1 EXHIBIT 4.27
EXECUTION COPY
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as
of July 24, 1997, by and among American Banknote Corporation, a
Delaware corporation, with headquarters located at ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("Company"), and
each of the purchasers set forth on the signature pages hereto
(the "Buyers").
WHEREAS:
A. The Company and the Buyers are executing and delivering
this Agreement in reliance upon the exemption from securities
registration afforded by Rule 506 under Regulation D ("Regulation
D") as promulgated by the United States Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as
amended (the "1933 Act");
B. The Company has authorized the issuance to the Buyers of
(i) convertible subordinated debentures, in the form attached
hereto as Exhibit "A", in the aggregate principal amount of Five
Million Dollars ($5,000,000), convertible into shares of common
stock, $.01 par value per share, of the Company (together with
any rights attached to such common stock pursuant to the
Company's Stockholders Rights Plan, the "Common Stock"), upon the
terms and subject to the limitations and conditions set forth in
such debentures (the "Debentures"), (ii) warrants, in the form
attached hereto as Exhibit "B", to purchase One Hundred Forty
Thousand (140,000) shares of Common Stock (the "A-Warrants") and
(iii) warrants, in the form attached hereto as Exhibit "C", to
purchase Seventy-Five Thousand (75,000) shares of Common Stock
(the "B-Warrants and, collectively with the A-Warrants, the
"Closing Warrants");
C. The Buyers desire to purchase and the Company desires to
issue and sell, upon the terms and conditions set forth in this
Agreement, the Debentures, the A-Warrants, and the B-Warrants,
for an aggregate purchase price of Five Million Dollars
($5,000,000).
D. Each Buyer wishes to purchase, upon the terms and
conditions stated in this Agreement, such principal amount of
Debentures and number of Warrants as is set forth immediately
below its name on the signature pages hereto;
E. Contemporaneous with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a
Registration Rights Agreement, in the form attached hereto as
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Exhibit "D" (the "Registration Rights Agreement"), pursuant to
which the Company has agreed to provide certain registration
rights under the 1933 Act and the rules and regulations
promulgated thereunder, and applicable state securities laws; and
F. In accordance with the terms of the Debentures, under
certain circumstances the Company may redeem the Debentures for
cash plus a number of additional warrants, in the form attached
hereto as Exhibit "E", determined based upon the redemption
amount (the "Redemption Warrants" and, collectively with the
Closing Warrants, the "Warrants").
NOW THEREFORE, the Company and each of the Buyers
(severally and not jointly) hereby agree as follows:
1. PURCHASE AND SALE OF DEBENTURES AND CLOSING
WARRANTS.
a. Purchase of Debentures and Closing Warrants.
The Company shall issue and sell to each Buyer and each Buyer
severally agrees to purchase from the Company such principal
amount of Debentures as are set forth immediately below such
Buyer's name on the signatures pages hereto at the aggregate
purchase price (the "Purchase Price") as is set forth immediately
below such Buyer's name on the signature pages hereto. The
issuance, sale and purchase of the Debentures and Closing
Warrants shall take place at the closing (the "Closing").
Subject to the satisfaction (or waiver) of the conditions thereto
set forth in Section 6 and Section 7 below, at the Closing, the
Company shall issue and sell to each Buyer and each Buyer shall
purchase from the Company the aggregate principal amount of
Debentures and Closing Warrants which such Buyer is purchasing
hereunder for the Purchase Price. The aggregate principal amount
of Debentures to be issued at the Closing is Five Million Dollars
($5,000,000), the aggregate number of A-Warrants to be issued at
the Closing is One Hundred Forty Thousand (140,000) and the
aggregate number of B-Warrants to be issued at the Closing is
Seventy-Five Thousand (75,000), for an aggregate purchase price
of Five Million Dollars ($5,000,000). The term Debentures
includes the Debentures to be sold hereunder and any debenture(s)
issued in replacement thereof in accordance with the terms
thereof.
b. Form of Payment. On the Closing Date (as
defined below), (i) each Buyer shall pay the Purchase Price for
the Debentures and Closing Warrants to be issued and sold to it
at the Closing by wire transfer of immediately available funds to
the Company, in accordance with the Company's written wiring
instructions, against delivery of the Debentures and Closing
Warrants which such Buyer is purchasing, and (ii) the Company
shall deliver such Debentures and Closing Warrants against
delivery of such Purchase Price.
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c. Closing Date. Subject to the satisfaction
(or waiver) of the conditions thereto set forth in Section 6 and
Section 7 below, the date and time of the issuance and sale of
the Debentures and Closing Warrants pursuant to this Agreement
(the "Closing Date") shall be 12:00 noon Eastern Standard Time on
July 10, 1997 or such other mutually agreed upon time. The
Closing shall occur on the Closing Date at the offices of the
Company, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
2. BUYERS' REPRESENTATIONS AND WARRANTIES.
Each Buyer severally (and not jointly) represents and
warrants to the Company solely as to such Buyer that:
a. Investment Purpose. The Buyer is purchasing
the Debentures and the shares of Common Stock issuable upon
conversion thereof (the "Conversion Shares") and the Warrants and
the shares of Common Stock issuable upon exercise of the Warrants
(the "Warrants Shares") (collectively, the "Securities") for its
own account for investment only and not with a present view
towards the public sale or distribution thereof, except pursuant
to sales registered or exempted under the ▇▇▇▇ ▇▇▇.
b. Accredited Investor Status. The Buyer is an
"accredited investor" as that term is defined in Rule 501(a) of
Regulation D and a sophisticated investor (as defined in Rule
506(b)(2)(ii) at Regulation D).
c. Reliance on Exemptions. The Buyer
understands (i) that the Securities are being offered and sold to
it in reliance upon specific exemptions from the registration
requirements of United States federal and state securities laws
and that the Company is relying upon the truth and accuracy of,
and the Buyer's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of the Buyer set
forth herein in order to determine the availability of such
exemptions and the eligibility of the Buyer to acquire the
Securities and (ii) it is not authorized, and acknowledges that
it has not, relied on any analyst or other reports or other third
party source information relating to the Company.
d. Information. The Buyer and its advisors, if
any, have been furnished with all materials relating to the
business, finances and operations of the Company and materials
relating to the offer and sale of the Securities which have been
requested by the Buyer or its advisors. The Buyer and its
advisors, if any, have not relied on any oral or written
representations or assurances made by third parties or any oral
or written representations or assurances from the Company or any
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representative or agent of the Company other than as set forth in
this Agreement. The Buyer and its advisors, if any, have been
afforded the opportunity to ask questions of the Company and have
received what the Buyer believes to be satisfactory answers to
any such inquiries. Neither such inquiries nor any other due
diligence investigation conducted by Buyer or any of its advisors
or representatives shall modify, amend or affect Buyer's right to
rely on the Company's representations and warranties contained in
Section 3 below. The Buyer understands that its investment in
the Securities is speculative and involves a significant degree
of risk.
e. Governmental Review. The Buyer understands
that no United States federal or state agency or any other
government or governmental agency has passed upon or made any
recommendation or endorsement of the Securities.
f. Transfer or Resale. The Buyer understands
that (i) except as provided in the Registration Rights Agreement,
the Securities have not been and are not being registered under
the 1933 Act or any applicable state securities laws, and may not
be transferred unless (a) subsequently included in an effective
registration statement thereunder, or (b) the Buyer shall have
delivered to the Company an opinion of counsel (which opinion
shall be reasonably acceptable to the Company) to the effect that
the Securities to be sold or transferred may be sold or
transferred pursuant to an exemption from such registration or
(c) sold pursuant to Rule 144 promulgated under the 1933 Act (or
a successor rule); (ii) any sale of such Securities made in
reliance on Rule 144 may be made only in accordance with the
terms of said Rule and further, if said Rule is not applicable,
any resale of such Securities under circumstances in which the
seller (or the person through whom the sale is made) may be
deemed to be an underwriter (as that term is defined in the ▇▇▇▇
▇▇▇) may require compliance with some other exemption under the
1933 Act or the rules and regulations of the SEC thereunder; and
(iii) neither the Company nor any other person is under any
obligation to register such Securities under the 1933 Act or any
state securities laws or to comply with the terms and conditions
of any exemption thereunder (in each case, other than pursuant to
the Registration Rights Agreement). Notwithstanding the
foregoing or anything else contained herein to the contrary, the
Securities may be pledged as collateral in connection with a bona
fide margin account.
g. Legends. The Buyer understands that the
Debentures, Warrants and, until such time as the Conversion
Shares and Warrants Shares have been registered under the 1933
Act, as contemplated by the Registration Rights Agreement, the
Conversion Shares and Warrant Shares, may bear a restrictive
legend in substantially the following form (and a stop-transfer
order may be placed against transfer of the certificates for such
Securities):
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"The securities represented by this certificate
have not been registered under the Securities
Act of 1933, as amended. The securities have
been acquired for investment and may not be
sold, transferred or assigned in the absence of
an effective registration statement for the
securities under said Act, or an opinion of
counsel, in form, substance and scope
reasonably acceptable to the Company, that
registration is not required under said Act or
unless sold pursuant to Rule 144 under said
Act."
The legend set forth above shall be removed and the Company
shall issue a certificate without such legend to the holder of
any Security upon which it is stamped, if, unless otherwise
required by applicable state securities laws, (a) such Security
is registered for sale under an effective registration statement
filed under the 1933 Act, or (b) such holder provides the Company
with an opinion of counsel, in form, substance and scope
reasonably acceptable to the Company, to the effect that a public
sale or transfer of such Security may be made without
registration under the 1933 Act and such Security is so sold or
transferred or (c) such holder provides the Company with
reasonable assurances that such Security can be sold pursuant to
Rule 144 under the 1933 Act (or a successor rule thereto) without
any restriction as to the number of Securities acquired as of a
particular date that can then be immediately sold. The Buyer
agrees to sell all Securities, including those represented by a
certificate(s) from which the legend has been removed, in
compliance with applicable prospectus delivery requirements, if
any.
h. Authorization; Enforcement. This Agreement
and the Registration Rights Agreement have been duly and validly
authorized, executed and delivered on behalf of the Buyer and are
valid and binding agreements of the Buyer enforceable in
accordance with their terms except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting
generally, the enforcement of creditors' rights and remedies or
by other equitable principles of general application.
i. Residency. The Buyer is a resident of the
jurisdiction set forth immediately below such Buyer's name on the
signature pages hereto.
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j. No Legal Advice. The Buyer acknowledges that
it has had the opportunity to review this Agreement and the
transactions contemplated hereby with its own legal counsel and
investment and tax advisors. The Buyer is relying solely on such
counsel and advisors and not on any statements of representatives
of the Company or its representatives as agents for legal, tax or
investment advice with respect to this investment, the
transactions contemplated hereby or the securities laws of any
jurisdiction.
k. No Brokers. The Buyer has taken no action
which would give rise to any claim by any person for brokerage
commissions, finder's fees or similar payments relating to this
Agreement or the transactions contemplated hereby, except for
dealings with Greystone Capital, Ltd. whose commissions and fees
will be paid by the Company.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each Buyer that:
a. Organization and Qualification. The Company
and each of its Subsidiaries (as defined below), is a corporation
duly organized, validly existing and in good standing under the
laws of the jurisdiction in which it is incorporated, with full
power and authority (corporate and other) to own, lease, use and
operate its properties and to carry on its business as and where
now owned, leased, used, operated and conducted. Schedule 3(a)
sets forth a list of all of the subsidiaries of the Company
pursuant to which material operations of the Company are
conducted (the "Subsidiaries") and the jurisdiction in which each
is incorporated. The Company and each of its Subsidiaries is
duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which the nature of the
business conducted by it makes such qualification necessary
except where the failure to be so qualified or in good standing
would not have a Material Adverse Effect. "Material Adverse
Effect" means any material adverse effect on the operations,
assets, financial condition or prospects of the Company and its
Subsidiaries taken as a whole, or which would prohibit or
otherwise adversely interfere with the ability of the Company to
enter into and perform its obligations under this Agreement, the
Debenture, the Registration Rights Agreement and the Warrants.
b. Authorization; Enforcement. (i) The Company
has all requisite corporate power and authority to enter into and
perform this Agreement, the Registration Rights Agreement, the
Debentures and the Warrants and to consummate the transactions
contemplated hereby and thereby and to issue the Securities, in
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accordance with the terms hereof and thereof, (ii) the execution
and delivery of this Agreement, the Registration Rights
Agreement, the Debentures and the Warrants by the Company and the
consummation by it of the transactions contemplated hereby and
thereby (including without limitation the issuance of the
Debentures and the Warrants and the issuance and reservation for
issuance of the Conversion Shares and Warrant Shares issuable
upon conversion or exercise thereof) have been duly authorized by
the Company's Board of Directors and no further consent or
authorization of the Company, its Board of Directors, or its
shareholders is required, (iii) this Agreement has been duly
executed and delivered by the Company, and (iv) this Agreement
constitutes, and upon execution and delivery by the Company of
the Registration Rights Agreement, the Debentures and the
Warrants, each such instrument will constitute, a legal, valid
and binding obligation of the Company enforceable against the
Company in accordance with its terms except as such
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar
laws relating to, or affecting generally, the enforcement of
creditors' rights and remedies or by other equitable principles
of general application.
c. Capitalization. As of June 30, 1997, the
authorized capital stock of the Company consists of (i)
50,000,000 shares of Common Stock of which 19,998,848 shares are
issued and outstanding, 5,187,363 shares are reserved for
issuance pursuant to the Company's benefit plans, no shares are
reserved for issuance pursuant to securities (other than the
Debentures and the Warrants) exercisable for, or convertible into
or exchangeable for shares of Common Stock and 1,850,000 shares
are reserved for issuance upon conversion of the Debentures and
exercise of the Warrants (subject to adjustment pursuant to the
Company's covenant set forth in Section 4(h) below); and (ii)
5,000,000 shares of preferred stock, none of which shares are
issued and outstanding. All of such outstanding shares of
capital stock are, or upon issuance will be, duly authorized,
validly issued, fully paid and nonassessable. No shares of
capital stock of the Company are subject to preemptive rights or
any other similar rights of the stockholders of the Company.
Except as disclosed in Schedule 3(c) and except for the
transactions contemplated hereby, as of the effective date of
this Agreement, (i) there are no outstanding options, warrants,
scrip, rights to subscribe for, puts, calls, rights of first
refusal, agreements, understandings, claims or other commitments
or rights of any character whatsoever relating to, or securities
or rights convertible into or exchangeable for any shares of
capital stock of the Company, or arrangements by which the
Company is or may become bound to issue additional shares of
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capital stock of the Company, and (ii) there are no agreements or
arrangements under which the Company is obligated to register the
sale of any of its or their securities under the 1933 Act (except
the Registration Rights Agreement) and (iii) there are no
anti-dilution or price adjustment provisions contained in any
security issued by the Company (or in any agreement providing
rights to security holders) that will be triggered by the
issuance of the Debentures or Conversion Shares or the Warrants
or Warrant Shares. The Company has furnished to the Buyer true
and correct copies of the Company's Restated Certificate of
Incorporation as in effect on the date hereof ("Certificate of
Incorporation"), the Company's By-laws, as in effect on the date
hereof (the "By-laws"), and the terms of all securities
convertible into or exercisable for Common Stock of the Company
and the material rights of the holders thereof in respect
thereto. The Company shall provide the Buyer with a written
update of this representation signed by the Company's Chief
Executive or Chief Financial Officer on behalf of the Company as
of the Closing Date.
d. Issuance of Shares. The Conversion Shares
and Warrant Shares are duly authorized and, upon issuance upon
conversion of the Debentures or upon exercise of the Warrants in
accordance with the terms thereof will be validly issued, fully
paid and non-assessable, and free from liens and charges with
respect to the issue thereof and shall not be subject to
preemptive rights or other similar rights of stockholders of the
Company. The term Conversion Shares includes the shares of
Common Stock issuable upon conversion of the Debentures,
including without limitation, such additional shares, if any, as
are issuable as a result of the events described in Section 2(c)
of the Registration Rights Agreement. The Company understands
and acknowledges the potentially dilutive effect to the Common
Stock of the issuance of the Conversion Shares and Warrant Shares
upon conversion or exercise of the Debentures or Warrants. The
Company further acknowledges that its obligation to issue
Conversion Shares upon conversion of the Debentures and Warrant
Shares upon exercise of the Warrants in accordance with this
Agreement, the Debentures and the Warrants is absolute and
unconditional (subject to the Company's redemption rights as
provided in the Debentures) regardless of the dilutive effect
that such issuance may have on the ownership interests of other
stockholders of the Company.
e. No Conflicts. The execution, delivery and
performance of this Agreement, the Registration Rights Agreement,
the Debentures and the Warrants by the Company and the
consummation by the Company of the transactions contemplated
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hereby and thereby (including, without limitation, the issuance
and reservation for issuance of the Conversion Shares and Warrant
Shares) will not (i) conflict with or result in a violation of
any provision of the Certificate of Incorporation or By-laws or
(ii) violate or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which with
notice or lapse of time or both could become a default) under, or
give to others any rights of termination, amendment, acceleration
or cancellation of, any agreement, indenture or instrument to
which the Company or any of its Subsidiaries is a party, or
result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws
and regulations) applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or
any of its Subsidiaries is bound or affected (except for such
conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect and as set forth in
Schedule 3(e)). Neither the Company nor any of its Subsidiaries
is in violation of its Certificate of Incorporation, By-laws or
other organizational documents and neither the Company nor any of
its Subsidiaries is in default (and no event has occurred which
with notice or lapse of time or both could put the Company or any
of its Subsidiaries in default) under, and neither the Company
nor any of its Subsidiaries has taken any action or failed to
take any action that would give to others any rights of
termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company or any of
its Subsidiaries is a party or by which any property or assets of
the Company or any of its Subsidiaries is bound or affected,
except for possible defaults as would not, individually or in the
aggregate, have a Material Adverse Effect. To the knowledge of
the Company, the businesses of the Company and its Subsidiaries,
are not being conducted, and shall not be conducted so long as a
Buyer owns any of the Securities, in violation of any law,
ordinance or regulation of any governmental entity which
violation would have a Material Adverse Effect. Except as
specifically contemplated by this Agreement and as required under
the 1933 Act and any applicable state securities laws, the
Company is not required to obtain any consent, authorization or
order of, or make any filing or registration with, any court or
governmental agency or any regulatory or self regulatory agency
in order for it to execute, deliver or perform any of its
obligations under this Agreement, the Registration Rights
Agreement, the Debentures or the Warrants in accordance with the
terms hereof or thereof. Except as disclosed in Schedule 3(e),
all consents, authorizations, orders, filings and registrations
which the Company is required to obtain pursuant to the preceding
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sentence have been obtained or effected on or prior to the date
hereof. The Company is unaware of any facts or circumstances
which would give rise to any of the foregoing. The Company is
not in violation of the listing requirements of the New York
Stock Exchange ("NYSE") and does not reasonably anticipate that
the Common Stock will be delisted by the NYSE in the foreseeable
future.
f. SEC Documents; Financial Statements. Since
December 31, 1995, the Company has timely filed all reports,
schedules, forms, statements and other documents required to be
filed by it with the SEC pursuant to the reporting requirements
of the Exchange Act of 1934, as amended (the "1934 Act") (all of
the foregoing filed prior to the date hereof and all exhibits
included therein and financial statements and schedules thereto
and documents (other than exhibits) incorporated by reference
therein, being hereinafter referred to herein as the "SEC
Documents"). The Company has delivered to each Buyer true and
complete copies of the SEC Documents, except for such exhibits
and incorporated documents. As of their respective dates, the
SEC Documents complied in all material respects with the
requirements of the 1934 Act and the rules and regulations of the
SEC promulgated thereunder applicable to the SEC Documents, and
none of the SEC Documents, at the time they were filed with the
SEC, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. As
of their respective dates, the financial statements of the
Company included in the SEC Documents complied as to form in all
material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto.
Such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied,
during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent
they may not include footnotes or may be condensed or summary
statements) and fairly present in all material respects the
consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments). Except as set forth in
the financial statements of the Company included in the SEC
Documents or on Schedule 3(f), the Company has no liabilities,
contingent or otherwise, other than (i) liabilities incurred in
the ordinary course of business subsequent to December 31, 1996
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and (ii) obligations under contracts and commitments incurred in
the ordinary course of business and not required under generally
accepted accounting principles to be reflected in such financial
statements, which, individually or in the aggregate, are not
material to the financial condition or operating results of the
Company.
g. Absence of Certain Changes. Since December
31, 1996, there has been no adverse change and no adverse
development in the assets, liabilities, business, properties,
operations, financial condition, results of operations or
prospects of the Company or any of its Subsidiaries except as
disclosed on any schedule hereto other than matters which would
not, individually or in the aggregate, have a Material Adverse
Effect.
h. Absence of Litigation. There is no action,
suit, claim, proceeding, inquiry or investigation before or by
any court, public board, government agency, self-regulatory
organization or body pending or, to the knowledge of the Company
(or any officer or director of the Company), threatened against
or affecting the Company or any of its Subsidiaries (or any
officer or director of the Company or any of its Subsidiaries)
that could have a Material Adverse Effect.
i. [Intentionally Omitted]
j. [Intentionally Omitted]
k. Tax Status. Except as set forth on Schedule
3(k), the Company and each of its Subsidiaries has made or filed
all federal and state income and all other tax returns, reports
and declarations required by any jurisdiction to which it is
subject (unless and only to the extent that the Company and each
of its Subsidiaries has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported
taxes) and has paid all taxes and other governmental assessments
and charges that are material in amount, shown or determined to
be due on such returns, reports and declarations, except those
being contested in good faith and has set aside on its books
provisions reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports
or declarations apply. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any
jurisdiction, and the officers of the Company know of no basis
for any such claim.
l. [Intentionally Omitted]
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m. Disclosure. All information relating to or
concerning the Company or any of its Subsidiaries set forth in
this Agreement and provided to the Buyers pursuant to Section
2(d) hereof and otherwise in connection with the transactions
contemplated hereby is true and correct in all material respects
and the Company has not omitted to state any material fact
necessary in order to make the statements made herein or therein,
in light of the circumstances under which they were made, not
misleading. Except as set forth in Schedule 3(f), no event or
circumstance has occurred or exists with respect to the Company
or any of its Subsidiaries or its or their business, properties,
prospects, operations or financial conditions, which, under
applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly
announced or disclosed (assuming for this purposes that the
Company's reports filed under the 1934 Act are being incorporated
into an effective registration statement filed by the Company
under the 1933 Act). Notwithstanding the foregoing, the Company
expressly disclaims any and all responsibility for any oral or
written statements about the Company made by any third party
(including but not limited to statements by analysts in research
reports or otherwise), and the Company makes no representation or
warranty as to the accuracy or completeness of such statements.
n. Acknowledgment Regarding Buyers' Purchase of
Securities. The Company acknowledges and agrees that the Buyers
are acting solely in the capacity of arm's length purchasers with
respect to this Agreement and the transactions contemplated
hereby. The Company further acknowledges that no Buyer is acting
as a financial advisor or fiduciary of the Company (or in any
similar capacity) with respect to this Agreement and the
transactions contemplated hereby and any advice given by any
Buyer or any of their respective representatives or agents in
connection with this Agreement and the transactions contemplated
hereby is merely incidental to the Buyers, purchase of the
Securities. The Company further represents to each Buyer that
the Company's decision to enter into this Agreement has been
based solely on the independent evaluation of the Company and its
representatives.
o. No Integrated Offering. Neither the Company,
nor any of its affiliates, nor any person acting on its or their
behalf, has directly or indirectly made any offers or sales in
any security or solicited any offers to buy any security under
circumstances that would require registration under the 1933 Act
of the issuance of the Securities to the Buyers. The issuance of
the Securities to the Buyers will not be integrated with any
other issuance of the Company's securities (past, current or
future) which requires stockholder approval under the rules of
the NYSE.
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p. No Brokers. The Company has taken no action
which would give rise to any claim by any person for brokerage
commissions, finder's fees or similar payments relating to this
Agreement or the transactions contemplated hereby, except for
dealings with Greystone Capital, Ltd. whose commissions and fees
will be paid for by the Company.
4. COVENANTS.
a. Best Efforts. The parties shall use their
best efforts to satisfy timely each of the conditions described
in Section 6 and 7 of this Agreement.
b. Form D; Blue Sky Laws. The Company agrees to
file a Form D with respect to the Securities as required under
Regulation D and to provide a copy thereof to each Buyer promptly
after such filing. The Company shall, on or before the Closing
Date, take such action as the Company shall reasonably determine
is necessary to qualify the Securities for sale to the Buyers at
the applicable closing pursuant to this Agreement under
applicable securities or "blue sky" laws of the states of the
United States (or to obtain an exemption from such
qualification), and shall provide evidence of any such action so
taken to each Buyer on or prior to such Closing Date.
c. Reporting Status; Eligibility to Use Form
S-3. The Company's Common Stock is registered under Section
12(b) of the 1934 Act. So long as any Buyer beneficially owns
any of the Securities, the Company shall timely file all reports
required to be filed with the SEC pursuant to the 1934 Act, and
the Company shall not terminate its status as an issuer required
to file reports under the 1934 Act even if the 1934 Act or the
rules and regulations thereunder would permit such termination.
The Company currently meets, and will take all necessary action
to continue to meet, the "registrant eligibility" requirements
set forth in the general instructions to Form S-3.
d. Use of Proceeds. The Company shall use the
proceeds from the sale of the Debentures and Warrants in the
manner set forth in Schedule 4(d) attached hereto and made a part
hereof.
14
e. Additional Equity Capital; Right of First
Refusal. Subject to the exceptions described below, the Company
agrees that during the period beginning on the date hereof and
ending on the later of (i) seventy-five (75) days thereafter or
(ii) thirty (30) days following the effective date of the
Registration Statement to be filed pursuant to Section 2(a) of
the Registration Rights Agreement (the "Lock-Up Period"), the
Company will not, without the prior written consent of a
majority-in-interest of the Buyers, conduct any additional equity
financing (including debt financing with a discounted or
convertible equity component or warrants). After the expiration
of the Lock-Up Period, subject to the exceptions described below,
the Company shall not negotiate or contract with any party (other
than the Buyers) to obtain additional equity financing (including
debt financing with a discounted or convertible equity component
or warrants) that provides for the registration under the 1933
Act of public resales of Common Stock within one hundred eighty
(180) days of the effective date of the Registration Statement to
be filed pursuant to Section 2(a) of the Registration Rights
Agreement. Subject to the exceptions described below, the
Company will not conduct any equity financing (including debt
with a discounted or convertible equity component or warrants)
("Future Offerings") during the period beginning on the Closing
Date and ending one hundred eighty (180) days after the
expiration of the Lock-Up Period unless it shall have first
delivered to each Buyer, at least fifteen (15) business days
prior to the closing of such Future Offering, written notice
describing the proposed Future Offering, including the terms and
conditions thereof, and providing each Buyer an option during the
ten (10) business day period following delivery of such notice to
purchase its pro rata share (based on the ratio that the
principal amount of the Debentures purchased by it hereunder
bears to the aggregate principal amount of Debentures purchased
hereunder) of the securities being offered in the Future Offering
on the same terms as contemplated by such Future Offering (the
limitations referred to in this paragraph are collectively
referred to as the "Capital Raising Limitations"), provided that
if the Buyers, as a whole, do not purchase all of such Future
Offering, the Company will be free to pursue such Future Offering
entirely with third parties. The Lock-Up Period, Future Offering
and Capital Raising Limitations shall not apply to any
transaction involving (i) issuances of securities in a firm
commitment underwritten public offering (excluding a continuous
offering pursuant to Rule 415 under the ▇▇▇▇ ▇▇▇) or (ii)
issuances of securities as consideration for a merger,
consolidation or sale of assets, or in connection with any
strategic partnership or joint venture (the primary purpose of
which is not to raise equity capital), or in connection with the
15
disposition or acquisition of a business, product or license by
the Company. The Lock-Up Period, Future Offering and Capital
Raising Limitations also shall not apply to the issuance of
securities upon exercise or conversion of the Company's options,
warrants or other convertible securities outstanding as of the
date hereof or to the grant of additional options or warrants, or
the issuance of additional securities, under any Company stock
option or restricted stock plan approved by a majority of the
Company's disinterested directors.
f. Expenses. The Company shall reimburse ▇▇▇▇
▇▇▇▇ Capital Management, L.P. ("RGC") for all expenses incurred
by it in connection with the negotiation, preparation, execution,
delivery and performance of this Agreement and the other
agreements to be executed in connection herewith, including,
without limitation, attorneys' and consultants' fees and
expenses. The Company's obligation to reimburse RGC's expenses
under this Section 4(f) shall be limited to Thirty Thousand
Dollars ($30,000).
g. Financial Information. The Company agrees to
send the following reports to each Buyer until such Buyer
transfers, assigns, or sells all of the Securities: (i) within
ten (10) days after the filing with the SEC, a copy of its Annual
Report on Form 10-K, its Quarterly Reports on Form 10-Q and any
Current Reports on Form 8-K; (ii) within one (1) day after
release, copies of all press releases issued by the Company or
any of its Subsidiaries; and (iii) contemporaneously with the
making available or giving to the stockholders of the Company,
copies of any notices or other information the Company makes
available or gives to such stockholders.
h. Reservation of Shares. The Company shall at
all times have authorized, and reserved for the purpose of
issuance, a sufficient number of shares of Common Stock to
provide for the full conversion of the outstanding Debentures and
issuance of the Conversion Shares in connection therewith (based
on the Conversion Price of the Debentures in effect from time to
time) and the full exercise of the Warrants and the issuance of
the Warrant Shares in connection therewith (based upon the
Exercise Price of the Warrants in effect from time to time),
initially, 1,850,000 shares. The Company shall not reduce the
number of shares of Common Stock reserved for issuance upon
conversion of the Debentures or exercise of the Warrants without
the consent of each Buyer, which consent will not be unreasonably
withheld except pursuant to redemptions as provided in the
Debentures. The Company shall use its best efforts at all times
16
to maintain the number of shares of Common Stock so reserved for
issuance at no less than one hundred fifty percent (150%) of the
number that is then actually issuable upon full conversion of the
Debentures (based on the Conversion Price of the Debentures in
effect from time to time) and the full exercise of the Warrants
(based on the Exercise Price of the Warrants in effect from time
to time). If at any time the number of shares of Common Stock
authorized and reserved for issuance is below the number of
Conversion Shares and Warrant Shares issued and issuable upon
conversion or exercise of the Debentures and the Warrants (based
on the Conversion Price and Exercise Price then in effect), the
Company will promptly take all corporate action necessary to
authorize and reserve a sufficient number of shares, including,
without limitation, calling a special meeting of shareholders to
authorize additional shares to meet the Company's obligations
under this Section 4(h), in the case of an insufficient number of
authorized shares, and using its best efforts to obtain
shareholder approval of an increase in such authorized number of
shares.
i. Listing. The Company shall promptly secure
the listing of the Conversion Shares and Warrant Shares upon each
national securities exchange or automated quotation system, if
any, upon which shares of Common Stock are then listed (subject
to official notice of issuance) and shall maintain, so long as
any other shares of Common Stock shall be so listed, such listing
of all Conversion Shares and Warrant Shares from time to time
issuable upon conversion or exercise of the Debentures and the
Warrants. The Company will obtain and maintain the listing and
trading of its Common Stock on the NYSE, Nasdaq National Market
("Nasdaq"), or the American Stock Exchange ("AMEX") and will
comply in all respects with the Company's reporting, filing and
other obligations under the bylaws or rules of the National
Association of Securities Dealers ("NASD") and such exchanges, as
applicable. The Company shall promptly provide to each Buyer
copies of any notices it receives from the NYSE regarding the
continued eligibility of the Common Stock for listing on the
NYSE.
j. Corporate Existence. So long as a Buyer
beneficially owns any Debentures, the Company shall maintain its
corporate existence and shall not sell all or substantially all
of the Company's assets, except in the event of a merger or
consolidation or sale of all or substantially all of the
Company's assets, where the surviving or successor entity in such
transaction (i) assumes the Company's obligations hereunder and
under the agreements and instruments entered into in connection
herewith and (ii) is a publicly traded corporation whose Common
Stock is listed for trading on the NYSE, Nasdaq or AMEX.
17
k. Solvency. The Company (both before and after
giving effect to the transactions contemplated by this Agreement)
is solvent and currently the Company has no information that
would lead it to reasonably conclude that the Company would not
have, nor does it intend to take any action that would impair,
its ability to pay or refinance its debts from time to time in
connection therewith. The Buyer hereby acknowledges (i) that the
Company does not currently have funds reserved specifically for
the repayment of the Debentures and (ii) that the Company expects
all amounts payable under the Debentures to be converted into
Common Stock in accordance with Article I thereof. The Company
did not receive a qualified opinion from its auditors with
respect to its most recent fiscal year end and does not
anticipate or know of any basis upon which its auditors might
issue a qualified opinion in respect of its current fiscal year.
l. Compliance with Short Sale Regulations. As
of the date hereof, the Buyers represent that they do not have
any short positions in the Company's Common Stock. To the extent
the Buyer's engage in any hedging transaction involving "short
sales" of the Company's Common Stock subsequent to the date
hereof, the Buyers agree to comply with applicable rules and
regulations applying to short sales (subject to applicable
exemptions).
5. TRANSFER AGENT INSTRUCTIONS.
The Company shall issue irrevocable instructions to its
transfer agent to issue certificates, registered in the name of
each Buyer or its nominee, for the Conversion Shares and Warrant
Shares in such amounts as specified from time to time by each
Buyer to the Company upon proper conversion or exercise of the
Debentures and the Warrants (the "Transfer Agent Instructions").
Prior to registration of the Conversion Shares and Warrant Shares
under the 1933 Act, all such certificates shall bear the
restrictive legend specified in Section 2(g) of this Agreement.
The Company warrants that no instruction other than the
Irrevocable Transfer Agent Instructions referred to in this
Section 5, and stop transfer instructions to give effect to
Section 2(f) hereof (in the case of the Conversion Shares or
Warrant Shares, prior to registration of the Conversion Shares or
Warrant Shares under the 1933 Act), will be given by the Company
to its transfer agent and that the Securities shall otherwise be
freely transferable on the books and records of the Company as
and to the extent provided in this Agreement and the Registration
Rights Agreement. Nothing in this Section shall affect in any
way the Buyer's obligations and agreement set forth in Section
2(g) hereof to comply with all applicable prospectus delivery
18
requirements, if any, upon resale of the Securities. If a Buyer
provides the Company with an opinion of counsel, reasonably
satisfactory to the Company in form, substance and scope, that
registration of a resale by such Buyer of any of the Securities
is not required under the 1933 Act, the Company shall permit the
transfer, and, in the case of the Conversion Shares or Warrant
Shares, promptly instruct its transfer agent to issue one or more
certificates in such name and in such denominations as specified
by such Buyer. The Company acknowledges that a breach by it of
its obligations hereunder will cause irreparable harm to the
Buyers, by vitiating the intent and purpose of the transaction
contemplated hereby. Accordingly, the Company acknowledges that
the remedy at law for a breach of its obligations under this
Section 5 will be inadequate and agrees, in the event of a breach
or threatened breach by the Company of the provisions of this
Section, that the Buyers shall be entitled, in addition to all
other available remedies, to an injunction restraining any breach
and requiring immediate transfer, without the necessity of
showing economic loss and without any bond or other security
being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell
the Debentures and the Warrants to a Buyer at the Closing is
subject to the satisfaction, at or before the Closing Dates of
each of the following conditions thereto, provided that these
conditions are for the Company's sole benefit and may be waived
by the Company at any time in its sole discretion:
a. The applicable Buyer shall have executed this
Agreement and the Registration Rights Agreement, and delivered
the same to the Company.
b. The applicable Buyer shall have delivered the
Purchase Price in accordance with Section 1(b) above.
c. The representations and warranties of the
applicable Buyer shall be true and correct in all material
respects as of the date when made and as of the Closing Date as
though made at that time (except for representations and
warranties that speak as of a specific date), and the applicable
Buyer shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied
with by the applicable Buyer at or prior to the Closing Date.
19
d. No litigation, statute, rule, regulation,
executive order, decree, ruling or injunction shall have been
enacted, entered, promulgated or endorsed by or in any court or
governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters
contemplated hereby which prohibits the consummation of any of
the transactions contemplated by this Agreement.
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
The obligation of each Buyer hereunder to purchase the
Debentures and the Warrants at the Closing is subject to the
satisfaction, at or before the Closing Date, of each of the
following conditions, provided that these conditions are for such
Buyer's sole benefit and may be waived by such Buyer at any time
in its sole discretion:
a. The Company shall have executed this
Agreement and the
Registration Rights Agreement, and delivered the same to the
Buyer.
b. The Company shall have delivered to such
Buyer duly executed Debentures and the Closing Warrants being so
purchased in accordance with Section 1(b) above.
c. The Transfer Agent Instructions, in form and
substance satisfactory to a majority-in-interest of the Buyers,
shall have been delivered to and acknowledged in writing by the
Company's Transfer Agent.
d. The representations and warranties of the
Company shall be true and correct in all material respects as of
the date when made and as of the Closing Date as though made at
such time (except for representations and warranties that speak
as of a specific date) and the Company shall have performed,
satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement
to be performed, satisfied or complied with by the Company at or
prior to the Closing Date. The Buyer shall have received a
certificate or certificates, executed by the chief executive
officer of the Company, dated as of the Closing Date, to the
foregoing effect and as to such other matters as may be
reasonably requested by such Buyer, including, but not limited to
certifications with respect to the Company's Certificate of
Incorporation, By-laws and Board of Directors' resolutions
relating to the transactions contemplated hereby.
20
e. No litigation, statute, rule, regulation,
executive order, decree, ruling or injunction shall have been
enacted, entered, promulgated or endorsed by or in any court or
governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters
contemplated hereby which prohibits the consummation of any of
the transactions contemplated by this Agreement.
f. The Conversion Shares and Warrant Shares
shall have been authorized for quotation on the NYSE and trading
in the Common Stock on the NYSE shall not have been suspended by
the SEC or the NYSE.
h. The Buyer shall have received an opinion of
the Company's counsel, dated as of the Closing Date, in form,
scope and substance reasonably satisfactory to the Buyer and in
substantially the same form as Exhibit "F" attached hereto.
i. The Buyer shall have received the officer's
certificate described in Section 3(c) above, dated as of the
Closing Date.
8. GOVERNING LAW; MISCELLANEOUS.
a. Governing Law. This Agreement shall be
governed by and interpreted in accordance with the laws of the
State of Delaware without regard to the principles of conflict of
laws. The parties hereto hereby submit to the exclusive
jurisdiction of the United States Federal Courts located in
Delaware with respect to any dispute arising under this
Agreement, the agreements entered into in connection herewith or
the transactions contemplated hereby or thereby.
b. Counterparts; Signatures by Facsimile. This
Agreement may be executed in two or more counterparts, all of
which shall be considered one and the same agreement and shall
become effective when counterparts have been signed by each party
and delivered to the other party. This Agreement, once executed
by a party, may be delivered to the other party hereto by
facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.
c. Headings. The headings of this Agreement are
for convenience of reference and shall not form part of, or
affect the interpretation of, this Agreement.
d. Severability. If any provision of this
Agreement shall be invalid or unenforceable in any jurisdiction,
such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other
jurisdiction.
21
e. Entire Agreement; Amendments. This Agreement
and the instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered
herein and therein and, except as specifically set forth herein
or therein, neither the Company nor the Buyer makes any
representation, warranty, covenant or undertaking with respect to
such matters. No provision of this Agreement may be waived or
amended other than by an instrument in writing signed by the
party to be charged with enforcement.
f. Notices. Any notices required or permitted
to be given under the terms of this Agreement shall be sent by
certified or registered mail (return receipt requested) or
delivered personally or by courier (including a recognized
overnight delivery service) or by facsimile and shall be
effective five days after being placed in the mail, if mailed by
regular U.S. mail, or upon receipt, if delivered personally or by
courier (including a recognized overnight delivery service) or by
facsimile, in each case addressed to a party. The addresses for
such communications shall be:
If to the Company:
American Banknote Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With copy to:
Kramer, Levin, Natfalis & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to a Buyer: To the address set forth immediately below
such Buyer's name on the signature pages hereto.
Each party shall provide notice to the other party of any
change in address.
22
g. Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of the parties and their
successors and assigns. Neither the Company nor any Buyer shall
assign this Agreement or any rights or obligations hereunder
without the prior written consent of the other. Notwithstanding
the foregoing, any Buyer may assign its rights hereunder to any
person that purchases Securities in a private transaction from a
Buyer or to any of its "affiliates," as that term is defined
under the 1934 Act, without the consent of the Company. Buyer
agrees not to knowingly sell, assign, pledge or otherwise dispose
of or transfer in a private transaction the Debentures,
Conversion Shares or Warrant Shares to (i) any purchaser who is a
direct competitor of the Company or its Subsidiaries or (ii) any
purchaser who alone or together with other persons comprise a
"group" within the meaning of Section 13(d) of the 1934 Act as
the owner of 10% of the capital stock of the Company. The
foregoing sentence shall not apply to any transfer that does not
constitute a private transaction including, without limitation,
open market transactions affected on the NYSE or on any other
stock exchange or quotation system on which the Common Stock may
be quoted or listed and shall terminate with respect to such
sales.
h. Third Party Beneficiaries. This Agreement is
intended for the benefit of the parties hereto and their
respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any
other person.
i. Survival. The representations and warranties
of the Company and the agreements and covenants set forth in
Sections 2, 3, 4, 5 and 8 shall survive the closing hereunder
notwithstanding any due diligence investigation conducted by or
on behalf of the Buyers.
j. Publicity. The Company and each of the
Buyers shall have the right to review a reasonable period of time
before issuance of any press releases, SEC, NYSE or NASD filings,
or any other public statements with respect to the transactions
contemplated hereby; provided, however, that the Company shall be
entitled, without the prior approval of each of the Buyers, to
make any press release or SEC, NYSE or NASD filings with respect
to such transactions as is required by applicable law and
regulations (although each of the Buyers shall be consulted by
the Company in connection with any such press release prior to
its release and shall be provided with a copy thereof and be
given an opportunity to comment thereon).
23
k. Further Assurances. Each party shall do and
perform, or cause to be done and performed, all such further acts
and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.
l. No Strict Construction. The language used in
this Agreement will be deemed to be the language chosen by the
parties to express their mutual intent, and no rules of strict
construction will be applied against any party.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
24
IN WITNESS WHEREOF, the undersigned Buyers and the Company
have caused this Agreement to be duly executed as of the date
first above written.
AMERICAN BANKNOTE CORPORATION
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Executive Vice President, General Counsel and Secretary
RGC INTERNATIONAL INVESTORS, LDC
By: ▇▇▇▇ ▇▇▇▇ Capital Management, L.P.
By: RGC General Partner Corp.
By:
▇▇▇▇▇ ▇. ▇▇▇▇▇
Managing Director
RESIDENCE: Cayman Islands
ADDRESS:
c/o ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
AGGREGATE SUBSCRIPTION AMOUNT:
Principal Amount of Debentures
$ 5,000,000
Number of A-Warrants:
140,000
Number of B-Warrants:
75,000
Aggregate Purchase Price:
$ 5,000,000
