-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MinZdTCoivGofkRHOCVXScDxu2E2p2CY6JEQRw8rXjWh+21bMk9Yx/gGbklRYmXl HtTPg//JlmSqIy/B3WgKzA== /in/edgar/work/20000921/0000950135-00-004403/0000950135-00-004403.txt : 20000924 0000950135-00-004403.hdr.sgml : 20000924 ACCESSION NUMBER: 0000950135-00-004403 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20000921 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN BANK NOTE HOLOGRAPHICS INC CENTRAL INDEX KEY: 0001052489 STANDARD INDUSTRIAL CLASSIFICATION: [7389 ] IRS NUMBER: 133317668 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-54447 FILM NUMBER: 726341 BUSINESS ADDRESS: STREET 1: 399 EXECUTIVE BOULEVARD CITY: ELMSFORD STATE: NY ZIP: 10523 BUSINESS PHONE: 9145922355 MAIL ADDRESS: STREET 1: 399 EXECUTIVE BOULEVARD CITY: ELMSFORD STATE: NY ZIP: 10523 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: CRANE & CO INC CENTRAL INDEX KEY: 0001124057 STANDARD INDUSTRIAL CLASSIFICATION: [ ] IRS NUMBER: 041215780 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 30 SOUTH ST CITY: DALTON STATE: MA ZIP: 01226 BUSINESS PHONE: 4136846202 MAIL ADDRESS: STREET 1: 30 SOUTH ST CITY: DALTON STATE: MA ZIP: 01226 SC 13D 1 b36743absc13d.txt AMERICAN BANK NOTE HOLOGRPHICS, INC. 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 American Bank Note Holographics, Inc. -------------------------------------------- (Name of Issuer) Common Stock, $.01 par value --------------------------------- (Title of Class of Securities) 024490104 ---------------------- (CUSIP Number) Douglas A. Crane Crane & Co., Inc. 30 South Street Dalton, MA 01226 Telephone: (413) 684-6202 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) Copies to: Frank B. Porter, Jr., Esq. Choate, Hall & Stewart Exchange Place 53 State Street Boston, MA 02109-2891 June 30, 2000 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ]. 2 SCHEDULE 13D - ------------------- ------------------ CUSIP NO. 024490104 PAGE 2 OF 7 PAGES - ------------------- ------------------ - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Crane & Co., Inc. -- 04-1215780 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS WC - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION US - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF SHARES 3,387,720 BENEFICIALLY ----------------------------------------------------- OWNED BY 8 SHARED VOTING POWER EACH REPORTING 0 PERSON ----------------------------------------------------- WITH 9 SOLE DISPOSITIVE POWER 3,387,720 ----------------------------------------------------- 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,387,720 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 19.89% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON CO - -------------------------------------------------------------------------------- 3 - ------------------- ------------------ CUSIP NO. 024490104 PAGE 3 OF 7 PAGES - ------------------- ------------------ ITEM 1. SECURITY AND ISSUER. This statement relates to the Common Stock, $.01 par value (the "Common Stock") of American Bank Note Holographics, Inc. (the "Issuer"), a Delaware corporation, with its principal executive offices located at 399 Executive Boulevard, Elmsford, NY 10523. ITEM 2. IDENTITY AND BACKGROUND This Statement is being filed by Crane & Co., Inc. (the "Reporting Person"). The Reporting Person is a corporation organized under the laws of The Commonwealth of Massachusetts. The Reporting Person's business address is 30 South Street, Dalton, MA 01226. The Reporting Person's principal business is the manufacture of papers and stationery. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. Pursuant to a Stock Purchase Agreement, dated as of June 30, 2000 (the "Purchase Agreement") by and among the Reporting Person and the Issuer, the Reporting Person purchased 3,387,720 shares of the Issuer's Common Stock for a payment to the Issuer of $9,316,230. Prior to the execution of the Purchase Agreement, the Reporting Person held no shares of the Issuer's Common Stock. A copy of the Purchase Agreement has been filed as EXHIBIT 10 to the Report on Form 10-Q filed by the Issuer with the Securities and Exchange Commission on August 14, 2000, and is incorporated in its entirety herein by reference. The source of funds for the Reporting Person's purchase of the shares was its working capital. ITEM 4. PURPOSE OF TRANSACTION. The purpose of the transaction was for the Reporting Person to make an investment in the Issuer. Pursuant to the Purchase Agreement, if the Issuer proposes to undertake an issuance of any new capital stock, or options or other rights convertible or exercisable for capital stock ("New Securities"), the Reporting Person and any permitted transferee thereof shall have the right to purchase its Proportional Share (defined as the percentage of the Issuer's Common Stock outstanding held by such party immediately prior to such issuance) of such New Securities, and the Reporting Person and all such permitted transferees shall have the right of over-allotment with respect to such Proportional Share of each, as specified in the Purchase Agreement. Additionally, if the Issuer issues any securities in connection with the settlement of any litigation outstanding on the closing date of this transaction ("Settlement Securities"), the Reporting Person and any permitted transferee shall have the right to purchase such Settlement Securities so as to raise its total percentage ownership of the Issuer's Common Stock up to but not above its Proportional Share immediately prior to such settlement, at a price of $3.35 per share. 4 - ------------------- ------------------ CUSIP NO. 024490104 PAGE 4 OF 7 PAGES - ------------------- ------------------ Also pursuant to the Purchase Agreement, the Board of Directors and the Audit Committee thereof of the Issuer shall each be expanded by one seat, and Douglas A. Crane, an executive officer of the Reporting Person, has been appointed to both the Board of Directors and the Audit Committee thereof. The Purchase Agreement provides that, for as long as the Reporting Person shall own at least 51% of the shares of Common Stock of the Issuer purchased pursuant thereto, the Reporting Person shall be entitled to designate one director on the management slate of nominees to the Board of Directors of the Issuer, and that, should such Board of Directors be expanded to a number greater than six (6), then such Board of Directors shall be expanded by another seat, and the Reporting Person shall be entitled to nominate an additional director thereto. Except as set forth in this statement, the Reporting Person has not formulated any plans or proposals which relate to or would result in: (a) the acquisition by any person of additional securities of the Issuer or the disposition of securities of the Issuer, (b) an extraordinary corporate transaction involving the Issuer or any of its subsidiaries, (c) a sale or transfer of a material amount of the assets of the Issuer or any of its subsidiaries, (d) any change in the present board or management of the Issuer, (e) any material change in the Issuer's capitalization or dividend policy, (f) any other material change in the Issuer's business or corporate structure, (g) any change in the Issuer's charter or bylaws, or other instrument corresponding thereto, or other action which may impede the acquisition of control of the Issuer by any person, (h) causing a class of the Issuer's securities to be deregistered or delisted, (i) a class of equity securities of the Issuer becoming eligible for termination of registration or (j) any action similar to any of those enumerated above. However, the Reporting Person will continue to review the business of the Issuer and may in the future propose that the Issuer take one or more of such actions. The Reporting Person reserves the right to acquire more shares or dispose of shares of the Common Stock of the Issuer from time to time, subject to market conditions, other investment opportunities and other factors. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a) The Reporting Person has acquired beneficial ownership of 3,387,720 shares of Common Stock. The Common Stock owned by the Reporting Person represents approximately 19.89% of the outstanding Common Stock. The Reporting Person expressly disclaims beneficial ownership of any shares of Common Stock except the 3,387,720 shares with respect to which it possesses sole dispositive power. (b) The Reporting Person has sole power to vote, or to direct the vote of, 3,387,720 shares of Common Stock. The Reporting Person has sole power to dispose of, or to direct the disposition of, the 3,387,720 shares of Common Stock acquired as a result of the transaction contemplated by the Purchase Agreement. 5 - ------------------- ------------------ CUSIP NO. 024490104 PAGE 5 OF 7 PAGES - ------------------- ------------------ (c) During the past 60 days and during the 60 days immediately preceding the Reporting Person's purchase of the Common Stock of the Issuer, the Reporting Person has not effected any transactions in the shares of Common Stock except as disclosed here in this statement. (d) No other person is known to have the right to receive or the power to direct the receipt of dividends from, or proceeds from the sale of, any of the Common Stock beneficially owned by the Reporting Person. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. PURCHASE AGREEMENT. Pursuant to the Purchase Agreement, the Reporting Person purchased 3,387,720 shares of Common Stock in exchange for a payment of $9,316,230, described in Item 3. REGISTRATION RIGHTS AGREEMENT. The shares of Common Stock issued to the Reporting Person are not registered securities within the meaning of the Securities Act of 1933, as amended (the "Act"). Pursuant to Section 5.01(f) of the Purchase Agreement, the Issuer has granted to the Reporting Person certain registration rights, set forth in a Registration Rights Agreement dated as of June 30, 2000 among the Reporting Person and the Issuer (the "Registration Rights Agreement"). A copy of the Registration Rights Agreement is filed herewith as EXHIBIT B hereto and is incorporated in its entirety herein by reference. If at any time the Reporting Person requests that the Issuer file a registration statement for a firm commitment public offering of Registrable Securities (as that term is defined in the Registration Rights Agreement), the Issuer shall use its best efforts to register the shares of Common Stock held by the Reporting Person and requested by it to be registered under the Act. The Issuer shall effect a minimum of one such "demand" request from the Reporting Person. Additionally, if the Issuer proposes to register any shares of Common Stock for its own or others' account under the Act, other than a registration solely relating to employee benefit plans or to shares to be sold under Rule 145 under the Act, the Issuer shall give the Reporting Person prompt written notice of its intent. Upon written request of the Reporting Person, given within twenty (20) days after receipt of such notice, the Issuer shall include in such registration all shares of Common Stock held by the Reporting Person specified in such written request, provided that such inclusion will not materially and adversely affect the offering. Finally, at a time when a Form S-3 (or other comparable form) is available for such registration, if the Issuer shall receive a written request from the Reporting Person that the Issuer 6 - ------------------- ------------------ CUSIP NO. 024490104 PAGE 6 OF 7 PAGES - ------------------- ------------------ effect a registration on Form S-3 (or comparable form) of the Registrable Securities (as that term is defined in the Registration Rights Agreement), the Issuer will, as soon as reasonably practicable, effect such registration and all related qualifications and compliances as may be requested by the Reporting Person. The foregoing descriptions of the Purchase Agreement and the Registration Rights Agreement are qualified in their entirety by reference to such agreements, copies of which are attached hereto or which are incorporated herein by reference. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. Attached to this statement and filed with this statement as exhibits are the following documents: EXHIBIT A: Stock Purchase Agreement, dated as of June 30, 2000, by and among Crane & Co., Inc. and American Bank Note Holographics, Inc. (incorporated by reference from EXHIBIT 10 to the Report on Form 10-Q filed by the Issuer with the SEC on August 14, 2000). EXHIBIT B: Registration Rights Agreement, dated as of June 30, 2000, by and among Crane & Co., Inc. and American Bank Note Holographics, Inc. 7 - ------------------- ------------------ CUSIP NO. 024490104 PAGE 7 OF 7 PAGES - ------------------- ------------------ SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: September 11, 2000 CRANE & CO., INC. /s/ Douglas A. Crane --------------------------------- By: Its: EX-99.(B) 2 b36743abex99-b.txt REGISTRATION RIGHTS AGREEMENT 1 EXHIBIT 99(b) REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (the "AGREEMENT") is entered into as of this 30th day of June, 2000, by and between Crane & Co., Inc., a Massachusetts corporation (the "INVESTOR"), and American Bank Note Holographics, Inc., a Delaware corporation ("ABNH"). WHEREAS, The Investor and ABNH have entered into a Stock Purchase Agreement dated as of the date hereof (the "PURCHASE AGREEMENT"), pursuant to which the Investor will purchase up to 3,387,720 shares of ABNH's Common Stock ("COMMON STOCK"). The parties wish to agree as to certain rights concerning the registration of the Registrable Shares. Certain capitalized terms used herein are defined in Section 4 hereof. Capitalized terms used herein and not otherwise defined shall have the meanings given to them in the Purchase Agreement. NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: SECTION 1. DEMAND REGISTRATION RIGHTS. (a) At any time, upon written demand from the Investor or any Permitted Transferee requesting that ABNH file a registration statement under the Securities Act of 1933, as amended (the "SECURITIES ACT"), for a firm commitment underwritten public offering of Registrable Securities, ABNH shall use its best efforts to file a registration statement under the Securities Act covering the Registrable Securities requested to be registered within 90 days after receiving notice of such request for registration from the Investor or any Permitted Transferee. ABNH is obligated to effect one such demand registration requested by the Investor or Permitted Transferee. (b) The registration statement filed pursuant to this Section 1 may, subject to the provisions of Section 1(d), include other securities of ABNH which are held by (i) officers or directors of ABNH or (ii) other persons who, by virtue of agreements with ABNH are entitled to include their securities in any such registration (collectively, the "Other Stockholders"). (c) ABNH shall have the right to defer its obligation to effect a registration for up to one hundred twenty (120) calendar days, if, in the good faith judgment of ABNH's board of directors, effecting a registration would be seriously 2 detrimental to ABNH and an executive officer of ABNH so notifies the Investor in writing. The right of ABNH to defer such obligation may only be exercised once and in any year and may not be exercised more than twice during the term of this Agreement. (d) If the underwriter managing the offering determines that, because of marketing considerations, all of the Registrable Securities requested to be registered may not be included in the offering, the underwriter may reduce the number of Registrable Securities included therein. Such reduction shall be applied (i) first, to shares other than Registrable Securities and other than securities held by Other Stockholders, (ii) second, to securities held by Other Stockholders, and (iii) third, to the Registrable Securities. If any such reduction results in the inclusion of less than 75% of the Registrable Securities requested to be included therein, such registration shall not be deemed a registration under this Section 1. SECTION 2. PIGGYBACK REGISTRATION RIGHTS. (a) Whenever ABNH proposes to register any Common Stock for its own or others' account under the Securities Act, other than a registration relating to employee benefit plans or a registration solely relating to shares to be sold under Rule 145 or similar provision under the Securities Act, ABNH shall give the Investor prompt written notice of its intent to do so. Upon the written request of the Investor given within 20 days after receipt of such notice, ABNH will use its best efforts to cause to be included in such registration all of the Registrable Securities which the Investor or any Permitted Transferee requests. (b) If ABNH is advised in writing in good faith by any managing underwriter of the securities being offered pursuant to any registration statement under this Section 2 that, because of marketing considerations, the number of shares to be sold by persons other than ABNH is greater than the number of such shares which can be offered without adversely affecting the offering, ABNH may reduce the number of shares offered for the accounts of such persons to a number deemed satisfactory by such managing underwriter. Such reduction shall be applied (i) first, to shares other than Registrable Securities and other than securities held by Other Stockholder, (ii) second, to securities held by Other Stockholders, and (iii) to the Registrable Securities. SECTION 3. FORM S-3 REGISTRATION RIGHTS. If, at a time when Form S-3 (or a comparable form) is available for such registration, ABNH shall receive from the Investor a written request or requests that ABNH effect a registration on Form S-3 (or such comparable form) of the Registrable Securities, ABNH will, as soon as reasonably practicable, effect such registration -2- 3 and all related qualifications and compliances as may be requested and as would permit or facilitate the sale and distribution of all Registrable Securities as are specified in such request. ABNH will maintain the effectiveness of such registration statement for as long as requested by the Investor and until such time as the Registrable Securities no longer meet the definition of Registrable Securities. Any registration under this Section 3 will not be counted as a registration under Section 1 above. SECTION 4. DEFINITIONS. (a) As used herein, "REGISTRABLE SECURITIES" means all shares of Common Stock held by the Investor and Permitted Transferees at any time, including without limitation any other shares of Common Stock of ABNH acquired (or which may be acquired upon the exercise or conversion of securities for or into shares of Common Stock) by the Investor pursuant to any preemptive right, right of first refusal or otherwise, and any other shares of Common Stock of ABNH issued in respect of any of such securities (as a result of stock splits, stock dividends, reclassifications, recapitalizations or other events); PROVIDED, HOWEVER, that such securities shall cease to be Registrable Securities upon (i) any sale pursuant to a registration statement under the Securities Act, (ii) any sale that constitutes a "brokers' transaction" pursuant to Rule 144 under the Securities Act, or (iii) delivery of a written opinion of counsel reasonably satisfactory to the Investors and the Permitted Transferees that such securiites are eligible for sale under Rule 144(k) under the Securities Act. (b) As used herein, "COMMON STOCK" means the Common Stock of ABNH, and any replacement class(es) of common stock of ABNH into which such Common Stock is exchanged or converted. SECTION 5. SELECTION OF UNDERWRITER. The underwriter of any offering pursuant to Section 1 hereof shall be a nationally-recognized investment bank selected by the Investor or the Permitted Transferees initiating such registration, PROVIDED that such underwriter shall be reasonably acceptable to ABNH. The underwriter of any offering requested pursuant to Section 2 hereof shall be selected by ABNH. SECTION 6. REGISTRATION PROCEDURES. If and whenever ABNH is required by the provisions of this Agreement to use its best efforts to effect the registration of any of the Registrable Securities under the Securities Act, ABNH shall: (a) as expeditiously as possible (and, in the case of a registration pursuant to Section 1 hereof, within 45 days of any request thereunder) file with the Securities and Exchange Commission (the "COMMISSION") a registration statement, in form -3- 4 and substance required by the Securities Act, with respect to such Registrable Securities and use its best efforts to cause that registration statement to become effective as soon as practicable; (b) as expeditiously as possible, prepare and file with the Commission any amendments and supplements to the registration statement and the prospectus included in the registration statement as may be necessary to keep the registration statement effective, in the case of a firm commitment underwritten public offering, until completion of the distribution of all securities described therein and, in the case of any other offering, until the earlier of the sale of all Registrable Securities covered thereby or 120 days after the effective date thereof; (c) as expeditiously as possible, furnish to the Investor such reasonable numbers of copies of the prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as the Investor may reasonably request in order to facilitate the public sale or other disposition of the Registrable Securities owned by the Investor; (d) as expeditiously as possible, use its best efforts to register or qualify the Registrable Securities covered by the registration statement under the securities or Blue Sky laws of such states as the Investor shall reasonably request, and do any and all other acts and things that may be necessary or desirable to enable the Investor to consummate the public sale or other disposition in such states of the Registrable Securities owned by the Investor; PROVIDED, HOWEVER, that ABNH shall not be required in connection with this paragraph (d) to qualify as a foreign corporation or to execute a general consent to service of process in any jurisdiction; (e) in connection with each registration pursuant to Sections 1, 2 and 3 above covering an underwritten public offering, agree with the Investor to enter into a written agreement with the managing underwriter in such form and containing such provisions (including, if the underwriter so requests, customary contribution provisions on the part of ABNH) as are customary in the securities business for such an arrangement between such underwriter and companies of ABNH's size and investment stature, PROVIDED that the Investor shall not be obligated to enter into any such underwriting agreement if the indemnification provisions thereof are more burdensome on the Investor than those contained herein or if any standback or lock-up requirement therein is for a period that exceeds the period required by this Agreement; -4- 5 (f) at the request of the Investor, furnish to each underwriter, if any, and to the Investor, a legal opinion of ABNH's counsel and a letter from its independent certified public accountants, each in customary form and substance, at such time or times as such documents are customarily provided in the type of offering involved; (g) whenever ABNH is registering any Common Stock under the Securities Act and the Investor is selling securities under such registration or determines that it may be a controlling person under the Securities Act, keep the Investor advised in writing of the initiation, progress and completion of such registration, and ABNH will also allow the Investor and the Investor's counsel to participate in the preparation of the registration statement and to have access to all relevant corporate records, documents and information, will include in the registration statement such information as the Investor may reasonably request and will take all such other action as the Investor may reasonably request; (h) in participating in any registration pursuant to this Agreement, be entitled to receive from the Investor such information regarding the Investor and the distribution proposed by the Investor as ABNH may reasonably request in writing and as shall be required in connection with the registration, qualification or compliance referred to in this Agreement; (i) as of the effective date of any registration statement relating thereto, cause all such Registrable Securities to be listed on each securities exchange on which similar securities issued by ABNH are then listed; and (j) as of the effective date of any registration statement relating thereto, provide a transfer agent and registrar for all such Registrable Securities. SECTION 7. EXPENSES. ABNH will pay all expenses incurred by ABNH in complying with this Agreement, including, without limitation, all registration and filing fees, exchange listing fees, printing expenses, transfer taxes, fees and expenses of counsel for ABNH and the fees and expenses of one counsel selected by the Investor to be included in such registration to represent them, state Blue Sky fees and expenses, and the expense of any special audits incident to or required by any such registration, but excluding underwriting discounts and selling commissions relating to the sale of the Registrable Securities. SECTION 8. NOTIFICATION. Upon filing any registration statement, ABNH shall promptly notify the Investor of any event which results in the prospectus included in such registration statement, as then in effect, containing an untrue statement of a material fact or omitting to state a material fact required to be -5- 6 stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing. SECTION 9. INDEMNIFICATION AND CONTRIBUTION. (a) INDEMNIFICATION BY ABNH. ABNH shall indemnify and hold harmless the Investor, its officers, directors and partners, each underwriter of the Registrable Securities being sold by the Investor, and each controlling person of any of the foregoing, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any prospectus, offering circular, or other document relating to such Registrable Securities (or in any related registration statement, notification or the like) or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by ABNH of the Act, or the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), or any applicable state securities laws, or any rule or regulation promulgated thereunder, applicable to ABNH and relating to action or inaction required of ABNH in connection with any registration, qualification or compliance contemplated by this Agreement, and will reimburse the Investor, each of its officers, directors and partners, and each such underwriter and controlling person for any legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, whether or not resulting in liability; PROVIDED, HOWEVER, that ABNH will not be liable in any such case to the extent that any such claim, loss, damage or liability (i) arises out of or is based on any untrue statement or omission based upon and in conformity with written information furnished to ABNH by the Investor or such underwriter and stated to be specifically for use therein after ABNH has furnished the Investor with a sufficient number of copies thereof, or (ii) results solely from the failure of the Investor to deliver a copy of the current version of the registration statement, prospectus, offering circular or any amendments or supplements thereto after ABNH has furnished the Investor with a sufficient number of copies thereof. (b) INDEMNIFICATION BY THE INVESTOR. The Investor shall indemnify and hold harmless ABNH, each of its directors, each of its officers who has signed the registration statement, each underwriter of the Registrable Securities, and each controlling person of any of the foregoing, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any prospectus, offering circular, or other document relating to the Registrable Securities (or in any related registration statement, notification or the like) or any omission (or alleged omission) -6- 7 to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made therein in reliance upon and in conformity with written information furnished to ABNH by the Investor expressly for use therein, or by the failure of the Investor to deliver a copy of the current version of the registration statement, prospectus, offering circular, or any amendments or supplements thereto after ABNH has furnished the Investor with a sufficient number of copies thereof, and will reimburse ABNH and each such director, officer or controlling person for any legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, PROVIDED, HOWEVER, that the Investor will not be liable under this Section for losses, costs, damages or expenses exceeding in the aggregate the net proceeds to the Investor in such offering. (c) PROCEDURES FOR INDEMNIFICATION. Each party entitled to indemnification under Subsection (a) or (b) of this Section 9 (the "INDEMNIFIED PARTY") shall give notice to the party required to provide indemnification (the "INDEMNIFYING PARTY") promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom; PROVIDED, that counsel for the Indemnifying Party, who shall conduct the defense of such claim or any litigation resulting therefrom, shall be approved by the Indemnified Party (whose approval shall not be unreasonably withheld); and, PROVIDED, FURTHER, that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Agreement. The Indemnified Party may participate in such defense at such party's expense; PROVIDED, HOWEVER, that the Indemnifying Party shall pay such expense if the Indemnified Party shall believe in good faith that representation of such Indemnified Party by the counsel retained by the Indemnifying Party would be inappropriate due to actual or potential differing interests between the Indemnified Party and any other party represented by such counsel in such proceeding. No Indemnifying Party, in the defense of any such claim or litigation shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect of such claim or litigation, and no Indemnified Party shall consent to entry of any judgment or settle such claim or litigation without the prior written consent of the Indemnifying Party. -7- 8 (d) CONTRIBUTION. If the indemnification provided for in Subsections (a) or (b) of this Section 9 is unavailable to any Indemnified Party thereunder in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to in such Subsections, then each person or entity that would have been an Indemnifying Party thereunder shall contribute to the amount paid or payable by such Indemnified Party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and such Indemnified Party on the other. The relative fault shall be determined by reference to, among other things, whether any untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Indemnifying Party or such Indemnified Party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission, or whether such losses, claims, damages or liabilities (or actions in respect thereof) arose out of the action or failure to act of one or more of such parties. Notwithstanding the foregoing, (i) the Investor will not be required to contribute any amount in excess of the net proceeds to the Investor of all Registrable Securities sold by the Investor pursuant to such registration statement, and (ii) no person or entity guilty of fraudulent misrepresentation, within the meaning of Section 11(f) of the Act, shall be entitled to contribution from any person or entity who is not guilty of such fraudulent misrepresentation. SECTION 10. REPORTS UNDER EXCHANGE ACT. With a view to making available to the Investor the benefits of Rule 144 promulgated under the Act and any other rule or regulation of the Commission that may at any time permit the Investor to sell securities of ABNH to the public without registration or pursuant to a registration on Form S-3, ABNH agrees to use its best efforts to satisfy the requirements of all such rules and regulations (including the requirements for public information, registration under the Exchange Act and timely reporting to the Commission) at all times. ABNH will furnish to the Investor, whenever requested, a written statement as to its compliance with the reporting requirements of Rule 144, the Act and the Exchange Act, a copy of its most recent annual or quarterly report, and such other reports and information filed by ABNH as the Investor may reasonably request in connection with the sale of Registrable Securities without registration. SECTION 11. REGISTRATION RIGHTS OF OTHERS. ABNH will not, without the prior written consent of the Investor, grant to any other person or entity the right to (a) require ABNH to initiate the registration of any securities if such rights are superior to the rights of the Investor contained herein or (b) require ABNH to include in any registration, securities owned by the Investor without the consent of the Investor. ABNH represents and warrants as of the date hereof that it has not granted to any person or entity the right to require ABNH to initiate the registration of any securities or to include in any registration any securities owned by the Investor. SECTION 12. LOCK-UP AGREEMENT. The Investor agrees that in connection with any public offering of ABNH's Common Stock, and upon the request of the managing underwriter in such offering, the Investor will not sell any of ABNH's securities held by the Investor (other than those included in such registration) without the prior written consent of such underwriter, for such period of time as may be requested by such underwriter (not to exceed 90 days after the effective date of such registration). The obligation of the Investor under this Section 12 is conditional upon the agreement of all of ABNH's officers and directors to be bound by the terms of this Section 12. -8- 9 SECTION 13. INSIDER TRADING POLICY. At all times during which ABNH is subject to the reporting requirements of the Act, ABNH will use its reasonable best efforts to establish and maintain an internal policy with respect to officers, directors, employees and related persons and entities who possess material, non-public information of ABNH or any of its Subsidiaries (each, an "INSIDER") that is approved by the board of directors of ABNH. SECTION 14. NOTICES. All notices, demands, requests or other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered in person, or by United States mail, certified or registered with return receipt requested, or by nationally recognized overnight courier service, to the addresses of the respective parties for notices in accordance with the Purchase Agreement. SECTION 15. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, including any subsequent holders of Registrable Securities. SECTION 16. SURVIVAL. This Agreement, including without limitation the obligation of the parties under Section 9 hereof, shall survive indefinitely. SECTION 17. SEVERABILITY AND GOVERNING LAW. If any provision of this Agreement is rendered void, invalid or unenforceable by any court of law for any reason, such invalidity or unenforceability shall not void or render invalid or unenforceable any other provision of this Agreement. This Agreement is governed by and construed in accordance with the internal laws of The Commonwealth of Massachusetts. SECTION 18. AMENDMENTS, ETC. This Agreement may be changed, waived, discharged or terminated only with the written consent of both ABNH and the Investor. SECTION 19. COUNTERPARTS. This Agreement may be executed in one or more counterparts, and with counterpart signature pages, including facsimile counterpart signature pages, each of which shall be an original, but all of which together shall constitute one in the same Agreement. [SIGNATURE PAGE FOLLOWS.] -9- 10 IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as a sealed instrument as of the date first above written. AMERICAN BANK NOTE HOLOGRAPHICS, INC. /s/ Kenneth Traub -------------------------------------- By: Kenneth Traub Its: President and Chief Executive Officer CRANE & CO., INC. -------------------------------------- By: Its: 11 IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as a sealed instrument as of the date first above written. AMERICAN BANK NOTE HOLOGRAPHICS, INC. -------------------------------------- By: Its: CRANE & CO., INC. /s/ Lansing E. Crane -------------------------------------- By: Its: -----END PRIVACY-ENHANCED MESSAGE-----