terms identical in all
material respects to the Initial Securities. The Holders shall be entitled to
receive certain additional interest payments in the event such exchange offer
is not consummated and upon certain other conditions, all pursuant to and in
accordance with the terms of the Registration Rights Agreement.
23. Governing Law.
The laws of the State of New York shall govern the Indenture, this
Security and any Guarantee thereof without regard to principles of conflicts of
laws.
A-8
<PAGE> 92
[FORM OF GUARANTEE]
SENIOR SUBORDINATED GUARANTEE
The Guarantor (as defined in the Indenture referred to in the Security
upon which this notation is endorsed) hereby unconditionally guarantees on a
senior subordinated basis (such Guarantee by the Guarantor being referred to
herein as the "Guarantee") the due and punctual payment of the principal of,
premium, if any, and interest on the Securities, whether at maturity, by
acceleration or otherwise, the due and punctual payment of interest on the
overdue principal, premium and interest on the Securities, and the due and
punctual performance of all other obligations of the Company to the Holders or
the Trustee, all in accordance with the terms set forth in Article Eleven of
the Indenture.
The obligations of the Guarantor to the Holders of Securities and to the
Trustee pursuant to the Guarantee and the Indenture are expressly set forth,
and are expressly subordinated and subject in right of payment to the prior
payment in full of all Guarantor Senior Indebtedness (as defined in the
Indenture) of such Guarantor, to the extent and in the manner provided in
Article Eleven and Article Twelve of the Indenture, and reference is hereby
made to such Indenture for the precise terms of the Guarantee therein made.
This Guarantee shall not be valid or obligatory for any purpose until the
certificate of authentication on the Securities upon which this Guarantee is
noted shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.
This Guarantee shall be governed by and construed in accordance with the
laws of the State of New York without regard to principles of conflicts of law.
This Guarantee is subject to release upon the terms set forth in the
Indenture.
AMERICAN BANK NOTE COMPANY
ABN SECURITIES SYSTEMS, INC.
HORSHAM HOLDING COMPANY, INC.
AMERICAN BANKNOTE CARD SERVICES, INC.
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
AMERICAN BANKNOTE MERCHANT SERVICES,
INC.
ABN INVESTMENTS, INC.
ABN EQUITIES, INC.
AMERICAN BANKNOTE AUSTRALASIA
HOLDINGS, INC.
ABN GOVERNMENT SERVICES, INC.
ABN CBA, INC.
USBC CAPITAL CORP.
By:
Name:
Title:
<PAGE> 93
ASSIGNMENT FORM
I or we assign and transfer this Security to
(Print or type name, address and zip code of assignee or transferee)
(Insert Social Security or other identifying number of assignee or transferee)
and irrevocably appoint agent to transfer this Security on the books of the
Company. The agent may substitute another to act for him.
Dated:___________________ Signed:______________________________
(Signed exactly as name
appears on the other side
of this Security)
Signature Guarantee:
Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor
program reasonably acceptable to the Trustee)
<PAGE> 94
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.05 or Section 4.14 of the Indenture, check the
appropriate box:
Section 4.05 [ ]
Section 4.14 [ ]
If you want to elect to have only part of this Security purchased by the
Company pursuant to Section 4.05 or Section 4.14 of the Indenture, state the
amount: $_____________
Dated:___________________ Your Signature:__________________________________
(Signed exactly as name
appears on the other side
of this Security)
Signature Guarantee:________________________________________________________
Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor
program reasonably acceptable to the Trustee)
<PAGE> 95
EXHIBIT B
[FORM OF SERIES B SECURITY]
AMERICAN BANKNOTE CORPORATION
11 1/4% Senior Subordinated Note
due December 1, 2007, Series B
CUSIP No.:[ ]
No. [ ] $[ ]
AMERICAN BANKNOTE CORPORATION, a Delaware corporation (the "Company",
which term includes any successor corporation), for value received promises to
pay to [ ] or registered assigns, the principal sum of [ ]
Dollars, on December 1, 2007.
Interest Payment Dates: June 1 and December 1, commencing on June 1,
1998.
Interest Record Dates: May 15 and November 15.
Reference is made to the further provisions of this Security contained
herein, which will for all purposes have the same effect as if set forth at
this place.
IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officers.
AMERICAN BANKNOTE CORPORATION
By:
Name:
Title:
By:
Name:
Title:
Dated: December 12, 1997
B-1
<PAGE> 96
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the 11 1/4% Senior Subordinated Notes due December 1, 2007,
Series B, described in the within-mentioned Indenture.
Dated: December 12, 1997
THE BANK OF NEW YORK,
as Trustee
By:
Authorized Signatory
B-2
<PAGE> 97
(REVERSE OF SECURITY)
AMERICAN BANKNOTE CORPORATION
11 1/4% Senior Subordinated Note
due December 1, 2007, Series B
1. Interest.
AMERICAN BANKNOTE CORPORATION, a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Security at the rate
per annum shown above. Cash interest on the Securities will accrue from the
most recent date to which interest has been paid or, if no interest has been
paid, from December 12, 1997. The Company will pay interest semi-annually in
arrears on each Interest Payment Date, commencing June 1, 1998. Interest will
be computed on the basis of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal from time to time on
demand and on overdue installments of interest (without regard to any
applicable grace periods) to the extent lawful from time to time on demand, in
each case at the rate borne by the Securities
2. Method of Payment.
The Company shall pay interest on the Securities (except defaulted
interest) to the persons who are the registered Holders at the close of
business on the Interest Record Date immediately preceding the Interest Payment
Date even if the Securities are canceled on registration of transfer or
registration of exchange after such Interest Record Date. Holders must
surrender Securities to a Paying Agent to collect principal payments. The
Company shall pay principal and interest in money of the United States that at
the time of payment is legal tender for payment of public and private debts
("U.S. Legal Tender"). However, the Company may pay principal and interest by
wire transfer of Federal funds (provided that the Paying Agent shall have
received wire instructions on or prior to the relevant Interest Record Date),
or interest by check payable in such U.S. Legal Tender. The Company may
deliver any such interest payment to the Paying Agent or to a Holder at the
Holder's registered address.
3. Paying Agent and Registrar.
Initially, The Bank of New York (the "Trustee") will act as Paying Agent
and Registrar. The Company may change any Paying Agent or Registrar without
notice to the Holders. The Company or any of its Subsidiaries may, subject to
certain exceptions, act as Registrar.
4. Indenture and Guarantees.
The Company issued the Securities under an Indenture, dated as of December
12, 1997 (the "Indenture"), by and among the Company, the Guarantors and the
Trustee. Capitalized terms herein are used as defined in the Indenture unless
otherwise defined herein. This Security is one of a duly authorized issue of
Securities of the Company designated as its 11 1/4% Senior Subordinated Notes
due 2007, Series B (the "Unrestricted Securities"), limited (except as
otherwise provided in the Indenture) in aggregate principal amount to
B-3
<PAGE> 98
$95,000,000, which may be issued under the Indenture. The Securities include
the 11 1/4% Senior Subordinated Notes due 2007, Series A (the "Initial
Securities"), the Private Exchange Securities (as defined in the Indenture) and
the Unrestricted Securities. The Initial Securities, the Private Exchange
Securities and the Unrestricted Securities are treated as a single class of
securities under the Indenture. The terms of the Securities include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) (the "TIA"), as in
effect on the date of the Indenture (except as otherwise indicated in the
Indenture) until such time as the Indenture is qualified under the TIA, and
thereafter as in effect on the date on which the Indenture is qualified under
the TIA. Notwithstanding anything to the contrary herein, the Securities are
subject to all such terms, and holders of Securities are referred to the
Indenture and the TIA for a statement of them. The Securities are general
unsecured obligations of the Company. The Securities are subordinated in right
of payment to all Senior Indebtedness of the Company to the extent and in the
manner provided in the Indenture. Each Holder of a Security, by accepting a
Security, agrees to such subordination, authorizes the Trustee to give effect to
such subordination and appoints the Trustee as attorney-in-fact for such
purpose.
Payment on the Securities is guaranteed (each, a "Guarantee"), on a senior
subordinated basis, jointly and severally, by each Restricted Subsidiary of the
Company existing on the Issue Date (each, a "Guarantor") pursuant to Article
Eleven and Article Twelve of the Indenture. In addition, in certain
circumstances subject to certain exceptions, the Indenture requires the Company
to cause each Restricted Subsidiary formed, created or acquired after the Issue
Date to become a party to the Indenture as a Guarantor and guarantee payment on
the Securities pursuant to Article Eleven and Article Twelve of the Indenture.
In certain circumstances, the Guarantees may be released.
5. Optional Redemption.
The Securities will be redeemable at the option of the Company, in whole
or in part, at any time on or after December 1, 2002, at the redemption prices
(expressed as a percentage of principal amount) set forth below, plus accrued
and unpaid interest thereon, if any, to the Redemption Date (subject to the
right of holders of record on the relevant Interest Record Date to receive
interest due on the relevant Interest Payment Date) if redeemed during the
12-month period commencing on December 1 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
- ---- ----------
<S> <C>
2002 105.625%
2003 103.750%
2004 101.875%
2005 and thereafter 100.000%
</TABLE>
6. Optional Redemption upon Public Equity Offerings.
In addition, at any time and from time to time on or prior to December 1,
2000, the Company may redeem in the aggregate up to 35% of the originally
issued aggregate principal amount of the Securities with the net cash proceeds
of one or more Public Equity Offerings by the Company at a redemption price in
cash equal to 111.25% of the principal amount thereof, plus accrued and unpaid
interest thereon, if any, to the Redemption Date (subject to the right of
Holders of record on the relevant Interest Record Date to receive interest due
on the relevant Interest Payment Date); provided, however, that at least 65% of
the originally issued aggregate principal amount of the Securities must remain
outstanding immediately after giving effect to each such redemption (excluding
any Securities held by the Company or any of its Affiliates). Notice of any
such redemption must be given within 60 days after the date of the closing of
the relevant Public Equity Offering of the Company.
B-4
<PAGE> 99
7. Notice of Redemption.
Notice of redemption will be mailed by first-class mail at least 30 days
but not more than 60 days before the Redemption Date to each Holder of
Securities to be redeemed at its registered address. The Trustee may select
for redemption portions of the principal amount of Securities that have
denominations equal to or larger than $1,000 principal amount. Securities and
portions of them the Trustee so selects shall be in amounts of $1,000 principal
amount or integral multiples thereof.
If any Security is to be redeemed in part only, the notice of redemption
that relates to such Security shall state the portion of the principal amount
thereof to be redeemed. A new Security in a principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof
upon cancellation of the original Security. On and after the Redemption Date,
interest will cease to accrue on Securities or portions thereof called for
redemption so long as the Company has deposited with the Paying Agent for the
Securities funds in satisfaction of the redemption price pursuant to the
Indenture and the Paying Agent is not prohibited from paying such funds to the
Holders pursuant to the terms of the Indenture.
8. Change of Control Offer.
Following the occurrence of a Change of Control (the date of such
occurrence being the "Change of Control Date"), the Company shall within 20
days after the Change of Control Date, make an Offer to Purchase all Securities
then outstanding at a purchase price in cash equal to 101% of the aggregate
principal amount thereof, plus accrued and unpaid interest thereon, if any, to
the Purchase Date (subject to the right of Holders of record on the relevant
Interest Record Date to receive interest due on the relevant Interest Payment
Date).
9. Limitation on Disposition of Assets.
The Company is, subject to certain conditions and certain exceptions,
obligated to make an Offer to Purchase Securities at a purchase price equal to
100% of the principal amount thereof, plus accrued and unpaid interest thereon,
if any, to the Purchase Date (subject to the right of Holders of record on the
relevant Interest Record Date to receive interest due on the relevant Interest
Payment Date) with the proceeds of certain asset dispositions.
10. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in denominations
of $1,000 and integral multiples of $1,000. A Holder shall register the
transfer of or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay certain transfer taxes or
similar governmental charges payable in connection therewith as permitted by
the Indenture. The Registrar need not register the transfer of or exchange any
Securities or portions thereof selected for redemption, except the unredeemed
portion of any security being redeemed in part.
B-5
<PAGE> 100
11. Persons Deemed Owners.
The registered Holder of a Security shall be treated as the owner of it
for all purposes.
12. Unclaimed Funds.
If funds for the payment of principal or interest remain unclaimed for two
years, the Trustee and the Paying Agent will repay the funds to the Company at
its written request. After that, all liability of the Trustee and such Paying
Agent with respect to such funds shall cease.
13. Legal Defeasance and Covenant Defeasance.
The Company and the Guarantors may be discharged from their obligations
under the Indenture, the Securities and the Guarantees, except for certain
provisions thereof, and may be discharged from obligations to comply with
certain covenants contained in the Indenture, the Securities and the
Guarantees, in each case upon satisfaction of certain conditions specified in
the Indenture.
14. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture, the Securities and the
Guarantees may be amended or supplemented with the written consent of the
Holders of at least a majority in aggregate principal amount of the Securities
then outstanding, and any existing Default or Event of Default or compliance
with any provision may be waived with the consent of the Holders of a majority
in aggregate principal amount of the Securities then outstanding. Without
notice to or consent of any Holder, the parties thereto may amend or supplement
the Indenture, the Securities and the Guarantees to, among other things, cure
any ambiguity, omission, defect or inconsistency, provide for uncertificated
Securities in addition to or in place of certificated Securities or comply with
any requirements of the SEC in connection with the qualification of the
Indenture under the TIA, or make any other change that does not materially
adversely affect the rights of any Holder of a Security.
15. Restrictive Covenants.
The Indenture contains certain covenants that, among other things, limit
the ability of the Company and the Restricted Subsidiaries to make restricted
payments, to incur indebtedness, to create liens, to sell assets, to permit
restrictions on dividends and other payments by Restricted Subsidiaries to the
Company, to consolidate, merge or sell all or substantially all of its assets,
to engage in transactions with affiliates or certain other related persons.
The limitations are subject to a number of important qualifications and
exceptions. The Company must report annually to the Trustee on compliance with
such limitations.
16. Defaults and Remedies.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of Securities then
outstanding may declare all the Securities to be due and payable immediately in
the manner and with the effect provided in the Indenture. Holders of
Securities may not enforce the Indenture, the Securities or the Guarantees
except as provided in the Indenture. The Trustee is not obligated to enforce
the Indenture, the Securities or the Guarantees unless it has received
indemnity satisfactory to it. The Indenture permits, subject to certain
limitations therein provided, Holders of a majority in aggregate principal
amount of the Securities then outstanding to direct the Trustee in its exercise
of any trust or power. The Trustee may withhold from Holders of Securities
notice of certain continuing Defaults or Events of Default if it determines
that withholding notice is in their interest.
B-6
<PAGE> 101
17. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other capacity,
may become the owner or pledgee of Securities and may otherwise deal with the
Company, its Subsidiaries or their respective Affiliates as if it were not the
Trustee.
18. No Recourse Against Others.
No, director, officer, employee or stockholder, as such, of the Company or
any of its Affiliates shall have any liability for any obligation of the
Company or any of its Affiliates under the Securities, the Guarantee of such
Guarantor or the Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder by accepting a
Security waives and releases all such liability. The waiver and release are
part of the consideration for the issuance of the Securities and the
Guarantees.
19. Authentication.
This Security shall not be valid until the Trustee or authenticating agent
signs the certificate of authentication on this Security.
20. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a Security
or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by
the entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities.
No representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
22. Governing Law.
The laws of the State of New York shall govern the Indenture, this
Security and any Guarantee thereof without regard to principles of conflicts of
laws.
B-7
<PAGE> 102
[FORM OF SECURITY GUARANTEE]
SENIOR SUBORDINATED GUARANTEE
The Guarantor (as defined in the Indenture referred to in the Security
upon which this notation is endorsed) hereby unconditionally guarantees on a
senior subordinated basis (such Guarantee by the Guarantor being referred to
herein as the "Guarantee") the due and punctual payment of the principal of,
premium, if any, and interest on the Securities, whether at maturity, by
acceleration or otherwise, the due and punctual payment of interest on the
overdue principal, premium and interest on the Securities, and the due and
punctual performance of all other obligations of the Company to the Holders or
the Trustee, all in accordance with the terms set forth in Article Eleven of
the Indenture.
The obligations of the Guarantor to the Holders of Securities and to the
Trustee pursuant to the Guarantee and the Indenture are expressly set forth,
and are expressly subordinated and subject in right of payment to the prior
payment in full of all Guarantor Senior Indebtedness (as defined in the
Indenture) of such Guarantor, to the extent and in the manner provided in
Article Eleven and Article Twelve of the Indenture, and reference is hereby
made to such Indenture for the precise terms of the Guarantee therein made.
This Guarantee shall not be valid or obligatory for any purpose until the
certificate of authentication on the Securities upon which this Guarantee is
noted shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.
This Guarantee shall be governed by and construed in accordance with the
laws of the State of New York without regard to principles of conflicts of law.
This Guarantee is subject to release upon the terms set forth in the
Indenture.
AMERICAN BANK NOTE COMPANY
ABN SECURITIES SYSTEMS, INC.
HORSHAM HOLDING COMPANY, INC.
AMERICAN BANKNOTE CARD SERVICES, INC.
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
AMERICAN BANKNOTE MERCHANT SERVICES,
INC.
ABN INVESTMENTS, INC.
ABN EQUITIES, INC.
AMERICAN BANKNOTE AUSTRALASIA
HOLDINGS, INC.
ABN GOVERNMENT SERVICES, INC.
ABN CBA, INC.
USBC CAPITAL CORP.
By:
Name:
Title:
<PAGE> 103
ASSIGNMENT FORM
I or we assign and transfer this Security to
(Print or type name, address and zip code of assignee or transferee)
(Insert Social Security or other identifying number of assignee or transferee)
and irrevocably appoint agent to transfer this Security on the books of the
Company. The agent may substitute another to act for him.
Dated:___________________ Signed:______________________________
(Signed exactly as name appears
on the other side of this Security)
Signature Guarantee:
Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor
program reasonably acceptable to the Trustee)
<PAGE> 104
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.05 or Section 4.14 of the Indenture, check the
appropriate box:
Section 4.05 [ ]
Section 4.14 [ ]
If you want to elect to have only part of this Security purchased by the
Company pursuant to Section 4.05 or Section 4.14 of the Indenture, state the
amount: $_____________
Dated:___________________ Your Signature:
(Signed exactly as name appears
on the other side of this Security)
Signature Guarantee:
Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor
program reasonably acceptable to the Trustee)
<PAGE> 105
EXHIBIT C
FORM OF LEGEND FOR GLOBAL SECURITIES
Any Global Security authenticated and delivered hereunder shall bear a
legend (which would be in addition to any other legends required in the case of
a Restricted Security) in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS SECURITY IS NOT
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS
SECURITY AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A
NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE
DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN
THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTION 2.16 OF THE INDENTURE.
C-1
<PAGE> 106
EXHIBIT D
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF SECURITIES
Re: 11 1/4% Senior Subordinated Notes due 2007
(the "Securities") of American Banknote Corporation
This Certificate relates to $_______ principal amount of Securities held
in the form of* ___ a beneficial interest in a Global Security or* _______
Physical Securities by ______ (the "Transferor").
The Transferor:*
[ ] has requested by written order that the Registrar deliver in exchange for
its beneficial interest in the Global Security held by the Depositary a
Physical Security or Physical Securities in definitive, registered form of
authorized denominations and an aggregate number equal to its beneficial
interest in such Global Security (or the portion thereof indicated above); or
[ ] has requested that the Registrar by written order to exchange or register
the transfer of a Physical Security or Physical Securities.
In connection with such request and in respect of each such Security, the
Transferor does hereby certify that the Transferor is familiar with the
Indenture relating to the above captioned Securities and the restrictions on
transfers thereof as provided in Section 2.16 of such Indenture, and that the
transfer of the Securities does not require Registration under the Securities
Act of 1933, as amended (the "Act"), because*:
[ ] Such Security is being acquired for the Transferor's own account, without
transfer (in satisfaction of Section 2.16 of the Indenture).
[ ] Such Security is being transferred to a "qualified institutional buyer"
(as defined in Rule 144A under the Act), in reliance on Rule 144A.
[ ] Such Security is being transferred to an institutional "accredited
investor" (within the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule
501 under the Act) which delivers a certificate to the Trustee in the form of
Exhibit E to the Indenture.
[ ] Such Security is being transferred in reliance on Rule 144 under the Act.
[ ] Such Security is being transferred in reliance on and in compliance with
an exemption from the Registration requirements of the Act other than Rule 144A
or Rule 144 under the Act to a person other than an institutional "accredited
investor." [An Opinion of Counsel to the effect that such transfer does not
require Registration under the Securities Act accompanies this certification.]
______________________________
[INSERT NAME OF TRANSFEROR]
By: __________________________
[Authorized Signatory]
Date: _____________
*Check applicable box.
D-1
<PAGE> 107
EXHIBIT E
Form of Transferee Letter of Representation
American Banknote Corporation
c/o The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Corporate Trust Trustee Administration
Dear Sirs:
This certificate is delivered to request a transfer of $________ principal
amount of the 11 1/4% Senior Subordinated Notes due 2007 (the "Notes") of
American Banknote Corporation (the "Company"). Upon transfer, the Notes would
be registered in the name of the new beneficial owner as follows:
Name:
Address:
Taxpayer ID Number:
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the
"Securities Act")), purchasing for our own account or for the account of such
an institutional "accredited investor" at least $250,000 principal amount of
the Notes, and we are acquiring the Notes not with a view to, or for offer or
sale in connection with, any distribution in violation of the Securities Act.
We have such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risk of our investment in the Notes and
we invest in or purchase securities similar to the Notes in the normal course
of our business. We and any accounts for which we are acting are each able to
bear the economic risk of our or its investment.
2. We understand that the Notes have not been registered under the
Securities Act and, unless so registered, may not be sold except as permitted
in the following sentence. We agree on our own behalf and on behalf of any
investor account for which we are purchasing Notes not to offer, sell or
otherwise transfer such Notes prior to the date which is two years after the
later of the date of original issue and the last date on which the Company or
any affiliate of the Company was the owner of such Notes (or any predecessor
thereto) (the "Resale Restriction Termination Date") only (i) if it is an
initial investor in the Notes (a) to the Company, (b) pursuant to a
registration statement which has been declared effective under the Securities
Act, (c) in a transaction complying with the requirements of Rule 144A under
the Securities Act ("Rule 144") to a person we reasonably believe is a
qualified institutional buyer under Rule 144A (a "QIB") that purchases for its
own account or for the account of a QIB and to whom notice is given that the
transfer is being made in reliance on Rule 144A, (d) pursuant to offers and
sales that occur outside the United States within the meaning of Regulation S
under the Securities Act or (e) pursuant to an exemption from registration
under the Securities Act provided by Rule 144 thereunder (if available), and
(ii) if it is a subsequent investor in the Notes, (a) as set forth in (i) above
and (b) to an institutional "accredited investor" within the meaning of Rule
501(a)(1), (2), (3) and (7)
E-1
<PAGE> 108
under the Securities Act that is purchasing for its own account or for the
account of such an institutional "accredited investor," in each case, in a
transaction involving a minimum principal amount of $250,000 for such Notes,
subject in each of the foregoing cases to any requirement of law that the
disposition of our property or the property of such investor account or
accounts be at all times within our or their control and in compliance with any
applicable state securities laws. The foregoing restrictions on resale will
not apply subsequent to the Resale Restriction Termination Date. If any resale
or other transfer of the Notes is proposed to be made pursuant to clause
(ii)(b) above prior to the Resale Restriction Termination Date, the transferor
shall deliver a letter from the transferee substantially in the form of this
letter to the Company and the Trustee, which shall provide, among other things,
that the transferee is an institutional "accredited investor" within the
meaning of Rules 501(a)(1), (2), (3) and (7) under the Securities Act and that
is acquiring such Notes for investment purposes and not for distribution in
violation of the Securities Act. Each purchaser acknowledges that the Company
and the Trustee reserve the right prior to the offer, sale or other transfer
prior to the Resale Termination Date of the Notes pursuant to clauses (i)(d),
(i)(e) or (ii)(b) above to require the delivery of an opinion of counsel,
certifications or other information satisfactory to the Company and the
Trustee.
Dated: ______________________ TRANSFEREE: _________________________
By:
--------------------------------------
E-2
<PAGE> 1
EXHIBIT 4.5
FIRST SUPPLEMENTAL INDENTURE (the "Supplemental Indenture"), dated as
of October 8, 1997, between AMERICAN BANKNOTE CORPORATION (formerly United
States Banknote Corporation), a Delaware corporation (the "Company"), having its
principal office at 200 Park Avenue, New York, New York 10166, and STATE STREET
BANK & TRUST COMPANY (as successor to First National Bank of Boston) (the
"Trustee"). All capitalized terms used herein which are not defined herein shall
have the meaning ascribed thereto in the Indenture (as defined).
W I T N E S S E T H:
WHEREAS, pursuant to the Offer to Purchase and Consent Solicitation
Statement dated September 25, 1997 (the "Statement") and related Consent and
Letter of Transmittal (together with the Statement, the "Offer"), the Company
has commenced an offer to purchase (the "Tender Offer") all of the Company's
outstanding 11 5/8% Senior Notes due 2002 (the "Notes") and to solicit consents
(the "Consent Solicitation") to the amendment of certain provisions of the
indenture, dated as of May 1, 1994, between the Company and the Trustee (as so
amended, the "Indenture"), pursuant to which the Notes were issued;
WHEREAS, Section 9.02 of the Indenture authorizes the Company and the
Trustee, from time to time, with the consent of the Holders of not less than a
majority in principal amount of outstanding Notes, to amend the Indenture by
supplemental indenture for the purpose therein set forth;
WHEREAS, in accordance with Section 9.02 of the Indenture, the Trustee,
the Company and the Holders of a majority in principal amount of the outstanding
Notes as of the date hereof have agreed to amend certain terms of the Indenture
as set forth below;
WHEREAS, the Company, by appropriate corporate action, has determined
to amend the provisions of the Indenture in the manner described below and has
taken all acts and proceedings required by law, by the Indenture, and by its
Certificate of Incorporation and By-laws necessary to duly authorize, execute
and deliver this Supplemental Indenture and to constitute this Supplemental
Indenture a legal, valid and binding agreement of the Company enforceable
against the Company in accordance with the terms herein; and
<PAGE> 2
WHEREAS, the Company desires that the modifications and amendments
contained herein become operative and effective on the date the Company accepts
for purchase and payment Notes validly tendered (and not validly withdrawn)
pursuant to the terms of the Offer;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1.1 Amendment of Section 4.06. Section 4.06 is hereby amended
by deleting the existing section in its entirety.
SECTION 1.2 Amendment of Section 4.07. Section 4.07 is hereby amended
by deleting the existing section in its entirety.
SECTION 1.3 Amendment of Section 4.08. Section 4.08 is hereby amended
by deleting the existing section in its entirety.
SECTION 1.4 Amendment of Section 4.09. Section 4.09 is hereby amended
by deleting the existing section in its entirety.
SECTION 1.5 Amendment of Section 4.10. Section 4.10 is hereby amended
by deleting the existing section in its entirety.
SECTION 1.6 Amendment of Section 4.11. Section 4.11 is hereby amended
by deleting the existing section in its entirety.
SECTION 1.7 Amendment of Section 4.12. Section 4.12 is hereby amended
by deleting the existing section in its entirety.
SECTION 1.8 Amendment of Section 4.13. Section 4.13 is hereby amended
by deleting the existing section in its entirety.
SECTION 1.9 Amendment of Section 4.14. Section 4.14 is hereby amended
by deleting the existing section in its entirety.
SECTION 1.10 Amendment of Section 4.15. Section 4.15 is hereby amended
by deleting the existing section in its entirety.
2
<PAGE> 3
SECTION 1.11 Deletion of Certain Definitions. The Indenture is hereby
amended to delete all definitions and defined terms from the Indenture where all
references to such definitions or defined terms would be eliminated as a result
of the amendments set forth herein.
SECTION 2. Operative Effect of Amendments. Sections 1.1 through 1.11
shall not become effective unless and until the Notes are accepted for purchase
by the Company pursuant to the Offer, which is expected to occur promptly after
the Tender Offer Expiration Date. In the event the Notes are not accepted for
purchase by the Company on or prior to December 8, 1997, such Sections shall be
null and void and of no further effect.
SECTION 3. Governing Law. This Supplemental Indenture shall be governed
by and construed in accordance with the laws of the State of New York, as
applied to contracts made and performed within the State of New York, without
regard to principles of conflicts of laws.
SECTION 4. Counterparts. This Supplemental Indenture may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
SECTION 5. Severability. In case any provision in this Supplemental
Indenture shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 6. Ratification. Except as expressly amended hereby, each
provision of the Indenture shall remain in full force and effect and, as amended
hereby, the Indenture is in all respects agreed to, ratified and confirmed by
each of the Company and the Trustee.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.
AMERICAN BANKNOTE CORPORATION
By: /s/ Harvey J. Kesner
-----------------------------------------
Name: Harvey J. Kesner
Title: Executive Vice
President
STATE STREET BANK & TRUST
COMPANY, as Trustee
By: /s/ James E. Mogavero
-----------------------------------------
Name: James E. Mogavero
Title: Vice President
4
<PAGE> 1
REGISTRATION RIGHTS AGREEMENT
AMONG
AMERICAN BANKNOTE CORPORATION
THE GUARANTORS NAMED HEREIN
AND
CHASE SECURITIES INC.
BEAR, STEARNS & CO. INC.
NATIONSBANC MONTGOMERY SECURITIES, INC.
SOCIETE GENERALE SECURITIES CORPORATION
DATED AS OF DECEMBER 12, 1997
<PAGE> 2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is dated as of
December 12, 1997, by and among American Banknote Corporation, a Delaware
corporation (the "Company"), American Bank Note Company and ABN Securities
Systems, Inc., each a New York corporation, Horsham Holdings Company Inc., a
Pennsylvania corporation, American Bank Note Holgraphics Inc., American
Banknote Card Services, Inc., American Banknote Merchant Services, Inc., ABN
Investments, Inc., ABN Equities, Inc., ABNH Equities, Inc., American Banknote
Australasia Holdings, Inc., ABN Government Services, Inc., ABN CBA, Inc. and
USBC Capital Corp., each a Delaware corporation (collectively with each of the
Company's subsidiaries formed or acquired after the Closing Date required to
become a guarantor hereunder, the "Guarantors," and, together with the Company,
the "Issuers"), and CHASE SECURITIES INC., BEAR, STEARNS & CO. INC.,
NATIONSBANC MONTGOMERY SECURITIES, INC. and SOCIETE GENERALE SECURITIES
CORPORATION (collectively, the "Initial Purchasers").
This Agreement is entered into in connection with the Purchase Agreement,
dated December 5, 1997, by and among the Issuers and the Initial Purchasers
(the "Purchase Agreement") relating to the sale by the Issuers to the Initial
Purchasers of 95,000 units (the "Units"), consisting of $95,000,000 aggregate
principal amount of the Company's 11 1/4% senior subordinated notes due 2007
(the "Notes") and 95,000 warrants to purchase an aggregate of 1,185,790 shares
of the Company's common stock (the "Warrants"). The Notes have been guaranteed
(the "Guarantees" and, together with the Notes, the "Securities") on a senior
subordinated basis by each of the Guarantors. In order to induce the Initial
Purchasers to enter into the Purchase Agreement, the Issuers have agreed to
provide the registration rights set forth in this Agreement for the benefit of
the Initial Purchasers and their direct and indirect transferees. The execution
and delivery of this Agreement is a condition to the Initial Purchasers'
obligation to purchase the Securities under the Purchase Agreement.
The parties hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
Additional Interest: See Section 4(a).
Advice: See the last paragraph of Section 5.
Applicable Period: See Section 2(b).
<PAGE> 3
Closing Date: The Closing Date as defined in the Purchase Agreement.
Company: See the introductory paragraph to this Agreement.
Effectiveness Date: The 120th day after the Closing Date; provided,
however, that with respect to the Initial Shelf Registration Statement, (i) if
the Filing Date in respect thereof is fewer than 45 days prior to the 120th day
after the Closing Date, then the Effectiveness Date in respect thereof shall be
the 45th day after such Filing Date and (ii) if the Filing Date is after the
filing of the Exchange Offer Registration Statement with the SEC, then the
Effectiveness Date in respect thereof shall be the 45th day after such Filing
Date.
Effectiveness Period: See Section 3.
Event Date: See Section 4.
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder.
Exchange Offer: See Section 2(a).
Exchange Offer Registration Statement: See Section 2(a).
Exchange Securities: See Section 2(a).
Expiration Date: The 30th day after the commencement of the Exchange
Offer: provided, however, that if the Exchange Offer is required by applicable
law to be open for a period of more than 30 days, the Expiration Date shall
mean the last date of such period.
Filing Date: The 45th day after the Closing Date; provided, however,
that with respect to the Initial Shelf Registration Statement, (i) if a Shelf
Registration Event shall have occurred fewer than 30 days prior to the 45th day
after the Closing Date, then the Filing Date in respect thereof shall be the
30th day after such Shelf Registration Event and (ii) if a Shelf Registration
Event shall have occurred after the filing of the Exchange Offer Registration
Statement with the SEC, then the Filing Date in respect thereof shall be the
30th day after such Shelf Registration Event.
Guarantees: See the second introductory paragraph to this Agreement.
Guarantors: See the introductory paragraph to this Agreement.
Holder: Any record holder of Registrable Securities.
Indemnified Person: See the third paragraph of Section 7.
2
<PAGE> 4
Indemnifying Person: See the third paragraph of Section 7.
Indenture: The Indenture, dated December 12, 1997, among the Company,
the Guarantors and The Bank of New York, as trustee, pursuant to which the
Notes are being issued, as amended or supplemented from time to time in
accordance with the terms thereof.
Initial Purchasers: See the introductory paragraph to this Agreement.
Initial Shelf Registration Statement: See Section 3(a).
Inspectors: See Section 5(o).
Issue Date: The date of original issuance of the Securities.
Issuers: Section introductory paragraph to this Agreement.
NASD: See Section 5(t).
Notes: See the second introductory paragraph to this Agreement.
Participant: See the first paragraph of Section 7.
Participating Broker-Dealer: See Section 2(b).
Person: An individual, corporation, limited or general partnership,
limited liability company, joint venture, association, joint stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
Private Exchange: See Section 2(b).
Private Exchange Securities: See Section 2(b).
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
Purchase Agreement: See the second introductory paragraph to this
Agreement.
3
<PAGE> 5
Records: See Section 5(o).
Registrable Securities: The Securities, upon original issuance thereof
and at all times subsequent thereto, each Exchange Security as to which Section
2(c)(v) hereof is applicable upon original issuance and at all times subsequent
thereto and, if issued, the Private Exchange Securities, until in the case of
any such Securities, Exchange Securities or Private Exchange Securities, as the
case may be, (i) a Registration Statement (other than, with respect to any
Exchange Security as to which Section 2(c)(v) hereof is applicable, the
Exchange Offer Registration Statement) covering such Securities, Exchange
Securities or Private Exchange Securities has been declared effective by the
SEC and such Securities, Exchange Securities or Private Exchange Securities, as
the case may be, have been disposed of in accordance with such effective
Registration Statement, (ii) such Securities, Exchange Securities or Private
Exchange Securities, as the case may be, are sold in compliance with Rule 144,
(iii) such Security has been exchanged for an Exchange Security pursuant to the
Exchange Offer and Section 2(c)(v) is not applicable thereto or (iv) such
Securities, Exchange Securities or Private Exchange Securities, as the case may
be, cease to be outstanding.
Registration Statement: Any registration statement of the Issuers,
including, but not limited to, the Exchange Offer Registration Statement, that
covers any of the Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits and
all material incorporated by reference or deemed to be incorporated by
reference in such registration statement.
Rule 144: Rule 144 promulgated under the Securities Act, as such Rule may
be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities
being free of the registration and prospectus delivery requirements of the
Securities Act.
Rule 144A: Rule 144A promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule (other than Rule 144) or
regulation hereafter adopted by the SEC.
Rule 415: Rule 415 promulgated under the Securities Act, as such Rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities. Together, the Notes and the related Guarantees.
4
<PAGE> 6
Securities Act: The Securities Act of 1933, as amended, and the rules and
regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2(c).
Shelf Registration Statement: See Section 3(b).
Shelf Registration Event: See Section 2(c).
Subsequent Shelf Registration Statement: See Section 3(b).
TIA: The Trust Indenture Act of 1939, as amended.
Transfer Restricted Securities: Each Note until (i) the date on which
such Note has been exchanged for a freely transferable Exchange Note in the
Exchange Offer, (ii) the date on which such Note has been effectively
registered under the Securities Act and disposed of in accordance with the
Shelf Registration Statement or (iii) the date on which such Note is
distributed to the public pursuant to Rule 144 under the Securities Act or is
salable pursuant to Rule 144(k) under the Securities Act.
Trustee: The trustee under the Indenture and, if applicable, the trustee
under any indenture governing the Exchange Securities and Private Exchange
Securities (if any).
Underwritten registration or underwritten offering: A registration in
which securities of the Company are sold to an underwriter for reoffering to
the public.
2. EXCHANGE OFFER
(a) The Issuers agree to file with the SEC, on or before the Filing Date,
an offer to exchange (the "Exchange Offer") any and all of the Registrable
Securities for a like aggregate principal amount of senior subordinated debt
securities of the Company which are identical to the Notes and are guaranteed,
jointly and severally, by each of the Guarantors with terms identical to the
Guarantees (the "Exchange Securities") (and which are entitled to the benefits
of a trust indenture that is substantially identical to the Indenture (other
than such changes as are necessary to comply with any requirements of the SEC
to effect or maintain the qualification of such trust indenture under the TIA)
and which has been qualified under the TIA), except that the Exchange
Securities shall have been registered pursuant to an effective Registration
Statement under the Securities Act and shall contain no restrictive legend
thereon. The Exchange Offer will be registered under the Securities Act on the
appropriate form (the "Exchange Offer Registration Statement") and will comply
with all applicable tender offer rules and regulations under the Exchange Act.
Each of the Issuers agrees to use its best efforts (i) to cause the Exchange
Offer Registration Statement to become effective and to commence the Exchange
Offer on or prior to the Effectiveness Date, (ii) to keep the Exchange
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<PAGE> 7
Offer open for at least 30 days (or longer if required by applicable law) and
(iii) to exchange Exchange Securities for all Securities validly tendered and
not withdrawn pursuant to the Exchange Offer on or prior to the fifth day
following the Expiration Date. The Issuers shall not permit any securities
other than the Registration Securities to be included in the Exchange Offer
Registration Statement.
Each Holder who participates in the Exchange Offer will be deemed to
represent that any Exchange Securities received by it will be acquired in the
ordinary course of its business, that at the time of the consummation of the
Exchange Offer such Holder will have no arrangement with any Person to
participate in the distribution of the Exchange Securities in violation of the
provisions of the Securities Act and that such Holder is not an "affiliate" of
any of the Issuers, as defined in Rule 405 under the Securities Act.
Upon consummation of the Exchange Offer in accordance with Section 2 of
this Agreement, the provisions of this Agreement shall continue to apply,
mutatis mutandis, solely with respect to Registrable Securities that are
Private Exchange Securities, Exchange Securities to which Section 2(c)(v) is
applicable and Exchange Securities held by Participating Broker-Dealers, and
the Issuers shall have no further obligation to register Registrable Securities
(other than Private Exchange Securities and other than Exchange Securities as
to which Section 2(c)(v) hereof applies) pursuant to Section 3 of this
Agreement. No securities other than the Exchange Securities shall be included
in the Exchange Offer Registration Statement.
(b) The Issuers shall include within the Prospectus contained in the
Exchange Offer Registration Statement a section entitled "Plan of
Distribution," reasonably acceptable to the Initial Purchasers, which shall
contain a summary statement of the positions taken or policies made by the
Staff of the SEC (and publicly disseminated) with respect to the potential
"underwriter" status of any broker-dealer that is the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act) of Exchange Securities received
by such broker-dealer in the Exchange Offer (a "Participating Broker-Dealer").
Such "Plan of Distribution" section shall also allow the use of the Prospectus
by all Persons subject to the prospectus delivery requirements of the
Securities Act, including all Participating Broker-Dealers, and include a
statement describing the means by which Participating Broker-Dealers may resell
the Exchange Securities.
Each of the Issuers shall use its best efforts to keep the Exchange Offer
Registration Statement effective and to amend and supplement the Prospectus
contained therein in order to permit such Prospectus to be lawfully delivered
by all Persons subject to the prospectus delivery requirements of the
Securities Act for at least 180 days following the first bona fide offering of
securities under such Registration Statement (or such shorter time as such
Persons must comply with such requirements in order to resell the Exchange
Securities) (the "Applicable Period").
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<PAGE> 8
If, prior to consummation of the Exchange Offer, the Initial Purchasers
hold any Securities acquired by them and having, or which are reasonably likely
to be determined to have, the status of an unsold allotment in the initial
distribution, the Issuers upon the request of the Initial Purchasers shall,
simultaneously with the delivery of the Exchange Securities in the Exchange
Offer, issue and deliver to the Initial Purchasers, in exchange (the "Private
Exchange") for the Securities held by the Initial Purchaser, a like principal
amount of debt securities of the Company that are identical to the Exchange
Securities and are guaranteed, jointly and severally, by each of the Guarantors
with terms identical to the Guarantees (the "Private Exchange Securities") (and
which are issued pursuant to the same indenture as the Exchange Securities)
(except for the placement of a restrictive legend on such Private Exchange
Securities). The Private Exchange Securities shall bear the same CUSIP number
as the Exchange Securities. Interest on the Exchange Securities and Private
Exchange Securities will accrue from the last interest payment date on which
interest was paid on the Securities surrendered in exchange therefor or, if no
interest has been paid on the Securities, from the Issue Date.
Any indenture under which the Exchange Securities or the Private Exchange
Securities will be issued shall provide that the holders of any of the Exchange
Securities and the Private Exchange Securities will vote and consent together
on all matters to which such holders are entitled to vote or consent as one
class and that none of the holders of the Exchange Securities and the Private
Exchange Securities will have the right to vote or consent as a separate class
on any matter.
(c) If (i) the Company reasonably determines in good faith, after
consultation with counsel, that it is not permitted to effect the Exchange
Offer because of any change in law or applicable interpretations thereof by the
staff of the SEC, (ii) the Exchange Offer is not commenced on or prior to the
160th day after the issue date, (iii) the Exchange Offer is not consummated on
or prior to the fifth business day after the Expiration Date, (iv) any Holder
that participates in the Exchange Offer does not receive Exchange Securities on
the date of the exchange that may be sold without restriction under state and
federal securities laws (other than due solely to the status of such Holders or
an affiliate of any of the Issuers within the meaning of the Securities Act),
(v) any applicable law or interpretation thereof does not permit any holder of
Notes to participate in the Exchange Offer, (vi) any Initial Purchaser or other
Holder so requests with respect to Notes not eligible to be exchanged for
Exchange Notes in the Exchange Offer, or (vii) the Company so elects (the
occurrence of any such event, a "Shelf Registration Event"), then, in the case
of each of clauses (i) through (vii) of this sentence, the Company shall
promptly deliver to the Holders and the Trustee notice thereof (the "Shelf
Notice") and thereafter the Issuers shall file an Initial Shelf Registration
Statement pursuant to Section 3.
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<PAGE> 9
3. SHELF REGISTRATION
If a Shelf Registration Event has occurred (and whether or not an Exchange
Offer Registration Statement has been filed with the SEC or has become
effective or the Exchange Offer has been consummated), then:
Initial Shelf Registration Statement. The Issuers shall promptly prepare
and file with the SEC a Registration Statement for an offering to be made on a
continuous basis pursuant to Rule 415 covering all of the Registrable
Securities (the "Initial Shelf Registration Statement"). The Issuers shall
file with the SEC the Initial Shelf Registration Statement on or prior to the
Filing Date. The Initial Shelf Registration Statement shall be on Form S-1 or
another appropriate form, if available, permitting registration of such
Registrable Securities for resale by such holders in the manner designated by
them (including, without limitation, in one or more underwritten offerings).
The Issuers shall not permit any securities other than the Registrable
Securities to be included in the Initial Shelf Registration Statement or any
Subsequent Shelf Registration Statement (as defined below). Each of the
Issuers shall use their best efforts to cause the Initial Shelf Registration
Statement to be declared effective under the Securities Act on or prior to the
Effectiveness Date, and to keep the Initial Shelf Registration Statement
continuously effective under the Securities Act until the date which is 24
months from the Issue Date, or such shorter period ending when (i) all
Registrable Securities covered by the Initial Shelf Registration Statement have
been sold in the manner set forth and as contemplated in the Initial Shelf
Registration Statement or (ii) a Subsequent Shelf Registration Statement
covering all of the Registrable Securities has been declared effective under
the Securities Act (such 24 month or shorter period, the "Effectiveness
Period").
Subsequent Shelf Registration Statements. If the Initial Shelf
Registration Statement or any Subsequent Shelf Registration Statement ceases to
be effective for any reason at any time during the Effectiveness Period (other
than because of the sale of all of the securities registered thereunder), each
of the Issuers shall use their best efforts to obtain the prompt withdrawal of
any order suspending the effectiveness thereof, and in any event the Issuers
shall within 45 days of such cessation of effectiveness amend the Shelf
Registration Statement in a manner reasonably expected to obtain the withdrawal
of the order suspending the effectiveness thereof, or file an additional
"shelf" Registration Statement pursuant to Rule 415 covering all of the
Registrable Securities (a "Subsequent Shelf Registration Statement"). If a
Subsequent Shelf Registration Statement is filed, each of the Issuers shall use
their best efforts to cause the Subsequent Shelf Registration Statement to be
declared effective as soon as reasonably practicable after such filing and to
keep such Registration Statement continuously effective until the end of the
Effectiveness Period. As used herein, the term "Shelf Registration Statement"
means the Initial Shelf Registration Statement and any Subsequent Shelf
Registration Statement.
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<PAGE> 10
Supplements and Amendments. The Issuers shall promptly supplement and
amend the Shelf Registration Statement if required by the rules, regulations or
instructions applicable to the registration form used for such Shelf
Registration Statement, if required by the Securities Act, or if reasonably
requested by the Holders of a majority in aggregate principal amount of the
Registrable Securities covered by such Registration Statement or by any
underwriter of such Registrable Securities.
4. ADDITIONAL INTEREST
(a) The Issuers and the Initial Purchasers agree that the Holders of the
Securities will suffer damages if the Issuers fail to fulfill their obligations
under Section 2 or Section 3 hereof and that it would not be feasible to
ascertain the extent of such damages with precision. Accordingly, the Company
agrees to pay, as liquidated damages, additional interest on the Securities
("Additional Interest") under the circumstances and to the extent set forth
below (each of which shall be given independent effect):
(i) if either the Exchange Offer Registration Statement or the Initial
Shelf Registration Statement has not been filed on or prior to the Filing
Date (unless, with respect to the Exchange Offer Registration Statement,
a Shelf Event described in clause (i) of Section 2(c) shall have
occurred prior to the Filing Date), Additional Interest shall accrue on
the Securities over and above the stated interest in an amount equal to
$0.192 per week (or any part thereof) per $1,000 principal amount of the
Securities constituting Transfer Restricted Securities;
(ii) if either the Exchange Offer Registration Statement or the Initial
Shelf Registration Statement is not declared effective by the SEC on or
prior to the Effectiveness Date (unless, with respect to the Exchange
Offer Registration Statement, a Shelf Event described in clause (i) of
Section 2(c) shall have occurred), Additional Interest shall accrue on
the Securities over and above the stated interest in an amount equal to
$0.192 per week (or any part thereof) per $1,000 principal amount of
Securities constituting Transfer Restricted Securities; and
(iii) if (A) the Issuers have not exchanged Exchange Securities for all
Securities validly tendered and not withdrawn in accordance with the
terms of the Exchange Offer on or prior to the 5th day after the
Expiration Date, (B) the Exchange Offer Registration Statement ceases to
be effective at any time prior to the Expiration Date or (C) if
applicable, any Shelf Registration Statement has been declared effective
and such Shelf Registration Statement ceases to be effective at any time
during the Effectiveness Period, then Additional Interest shall accrue on
the Securities over and above the stated interest in an amount equal to
$0.192 per week (or any part thereof) per $1,000 principal amount of the
Securities commencing on (x) the sixth day after the Expiration Date, in
the case of (A) above, or (y) the day the Exchange Offer Reg
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<PAGE> 11
istration Statement ceases to be effective in the case of (B) above, or
(z) the day such Shelf Registration Statement ceases to be effective in
the case of (C) above;
provided, however, that (1) upon the filing of the Exchange Offer Registration
Statement or a Shelf Registration Statement as required hereunder (in the case
of clause (i) of this Section 4(a)), (2) upon the effectiveness of the Exchange
Offer Registration Statement or the Shelf Registration Statement as required
hereunder (in the case of clause (ii) of this Section 4(a)) or (3) upon the
exchange of Exchange Securities for all Securities validly tendered and not
withdrawn (in the case of clause (iii)(A) of this Section 4(a)), or upon the
effectiveness of the Exchange Offer Registration Statement which had ceased to
remain effective (in the case of clause (iii)(B) of this Section 4(a)), or
upon the effectiveness of the Shelf Registration Statement which had ceased to
remain effective (in the case of clause (iii)(C) of this Section 4(a)),
Additional Interest on the Securities as a result of such clause (or the
relevant subclause thereof), as the case may be, shall cease to accrue (but any
accrued amount shall be payable).
(b) The Company shall notify the Trustee within one business day after
each and every date on which an event occurs in respect of which Additional
Interest is required to be paid (an "Event Date"). The Company shall pay the
Additional Interest due on the Registrable Securities by depositing with the
Trustee, in trust, for the benefit of the Holders thereof, on or before the
applicable semi-annual interest payment date, immediately available funds in
sums sufficient to pay the Additional Interest then due to Holders of
Registrable Securities. Each obligation to pay Additional Interest shall be
deemed to accrue immediately following the occurrence of the applicable Event
Date. Any accrued Additional Interest amount shall be due and payable on each
interest payment date immediately after the applicable Event Date to the record
Holder of Registrable Securities entitled to receive the interest payment to be
made on such date as set forth in the Indenture. The parties hereto agree that
the Additional Interest provided for in Section 4 of this Agreement constitutes
a reasonable estimate of the damages that may be incurred by Holders of
Registrable Securities by reason of the failure of a Shelf Registration
Statement or Exchange Offer Registration Statement to be filed or declared
effective, or a Shelf Registration Statement or an Exchange Offer Registration
Statement to remain effective, as the case may be, in accordance with Section 4
of this Agreement.
(c) Each of the Guarantors, jointly and severally, guarantee the payment
of the Additional Interest to the same extent and in the same manner as the
guarantee provisions set forth in the Indenture, which provisions are
incorporated herein by reference mutatis mutandis.
5. REGISTRATION PROCEDURES
In connection with the registration of any Registrable Securities pursuant
to Section 2 or Section 3 hereof, each of the Issuers shall use their best
efforts to effect such
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<PAGE> 12
registrations to permit the sale of such Registrable Securities in accordance
with the intended method or methods of disposition thereof, and pursuant
thereto the Issuers shall:
(a) prepare and file with the SEC on or before the Filing Date, a
Registration Statement or Registration Statements as prescribed by Section 2 or
Section 3, and to use their best efforts to cause each such Registration
Statement to become effective and remain effective as provided herein, provided
that, if (1) such filing is pursuant to Section 3, or (2) a Prospectus
contained in an Exchange Offer Registration Statement filed pursuant to Section
2 is required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Securities during the Applicable
Period, before filing any Registration Statement or Prospectus or any
amendments or supplements thereto, the Issuers shall furnish to and afford the
Holders of the Registrable Securities and each such Participating
Broker-Dealer, as the case may be, covered by such Registration Statement,
their counsel and the managing underwriters, if any, a reasonable opportunity
to review copies of all such documents (including copies of any documents to be
incorporated by reference therein and all exhibits thereto) proposed to be
filed (at least five days prior to such filing); the Issuers shall not file any
Registration Statement or Prospectus or any amendments or supplements thereto
in respect of which the Holders must be afforded a reasonable opportunity to
review prior to the filing of such document, if the Holders of a majority in
aggregate principal amount of the Registrable Securities covered by such
Registration Statement, or each such Participating Broker-Dealer, as the case
may be, their counsel, or the managing underwriters, if any, shall reasonably
object;
(b) prepare and file with the SEC such amendments and post-effective
amendments to each Shelf Registration Statement or Exchange Offer Registration
Statement, as the case may be, as may be necessary to keep such Registration
Statement continuously effective for the Effectiveness Period, in the case of a
Shelf Registration Statement, or until the later of the Expiration Date and the
Applicable Period, in the case of the Exchange Offer Registration Statement;
cause the related Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 (or any
similar provisions then in force) under the Securities Act; and comply with the
provisions of the Securities Act, the Exchange Act and the rules and
regulations of the SEC promulgated thereunder applicable to it with respect to
the disposition of all securities covered by such Registration Statement as so
amended or in such Prospectus as so supplemented and with respect to the
subsequent resale of any securities being sold by a Participating Broker-Dealer
covered by any such Prospectus;
(c) if (1) a Shelf Registration Statement is filed pursuant to Section 3,
or (2) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during
the Applicable Period, notify the selling Holders of Registrable Securities, or
each such Participating Broker-Dealer, as the case may
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<PAGE> 13
be, their counsel and the managing underwriters, if any, promptly (but in any
event within three business days), and confirm such notice in writing, (i) when
a Prospectus or any prospectus supplement or post-effective amendment has been
filed, and, with respect to a Registration Statement or any post-effective
amendment, when the same has become effective (including in such notice a
written statement that any Holder may, upon request, obtain, without charge,
one conformed copy of such Registration Statement or post-effective amendment
including financial statements and schedules, documents incorporated or deemed
to be incorporated by reference and exhibits); (ii) of the issuance by the SEC
of any stop order suspending the effectiveness of a Registration Statement or
of any order preventing or suspending the use of any preliminary prospectus or
the initiation of any proceedings for that purpose; (iii) if at any time when a
prospectus is required by the Securities Act to be delivered in connection with
sales of the Registrable Securities the representations and warranties of any
of the Issuers contained in any agreement (including any underwriting
agreement) contemplated by Section 5(n) below cease to be true and correct;
(iv) of the receipt by any of the Issuers of any notification with respect to
the suspension of the qualification or exemption from qualification of a
Registration Statement or any of the Registrable Securities or the Exchange
Securities to be sold by any Participating Broker-Dealer for offer or sale in
any jurisdiction, or the initiation or threatening of any proceeding for such
purpose; (v) of the happening of any event or any information becoming known
that makes any statement made in such Registration Statement or related
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of any
changes in such Registration Statement, Prospectus or documents so that, in the
case of the Registration Statement, it will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and that in
the case of the Prospectus, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that such
notification need not specifically identify such event if notification of the
occurrence thereof would, in the Company's reasonable judgment, involve the
disclosure of confidential non-public information; and (vi) of the Company's
reasonable determination that a post-effective amendment to the Registration
Statement would be appropriate;
(d) if (1) a Shelf Registration Statement is filed pursuant to Section 3,
or (2) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during
the Applicable Period, use their best efforts to prevent the issuance of any
order suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the
qualification (or exemption from qualification) of any of the Registrable
Securities or the Exchange Securities to be sold by any Participating
Broker-Dealer for sale in any jurisdiction,
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<PAGE> 14
and, if any such order is issued, to use their best efforts to obtain the
withdrawal of any such order at the earliest possible moment;
(e) if a Shelf Registration Statement is filed pursuant to Section 3 and
if requested by the managing underwriters, if any, or the Holders of a majority
in aggregate principal amount of the Registrable Securities being sold in
connection with an underwritten offering or any Participating Broker-Dealer,
(i) promptly incorporate in a prospectus supplement or post-effective amendment
such information as the managing underwriters, if any, such Holders, any
Participating Broker-Dealer or their respective counsel reasonably request to
be included therein; (ii) make all required filings of such prospectus
supplement or such post-effective amendment as soon as reasonably practicable
after the Company has received notification of the matters to be incorporated
in such prospectus supplement or post-effective amendment and (iii) supplement
or make amendments to such Registration Statement;
(f) if (1) a Shelf Registration Statement is filed pursuant to Section 3,
or (2) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during
the Applicable Period, furnish to each selling Holder of Registrable Securities
and to each such Participating Broker-Dealer who so requests and upon request
to their respective counsel and each managing underwriter, if any, without
charge, one conformed copy of the Registration Statement or Registration
Statements and each post-effective amendment thereto, including all financial
statements, schedules, and documents incorporated or deemed to be incorporated
therein by reference, and all exhibits;
(g) if (1) a Shelf Registration Statement is filed pursuant to Section 3,
or (2) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during
the Applicable Period, deliver to each selling Holder of Registrable
Securities, or each such Participating Broker-Dealer, as the case may be, their
counsel, and the underwriters, if any, without charge, as many copies of the
Prospectus or Prospectuses (including each form of preliminary prospectus) and
each amendment or supplement thereto and any documents incorporated by
reference therein as such Persons may reasonably request; and, subject to the
last paragraph of Section 5 of this Agreement, each of the Issuers hereby
consents to the use of such Prospectus and each amendment or supplement thereto
by each of the selling Holders of Registrable Securities or each such
Participating Broker-Dealer, as the case may be, and the underwriters or
agents, if any, and dealers (if any), in connection with the offering and sale
of the Registrable Securities covered by or the sale by Participating
Broker-Dealers of the Exchange Securities pursuant to such Prospectus and any
amendment or supplement thereto;
(h) prior to any public offering of Registrable Securities or any delivery
of a Prospectus contained in the Exchange Offer Registration Statement by any
Participating
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<PAGE> 15
Broker-Dealer who seeks to sell Exchange Securities during the Applicable
Period, use their best efforts to register or qualify, and to cooperate with
the selling Holders of Registrable Securities or each such Participating
Broker-Dealer, as the case may be, the underwriters, if any, and their
respective counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable
Securities or Exchange Securities, as the case may be, for offer and sale under
the securities or Blue Sky laws of such jurisdictions within the United States
as any selling Holder, Participating Broker-Dealer, or the managing
underwriters reasonably request in writing; provided , however, that where
Exchange Securities held by Participating Broker-Dealers or Registrable
Securities are offered other than through an underwritten offering, the Issuers
shall cause their counsel to (i) perform Blue Sky investigations and file
registrations and qualifications required to be filed pursuant to this Section
5(h), (ii) use their best efforts to keep each such registration or
qualification (or exemption therefrom) effective during the period such
Registration Statement is required to be kept effective hereunder and (iii) do
any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Exchange Securities held by
Participating Broker-Dealers or the Registrable Securities covered by the
applicable Registration Statement; provided, further, however, that none of the
Issuers shall in any case be required to (A) qualify generally to do business
in any jurisdiction where it is not then so qualified, (B) take any action that
would subject it to general service of process in any such jurisdiction where
it is not then so subject or (C) subject itself to taxation in excess of a
nominal dollar amount in any such jurisdiction;
(i) if a Shelf Registration Statement is filed pursuant to Section 3,
cooperate with the selling Holders of Registrable Securities and the managing
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold, which certificates
shall not bear any restrictive legends and shall be in a form eligible for
deposit with The Depository Trust Company; and enable such Registrable
Securities to be in such denominations and registered in such names as the
managing underwriter or underwriters, if any, or Holders may reasonably
request;
(j) use their best efforts to cause the Registrable Securities covered by
the Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the seller
or sellers thereof or the underwriters, if any, to consummate the disposition
of such Registrable Securities, except as may be required solely as a
consequence of the nature of such selling Holder's business, in which case the
Issuers will cooperate in all reasonable respects with the filing of such
Registration Statement and the granting of such approvals;
(k) if (1) a Shelf Registration Statement is filed pursuant to Section 3,
or (2) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during
the Applicable Period, upon the occur
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<PAGE> 16
rence of any event contemplated by paragraphs 5(c)(v) or 5(c)(vi) above, as
promptly as practicable prepare and (subject to Section 5(a) above) file with
the SEC, solely at the expense of the Issuers, a supplement or post-effective
amendment to the Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be incorporated therein by
reference, or file any other required document so that, as thereafter delivered
to the purchasers of the Registrable Securities being sold thereunder or to the
purchasers of the Exchange Securities to whom such Prospectus will be delivered
by a Participating Broker-Dealer, any such Prospectus will not contain an
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided,
however, that the Issuers shall not be required to amend or supplement a
Registration Statement, any related Prospectus or any document incorporated
therein by reference, in the event that, and for a period not to exceed 90 days
or an aggregate of 120 days in any 18-month period) year if, (i) an event
occurs and is continuing as a result of which a Shelf Registration Statement
would, in the Issuers' good faith judgment, contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading and (ii) (a) the Issuers determine in their good faith
judgment that the disclosure of such event at such time would have a material
adverse effect on the business, operations or prospects of the Issuers or (b)
the disclosure otherwise relates to a pending material business transaction
that has not been publicly disclosed;
(l) use their best efforts to cause the Registrable Securities covered by
a Registration Statement or the Exchange Securities, as the case may be, to be
rated with the appropriate rating agencies, if so requested by the Holders of a
majority in aggregate principal amount of Registrable Securities covered by
such Registration Statement or a Participating Broker-Dealer selling Exchange
Securities, as the case may be, or the managing underwriters, if any;
(m) prior to the effective date of the first Registration Statement
relating to the Registrable Securities, (i) provide the Trustee with printed
certificates for the Registrable Securities in a form eligible for deposit with
The Depository Trust Company and (ii) provide a CUSIP number for the
Registrable Securities;
(n) in connection with an underwritten offering of Registrable Securities
pursuant to a Shelf Registration Statement, enter into an underwriting
agreement as is customary in underwritten offerings and take all such other
actions as are reasonably requested by the managing underwriters in order to
expedite or facilitate the registration or the disposition of such Registrable
Securities, and in such connection (i) make such representations and warranties
to and covenants with, the underwriters, with respect to the business of the
Issuers and their subsidiaries and the Registration Statement, Prospectus and
documents, if any, incorporated or deemed to be incorporated by reference
therein, in each case, as are customarily
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<PAGE> 17
made by issuers to underwriters in underwritten offerings, and confirm the same
if and when reasonably requested; (ii) obtain the written opinions of counsel
to the Issuers and updates thereof in form and substance reasonably
satisfactory to the managing underwriters, addressed to the underwriters
covering the matters customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested by
underwriters; (iii) use their best efforts to obtain "cold comfort" letters and
updates thereof in form and substance reasonably satisfactory to the managing
underwriters from the independent certified public accountants of the Issuers
(and, if necessary, any other independent certified public accountants of any
subsidiary of the Company or of any business acquired by the Company or any of
its subsidiaries for which financial statements and financial data are, or are
required to be, included in the Registration Statement), addressed to each of
the underwriters, such letters to be in customary form and covering matters of
the type customarily covered in "cold comfort" letters in connection with
underwritten offerings and such other matters as reasonably requested by
underwriters; and (iv) if an underwriting agreement is entered into, the same
shall contain indemnification provisions and procedures comparable to those set
forth in Section 7 hereof (or such other provisions and procedures reasonably
acceptable to the Holders of a majority in aggregate principal amount of
Registrable Securities covered by such Registration Statement and the managing
underwriters or agents) with respect to all parties to be indemnified pursuant
to said Section, all of which shall be done at each closing under such
underwriting agreement, or as and to the extent required thereunder;
(o) if (1) a Shelf Registration Statement is filed pursuant to Section 3,
or (2) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during
the Applicable Period, subject to the prior receipt by the Company of
undertakings to use reasonable efforts to preserve the confidentiality of any
information disclosed by the Issuers pursuant hereto in form and substance
reasonably satisfactory to the Company, make available for inspection by one
representive of the selling Holders of such Registrable Securities being sold,
or each such Participating Broker-Dealer, as the case may be, any underwriter
participating in any such disposition of Registrable Securities, if any, and
any attorney, accountant or other agent retained by any such selling Holder or
each such Participating Broker-Dealer, as the case may be, or underwriter
(collectively, the "Inspectors"), at the offices where normally kept, during
reasonable business hours, all relevant financial and other records, pertinent
corporate documents and properties of the Issuers and their subsidiaries
(collectively, the "Records") as shall be necessary to enable them to exercise
any applicable due diligence responsibilities, and cause the officers,
directors and employees of the Issuers and their subsidiaries to supply all
information in each case requested by any such Inspector in connection with
such Registration Statement; provided, however, that records which the Company
determines, in good faith, to be confidential and any Records which the Company
notifies the Inspectors are confidential shall not be disclosed by the
Inspectors unless: (i) the disclosure of such Records is necessary to avoid or
correct a misstatement or omission in such Registration Statement; (ii) the
release of such Re
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cords is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction; (iii) the information in such Records has been made
generally available to the public; or (iv) release thereof is necessary or
advisable in connection with any action, suit or proceeding involving any
Holder or other Inspector; provided, further, however, that prior notice shall
be provided as soon as practicable to the Issuers of the potential disclosure
of any information by such Inspector pursuant to clauses (i), (ii), (iii) or
(iv) of this sentence to permit the Issuers to obtain a protective order (or
waive the provisions of this paragraph (o)) and that such Inspector shall take
such actions as are reasonably necessary to protect the confidentiality of such
information (if practicable) to the extent such action is otherwise not
inconsistent with, an impairment of or in derogation of the rights and
interests of the Holder or any Inspector; each selling Holder of such
Registrable Securities and each such Participating Broker-Dealer will be
required to agree that information obtained by it as a result of such
inspections shall be deemed confidential and shall not be used by it as the
basis for any market transactions in the securities of the Issuers unless and
until such information is generally available to the public; each selling
Holder of such Registrable Securities and each such Participating Broker-Dealer
will be required to further agree that it will, upon learning that disclosure
of such Records is sought in a court of competent jurisdiction, give notice to
the Issuers and allow the Issuers to undertake appropriate action to prevent
disclosure of the Records deemed confidential at the Issuers' sole expense;
(p) provide for an indenture trustee for the Registrable Securities or the
Exchange Securities, as the case may be, and cause the Indenture or the trust
indenture provided for in Section 2(a), as the case may be, to be qualified
under the TIA not later than the effective date of the Exchange Offer or the
first Registration Statement relating to the Registrable Securities; and in
connection therewith, cooperate with the trustee under any such indenture and
the holders of the Registrable Securities to effect such changes to such
indenture as may be required for such indenture to be so qualified in
accordance with the terms of the TIA; and execute, and use their best efforts
to cause such trustee to execute, all documents as may be required to effect
such changes, and all other forms and documents required to be filed with the
SEC to enable such indenture to be so qualified in a timely manner;
(q) comply with all applicable rules and regulations of the SEC to the
extent and so long as they are applicable to the Exchange Offer Registration
Statement or the Shelf Registration Statement and make generally available to
their securityholders earning statements satisfying the provisions of Section
11(a) of the Securities Act and Rule 158 thereunder (or any similar rule
promulgated under the Securities Act) no later than 45 days after the end of
any 12-month period (or 90 days after the end of any 12-month period if such
period is a fiscal year) (i) commencing at the end of any fiscal quarter in
which Registrable Securities are sold to underwriters in a firm commitment or
best efforts underwritten offering; and (ii) if not sold to underwriters in
such an offering, commencing on the first day of the first fiscal quarter of
the Company after the effective date of a Registration Statement, which
statements shall cover said 12-month periods;
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(r) upon consummation of an Exchange Offer or a Private Exchange, obtain
an opinion of counsel to the Company in customary form, relating to the
Exchange Securities or the Private Exchange Securities, as the case may be,
addressed to the Trustee for the benefit of all Holders of Registrable
Securities participating in the Exchange Offer or the Private Exchange, as the
case may be, and which includes an opinion that (i) each of the Issuers have
duly authorized, executed and delivered the Exchange Securities and Private
Exchange Securities, the Guarantees to be endorsed thereon and the related
indenture; and (ii) each of the Exchange Securities or the Private Exchange
Securities, as the case may be, the Guarantees endorsed thereon and the related
indenture and guarantees thereunder constitute legal, valid and binding
obligations of each of the Issuers party thereto, enforceable against each of
the Issuers party thereto in accordance with their respective terms (with
customary exceptions);
(s) if an Exchange Offer or a Private Exchange is to be consummated, upon
delivery of the Registrable Securities by Holders to the Company (or to such
other Person as directed by the Company) in exchange for the Exchange
Securities or the Private Exchange Securities, as the case may be, mark, or
caused to be marked, on such Registrable Securities that such Registrable
Securities are being cancelled in exchange for the Exchange Securities or the
Private Exchange Securities, as the case may be; in no event shall such
Registrable Securities be marked as paid or otherwise satisfied;
(t) cooperate with each seller of Registrable Securities covered by any
Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Securities and their respective counsel in
connection with any filings required to be made with the National Association
of Securities Dealers, Inc. (the "NASD"); and
(u) use their best efforts to take all other steps necessary to effect the
registration of the Registrable Securities covered by a Registration Statement
contemplated hereby.
The Issuers may require each seller of Registrable Securities or
Participating Broker-Dealer as to which any registration is being effected to
furnish to the Issuers such information regarding such seller or Participating
Broker-Dealer and the distribution of such Registrable Securities or Exchange
Securities to be sold by such Participating Broker-Dealer, as the case may be,
as the Issuers may, from time to time, reasonably request. The Issuers may
exclude from such registration the Registrable Securities or Exchange
Securities of any selling Holder or Participating Broker-Dealer, as the case
may be, who unreasonably fails to furnish such information within a reasonable
time after receiving such request.
Each Holder of Registrable Securities and each Participating Broker-Dealer
agrees by acquisition of such Registrable Securities or Exchange Securities to
be sold by such Participating Broker-Dealer, as the case may be, that, upon
receipt of any notice from the Company of the happening of any event of the
kind described in Sections 5(c)(ii), 5(c)(iv),
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5(c)(v) or 5(c)(vi), such Holder will forthwith discontinue disposition of such
Registrable Securities covered by such Registration Statement or Prospectus or
Exchange Securities to be sold by such Participating Broker-Dealer, as the case
may be, until such Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 5(k), or until it is advised in
writing (the "Advice") by the Company that the use of the applicable Prospectus
may be resumed, and has received copies of any amendments or supplements
thereto. In the event that the Issuers shall give any such notice, each of the
Effectiveness Period and the Applicable Period shall be extended by the number
of days during such periods from and including the date of the giving of such
notice to and including the date when each seller of Registrable Securities
covered by such Registration Statement or Exchange Securities to be sold by
such Participating Broker-Dealer, as the case may be, shall have received (x)
the copies of the supplemented or amended Prospectus contemplated by Section
5(k) hereof or (y) the Advice.
6. REGISTRATION EXPENSES
(a) All fees and expenses incident to the performance of or compliance
with this Agreement by the Issuers shall be borne by the Issuers whether or not
the Exchange Offer Registration Statement or a Shelf Registration Statement is
filed or becomes effective, including, without limitation, (i) all registration
and filing fees (including, without limitation, (A) fees with respect to
filings required to be made with the NASD in connection with an underwritten
offering and (B) fees and expenses of compliance with state securities or Blue
Sky laws (including, without limitation, reasonable fees and disbursements of
counsel in connection therewith) in such jurisdictions (x) where the
Registrable Securities may be sold, in the case of the Exchange Securities, or
(y) as provided in Section 5(h), in the case of Registrable Securities to be
sold in a public offering or Exchange Securities to be sold by a Participating
Broker-Dealer during the Applicable Period)); (ii) printing expenses
(including, without limitation, expenses of printing certificates for
Registrable Securities or Exchange Securities in a form eligible for deposit
with The Depository Trust Company and of printing prospectuses if the printing
of prospectuses is requested by the managing underwriters, if any, or, in
respect of Registrable Securities or Exchange Securities to be sold by any
Participating Broker-Dealer during the Applicable Period, by the Holders of a
majority in aggregate principal amount of the Registrable Securities included
in any Registration Statement or a Participating Broker-Dealer selling Exchange
Securities, as the case may be); (iii) messenger, telephone and delivery
expenses incurred by the Issuers; (iv) fees and disbursements of counsel for
the Issuers and reasonable fees and disbursements of special counsel for the
sellers of Registrable Securities (subject to the provisions of Section 6(b));
(v) fees and disbursements of all independent certified public accountants
referred to in Section 5(n)(iii) (including, without limitation, the expenses
of any special audit and "cold comfort" letters required by or incident to such
performance); (vi) the reasonable fees and expenses of any "qualified
independent underwriter" or other independent appraiser participating in an
offering pursuant to Rule 2710 or Rule 2720 of the Conduct Rules of the NASD;
(vii) rating agency fees; (viii) Securities Act liability in
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<PAGE> 21
surance, if the Issuers desire such insurance; (ix) fees and expenses of all
other Persons retained by the Issuers; (x) internal expenses of the Issuers
(including, without limitation, all salaries and expenses of officers and
employees of the Issuers performing legal or accounting duties); (xi) the
expense of any annual audit of the Issuers; (xii) the fees and expenses
incurred by the Issuers in connection with the listing of the Registrable
Securities on any securities exchange; and (xiii) the expenses relating to
printing, word processing and distributing all Registration Statements,
underwriting agreements, securities sales agreements, indentures and any other
documents necessary in order to comply with this Agreement.
(b) In connection with any Shelf Registration Statement hereunder, the
Issuers shall reimburse the Holders of the Registrable Securities being
registered in such registration for the reasonable fees and disbursements of
not more than one counsel (in addition to appropriate local counsel) chosen by
the Holders of a majority in aggregate principal amount of the Registrable
Securities to be included in such Registration Statement and other reasonable
out-of-pocket expenses of the Holders of Registrable Securities incurred in
connection with the registration of the Registrable Securities.
7. INDEMNIFICATION
Each of the Issuers, jointly and severally, agrees to indemnify and hold
harmless each Holder of Registrable Securities and each Participating
Broker-Dealer selling Exchange Securities during the Applicable Period, the
officers and directors of each such Person, and each Person, if any, who
controls any such Person within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act (each, a "Participant"), from
and against any and all losses, claims, damages and liabilities (including,
without limitation, the reasonable legal fees and other expenses actually
incurred in connection with any suit, action or proceeding or any claim
asserted) caused by any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement (or any amendment
thereto) or Prospectus (as amended or supplemented if the Issuers shall have
furnished any amendments or supplements thereto) or any preliminary prospectus,
or caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
except insofar as such losses, claims, damages or liabilities are caused by any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with information relating to such Holder of
Registrable Securities or Participating Broker-Dealer, as the case may be,
furnished to the Company in writing by such Holder of Registrable Securities or
Participating Broker-Dealer, as the case may be, expressly for use therein;
provided, however, that the foregoing indemnity with respect to any preliminary
prospectus shall not inure to the benefit of any Holder of Registrable
Securities or Participating Broker-Dealer, as the case may be (or to the
benefit of any officer or director of, or of any Person controlling, such
Holder of Registrable Securities or Participating Broker-Dealer) from whom the
Person asserting any such losses, claims, damages or liabilities purchased
Registra
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ble Securities or Exchange Securities, as the case may be, to the extent that
such untrue statement or omission or alleged untrue statement or omission made
in such preliminary prospectus is eliminated or remedied in the related
Prospectus (as amended or supplemented if the Issuers shall have furnished any
amendments or supplements thereto) and such Prospectus does not contain any
other untrue statement or omission or alleged untrue statement or omission of a
material fact and, to the extent required by applicable law, a copy of the
related Prospectus (as so amended or supplemented) shall not have been
furnished to such Person at or prior to the sale of such Registrable Securities
or Exchange Securities, as the case may be, to such Person, unless such failure
to furnish was a result of non-compliance by the Issuers with Section 5(g).
Each Holder of Registrable Securities and each Participating Broker-Dealer
selling Exchange Securities during the Applicable Period will be required to
agree, severally and not jointly, to indemnify and hold harmless each of the
Issuers, its directors, its officers who sign the Registration Statement and
each Person who controls any Issuer within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Issuers to each Participant, but only with
reference to information relating to such Holder of Registrable Securities or
Participating Broker-Dealer, as the case may be, furnished to the Company in
writing by such Holder of Registrable Securities or Participating
Broker-Dealer, as the case may be, expressly for use in any Registration
Statement or Prospectus, any amendment or supplement thereto, or any
preliminary prospectus. The liability of any such Holder of Registrable
Securities or Participating Broker-Dealer, as the case may be, under this
paragraph shall in no event exceed the proceeds received by such Holder of
Registrable Securities or Participating Broker-Dealer, as the case may be, from
sales of Registrable Securities or Exchange Securities, as the case may be,
giving rise to such obligations.
If any suit, action, proceeding (including any governmental or regulatory
investigation), claim or demand shall be brought or asserted against any Person
in respect of which indemnity may be sought pursuant to either of the two
preceding paragraphs, such Person (the "Indemnified Person") shall promptly
notify the Person against whom such indemnity may be sought (the "Indemnifying
Person") in writing, and the Indemnifying Person, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may designate in such proceeding and shall pay the
reasonable fees and expenses incurred by such counsel related to such
proceeding; provided, however, that the failure to so notify the Indemnifying
Person shall not relieve it of any obligation or liability which it may have
hereunder or otherwise (unless and only to the extent that the Indemnifying
Person was otherwise unaware that such suit, action, proceeding, claim, or
demand shall have been brought or asserted and such failure actually materially
prejudices the Indemnifying Person (through the forfeiture of substantive
rights or defenses)). In any such proceeding, any Indemnified Person shall
have the right to retain its own counsel, but, other than in circumstances
involv
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ing a conflict among Indemnified Persons, the fees and expenses of such
counsel shall be at the expense of such Indemnified Person unless (i) the
Indemnifying Person and the Indemnified Person shall have agreed to the
contrary; (ii) the Indemnifying Person has failed within a reasonable time to
retain counsel reasonably satisfactory to the Indemnified Person; or (iii) the
named parties in any such proceeding (including any impleaded parties) include
both the Indemnifying Person and the Indemnified Person and representation of
both parties by the same counsel would be inappropriate due to an actual or
potential conflict of interest. It is understood that, other than in
circumstances involving a conflict among Indemnified Persons, the Indemnifying
Person shall not, in connection with any proceeding or related proceeding in
the same jurisdiction, be liable for the fees and expenses of more than one
separate firm (in addition to any local counsel) for all Indemnified Persons,
and that all such fees and expenses shall be reimbursed as they are incurred.
Any such separate firm for the Participants shall be designated in writing by
the Holders of Registrable Securities or Participating Broker-Dealers selling
Exchange Securities during the Applicable Period, as the case may be, who sold
a majority in interest of Registrable Securities or Exchange Securities, as the
case may be, sold by all such Holders of Registrable Securities or
Participating Broker-Dealers, as the case may be. Any such separate firm for
the Issuers, its directors, its officers and such control Persons of the
Issuers shall be designated in writing by the Company. The Indemnifying Person
shall not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the Indemnifying Person agrees to indemnify any
Indemnified Person from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an Indemnified Person shall have requested an Indemnifying Person to reimburse
the Indemnified Person for reasonable fees and expenses incurred by counsel as
contemplated by the third sentence of this paragraph, the Indemnifying Person
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 30
days after receipt by such Indemnifying Person of the aforesaid request and
(ii) such Indemnifying Person shall not have reimbursed the Indemnified Person
in accordance with such request prior to the date of such settlement; provided,
however, that the Indemnifying Person shall not be liable for any settlement
effected without its consent pursuant to this sentence if the Indemnifying
Party is contesting, in good faith, such request for reimbursement. No
Indemnifying Person shall, without the prior written consent of the Indemnified
Person, (which consent shall not be unreasonably withheld) effect any
settlement of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party, and indemnity could have been
sought hereunder by such indemnified party and indemnity could have been sought
hereunder by such indemnified party unless such settlement includes an
unconditional written release of such Indemnified Person in form and substance
satisfactory to the Indemnified Persons from all liability on claims that are
the subject matter of such proceeding.
If the indemnification provided for in the first and second paragraphs of
Section 7 of this Agreement is for any reason unavailable to, or insufficient to
hold harmless, an
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Indemnified Person in respect of any losses, claims, damages or liabilities
referred to therein, then each Indemnifying Person under such paragraphs, in
lieu of indemnifying such Indemnified Person thereunder and in order to provide
for just and equitable contribution, shall contribute to the amount paid or
payable by such Indemnified Person as a result of such losses, claims, damages
or liabilities in such proportion as is appropriate to reflect (i) the relative
benefits received by the Indemnifying Person or Persons on the one hand and the
Indemnified Person or Persons on the other from the initial offering of the
Securities or (ii) if the allocation provided by the foregoing clause (i) is
not permitted by applicable law, not only such relative benefits but also the
relative fault of the Indemnifying Person or Persons on the one hand and the
Indemnified Person or Persons on the other in connection with the statements or
omissions or alleged statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof) as well as any
other relevant equitable considerations. The relative benefits received by the
Issuers on the one hand and the Holders of Registrable Securities or
Participating Broker-Dealers selling Exchange Securities during the Applicable
Period, as the case may be, on the other shall be deemed to be in the same
proportion as the total proceeds from the initial offering (net of discounts
and commissions but before deducting expenses) of the Securities received by
the Issuers bears to the total proceeds received by such Holders of Registrable
Securities or Participating Broker-Dealers, as the case may be, from the sale
of Registrable Securities or Exchange Securities, as the case may be. The
relative fault of the parties shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by the Issuers, on the one hand, or such Holder of
Registrable Securities or Participating Broker-Dealer, as the case may be, on
the other, the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission, and any other
equitable considerations appropriate in the circumstances.
The parties shall agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
(even if the Participants were treated as one entity for such purpose) or by
any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph
shall be deemed to include, subject to the limitations set forth above, any
reasonable legal or other expenses actually incurred by such Indemnified Person
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall a Holder of
Registrable Securities or Participating Broker-Dealer be required to contribute
any amount in excess of the amount by which proceeds received by such Holder of
Registrable Securities or Participating Broker-Dealer, as the case may be, from
sales of Registrable Securities or Exchange Securities, as the case may be,
exceeds the amount of any damages that such Holder of Registrable Securities or
Participating Broker-Dealer, as the case may be, has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omis
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sion or alleged omission. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any Person who was not guilty of such fraudulent
misrepresentation.
The indemnity and contribution agreements contained in this Section 7 will
be in addition to any liability which the Indemnifying Persons may otherwise
have to the Indemnified Persons referred to above.
8. RULE 144 AND RULE 144A
Each of the Issuers covenants that it will file the reports required to be
filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder in a timely manner and, if at any
time any of the Issuers is not required to file such reports, it will, upon the
request of any Holder of Registrable Securities, make publicly available other
information so long as necessary to permit sales pursuant to Rule 144 and Rule
144A under the Securities Act. Each of the Issuers further covenants that it
will take such further action as any Holder of Registrable Securities may
reasonably request, to the extent required from time to time to enable such
Holder to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by Rule 144 and Rule 144A
under the Securities Act.
9. UNDERWRITTEN REGISTRATIONS
If any of the Registrable Securities covered by any Shelf Registration
Statement are to be sold in an underwritten offering, the investment banker or
investment bankers and manager or managers that will manage the offering will
be selected by the Holders of a majority in aggregate principal amount of such
Registrable Securities included in such offering and reasonably acceptable to
the Company.
No Holder of Registrable Securities may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Securities on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements
(however the terms applicable to each Holder shall be identical in all
respects) and (b) completes and executes all questionnaires, powers of
attorney, lock-up letters, indemnities, underwriting agreements and other
documents required under the terms of such underwriting arrangements applicable
to all Holders.
10. MISCELLANEOUS
(a) Remedies. In the event of a breach by any of the Issuers of any of
its obligations under this Agreement, each Holder of Registrable Securities, in
addition to being entitled to exercise all rights provided herein, in the
Indenture or, in the case of the Initial Purchasers, in the Purchase Agreement
or granted by law, including recovery of damages, will be
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entitled to specific performance of its rights under this Agreement. The
Issuers agree that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.
(b) No Inconsistent Agreements. None of the Issuers has, as of the date
hereof, entered into and each shall not, after the date of this Agreement,
enter into any agreement with respect to any of its securities that is
inconsistent with the rights granted to the Holders of Registrable Securities
in this Agreement or otherwise conflicts with the provisions hereof. None of
the Issuers has entered into and each will not enter into any agreement with
respect to any of its securities which will grant to any Person "piggy-back"
rights with respect to a Registration Statement (other than any such agreements
that have been, or prior to the Filing Date, will be, amended or waived).
(c) Adjustments Affecting Registrable Securities. The Issuers shall not,
directly or indirectly, take any action with respect to the Registrable
Securities as a class that would adversely affect the ability of the Holders of
Registrable Securities to include such Registrable Securities in a registration
undertaken pursuant to this Agreement.
(d) Joint and Several Obligations; Addition of Guarantors. The Guarantors
agree that their obligations under this agreement are joint and several. So
long as any Registrable Securities remain outstanding, the Company shall cause
each of its subsidiaries that becomes a guarantor of the Notes under the
Indenture to execute and deliver an instrument pursuant to which such
subsidiary agrees to be bound by the provisions of this agreement as a
Guarantor.
(e) Amendments and Waivers. Except as provided in paragraph (d) above,
the provisions of this Agreement may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, otherwise than with the prior written consent of (A) the Holders of not
less than a majority in aggregate principal amount of the then outstanding
Registrable Securities and (B) in circumstances that would adversely affect the
Participating Broker-Dealers, the Participating Broker-Dealers holding not less
than a majority in aggregate principal amount of the Exchange Securities held
by all Participating Broker-Dealers; provided, however, that Section 7 and this
Section 10(e) may not be amended, modified or supplemented without the prior
written consent of each Holder and each Participating Broker-Dealer (including
any Person who was a Holder or Participating Broker-Dealer of Registrable
Securities or Exchange Securities, as the case may be, disposed of pursuant to
any Registration Statement) affected by any such amendment, modification or
supplement. Notwithstanding the foregoing, a waiver or consent to depart from
the provisions hereof with respect to a matter that relates exclusively to the
rights of Holders of Registrable Securities whose securities are being sold
pursuant to a Registration Statement
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and that does not directly or indirectly affect, impair, limit or compromise
the rights of other Holders of Registrable Securities may be given by Holders
of at least a majority in aggregate principal amount of the Registrable
Securities being sold by such Holders pursuant to such Registration Statement.
(f) Notices. All notices and other communications (including without
limitation any notices or other communications to the Trustee) provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier or telecopier:
(i) if to a Holder of Registrable Securities, at the most current address
given by the Trustee to the Company; and
(ii) if to the Issuers, at American Banknote Corporation, 200 Park
Avenue, New York, New York 10166-4999, Attention: Chief Financial
Officer.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; one business day
after being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the trustee under the
Indenture at the address specified in such Indenture.
(g) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Holders of Registrable Securities.
(h) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(i) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(J) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT
26
<PAGE> 28
TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(k) Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall
in no way be affected, impaired or invalidated, and the parties hereto shall
use their best efforts to find and employ an alternative means to achieve the
same or substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may
be hereafter declared invalid, illegal, void or unenforceable.
(l) Entire Agreement. This Agreement, together with the Purchase
Agreement, is intended by the parties as a final expression of their agreement,
and is intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein and therein.
(m) Securities Held by the Issuers or Its Affiliates. Whenever the
consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by any of the
Issuers or its affiliates (as such term is defined in Rule 405 under the
Securities Act) shall not be deemed to be not outstanding for purposes of
determining whether such consent or approval was given by the Holders of such
required percentage.
[Signature Pages Follow]
27
<PAGE> 29
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
AMERICAN BANKNOTE CORPORATION
By: /s/ Harvey J. Kesner
Name: Harvey J. Kesner
Title: Executive Vice President
AMERICAN BANK NOTE COMPANY
By: /s/ Harvey J. Kesner
Name: Harvey J. Kesner
Title: Executive Vice President
ABN SECURITIES SYSTEMS, INC.
By: /s/ Harvey J. Kesner
Name: Harvey J. Kesner
Title: Executive Vice President
HORSHAM HOLDING COMPANY, INC.
By: /s/ Harvey J. Kesner
Name: Harvey J. Kesner
Title: Executive Vice President
AMERICAN BANK NOTE HOLGRAPHICS,
INC.
By: /s/ Harvey J. Kesner
Name: Harvey J. Kesner
Title: Executive Vice President
S-1
<PAGE> 30
AMERICAN BANKNOTE CARD SERVICES,
INC.
By: /s/ Harvey J. Kesner
Name: Harvey J. Kesner
Title: Executive Vice President
AMERICAN BANKNOTE MERCHANT
SERVICES, INC.
By: /s/ Harvey J. Kesner
Name: Harvey J. Kesner
Title: Executive Vice President
ABN INVESTMENTS, INC.
By: /s/ Harvey J. Kesner
Name: Harvey J. Kesner
Title: Executive Vice President
ABN EQUITIES, INC.
By: /s/ Harvey J. Kesner
Name: Harvey J. Kesner
Title: Executive Vice President
AMERICAN BANKNOTE AUSTRALASIA
HOLDINGS, INC.
By: /s/ Harvey J. Kesner
Name: Harvey J. Kesner
Title: Executive Vice President
S-2
<PAGE> 31
ABN GOVERNMENT SERVICES, INC.
By: /s/ Harvey J. Kesner
Name: Harvey J. Kesner
Title: Executive Vice President
ABN CBA, INC.
By: /s/ Harvey J. Kesner
Name: Harvey J. Kesner
Title: Executive Vice President
USBC CAPITAL CORP.
By: /s/ Harvey J. Kesner
Name: Harvey J. Kesner
Title: Executive Vice President
<FF>
S-3
<PAGE> 32
CHASE SECURITIES INC.
By: /s/ David Fass
Name: David Fass
Title: Vice President
BEAR, STEARNS & CO. INC.
By: /s/ Christopher DeMarco
Name: Christopher DeMarco
Title: Associate Director
NATIONSBANC MONTGOMERY SECURITIES, INC.
By: /s/ Peter Wilson
Name: Peter Wilson
Title: Managing Director
SOCIETE GENERALE SECURITIES CORPORATION
By: /s/ Ian Hardington
Name: Ian Hardington
Title: Managing Director
S-4
<PAGE> 1
<TABLE>
<CAPTION>
EXHIBIT 12
STATEMENT OF COMPUTATIONS OF RATIOS OF EARNINGS TO FIXED CHARGES
AMERICAN BANKNOTE CORPORATION AND SUBSIDIARIES
(Dollars in thousands)
Nine months ended
Year ended December 31 September 30
--------------------------------------------------- ----------------
1996 1995 1994 1993 1992 1997 1996
------ ------ ------ ------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings (loss) before income taxes $9,733 ($32,211) ($8,102) $6,144 $11,848 $7,517 $7,095
Interest expense 28,864 23,147 21,057 14,605 14,609 24,353 20,124
Interest portion of rental expense 2,567 2,667 2,700 2,333 1,833 3,022 2,080
Other - capitalized interest
included in other income (400) (320)
------- ------- ------- ------- ------- ------- -------
$40,764 ($6,397) $15,655 $23,082 $28,290 $34,572 $29,299
======= ======= ======= ======= ======= ======= =======
Fixed Charges
Interest expense $28,864 $23,147 $21,057 $14,605 $14,609 $24,353 $20,124
Zero Coupon Debenture 100
Interest portion of rental 2,567 2,667 2,700 2,333 1,833 3,022 2,080
------- ------- ------- ------- ------- ------- -------
$31,431 $25,814 $23,757 $16,938 $16,442 $27,475 $22,204
======= ======= ======= ======= ======= ======= =======
Ratio of earnings to fixed charges 1.30 x -- -- 1.36 x 1.72 x 1.26 x 1.32 x
======= ======= ======= ======= ======= ======= =======
Deficiency of earnings $32,211 $8,102
======= =======
</TABLE>
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
American Banknote Corporation on Form S-4 of our report dated February 21,
1997, included in the Annual Report on Form 10-K of American Banknote
Corporation for the year ended December 31, 1996 as amended on Form 10-K/A,
and to use of our report dated February 21, 1997, appearing in the Prospectus,
which is part of this Registration Statement. We also consent to the reference
to us under the headings "Experts" in such Prospectus.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
New York, New York
January 9, 1998
<PAGE> 1
KPMG Exhibit 23.2
Chartered Accountants
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement, of American Banknote
Corporation on Form S-4, of our report dated 14 August 1996 on the special
purpose financial statements of Leigh Mardon Security Division (the "Economic
Entity") as defined in Note 1 thereto, appearing in the Prospectus which is a
part of such Registration Statement, and to the reference to us under the
heading "Experts" in such Prospectus.
/s/ KPMG
KPMG
Melbourne, Australia
January 8, 1998
<PAGE> 1
EXHIBIT 25
THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING SUBMITTED PURSUANT TO RULE 901(d)
OF REGULATION S T
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
AMERICAN BANKNOTE CORPORATION
(Exact name of obligor as specified in its charter)
Delaware 13-0460520
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Table of Additional Registrants
<TABLE>
<CAPTION>
<S> <C> <C>
American Bank Note Company New York 13-2735924
ABN Securities Systems, Inc. New York 13-2791166
Horsham Holding Company Inc. Pennsylvania 23-2204722
American Bank Note
Holographics, Inc. Delaware 13-3317668
American Banknote Card
Services, Inc. Delaware 13-3690286
American Banknote Merchant
Services, Inc. Delaware 13-3962422
ABN Investments, Inc. Delaware 13-3753757
ABN Equities, Inc. Delaware 13-3753756
American Banknote Australasia
Holdings, Inc. Delaware 13-3893332
ABN Government Services, Inc. Delaware 13-3869963
USBC Capital Corp. Delaware 13-3778099
ABN CBA, Inc. Delaware 13-3979794
200 Park Avenue
New York, NY 10166
(Address of principal executive offices) (Zip code)
</TABLE>
----------------------
11 1/4% Senior Subordinated Notes
due 2007, Series B
(Title of the indenture securities)
================================================================================
<PAGE> 2
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE
TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO
WHICH IT IS SUBJECT.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION,
ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO
RULE 7a-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17
C.F.R. 229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which
contains the authority to commence business and a grant of
powers to exercise corporate trust powers. (Exhibit 1 to
Amendment No. 1 to Form T-1 filed with Registration Statement
No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with
Registration Statement No. 33-21672 and Exhibit 1 to Form T-1
filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to
Form T-1 filed with Registration Statement No. 33-31019.)
-2-
<PAGE> 3
6. The consent of the Trustee required by Section 321(b) of the
Act. (Exhibit 6 to Form T-1 filed with Registration Statement
No. 33-44051.)
7. A copy of the latest report of condition of the Trustee
published pursuant to law or to the requirements of its
supervising or examining authority.
-3-
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 30th day of December, 1997.
THE BANK OF NEW YORK
By: /s/ MARY LAGUMINA
-------------------------------
Name: MARY LAGUMINA
Title: ASSISTANT VICE PRESIDENT
-4-
<PAGE> 5
EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business June 30, 1997,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin .................. $ 7,769,502
Interest-bearing balances .......... 1,472,524
Securities:
Held-to-maturity securities ........ 1,080,234
Available-for-sale securities ...... 3,046,199
Federal funds sold and Securities pur-
chased under agreements to resell...... 3,193,800
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................35,352,045
LESS: Allowance for loan and
lease losses ..............625,042
LESS: Allocated transfer risk
reserve........................429
Loans and leases, net of unearned
income, allowance, and reserve 34,726,574
Assets held in trading accounts ...... 1,611,096
Premises and fixed assets (including
capitalized leases) ................ 676,729
Other real estate owned .............. 22,460
Investments in unconsolidated
subsidiaries and associated
companies .......................... 209,959
Customers' liability to this bank on
acceptances outstanding ............ 1,357,731
Intangible assets .................... 720,883
Other assets ......................... 1,627,267
-----------
Total assets ......................... $57,514,958
===========
LIABILITIES
Deposits:
In domestic offices ................ $26,875,596
Noninterest-bearing ......11,213,657
Interest-bearing .........15,661,939
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 16,334,270
Noninterest-bearing .........596,369
Interest-bearing .........15,737,901
Federal funds purchased and Securities
sold under agreements to repurchase. 1,583,157
Demand notes issued to the U.S.
Treasury ........................... 303,000
Trading liabilities .................. 1,308,173
Other borrowed money:
With remaining maturity of one year
or less .......................... 2,383,570
With remaining maturity of more than
one year through three years...... 0
With remaining maturity of more than
three years ...................... 20,679
Bank's liability on acceptances exe-
cuted and outstanding .............. 1,377,244
Subordinated notes and debentures .... 1,018,940
Other liabilities .................... 1,732,792
-----------
Total liabilities .................... 52,937,421
-----------
EQUITY CAPITAL
Common stock ........................ 1,135,284
Surplus ............................. 731,319
Undivided profits and capital
reserves .......................... 2,721,258
Net unrealized holding gains
(losses) on available-for-sale
securities ........................ 1,948
Cumulative foreign currency transla-
tion adjustments .................. ( 12,272)
------------
Total equity capital ................ 4,577,537
-----------
Total liabilities and equity
capital ........................... $57,514,958
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-named
bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Alan R. Griffith |
J. Carter Bacot |
Thomas A. Renyi | Directors
<PAGE> 1
LETTER OF TRANSMITTAL
AMERICAN BANKNOTE CORPORATION
TO TENDER FOR EXCHANGE 11 1/4% SENIOR SUBORDINATED NOTES DUE 2007
PURSUANT TO THE PROSPECTUS DATED , 1998
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1998 UNLESS EXTENDED (THE "EXPIRATION
DATE").
PLEASE READ CAREFULLY THE ATTACHED INSTRUCTIONS
IF YOU DESIRE TO ACCEPT THE EXCHANGE OFFER, THIS LETTER OF TRANSMITTAL
SHOULD BE COMPLETED, SIGNED, AND SUBMITTED TO THE EXCHANGE AGENT:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
By Hand or Overnight Delivery: By Facsimile Transmission: By Registered or Certified
(for Eligible Institutions Mail:
The Bank of New York Only)
101 Barclay Street The Bank of New York
Corporate Trust Services Window (212) 571-3080 101 Barclay Street, 7E
Ground Level New York, New York 10286
New York, New York 10286 To Confirm by Telephone Attention:
Attention: or for Information Call: Reorganization Station
Reorganization Section (212) 815-6333
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION VIA
FACSIMILE TO A NUMBER, OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY. FOR ANY QUESTIONS REGARDING THIS LETTER OF TRANSMITTAL OR FOR ANY
ADDITIONAL INFORMATION, YOU MAY CONTACT THE EXCHANGE AGENT.
The undersigned hereby acknowledges receipt of the Prospectus dated
, 1998 (as it may be supplemented and amended from time to time, the
"Prospectus") of American Banknote Corporation, a Delaware corporation
("Company"), and this Letter of Transmittal (the "Letter of Transmittal"), that
together constitute the Company's offer (the "Exchange Offer") to exchange
$1,000 in principal amount of its 11 1/4% Senior Subordinated Notes due 2007,
Series B (the "Exchange Notes"), which have been registered under the Securities
Act of 1933, as amended (the "Securities Act"), pursuant to a Registration
Statement, for each $1,000 in principal amount of its outstanding 11 1/4% Senior
Subordinated Notes due 2007, Series A (the "Notes"), of which $95,000,000
aggregate principal amount is outstanding. Capitalized terms used but not
defined herein have the meanings ascribed to them in the Prospectus.
The undersigned hereby tenders the Notes described in Box 1 below (the
"Tendered Notes") pursuant to the terms and conditions described in the
Prospectus and this Letter of Transmittal. The undersigned is the registered
owner of all the Tendered Notes and the undersigned represents that it has
received from each beneficial owner of the Tendered Notes ("Beneficial Owners")
a duly completed and executed form of "Instruction to Registered Holder and/or
Book-Entry Transfer Facility Participant from Beneficial Owner" accompanying
this Letter of Transmittal, instructing the undersigned to take the action
described in this Letter of Transmittal.
Subject to, and effective upon, the acceptance for exchange of the Tendered
Notes, the undersigned hereby exchanges, assigns and transfers to, or upon the
order of, the Company all right, title, and interest in, to and under the
Tendered Notes.
<PAGE> 2
Please issue the Exchange Notes exchanged for Tendered Notes in the name(s)
of the undersigned. Similarly, unless otherwise indicated under "SPECIAL
DELIVERY INSTRUCTIONS" below (see Box 3), please send or cause to be sent the
certificates for the Exchange Notes (and accompanying documents, as appropriate)
to the undersigned at the address shown below in Box 1.
The undersigned hereby irrevocably constitutes and appoints the Exchange
Agent as the true and lawful agent and attorney in fact of the undersigned with
respect to the Tendered Notes, with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest), to
(i) deliver the Tendered Notes to the Company or cause ownership of the Tendered
Notes to be transferred to, or upon the order of, the Company, on the books of
the registrar for the Notes and deliver all accompanying evidences of transfer
and authenticity to, or upon the order of, the Company upon receipt by the
Exchange Agent, as the undersigned's agent, of the Exchange Notes to which the
undersigned is entitled upon acceptance by the Company of the Tendered Notes
pursuant to the Exchange Offer, and (ii) receive all benefits and otherwise
exercise all rights of beneficial ownership of the Tendered Notes, all in
accordance with the terms of the Exchange Offer.
The undersigned understands that tenders of Notes pursuant to the
procedures described under the caption "The Exchange Offer" in the Prospectus
and in the instructions hereto will constitute a binding agreement between the
undersigned and the Company upon the terms and subject to the conditions of the
Exchange Offer, subject only to withdrawal of such tenders on the terms set
forth in the Prospectus under the caption "The Exchange Offer -- Withdrawal of
Tenders." All authority herein conferred or agreed to be conferred shall survive
the death or incapacity of the undersigned and any Beneficial Owner(s), and
every obligation of the undersigned or any Beneficial Owner(s) hereunder shall
be binding upon the heirs, representatives, successors, and assigns of the
undersigned and such Beneficial Owner(s).
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, exchange, assign, and transfer the Tendered
Notes and that the Company will acquire good and unencumbered title thereto,
free and clear of all liens, restrictions, charges, encumbrances, and adverse
claims when the Tendered Notes are acquired by the Company as contemplated
herein. The undersigned and each Beneficial Owner will, upon request, execute
and deliver any additional documents reasonably requested by the Company or the
Exchange Agent as necessary or desirable to complete and give effect to the
transactions contemplated hereby.
The undersigned hereby represents and warrants that the information set
forth in Box 2 is true and correct.
By accepting the Exchange Offer, the undersigned hereby represents and
warrants that (i) the Exchange Notes to be acquired by the undersigned and any
Beneficial Owner(s) in connection with the Exchange Offer are being acquired by
the undersigned and any Beneficial Owner(s) in the ordinary course of business
of the undersigned and any Beneficial Owner(s), (ii) the undersigned and each
Beneficial Owner are not participating, do not intend to participate, and have
no arrangement or understanding with any person to participate, in the
distribution of the Exchange Notes, (iii) except as otherwise disclosed in
writing herewith, neither the undersigned nor any Beneficial Owner is an
"affiliate," as defined in Rule 405 under the Securities Act, of the Company,
and (iv) the undersigned and each Beneficial Owner acknowledge and agree that
any person participating in the Exchange Offer with the intention or for the
purpose of distributing the Exchange Notes must comply with the registration and
prospectus delivery requirements of the Securities Act of 1933, as amended
(together with the rules and regulations promulgated thereunder, the "Securities
Act") in connection with a secondary resale of the Exchange Notes acquired by
such person and cannot rely on the position of the Staff of the Securities and
Exchange Commission (the "Commission") set forth in the no-action letters that
are discussed in the section of the Prospectus entitled "The Exchange Offer." In
addition, by accepting the Exchange Offer, the undersigned
2
<PAGE> 3
hereby (i) represents and warrants that, if the undersigned or any Beneficial
Owner of the Notes is a Participating Broker-Dealer, such Participating
Broker-Dealer acquired the Notes for its own account as a result of
market-making activities or other trading activities and has not entered into
any arrangement or understanding with the Company or any "affiliate" of the
Company (within the meaning of Rule 405 under the Securities Act) to distribute
the Exchange Notes to be received in the Exchange Offer, and (ii) acknowledges
that, by receiving Exchange Notes for its own account in exchange for Notes,
where such Notes were acquired as a result of market-making activities or other
trading activities, such Participating Broker-Dealer will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of
such Exchange Notes.
Holders of Notes that are tendering by book-entry transfer to the Exchange
Agent's account at DTC can execute the tender through the DTC Automated Tender
Offer Program ("ATOP"), for which the transaction will be eligible. DTC
participants that are accepting the Exchange Offer must transmit their
acceptance to DTC, which will verify the acceptance and execute a book-entry
delivery to the Exchange Agent's DTC account. DTC will then send an Agent's
Message to the Exchange Agent for its acceptance. DTC participants may also
accept the Exchange Offer prior to the Expiration Date by submitting a Notice of
Guaranteed Delivery through ATOP.
[ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED HEREWITH.
[ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT AND COMPLETE
"USE OF GUARANTEED DELIVERY" BELOW (Box 4).
[ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE "USE OF BOOK-ENTRY TRANSFER" BELOW (Box 5).
[ ] CHECK HERE IF YOU ARE A PARTICIPATING BROKER-DEALER WHO ACQUIRED THE NOTES
FOR ITS OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING
ACTIVITIES AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND
10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO (Box 7).
3
<PAGE> 4
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING THE BOXES
BOX 1
DESCRIPTION OF NOTES TENDERED
(Attach additional signed pages, if necessary)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED NOTE AGGREGATE
HOLDER(S), PRINCIPAL AGGREGATE
EXACTLY AS NAME(S) APPEAR(S) ON NOTE CERTIFICATE AMOUNT PRINCIPAL
CERTIFICATE(S) NUMBER(S) OF REPRESENTED AMOUNT
(PLEASE FILL IN, IF BLANK) NOTES* BY CERTIFICATE(S) TENDERED**
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Total
- ------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by persons tendering by book-entry transfer.
** The minimum permitted tender is $1,000 in principal amount of Notes. All
other tenders must be in integral multiples of $1,000 of principal amount.
Unless otherwise indicated in this column, the principal amount of all Note
Certificates identified in this Box 1 or delivered to the Exchange Agent
herewith shall be deemed tendered. See Instruction 4.
BOX 2
BENEFICIAL OWNER(S)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
STATE OF PRINCIPAL RESIDENCE OF EACH PRINCIPAL AMOUNT OF TENDERED NOTES
BENEFICIAL OWNER OF TENDERED NOTES HELD FOR ACCOUNT OF BENEFICIAL OWNER
- ----------------------------------------------------------------------------------------------
<S> <C>
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
==============================================================================================
</TABLE>
4
<PAGE> 5
BOX 3
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7)
TO BE COMPLETED ONLY IF EXCHANGE NOTES EXCHANGED FOR NOTES AND UNTENDERED
NOTES ARE TO BE SENT TO SOMEONE OTHER THAN THE UNDERSIGNED, OR TO THE
UNDERSIGNED AT AN ADDRESS OTHER THAN THAT SHOWN ABOVE
Mail Exchange Note(s) and any untendered Notes to:
Name(s):
-----------------------------------
(PLEASE PRINT)
Address:
------------------------------------
------------------------------------------------------
------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------
TAX IDENTIFICATION OR SOCIAL SECURITY NO.
- ------------------------------------------------------
BOX 4
USE OF GUARANTEED DELIVERY
(SEE INSTRUCTION 2)
TO BE COMPLETED ONLY IF NOTES ARE BEING TENDERED BY MEANS OF A NOTICE OF
GUARANTEED DELIVERY.
Name(s) of Registered Holder(s):
------------------------------------------------------
Window Ticket No. (if any): ------------------------
Date of Execution of Notice of Guaranteed Delivery:
------------------------------------------------------
Name of Institution that Guaranteed Delivery:
------------------------------------------------------
If Delivered by Book-Entry Transfer:
Account Number with DTC: -----------------
Transaction Code Number: -----------------
- ------------------------------------------------------
BOX 5
USE OF BOOK-ENTRY TRANSFER
(SEE INSTRUCTION 2)
TO BE COMPLETED ONLY IF DELIVERY OF TENDERED NOTES IS TO BE MADE BY BOOK-ENTRY
TRANSFER.
Name of Tendering Institution:
---------------------------------
Account Number:
--------------------------------------------------------------
Transaction Code Number:
-------------------------------------------
5
<PAGE> 6
BOX 6
TENDERING HOLDER SIGNATURE
(SEE INSTRUCTIONS 1 AND 5)
IN ADDITION, COMPLETE SUBSTITUTE FORM W-9
X
- --------------------------------------------------------------------------------
X
- --------------------------------------------------------------------------------
(SIGNATURE OF REGISTERED HOLDER(S) OR AUTHORIZED SIGNATORY)
Note: The above lines must be signed by the registered holder(s) of Notes as
their name(s) appear(s) on the Notes or by person(s) authorized to become
registered holder(s) (evidence of such authorization must be transmitted with
this Letter of Transmittal). If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer, or other person acting in a
fiduciary or representative capacity, such person must set forth his or her full
title below. See Instruction 5.
Name(s):
------------------------------------------------------------------------
Capacity:
-----------------------------------------------------------------------
Street Address:
-----------------------------------------------------------------
------------------------------------------------------------------
(ZIP CODE)
Area Code and Telephone Number:
-----------------------------------
Tax Identification or Social Security Number:
----------
SIGNATURE GUARANTEE
(IF REQUIRED BY INSTRUCTION 5)
Authorized Signature
-----------------------------------------------------------
X
- --------------------------------------------------------------------------------
Name:
---------------------------------------------------------------------------
(PLEASE PRINT)
Title:
--------------------------------------------------------------------------
Name of Firm:
------------------------------------------------------------------
(MUST BE AN ELIGIBLE INSTITUTION AS DEFINED IN INSTRUCTION 2)
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(ZIP CODE)
Area Code and Telephone Number:
-----------------------------------
Dated:
---------------------
6
<PAGE> 7
BOX 7
BROKER-DEALER STATUS
[ ] Check this box if the Beneficial Owner of the Notes is a Participating
Broker-Dealer and such Participating Broker-Dealer acquired the Notes for
its own account as a result of market-making activities or other trading
activities. If this box is checked, regardless of whether you are tendering
by book-entry transfer through ATOP, an executed copy of this Letter of
Transmittal must be received within three NYSE trading days after the
Expiration Date by American Banknote Corporation, attention Harvey J.
Kesner, facsimile (212) 338-0740.
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
EXCHANGE AGENT'S NAME: THE BANK OF NEW YORK
- ---------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE
FORM W-9 BOX AT RIGHT AND CERTIFY BY SIGNING AND ---------------------------------
DEPARTMENT OF THE TREASURY DATING BELOW Social Security Number
INTERNAL REVENUE SERVICE or
Employer Identification Number
--------------------------------------------------------------------------
PAYER'S REQUEST FOR PART 2 -- CERTIFICATION -- Under penalties of perjury, I certify that:
TAXPAYER IDENTIFICATION (1) The number shown on this form is my correct Taxpayer Identification
NUMBER ("TIN") Number (or I am waiting for a number to be issued to me) and
(2) I am not subject to backup withholding either because I have not been
notified by the Internal Revenue Service (the "IRS") that I am subject to
backup withholding as a result of failure to report all interest or
dividends, or the IRS has notified me that I am no longer subject to
backup withholding.
--------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS -- You must PART 3 --
cross out item (2) above if you have Awaiting TIN [ ]
been notified by the IRS that you are
currently subject to backup withholding
because of underreporting interest or
dividends on your tax return. However,
if after being notified by the IRS that
you were subject to backup withholding
you received another notification from
the IRS that you are no longer subject
to backup withholding, do not cross out
such item (2).
- ---------------------------------------------------------------------------------------------------------
Signature Date
- ---------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU. PLEASE REVIEW THE
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF
SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administrative Office or (b)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number by the time of payment, 31%
of all reportable payments made to me will be withheld, but that such amounts
will be refunded to me if I then provide a Taxpayer Identification Number within
60 days.
________________________________________________________________________, 1998
Signature Date
7
<PAGE> 8
AMERICAN BANKNOTE CORPORATION
INSTRUCTIONS TO LETTER OF TRANSMITTAL
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER
1. Delivery of this Letter of Transmittal and Notes. This Letter of
Transmittal is to be completed by registered holders of Notes if certificates
representing such Notes are to be forwarded herewith pursuant to the procedures
set forth in the Prospectus under "The Exchange Offer -- Procedures for
Tendering," unless delivery of such certificates is to be made by book-entry
transfer to the Exchange Agent's account maintained by DTC through ATOP. For a
holder to properly tender Notes pursuant to the Exchange Offer, a properly
completed and duly executed copy of this Letter of Transmittal, including
Substitute Form W-9, and any other documents required by this Letter of
Transmittal must be received by the Exchange Agent at its address set forth
herein, and either (i) certificates for Tendered Notes must be received by the
Exchange Agent at its address set forth herein, or (ii) such Tendered Notes must
be transferred pursuant to the procedures for book-entry transfer described in
the Prospectus under the caption "The Exchange Offer -- Procedures for
Tendering" (and a confirmation of such transfer received by the Exchange Agent),
in each case prior to 5:00 p.m., New York City time, on the Expiration Date. The
method of delivery of certificates for Tendered Notes, this Letter of
Transmittal and all other required documents to the Exchange Agent is at the
election and risk of the tendering holder and the delivery will be deemed made
only when actually received by the Exchange Agent. If delivery is by mail,
registered mail with return receipt requested, properly insured, is recommended.
Instead of delivery by mail, it is recommended that the holder use an overnight
or hand delivery service. In all cases, sufficient time should be allowed to
assure timely delivery. No Letter of Transmittal or Tendered Notes should be
sent to the Company. Neither the Company nor the Exchange Agent is under any
obligation to notify any tendering holder of the Company's acceptance of
Tendered Notes prior to the closing of the Exchange Offer.
2. Guaranteed Delivery Procedures. If a registered holder desires to
tender Notes pursuant to the Exchange Offer and (a) certificates representing
such tendered Notes are not immediately available, (b) time will not permit such
holder's Letter of Transmittal, certificates representing such Tendered Notes
and all other required documents to reach the Exchange Agent on or prior to the
Expiration Date, or (c) the procedures for book-entry transfer cannot be
completed on or prior to the Expiration Date, such holder may nevertheless
tender such Tendered Notes with the effect that such tender will be deemed to
have been received on or prior to the Expiration Date if the procedures set
forth below and in the Prospectus under "The Exchange Offer -- Guaranteed
Delivery Procedures" (including the completion of Box 4 above) are followed.
Pursuant to such procedures, (i) the tender must be made by or through an
Eligible Institution (as defined), (ii) a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form provided by the Company
herewith, or an Agent's Message with respect to a guaranteed delivery that is
accepted by the Company, must be received by the Exchange Agent on or prior to
the Expiration Date, and (iii) the certificates for the Tendered Notes, in
proper form for transfer (or a Book-Entry Confirmation of the transfer of such
Tendered Notes to the Exchange Agent's account at DTC as described in the
Prospectus), together with a Letter of Transmittal (or manually signed facsimile
thereof) properly completed and duly executed, with any required signature
guarantees and any other documents required by the Letter of Transmittal or a
properly transmitted Agent's Message, must be received by the Exchange Agent
within three New York Stock Exchange trading days after the date of execution of
the Notice of Guaranteed Delivery. Any holder who wishes to tender Notes
pursuant to the guaranteed delivery procedures described above must ensure that
the Exchange Agent receives the Notice of Guaranteed Delivery relating to such
tendered Notes prior to 5:00 p.m., New York City time, on the Expiration Date.
Failure to complete the guaranteed delivery procedures outlined above will not,
of itself, affect the validity or effect a revocation of any Letter of
8
<PAGE> 9
Transmittal form properly completed and executed by an Eligible Holder who
attempted to use the guaranteed delivery process.
3. Beneficial Owner Instructions to Registered Holders. Only a holder in
whose name Tendered Notes are registered on the books of the registrar (or the
legal representative or attorney-in-fact of such registered holder) may execute
and deliver this Letter of Transmittal. Any Beneficial Owner of Tendered Notes
who is not the registered holder must arrange promptly with the registered
holder to execute and deliver this Letter of Transmittal on his or her behalf
through the execution and delivery to the registered holder of the "Instructions
to Registered Holder and/or Book-Entry Transfer Facility Participant from
Beneficial Owner" form accompanying this Letter of Transmittal.
4. Partial Tenders. Tenders of Notes will be accepted only in integral
multiples of $1,000 in principal amount. If less than the entire principal
amount of Notes held by the holder is tendered, the tendering holder should fill
in the principal amount tendered in the column labeled "Aggregate Principal
Amount Tendered" of the box entitled "Description of Notes Tendered" (see Box 1)
above. The entire principal amount of Notes delivered to the Exchange Agent will
be deemed to have been tendered unless otherwise indicated. If the entire
principal amount of all Notes held by the holder is not tendered, then Notes for
the principal amount of Notes not tendered and Exchange Notes issued in exchange
for any Notes tendered and accepted will be sent to the holder at his or her
registered address, unless a different address is provided in the appropriate
box on this Letter of Transmittal, as soon as practicable following the
Expiration Date,
5. Signatures on the Letter of Transmittal; Bond Powers and Endorsements;
Guarantee of Signatures. If this Letter of Transmittal is signed by the
registered holder(s) of the Tendered Notes, the signature must correspond with
the name(s) as written on the face of the Tendered Notes without alteration,
enlargement or any change whatsoever.
If any of the Tendered Notes are owned of record by two joint owners, all
such owners must sign this Letter of Transmittal. If any Tendered Notes are held
in different names, it will be necessary to complete, sign and submit as many
separate copies of the Letter of Transmittal as there are different names in
which Tendered Notes are held.
If this Letter of Transmittal is signed by the registered holder(s) of
Tendered Notes, and Exchange Notes issued in exchange therefor are to be issued
(and any untendered principal amount of Notes is to be reissued) in the name of
the registered holder(s), then such registered holder(s) need not and should not
endorse any Tendered Notes, nor provide a separate bond power. In any other
case, such registered holder(s) must either properly endorse the Tendered Notes
or a properly completed separate bond power with this Letter of Transmittal,
with the signature(s) on the endorsement or bond power guaranteed by a Medallion
Signature Guarantor (as defined below).
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of any Tendered Notes, such Tendered Notes must be endorsed
or accompanied by appropriate bond powers, in each case, signed as the name(s)
of the registered holder(s) appear(s) on the Tendered Notes, with the
signature(s) on the endorsement or bond power guaranteed by a Medallion
Signature Guarantor.
If this Letter of Transmittal or any Tendered Notes or bond powers are
signed by trustees, executors, administrators, guardians, attorney-in-fact,
officers of corporations, or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing and, unless waived by the
Company, evidence satisfactory to the Company of their authority to so act must
he submitted with this Letter of Transmittal.
Signatures on this Letter of Transmittal must be guaranteed by a recognized
participant in the Securities Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Program or the Stock Exchange Medallion
Program (each a "Medallion Signature Guarantor"),
9
<PAGE> 10
unless the Tendered Notes are tendered (i) by a registered holder of Tendered
Notes (or by a participant in DTC whose name appears on a security position
listing as the owner of such Tendered Notes) who has not completed Box 3
("Special Delivery Instructions") on this Letter of Transmittal, or (ii) for the
account of a member firm of a registered national securities exchange, a member
of the National Association of Securities Dealers, Inc. ("NASD") or a commercial
bank or trust company having an office or correspondent in the United States
(each of the foregoing being referred to as an "Eligible Institution"). If the
Tendered Notes are registered in the name of a person other than the signor of
the Letter of Transmittal or if Notes not tendered are to be returned to a
person other than the registered holder, then the Signature on this Letter of
Transmittal accompanying the Tendered Notes must be guaranteed by a Medallion
Signature Guarantor as described above. Beneficial owners whose Notes are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee if they desire to tender such Notes.
6. Special Delivery Instructions. Tendering holders should indicate in
Box 3 the name and address to which the Exchange Notes and/or substitute Notes
for principal amounts not tendered or not accepted for exchange are to be sent,
if different from the name and address of the person signing this Letter of
Transmittal. In the case of issuance in a different name, the taxpayer
identification or social security number of the person must also be indicated.
7. Transfer Taxes. The Company will pay all transfer taxes, if any,
applicable to the exchange of Tendered Notes pursuant to the Exchange Offer. If,
however, a transfer tax is imposed for any reason other than the transfer and
exchange of Tendered Notes pursuant to the Exchange Offer, then the amount of
any such transfer taxes (whether imposed on the registered holder or on any
other person) will be payable by the tendering holder. If satisfactory evidence
of payment of such taxes or exemption therefrom is not submitted with this
Letter of Transmittal, the amount of such transfer taxes will be billed directly
to such tendering holder.
Except as provided in this Instruction 7, it will not be necessary for
transfer tax stamps to be affixed to the Tendered Notes listed in this Letter of
Transmittal.
8. Tax Identification Number. Federal income tax law requires that the
holder(s) of any Tendered Notes which are accepted for exchange must provide the
Exchange Agent (as payor) with its correct taxpayer identification number
("TIN"), which, in the case of a holder who is an individual, is his or her
social security number. If the Exchange Agent is not provided with the correct
TIN, the holder may be subject to backup withholding and a $50 penalty imposed
by the Internal Revenue Service. (If withholding results in an over-payment of
taxes, a refund may be obtained.) Certain holders (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding and reporting requirements. See the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional instructions.
To prevent backup withholding, each holder of Tendered Notes must provide
such holder's correct TIN by completing the Substitute Form W-9 set forth
herein, certifying that the TIN provided is correct (or that such holder is
awaiting a TIN), and that (i) the holder has not been notified by the Internal
Revenue Service that such holder is subject to backup withholding as a result of
failure to report all interest or dividends or (ii) if previously so notified,
the Internal Revenue Service has notified the holder that such holder is no
longer subject to backup withholding. If the Tendered Notes are registered in
more than one name or are not in the name of the actual owner, consult the
"Guidelines for Certification of Taxpayer IdentificatIon Number on Substitute
Form W-9" for information on which TIN to report.
The Company reserves the right in its sole discretion to take whatever
steps are necessary to comply with the Company's obligation regarding backup
withholding.
9. Validity of Tenders. All questions as to the validity, form,
eligibility (including time of receipt), acceptance and withdrawal of Tendered
Notes will be determined by the Company in its sole discretion, which
determination will be final and binding. The Company reserves the right to
10
<PAGE> 11
reject any and all Notes not validly tendered or any Notes the Company's
acceptance of which would, in the opinion of the Company or its counsel, be
unlawful. The Company also reserves the right to waive any conditions of the
Exchange Offer or defects or irregularities in tenders of Notes as to any
ineligibility of any holder who seeks to tender Notes in the Exchange Offer. The
interpretation of the terms and conditions of the Exchange Offer (including this
Letter of Transmittal and the instructions hereto) by the Company shall be final
and binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Notes must be cured within such time as the Company
shall determine. Neither the Company, the Exchange Agent nor any other person
shall be under any duty to give notification of defects or irregularities with
respect to tenders of Notes, nor shall any of them incur any liability for
failure to give such notification. Tenders of Notes will not be deemed to have
been made until such defects or irregularities have been cured or waived. Any
Notes received by the Exchange Agent that are not properly tendered and as to
which the defects or irregularities have not been cured or waived will be
returned by the Exchange Agent to the tendering holders, unless otherwise
provided in this Letter of Transmittal, as soon as practicable following the
Expiration Date.
10. Waiver of Conditions. The Company reserves the absolute right to
amend, waive or modify any of the conditions in the Exchange Offer in the case
of any Tendered Notes.
11. No Conditional Tender. No alternative, conditional, irregular, or
contingent tender of Notes or transmittal of this Letter of Transmittal will be
accepted.
12. Mutilated, Lost, Stolen or Destroyed Notes. Any tendering holder
whose Notes have been mutilated, lost, stolen or destroyed should contact the
Exchange Agent at the address indicated herein for further instructions.
13. Requests for Assistance or Additional Copies. Questions and requests
for assistance and requests for additional copies of the Prospectus or this
Letter of Transmittal may be directed to the Exchange Agent at the address
indicated herein. Holders may also contact their broker, dealer, commercial
bank, trust company or other nominee for assistance concerning the Exchange
Offer.
14. Acceptance of Tendered Notes and Issuance of Exchange Notes; Return of
Notes. Subject to the terms and conditions of the Exchange Offer, the Company
will accept for exchange all validly tendered Notes as soon as practicable after
the Expiration Date and will issue Exchange Notes therefor as soon as
practicable thereafter. For purposes of the Exchange Offer, the Company shall be
deemed to have accepted Tendered Notes when, as and if the Company has given
written or oral notice (immediately followed in writing) thereof to the Exchange
Agent. If any Tendered Notes are not exchanged pursuant to the Exchange Offer
for any reason, such unexchanged Notes will be returned, without expense, to the
undersigned at the address shown in Box 1 or at a different address as may be
indicated herein under "Special Delivery Instructions" (Box 3).
15. Withdrawal. Tenders may be withdrawn only pursuant to the procedures
set forth in the Prospectus under the caption "The Exchange Offer -- Withdrawal
of Tenders."
11
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
IN RESPECT OF
11 1/4% SENIOR SUBORDINATED NOTES DUE 2007
OF
AMERICAN BANKNOTE CORPORATION
PURSUANT TO THE PROSPECTUS DATED , 1998
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1998, UNLESS EXTENDED ("THE EXPIRATION
DATE").
As set forth in the Prospectus dated , 1998 (as it may be
supplemented and amended from time to time, the "Prospectus") of American
Banknote Corporation (the "Company") under "The Exchange Offer -- Guaranteed
Delivery Procedures," and in the Instructions to the related Letter of
Transmittal (the "Letter of Transmittal"), this form, or one substantially
equivalent hereto, or an Agent's Message relating to the guaranteed delivery
procedures, must be used to accept the Company's offer (the "Exchange Offer") to
exchange any and all of its outstanding 11 1/4% Senior Subordinated Notes due
2007, Series A (the "Notes"), for new 1/4% Senior Subordinated Notes due 2007,
Series B (the "Exchange Notes"), if time will not permit the Letter of
Transmittal, certificates representing such Notes and other required documents
to reach the Exchange Agent, or the procedures for book-entry transfer cannot be
completed, on or prior to the Expiration Date (as defined).
This form must be delivered by an Eligible Institution (as defined herein)
by mail or hand delivery or transmitted via facsimile to the Exchange Agent as
set forth above. If a signature on the Letter of Transmittal is required to be
guaranteed by a Medallion Signature Guarantor under the instructions thereto,
such signature guarantee must appear in the applicable space provided in the
Letter of Transmittal. This form is not to be used to guarantee signatures.
Questions and requests for assistance and requests for additional copies of
the Prospectus may be directed to the Exchange Agent at the address above.
Holders may also contact their broker, dealer, commercial bank, trust company,
or other nominee for assistance concerning the Exchange Offer.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
By Registered or Certified Facsimile Transmissions: By Hand or Overnight Delivery:
Mail: (Eligible Institutions Only) The Bank of New York
The Bank of New York (212) 571-3080 101 Barclay Street
101 Barclay Street, 7E Corporate Trust Services Window
New York, New York 10286 Confirm By Telephone Ground Level
Attention: Reorganization New York, New York 10286
Section (212) 815-6333 Attention: Reorganization
For Information Call: Section
(212) 815-6333
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS, OR
TRANSMISSION VIA FACSIMILE TO A NUMBER, OTHER THAN AS SET FORTH ABOVE WILL NOT
CONSTITUTE VALID DELIVERY.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tender(s) to the Company, upon the terms and subject
to the conditions set forth in the Prospectus and the related Letter of
Transmittal (receipt of which is hereby acknowledged), the principal amount of
the Notes specified below pursuant to the guaranteed delivery procedures set
forth in the Prospectus under "The Exchange Offer -- Guaranteed Delivery
Procedures" and in Instruction 2 to the Letter of Transmittal. The undersigned
hereby authorizes the Exchange Agent to deliver this Notice of Guaranteed
Delivery to the Company with respect to the Notes tendered pursuant to the
Exchange Offer.
The undersigned understands that Notes will be exchanged only after timely
receipt by the Exchange Agent of (i) such Notes, or a Book-Entry Confirmation,
and (ii) a Letter of Transmittal (or a manually signed facsimile thereof),
including by means of an Agent's Message, of the transfer of such Notes into the
Exchange Agent's account at the Book-Entry Transfer Facility, with respect to
such Notes, properly completed and duly executed, with any signature guarantees
and any other documents required by the Letter of Transmittal within three New
York Stock Exchange, Inc. trading days after the execution hereof. The
undersigned also understands that the method of delivery of this Notice of
Guaranteed Delivery and any other required documents to the Exchange Agent is at
the election and sole risk of the holder, and the delivery will be deemed made
only when actually received by the Exchange Agent.
The undersigned understands that tenders of Notes will be accepted only in
principal amounts equal to $1,000 or integral multiples thereof. The undersigned
also understands that tenders of Notes may be withdrawn at any time prior to the
Expiration Date.
All authority conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall not be affected by, and shall survive, the death or
incapacity of the undersigned, and every obligation of the undersigned under
this Notice of Guaranteed Delivery shall be binding upon the heirs, executors,
administrators, trustees in bankruptcy, personal and legal representatives,
successors and assigns of the undersigned.
All capitalized terms used herein but not defined herein shall have the
meanings ascribed to them in the Prospectus.
2
<PAGE> 3
PLEASE SIGN AND COMPLETE
Principal Amount of Notes Tendered:
---------------------------------------------
Name(s) of Registered Holder(s):
-------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Certificate No.(s) of Notes (if available):
--------------------------------------
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Area Code and Telephone No.:
----------------------------------------------------
If Notes will be delivered by book-entry transfer, provide the following
information:
Signature(s) of Registered Holder(s)
or Authorized Signatory:
--------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DTC Account No.:
----------------------------------------------------------------
Date:
---------------------------------------------------------------------------
THIS NOTICE OF GUARANTEED DELIVERY MUST BE SIGNED BY THE HOLDER(S) EXACTLY AS
THEIR NAME(S) APPEAR(S) ON CERTIFICATE(S) FOR NOTES OR ON A SECURITY POSITION
LISTING AS THE OWNER OF NOTES, OR BY PERSON(S) AUTHORIZED TO BECOME HOLDER(S) BY
ENDORSEMENTS AND DOCUMENTS TRANSMITTED WITH THIS NOTICE OF GUARANTEED DELIVERY
WITHOUT ALTERATION, ENLARGEMENT OR ANY CHANGE WHATSOEVER. IF SIGNATURE IS BY A
TRUSTEE, EXECUTOR, ADMINISTRATOR, GUARDIAN, ATTORNEY-IN-FACT, OFFICER OR OTHER
PERSON ACTING IN A FIDUCIARY OR REPRESENTATIVE CAPACITY, SUCH PERSON MUST
PROVIDE THE FOLLOWING INFORMATION.
Please print name(s) and address(es)
Name(s):
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Capacity:
-----------------------------------------------------------------------
Address(es):
--------------------------------------------------------------------
- --------------------------------------------------------------------------------
3
<PAGE> 4
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member of the Securities Transfer Agents Medallion
Program, the Stock Exchange Medallion Program or the New York Stock Exchange,
Inc. Medallion Signature Program (each, an "Eligible Institution"), hereby (i)
represents that the above-named persons are deemed to own the Notes tendered
hereby within the meaning of Rule 14e-4 promulgated under the Securities
Exchange Act of 1934, as amended ("Rule 14e-4"), (ii) represents that such
tender of Notes complies with Rule 14e-4 and (iii) guarantees that the Notes
tendered hereby are in proper form for transfer (pursuant to the procedures set
forth in the Prospectus under "The Exchange Offer -- Guaranteed Delivery
Procedures"), and that the Exchange Agent will receive (a) such Notes, or a
Book-Entry Confirmation of the transfer of such Notes into the Exchange Agent's
account at the Book-Entry Transfer Facility and (b) a properly completed and
duly executed Letter of Transmittal or facsimile thereof (or Agent's message)
with any required signature guarantees and any other documents required by the
Letter of Transmittal within three New York Stock Exchange, Inc. trading days
after the date of execution hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Exchange Agent and must deliver the Letter of Transmittal and
Notes to the Exchange Agent within the time period shown herein. Failure to do
so could result in a financial loss to such Eligible Institution.
Name of Firm:
-------------------------------------------------------------------
Authorized Signature:
-----------------------------------------------------------
Title:
--------------------------------------------------------------------------
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Zip Code)
Area Code and Telephone Number:
-------------------------------------------------
Dated:
------------------------------ , 1998
DO NOT SEND NOTES WITH THIS FORM. NOTES SHOULD BE SENT TO THE EXCHANGE AGENT
TOGETHER WITH A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL.
4
<PAGE> 1
EXHIBIT 99.3
INSTRUCTIONS TO REGISTERED HOLDER AND/OR
BOOK-ENTRY TRANSFER FACILITY PARTICIPANT FROM BENEFICIAL OWNER
OF
AMERICAN BANKNOTE CORPORATION
11 1/4% SENIOR SUBORDINATED NOTES DUE 2007
To Registered Holder and/or Participant of the Book-Entry Transfer
Facility:
The undersigned hereby acknowledges receipt of the Prospectus,
dated , 1998 (as the same may be amended or supplemented from time to
time, the "Prospectus") of American Banknote Corporation, a Delaware corporation
(the "Company"), and the accompanying Letter of Transmittal (the "Letter of
Transmittal"), that together constitute the Company's offer (the "Exchange
Offer"), Capitalized terms used but not defined herein have the meanings
ascribed to them in the Prospectus.
This will instruct you, the registered holder and/or book-entry transfer
facility participant, as to action to be taken by you relating to the Exchange
Offer with respect to the 11 1/4% Senior Subordinated Notes due 2007 (the
"Notes") held by you for the account of the undersigned.
The aggregate face amount of the Notes held by you for the account of the
undersigned is (fill in amount):
$ of the 11 1/4% Senior Subordinated Notes due 2007.
With respect to the Exchange Offer, the undersigned hereby instructs you
(check appropriate box):
[ ] TO TENDER the following Notes held by you for the account of the
undersigned (insert principal amount of Notes to be tendered, if any):
$
[ ] NOT TO TENDER any Notes held by you for the account of the
undersigned.
If the undersigned instruct you to tender the Notes held by you for the
account of the undersigned, it is understood that you are authorized (a) to
make, on behalf of the undersigned (and the undersigned, by its signature below,
hereby makes to you), the representation and warranties contained in the Letter
of Transmittal that are to be made with respect to the undersigned as a
beneficial owner, including, but not limited to, the representations that (i)
the undersigned's principal residence is in the State of (fill in
State) (ii) the undersigned is acquiring the Exchange Notes in the ordinary
course of business of the undersigned, (iii) the undersigned is not
participating, does not participate, and has no arrangement or understanding
with any person to participate in the distribution of the Exchange Notes, (iv)
the undersigned acknowledges that any person participating in the Exchange Offer
for the purpose of distributing the Exchange Notes must comply with the
registration and prospectus delivery requirements of the Securities Act of 1933,
as amended (the "Act"), in connection with a secondary resale transaction of the
Exchange Notes acquired by such person and cannot rely on the position of the
Staff of the Securities and Exchange Commission set forth in no-action letters
that are discussed in the section of the Prospectus entitled "The Exchange
Offer -- Resale of the Exchange Notes," and (v) the undersigned is not an
"affiliate," as defined in Rule 405 under the Act, of the Company or any
Guarantor; (b) to agree, on behalf of the undersigned, as set forth in the
Letter of Transmittal; and (c) to take such other action as necessary under the
Prospectus or the Letter of Transmittal to effect the valid tender of such
Notes.
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<PAGE> 2
[ ] Check this box if the Beneficial Owner of the Note is a Participating
Broker-Dealer and such Participating Broker-Dealer acquired the Notes
for its own account as a result of market-making activities or other
trading activities. If this box is checked, a copy of these
Instructions must be received within three New York Stock Exchange
trading days after the Expiration Date by American Banknote
Corporation, attention Harvey J. Kesner, facsimile (212) 338-0740.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGN HERE
Name of beneficial owner(s):
----------------------------------------------------
Signature(s):
-------------------------------------------------------------------
Name (please print):
------------------------------------------------------------
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Telephone number:
---------------------------------------------------------------
Taxpayer Identification or Social Security Number:
------------------------------
Date:
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- --------------------------------------------------------------------------------
2
<PAGE> 1
EXHIBIT 99.4
______________, 1998
EXCHANGE AGENT AGREEMENT
The Bank of New York
Corporate Trust Trustee Administration
101 Barclay Street - 21st Floor
New York, New York 10286
Ladies and Gentlemen:
American Banknote Corporation (the "Company") proposes to make an
offer (the "Exchange Offer") to exchange its 11 1/4% Senior Subordinated Notes
due 2007 (the "Old Notes") for its 11 1/4% Senior Subordinated Notes due 2007,
Series B (the "New Notes"). The terms and conditions of the Exchange Offer as
currently contemplated are set forth in a prospectus, dated ___________, 1998
(the "Prospectus"), proposed to be distributed to all record holders of the Old
Notes. The Old Notes and the New Notes are collectively referred to herein as
the "Notes".
The Company hereby appoints The Bank of New York to act as exchange
agent (the "Exchange Agent") in connection with the Exchange Offer. References
hereinafter to "you" shall refer to The Bank of New York.
The Exchange Offer is expected to be commenced by the Company on or
about _____________, 1998. The Letter of Transmittal accompanying the Prospectus
(or in the case of book entry securities, the ATOP system) is to be used by the
holders of the Old Notes to accept the Exchange Offer and contains instructions
with respect to the delivery of certificates for Old Notes tendered in
connection therewith.
The Exchange Offer shall expire at 5:00 P.M., New York City time, on
____________, 1998 or on such later date or time to which the Company may extend
the Exchange Offer (the "Expiration Date"). Subject to the terms and conditions
set forth in the Prospectus, the Company expressly reserves the right to extend
the Exchange Offer from time to time and may extend the Exchange Offer by giving
oral (confirmed in writing) or written notice to you before 9:00 A.M., New York
City time, on the business day following the previously scheduled Expiration
Date.
<PAGE> 2
The Company expressly reserves the right to amend or terminate the
Exchange Offer, and not to accept for exchange any Old Notes not theretofore
accepted for exchange, upon the occurrence of any of the conditions of the
Exchange Offer specified in the Prospectus under the caption "The Exchange
Offer-Conditions." The Company will give oral (confirmed in writing) or written
notice of any amendment, termination or nonacceptance to you as promptly as
practicable.
In carrying out your duties as Exchange Agent, you are to act in
accordance with the following instructions:
1. You will perform such duties and only such duties as are
specifically set forth in the section of the Prospectus captioned "The Exchange
Offer" or as specifically set forth herein; provided, however, that in no way
will your general duty to act in good faith be discharged by the foregoing.
2. You will establish an account with respect to the Old Notes at
The Depository Trust Company (the "Book-Entry Transfer Facility") for purposes
of the Exchange Offer within two business days after the date of the Prospectus,
and any financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of the Old Notes by causing the
Book-Entry Transfer Facility to transfer such Old Notes into your account in
accordance with the Book-Entry Transfer Facility's procedure for such transfer.
3. You are to examine each of the Letters of Transmittal and
certificates for Old Notes (or confirmation of book-entry transfer into your
account at the Book-Entry Transfer Facility) and any other documents delivered
or mailed to you by or for holders of the Old Notes to ascertain whether: (i)
the Letters of Transmittal and any such other documents are duly executed and
properly completed in accordance with instructions set forth therein and (ii)
the Old Notes have otherwise been properly tendered. In each case where the
Letter of Transmittal or any other document has been improperly completed or
executed or any of the certificates for Old Notes are not in proper form for
transfer or some other irregularity in connection with the acceptance of the
Exchange Offer exists, you will endeavor to inform the presenters of the need
for fulfillment of all requirements and to take any other action as may be
necessary or advisable to cause such irregularity to be corrected.
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<PAGE> 3
4. With the approval of the Chairman, President or any Vice
President of the Company (such approval, if given orally, to be confirmed in
writing) or any other party designated by such an officer in writing, you are
authorized to waive any irregularities in connection with any tender of Old
Notes pursuant to the Exchange Offer.
5. Tenders of Old Notes may be made only as set forth in the Letter
of Transmittal and in the section of the Prospectus captioned "The Exchange
Offer-Procedures for Tendering", and Old Notes shall be considered properly
tendered to you only when tendered in accordance with the procedures set forth
therein.
Notwithstanding the provisions of this paragraph 5, Old Notes which
the Chairman, President or any Vice President of the Company shall approve as
having been properly tendered shall be considered to be properly tendered (such
approval, if given orally, shall be confirmed in writing).
6. You shall advise the Company with respect to any Old Notes
received subsequent to the Expiration Date and accept its instructions with
respect to disposition of such Old Notes.
7. You shall accept tenders:
(a) in cases where the Old Notes are registered in two or more names
only if signed by all named holders;
(b) in cases where the signing person (as indicated on the Letter of
Transmittal) is acting in a fiduciary or a representative capacity only when
proper evidence of his or her authority so to act is submitted; and
(c) from persons other than the registered holder of Old Notes
provided that customary transfer requirements, including any applicable transfer
taxes, are fulfilled.
You shall accept partial tenders of Old Notes where so indicated and
as permitted in the Letter of Transmittal and deliver certificates for Old Notes
to the transfer agent for split-up and return any untendered Old Notes to the
holder (or such other person as may be designated in the Letter of Transmittal)
as promptly as practicable after expiration or termination of the Exchange
Offer.
8. Upon satisfaction or waiver of all of the conditions to the
Exchange Offer, the Company will notify you
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<PAGE> 4
(such notice if given orally, to be confirmed in writing) of its acceptance,
promptly after the Expiration Date, of all Old Notes properly tendered and you,
on behalf of the Company, will exchange such Old Notes for New Notes and cause
such Old Notes to be cancelled. Delivery of New Notes will be made on behalf of
the Company by you at the rate of $1,000 principal amount of New Notes for each
$1,000 principal amount of the corresponding series of Old Notes tendered
promptly after notice (such notice if given orally, to be confirmed in writing)
of acceptance of said Old Notes by the Company; provided, however, that in all
cases, Old Notes tendered pursuant to the Exchange Offer will be exchanged only
after timely receipt by you of certificates for such Old Notes (or confirmation
of book-entry transfer into your account at the Book-Entry Transfer Facility), a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) with any required signature guarantees and any other required
documents. You shall issue New Notes only in denominations of $1,000 or any
integral multiple thereof.
9. Tenders pursuant to the Exchange Offer are irrevocable, except
that, subject to the terms and upon the conditions set forth in the Prospectus
and the Letter of Transmittal, Old Notes tendered pursuant to the Exchange Offer
may be withdrawn at any time prior to the Expiration Date.
10. The Company shall not be required to exchange any Old Notes
tendered if any of the conditions set forth in the Exchange Offer are not met.
Notice of any decision by the Company not to exchange any Old Notes tendered
shall be given (and confirmed in writing) by the Company to you.
11. If, pursuant to the Exchange Offer, the Company does not accept
for exchange all or part of the Old Notes tendered because of an invalid tender,
the occurrence of certain other events set forth in the Prospectus under the
caption "The Exchange Offer-Conditions" or otherwise, you shall as soon as
practicable after the expiration or termination of the Exchange Offer return
those certificates for unaccepted Old Notes (or effect appropriate book-entry
transfer), together with any related required documents and the Letters of
Transmittal relating thereto that are in your possession, to the persons who
deposited them.
12. All certificates for reissued Old Notes, unaccepted Old Notes or
for New Notes shall be forwarded by first-class mail.
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<PAGE> 5
13. You are not authorized to pay or offer to pay any concessions,
commissions or solicitation fees to any broker, dealer, bank or other persons or
to engage or utilize any person to solicit tenders.
14. As Exchange Agent hereunder you:
(a) shall have no duties or obligations other than those
specifically set forth herein or as may be subsequently agreed to in writing by
you and the Company;
(b) will be regarded as making no representations and having
no responsibilities as to the validity, sufficiency, value or genuineness of any
of the certificates or the Old Notes represented thereby deposited with you
pursuant to the Exchange Offer, and will not be required to and will make no
representation as to the validity, value or genuineness of the Exchange Offer;
(c) shall not be obligated to take any legal action hereunder
which might in your reasonable judgment involve any expense or liability, unless
you shall have been furnished with reasonable indemnity;
(d) may reasonably rely on and shall be protected in acting in
reliance upon any certificate, instrument, opinion, notice, letter, telegram or
other document or security delivered to you and reasonably believed by you to be
genuine and to have been signed by the proper party or parties;
(e) may reasonably act upon any tender, statement, request,
comment, agreement or other instrument whatsoever not only as to its due
execution and validity and effectiveness of its provisions, but also as to the
truth and accuracy of any information contained therein, which you shall in good
faith believe to be genuine or to have been signed or represented by a proper
person or persons;
(f) may rely on and shall be protected in acting upon written
or oral instructions from any officer of the Company;
(g) may consult with your counsel with respect to any
questions relating to your duties and responsibilities and the advice or opinion
of such counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted to be taken by you
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<PAGE> 6
hereunder in good faith and in accordance with the advice or opinion of such
counsel; and
(h) shall not advise any person tendering Old Notes pursuant
to the Exchange Offer as to the wisdom of making such tender or as to the market
value or decline or appreciation in market value of any Old Notes.
15. You shall take such action as may from time to time be requested
by the Company or its counsel (and such other action as you may reasonably deem
appropriate) to furnish copies of the Prospectus, Letter of Transmittal and the
Notice of Guaranteed Delivery (as defined in the Prospectus) or such other forms
as may be approved from time to time by the Company, to all persons requesting
such documents and to accept and comply with telephone requests for information
relating to the Exchange Offer, provided that such information shall relate only
to the procedures for accepting (or withdrawing from) the Exchange Offer. The
Company will furnish you with copies of such documents at your request. All
other requests for information relating to the Exchange Offer shall be directed
to the Company, Attention: Jean Marie Young, Director of Investor Relations.
16. You shall advise by facsimile transmission or telephone, and
promptly thereafter confirm in writing to Harvey J. Kesner, Esq., of the
Company, David G. Schwartz, Esq., of Weil, Gotshal & Manges LLP, counsel to the
Company (facsimile no. (212) 310-8133)), and such other person or persons as it
may request, daily (and more frequently during the week immediately preceding
the Expiration Date and if otherwise requested) up to and including the
Expiration Date, as to the number of Old Notes which have been tendered pursuant
to the Exchange Offer and the items received by you pursuant to this Agreement,
separately reporting and giving cumulative totals as to items properly received
and items improperly received. In addition, you will also inform, and cooperate
in making available to, the Company or any such other person or persons upon
oral request made from time to time prior to the Expiration Date of such other
information as it or he or she reasonably requests. Such cooperation shall
include, without limitation, the granting by you to the Company and such person
as the Company may request of access to those persons on your staff who are
responsible for receiving tenders, in order to ensure that immediately prior to
the Expiration Date the Company shall have received information in sufficient
detail to enable it to decide whether to extend the Exchange Offer. You shall
prepare a final list of all persons whose tenders were accepted, the aggregate
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<PAGE> 7
principal amount of Old Notes tendered, the aggregate principal amount of Old
Notes accepted and deliver said list to the Company.
17. Letters of Transmittal and Notices of Guaranteed Delivery shall
be stamped by you as to the date and the time of receipt thereof and shall be
preserved by you for a period of time at least equal to the period of time you
preserve other records pertaining to the transfer of securities. You shall
dispose of unused Letters of Transmittal and other surplus materials by
returning them to the Company.
18. You hereby expressly waive any lien, encumbrance or right of
set-off whatsoever that you may have with respect to funds deposited with you
for the payment of transfer taxes by reasons of amounts, if any, borrowed by the
Company, or any of its subsidiaries or affiliates pursuant to any loan or credit
agreement with you or for compensation owed to you hereunder.
19. For services rendered as Exchange Agent hereunder, you shall be
entitled to such compensation as set forth on Schedule I attached hereto.
20. You hereby acknowledge receipt of the Prospectus and the Letter
of Transmittal and further acknowledge that you have examined each of them. Any
inconsistency between this Agreement, on the one hand, and the Prospectus and
the Letter of Transmittal (as they may be amended from time to time), on the
other hand, shall be resolved in favor of the latter two documents, except with
respect to the duties, liabilities and indemnification of you as Exchange Agent,
which shall be controlled by this Agreement.
21. The Company covenants and agrees to indemnify and hold you
harmless in your capacity as Exchange Agent hereunder against any loss,
liability, cost or expense, including attorneys' fees and expenses, arising out
of or in connection with any act, omission, delay or refusal made by you in
reliance upon any signature, endorsement, assignment, certificate, order,
request, notice, instruction or other instrument or document reasonably believed
by you to be valid, genuine and sufficient and in accepting any tender or
effecting any transfer of Old Notes reasonably believed by you in good faith to
be authorized, and in delaying or refusing in good faith to accept any tenders
or effect any transfer of Old Notes; provided, however, that the Company shall
not be liable for indemnification or otherwise for any loss, liability, cost or
expense to the extent arising out of
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<PAGE> 8
your gross negligence or willful misconduct. In no case shall the Company be
liable under this indemnity with respect to any claim against you unless the
Company shall be notified by you, by letter or by facsimile confirmed by letter,
of the written assertion of a claim against you or of any other action commenced
against you, promptly after you shall have received any such written assertion
or notice of commencement of action. The Company shall be entitled to
participate at its own expense in the defense of any such claim or other action,
and, if the Company so elects, the Company shall assume the defense of any suit
brought to enforce any such claim. In the event that the Company shall assume
the defense of any such suit, the Company shall not be liable for the fees and
expenses of any additional counsel thereafter retained by you so long as the
Company shall retain counsel satisfactory to you to defend such suit, and so
long as you have not determined, in your reasonable judgment, that a conflict of
interest exists between you and the Company.
22. You shall arrange to comply with all requirements under the tax
laws of the United States, including those relating to missing Tax
Identification Numbers, and shall file any appropriate reports with the Internal
Revenue Service. The Company understands that you are required to deduct 31% on
payments to holders who have not supplied their correct Taxpayer Identification
Number or required certification. Such funds will be turned over to the Internal
Revenue Service in accordance with applicable regulations.
23. You shall deliver or cause to be delivered, in a timely manner
to each governmental authority to which any transfer taxes are payable in
respect of the exchange of Old Notes, your check in the amount of all transfer
taxes so payable, and the Company shall reimburse you for the amount of any and
all transfer taxes payable in respect of the exchange of Old Notes; provided,
however, that you shall reimburse the Company for amounts refunded to you in
respect of your payment of any such transfer taxes, at such time as such refund
is received by you.
24. This Agreement and your appointment as Exchange Agent hereunder
shall be construed and enforced in accordance with the laws of the State of New
York applicable to agreements made and to be performed entirely within such
state, and without regard to conflicts of law principles, and shall inure to the
benefit of, and the obligations created hereby shall be binding upon, the
successors and assigns of each of the parties hereto.
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<PAGE> 9
25. This Agreement may be executed in two or more counterparts, each
of which shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
26. In case any provision of this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
27. This Agreement shall not be deemed or construed to be modified,
amended, rescinded, cancelled or waived, in whole or in part, except by a
written instrument signed by a duly authorized representative of the party to be
charged. This Agreement may not be modified orally.
28. Unless otherwise provided herein, all notices, requests and
other communications to any party hereunder shall be in writing (including
facsimile or similar writing) and shall be given to such party, addressed to it,
at its address or telecopy number set forth below:
If to the Company:
American Banknote Corporation
200 Park Avenue
New York, New York 10166
Facsimile: (212) 338-0740
Attention: Harvey J. Kesner, Esq.
If to the Exchange Agent:
The Bank of New York
101 Barclay Street
Floor 21 West
New York, New York 10286
Facsimile: (212) 815-5915
Attention: Corporate Trust Trustee
Administration
29. Unless terminated earlier by the parties hereto, this Agreement
shall terminate 90 days following the Expiration Date. Notwithstanding the
foregoing, Paragraphs 19, 21 and 23 shall survive the termination of this
Agreement. Upon any termination of this Agreement, you shall promptly deliver to
the Company any certificates for Notes, funds or property then held by you as
Exchange Agent under this Agreement.
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<PAGE> 10
30. This Agreement shall be binding and effective as of the date
hereof.
Please acknowledge receipt of this Agreement and confirm the
arrangements herein provided by signing and returning the enclosed copy.
AMERICAN BANKNOTE CORPORATION
By:________________________
Name: Harvey J. Kesner
Title: Executive Vice
President, General
Counsel and
Secretary
Accepted as of the date
first above written:
THE BANK OF NEW YORK, as Exchange Agent
By:_____________________
Name:
Title:
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<PAGE> 11
SCHEDULE I
FEES
<TABLE>
<S> <C>
Flat fee ................................. $3,500
</TABLE>
11
