Exhibit 10.32
CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN
AFFORDED CONFIDENTIAL TREATMENT UNDER RULE 24b-2 OF THE SECURITIES
EXCHANGE ACT OF 1934. THE OMITTED MATERIALS HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
AMENDMENT NO. 1 TO
DEVELOPMENT, SUPPLY AND SUBCONTRACTING AGREEMENT
This Amendment No. 1 to the
Development, Supply and Subcontracting Agreement (the
“Agreement”), dated as of May 30, 2001, by and between
American Bank Note Holographics, Inc., a Delaware corporation
(“ABNH”), with its principal place of business at 2
Applegate Drive, Robbinsville, NJ 08691, and CFC
International, Inc., a Delaware corporation (“CFC”),
with its principal place of business at 500 State Street, Chicago
Heights, IL 60411, is entered into as of January 4, 2006.
Capitalized terms used herein and not otherwise defined shall have
the meaning ascribed to such terms in the Agreement.
WHEREAS, ABNH and CFC are parties to
the Agreement, under which ABNH currently purchases from CFC, and
CFC sells to ABNH, the HoloMag Foils as described in Schedule A of
the Agreement;
WHEREAS, ABNH has created custom
HoloMag images for, and has entered into supply agreements with
[*], [*], [*] and [*] and is negotiating additional potential
supply agreements with other customers; and
WHEREAS, ABNH and CFC desire to
amend certain terms of the Agreement.
NOW, THEREFORE, the parties covenant
and agree as follows:
1.0
Section 1 of the
Agreement is hereby amended as follows:
(i)
The sentence
under Section 1(b) that reads “ABNH agrees to remit payment
to CFC within 30 days from receipt of a valid invoice.” shall
be labeled and referred to as Section 1(c).
(ii)
Section 1(d)
shall be deleted and replaced with the following new Section 1(d):
“ABNH agrees to purchase * of its HoloMag Foil from CFC
subject to the satisfaction of the following conditions by CFC on
an ongoing basis: (i) CFC is in compliance with all of its
obligations under this Agreement, including but not limited to, the
procedures and specifications set forth in the attached Amended
Schedule A, (ii) the quality of the HoloMag Foil products produced
by CFC is comparable in all material respects to any alternative or
competing products available in the market, and (iii) CFC complies
with the reasonable requests of ABNH or its customers pertaining to
modifications in product features, quality, service, security or
delivery as long as such requests are consistent with
industry
* Confidential
practice. In the
event that ABNH notifies CFC in writing than CFC is not in
compliance with the conditions and requirements set forth in the
foregoing sentence, CFC shall have a period of 45 days from the
date of such notice to cure such non-compliance. If such
non-compliance is not cured within such 45-day period, ABNH shall
have the right, but not the obligation to procure or manufacture
the HoloMag Foils or any component thereof from any other
source.”
2.0
Section 2 of the
Agreement is hereby amended as follows:
(i)
The second
paragraph of paragraph (a) thereof shall be labeled and referred to
as Section 2(b). In the new 2(b), insert on line five after the
word “[*]” the following: “or any security
hologram, holographic magnetic stripe or other security device that
competes with any product currently supplied by ABNH to the
aforementioned accounts, including but not limited to HoloMag.
[*].”
(ii)
The following new
sentence shall be added at the end of Section 2(b): “To
the extent there is an inconsistency between any purchase orders
submitted by ABNH and the terms of this Agreement, the terms of
this Agreement shall prevail. CFC represents that its maximum
manufacturing capabilities are [*]. ABNH will not order more than
CFC’s maximum capabilities in any month unless the parties
mutually agree to an increased amount.”
3.0
Section 3 of the
Agreement is hereby amended as follows:
Section 3(a) is hereby deleted, and
replaced by the following: “Effective on January 4, 2006
(“Amendment No. 1 Effective Date”), the Agreement shall
renewed for a period of five (5) years (the “Term”),
and shall automatically renew for successive terms of five (5)
years unless either party provides the other Party not less than
six (6) months notice of non-renewal thereof prior to the end of
the then current Term.”
4.0
Section 9 is
hereby amended by deleting paragraphs (a) and (b) and replacing it
with the following:
(a)
if to ABNH
at:
American Bank Note Holographics,
Inc.
2 Applegate Drive
Robbinsville, NJ 08691
Attention: Chief Executive Officer
Telephone: (609) 632-0800
Facsimile: (609) 632-0850
* Confidential
with a copy to:
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, NY 10103-3198
Attention: Paul Jacobs, Esq.
Facsimile: (212) 318-3400
(b)
if to CFC
at:
500 State Street
Chicago Heights, IL 60411
Attention: Dennis Lakomy, Chief Financial Officer
Facsimile: (708) 758-3976
with a copy to:
Holland & Knight LLP
One Mid America Plaza, Suite 1000
Oakbrook Terrace, IL 60181-4710
Attn: Carl Neumann, Esq.
Facsimile: (630) 954-2112
5.0
A new Section 18
is hereby added as follows:
18.
Schedule B Price Adjustments .
[*]
All measurements of the Index will
take place on the last published data for the year end. Any price
adjustments will be retroactive to January 1 of the year following
the year applicable to the Annual Index Change.
6.0
A new Section 19
is hereby added as follows:
19.
ABNH HoloMag facility
CFC agrees that ABNH may build or
operate its own HoloMag production facility. After ABNH commences
operations of its facility, ABNH will be entitled to produce its
own HoloMag Foil requirements. After ABNH commences operations of
its facility, ABNH will purchase at least 15% of its total finished
HoloMag Foil requirements from CFC and will not purchase such
requirements from a third party, subject to the satisfaction of the
following conditions by CFC on an ongoing basis: (i) CFC is in
compliance with all of its obligations under this Agreement
including but not limited to the procedures and specifications set
forth in the attached Amended Schedule A, (ii) the quality of the
HoloMag product, or
*Confidential
ingredients as applicable, produced
by CFC is comparable in all material respects to any alternative or
competing products available in the market, and (iii) CFC complies
with reasonable requests of ABNH or its customers pertaining to
modifications in product features, quality, service, security or
delivery as long as such requests are consistent with industry
practice. Subject to the foregoing conditions, ABNH also intends to
purchase other ingredients or materials from CFC as required in
ABNH’s sole discretion. The parties understand that ABNH does
not currently intend to solicit assistance from CFC in the design
or operation of ABNH’s HoloMag facility, but in the event
that ABNH requests such assistance, the parties will negotiate in
good faith the terms of an agreement for such
assistance.
7.0
A new Section 20
is hereby added as follows:
20.
Product Changes
If ABNH requires a change in the
product features of specifications that materially changes the
product from what is contemplated under Amended Schedule A, CFC and
ABNH will use their best efforts to cooperate on the required
changes. If such changes in the features or specifications result
in an increase in cost to CFC, then CFC and ABNH will negotiate in
good faith an increase in price, which shall reflect the increase
in cost to CFC plus a reasonable margin.
8.0
A new Section 21
is hereby added as follows:
21.
Insurance
CFC shall procure the following
insurance coverage at its own expense with respect to the
manufacture of HoloMag. Such insurance shall
