Exhibit 10.1
FORM OF
SEPARATION AGREEMENT
BY AND BETWEEN
AMERICAN BANKNOTE CORPORATION
AND
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
DATED AS OF [________ __,] 1998
SEPARATION AGREEMENT
SEPARATION AGREEMENT (this "Agreement"), dated as of the IPO Effective
Date, is entered into by and between Parent and ABNH. Capitalized terms used in
this Agreement and not otherwise defined herein shall have the respective
meanings assigned to them in Section 1.
WHEREAS, the Board of Directors of Parent has determined that it is
appropriate and desirable for Parent to sell for its account all of the shares
of ABNH Common Stock owned by Parent; and
WHEREAS, it is appropriate and desirable to set forth certain
agreements of the parties in connection with the Separation;
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the parties hereto agree as follows:
Section 1. Definitions.
For the purpose of this Agreement the following terms shall have the
following meanings:
"Action" means any demand, action, suit, countersuit, arbitration,
inquiry, proceeding or investigation by or before any federal, state, local,
foreign or international Governmental Authority or any arbitration or mediation
tribunal.
"Affiliate" of any Person means a Person that controls, is controlled
by, or is under common control with such Person. As used herein, "control" of
any Person means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through ownership of voting securities or other interests, by contract or
otherwise.
"Agreement" means this Separation Agreement, including any Schedules
hereto.
"Ancillary Agreements" means any and all supplemental and other
agreements and instruments contemplated by this Agreement or entered into in
connection with this Agreement.
"ABNH" means American Bank Note Holographics, Inc., a Delaware
corporation.
"ABNH Common Stock" means the Common Stock, $0.01 par value per share,
of ABNH.
"ABNH Indemnitees" has the meaning set forth in Section 11.3.
"Closing" means the receipt by Parent of the net proceeds of the shares
of ABNH Common Stock sold by it in the IPO in accordance with the terms of the
Underwriting Agreement.
"Closing Date" means the date on which the Closing occurs.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission, including
the members of its staff.
"Environmental Law" means any federal, state, local, foreign or
international statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, common law (including tort and environmental
nuisance law), legal doctrine, order, judgment, decree, injunction, requirement
or agreement with any Governmental Authority, now or hereafter in effect,
relating to health, safety, pollution or the environment (including ambient air,
surface water, groundwater, land surface or subsurface strata) or to emissions,
discharges, releases or threatened releases of any substance currently or at any
subsequent time listed, defined, designated or classified as hazardous, toxic,
waste, radioactive or dangerous, or otherwise regulated, under any of the
foregoing, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of any such substances,
including the Comprehensive Environmental Response, Compensation and Liability
Act, the Superfund Amendments and Reauthorization Act and the Resource
Conservation and Recovery Act and comparable provisions in state, local, foreign
or international law.
"Environmental Liabilities" means all Liabilities relating to, arising
out of or resulting from any Environmental Law or contract or agreement relating
to environmental, health or safety matters (including all removal, remediation
or cleanup costs, investigatory costs, governmental response costs, natural
resources damages, property damages, personal injury damages, costs of
compliance with any settlement, judgment or other determination of Liability and
indemnity, contribution or similar obligations) and all costs and expenses
(including allocated costs of in-house counsel and other personnel), interest,
fines, penalties or other monetary sanctions in connection with such
liabilities.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
together with the rules and regulations promulgated under the Exchange Act.
"GAAP" means generally accepted accounting principles.
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"Governmental Authority" shall mean any federal, state, local, foreign
or international court, government, department, commission, board, bureau,
agency, official or other regulatory, administrative or governmental authority.
"Indemnifying Party" has the meaning set forth in Section 11.4.
"Indemnitee" has the meaning set forth in Section 11.4.
"Indemnity Payment" has the meaning set forth in Section 11.4.
"Information" means information, whether or not patentable or
copyrightable, in written, oral, electronic or other tangible or intangible
forms, stored in any medium, including studies, reports, records, books,
contracts, instruments, surveys, discoveries, ideas, concepts, know-how,
techniques, designs, specifications, drawings, blueprints, diagrams, models,
prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes,
computer programs or other software, marketing plans, customer names,
communications by or to attorneys (including attorney-client privileged
communications), memos and other materials prepared by attorneys or under their
direction (including attorney work product), and other technical, financial,
employee or business information or data.
"Insurance Proceeds" means those monies:
(a) received by an insured from an insurance carrier;
(b) paid by an insurance carrier on behalf of the insured; or
(c) received (including by way of set-off) from any third party in the
nature of insurance, contribution or indemnification in respect of any
Liability; in any such case net of any applicable premium adjustments (including
reserves and retrospectively rated premium adjustments) and net of any costs or
expenses (including allocated costs of in-house counsel and other personnel)
incurred in the collection of proceeds.
"IPO" means the public offering of shares of ABNH Common Stock pursuant
to the IPO Registration Statement.
"IPO Effective Date" means [_____ __], 1998, which is the date on which
the IPO Registration Statement was declared effective by the Commission.
"IPO Registration Statement" means the registration statement,
Registration No. 333-51845, on Form S-1 filed under the Securities Act, pursuant
to which the ABNH Common Stock to be sold in the IPO has been registered.
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"Liabilities" means any and all losses, claims, charges, debts,
demands, actions, causes of action, suits, damages, obligations, costs and
expenses, including those arising under any law, rule, regulation, Action,
threatened or contemplated Action (including the costs and expenses of demands,
assessments, judgments, settlements and compromises relating thereto and
attorneys' fees and any and all costs and expenses (including allocated costs of
in-house counsel and other personnel) whatsoever reasonably incurred in
investigating, preparing or defending against any such Actions or threatened or
contemplated Actions), order or consent decree of any Governmental Authority or
any award of any arbitrator or mediator of any kind.
"Parent" means American Banknote Corporation, a Delaware corporation.
"Parent Group" means Parent and each Person (other than ABNH) that is
an Affiliate of Parent immediately after the Closing Date.
"Parent Indemnitees" has the meaning set forth in Section 11.2.
"Person" means an individual, a general or limited partnership, a
corporation, a trust, a joint venture, an unincorporated organization, a limited
liability entity, any other entity and any Governmental Authority.
"Prime Rate" means the rate which The Chase Manhattan Bank (or any
successor or other major money center commercial bank agreed to by the parties)
announces from time to time as its prime lending rate, as in effect from time to
time.
"Prospectus" means each preliminary, final or supplemental prospectus
forming a part of the IPO Registration Statement.
"Securities Act" means the Securities Act of 1933, as amended, together
with the rules and regulations promulgated under the Securities Act.
"Separation" means the transactions, arrangements and agreements
embodied in this Agreement entered into by the parties in preparation for the
sale by Parent of all ABNH Common Stock held by Parent.
"Subsidiary" of any Person means any corporation or other organization
whether incorporated or unincorporated of which at least a majority of the
securities or interests having by the terms thereof ordinary voting power to
elect at least a majority of the board of directors or others performing similar
functions with respect to such corporation or other organization is directly or
indirectly owned or controlled by such Person or
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by any one or more of its Subsidiaries, or by such Person and one or more of its
Subsidiaries; provided, however that no Person that is not directly or
indirectly wholly owned by any other Person shall be a Subsidiary of such other
Person unless such other Person controls, or has the right, power or ability to
control, that Person.
"Tax" or "Taxes" means all taxes, charges, fees, levies or other
assessments, including, without limitation, income, gross receipts, excise,
property, sales, withholding, social security, occupations, use, service,
service use, license, payroll, franchise, transfer and recording taxes, fees and
charges, imposed by the United States, or any state, local or foreign government
or subdivision or agency thereof, whether computed on a separate, consolidated,
unitary, combined or any other basis; and such term shall include any interest,
fines, penalties or additional amounts attributable to or imposed on or with
respect to any such taxes, charges, fees, levies or other assessments.
"Third Party Claim" has the meaning set forth in Section 11.5.
"Underwriters" means the managing underwriters for the IPO.
"Underwriting Agreement" means the underwriting agreement entered into
among Parent, ABNH and the Underwriters with respect to the IPO.
Section 2. Effect of Agreement. This Agreement is being executed and
delivered on the IPO Effective Date to memorialize actions that have been taken
by the parties prior to the IPO Effective Date in connection with the
Separation, and to govern the conduct of the parties subsequent to the IPO
Effective Date as to the matters addressed in this Agreement. If the Closing
does not occur, this Agreement shall terminate.
Section 3. Closing Date Unrestricted Cash. The parties acknowledge and
agree that, as of the Closing Date, ABNH's unrestricted cash on hand is not
likely to exceed a nominal amount, and that there is no requirement that Parent
take any action to cause ABNH's unrestricted cash on hand to be any particular
amount. Prior to the Closing Date, Parent shall be entitled to all unrestricted
cash of ABNH.
Section 4. Certain Tax Matters.
4.1 Consolidated, Combined and Unitary Income Tax Returns. Parent will
include the income of ABNH (including any deferred income required to be
recognized under Treasury
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Regulation Sections 1.1502-13 and any excess loss account taken into income
under Treasury Regulation Sections 1.1502-19) on the Parent consolidated federal
income tax returns (and on any state, local and foreign income tax returns filed
by Parent on a consolidated, combined or unitary basis) for all periods that end
prior to or include the Closing Date and will pay all Taxes assessed, and retain
for its own account any refunds received, with respect to such income tax
returns, provided that ABNH shall, no later than 10 days following receipt of
notice from Parent requesting such payment, pay to Parent the amount of any
Taxes to the extent incurred or treated as being incurred by ABNH or arising
with respect to the activities of ABNH. ABNH will furnish all information
reasonably required by Parent for inclusion in Parent' consolidated, combined or
unitary income tax returns in accordance with ABNH's past custom and practice.
Parent will allow ABNH an opportunity to review and comment on such income tax
returns (including any amended returns) to the extent they relate to ABNH. ABNH
will include its income on its separate income tax returns for all taxable
periods beginning after the Closing Date. The income of ABNH will be apportioned
to the period up to and including the Closing Date and the period after the
Closing Date by closing the books of ABNH as of the end of the Closing Date,
unless Parent and ABNH elect ratable allocation pursuant to Treasury Regulation
Sections 1.1502-76(b)(2)(ii). ABNH shall assign and pay over to Parent all
refunds of Taxes with respect to any period ending on or before the Closing
Date, or with respect to which Parent has agreed to indemnify ABNH under Section
11.3(iii). For all purposes of this Section and Sections 4.3, 11.2 and 11.3,
Taxes shall be treated as incurred by ABNH, whether or not actually assessed or
paid, if and to the extent such Taxes would be incurred and payable by ABNH if
ABNH filed its returns on a separate company basis.
4.2 Separate Tax Returns. For all periods following the Closing Date,
and for all periods ending prior to or on the Closing Date with respect to
state, local and foreign income and other tax returns not filed by Parent and
ABNH on a consolidated, combined or unitary basis, Parent and ABNH will file
their tax returns for state, local and foreign income tax purposes and all other
tax returns on a separate basis and, subject to Sections 11.2 and 11.3, shall be
separately responsible for all Taxes assessed with respect to such returns.
4.3 Audits. Parent will allow ABNH and its counsel to participate at
ABNH's own expense in any audits of the federal, state, local or foreign
consolidated, combined or unitary income tax returns of Parent to the extent
that such returns relate to ABNH. ABNH shall indemnify Parent for attorneys'
fees and any and all costs and expenses (including allocated costs of in-house
counsel and other personnel) whatsoever reasonably incurred in connection with
any such audit to the extent such audit relates to Taxes incurred by ABNH or
arising with respect to the activities of ABNH. Parent will not settle any such
audit in a manner that would adversely affect ABNH after the Closing Date,
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unless such settlement would be reasonable in the case of a person that owned
ABNH both before and after the Closing Date.
4.4 Post-Closing Elections. At Parent's request, ABNH will make or join
with Parent in making any election for Tax purposes if the making of such
election does not have a material adverse impact on ABNH for any taxable period
after the Closing Date.
4.5 Termination of Other Tax Sharing Agreements. Any Tax sharing or
allocation agreements between Parent and ABNH other than this Agreement shall
terminate on the Closing Date.
Section 5. Insurance Matters.
5.1 New Policies. On or prior to the date hereof, ABNH obtained binders
for such new business insurance policies as it deems necessary and proper for
the conduct of its business, which policies by their terms became or become
effective no later than the Closing Date. ABNH is responsible for paying all
premiums required under such policies and, to the extent any such premiums
became due prior to the IPO Effective Date, ABNH has paid such premiums.
5.2 Tail Coverages. ABNH is or has been a named insured under various
blanket business insurance policies owned by Parent (the "Parent Blanket
Policies"). Parent has made available to ABNH the opportunity to purchase
extended discovery period coverage for the benefit of ABNH under the Parent
Blanket Policies, and ABNH has purchased such extended discovery period
coverages as it deems necessary and proper for the conduct of its business.
5.3 Refunds and Adjustments, etc. The parties acknowledge that certain
of the premiums paid by Parent under the Parent Blanket Policies are subject to
reduction after the applicable insurer audits the related claims history.
Refunds reflecting any such reductions shall be solely for the account of
Parent, and ABNH shall have no claim with respect thereto. To the extent that
ABNH receives any such refund, ABNH shall immediately pay it over to Parent.
ABNH shall indemnify Parent for the full amount of any retroactive premium
adjustment or similar charge, with respect to workers' compensation or other
insurance, arising out of the activities of ABNH. Any retroactive adjustments
for ABNH from prior years shall be paid by ABNH.
5.4 Workers' Compensation. Effective as of Closing Date (the "WC Switch
Date"), ABNH obtained such workers' compensation insurance arrangements as it
deems necessary and proper for the conduct of its business, and ABNH shall be
solely responsible for all workers' compensation claims of ABNH employees
incurred after the WC Switch Date.
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Section 6. Lien and Guaranty Releases. It is the parties' intention
that, from and after the Closing Date, (a) no assets (including, without
limitation, cash balances in bank accounts and rights as lessee) or capital
stock of ABNH will be subject to any lien, security interest, mortgage or other
encumbrance relating to any indebtedness of Parent or of any member of the
Parent Group, and ABNH will have no obligation, as guarantor or otherwise, for
any indebtedness of Parent or of any member of the Parent Group, and (b) no
assets (including, without limitation, cash balances in bank accounts and rights
as lessee) or capital stock of Parent will be subject to any lien, security
interest, mortgage or other encumbrance relating to any indebtedness of ABNH,
and Parent will have no obligation, as guarantor or otherwise, for any
indebtedness of ABNH. If, after the Closing Date, any lien or guaranty is
discovered that encumbers any asset or capital stock of ABNH, or under which
ABNH has any obligation, and that relates to any indebtedness of Parent or of
any member of the Parent Group, Parent shall take all actions that shall be
necessary to obtain the release of such lien or guaranty. If, after the Closing
Date, any lien or guaranty is discovered that encumbers any asset or capital
stock of Parent, or under which Parent has any obligation, and that relates to
any indebtedness of ABNH, ABNH shall take all actions that shall be necessary to
obtain the release of such lien or guaranty.
Section 7. Asset Transfer. As of the Closing Date, (a) Parent shall
execute and deliver to ABNH a quitclaim xxxx of sale, transferring to ABNH any
interest Parent might have in any of the assets used by ABNH in the conduct of
its business and (b) ABNH shall execute and deliver to Parent a quitclaim deed,
transferring to Parent any interest ABNH might have in any of the assets used by
Parent in the conduct of its business which are not necessary for the conduct of
ABNH's business.
Section 8. Bank Accounts/Cash Management. Prior to the IPO Effective
Date, ABNH has established such bank accounts as it deems to be necessary to
conduct its business (and/or, with the assistance of Parent, has amended the
authorizations relating to mutually agreed existing bank accounts so that they
are controlled exclusively by ABNH personnel), and, where applicable, all
authorizations, standing wire instructions and the like relating to ABNH's
participation in Parent's cash management system have been terminated.
Section 9. Employee Benefit Plans. Simultaneously with the execution of
this Agreement, ABNH and Parent have executed the Employee Benefits Allocation
Agreement attached as Schedule 13 hereto, which agreement constitutes the
agreement between ABNH and Parent with respect to employee benefit aspects of
the Separation.
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Section 10. Termination of Agreements. Except for this Agreement and
any Ancillary Agreements, in furtherance of the Separation, ABNH and Parent
hereby terminate any and all agreements, arrangements, commitments or
understandings, whether or not in writing, between or among ABNH, on the one
hand, and Parent and/or any member of the Parent Group, on the other hand,
effective as of the Closing Date.
Section 11. Mutual Releases; Indemnification.
11.1 Release of Pre-Closing Claims. (a) Except as provided in Section
11.1(c), effective as of the Closing Date, ABNH does, for itself and its
successors and assigns, remise, release and forever discharge Parent, the
members of the Parent Group, their respective Affiliates (other than ABNH),
successors and assigns, and all Persons who at any time prior to the Closing
Date have been shareholders, directors, officers, agents or employees of any
member of the Parent Group (in each case, in their respective capacities as
such), and their respective heirs, executors, administrators, successors and
assigns, from any and all Liabilities to ABNH, whether at law or in equity
(including any right of contribution), whether arising under any contract or
agreement, by operation of law or otherwise, existing or arising from any acts
or events occurring or failing to occur or alleged to have occurred or to have
failed to occur or any conditions existing or alleged to have existed on or
before the Closing Date.
(b) Except as provided in Section 11.1(c), effective as of the Closing
Date, Parent does, for itself and each other member of the Parent Group, their
respective Affiliates (other than ABNH), successors and assigns, remise, release
and forever discharge ABNH, and all Persons who at any time prior to the Closing
Date have been shareholders, directors, officers, agents or employees of ABNH
(in each case, in their respective capacities as such), and their respective
heirs, executors, administrators, successors and assigns, from any and all
Liabilities to Parent or any of the Parent Group, whether at law or in equity
(including any right of contribution), whether arising under any contract or
agreement, by operation of law or otherwise, existing or arising from any acts
or events occurring or failing to occur or alleged to have occurred or to have
failed to occur or any conditions existing or alleged to have existed on or
before the Closing Date, except to the extent of such product warranty
obligations or other Liabilities, if any, as may arise out of the provision of
goods by ABNH to Parent or other members of the Parent Group or their respective
Affiliates which are or have been customers of ABNH, which shall not be subject
to or affected by the foregoing release.
(c) Nothing contained in Section 11.1(a) or (b) shall impair any
obligation under this Agreement or any Ancillary
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Agreement or any right of any Person to enforce this Agreement or any Ancillary
Agreement.
11.2 Indemnification by ABNH. Except as provided in Section 11.4, ABNH
shall indemnify, defend and hold harmless Parent, each member of the Parent
Group and each of their respective directors, officers, agents and employees,
and each of the heirs, executors, successors and assigns of any of the foregoing
(collectively, the "Parent Indemnitees"), from and against any and all
Liabilities of the Parent Indemnitees relating to, arising out of or resulting
from any of the following items (without duplication):
(i) the IPO, the conduct by ABNH of its business, whether
before or after the Closing Date, including as a result of guarantees
by Parent of any obligations of ABNH, and the purchase of any goods or
services from or through Parent prior to the Closing;
(ii) any breach by ABNH of this Agreement or any Ancillary
Agreement;
(iii) Taxes incurred by ABNH (including any amounts assessed
by a federal, state or local taxing authority), or arising with respect
to the activities of, ABNH, with respect to any and all periods,
whether ending before, on or after the Closing Date; and
(iv) the IPO, provided that such indemnification will be
subordinate to any indemnity provided by ABNH to the Underwriters in
connection with the IPO pursuant to the Underwriting Agreement, among
ABNH, Parent and the Underwriters listed on Schedule A thereto, and no
amount shall be paid pursuant to such indemnification until any amount
which is then payable under the Underwriting Agreement is paid in full.
11.3 Indemnification by Parent. Parent shall indemnify, defend and hold
harmless ABNH, and each of its directors, officers, agents and employees, and
each of the heirs, executors, successors and assigns of any of the foregoing
(collectively, the "ABNH Indemnitees"), from and against any and all Liabilities
of the ABNH Indemnitees relating to, arising out of or resulting from any of the
following items (without duplication):
(i) the conduct by Parent or any member of the Parent Group,
of their respective businesses at any time, including as a result of
guarantees by ABNH of any obligations of Parent or any member of the
Parent Group;
(ii) any breach by Parent or any member of the Parent Group of
this Agreement or any Ancillary Agreement; and
(iii) Taxes incurred by, or arising with respect to the
activities of, Parent or any member of the Parent Group, other than
Taxes incurred by, or arising with respect to the activities of, ABNH,
during or with respect to any and all periods ending before, on or
after the Closing Date.
11.4 Indemnification Obligations Net of Insurance Proceeds and Other
Amounts. The parties intend that any Liability subject to indemnification or
reimbursement pursuant to this Section 11 will be net of Insurance Proceeds.
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11.5 Procedures for Indemnification of Third Party Claims. (a) If an
Indemnitee shall receive notice or otherwise learn of the assertion by a Person
of any claim or of the commencement by any such Person of any Action
(collectively, a "Third Party Claim") with respect to which an Indemnifying
Party may be obligated to provide indemnification to such Indemnitee pursuant to
Section 11.2 or 11.3, or any other Section of this Agreement or any Ancillary
Agreement, such Indemnitee shall give such Indemnifying Party written notice
within 20 days after becoming aware of such Third Party Claim. Any such notice
shall describe the Third Party Claim in reasonable detail. Notwithstanding the
foregoing, the failure of any Indemnitee or other Person to give notice as
provided in this Section 11.5(a) shall not relieve the related Indemnifying
Party of its obligations under this Section 11, except to the extent that such
Indemnifying Party is actually prejudiced by such failure to give notice.
(b) An Indemnifying Party may elect to defend (or, with respect to a
Third partly Claim relating to Taxes to which Section 11.2(iii) applies,
participate), and to seek to settle or compromise, at such Indemnifying Party's
own expense and by such Indemnifying Party's own counsel, any Third Party Claim.
Within 30 days after the receipt of notice from an Indemnitee in accordance with
Section 11.5(a) (or sooner, if the nature of such Third Party Claim so
requires), the Indemnifying Party shall notify the Indemnitee whether the
Indemnifying Party will assume responsibility for defending such Third Party
Claim.
(c) If an Indemnifying Party elects not to assume responsibility for
defending a Third Party Claim, or fails to notify an Indemnitee of its election
as provided in Section 11.5(d), such Indemnitee may defend such Third Party
Claim at the cost and expense (including allocated costs of in-house counsel and
other personnel) of the Indemnifying Party.
(d) Unless the Indemnifying Party has failed to assume the defense of
the Third Party Claim in accordance with the terms of this Agreement, no
Indemnitee may settle or compromise any Third Party Claim without the consent of
the Indemnifying Party.
(e) No Indemnifying Party shall consent to entry of any judgment or
enter into any settlement of the Third Party Claim without the consent of the
Indemnitee if the effect thereof is to permit any injunction, declaratory
judgment, other order or other nonmonetary relief to be entered, directly or
indirectly, against any Indemnitee.
11.6 Additional Matters. (a) Any claim on account of a Liability that
does not result from a Third Party Claim shall be asserted by written notice
given by the Indemnitee to the related Indemnifying Party. Such Indemnifying
Party shall have a period of 30 days after the receipt of such notice within
which to respond. If such Indemnifying Party does not respond within
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such 30-day period, such Indemnifying Party shall be deemed to have refused to
accept responsibility to make payment. If such Indemnifying Party does not
respond within such 30-day period or rejects such claim in whole or in part,
such Indemnitee shall be free to pursue such remedies as may be available to
such party as contemplated by this Agreement and any Ancillary Agreement.
(b) In the event of payment by or on behalf of any Indemnifying Party
to any Indemnitee in connection with any Third Party Claim, such Indemnifying
Party shall be subrogated to and shall stand in the place of such Indemnitee as
to any events or circumstances in respect of which such Indemnitee may have any
right, defense or claim relating to such Third Party Claim against any claimant
or plaintiff asserting such Third Party Claim or against any other person. Such
Indemnitee shall cooperate with such Indemnifying Party in a reasonable manner,
and at the cost and expense (including allocated costs of in-house counsel and
other personnel) of such Indemnifying Party, in prosecuting any subrogated
right, defense or claim.
11.7 Remedies Cumulative. The remedies provided in this Section 11
shall be cumulative and shall not preclude assertion by any Indemnitee of any
other rights or the seeking of any and all other remedies against any
Indemnifying Party.
11.8 Survival of Indemnities. The rights and obligations of each of
Parent and ABNH and their respective Indemnitees under this Section 11 shall
survive the Closing for a period of three years or, in the case of any Tax, for
the longer of such period or the period of the applicable statute of limitations
(including any period for which such statute is tolled or waived by agreement or
otherwise).
Section 12. Certain Business Matters. (a) Neither ABNH, Parent nor any
member of the Parent Group shall have any duty to refrain from (i) engaging in
the same or similar activities or lines of business as any other of such
Persons, (ii) doing business with any potential or actual supplier or customer
of any other of such Persons, or (iii) engaging in, or refraining from, any
other activities relating to any of the potential or actual suppliers or
customers of any other of such Persons. Until the first anniversary of the
Closing Date, ABNH shall not solicit any employee of Parent or of any member of
the Parent Group to become an employee of ABNH, and neither Parent nor any
member of the Parent Group shall solicit any employee of ABNH to become an
employee of Parent or of any member of the Parent Group.
Section 13. Late Payments. Any amount not paid when due pursuant to
this Agreement or any Ancillary Agreement shall accrue interest at a rate per
annum equal to the Prime Rate plus 1%.
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Section 14. Exchange of Information. Each of Parent and ABNH agrees to
provide, or cause to be provided, to each other, at any time after the Closing
Date, as soon as reasonably practicable after written request, any Information
in its possession or under its control that the requesting party reasonably
needs (i) to comply with reporting, disclosure, filing or other requirements
imposed on the requesting party (including under applicable securities or tax
laws) by a Governmental Authority having jurisdiction over the requesting party,
(ii) for use in any other judicial, regulatory, administrative, tax or other
proceeding or in order to satisfy audit, accounting, claims, regulatory,
litigation, tax or other similar requirements, or (iii) to comply with its
obligations under this Agreement or any Ancillary Agreement; provided, however,
that if any party determines that any such provision of Information could be
commercially detrimental, violate any law or agreement, or waive any
attorney-client privilege, the parties shall take all reasonable measures to
permit the compliance with such obligations in a manner that avoids any such
harm or consequence.
Section 15. Confidentiality. Each of Parent and ABNH agrees to hold,
and to cause its respective directors, officers, employees, agents, accountants,
counsel, other advisors and representatives, and Subsidiaries to hold, in strict
confidence, with at least the same degree of care that applies to Parent's
confidential and proprietary information pursuant to policies in effect as of
the Closing Date, all Information concerning the other that is either in its
possession (including Information in its possession prior to the Closing Date)
or furnished by such other or its respective directors, officers, employees,
agents, accountants, counsel and other advisors and representatives at any time
pursuant to this Agreement, any Ancillary Agreement or otherwise, and shall not
use any such Information other than for such purposes as contemplated by such
agreements, except, in each case, to the extent that such Information has been
(i) in the public domain through no fault of such party or any of its directors,
officers, employees, agents, accountants, counsel and other advisors and
representatives, (ii) later lawfully acquired from other sources by such party,
which sources are not themselves bound by a confidentiality obligation, or (iii)
independently generated without reference to any proprietary or confidential
Information of the other party. In the event that any party either determines on
the advice of its counsel that it is required to disclose any Information
pursuant to applicable law or receives any demand under lawful process or from
any Governmental Authority to disclose or provide Information of any other party
that is subject to the confidentiality provisions of this Agreement, such party
shall notify the other party prior to disclosing or providing such Information
and shall cooperate at the expense of the requesting party in seeking any
reasonable protective arrangements requested by such other party. Subject to the
foregoing, the Person that received such request may
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subsequently disclose or provide Information to the extent required by such law
(as so advised by counsel) or by lawful process or such Governmental Authority.
Section 16. Further Assurances. In addition to the actions specifically
provided for elsewhere in this Agreement, each of the parties hereto shall use
its reasonable best efforts, prior to, on and after the Closing Date, to take,
or cause to be taken, all actions, and to do, or cause to be done, all things,
reasonably necessary, proper or advisable under applicable laws, regulations and
agreements to consummate and make effective the transactions contemplated by
this Agreement and the Ancillary Agreements.
Section 17. Miscellaneous.
17.1 Counterparts; Entire Agreement. (a) This Agreement and each
Ancillary Agreement may be executed in one or more counterparts, all of which
shall be considered one and the same agreement, and shall become effective when
one or more counterparts have been signed by each of the parties and delivered
to the other party.
(b) This Agreement, any Ancillary Agreements and the Schedules hereto
and thereto contain the entire agreement between the parties with respect to the
subject matter hereof, supersede all previous agreements, negotiations,
discussions, writings, understandings, commitments and conversations with
respect to such subject matter and there are no agreements or understandings
between the parties other than those set forth or referred to herein or therein.
17.2 Governing Law. This Agreement and each Ancillary Agreement shall
be governed by and construed and interpreted in accordance with the laws of the
State of New York, irrespective of the choice of laws principles of the State of
New York, as to all matters, including matters of validity, construction,
effect, enforceability, performance and remedies.
17.3 Assignability. This Agreement and each Ancillary Agreement shall
be binding upon and inure to the benefit of the parties to such agreements,
respectively, and their respective successors and assigns; provided, however,
that no party may assign its respective rights or delegate its respective
obligations under this Agreement or any Ancillary Agreement without the express
prior written consent of the other parties.
17.4 Third Party Beneficiaries. Except for the indemnification rights
under this Agreement of any Parent Indemnitee or ABNH Indemnitee in their
respective capacities as such, (a) the provisions of this Agreement and each
Ancillary Agreement are solely for the benefit of the parties and are not
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intended to confer upon any Person except the parties any rights or remedies
under this Agreement, and (b) there are no third party beneficiaries of this
Agreement or any Ancillary Agreement and neither this Agreement nor any
Ancillary Agreement shall provide any third person with any remedy, claim,
liability, reimbursement, claim of action or other right in excess of those
existing without reference to this Agreement or any Ancillary Agreement.
17.5 Notices. All notices or other communications under this Agreement
or any Ancillary Agreement shall be in writing and shall be deemed to be duly
given when (a) delivered in person or (b) deposited in the United States mail or
private express mail, postage prepaid, addressed as follows:
If to Parent, to: Secretary
American Banknote Corporation
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
If to ABNH, to: Secretary
American Bank Note
Holographics, Inc.
000 Xxxxxxxxx Xxxxxxxxx
Xxxxxxxx, XX 00000
Any party may, by notice to the other party, change the address to which such
notices are to be given.
17.6 Severability. If any provision of this Agreement or any Ancillary
Agreement or its application to any Person or circumstance is determined by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions of such agreement, or the application of such provision to
Persons or circumstances or in jurisdictions other than those as to which it has
been held invalid or unenforceable, shall remain in full force and effect and
shall in no way be affected, impaired or invalidated, so long as the economic or
legal substance of the transactions contemplated by such agreement, as the case
may be, is not affected in any manner adverse to any party. Upon such
determination, the parties shall negotiate in good faith in an effort to agree
upon such a suitable and equitable provision to effect the original intent of
the parties.
17.7 Force Majeure. No party shall be deemed in default of this
Agreement or any Ancillary Agreement to the extent that any delay or failure in
the performance of its obligations under this Agreement or any Ancillary
Agreement results from any cause beyond its reasonable control and without its
fault or negligence, such as acts of God, acts of civil or military authority,
embargoes, epidemics, war, riots, insurrections, fires, explosions, earthquakes,
floods, unusually severe weather conditions, labor problems or unavailability of
parts, or, in the case of computer systems, any failure in
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electrical or air conditioning equipment. In the event of any such excused
delay, the time for performance shall be extended for a period equal to the time
lost by reason of the delay.
17.8 Publicity; Expenses. Prior to the Closing Date, each of ABNH and
Parent shall consult with each other prior to issuing any press releases or
otherwise making public statements with respect to the IPO, the Separation or
any of the other transactions contemplated hereby. All expenses of ABNH and
Parent incurred in connection with the implementation of the IPO and the
Separation shall be for the account of ABNH, except for expenses incurred by
Parent in connection with the Separation and Underwriters' commission for the
shares of ABNH Common Stock to be sold in the IPO which shall be for the account
of Parent. Notwithstanding the provisions of the foregoing sentence and of
Section 11.2(i), Parent shall pay all SEC filing fees and legal, accounting,
printing and other similar out-of-pocket expenses directly relating to ABNH's
participation in the completion of the IPO; provided however, that in the event
the Underwriters exercise their over-allotment option to purchase Common Stock
from ABNH, such expenses shall be allocated in such amounts and percentages as
the parties shall agree.
17.9 Waivers of Default. Waiver by any party of any default by the
other party of any provision of this Agreement or any Ancillary Agreement shall
not be deemed a waiver by the waiving party of any subsequent or other default,
nor shall it prejudice the rights of the other party.
17.10 Specific Performance. In the event of any actual or threatened
default in, or breach of, any of the terms, conditions and provisions of this
Agreement or any Ancillary Agreement, the party or parties who are or are to be
aggrieved shall have the right to specific performance and injunctive or other
equitable relief of its rights under this Agreement or such Ancillary Agreement,
in addition to any and all other rights and remedies at law or in equity, and
all such rights and remedies shall be cumulative. The parties agree that the
remedies at law for any breach or threatened breach, including monetary damages,
are inadequate compensation for any loss and that any defense in any action for
specific performance that a remedy at law would be adequate is waived. Any
requirements for the securing or posting of any bond with such remedy are
waived.
17.11 Amendments. No provision of this Agreement or any Ancillary
Agreement shall be deemed waived, amended, supplemented or modified by any
party, unless such waiver, amendment, supplement or modification is in writing
and signed by the authorized representative of the party against whom it is
sought to enforce such waiver, amendment, supplement or modification.
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IN WITNESS WHEREOF, each of the parties has caused this Separation
Agreement to be duly executed by its duly authorized officer as of the day and
year first written above.
AMERICAN BANKNOTE CORPORATION
By:_______________________________
Name:_____________________________
Title:____________________________
AMERICAN BANK NOTE HOLOGRAPHICS, INC.
By:_______________________________
Name:_____________________________
Title:____________________________
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