SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) November 17, 1998
HoloPak Technologies, Inc.
_______________________________________________________________________________
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-19453 51-0323272
(State or Other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification
Incorporation) No.)
9 Cotters Lane, East Brunswick, New Jersey 08816
_______________________________________________________________________________
(Address of Principal Executive Offices) (Zip Code)
(Registrant's Telephone Number, Including Area Code (732) 238-2883
_______________________________________________________________________________
Not Applicable
_______________________________________________________________________________
(Former Name or Former Address, If Changed Since Last Report.)
779995.1
1
<PAGE>
ITEM 5. Other Events.
On November 17, 1998, HoloPak Technologies, Inc., a Delaware corporation
("HoloPak"), Foilmark, Inc., a Delaware corporation ("Foilmark"), and Foilmark
Acquisition Corporation, a Delaware corporation ("Foilmark Sub"), entered into
an Agreement and Plan of Merger (the "Merger Agreement"), a copy of which is
filed as Exhibit 99.2 hereto and incorporated herein by reference, providing for
the merger of HoloPak (the "Merger") with and into Foilmark Sub, with Foilmark
Sub as the surviving corporation in the Merger. Pursuant to the Merger Agreement
and upon the terms and subject to the conditions and limitations therein, each
issued and outstanding share of common stock, par value $0.01 per share, of
HoloPak (the "HoloPak Common Stock") will be converted into the right to receive
(i) 1.11 shares of common stock, par value $0.01 per share, of Foilmark (the
"Foilmark Common Stock") and (ii) $1.42 in cash.
In addition, on November 17, 1998, certain directors and shareholders of
HoloPak (the "HoloPak Shareholders") entered into a Shareholder Agreement with
Foilmark and Foilmark Sub (the "HoloPak Shareholder Agreement"), a copy of which
is filed as Exhibit 99.3 hereto and incorporated herein by reference, pursuant
to which the HoloPak Shareholders, who have collectively represented to Foilmark
and Foilmark Sub that they own 1,517,932 issued and outstanding shares of
HoloPak Common Stock, representing approximately 45% of all outstanding shares
of HoloPak Common Stock, have agreed, among other things, to vote all shares of
HoloPak Common Stock owned by such HoloPak Shareholder in favor of the Merger,
upon the terms and subject to the conditions thereof.
In addition, on November 17, 1998, certain directors and shareholders of
Foilmark (the "Foilmark Shareholders") entered into a Shareholder Agreement with
HoloPak (the "Foilmark Shareholder Agreement"), a copy of which is filed as
Exhibit 99.4 hereto and incorporated herein by reference, pursuant to which the
Foilmark Shareholders, who have collectively represented to HoloPak that they
own 1,481,394 shares of Foilmark Common Stock, representing approximately 35% of
all outstanding shares of Foilmark Common Stock, have agreed, among other
things, to vote all shares of Foilmark Common Stock owned by such Foilmark
Shareholder in favor of the Merger, upon the terms and subject to the conditions
thereof.
In addition, on November 17, 1998, certain shareholders of Foilmark and
certain shareholders of HoloPak have agreed, upon the effective time of the
Merger, to enter into a Voting Agreement (the "Voting Agreement"), the form of
which is attached as Exhibit 9.1(i) to the Merger Agreement and incorporated
herein by reference. Pursuant to the Voting Agreement, these shareholders have
agreed, for a period of five years following the effective time of the Merger or
until such time as such shareholders of either HoloPak or Foilmark shall as a
group own less than five percent (5%) of the outstanding shares of Foilmark
Common Stock, to vote all of their respective shares of Foilmark Common Stock
(i) for five nominees designated by Bradford Associates to the Board of
Directors of Foilmark; (ii) for five nominees designated by Frank J. Olsen, Jr.
to the Board of Directors of Foilmark; (iii) to cause the Board of Directors of
Foilmark to be fixed at ten; (iv) to cause Robert J. Simon to serve as Chairman
of the Board of Directors of Foilmark; and (v) to cause the Board of Directors
of Foilmark to establish an Executive Committee, Compensation Committee and
Audit Committee, to consist of and to be chaired by such persons as specified in
the Voting Agreement.
779995.1
2
<PAGE>
Consummation of the Merger, which is expected in the first quarter of 1999,
is subject to various conditions, including approval of the Merger by the
shareholders of each of HoloPak and Foilmark. Prior to such shareholders'
meetings, Foilmark will file a registration statement with the Securities and
Exchange Commission registering under the Securities Act of 1933, as amended,
the shares of the Foilmark Common Stock to be issued in exchange for the
outstanding shares of HoloPak Common Stock. Such shares of Foilmark Common Stock
will be offered to the HoloPak shareholders only pursuant to a prospectus that
will also serve as a joint proxy statement for the separate meetings of
shareholders of HoloPak and Foilmark.
On November 18, 1998, HoloPak and Foilmark issued a joint press release
announcing the execution of the Merger Agreement, the HoloPak Shareholder
Agreement and the Foilmark Shareholder Agreement. A copy of such press release
is filed as Exhibit 99.1 hereto and is incorporated herein by reference.
This Current Report on Form 8-K and such press release contain "forward
looking statements" within the meaning of the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995 and are qualified by cautionary
statements contained herein, including the fact that the Merger is subject to
certain conditions and therefore may not close when anticipated or at all, and
in HoloPak's filings with the Securities and Exchange Commission.
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits.
Exhibit Description
99.1 Text of Press Release, dated November 18, 1998, issued by HoloPak
Technologies, Inc. and Foilmark, Inc.
99.2 Agreement and Plan of Merger, dated as of November 17, 1998, by and
among HoloPak Technologies, Inc., Foilmark, Inc. and Foilmark
Acquisition Corporation.
99.3 Shareholders Agreement, dated as of November 17, 1998 between
Foilmark, Inc., Foilmark Acquisition Corporation and Robert J. Simon,
Bradford Venture Partners, L.P., Overseas Private Investor Partners,
James L. Rooney, Harvey S. Share, Brian Kelly and Michael S. Mathews.
99.4 Shareholders Agreement, dated as of November 17, 1998 between
HoloPak Technologies, Inc. and Martin A. Olsen, Frank J. Olsen, Jr.,
Wilhelm Kutsch, Philip Leibel, Carol Robie, Edward Sullivan, Kenneth
Harris, Thomas R. Schwarz and Michael Foster.
779995.1
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HOLOPAK TECHNOLOGIES, INC.
(Registrant)
Date: November 25, 1998
By: /s/ James L. Rooney
----------------------------
Name: James L. Rooney
Title: President and Chief
Executive Officer
779995.1
4
<PAGE>
EXHIBIT INDEX
Exhibit Description
99.1 Text of Press Release, dated November 18, 1998, issued by HoloPak
Technologies, Inc. and Foilmark, Inc.
99.2 Agreement and Plan of Merger, dated as of November 17, 1998, by and
among HoloPak Technologies, Inc., Foilmark, Inc. and Foilmark
Acquisition Corporation.
99.3 Shareholders Agreement, dated as of November 17, 1998 between
Foilmark, Inc., Foilmark Acquisition Corporation and Robert J. Simon,
Bradford Venture Partners, L.P., Overseas Private Investor Partners,
James L. Rooney, Harvey S. Share, Brian Kelly and Michael S. Mathews.
99.4 Shareholders Agreement, dated as of November 17, 1998 between
HoloPak Technologies, Inc. and Martin A. Olsen, Frank J. Olsen, Jr.,
Wilhelm Kutsch, Philip Leibel, Carol Robie, Edward Sullivan, Kenneth
Harris, Thomas R. Schwarz and Michael Foster.
779995.1
5
Exhibit 99.1
FOILMARK, INC. AND HOLOPAK TECHNOLOGIES, INC.
ANNOUNCE MERGER
NEWBURYPORT, MA. and EAST BRUNSWICK, N.J., Nov. 18, 1998/PRNewswire/--
Foilmark, Inc., a manufacturer of hot stamping foils, holographic films and
image transfer systems (Nasdaq National Market System: FLMK), and HoloPak
Technologies, Inc. (Nasdaq National Market System: HOLO), a specialty
manufacturer of holographic images, hot-stamping foils and metallized paper,
today jointly announced that they have entered into a merger agreement pursuant
to which HoloPak would merge with Foilmark. Following the merger, current
HoloPak stockholders will own approximately 47% of Foilmark. Certain officers of
HoloPak will assume strategic roles at Foilmark. In addition, the newly
comprised ten member Board of Foilmark will consist of five HoloPak directors
and five Foilmark directors. The Chairman of the Board of Foilmark will be
Robert J. Simon. Frank J. Olsen, Jr. will be the President and Chief Executive
Officer of Foilmark.
Under the terms of the merger agreement, each share of HoloPak common stock
outstanding on the effective date of the proposed merger will be converted into
the right to receive 1.11 shares of Foilmark common stock plus $1.42 per share
in cash. The merger will be accounted as a purchase transaction.
Commenting on the merger announcement, Foilmark Chairman and CEO, Frank J.
Olsen, Jr. stated, "Foilmark is very pleased to be entering into this merger
with HoloPak. We believe that the combination will result in a stronger, more
competitive company capable of further enhancing the manufacturing, technical,
and marketing strengths of both businesses. The new company will have one of the
broadest hot stamp foil product lines in the world and will be able to offer a
wide range of holographic products for the security, packaging and graphic
industries. I look forward to working with the HoloPak personnel to build the
new Foilmark into an industry leader."
Robert J. Simon, Chairman of HoloPak, commented, "We believe that this is a
good strategic move for both companies. The increased financial resources and
synergistic efficiencies resulting from the merger will create a much stronger
enterprise able to compete more effectively. Stockholders, customers and
employees alike will benefit from the more competitive market position that our
combination provides."
Consummation of the merger is subject to several conditions, including,
without limitation, approval by the stockholders of HoloPak and Foilmark.
Certain shareholders and directors of both companies have agreed to vote shares
under their control in favor of this transaction. This represents approximately
35% of the Foilmark and 45% of the HoloPak shares outstanding. Foilmark and
HoloPak believe the transaction will close in the first quarter of 1999.
HoloPak Technologies is a leading manufacturer of holographic images,
hot-stamp foils, diffractive films, and metallized paper used to decorate or
label a wide variety of products, including packaging and promotional materials,
greeting cards, paperback book covers, cosmetics, appliances, and sporting
goods. Three-dimensional holograms are also used in security/anti-counterfeiting
applications. HoloPak has operations in the United States and in Canada.
779995.1
6
<PAGE>
Foilmark develops, manufactures and distributes globally value added hot
stamping foils and holographic films, used by the graphic arts, plastics and
packaging industries, to decorate or enhance products and their packaging. It
also produces image transfer equipment and printing supplies.
Certain statements in this news release are forward-looking statements.
Foilmark's ability to attain a more competitive market position is subject to
various risks and uncertainties that could cause actual results to differ
materially.
CONTACTS:
Foilmark, Inc.
Frank J. Olsen, Jr., Chairman, CEO and President
(978) 462-7300
Philip Leibel, CFO
(978) 465-0618
HoloPak Technologies, Inc.
James L. Rooney, CEO
(732) 238-2883
Arthur Karmel, CFO
(732) 238-1800
779995.1
7
Exhibit 3
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
FOILMARK, INC.,
FOILMARK ACQUISITION CORPORATION
AND
HOLOPAK TECHNOLOGIES, INC.
Dated as of November 17, 1998
<PAGE>
TABLE OF CONTENTS
Page
Preamble ..................................................................2
ARTICLE 1..................................................................2
1.1 Merger ......................................................2
1.2 Time and Place of Closing ...................................3
1.3 Effective Time ..............................................3
ARTICLE 2 .................................................................3
2.1 Charter .....................................................3
2.2 Bylaws ......................................................3
2.3 Directors and Officers ......................................3
2.4 Effects of the Merger .......................................3
ARTICLE 3 .................................................................4
3.1 Conversion of Shares ........................................4
3.2 Shares Held by Foilmark or Holopak ..........................4
3.3 Fractional Shares ...........................................4
3.4 Conversion of Stock Options .................................5
3.5 Dissenting Shares ...........................................6
ARTICLE 4 .................................................................7
4.1 Exchange Procedures .........................................7
4.2 Rights of Former Shareholders ...............................8
4.3 Investment of Exchange Fund .................................8
4.4 Termination of Exchange Fund ................................9
ARTICLE 5 .................................................................9
5.1 Organization, Standing, and Power ...........................9
5.2 Authority; No Breach By Agreement ...........................9
5.3 Capital Stock ...............................................10
5.4 FoilmarkSubsidiaries ........................................11
5.5 SEC Filings; Financial Statements ...........................12
5.6 Absence of Undisclosed Liabilities ..........................13
5.7 Absence of Certain Changes or Events ........................13
5.8 Tax Matters .................................................14
5.9 Assets ......................................................16
5.10 Intellectual Property .......................................17
5.11 Compliance with Laws ........................................18
5.12 Labor Relations .............................................18
5.13 Employee Benefit Plans ......................................19
5.14 Material Contracts ..........................................21
5.15 Legal Proceedings ...........................................22
5.16 Statements True and Correct .................................22
<PAGE>
5.17 Accounting, Tax and Regulatory Matters ......................23
5.18 State Takeover Laws .........................................23
5.19 Charter Provisions ..........................................23
5.20 Millennium Capability .......................................23
5.21 Third Party Consents and Governmental Approvals .............24
5.22 Authority of Foilmark Sub ...................................24
5.23 Fairness Opinion ............................................24
5.24 Environmental Matters .......................................24
5.25 HSR Act .....................................................25
ARTICLE 6 .................................................................25
6.1 Organization, Standing, and Power ...........................25
6.2 Authority; No Breach By Agreement ...........................26
6.3 Capital Stock ...............................................27
6.4 Holopak Subsidiaries ........................................27
6.5 SEC Filings; Financial Statements ...........................28
6.6 Absence of Undisclosed Liabilities ..........................29
6.7 Absence of Certain Changes or Events ........................30
6.8 Tax Matters .................................................30
6.9 Assets ......................................................33
6.10 Intellectual Property .......................................33
6.11 Compliance with Laws ........................................34
6.12 Labor Relations .............................................35
6.13 Employee Benefit Plans ......................................35
6.14 Material Contracts ..........................................37
6.15 Legal Proceedings ...........................................38
6.16 Statements True and Correct .................................39
6.17 Accounting, Tax and Regulatory Matters ......................40
6.18 State Takeover Laws .........................................39
6.19 Charter Provisions ..........................................40
6.20 Millennium Capability .......................................41
6.21 Third Party Consents and Governmental Approvals .............41
6.22 Fairness Opinion ............................................41
6.23 Environmental Matters .......................................41
6.24 HSR Act .....................................................42
ARTICLE 7 .................................................................41
7.1 Affirmative Covenants of Foilmark and Holopak ...............42
7.2 Negative Covenants of Foilmark and Holopak ..................45
7.4 Adverse Changes in Condition ................................44
7.4 Reports .....................................................45
ARTICLE 8 .................................................................45
8.1 Registration Statement; Proxy Statement;
Shareholder Approval .......................................45
8.2 Exchange Listing ............................................46
8.3 Applications; Antitrust Notification ........................46
<PAGE>
8.4 Filings with State Offices ..................................46
8.5 Agreement as to Efforts to Consummate .......................46
8.6 Investigation and Confidentiality ...........................47
8.7 Press Releases ..............................................47
8.8 No-Solicitation .............................................48
8.9 State Takeover Laws .........................................49
8.10 Charter Provisions ..........................................49
8.11 Indemnification and Insurance ...............................49
8.12 No Recourse .................................................50
8.13 Conversion of Non-Voting Stock ..............................50
8.14 Credit Facilities ...........................................51
8.15 Filing of S-8 ...............................................51
8.16 Environmental Report ........................................51
8.17 Employment Agreement ........................................49
ARTICLE 9 .................................................................51
9.1 Conditions to Obligations of Each Party .....................54
9.2 Conditions to Obligations of Holopak ........................54
9.3 Conditions to Obligations of Foilmark .......................57
ARTICLE 10 ................................................................58
10.1 Termination ................................................58
10.2 Effect of Termination .......................................60
10.3 Non-Survival of Representations and Warranties ..............61
ARTICLE 11 ................................................................60
11.1 Definitions .................................................60
11.2 Expenses ....................................................69
11.3 Brokers and Finders .........................................69
11.4 Entire Agreement ............................................70
11.5 Amendments ..................................................70
11.6 Waivers .....................................................70
11.7 Assignment ..................................................71
11.8 Notices .....................................................71
11.9 Governing Law ...............................................72
11.10 Counterparts ................................................72
11.11 Captions ....................................................72
11.12 Interpretations .............................................72
11.13 Enforcement of Agreement ....................................72
11.14 Severability ................................................72
<PAGE>
LIST OF EXHIBITS
Exhibit Number Description
2.1 The Certificate of Incorporation of Foilmark Sub
2.2 Bylaws of Foilmark Sub
8.17 Form of Employment Agreement with Frank J. Olsen, Jr.
9.1(i) Form of Voting Agreement, among Foilmark, Frank J. Olsen,
Jr., Bradford and other principal stockholders
9.2(j) Form of Registration Rights Agreement
9.2(o)(i) Terms of Consulting Agreement with James L. Rooney
9.2(o)(ii) Terms of Employment Agreement with J.T. Webb
9.2(o)(iii) Terms of Employment Agreement with Arthur Karmel
9.2(o)(iv) List of Foilmark Individuals with whom Foilmark shall
enter into Indemnification Agreements
9.2(n) List of Foilmark Individuals Receiving Stock Options
9.3(i) List of Holopak Individuals Receiving Stock Options
9.3(j) List of HoloPak Individuals with whom Foilmark shall
enter into Indemnification Agreements
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of November 17, 1998, by and among FOILMARK, INC. ("Foilmark"),
a Delaware corporation having its principal office located in Newburyport,
Massachusetts; FOILMARK ACQUISITION CORPORATION, a Delaware corporation and a
wholly-owned subsidiary of Foilmark ("Foilmark Sub"); and HOLOPAK TECHNOLOGIES,
INC. ("Holopak"), a Delaware corporation having its principal office located in
East Brunswick, New Jersey
<PAGE>
Preamble
The Boards of Directors of Foilmark, Foilmark Sub and Holopak have
determined that the transactions described herein, including, without
limitation, the Merger (as defined below) are advisable and in the best
interests of Foilmark and Holopak and their respective shareholders. This
Agreement provides for the merger of Holopak with and into Foilmark Sub with
Foilmark Sub as the surviving corporation. At the Effective Time (as defined
below), subject to, and in accordance with, Article 3 hereof, the outstanding
shares of the capital stock of Holopak shall be converted into the right to
receive (i) 1.11 shares of Foilmark Common Stock (as defined below) and (ii) one
dollar and forty-two cents ($1.42) in cash (except with respect to shares of
Holopak Common Stock (as defined herein) held by (a) any Foilmark Company, (b)
any Holopak Company or (c) any shareholder properly exercising dissenters'
rights of appraisal pursuant to Section 262 of the DGCL (as defined herein)). As
a result of the Merger, at the Effective Time, shareholders of Holopak shall be
shareholders of Foilmark, and Foilmark Sub shall continue to conduct its
business and operations as a wholly-owned subsidiary of Foilmark. The
transactions described in this Agreement are subject to the approvals of the
shareholders of Foilmark, the shareholders of Holopak, and the satisfaction of
certain other conditions described in this Agreement.
Certain terms used in this Agreement are defined in Section 11.1
of this Agreement.
NOW, THEREFORE, in consideration of the above and the mutual
warranties, representations, covenants, and agreements set forth herein, the
parties agree as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time, Holopak shall be merged with and into Foilmark
Sub (the "Merger") in accordance with the provisions of Section 251 of DGCL and
with the effect provided in Sections 259 and 261 of the DGCL. At the Effective
Time, Foilmark Sub shall be the Surviving Corporation resulting from the Merger
and shall remain a wholly-owned Subsidiary of Foilmark and continue to be
governed by the Laws of the State of Delaware and the separate existence of
Holopak shall cease. The Merger shall be consummated pursuant to the terms of
this Agreement, which has been approved and adopted by the respective Boards of
Directors of Foilmark, Foilmark Sub and Holopak and by Foilmark as the sole
shareholder of Foilmark Sub. The name of the Surviving Corporation shall be
Holopak Technologies, Inc.
1.2 Time and Place of Closing. The closing of the transactions
contemplated hereby (the "Closing") will take place at 10:00 A.M. on the date
that the
781485.1
2
<PAGE>
Effective Time occurs, or at such other time as the Parties, acting through
their authorized officers, may mutually agree. The Closing shall be held at such
place as may be mutually agreed upon by the Parties.
1.3 Effective Time. The Merger and other transactions
contemplated by this Agreement shall become effective on the date and at the
time the Certificate of Merger reflecting the Merger shall become effective with
the Secretary of State of the State of Delaware (the "Effective Time"). Subject
to the terms and conditions hereof, unless otherwise mutually agreed upon in
writing by authorized officers of each Party, the Parties shall use their
reasonable efforts to file the Certificate of Merger with the Secretary of State
of the State of Delaware to occur as soon as practicable but in any event not
later than the fifth business day following the later to occur of (i) the
effective date (including expiration of any applicable waiting period) of the
last required Consent of any Regulatory Authority having authority over and
approving or exempting the Merger, and (ii) the date on which the shareholders
of each of Foilmark and Holopak approve this Agreement to the extent such
approval is required by this Agreement and applicable Law.
ARTICLE 2
TERMS OF MERGER
2.1 Charter. The Certificate of Incorporation of Foilmark Sub
attached hereto as Exhibit 2.1, with such changes as contemplated by this
Agreement, in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation until otherwise
amended or repealed.
2.2 ..Bylaws. The Bylaws of Foilmark Sub attached hereto as
Exhibit 2.2 in effect immediately prior to the Effective Time shall be the
Bylaws of the Surviving Corporation until otherwise amended or repealed.
2.3 ..Directors and Officers. The directors of Foilmark Sub in
office immediately prior to the Effective Time, together with such additional
persons as may thereafter be elected, shall serve as the directors of the
Surviving Corporation from and after the Effective Time in accordance with the
Bylaws of the Surviving Corporation. The officers of Holopak in office
immediately prior to the Effective Time, together with such additional persons
as may thereafter be elected, shall serve as the officers of the Surviving
Corporation from and after the Effective Time in accordance with the Bylaws of
the Surviving Corporation.
2.4 Effects of the Merger. The Merger shall have the effects set
forth in this Agreement and in the applicable provisions of the DGCL. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, all the properties, rights, privileges, powers and franchises of Holopak
and Foilmark Sub shall vest in the Surviving Corporation, and all debts,
liabilities and duties of Holopak and Foilmark Sub shall become the debts,
liabilities and duties of the Surviving Corporation.
3
781485.1
<PAGE>
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 Conversion of Shares. Subject to the provisions of this
Article 3, at the Effective Time, by virtue of the Merger and without any action
on the part of Foilmark, Foilmark Sub, Holopak or the shareholders of any of the
foregoing, the shares of the constituent corporations shall be converted as
follows:
(a) Each share of Foilmark Common Stock issued and outstanding
immediately prior to the Effective Time shall remain issued and
outstanding from and after the Effective Time.
(b) Each share of Foilmark Sub Common Stock issued and
outstanding immediately prior to the Effective Time shall remain issued
and outstanding from and after the Effective Time and as of the Effective
Time shall constitute the only outstanding shares of capital stock of the
Surviving Corporation.
(c) Each share of Holopak Common Stock, excluding shares held by any
Holopak Company or any Foilmark Company issued and outstanding at the
Effective Time and excluding Dissenting Shares (as hereinafter defined),
shall cease to be outstanding and shall be converted into and exchanged
for the right to receive (i) 1.11 shares of Foilmark Common Stock (the
"Stock Merger Consideration"); and (ii) one dollar and forty-two cents
($1.42) in cash (the "Cash Merger Consideration," and together with the
Stock Merger Consideration, the "Merger Consideration").
3.2 Shares Held by Foilmark or Holopak. Each of the shares of
Holopak Common Stock held by any Foilmark Company or by any Holopak Company
shall automatically be canceled and retired and cease to exist at the Effective
Time and no consideration shall be issued in exchange therefor.
3.3 Fractional Shares. Notwithstanding any other provision of
this Agreement, each holder of shares of Holopak Common Stock exchanged pursuant
to the Merger who would otherwise have been entitled to receive a fraction of a
share of Foilmark Common Stock (after taking into account all certificates
delivered by such holder) shall receive, in lieu thereof, cash (without
interest) rounded to the nearest whole cent in an amount equal to such
fractional part of a share of Holopak Common Stock multiplied by the market
value of one share of Foilmark Common Stock on the date at the Effective Time.
The market value of one share of Foilmark Common Stock at the Effective Time
shall be the last sale price of Foilmark Common Stock on the Nasdaq National
Market on the business day immediately preceding the day on which the Effective
Time occurs (as reported by The Wall Street Journal or, if not reported thereby,
any other authoritative source mutually agreed upon by Holopak and
4
781485.1
<PAGE>
Foilmark). No such holder will be entitled to dividends, voting rights, or any
other rights as a shareholder of Foilmark in respect of any fractional shares.
3.4 Conversion of Stock Options.
(a) At the Effective Time, each option or other right to
purchase or receive shares of Holopak Common Stock pursuant to stock options,
stock appreciation or other similar rights ("Holopak Options") granted either
under the Holopak Stock Plans or otherwise, which are outstanding at the
Effective Time, whether or not exercisable, shall be converted into and become
rights with respect to Foilmark Common Stock, and Foilmark shall assume each
Holopak Option, in accordance with the terms of the Holopak Stock Plan and any
stock option or other agreement by which it is evidenced, except that from and
after the Effective Time, (i) Foilmark and its Compensation Committee shall be
substituted for Holopak and its Stock Option Committee of the Board of Directors
of Holopak (including, if applicable, the entire Board of Directors of Holopak)
administering such Stock Plans, (ii) each Holopak Option assumed by Foilmark may
be exercised solely for shares of Foilmark Common Stock (or cash in the case of
stock appreciation rights), (iii) the number of shares of Foilmark Common Stock
subject to such Holopak Option shall be equal to the number of shares of Holopak
Common Stock subject to such Holopak Option immediately prior to the Effective
Time multiplied by 1.11, and (iv) the per share exercise price under each
Holopak Option shall be adjusted by dividing the per share exercise price under
each such Holopak Option by 1.11 and rounding up to the nearest cent and
deducting $1.42. Notwithstanding the provisions of clause (iii) of the preceding
sentence, Foilmark shall not be obligated to issue any fraction of a share of
Foilmark Common Stock upon exercise of Holopak Options and any fraction of a
share of Foilmark Common Stock that otherwise would be subject to a converted
Holopak Option shall represent the right to receive a cash payment upon exercise
of such converted Holopak Option equal to the product of such fraction and the
difference between the market value of one share of Foilmark Common Stock at the
time of exercise of such Option and the per share exercise price of such Option.
The market value of one share of Foilmark Common Stock at the time of exercise
of an Option shall be the last sale price of the Foilmark Common Stock on the
Nasdaq National Market (as reported by The Wall Street Journal or, if not
reported thereby, any other authoritative source as determined by the Foilmark
Compensation Committee) on the last trading day preceding the date of exercise.
In addition, notwithstanding the clauses (iii) and (iv) of the first sentence of
this Section 3.4, each Holopak Option which is an "incentive stock option" shall
be adjusted as required by Section 424 of the Internal Revenue Code, and the
regulations promulgated thereunder, so as not to constitute a modification,
extension or renewal of the option, within the meaning of Section 424(h) of the
Internal Revenue Code. Holopak agrees to take all necessary steps to effectuate
the foregoing provisions of this Section 3.4, including using its reasonable
efforts to obtain from each holder of a Holopak Option any Consent or Contract
that may be deemed necessary or advisable in order to effect the transactions
contemplated by this Section 3.4.
5
781485.1
<PAGE>
(b) Promptly after the Effective Time, Foilmark shall
deliver to the participants in each Holopak Stock Plan and other holders of
Holopak Options an appropriate notice setting forth such participant's rights
pursuant thereto. The grants subject to such Holopak Options shall continue in
effect on the same terms and conditions (subject to the adjustments required by
Section 3.4(a) after giving effect to the Merger), and shall comply with the
terms of each Holopak Option to ensure, to the extent required by, and subject
to the provisions of, such Holopak Stock Plan, that Holopak Options which
qualified as incentive stock options prior to the Effective Time continue to
qualify as incentive stock options after the Effective Time. At or prior to the
Effective Time, Foilmark shall take all corporate action necessary to reserve
for issuance sufficient shares of Foilmark Common Stock for delivery upon
exercise of Holopak Options assumed by it in accordance with this Section 3.4.
Promptly after the Effective Time, Foilmark shall file a registration statement
on Form S-8 (or any successor or other appropriate forms), with respect to the
shares of Foilmark Common Stock subject to such options and shall use its best
efforts to maintain the effectiveness of such registration statements (and
maintain the current status of the prospectus or prospectuses contained therein)
for so long as such Holopak Options remain outstanding. With respect to those
individuals who subsequent to the Merger will be subject to the reporting
requirements under Section 16(a) of the Exchange Act, where applicable, Foilmark
shall administer the Holopak Stock Plan assumed pursuant to this Section 3.4 in
a manner that complies with Rule 16b-3 promulgated under the Exchange Act to the
extent the Holopak Stock Plan complied with such rule prior to the Effective
Time.
3.5 Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, shares of Holopak Common Stock issued and outstanding
immediately prior to the Effective Time held by a holder (if any) who has not
voted in favor of the Merger or consented thereto in writing and who has the
right to demand, and who properly demands, an appraisal of such shares of
Holopak Common Stock in accordance with Section 262 of the DGCL (or any
successor provisions) ("Dissenting Shares") shall not be converted into a right
to receive the Merger Consideration unless such holder fails to perfect or
otherwise loses such holder's right to such appraisal, if any. If, after the
Effective Time, such holder fails to perfect or loses any such right to
appraisal, each such share of such holder shall be treated as a share of Holopak
Common Stock that had been converted as of the Effective Time into the right to
receive Merger Consideration in accordance with Section 3.1(c) hereof.
Notwithstanding anything to the contrary contained herein, if the Merger is
rescinded or abandoned, then the right of any holder to be paid the fair value
of such holder's Dissenting Shares shall cease. Holopak shall give notice to
Foilmark of any demands received by Holopak for appraisal of shares of Holopak
Common Stock and any withdrawal of such demands.
6
781485.1
<PAGE>
ARTICLE 4
EXCHANGE OF SHARES
4.1 Exchange Procedures. Prior to the Effective Time, Foilmark
shall appoint a commercial bank or trust company satisfactory to Holopak to act
as exchange and paying agent hereunder (the "Exchange Agent"). At the Effective
Time, Foilmark shall deposit with the Exchange Agent, (i) certificates
representing Foilmark Common Stock which immediately prior to the Effective Time
represent a number of shares of Foilmark Common Stock required to be issued
pursuant to Section 3.1(c) hereof in exchange for the issued and outstanding
shares of Holopak Common Stock (together with cash as required to (x) pay any
dividends or distributions with respect thereto in accordance with Section 4.2
hereof and (y) make payments in lieu of fractional shares of Holopak Common
Stock pursuant to Section 3.3 hereof; and (ii) cash in an aggregate amount
sufficient to pay the Cash Merger Consideration (collectively, the "Exchange
Fund"). The Exchange Fund shall not be used for any other purpose except as
provided for in this Agreement. Promptly after the Effective Time but in no
event later than five business days after the Effective Time, Foilmark shall
cause the Exchange Agent to mail to each holder of a certificate or certificates
which immediately prior to the Effective Time represented outstanding shares of
Holopak Common Stock (the "Holopak Share Certificates") appropriate transmittal
materials (which shall specify that delivery shall be effected, and risk of loss
and title to the certificates theretofore representing shares of Holopak Common
Stock shall pass, only upon proper delivery of such certificates to the Exchange
Agent) and instructions for use in effecting the surrender of the Holopak Share
Certificates in exchange for the Merger Consideration. The Exchange Agent may
establish reasonable and customary rules and procedures in connection with its
duties. After the Effective Time, each holder of shares of Holopak Common Stock
(other than shares to be canceled pursuant to Section 3.2 of this Agreement or
Dissenting Shares) issued and outstanding at the Effective Time shall surrender
the Holopak Share Certificates to the Exchange Agent and shall promptly upon
surrender thereof receive in exchange therefor the consideration provided in
Section 3.1 of this Agreement, together with all undelivered dividends or
distributions in respect of such shares (without interest thereon) pursuant to
Section 4.2 of this Agreement. To the extent required by Section 3.3 of this
Agreement, each holder of shares of Holopak Common Stock issued and outstanding
at the Effective Time also shall receive, upon surrender of the Holopak Share
Certificates, cash in lieu of any fractional share of Foilmark Common Stock to
which such holder may be otherwise entitled (without interest). Foilmark shall
not be obligated to deliver the Merger Consideration to which any holder of
Holopak Common Stock is entitled as a result of the Merger until such holder
surrenders such holder's Holopak Share Certificate for exchange as provided in
this Section 4.1. The Holopak Share Certificate so surrendered shall be duly
endorsed as the Exchange Agent may reasonably require. Any other provision of
this Agreement notwithstanding, neither the Surviving Corporation nor the
Exchange Agent shall be liable to a holder of Holopak Common Stock for any
amounts paid or property delivered in good faith to a public official pursuant
to any applicable abandoned property Law. Adoption of this Agreement by
7
<PAGE>
the shareholders of Holopak shall constitute ratification of the appointment of
the Exchange Agent.
4.2 Rights of Former Holopak Shareholders. At the Effective
Time, the stock transfer books of Holopak shall be closed as to holders of
Holopak Common Stock immediately prior to the Effective Time and no transfer of
Holopak Common Stock by any such holder shall thereafter be made or recognized.
Until surrendered for exchange in accordance with the provisions of Section 4.1
of this Agreement, each Holopak Share Certificate (other than Dissenting Shares
and shares to be canceled pursuant to Sections 3.2 of this Agreement) shall from
and after the Effective Time represent for all purposes only the right to
receive the consideration provided in Sections 3.1 and 3.3 of this Agreement in
exchange therefor, subject, however, to the Surviving Corporation's obligation
to pay any dividends or make any other distributions with a record date prior to
the Effective Time which have been declared or made by Holopak in respect of
such shares of Holopak Common Stock in accordance with the terms of this
Agreement and which remain unpaid at the Effective Time. Whenever a dividend or
other distribution is declared by Foilmark on the Foilmark Common Stock, the
record date for which is at or after the Effective Time, the declaration shall
include dividends or other distributions on all shares of Foilmark Common Stock
issuable pursuant to this Agreement, but no dividend or other distribution
payable to the holders of record of Foilmark Common Stock as of any time
subsequent to the Effective Time shall be delivered to the holder of the Share
Certificate until such holder surrenders such Holopak Share Certificate for
exchange as provided in Section 4.1 of this Agreement. However, upon surrender
of a Holopak Share Certificate, both the certificate representing shares of
Foilmark Common Stock issued in accordance with Section 3.1(c) hereof, (together
with all such undelivered dividends or other distributions without interest) and
any undelivered dividends and cash payments payable hereunder (without interest)
shall be delivered and paid with respect to each share represented by such
certificate.
4.3 Investment of Exchange Fund. The Exchange Agent shall invest
the cash portion of the Exchange Fund, in (i) direct obligations of the United
States of America, (ii) obligations for which the full faith and credit of the
United States of America is pledged to provide for the payment of principal and
interest, (iii) commercial paper rated the highest quality by either Moody's
Investors Services, Inc. or Standard & Poor's Corporation, or (iv) certificates
of deposit, bank repurchase agreements or bankers' acceptances of commercial
banks with capital exceeding $500 million; and any net earnings with respect to
the Exchange Fund shall be the property of and paid over to Foilmark as and when
requested by Foilmark; provided, however, that any Taxes payable with respect to
the Exchange Fund shall be the sole obligation and liability of Foilmark;
provided, further that any such investment or any such payment of earnings shall
not delay the timely receipt by holders of Holopak Share Certificates of the
Merger Consideration or otherwise impair such holders' respective rights
hereunder.
8
781485.1
<PAGE>
4.4 Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the holders of Holopak Share Certificates
for 365 days after the Effective Time shall be delivered to Foilmark, upon
demand, and any holders of Holopak Share Certificates that have not theretofore
complied with this Article 4 shall thereafter (subject to the terms of this
Agreement, abandoned property, escheat and other similar laws) look only to
Foilmark, and only as general creditors thereof, for payment of their claim for
any Merger Consideration.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF Foilmark
Foilmark hereby represents and warrants to Holopak as follows:
5.1 Organization, Standing, and Power. Foilmark is a corporation
duly organized, validly existing, and in good standing under the Laws of the
State of Delaware, and has the corporate power and authority to carry on its
business as now conducted and to own, lease and operate its Assets. Foilmark is
duly qualified or licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign jurisdictions where the
character of the assets or the nature or conduct of its business requires it to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed has not had and is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Foilmark or
prevent or materially delay the consummation of the Merger. Foilmark has
delivered to Holopak complete and correct copies of its Certificate of
Incorporation and Bylaws, as amended and restated and the Certificate of
Incorporation and Bylaws (or similar organizational documents) of its
Subsidiaries.
5.2 .Authority; No Breach By Agreement.
(a) Foilmark has the corporate power and authority necessary
to execute, deliver, and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery, and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly authorized
by all necessary corporate action in respect thereof on the part of Foilmark,
subject to the approval of this Agreement by the holders of a majority of the
outstanding shares of Foilmark Common Stock, voting at the Foilmark
Shareholders' Meeting at which a quorum is present, which is the only vote of
the holders of any class or series of Foilmark's capital stock required for
approval of this Agreement or under applicable Law and consummation of the
Merger by Foilmark. Subject to such requisite shareholder approval, this
Agreement represents a legal, valid, and binding obligation of Foilmark,
enforceable against Foilmark in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by
Foilmark, nor the consummation by Foilmark of the transactions contemplated
hereby, nor
9
781485.1
<PAGE>
compliance by Foilmark with any of the provisions hereof, will (i) conflict with
or result in a breach of any provision of Foilmark's or any of its Subsidiaries'
Certificate of Incorporation or Bylaws, or (ii) except as disclosed in Section
5.2 of the Foilmark Disclosure Memorandum, constitute or result in a Default
under, or require any Consent pursuant to, or result in the creation of any Lien
on any Asset of any Foilmark Company under, any Contract or Permit of any
Foilmark Company, except for any such Default, Consent or Lien that would not
have a Material Adverse Effect on Foilmark, or, (iii) subject to receipt of the
requisite Consents referred to in Section 9.1(b) of this Agreement, violate any
Law or Order applicable to any Foilmark Company or any of their respective
material Assets.
(c) Other than in connection or compliance with the
provisions of the Securities Laws, applicable state corporate and securities
Laws, and rules of the NASD, and other than Consents required from Regulatory
Authorities, and other than notices to or filings with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation with respect to any employee
benefit plans, no notice to, filing with, or Consent of, any public body or
authority is necessary for the consummation by Foilmark of the Merger and the
other transactions contemplated in this Agreement.
5.3 Capital Stock.
(a) The authorized capital stock of Foilmark consists of
500,000 shares of preferred stock, par value $.01 per share, of which no shares
are issued and outstanding, and 10,000,000 shares of Foilmark Common Stock, of
which 4,176,542 shares are issued and outstanding as of the date of this
Agreement. All of the issued and outstanding shares of Foilmark Capital Stock
are, and all of the shares of Foilmark Common Stock to be issued in exchange for
shares of Holopak Common Stock upon consummation of the Merger, will be as of
the Effective Time, duly and validly issued and outstanding, fully paid and
nonassessable and free and clear of all Liens created by Foilmark. None of the
outstanding shares of capital stock of Foilmark has been issued in violation of
any preemptive rights of the current or past shareholders of Foilmark. Foilmark
has reserved 475,000 shares of Foilmark Common Stock for issuance under the
Foilmark Stock Plans, pursuant to which options to purchase not more than
378,858 shares of Foilmark Common Stock have been granted.
(b) Except as set forth in Section 5.3(a) of this Agreement,
or as disclosed in Section 5.3 of the Foilmark Disclosure Memorandum, there are
no shares of capital stock or other equity securities of Foilmark outstanding
and no outstanding Rights relating to the capital stock of Foilmark.
5.4 .Foilmark Subsidiaries. Foilmark has disclosed in Section 5.4
of the Foilmark Disclosure Memorandum all of the Foilmark Subsidiaries
(identifying its jurisdiction of incorporation, each jurisdiction in which the
character of its Assets or the nature or conduct of its business requires it to
be qualified and/or licensed to transact business, and the number of shares
owned and percentage ownership interest
10
781485.1
<PAGE>
represented by such share ownership). Except as disclosed in Section 5.4 of the
Foilmark Disclosure Memorandum, Foilmark or one of its wholly-owned Subsidiaries
owns all of the issued and outstanding shares of capital stock (or other equity
interests) of each Foilmark Subsidiary. No capital stock (or other equity
interest) of any Foilmark Subsidiary is or may become required to be issued
(other than to another Foilmark Company) by reason of any Rights, and there are
no Contracts by which any Foilmark Subsidiary is bound to issue (other than to
another Foilmark Company) additional shares of its capital stock (or other
equity interests) or Rights or by which any Foilmark Company is or may be bound
to transfer any shares of the capital stock (or other equity interests) of any
Foilmark Subsidiary (other than to another Foilmark Company). There are no
Contracts relating to the rights of any Foilmark Company to vote or to dispose
of any shares of the capital stock (or other equity interests) of any Foilmark
Subsidiary. All of the shares of capital stock (or other equity interests) of
each Foilmark Subsidiary held by a Foilmark Company are fully paid and
nonassessable under the applicable corporation Law of the jurisdiction in which
such Subsidiary is incorporated or organized and are owned by the Foilmark
Company free and clear of any Lien. Except as disclosed in Section 5.4 of the
Foilmark Disclosure Memorandum, each Foilmark Subsidiary is a corporation duly
organized, validly existing, and in good standing under the Laws of the
jurisdiction in which it is incorporated, and has the corporate power and
authority necessary for it to own, lease, and operate its Assets and to carry on
its business as now conducted. Each Foilmark Subsidiary is duly qualified or
licensed to transact business as a foreign corporation in good standing in the
States of the United States and each jurisdiction in which it is so qualified or
licensed, except for such jurisdictions in which the failure to be so qualified
or licensed is not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on Foilmark. The minute book and other organizational
documents for each Foilmark Subsidiary have been made available to Holopak for
its review, and, except as disclosed in Section 5.4 of the Foilmark Disclosure
Memorandum, are true and correct as in effect as of the date of this Agreement
and accurately reflect all amendments thereto and all proceedings of the Board
of Directors and shareholders thereof.
5.5 SEC Filings; Financial Statements.
(a) Foilmark has timely filed and made available to Holopak
all SEC Documents required to be filed by Foilmark since January 1, 1994 or such
later date as Foilmark first filed, or was first obligated to file, such SEC
Documents (the "Foilmark SEC Reports"). The Foilmark SEC Reports (i) at the time
filed, complied in all material respects with the applicable requirements of the
Securities Laws and other applicable Laws and (ii) did not, at the time they
were filed (or, if amended or superseded by a filing, then on the date of such
filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated in such Foilmark SEC Reports or necessary in
order to make the statements in such Foilmark SEC Reports, in light of the
circumstances under which they were made, not misleading. No Foilmark Subsidiary
is required to file any SEC Documents.
11
781485.1
<PAGE>
(b) Each of the Foilmark Financial Statements (including, in
each case, any related notes) contained in the Foilmark SEC Reports, including
any Foilmark SEC Reports filed after the date of this Agreement until the
Effective Time, complied as to form in all material respects with the applicable
published rules and regulations of the Securities and Exchange Commission (the
"SEC") with respect thereto, was prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved (except to the extent required
by changes to GAAP or as may be indicated in the notes to such financial
statements or, in the case of unaudited interim statements, as permitted by Form
10-Q of the SEC), and fairly presented in all material respects the consolidated
financial position of Foilmark and its Subsidiaries as at the respective dates
and the consolidated results of operations and cash flows for the periods
indicated, except that the unaudited interim financial statements were or are
subject to normal and recurring year-end adjustments which were not or are not
expected to be material in amount or effect and any pro forma financial
information contained in the Joint Proxy Statement/Prospectus on Form S-4 to be
filed in connection with the Merger is not necessarily indicative of the
consolidated financial position of Foilmark and the Foilmark Subsidiaries, as
the case may be, as of the respective dates thereof and the consolidated results
of operations and cash flows for the periods indicated.
(c) Since November 1, 1988, or the date of organization if later,
Foilmark and each of its Subsidiaries has timely filed all reports and
statements, together with any amendments required to be made with respect
thereto, that it was required to file with Regulatory Authorities, including but
not limited to financial reports filed with foreign governmental agencies. As of
their respective dates, each of such reports and documents, including the
financial statements, exhibits, and schedules thereto, complied in all material
respects with all applicable Laws. As of its respective date, each such report
and document did not, in any material respect, contain any untrue statement of a
material fact or omit a material fact required to be stated therein or necessary
to make the statements made therein, in light of the circumstances under which
they were made, not misleading, provided, however, that to the extent that the
foregoing relates to facts or omission regarding Persons other than Foilmark and
its Affiliates, such representation and warranty is made to Foilmark's
Knowledge.
5.6 Absence of Undisclosed Liabilities. No Foilmark Company has
any Liabilities that have had or are reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Foilmark, except Liabilities
which are accrued or reserved against in the consolidated balance sheets of
Foilmark as of December 31, 1997 and September 30, 1998, included in the
Foilmark Financial Statements or reflected in the notes thereto, or as disclosed
in Section 5.6 of the Foilmark Disclosure Memorandum. No Foilmark Company has
incurred or paid any Liability since September 30, 1998, except for such
Liabilities (i) disclosed in Section 5.6 of the Foilmark Disclosure Memorandum
or (ii) incurred or paid (A) in the ordinary course of business consistent with
past business practice and which have not had and are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on
12
781485.1
<PAGE>
Foilmark or (B) in connection with the transactions contemplated by this
Agreement. Except as disclosed in Section 5.6 of the Foilmark Disclosure
Memorandum, no Foilmark Company is directly or indirectly liable, by guarantee,
indemnity, or otherwise, upon or with respect to, or obligated, by discount or
repurchase agreement or in any other way, to provide funds in respect to, or
obligated to guarantee or assume any Liability of any Person, other than another
Foilmark Company, for any amount in excess of $50,000.
5.7 Absence of Certain Changes or Events. Since September 30,
1998, except as disclosed in the Foilmark Financial Statements delivered prior
to the date of this Agreement and as disclosed in Section 5.7 of the Foilmark
Disclosure Memorandum and from the date hereof until the Effective Time, for
those actions permitted pursuant to Section 7.2 hereof with respect to Foilmark,
(i) there have been no events, changes, or occurrences which have had, or are
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Foilmark, and (ii) there has not been: (A) any damage, destruction or
loss (whether or not covered by insurance) with respect to any Assets of any
Foilmark Company that has resulted or is reasonably likely to result in a
Material Adverse Effect on Foilmark, (B) any change by any Foilmark Company in
its accounting methods, principles or practices; (C) Any increase in the
benefits under, or the establishment or amendment of, any material bonus,
insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option (including, without limitation, the granting of stock
options, stock appreciation rights, performance awards, or restricted stock
awards), stock purchase or other employee benefit plan, or any material increase
in the compensation payable or to become payable to directors, officers or
employees of any Foilmark Company, except for increases in salaries or wages
payable or to become payable in the ordinary course of business and consistent
with past practice and the granting of stock options as reflected in Section 5.3
hereof or (E) or take any other actions inconsistent with the actions described
in Section 7.2 hereof. Since the date of Foilmark's Annual Report on Form 10-K
for the fiscal year ended December 31, 1997 as filed with the SEC, there has not
been any declaration, setting aside or payment of any dividends or distributions
in respect of shares of Foilmark Common Stock or the shares of stock of any
Foilmark Subsidiary or any redemption, repurchase or other reacquisition of any
of Foilmark's equity securities or any of the equity securities of any Foilmark
Subsidiary.
5.8 Tax Matters. Except as disclosed in Section 5.8 of the
Foilmark Disclosure Memorandum:
(a) Except for such matters as would not have a Material
Adverse Effect on Foilmark, all Tax Returns required to be filed by or on behalf
of any of the Foilmark Companies have been timely filed or requests for
extensions have been timely filed, granted, and have not expired and all Tax
Returns filed are complete and accurate in all Material respects. All Taxes
shown to be payable on filed Tax Returns have been paid. To the Knowledge of
Foilmark, there is no pending or proposed audit examination, deficiency, or
refund Litigation with respect to any Taxes, except as
13
781485.1
<PAGE>
reserved against in the Foilmark Financial Statements delivered prior to the
date of this Agreement. All Taxes and other Liabilities due with respect to
completed and settled examinations or concluded Litigation have been paid.
Foilmark's Tax Returns have been audited by all relevant Tax Authorities for all
years through the year ended December 31, 1994. No claim has ever been made by
an authority or a jurisdiction where any Foilmark Company does not file Tax
Returns that it is or may be subject to taxation by that jurisdiction. No Tax
Authority has notified any Foilmark Company that it intends to examine or
investigate its Tax affairs.
(b) None of the Foilmark Companies has executed an extension
or waiver of any statute of limitations on the assessment or collection of any
Tax due (excluding such statutes that relate to years currently under
examination by the Internal Revenue Service or other applicable taxing
authorities) that is currently in effect. The statute of limitations for the
assessment of all Taxes has expired for all applicable Tax Returns of the
Foilmark Companies. The Tax Returns of the Foilmark Companies for the periods
set forth in Section 5.8 of the Foilmark Disclosure Memorandum have been
examined by the appropriate taxing authorities and no deficiency for any Tax
shown on any such audited return has been proposed, asserted or assessed against
any Foilmark Company that has not been resolved and paid in full.
(c) The provision for any Taxes due or to become due for any
of the Foilmark Companies for the period or periods through and including the
date of the respective Foilmark Financial Statements that has been made and is
reflected on such Foilmark Financial Statements is sufficient to cover all such
Taxes.
(d) Deferred Taxes of the Foilmark Companies have been
provided for in accordance with GAAP. No differences exist between the amounts
of the book basis and the tax basis of assets (net of liabilities) that are not
accounted for by an accrual on the books for federal income tax purposes.
(e) None of the Foilmark Companies is a party to any Tax
allocation or sharing agreement and none of the Foilmark Companies has been a
member of an affiliated group filing a consolidated federal income Tax Return
(other than a group the common parent of which was Foilmark) or has any
Liability for Taxes of any Person (other than Foilmark and its Subsidiaries)
under Treasury Regulation Section 1.1502-6 (or any similar provision of state,
local or foreign Law) as a transferee or successor or by Contract or otherwise.
(f) Each of the Foilmark Companies is in compliance in all
material respects with, and its records contain all information and documents
(including properly completed IRS Forms W-9) necessary to comply in all material
respects with, all applicable information reporting and Tax withholding
requirements under federal, state, and local Tax Laws, and such records identify
with specificity all accounts subject to backup withholding under Section 3406
of the Internal Revenue Code.
14
781485.1
<PAGE>
(g) None of the Foilmark Companies has made any payments, is
obligated to make any payments, or is a party to any Contract that could
obligate it to make any payments that would be disallowed as a deduction under
Section 280G or 162(m) of the Internal Revenue Code.
(h) No power of attorney currently in force has been granted
by any Foilmark Company concerning any Tax matter.
(i) No Foilmark Company has received a Tax Ruling or entered
into a Closing Agreement with any Tax Authority that would have a continuing
adverse effect after the Closing Date.
(j) No event, transaction, act or omission has occurred
which could result in any Foilmark Company becoming liable to pay or to bear any
Tax as a transferee, successor or otherwise which is primarily or directly
chargeable or attributable to any non-Foilmark Company, person or firm. No
Foilmark Company has actual or contingent liability (whether by reason of any
indemnity, warranty or otherwise) to any other person in respect of any actual,
contingent or deferred liability of such person for Taxes.
(k) No Foilmark Company has consented (nor will any of them
consent prior to the Closing) pursuant to Code ss.341(f) to have Code
ss.341(f)(2) apply to any disposition of a subsection (f) asset (as that term is
defined in Code ss.341(f)(4)) owned by any Foilmark Company.
(l) No property of any Foilmark Company is property that it
or any party to this transaction is or will be required to treat as being owned
by another person pursuant to the provisions of ss.168(f)(8) of the Internal
Revenue Code of 1954 (as in effect prior to its amendment by the Tax Reform Act
of 1986) or is "tax-exempt use property" within the meaning of Code ss.168(h).
(m) No Foilmark Company is required to include any
adjustment pursuant to Code ss.481(a) by reason of a voluntary change in
accounting method initiated by the Company, and to the best of the knowledge of
each Foilmark Company, the IRS has not proposed any such adjustment or change in
accounting method.
(n) No election under Codess.338 (or any predecessor
provisions) has been made by any
Foilmark Company with respect to any of its assets or properties.
(o) No Foilmark Company is subject to any contract,
obligation or commitment under which it will or may any time hereafter be or
become liable to make any payment (or provide any other amount in money or
money's worth) of an expense nature which (in either such case) is not
deductible, depreciable or amortizable in full in computing the income of any
Foilmark Company for the purpose of any Taxes on income or profits to which the
Company or any Subsidiary may be subject, other than
15
781485.1
<PAGE>
any payment relating to the acquisition of assets that are treated as having an
indefinite useful life for purposes of the relevant Tax.
(p) No Foilmark Company has disposed of any asset or
supplied any service or business facility of any kind (including a loan or the
letting, hiring or licensing of any property whether tangible or intangible) in
circumstances where the consideration to be received for such disposal or supply
will be less than the consideration deemed received for Tax purposes.
5.9 Assets. Except as disclosed in Section 5.9 of the Foilmark
Disclosure Memorandum or as disclosed or reserved against in the Foilmark
Financial Statements delivered prior to the date of this Agreement, the Foilmark
Companies have good and marketable title, free and clear of all Liens, to all of
their respective Assets. All tangible properties used in the businesses of the
Foilmark Companies are in good condition, reasonable wear and tear excepted, and
are usable in the ordinary course of business consistent with Foilmark's past
practices. Section 5.9 of the Foilmark Disclosure Memorandum sets forth, as of
the date of this Agreement (x) all real property owned by Foilmark and its
Subsidiaries, singly or in common or joint venture with each other or other
entities or individuals, and (y) all real property that Foilmark and its
Subsidiaries has leased or subleased among themselves or from a third party,
singly or in common or joint venture with each other or with other entities or
individuals. All items of inventory of the Foilmark Companies reflected on the
most recent balance sheet included in the Foilmark Financial Statements
delivered prior to the date of this Agreement and prior to the Effective Time
consisted and will consist, as applicable, of items of a quality and quantity
usable and saleable in the ordinary course of business and conform to generally
accepted standards in the industry in which the Foilmark Companies are a part.
All Assets which are material to Foilmark's business on a consolidated basis,
held under leases or subleases by any of the Foilmark Companies, are held under
valid Contracts enforceable in accordance with their respective terms, and each
such Contract is in full force and effect. Section 5.9 of the Foilmark
Disclosure Memorandum sets forth the scope of coverage of all of Foilmark's
insurance policies as of the date of this Agreement, the term of each such
policy and the premiums relating thereto. None of the Foilmark Companies has
received notice from any insurance carrier that (i) such insurance will be
canceled or that coverage thereunder will be reduced or eliminated, or (ii)
premium costs with respect to such policies of insurance will be substantially
increased. Except as disclosed in Section 5.9 of the Foilmark Disclosure
Memorandum, there are presently no claims pending under such policies of
insurance and no notices of denial of any material claim have been received by
any Foilmark Company under such policies within the past twelve months. The
Assets of the Foilmark Companies include all Assets required to operate the
business of the Foilmark Companies as presently conducted.
5.10 Intellectual Property. Section 5.10 of the Foilmark
Disclosure Memorandum sets forth a complete and accurate list of, and a brief
description of all Intellectual Property owned, used or licensed by or to
Foilmark which are used in or
16
781485.1
<PAGE>
necessary for the conduct of Foilmark's business, except as to which the absence
of which would not have a Material Adverse Effect on Foilmark ("Foilmark
Intellectual Property"). No Person has asserted a claim in writing to Foilmark
that Foilmark has abandoned any Foilmark Intellectual Property and, to the
Knowledge of Foilmark, Foilmark has not abandoned any Foilmark Intellectual
Property. Except as disclosed in Section 5.10 of the Foilmark Disclosure
Memorandum, a Foilmark Company owns all right, title and interest in and to or
has the lawful right to use the Foilmark Intellectual Property free and clear of
all Liens. All Foilmark Intellectual Property licensed to any Foilmark Company
is identified as "licensed" in Section 5.10 of the Foilmark Disclosure
Memorandum. Except as disclosed in Section 5.10 of the Foilmark Disclosure
Memorandum, use of the Foilmark Intellectual Property by any of the Foilmark
Companies has not to the Knowledge of Foilmark misappropriated or infringed on
any rights held or owned by any third party, nor has any third party asserted
any such claim. Except as disclosed in Section 5.10 of the Foilmark Disclosure
Memorandum, no Foilmark Company is obligated to pay any royalties to any Person
(other than another Foilmark Company) with respect to any Foilmark Intellectual
Property. Except as disclosed in Section 5.10 of the Foilmark Disclosure
Memorandum, every officer or management employee of any Foilmark Company is a
party to a Contract which requires such officer or management employee to keep
confidential any trade secrets, proprietary data, customer information, or other
business information of a Foilmark Company and, to the Knowledge of Foilmark, no
officer is party to, nor to the Knowledge of Foilmark has Foilmark received any
notice of any other management employee being a party to, any Contract with any
Person other than a Foilmark Company which requires such officer or management
employee to assign any interest in any Intellectual Property to any Person other
than a Foilmark Company or to keep confidential any trade secrets, proprietary
data, customer information, or other business information of any Person other
than a Foilmark Company. Except as disclosed in Section 5.10 of the Foilmark
Disclosure Memorandum, no officer of any Foilmark Company is party to, nor has
Foilmark received any notice of any other management employee being a party to,
any Contract which restricts or prohibits such officer or management employee
from engaging in activities competitive with any Person, including any Foilmark
Company.
5.11 Compliance with Laws. Each Foilmark Company has in effect
all Permits necessary for it to own, lease, or operate its Assets and to carry
on its business as now conducted, and there has occurred no Default under any
such Permit, except where the failure to possess such Permit or the occurrence
of a Default would not have a Material Adverse Effect on Foilmark or the
Operating Property to which the Permit relates. Except as disclosed in Section
5.11 of the Foilmark Disclosure Memorandum, Foilmark:
(a) is not in Default under any of the provisions of its
Certificate of Incorporation or By-laws (or other governing instruments);
17
781485.1
<PAGE>
(b) is not in Default under any foreign, federal, state or
local Laws, Orders, or Permits applicable to its business (including, but
not limited to applicable environmental and health laws), or employees
conducting its business except for any Default that would not have a
Material Adverse Effect on Foilmark or any property owned or operated by
Foilmark; or
(c) since January 1, 1993, has not received any notification
or communication from any agency or department of federal, state, or
local government or any Regulatory Authority or the staff thereof (i)
asserting that any Foilmark Company is in non-compliance with any of the
Laws or Orders, (ii) threatening to revoke any Permits, or (iii)
requiring any Foilmark Company to enter into or consent to the issuance
of a cease and desist order, formal agreement, directive, commitment, or
memorandum of understanding, or to adopt any Board resolution or similar
undertaking.
Copies of all reports, correspondence, notices and other documents relating to
any inspection, audit, monitoring or other form of review or enforcement action
by a Regulatory Authority have been made available to Holopak.
5.12 Labor Relations. No Foilmark Company is the subject of any
Litigation asserting that it or any other Foilmark Company has committed an
unfair labor practice (within the meaning of the National Labor Relations Act or
comparable state law) or seeking to compel it or any other Foilmark Company to
bargain with any labor organization as to wages or conditions of employment, nor
is any Foilmark Company party to any collective bargaining agreement, nor is
there any strike, slowdown, work stoppage or other labor dispute involving any
Foilmark Company, pending or threatened, or to the Knowledge of Foilmark, is
there any activity involving any Foilmark Company's employees seeking to certify
a collective bargaining unit or engaging in any other organization activity.
Except as set forth on Section 5.12 to the Foilmark Disclosure Memorandum, no
notification is required to be made to: (i) any federal, state, local or foreign
governmental entity is required to be made in connection with the effectiveness
of the Merger and any Foilmark facility; or (ii) any federal, state, local or
foreign governmental entities in connection with the closing of a Foilmark
facility.
5.13 Employee Benefit Plans.
(a) Foilmark has listed in Section 5.13 of the Foilmark
Disclosure Memorandum all pension, retirement, profit-sharing, deferred
compensation, stock option, employee stock ownership, severance pay, vacation,
bonus, or other incentive plan, all other written employee programs,
arrangements, or agreements, all medical, vision, dental, or other health plans,
all life insurance plans, and all other employee benefit plans or fringe benefit
plans, whether oral or written, including but not limited to "employee benefit
plans" as that term is defined in Section 3(3) of ERISA, currently adopted,
maintained by, sponsored in whole or in part by, or contributed to by any
18
781485.1
<PAGE>
Foilmark Company or any entity required to be aggregated with Foilmark under
Sections 414(b), (c), (m) or (o) of the Internal Revenue Code or Section 4001
(an "ERISA Affiliate") thereof for the benefit of employees, retirees,
dependents, spouses, directors, independent contractors, or other beneficiaries
and under which employees, retirees, dependents, spouses, directors, independent
contractors, or other beneficiaries are eligible to participate (collectively,
the "Foilmark Benefit Plans"). Any of the Foilmark Benefit Plans which is an
"employee pension benefit plan," as that term is defined in Section 3(2) of
ERISA, is referred to herein as a "Foilmark ERISA Plan."
(b) Each Foilmark Benefit Plan intended to qualify under
Section 401(a) of the Internal Revenue Code is the subject of a favorable
unrevoked determination letter issued by the IRS as to its tax-qualified status
under the Internal Revenue Code, which determination letter may still be relied
upon as to such tax-qualified status, and no circumstances have occurred that
would adversely affect the tax-qualified status of such Foilmark Benefit Plan.
(c) Each Foilmark Benefit Plan is maintained and operated in
all Material respects in compliance with its terms and with the applicable
provisions of ERISA, the Internal Revenue Code, and any other applicable Laws
the breach or violation of which are reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Foilmark. No Foilmark Company or
ERISA Affiliate has engaged in a transaction with respect to any Foilmark
Benefit Plan that, assuming the taxable period of such transaction expired as of
the date hereof, would subject any Foilmark Company or ERISA Affiliate to a Tax
imposed by either Section 4975 of the Internal Revenue Code or Sections 409 or
502(i) of ERISA.
(d) No Foilmark ERISA Plan is, and no Foilmark Company has
ever maintained or contributed to, a "defined benefit plan" (as defined in
Section 414(j) of the Internal Revenue Code and Section 3(35) of ERISA ) or a
multiemployer plan within the meaning of Section 3(37) of ERISA.
(e) Except as disclosed in Section 5.13 of the Foilmark
Disclosure Memorandum, none of the Foilmark Benefit plans provides, and no
Foilmark Company or any ERISA Affiliate has any obligation to provide, health,
medical, life or other non-pension benefits to retired or other former
employees, except as specifically required by Section 4980B of the Code or Part
6 of Title I or ERISA and there are no restrictions on the rights of such
Foilmark Company to amend or terminate any such Foilmark Benefit Plan without
incurring any Liability thereunder.
(f) Except as disclosed in Section 5.13 of the Foilmark
Disclosure Memorandum, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, "excess parachute
payment" (within the meaning of Section 280G of the Internal Revenue Code or
otherwise) becoming due to any director or any employee of any Foilmark Company
or ERISA Affiliate from any Foilmark Company or ERISA
19
781485.1
<PAGE>
Affiliate under any Foilmark Benefit Plan or otherwise, (ii) increase any
benefits otherwise payable under any Foilmark Benefit Plan, or (iii) result in
any acceleration of the time of payment or vesting of any such benefit.
(g) The actuarial present values of all accrued deferred
compensation entitlements (including entitlements under any executive
compensation, supplemental retirement, or employment agreement) of employees and
former employees of any Foilmark Company and their respective beneficiaries,
other than entitlements accrued pursuant to funded retirement plans subject to
the provisions of Section 412 of the Internal Revenue Code or Section 302 of
ERISA, have been fully reflected on the Foilmark Financial Statements to the
extent required by and in accordance with GAAP.
(h) Without limiting the generality of any of the foregoing,
with respect to any foreign Foilmark Benefit Plan providing pension or
comparable benefits, to the extent not reserved for on the December 31, 1998
balance sheet included in the Foilmark Financial Statements, the Foilmark
Disclosure Memorandum includes true and complete copies of estimates of the
amount of the liability determined on a projected benefits obligation basis and,
where applicable, the underlying actuarial assumptions related to any such
Foilmark Benefit Plan. With respect to any foreign Foilmark Benefit Plan
providing termination indemnities, such Foilmark Disclosure Memorandum includes
true and complete copies of estimates of the amount of the present value of any
liability, if such liability cannot be determined on a projected benefits
obligation basis.
(i) There is no suit, action, dispute, claim, arbitration or
legal, administrative or other proceeding or governmental investigation pending,
or to the knowledge of Foilmark threatened, alleging any breach of the terms of
any such Foilmark Benefit Plan or of any fiduciary duties thereunder or
violation of any applicable Law with respect to any such Foilmark Benefit Plan.
(j) Current copies of all Foilmark Benefit Plans (and, if
applicable, related trust or other funding arrangements, including but not
limited to insurance contracts), and all amendments, supplements and
modifications thereto and written interpretations thereof (including summary
plan descriptions) have been furnished to Holopak, together with (1) the two
most recent annual reports (Form 5500, including, if applicable, Schedule B
thereto) prepared in connection with any such Foilmark Benefit Plan, and (2) the
most recent actuarial valuation prepared in connection with any such Foilmark
Benefit Plan.
5.14 Material Contracts. Except as disclosed in Section 5.14 of
the Foilmark Disclosure Memorandum or otherwise reflected in the Foilmark
Financial Statements, none of the Foilmark Companies, nor any of their
respective Assets, businesses, or operations, is a party to, or is bound or
affected by, or receives benefits under, (i) any employment, severance,
termination, consulting, or retirement Contract
20
781485.1
<PAGE>
providing for payments to any Person, except for Contracts referred to in
Section 5.13(a) of this Agreement and unwritten Contracts with respect to the
employment of hourly personnel terminable at will or upon statutorily required
notice, (ii) any Contract relating to the borrowing of money by any Foilmark
Company or the guarantee by any Foilmark Company of any such obligation (other
than Contracts for purchase money indebtedness in an aggregate amount not
exceeding $50,000, Contracts evidencing trade payables, and Contracts relating
to borrowings or guarantees made in the ordinary course of business), (iii) any
Contract which prohibits or restricts any Foilmark Company from engaging in any
business activities in any geographic area, line of business or otherwise in
competition with any other Person, (iv) any Contract between or among Foilmark
Companies, (v) any Contract involving the licensing or use of Intellectual
Property, (vi) any lease of real property as lessee or lessor, (vii) any
Contract relating to the purchase or sale of any goods or services (other than
Contracts entered into in the ordinary course of business and that are either
(x) terminable by each Foilmark Company that is a party thereto upon not more
than sixty (60) days notice without payment or penalty or (y) has a remaining
term of not more than six months from the date of this Agreement and involves
payments not in excess of $50,000 per year), and (viii) any other Contract or
amendment thereto that would be required to be filed as an exhibit to a Form
10-K filed by Foilmark with the SEC as of the date of this Agreement (together
with all Contracts referred to in Sections 5.9 and 5.13(a) of this Agreement,
the "Foilmark Contracts"). With respect to each Foilmark Contract and except as
disclosed in Section 5.14 of the Foilmark Disclosure Memorandum: (i) the
Contract is in full force and effect; (ii) no Foilmark Company is in Default
thereunder except for any such Default as would not have a Material Adverse
Effect on Foilmark; (iii) no Foilmark Company has repudiated or waived any
material provision of any such Contract; and (iv) no other party to any such
Contract is, to the Knowledge of Foilmark, in Default in any respect, or has
repudiated or waived any material provision thereunder. Except as disclosed in
Section 5.14 of the Foilmark Disclosure Memorandum, all of the indebtedness of
any Foilmark Company for money borrowed is prepayable at any time by such
Foilmark Company without penalty or premium.
5.15 Legal Proceedings. Except as disclosed in Section 5.15 of
the Foilmark Disclosure Memorandum, there is no Litigation instituted or
pending, or, to the Knowledge of Foilmark, threatened (or unasserted but
considered probable of assertion and which if asserted would have at least a
reasonable probability of an unfavorable outcome) against any Foilmark Company,
or against any director, employee or employee benefit plan of any Foilmark
Company, or against any Asset, employee benefit plan, interest, or right of any
of them, that will have a Material Adverse Effect on Foilmark, nor are there any
Orders of any Regulatory Authorities, other governmental authorities, or
arbitrators outstanding against any Foilmark Company. Section 5.15 of the
Foilmark Disclosure Memorandum contains a summary of all instituted or pending
Litigation as of the date of this Agreement to which any Foilmark Company is a
party and which names a Foilmark Company as a defendant or cross-defendant.
21
781485.1
<PAGE>
5.16 Statements True and Correct. Foilmark has furnished Holopak
with copies of all written Foilmark Contracts, and such copies are true and
correct copies of the written Foilmark Contracts as such exist on the date of
this Agreement. None of the information supplied or to be supplied by any
Foilmark Company or any Affiliate thereof for inclusion in the Registration
Statement to be filed by Foilmark with the SEC, will, when the Registration
Statement becomes effective, be false or misleading with respect to any material
fact, or omit to state any material fact necessary to make the statements
therein not misleading. None of the information supplied or to be supplied by
any Foilmark Company or any Affiliate thereof for inclusion in the Joint Proxy
Statement to be mailed to each Party's shareholders in connection with the
Shareholders' Meetings, and any other documents to be filed by a Foilmark
Company or any Affiliate thereof with the SEC or any other Regulatory Authority
in connection with the transactions contemplated hereby, will, at the respective
time such documents are filed, and with respect to the Joint Proxy Statement,
when first mailed to the shareholders of Foilmark and Holopak, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or, in the case of the Joint Proxy
Statement or any amendment thereof or supplement thereto, at the time of the
Shareholders' Meetings, be false or misleading with respect to any material
fact, or omit to state any material fact necessary to correct any statement in
any earlier communication with respect to the solicitation of any proxy for the
Shareholders' Meetings. All documents that any Foilmark Company or any Affiliate
thereof is responsible for filing with any Regulatory Authority in connection
with the transactions contemplated hereby will comply as to form in all material
respects with the provisions of applicable Law.
5.17 Accounting, Tax and Regulatory Matters. No Foilmark Company
or, to the Knowledge of Foilmark, any Affiliate thereof has taken any action or
has any Knowledge of any fact or circumstance that is reasonably likely to (i)
prevent the Merger from qualifying for purchase accounting treatment, the
treatment of so-called negative goodwill resulting from the Merger or as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, or (ii) materially impede or delay receipt of any Consents of Regulatory
Authorities referred to in Section 9.1(b) of this Agreement or result in the
imposition of a condition or restriction of the type referred to in the last
sentence of such Section. Foilmark has been advised in writing by its
independent accountants (a copy of which letter has been made available to
Holopak) to the effect that under generally accepted accounting principles and
Regulation S-X promulgated by the SEC, both as in effect on the date hereof, the
Merger would be accounted for as a purchase of Holopak by Foilmark and to the
extent that the net book value of Holopak exceeds the purchase price, said net
book value will be reduced to said purchase price in accordance with such
applicable accounting principles.
5.18 State Takeover Laws. Each Foilmark Company has taken all
necessary action to exempt the transactions contemplated by this Agreement from
any
22
781485.1
<PAGE>
applicable "moratorium," "fair price," "business combination," "control share,"
or other anti-takeover Laws (collectively, "Takeover Laws").
5.19 Charter Provisions. Each Foilmark Company has taken all
action so that the entering into of this Agreement and the consummation of the
Merger and the other transactions contemplated by this Agreement do not and will
not result in the grant of any rights to any Person under the Certificate of
Incorporation, Bylaws or other governing instruments of any Foilmark Company or
restrict or impair the ability of Foilmark or any of its Subsidiaries to vote,
or otherwise to exercise the Rights of a shareholder with respect to, shares of
any Foilmark Company that may be directly or indirectly acquired or controlled
by it.
5.20 Millennium Capability. Except as disclosed in Section 5.20
of the Foilmark Disclosure Memorandum, all of Foilmark's technology and all of
the technology its customers and vendors use is Year 2000 compliant. For
purposes of this Section 5.20, "technology" includes all computer hardware,
software and network components; all communications systems and equipment; and
all machinery, equipment and devices containing microprocessors. To be "Year
2000 compliant," technology must correctly process date data within and between
the 20th and 21st centuries, so that: (a) no value for a calendar date
(including 9/9/99) will cause interruptions in normal operation; (b) all
manipulations of calendar-related data (dates, durations, days of week, etc.)
will produce desired results for all valid date values; (c) date elements in
interfaces and data storage permit specifying century to eliminate date
ambiguity; (d) for any date element represented without century, the correct is
unambiguous for all manipulations involving that element; and (e) the Year 2000
must be recognized as a leap year without interruption to normal operations or
generation of erroneous results.
5.21 Third Party Consents and Governmental Approvals. Except as
set forth in Section 5.21 of the Foilmark Disclosure Memorandum, no Consent,
authorization, approval, permit or license of, or filing with, any Regulatory
Authority, any lender or lessor or any other person or entity is required to
authorize, or is required in connection with, the execution, delivery and
performance of this Agreement or the agreements contemplated hereby on the part
of Foilmark.
5.22 Authority of Foilmark Sub. Foilmark Sub is a corporation
duly organized, validly existing and in good standing under the Laws of the
State of Delaware as a wholly-owned Subsidiary of Foilmark. The authorized
capital stock of Foilmark Sub shall consist of 1,000 shares of Foilmark Sub
Common Stock, all of which is validly issued and outstanding, fully paid and
nonassessable and is owned by Foilmark free and clear of any Lien. Foilmark Sub
was formed by Foilmark solely for the purpose of engaging in the transactions
contemplated by the Agreement. Except as contemplated by this Agreement,
Foilmark Sub has not engaged, directly or through any Subsidiary, in business
activities of any type or kind whatsoever. Foilmark Sub has the corporate power
and authority necessary to execute, deliver and perform its
23
781485.1
<PAGE>
obligations under this Agreement and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated herein, including the Merger, have
been duly and validly authorized by all necessary corporate action in respect
thereof on the part of Foilmark Sub. This Agreement represents a legal, valid,
and binding obligation of Foilmark Sub, enforceable against Foilmark Sub in
accordance with its terms.
5.23 Fairness Opinion. The Board of Directors of Foilmark has
received the written opinion of McFarland Dewey & Co., LLC, to the effect that,
as of such date, the consideration to be paid by Foilmark pursuant to the Merger
is fair from a financial point of view to the holders of Foilmark Common Stock.
5.24 Environmental Matters. (a) Except as set forth on Section
5.24 of the Foilmark Disclosure Memorandum, Foilmark has not received any notice
from any Person that Foilmark is in violation of any Hazardous Substances Law
(as hereinafter defined). Foilmark has obtained all Environmental Permits, and
all such Permits are currently in effect for the operation of its business.
Except as set forth in the Foilmark Disclosure Memorandum, Foilmark has no
knowledge (i) of any Hazardous Substances (as hereinafter defined) present on,
under or about any Asset, and to Foilmark's knowledge no disposal, release,
discharge, spillage, uncontrolled loss, seepage or migration of Hazardous
Substances has occurred on, under, from or about any Asset, (ii) that any of the
Assets violates, or has at any time violated, any Hazardous Substance Laws, and
to Foilmark's knowledge, (iii) there is no Hazardous Substance on or from any
Asset for which Foilmark has an obligation to undertake any remedial action
pursuant to Hazardous Substance Laws or as a result of which Foilmark may be
liable to any third party .
(b) For purposes hereof, "Hazardous Substances" means, without
limitation (1) those substances defined as "Hazardous Substances," "Hazardous
Wastes," "Toxic Substances", "Hazardous Materials", pollutants or contaminants
in or which are otherwise regulated under any Hazardous Substance Law.
"Hazardous Substance Law" shall mean the Comprehensive Environmental Response
Compensation and Liability Act, as amended, 42 U.S.C. ss.90,601, et seq.
("CERCLA"), the Resource Conservation and Recovery Act, as amended, 42 U.S.C.
ss.6901, et seq. ("RCRA"), the Toxic Substances Control Act, as amended, 15
U.S.C. ss.2601 , et seq., the Hazardous Materials Transportation Act, as
amended, 49 U.S.C. ss.1801 et seq., the Occupational Safety and Health Act, 29
U.S.C. ss.651, et seq. (insofar as it relates to employee health and safety in
relation to exposure to Hazardous Substances) and any other local, state,
federal or foreign laws or regulations related to the protection of public
health or the environment (collectively, "Hazardous Substances Laws"); (2) such
other substances, materials or wastes as are or become regulated under, or as
are classified as hazardous or toxic under Hazardous Substance Laws; and (3) any
materials, wastes or substances that can be defined as (A) petroleum products or
wastes; (B) asbestos; (C) polychlorinated biphenyls; (D) flammable or explosive;
or (E) radioactive.
24
781485.1
<PAGE>
5.25 HSR Act. Foilmark is not controlled by an other entity and has
neither (i) $100 Million in total assets or (ii) $100 Million in annual net
sales. For purposes of this Section 5.25, the terms "control", "total assets"
and "annual net sales" are used as defined in 16 C.F.R. Sections 801.1(b) and
801.11.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF Holopak
Holopak hereby represents and warrants to Foilmark as follows:
6.1 Organization, Standing, and Power. Holopak is a corporation
duly organized, validly existing, and in good standing under the Laws of the
State of Delaware, and has the corporate power and authority to carry on its
business as now conducted and to own, lease and operate its Assets. Holopak is
duly qualified or licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign jurisdictions where the
character of the Assets or the nature or conduct of its business requires it to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed has not had and is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Holopak or
prevent or materially delay the consummation of the Merger. Holopak has
delivered to Foilmark complete and correct copies of its Certificate of
Incorporation and Bylaws, as amended and restated, and the Certificate of
Incorporation and Bylaws (or similar organizational documents) of its
Subsidiaries.
6.2 Authority; No Breach By Agreement.
(a) Holopak has the corporate power and authority necessary
to execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly authorized
by all necessary corporate action in respect thereof on the part of Holopak,
subject to the approval of this Agreement by the holders of a majority of the
outstanding shares of Holopak Common Stock voting at the Holopak Shareholders'
Meeting which a quorum is present, which is the only vote of the holders of any
class or series of Holopak's capital stock required for approval of this
Agreement or under applicable Law and consummation of the Merger by Holopak.
Subject to such requisite shareholder approval, this Agreement represents a
legal, valid, and binding obligation of Holopak, enforceable against Holopak in
accordance with its terms.
(b) Neither the execution and delivery of this Agreement by
Holopak, nor the consummation by Holopak of the transactions contemplated
hereby, nor compliance by Holopak with any of the provisions hereof, will (i)
conflict with or result in a breach of any provision of Holopak's or any of its
Subsidiaries' Certificate of
25
781485.1
<PAGE>
Incorporation or Bylaws, or (ii) except as disclosed in Section 6.2 of the
Holopak Disclosure Memorandum, constitute or result in a Default under, or
require any Consent pursuant to, or result in the creation of any Lien on any
Asset of any Holopak Company under, any Contract or Permit of any Holopak
Company, except for any such Default, Consent or Lien that would not have a
Material Adverse Effect on Holopak, or, (iii) subject to receipt of the
requisite Consents referred to in Section 9.1(b) of this Agreement, violate any
Law or Order applicable to any Holopak Company or any of their respective
material Assets.
(c) Other than in connection or compliance with the
provisions of the Securities Laws, applicable state corporate and securities
Laws, and rules of the NASD, and other than Consents required from Regulatory
Authorities, and other than notices to or filings with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation with respect to any employee
benefit plans, no notice to, filing with, or Consent of, any public body or
authority is necessary for the consummation by Holopak of the Merger and the
other transactions contemplated in this Agreement.
6.3 .Capital Stock.
(a) The authorized capital stock of Holopak consists of (i)
10,000,000 shares of Holopak Common Stock, par value $.01 per share of which
2,593,433 shares are issued and outstanding as of the date of this Agreement,
(ii) 2,000,000 shares of Class A Common Stock, par value $.01 per share, of
which 753,086 shares are issued and outstanding as of the date of this
Agreement; (iii) 700,000 shares of Class B Common Stock, par value $.01 per
share of which no shares are issued and outstanding as of the date of this
Agreement, and (iv) 10,000,000 shares of Preferred Stock, par value $.01 per
share of which no shares are issued and outstanding as of the date of this
Agreement. All of the issued and outstanding shares of Holopak Capital Stock are
and will at the Effective Time be duly and validly issued and outstanding and
fully paid and nonassessable and free and clear of all Liens. None of the
outstanding shares of capital stock of Holopak has been issued in violation of
any preemptive rights of the current or past shareholders of Holopak. Holopak
has reserved 300,000 shares of Holopak Common Stock for issuance under the
Holopak Stock Plans pursuant to which options to purchase not more than 251,541
shares of Holopak Common Stock have been granted.
(b) Except as set forth in Section 6.3(a) of this Agreement
or as disclosed in Section 6.3 of the Holopak Disclosure Memorandum, there are
no shares of capital stock or other equity securities of Holopak outstanding and
no outstanding Rights relating to the capital stock of Holopak.
6.4 .Holopak Subsidiaries. Holopak has disclosed in Section 6.4
of the Holopak Disclosure Memorandum each of the Holopak Subsidiaries
(identifying its jurisdiction of incorporation, each jurisdiction in which the
character of its Assets or the nature of conduct of its business requires it to
be qualified and/or licensed to transact
26
781485.1
<PAGE>
business, and the number of shares owned and percentage ownership interest
represented by such share ownership). Except as disclosed in Section 6.4 of the
Holopak Disclosure Memorandum, Holopak or one of its wholly-owned Subsidiaries
owns all of the issued and outstanding shares of capital stock (or other equity
interests) of each Holopak Subsidiary. No capital stock (or other equity
interest) of any Holopak Subsidiary is or may become required to be issued
(other than to another Holopak Company) by reason of any Rights, and there are
no Contracts by which any Holopak Subsidiary is bound to issue (other than to
another Holopak Company) additional shares of its capital stock (or other equity
interests) or Rights or by which any Holopak Company is or may be bound to
transfer any shares of the capital stock (or other equity interests) of any
Holopak Subsidiary (other than to another Holopak Company). There are no
Contracts relating to the rights of any Holopak Company to vote or to dispose of
any shares of the capital stock (or other equity interests) of any Holopak
Subsidiary. All of the shares of capital stock (or other equity interests) of
each Holopak Subsidiary held by a Holopak Company are fully paid and
nonassessable under the applicable corporation Law of the jurisdiction in which
such Subsidiary is incorporated or organized and are owned by the Holopak
Company free and clear of any Lien. Except as disclosed in Section 6.4 of the
Holopak Disclosure Memorandum, each Holopak Subsidiary is a corporation duly
organized, validly existing, and in good standing under the Laws of the
jurisdiction in which it is incorporated, and has the corporate power and
authority necessary for it to own, lease, and operate its Assets and to carry on
its business as now conducted. Each Holopak Subsidiary is duly qualified or
licensed to transact business as a foreign corporation in good standing in the
States of the United States and each jurisdiction in which it is so qualified or
licensed, except for such jurisdictions in which the failure to be so qualified
or licensed is not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on Holopak. The minute book and other organizational
documents for each Holopak Subsidiary have been made available to Foilmark for
its review, and, except as disclosed in Section 6.4 of the Holopak Disclosure
Memorandum, are true and correct as in effect as of the date of this Agreement
and accurately reflect all amendments thereto and all proceedings of the Board
of Directors and shareholders thereof.
6.5 .SEC Filings; Financial Statements.
(a) Holopak has timely filed and made available to Foilmark
all SEC Documents required to be filed by Holopak since January 1, 1994 or such
later date as Holopak first filed, or was first obligated to file, such SEC
Documents (the "Holopak SEC Reports"). The Holopak SEC Reports (i) at the time
filed, complied in all material respects with the applicable requirements of the
Securities Laws and other applicable Laws and (ii) did not, at the time they
were filed (or, if amended or superseded by a filing, then on the date of such
filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated in such Holopak SEC Reports or necessary in
order to make the statements in such Holopak SEC Reports, in light of the
circumstances under which they were made, not misleading. No Holopak Subsidiary
is required to file any SEC Documents.
27
781485.1
<PAGE>
(b) Each of the Holopak Financial Statements (including, in
each case, any related notes) contained in the Holopak SEC Reports, including
any Holopak SEC Reports filed after the date of this Agreement until the
Effective Time, complied as to form in all material respects with the applicable
published rules and regulations of the SEC with respect thereto, was prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except to the extent required by changes to GAAP or as may be
indicated in the notes to such financial statements or, in the case of unaudited
interim statements, as permitted by Form 10-Q of the SEC), and fairly presented
in all material respects the consolidated financial position of Holopak and its
Subsidiaries as at the respective dates and the consolidated results of
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring
year-end adjustments which were not or are not expected to be material in amount
or effect, and any pro forma financial information contained in the Joint Proxy
Statement/Prospectus on Form S-4 to be filed with the SEC in connection with the
merger is not necessarily indicative of the consolidated financial position of
Holopak and the Holopak Subsidiaries, as the case may be, as of the respective
dates thereof and the consolidated results of operations and cash flows for the
period indicated.
(c) Since November 1, 1988 or the date of organization if
later, Holopak and each of its Subsidiaries has timely filed all reports and
statements, together with any amendments required to be made with respect
thereto, that it was required to file with Regulatory Authorities, including but
not limited to financial reports filed with foreign governmental agencies. As of
their respective dates, each of such reports and documents, including the
financial statements, exhibits, and schedules thereto, complied in all material
respects with all applicable Laws. As of its respective date, each such report
and document did not, in any material respect, contain any untrue statement of a
material fact or omit a material fact required to be stated therein or necessary
to make the statements made therein, in light of the circumstances under which
they were made, not misleading, provided, however, that to the extent that the
foregoing relates to facts or omission regarding Persons other than Holopak and
its Affiliates, such representation and warranty is made to Holopak's Knowledge.
6.6 .Absence of Undisclosed Liabilities. Except as set forth in
Section 6.6 of the Holopak Disclosure Memorandum, No Holopak Company has any
Liabilities that have had or are reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Holopak, except Liabilities which
are accrued or reserved against in the consolidated balance sheets of Holopak as
of March 31, 1998 and September 30, 1998, included in the Holopak Financial
Statements or reflected in the notes thereto, or as disclosed in the Holopak
Disclosure Memorandum. No Holopak Company has incurred or paid any Liability
since September 30, 1998 except for such Liabilities (i) disclosed in the
Holopak Disclosure Memorandum or (ii) incurred or paid (A) in the ordinary
course of business consistent with past business practice and which have not had
and are not reasonably likely to have, individually or in the aggregate, a
Material
28
781485.1
<PAGE>
Adverse Effect on Holopak or (B) in connection with the transactions
contemplated by this Agreement. Except as disclosed in Section 6.6 of the
Holopak Disclosure Memorandum, no Holopak Company is directly or indirectly
liable, by guarantee, indemnity, or otherwise, upon or with respect to, or
obligated, by discount or repurchase agreement or in any other way, to provide
funds in respect to, or obligated to guarantee or assume any Liability of any
Person, other than another Holopak Company, for any amount in excess of $50,000.
6.7 Absence of Certain Changes or Events. Since September 30,
1998, except as disclosed in the Holopak Financial Statements delivered prior to
the date of this Agreement and as disclosed in Section 6.7 of the Holopak
Disclosure Memorandum, and from the date hereof until the Effective Time, for
those actions permitted pursuant to Section 7.2 hereof with respect to Holopak,
(i) there have been no events, changes or occurrences which have had, or are
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Holopak, and (ii) there has not been: (A) any damage, destruction or
loss (whether or not covered by insurance) with respect to any Assets of any
Holopak Company that has resulted or is reasonably likely to result in a
Material Adverse Effect on Holopak, (B) any material change by any Holopak
Company in its accounting methods, principles or practices; (C) any increase in
the benefits under, or the establishment or amendment of, any material bonus,
insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option (including, without limitation, the granting of stock
options, stock appreciation rights, performance awards, or restricted stock
awards), stock purchase or other employee benefit plan, or any material increase
in the compensation payable or to become payable to directors, officers or
employees of any Holopak Company, except for increases in salaries or wages
payable or to become payable in the ordinary course of business and consistent
with past practice and the granting of stock options as reflected in Section 6.3
hereof or (D) take any other actions inconsistent with the actions described in
Section 7.2 hereof. Since the date of Holopak's Annual Report on Form 10-K for
the fiscal year ended March 31, 1998 as filed with the SEC, there has not been
any declaration, setting aside or payment of any dividends or distributions in
respect of shares of Holopak Common Stock or the shares of stock of any Holopak
Subsidiary or any redemption, repurchase or other reacquisition of any of
Holopak's equity securities or any of the equity securities of any Holopak
Subsidiary.
6.8 Tax Matters. Except as disclosed in Section 6.8 of the Holopak
Disclosure Memorandum:
(a) Except for such matters as would not have a Material
Adverse Effect on Holopak, all Tax Returns required to be filed by or on behalf
of any of the Holopak Companies have been timely filed or requests for
extensions have been timely filed, granted, and have not expired and all Tax
Returns filed are complete and accurate in all Material respects. All Taxes
shown to be payable on filed Tax Returns have been paid. To the Knowledge of
Holopak, there is no pending or proposed audit
29
781485.1
<PAGE>
examination, deficiency, or refund Litigation with respect to any Taxes, except
as reserved against in the Holopak Financial Statements delivered prior to the
date of this Agreement. Holopak's Tax Returns have not been audited by the
Internal Revenue Service for any periods since September 27, 1991 but have been
audited by all relevant state Tax Authorities as disclosed in Section 6.8 of the
Holopak Disclosure Memorandum. All Taxes and other Liabilities due with respect
to completed and settled examinations or concluded Litigation have been paid. No
claim has ever been made by an authority of a jurisdiction where any Holopak
Company does not file Tax Returns that it is or may be subject to taxation by
that jurisdiction. No Tax Authority has notified any Holopak Company that it
intends to examine or investigate its Tax affairs.
(b) None of the Holopak Companies has executed an extension
or waiver of any statute of limitations on the assessment or collection of any
Tax due (excluding such statutes that relate to years currently under
examination by the Internal Revenue Service or other applicable taxing
authorities) that is currently in effect. The statute of limitations for the
assessment of all Taxes has expired for all applicable Tax Returns of the
Holopak Companies. The Tax Returns of the Holopak Companies for the periods set
forth in Section 6.8 of the Holopak Disclosure Memorandum have been examined by
the appropriate taxing authorities and no deficiency for any Tax shown on any
such audited return has been proposed, asserted or assessed against any Holopak
Company that has not been resolved and paid in full.
(c) The provision for any Taxes due or to become due for any
of the Holopak Companies for the period or periods through and including the
date of the respective Holopak Financial Statements that has been made and is
reflected on such Holopak Financial Statements is sufficient to cover all such
Taxes.
(d) Deferred Taxes of the Holopak Companies have been
provided for in accordance with GAAP. No differences exist between the amounts
of the book basis and the tax basis of assets (net of liabilities) that are not
accounted for by an accrual on the books for federal income tax purposes.
(e) None of the Holopak Companies is a party to any Tax
allocation or sharing agreement and none of the Holopak Companies has been a
member of an affiliated group filing a consolidated federal income Tax Return
(other than a group the common parent of which was Holopak) or has any Liability
for Taxes of any Person (other than Holopak and its Subsidiaries) under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local or foreign
Law) as a transferee or successor or by Contract or otherwise.
(f) Each of the Holopak Companies is in compliance in all
material respects with, and its records contain all information and documents
(including properly completed IRS Forms W-9) necessary to comply in all material
respects with, all applicable information reporting and Tax withholding
requirements under federal, state,
30
781485.1
<PAGE>
and local Tax Laws, and such records identify with specificity all accounts
subject to backup withholding under Section 3406 of the Internal Revenue Code.
(g) None of the Holopak Companies has made any payments, is
obligated to make any payments, or is a party to any Contract that could
obligate it to make any payments that would be disallowed as a deduction under
Section 280G or 162(m) of the Internal Revenue Code.
(h) No power of attorney currently in force has been granted
by any Holopak Company concerning any Tax matter.
(i) No Holopak Company has received a Tax Ruling or entered
into a Closing Agreement with any Tax Authority that would have a continuing
adverse effect after the Closing Date.
(j) No event, transaction, act or omission has occurred
which could result in any Holopak Company becoming liable to pay or to bear any
Tax as a transferee, successor or otherwise which is primarily or directed
chargeable or attributable to any non-Holopak Company, person or firm. No
Holopak Company has actual or contingent liability (whether by reason of any
indemnity, warranty or otherwise) to any other person in respect of any actual,
contingent or deferred liability of such person for Taxes.
(k) No Holopak Company has consented (nor will any of them
consent prior to the Closing) pursuant to Code ss.341(f) to have Code
ss.341(f)(2) apply to any disposition of a subsection (f) asset (as that term is
defined in Code ss.341(f)(4)) owned by any Holopak Company.
(l) No property of any Holopak Company is property that it
or any party to this transaction is or will be required to treat as being owned
by another person pursuant to the provisions of ss.168(f)(8) of the Internal
Revenue Code of 1954 (as in effect prior to its amendment by the Tax Reform Act
of 1986) or is "tax-exempt use property" within the meaning of Code ss.168(h).
(m) No Holopak Company is required to include any adjustment
pursuant to Code ss.481(a) by reason of a voluntary change in accounting method
initiated by the Company, and to the best of the knowledge of each Holopak
Company, the IRS has not proposed any such adjustment or change in accounting
method.
(n) No election under Codess.338 (or any predecessor
provisions) has been made by any Company with respect to any of its assets or
properties.
(o) No Holopak Company is subject to any contract,
obligation or commitment under which it will or may any time hereafter be or
become liable to make any payment (or provide any other amount in money or
money's worth) of an expense
31
781485.1
<PAGE>
nature which (in either such case) is not deductible, depreciable or amortizable
in full in computing the income of any Holopak Company for the purpose of any
Taxes on income or profits to which Holopak or any Subsidiary may be subject,
other than any payment relating to the acquisition of assets that are treated as
having an indefinite useful life for purposes of the relevant Tax.
(p) No Holopak Company has disposed of any asset or supplied
any service or business facility of any kind including a loan of money or the
letting, hiring or licensing of any property whether tangible or intangible) in
circumstances where the consideration to be received for such disposal or supply
will be less than the consideration deemed received for Tax purposes.
(q) The interests of Holopak held by the shareholders of
Holopak are not United States real property interests, as defined in Section
897(c)(1) of the Code, as of the date this Agreement is entered into for
purposes of Treasury Regulations ss.ss.1.897-2(g)(1)(ii), 1.897-2(h)(1)(i) and
1.1445-2(c). The person signing this Agreement on behalf of Holopak is a
responsible corporate officer of Holopak who verified under the penalties of
perjury that the above statement is correct to his knowledge and belief. This
representation is intended to satisfy Treasury Regulations ss.1.1445-2(c) and
release Foilmark of any withholding requirements under Section 1445 of the Code.
Within 30 days prior to the Effective Time, Holopak will provide Foilmark with a
statement that the interests in Holopak held by the shareholders of Holopak are
not United States real property interests in accordance with Treasury
Regulations ss.ss.1.897-2(h)(1)(i) and 1.1445-2(c).
6.9 .Assets. Except as disclosed in Section 6.9 of the Holopak
Disclosure Memorandum or as disclosed or reserved against in the Holopak
Financial Statements delivered prior to the date of this Agreement, the Holopak
Companies have good and marketable title, free and clear of all Liens, to all of
their respective Assets. All tangible properties used in the businesses of the
Holopak Companies are in good condition, reasonable wear and tear excepted, and
are usable in the ordinary course of business consistent with Holopak's past
practices. Section 6.9 of the Holopak Disclosure Memorandum sets forth, as of
the date of this Agreement (x) all real property owned by Holopak and its
Subsidiaries, singly or in common or joint venture with each other or other
entities or individuals, and (y) all real property that Holopak and its
Subsidiaries has leased or subleased among themselves or from a third party,
singly or in common or joint venture with each other or with other entities or
individuals. All items of inventory of the Holopak Companies reflected on the
most recent balance sheet included in the Holopak Financial Statements delivered
prior to the date of this Agreement and prior to the Effective Time consisted
and will consist, as applicable, of items of a quality and quantity usable and
saleable in the ordinary course of business and conform to generally accepted
standards in the industry in which the Holopak Companies are a part. All Assets
which are material to Holopak's business on a consolidated basis, held under
leases or subleases by any of the Holopak Companies, are held under valid
Contracts enforceable in accordance with their respective terms,
32
781485.1
<PAGE>
and each such Contract is in full force and effect. Section 6.9 of the Holopak
Disclosure Memorandum sets forth the scope of coverage of all of Holopak's
insurance policies as of the date of this Agreement, the term of each such
policy and the premiums relating thereto. None of the Holopak Companies has
received notice from any insurance carrier that (i) such insurance will be
canceled or that coverage thereunder will be reduced or eliminated, or (ii)
premium costs with respect to such policies of insurance will be substantially
increased. Except as disclosed in Section 6.9 of the Holopak Disclosure
Memorandum, there are presently no claims pending under such policies of
insurance and no notices of denial of any material claim have been received by
any Holopak Company under such policies within the past twelve months. The
Assets of the Holopak Companies include all Assets required to operate the
business of the Holopak Companies as presently conducted.
6.10 Intellectual Property. Section 6.10 of the Holopak
Disclosure Memorandum sets forth a complete and accurate list of, and a brief
description of all Intellectual Property owned, used or licensed by or to
Holopak which are used in or necessary for the conduct of Holopak's business,
except as to which the absence of which would not have a Material Adverse Effect
on Holopak ("Holopak Intellectual Property"). No Person has asserted a claim in
writing to Holopak that Holopak has abandoned any Holopak Intellectual Property
and, to the Knowledge of Holopak, Holopak has not abandoned any Holopak
Intellectual Property free and clear of all liens. Except as disclosed in
Section 6.10 of the Holopak Disclosure Memorandum, an Holopak Company owns all
right, title and interest in and to or has the lawful right to use the Holopak
Intellectual Property free and clear of all Liens. All Holopak Intellectual
Property licensed to any Holopak Company is identified as "licensed" in Section
6.10 of the Holopak Disclosure Memorandum. Except as disclosed in Section 6.10
of the Holopak Disclosure Memorandum, use of the Holopak Intellectual Property
by any of the Holopak Companies has not to the Knowledge of Holopak
misappropriated or infringed on any rights held or owned by any third party, nor
has any third party asserted any such claim. Except as disclosed in Section 6.10
of the Holopak Disclosure Memorandum, no Holopak Company is obligated to pay any
royalties to any Person (other than another Holopak Company) with respect to any
Holopak Intellectual Property. Except as disclosed in Section 6.10 of the
Holopak Disclosure Memorandum, every officer or management employee of any
Holopak Company is a party to a Contract which requires such officer or
management employee to keep confidential any trade secrets, proprietary data,
customer information, or other business information of a Holopak Company, and,
to the Knowledge of Holopak, no officer is party to, nor to the Knowledge of
Holopak has Holopak received any notice of any other management employee being a
party to, any Contract with any Person other than a Holopak Company which
requires such officer or management employee to assign any interest in any
Intellectual Property to any Person other than a Holopak Company or to keep
confidential any trade secrets, proprietary data, customer information, or other
business information of any Person other than a Holopak Company. Except as
disclosed in Section 6.10 of the Holopak Disclosure Memorandum, no officer of
any Holopak Company is party to, nor has Holopak
33
781485.1
<PAGE>
received any notice of any other management employee being a party to, any
Contract which restricts or prohibits such officer or management employee from
engaging in activities competitive with any Person, including any Holopak
Company.
6.11 Compliance with Laws. Each Holopak Company has in effect all
Permits necessary for it to own, lease, or operate its Assets and to carry on
its business as now conducted, and there has occurred no Default under any such
Permit, except where the failure to possess such Permit or the occurrence of a
Default would not have a Material Adverse Effect on Holopak or the Operating
Property to which the Permit relates. Except as disclosed in Section 6.11 of the
Holopak Disclosure Memorandum, Holopak:
(a) is not in Default under any of the provisions of its
Certificate of Incorporation or By-laws (or other governing instruments);
(b) is not in Default under any foreign, federal, state or
local Laws, Orders, or Permits applicable to its business (including but
not limited to any applicable environmental and health laws) or employees
conducting its business, except for any Default that would not have a
Material Adverse Effect on Holopak or any property owned or operated by
Holopak; or
(c) since January 1, 1993, has received any notification or
communication from any agency or department of federal, state, or local
government or any Regulatory Authority or the staff thereof (i) asserting
that any Holopak Company is in Material non-compliance with any of the
Laws or Orders which such governmental authority or Regulatory Authority
enforces which have not been resolved, (ii) threatening to revoke any
Permits, or (iii) requiring any Holopak Company to enter into or consent
to the issuance of a cease and desist order, formal agreement, directive,
commitment, or memorandum of understanding, or to adopt any Board
resolution or similar undertaking.
Copies of all material reports, correspondence, notices and other documents
relating to any inspection, audit, monitoring or other form of review or
enforcement action by a Regulatory Authority have been made available to
Holopak.
6.12 Labor Relations. No Holopak Company is the subject of any
Litigation asserting that it or any other Holopak Company has committed an
unfair labor practice (within the meaning of the National Labor Relations Act or
comparable state law) or seeking to compel it or any other Holopak Company to
bargain with any labor organization as to wages or conditions of employment, nor
is any Holopak Company party to any collective bargaining agreement, nor is
there any strike, slowdown, work stoppage or other labor dispute involving any
Holopak Company, pending or threatened, or to the Knowledge of Holopak, is there
any activity involving any Holopak Company's employees seeking to certify a
collective bargaining unit or engaging in any other organization activity.
Except as set forth on Section 6.12 to the Holopak
34
781485.1
<PAGE>
Disclosure Memorandum, no notification is required to be made to: (i) any
governmental entity in connection with the Effectiveness of the Merger and any
Holopak facility; or (ii) federal, state, local or foreign governmental entities
in connection with the closing of a Holopak facility.
6.13 Employee Benefit Plans.
(a) Holopak has listed in Section 6.13 of the Holopak
Disclosure Memorandum all pension, retirement, profit-sharing, deferred
compensation, stock option, employee stock ownership, severance pay, vacation,
bonus, or other incentive plan, all other written employee programs,
arrangements, or agreements, all medical, vision, dental, or other health plans,
all life insurance plans, and all other employee benefit plans or fringe benefit
plans, whether oral or written, including but not limited to, "employee benefit
plans" as that term is defined in Section 3(3) of ERISA, currently adopted,
maintained by, sponsored in whole or in part by, or contributed to by any
Holopak Company or any entity required to be aggregated with Holopak under
Sections 414(b), (c), (m), or (o) of the Internal Revenue Code or Section 4001
or ERISA (an "ERISA Affiliate") thereof for the benefit of employees, retirees,
dependents, spouses, directors, independent contractors, or other beneficiaries
and under which employees, retirees, dependents, spouses, directors, independent
contractors, or other beneficiaries are eligible to participate (collectively,
the "Holopak Benefit Plans"). Any of the Holopak Benefit Plans which is an
"employee pension benefit plan," as that term is defined in Section 3(2) of
ERISA, is referred to herein as a "Holopak ERISA Plan."
(b) Each Holopak Benefit Plan intended to qualify under
Section 401(a) of the Internal Revenue Code is the subject of a favorable
unrevoked determination letter issued by the IRS as to its tax-qualified status
under the Internal Revenue Code, which determination letter may still be relied
upon as to such tax-qualified status, and no circumstances have occurred that
would adversely affect the tax-qualified status of such Holopak Benefit Plan.
(c) Each Holopak Benefit Plan is maintained and operated in
all Material respects in compliance with its terms and with the applicable
provisions of ERISA, the Internal Revenue Code, and any other applicable Laws
the breach or violation of which are reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Holopak. No Holopak Company or
ERISA Affiliate has engaged in a transaction with respect to any Holopak Benefit
Plan that, assuming the taxable period of such transaction expired as of the
date hereof, would subject any Holopak Company to a Tax imposed by either
Section 4975 of the Internal Revenue Code or Section 502(i) of ERISA.
(d) No Holopak ERISA Plan is, and no Holopak Company has
ever maintained or contributed to, a "defined benefit plan" (as defined in
Section 414(j) of the Internal Revenue Code and Section 3(35) of ERISA) or a
multiemployer plan within the meaning of Section 3(37) of ERISA.
35
781485.1
<PAGE>
(e) Except as disclosed in Section 6.13 of the Holopak
Disclosure Memorandum, none of the Holopak Benefit Plans provides, and no
Holopak Company or any ERISA Affiliate has any obligation to provide health,
medical, life or other non-pension benefits to retired or other former
employees, except as specifically required by Section 4980B of the Code or Part
6 of Title I or ERISA, and there are no restrictions on the rights of such
Holopak Company to amend or terminate any such Holopak Benefits Plan without
incurring any Liability thereunder.
(f) Except as disclosed in Section 6.13 of the Holopak
Disclosure Memorandum, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, "excess parachute
payment" - within the meaning of Section 280G of the Internal Revenue Code - or
otherwise) becoming due to any director or any employee of any Holopak Company
or ERISA affiliate from any Holopak Company or ERISA affiliate under any Holopak
Benefit Plan or otherwise, (ii) increase any benefits otherwise payable under
any Holopak Benefit Plan, or (iii) result in any acceleration of the time of
payment or vesting of any such benefit.
(g) The actuarial present values of all accrued deferred
compensation entitlements (including entitlements under any executive
compensation, supplemental retirement, or employment agreement) of employees and
former employees of any Holopak Company and their respective beneficiaries,
other than entitlements accrued pursuant to funded retirement plans subject to
the provisions of Section 412 of the Internal Revenue Code or Section 302 of
ERISA, have been fully reflected on the Holopak Financial Statements to the
extent required by and in accordance with GAAP.
(h) Without limiting the generality of any of the foregoing,
with respect to any foreign Holopak Benefit Plan providing pension or comparable
benefits, to the extent not reserved for on the December 31, 1998 balance sheet
included in the Holopak Financial Statements, the Holopak Disclosure Memorandum
includes true and complete copies of estimates of the amount of the liability
determined on a projected benefits obligation basis and, where applicable, the
underlying actuarial assumptions related to any such Holopak Benefit Plan. With
respect to any foreign Holopak Benefit Plan providing termination indemnities,
such Holopak Disclosure Memorandum includes true and complete copies of
estimates of the amount of the present value of any liability, if such liability
cannot be determined on a projected benefits obligation basis.
(i) There is no suit, action, dispute, claim, arbitration or
legal, administrative or other proceeding or governmental investigation pending,
or to the knowledge of Holopak threatened, alleging any breach of the terms of
any such Holopak Benefit Plan or of any fiduciary duties thereunder or violation
of any applicable Law with respect to any such Holopak Benefit Plan.
36
781485.1
<PAGE>
(j) Current copies of all Holopak Benefit Plans (and, if
applicable, related trust or other funding arrangements, including but not
limited to insurance contracts), and all amendments, supplements and
modifications thereto and written interpretations thereof (including summary
plan descriptions) have been furnished to Foilmark, together with (1) the two
most recent annual reports (Form 5500, including, if applicable, Schedule B
thereto) prepared in connection with any such Holopak Benefit Plan, and (2) the
most recent actuarial valuation prepared in connection with any such Holopak
Benefit Plan.
6.14 Material Contracts. Except as disclosed in Section 6.14 of
the Holopak Disclosure Memorandum or otherwise reflected in the Holopak
Financial Statements, none of the Holopak Companies, nor any of their respective
Assets, businesses, or operations, is a party to, or is bound or affected by, or
receives benefits under, (i) any employment, severance, termination, consulting,
or retirement Contract providing for payments to any Person, except for
Contracts referred to in Section 6.13(a) of this Agreement and unwritten
Contracts with respect to the employment of hourly personnel terminable at will
or upon statutorily required notice, (ii) any Contract relating to the borrowing
of money by any Holopak Company or the guarantee by any Holopak Company of any
such obligation (other than Contracts for purchase money indebtedness in an
aggregate amount not exceeding $50,000, Contracts evidencing trade payables, and
Contracts relating to borrowings or guarantees made in the ordinary course of
business), (iii) any Contract which prohibits or restricts any Holopak Company
from engaging in any business activities in any geographic area, line of
business or otherwise in competition with any other Person, (iv) any Contract
between or among Holopak Companies, (v) any Contract involving the licensing or
use of Intellectual Property, (vi) any lease of real property as lessee or
lessor, (vii) any Contract relating to the purchase or sale of any goods or
services (other than Contracts entered into in the ordinary course of business
and that are either (x) terminable by each Holopak Company that is a party
thereto upon not more than sixty (60) days notice without payment or penalty or
(y) has a remaining term of not more than six months from the date of this
Agreement and involves payments not in excess of $50,000 per year, and (viii)
any other Contract or amendment thereto that would be required to be filed as an
exhibit to a Form 10-K filed by Holopak with the SEC as of the date of this
Agreement (together with all Contracts referred to in Sections 6.9 and 6.14(a)
of this Agreement, the "Holopak Contracts"). With respect to each Holopak
Contract and except as disclosed in Section 6.14 of the Holopak Disclosure
Memorandum: (i) the Contract is in full force and effect; (ii) no Holopak
Company is in Default thereunder except for any such Default as would not have a
Material Adverse Effect on Holopak; (iii) no Holopak Company has repudiated or
waived any material provision of any such Contract; and (iv) no other party to
any such Contract is, to the Knowledge of Holopak, in Default in any respect, or
has repudiated or waived any material provision thereunder. Except as disclosed
in Section 6.14 of the Holopak Disclosure Memorandum, all of the indebtedness of
any Holopak Company for money
37
781485.1
<PAGE>
borrowed is prepayable at any time by such Holopak Company without penalty or
premium.
6.15 Legal Proceedings. Except as disclosed in Section 6.15 of
the Holopak Disclosure Memorandum there is no Litigation instituted or pending,
or, to the Knowledge of Holopak, threatened (or unasserted but considered
probable of assertion and which if asserted would have at least a reasonable
probability of an unfavorable outcome) against any Holopak Company, or against
any director, employee or employee benefit plan of any Holopak Company, or
against any Asset, employee benefit plan, interest, or right of any of them,
that will have, individually or in the aggregate, a Material Adverse Effect on
Holopak, nor are there any Orders of any Regulatory Authorities, other
governmental authorities, or arbitrators outstanding against any Holopak
Company, that are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Holopak. Section 6.15 of the Holopak Disclosure
Memorandum contains a summary of all instituted or pending litigation as of the
date of this Agreement to which any Holopak Company is a party and which names a
Holopak Company as a defendant or non-defendant.
6.16 Statements True and Correct. Holopak has furnished Foilmark
with copies of all written Holopak Contracts, and such copies are true and
correct copies of the written Holopak Contracts as such exist on the date of
this Agreement. None of the information supplied or to be supplied by any
Holopak Company or any Affiliate thereof for inclusion in the Registration
Statement to be filed by Foilmark with the SEC, will, when the Registration
Statement becomes effective, be false or misleading with respect to any material
fact, or omit to state any material fact necessary to make the statements
therein not misleading. None of the information supplied or to be supplied by
any Holopak Company or any Affiliate thereof for inclusion in the Joint Proxy
Statement to be mailed to each Party's shareholders in connection with the
Shareholders' Meetings, and any other documents to be filed by any Holopak
Company or any Affiliate thereof with the SEC or any other Regulatory Authority
in connection with the transactions contemplated hereby, will, at the respective
time such documents are filed, and with respect to the Joint Proxy Statement,
when first mailed to the shareholders of Foilmark and Holopak, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to make the statements therein in light of the circumstances under
which they were made, not misleading, or, in the case of the Joint Proxy
Statement or any amendment thereof or supplement thereto, at the time of the
Shareholders' Meetings, be false or misleading with respect to any material
fact, or omit to state any material fact necessary to correct any statement in
any earlier communication with respect to the solicitation of any proxy for the
Shareholders' Meetings. All documents that any Holopak Company or any Affiliate
thereof is responsible for filing with any Regulatory Authority in connection
with the transactions contemplated hereby will comply as to form in all material
respects with the provisions of applicable Law.
38
781485.1
<PAGE>
6.17 Accounting, Tax and Regulatory Matters. No Holopak Company
or, to the Knowledge of Holopak, any Affiliate thereof has taken any action or
has any Knowledge of any fact or circumstance that is reasonably likely to (i)
prevent the Merger from qualifying for purchase accounting treatment, the
treatment of any so-called negative goodwill resulting from the Merger or as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, or (ii) materially impede or delay receipt of any Consents of Regulatory
Authorities referred to in Section 9.1(b) of this Agreement or result in the
imposition of a condition or restriction of the type referred to in the last
sentence of such Section.
6.18 State Takeover Laws. Each Holopak Company has taken all
necessary action to exempt the transactions contemplated by this Agreement from
any applicable "moratorium," "fair price," "business combination," "control
share," or other anti-takeover Laws (collectively, "Takeover Laws").
6.19 Charter Provisions. Each Holopak Company has taken all
action so that the entering into of this Agreement and the consummation of the
Merger and the other transactions contemplated by this Agreement do not and will
not result in the grant of any rights to any Person under the Certificate of
Incorporation, Bylaws or other governing instruments of any Holopak Company or
restrict or impair the ability of Holopak or any of its Subsidiaries to vote, or
otherwise to exercise the Rights of a shareholder with respect to, shares of any
Holopak Company that may be directly or indirectly acquired or controlled by it.
6.20 Millennium Capability. Except as disclosed in Section 6.20
of the Holopak Disclosure Memorandum, all of Holopak's technology and all of the
technology its customers and vendors use is Year 2000 compliant. For purposes of
this Section 6.20, "technology" includes all computer hardware, software and
network components; all communications systems and equipment; and all machinery,
equipment and devices containing microprocessors. To be "Year 2000 compliant,"
technology must correctly process date data within and between the 20th and 21st
centuries, so that: (a) no value for a calendar date (including 9/9/99) will
cause interruptions in normal operation; (b) all manipulations of
calendar-related data (dates, durations, days of week, etc.) will produce
desired results for all valid date values; (c) date elements in interfaces and
data storage permit specifying century to eliminate date ambiguity; (d) for any
date element represented without century, the correct is unambiguous for all
manipulations involving that element; and (e) the Year 2000 must be recognized
as a leap year without interruption to normal operations or generation of
erroneous results.
6.21 Third Party Consents and Governmental Approvals. Except as
set forth in Section 6.21 of the Holopak Disclosure Memorandum, no Consent,
authorization, approval, permit or license of, or filing with, any Regulatory
Authority, any lender or lessor or any other person or entity is required to
authorize, or is required
39
781485.1
<PAGE>
in connection with, the execution, delivery and performance of this Agreement or
the agreements contemplated hereby on the part of Holopak.
6.22 Fairness Opinion. The Board of Directors of Holopak has
received the written opinion of Schroder & Co., Inc., to the effect that, as of
such date, the consideration to be paid by Foilmark pursuant to the Merger is
fair from a financial point of view to the holders of Holopak Common Stock.
6.23 Environmental Matters. (a) Except as set forth on Section
6.23 of the Holopak Disclosure Memorandum, Holopak has not received any notice
from any Person that there exists any violation of any Hazardous Substances Law
(as hereinafter defined). Holopak has obtained all Environmental Permits and any
such Permits are currently in effect for the operation of its business. Except
as set forth in the Holopak Disclosure Memorandum, Holopak has no knowledge (i)
of any Hazardous Substances (as hereinafter defined) present on, under or about
any Asset, and to Holopak's knowledge, no disposal, release, discharge,
spillage, uncontrolled loss, seepage or migration of Hazardous Substances has
occurred on, under, from, or about any Asset, (ii) that any of the Assets
violates, or has any time violated, any Hazardous Substance Laws, and to
Holopak's knowledge, (iii) there is no Hazardous Substance on or from any Asset
for which Holopak has no obligation to undertake any remedial action pursuant to
Hazardous Substance Laws or as a result of which Holopak may be liable to any
third party.
(b) For purposes hereof, "Hazardous Substances" means,
without limitation (1) those substances defined as "Hazardous Substances," and
"Hazardous Wastes," "Toxic Substances", "Hazardous Materials", pollutants or
contaminants in or which are otherwise regulated under any Hazardous Substance
Law. "Hazardous Substance Law" shall mean the Comprehensive Environmental
Response Compensation and Liability Act, as amended, 42 U.S.C. ss.90,601 et seq.
("CERCLA"), the Resource Conservation and Recovery Act, as amended, 42 U.S.C.
ss.6901, et seq. ("RCRA"), the Toxic Substances Control Act, as amended, 15
U.S.C. ss.2601, et seq., the Hazardous Materials Transportation Act, as amended,
49 U.S.C. ss.1801 et seq., the Occupational Safety and Health Act, 29 U.S.C.
ss.651, et seq. (insofar as it relates to employee health and safety in relation
to exposure to Hazardous Substances) and any other local, state, federal or
foreign laws or regulations related to the protection of public health or the
environment (collectively, "Hazardous Substances Laws"); (2) such other
substances, materials or wastes as are or become regulated under, or as are
classified as hazardous or toxic under Hazardous Substance Laws; and (3) any
materials, wastes or substances that can be defined as (A) petroleum products or
wastes; (B) asbestos; (C) polychlorinated biphenyls; (D) flammable or explosive;
or (E) radioactive.
6.24 HSR Act. Holopak is not controlled by an other entity and has
neither (i) $100 Million in total assets or (ii) $100 Million in annual net
sales. For purposes of
40
781485.1
<PAGE>
this Section 6.24, the terms "control", "total assets" and "annual net sales"
are used as defined in 16 C.F.R. Sections 801.1(b) and 801.11.
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 Affirmative Covenants of Foilmark and Holopak. From the date
of this Agreement until the earlier of the Effective Time or the termination of
this Agreement, unless the prior written consent of the other Party shall have
been obtained, and except as otherwise expressly contemplated herein, each of
Foilmark and Holopak shall and shall cause each of its respective Subsidiaries
to (a) operate its business in the usual, regular, and ordinary course, (b) use
its reasonable efforts to preserve intact its business organization and Assets
and maintain its rights and franchises, and (c) use their respective best
efforts to take no action which would (i) materially adversely affect the
ability of any Party to obtain any Consents required for the transactions
contemplated hereby without imposition of a condition or restriction of the type
referred to in the last sentences of Section 9.1(b) or 9.1(c) of this Agreement,
or (ii) materially adversely affect the ability of any Party to perform its
covenants and agreements under this Agreement.
7.2 Negative Covenants of Foilmark and Holopak. Except as
disclosed in the respective Foilmark or Holopak Disclosure Memorandum, from the
date of this Agreement until the earlier of the Effective Time or the
termination of this Agreement, except as contemplated by this Agreement, each of
Foilmark and Holopak covenants and agrees that it will not do or agree or commit
to do, or permit any of its Subsidiaries to do or agree or commit to do, any of
the following without the prior written consent of the chief executive officer
or chief financial officer of the other Party, which consent shall not be
unreasonably withheld, conditioned or delayed:
(a) amend its Certificate of Incorporation, Bylaws or other
governing instruments or the governing instruments of any Subsidiary
(except an amendment to the Certificate of Incorporation of Foilmark to
increase its authorized Common Stock to 15,000,000 Shares); or
(b) incur any additional debt obligation or other obligation
for borrowed money (other than indebtedness under its existing credit
line as disclosed on the Holopak Disclosure Memorandum and Foilmark
Disclosure Memorandum or, in the case of Foilmark, indebtedness between
Foilmark Companies that are wholly-owned subsidiaries of a Foilmark
Company or, in the case of Holopak, indebtedness between Holopak
Companies that are wholly-owned subsidiaries of a Holopak Company, in
excess of an aggregate of $50,000 on a consolidated basis except in the
ordinary course of the business consistent with past practices, or
impose, or suffer the imposition, on any Asset of any Lien or permit any
such Lien to exist (other than in connection with Liens in effect as of
41
781485.1
<PAGE>
the date hereof that are disclosed in the Foilmark Disclosure Memorandum
or Holopak Disclosure Memorandum); or
(c) repurchase, redeem, or otherwise acquire or exchange
(other than exchanges in the ordinary course under employee benefit
plans), directly or indirectly, any shares, or any securities convertible
into any shares, of its own capital stock or the capital stock of any
Subsidiary, or declare or pay any dividend or make any other distribution
in respect of it's capital stock; or
(d) except pursuant to the exercise of stock options
outstanding as of the date hereof and pursuant to the terms thereof in
existence on the date hereof, or as disclosed in Section 7.2(d) of the
Foilmark Disclosure Memorandum or Holopak Disclosure Memorandum, or
except pursuant to the conversion of all shares of Holopak Class A Common
Stock to Holopak Common Stock, issue, sell, pledge, encumber, authorize
the issuance of, enter into any Contract to issue, sell, pledge,
encumber, or authorize the issuance of, or otherwise permit to become
outstanding, any additional shares of any capital stock, or any stock
appreciation rights, or any option, warrant, conversion, or other right
to acquire any such stock, or any security convertible into any such
stock; or
(e) adjust, split, combine or reclassify any capital stock or
issue or authorize the issuance of any other securities in respect of or
in substitution for shares of any capital stock, or sell, lease, mortgage
or otherwise dispose of or otherwise encumber any shares of capital stock
of any Subsidiary or any Asset having a book value in excess of $25,000
other than in the ordinary course of business for reasonable and adequate
consideration; or
(f) except for purchases of U.S. Treasury securities or U.S.
Government agency securities, which in either case have maturities of one
year or less, purchase any securities or make any material investment,
either by purchase of stock of securities, contributions to capital,
Asset transfers, or purchase of any Assets, in any Person other than a
wholly-owned Subsidiary, or otherwise acquire direct or indirect control
over any Person, other than in connection with (i) foreclosures in the
ordinary course of business, or (iii) the creation of new wholly-owned
Subsidiaries organized to conduct or continue activities otherwise
permitted by this Agreement; or
(g) grant any increase in compensation or benefits to any
employees or officers, including but not limited to any employees or
officers of a Subsidiary, except in accordance with past practice as
disclosed in the Foilmark Disclosure Memorandum or the Holopak Disclosure
Memorandum, or as required by Law; pay any severance or termination pay
or any bonus other than pursuant to written policies or written Contracts
in effect on the date of this Agreement and disclosed in the Foilmark
Disclosure Memorandum or the Holopak Disclosure Memorandum; and enter
into or amend any severance agreements with any employees or
42
781485.1
<PAGE>
officers, including but not limited to any employees or officers of a
Subsidiary; grant any material increase in fees or other increases in
compensation or other benefits to directors of such Party or any
Subsidiary except in accordance with past practice disclosed in the
Foilmark Disclosure Memorandum or the Holopak Disclosure Memorandum, or
voluntarily accelerate the vesting of any stock options or other
stock-based compensation or employee benefits; or
(h) enter into or amend any employment Contract with any
Person (unless such amendment is required by Law and except for increases
in compensation or benefits in accordance with past practice as disclosed
in the Foilmark Disclosure Memorandum or the Holopak Disclosure
Memorandum) that the Party does not have the unconditional right to
terminate without Liability (other than Liability for services already
rendered), at any time on or after the Effective Time or upon statutorily
required notice;
(i) purchase or sell any real property or other material Asset
or enter into any agreement to purchase or sell the same in an amount in
excess of $35,000 individually, or $250,000 in the aggregate;
(j) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization or any agreement relating to an Acquisition Proposal
(other than as expressly permitted by this Agreement);
(k) adopt any new employee benefit plan or terminate or
withdraw from, or make any material change in or to, any existing
employee benefit plans other than any such change that is required by Law
or that, in the opinion of counsel, is necessary or advisable to maintain
the tax qualified status of any such plan, or make any distributions from
such employee benefit plans, except as required by Law, the terms of such
plans or consistent with past practice; or
(l) make any change in any Tax or accounting methods or
systems of internal accounting controls, except as may be appropriate to
conform to changes in Tax Laws or regulatory accounting requirements or
GAAP; or
(m) commence any Litigation, settle any Litigation in excess
of $50,000 individually, or $200,000 in the aggregate, involving any
Liability for money damages or restrictions upon the operations of such
Party or any of its Subsidiaries; or
(n) enter into, terminate or materially modify or amend any
Contract (including with respect to any capital expenditures) involving
the payment of $35,000 individually, or $250,000 in the aggregate, or
more, or waive, release, compromise or assign any material rights or
claims, except for purchases of
43
781485.1
<PAGE>
inventory in the ordinary course of business under existing Contracts
without alteration or amendment; or
(o) authorize any of, or commit or agree to any of, the
foregoing.
7.3 Adverse Changes in Condition. Each Party agrees to give
written notice promptly to the other Party upon becoming aware of the occurrence
or impending occurrence of any event or circumstance relating to it or any of
its Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (ii) would cause or constitute a
material breach of any of its representations, warranties, or covenants
contained herein, and to use its reasonable efforts to prevent or promptly to
remedy the same.
7.4 Reports. Each Party and its Subsidiaries shall file all
reports required to be filed by it with Regulatory Authorities between the date
of this Agreement and the Effective Time and shall deliver to the other Party
copies of all such reports promptly after the same are filed. If financial
statements are contained in any such reports filed with the SEC, such financial
statements will fairly present the consolidated financial position of the entity
filing such statements as of the dates indicated and the consolidated results of
operations, changes in shareholders' equity, and cash flows for the periods then
ended in accordance with GAAP (subject in the case of interim financial
statements to normal recurring year-end adjustments that are not material). As
of their respective dates, such reports filed with the SEC will comply in all
material respects with the Securities Laws and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein in light of the circumstances under which they were made, or
necessary in order to make the statements therein not misleading. Any financial
statements contained in any other reports to another Regulatory Authority shall
be prepared in accordance with Laws applicable to such reports.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 .Registration Statement; Proxy Statement; Shareholder
Approval. As soon as practicable after execution of this Agreement, Foilmark
shall prepare and file the Registration Statement with the SEC, and shall use
its reasonable efforts to cause the Registration Statement to become effective
under the 1933 Act and take any action required to be taken under the applicable
state Blue Sky or securities Laws in connection with the issuance of the shares
of Foilmark Common Stock upon consummation of the Merger. Holopak shall
cooperate in the preparation and filing of the Registration Statement and each
Party shall furnish to the other Party all information concerning it and the
holders of its capital stock as the other party may reasonably request in
connection with such action. Each of Foilmark and Holopak shall call a special
Shareholders' Meeting, to be held as soon as reasonably practicable after
44
781485.1
<PAGE>
the Registration Statement is declared effective by the SEC, for the purpose of
voting upon adoption of this Agreement, approval of the Merger and other
transactions contemplated by this Agreement, and such other related matters as
it deems appropriate. In connection with the Shareholders' Meetings, (i)
Foilmark and Holopak shall prepare and file with the SEC a Joint Proxy Statement
and mail such Joint Proxy Statement to their respective shareholders, (ii) the
Parties shall furnish to each other all information concerning them that they
may reasonably request in connection with such Joint Proxy Statement, (iii) the
Board of Directors of Foilmark and Holopak shall recommend to their respective
shareholders the adoption or approval of this Agreement (provided, that either
Board of Directors of Foilmark or Holopak may withdraw, modify or change its
recommendation, if, after having consulted with outside counsel it has
determined in good faith that the making of such recommendation, or the failure
to withdraw, modify or change its recommendation, would constitute a breach of
fiduciary duties of the members of such Board of Directors to their respective
shareholders under applicable law), and (iv) the Board of Directors and officers
of Foilmark and Holopak shall use their reasonable efforts to obtain such
shareholders' adoption or approval (provided that no such efforts shall be
required by the Board of Directors and officers of Holopak or Foilmark, as the
case may be, if after having consulted with outside counsel the Board of
Directors of Holopak or Foilmark, as the case may be, determines in good faith
that the taking of such actions would constitute a breach of fiduciary duties of
the members of such Board of Directors to their respective shareholders under
applicable law). Holopak and Foilmark shall make all necessary filings with
respect to the Merger under the Securities Laws.
8.2 .Exchange Listing. Foilmark shall use its best efforts to
list, prior to the Effective Time, on the Nasdaq National Market the shares of
Foilmark Common Stock to be issued to the holders of Holopak Common Stock
pursuant to the Merger, and Foilmark shall give all notices and make all filings
with the NASD required in connection with the transactions contemplated herein.
8.3 Applications; Antitrust Notification. Holopak and Foilmark
shall cooperate in the preparation and, where appropriate, filing of,
applications with all Regulatory Authorities having jurisdiction over the
transactions contemplated by this Agreement seeking the requisite Consents
necessary to consummate the transactions contemplated by this Agreement. To the
extent required by the HSR Act, each of the Parties will within fifteen business
days of the date hereof file with the United States Federal Trade Commission and
the United States Department of Justice the notification and report form
required for the transactions contemplated hereby and any supplemental or
additional information which may be reasonably requested in connection therewith
pursuant to the HSR Act and will comply in all material respects with the
requirements of the HSR Act. The fees to be paid in connection with any such
filing under the HSR Act shall be shared equally by the Parties. The Parties
shall deliver to each other copies of all filings, correspondence and orders to
and from all Regulatory Authorities in connection with the transactions
contemplated hereby.
45
781485.1
<PAGE>
8.4 Filings with State Offices. Upon the terms and subject to
the conditions of this Agreement, Foilmark, Foilmark Sub and Holopak shall
execute and file the Certificates of Merger with the Secretary of State of the
State of Delaware in connection with the Closing.
8.5 Agreement as to Efforts to Consummate. Subject to the terms
and conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable best efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
practicable after the date of this Agreement, the transactions contemplated by
this Agreement, including using its reasonable efforts to lift or rescind any
Order adversely affecting its ability to consummate the transactions
contemplated herein and to cause to be satisfied the conditions referred to in
Article 9 of this Agreement; provided, that nothing herein shall preclude either
Party from exercising its rights under this Agreement. Each Party shall use, and
shall cause each of its Subsidiaries to use, its reasonable best efforts to
obtain all Consents necessary or desirable for the consummation of the
transactions contemplated by this Agreement; provided, however, that nothing in
this Agreement shall obligate either Holopak, Foilmark or their respective
Subsidiaries to sell, transfer or otherwise dispose of any of their respective
Assets to cause a termination of the waiting period under the HSR Act or to
obtain any other approval under this Agreement.
8.6 Investigation and Confidentiality.
(a) Prior to the Effective Time, each Party shall keep the
other Party advised of all material developments relevant to its business and to
consummation of the Merger and shall permit the other Party to make or cause to
be made such investigation of the business and properties of it and its
Subsidiaries and of their respective financial and legal conditions as the other
Party reasonably requests, provided that such investigation shall be reasonably
related to the transactions contemplated hereby and shall not interfere
unnecessarily with normal operations. No investigation by a Party shall affect
the representations and warranties of the other Party.
(b) In addition to the Parties' respective obligations under
the Confidentiality Agreement, which is hereby reaffirmed and readopted, and
incorporated by reference herein, each Party shall, and shall direct its
directors, officers, employees, representatives and agents to, maintain the
confidentiality of all confidential information furnished to it by the other
Party concerning its and its Subsidiaries' businesses, operations, and financial
positions and shall not use such information for any purpose except in
furtherance of the transactions contemplated by this Agreement. If this
Agreement is terminated prior to the Effective Time, each Party shall promptly
return or certify the destruction of all documents and copies thereof, and all
work papers containing confidential information received from the other Party.
46
781485.1
<PAGE>
8.7 Press Releases. Prior to the Effective Time, Foilmark and
Holopak shall consult with each other as to the form and substance of any press
release or other public disclosure materially related to this Agreement or any
other transaction contemplated hereby; provided, that nothing in this Section
8.7 shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party's disclosure
obligations imposed by Law.
8.8 No-Solicitation. (a) Unless this Agreement is terminated in
accordance with the terms hereof, Holopak, Foilmark and their respective
Subsidiaries shall not, nor shall any of Holopak, Foilmark or any of their
respective Subsidiaries, direct any of their respective officers, directors,
employees, representatives, agents or Affiliates (including, without limitation,
any investment banker, attorney or accountant retained by Holopak or Foilmark or
any of their respective Subsidiaries), to, directly or indirectly, initiate,
solicit or encourage (including by way of furnishing non-public information), or
enter into, or maintain or continue discussions or negotiate with any Person in
furtherance of, an Acquisition Transaction (as defined below); provided,
however, that nothing herein shall prohibit the Board of Directors of Holopak or
Foilmark, as the case may be, from furnishing information to, or entering into
discussions or negotiations with, any Person (other than an Affiliate of Holopak
or Foilmark, as the case may be) that makes an unsolicited written proposal for
an Acquisition Transaction after the date hereof, if the Board of Directors of
Holopak or Foilmark, as the case may be, after consultation with and based upon
the advice of outside legal counsel, determines in good faith that the failure
to engage in such negotiations or discussions, or to disclose such non-public
information, would be a breach of the Board of Directors of Holopak's or
Foilmark's, as the case may be, fiduciary duties under applicable Law, and prior
to taking such action, Holopak or Foilmark, as the case may be, provides written
notice to the other within twenty-four (24) hours of receipt of any such
proposal to the effect that it is taking such action (which notice shall
identify the nature and material terms of the proposal). Holopak or Foilmark, as
the case may be, shall promptly deliver to the other a copy of any Acquisition
Transaction Proposal and promptly notify the other of any indication that any
Person is considering making an Acquisition Transaction Proposal or of any
request for non-public information relating to Holopak or Foilmark, as the case
may be, or their respective subsidiaries, or for access to the properties, books
or records of Holopak or Foilmark, as the case may be, or their respective
Subsidiaries, by any Person that may be considering making, or has made, an
Acquisition Transaction Proposal and shall keep the other fully and timely
informed of the status of the same.
(b) For purposes of this Agreement, "Acquisition Transaction"
shall mean a transaction involving any of the following (other than the
transactions contemplated by the Agreement with Foilmark or Holopak) involving
Foilmark (or any of its Subsidiaries) or Holopak (or any of its Subsidiaries),
as the case may be: (v) any direct or indirect acquisition or purchase of more
than 20% of any class of equity securities of Foilmark or Holopak, as the case
may be; (w) any merger, consolidation, share exchange,
47
781485.1
<PAGE>
recapitalization, business combination or other similar transaction involving
Foilmark or Holopak, as the case may be; (x) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of any Assets (other than
immaterial assets or the sale of inventory in the ordinary course of business)
of Foilmark (or any of its Subsidiaries) or Holopak (or any of its Subsidiaries)
in a single transaction or series of related transactions; or (y) any tender
offer or exchange offer for twenty-five percent (25%) or more of the outstanding
shares of Foilmark Capital Stock or Holopak Capital Stock. An "Acquisition
Transaction Proposal" means any offer or proposal for, or any indication of
interest in, an Acquisition Transaction. Nothing contained herein shall prohibit
Holopak or Foilmark, as the case may be, from taking and disclosing to its
stockholders a position contemplated by Rules 14d-9 and 14e-2(a) promulgated
under the Exchange Act or from making any disclosure to the stockholders of
Holopak or Foilmark, as the case may be, or making such disclosure as, in each
case, may be required under applicable law; provided that the Board of Directors
of Holopak or Foilmark, as the case may be, shall not withdraw or modify, or
propose to withdraw or modify, its position with respect to the Merger or
approve or recommend, or propose to approve or recommend, an Acquisition
Transaction Proposal except as expressly permitted above. Each of Holopak and
Foilmark agrees not to, in connection with an Acquisition Transaction Proposal,
(x) furnish any information to any third party unless such third party signs a
confidentiality agreement no less favorable to Holopak or Foilmark, as the case
may be, than the Confidentiality Agreement signed by Holopak and Foilmark, and
(y) release any third party from, or waive any provision of, any confidentiality
or standstill agreement to which Holopak or Foilmark, as the case may be, is a
party, unless the Board of Directors of Holopak or Foilmark, as the case may be,
shall have determined in good faith, after consultation with and based upon the
advice of outside legal counsel, that failing to release such third party or
waive such provisions would be a breach of, or would be inconsistent with, the
fiduciary duties of the Board of Directors of Holopak or Foilmark, as the case
may be, under applicable law.
8.9 .State Takeover Laws. Each Holopak Company and each Foilmark
Company shall take all necessary steps to exempt the transactions contemplated
by this Agreement from, or if necessary to challenge the validity or
applicability of, any applicable Takeover Law.
8.10 Charter Provisions. Each Foilmark Company and each Holopak
Company shall take all necessary action to provide that the entering into of
this Agreement and the consummation of the Merger and the other transactions
contemplated hereby do not and will not result in the grant of any Rights to any
Person under the Certificate of Incorporation, Bylaws or other governing
instruments of any such Foilmark Company or Holopak Company, respectively.
8.11 Indemnification and Insurance.
(a) Foilmark, Foilmark Sub and Holopak agree that all rights (legal and
contractual) to indemnification and limitations on liability for acts or
omissions occurring
48
781485.1
<PAGE>
prior to the Effective Time now existing in favor of the current or former
directors, officers, employees, representatives and agents, including persons
who become directors or officers after the date hereof and prior to the
Effective Time (the "Indemnified Parties") of Foilmark, Holopak and their
respective Subsidiaries as provided in their respective Certificates of
Incorporation or Bylaws (or similar organizational documents), or any agreement
for indemnification by Holopak and Foilmark or any of their respective
Subsidiaries of any Indemnified Person in effect on the date hereof and
disclosed on Section 8.11 of the Holopak Disclosure Memorandum or Foilmark
Disclosure Memorandum, as the case may be, shall survive the Merger and shall
continue in full force and effect in accordance with their respective terms.
(b) For six years from the Effective Time, Foilmark shall and shall cause
the Surviving Corporation to, maintain in effect the policies of directors' and
officers' liability insurance currently in effect for Holopak covering those
persons who are currently covered by such policies (copies of which have been
heretofore delivered to Foilmark) or, in lieu of maintaining such insurance,
Foilmark shall cause coverage to be provided under any policy maintained for the
benefit of such persons otherwise obtained by Foilmark, so long as the terms
thereof are no less advantageous to such persons than those of such persons'
current policy; provided, however, that in no event shall Foilmark be required
to expend in any one year an amount in excess of 250% of the annual premiums
currently paid by Holopak for such insurance, which Holopak represents is
$33,075; and, provided further, that if the annual premiums of such insurance
coverage exceed such amount, Foilmark shall be obligated to obtain a policy with
the greatest coverage available for a cost as least equal to such amount.
Foilmark shall, and shall cause the Surviving Corporation to, advance all
expenses to any Indemnified Person incurred by enforcing the indemnity or other
obligations provided for in this Section.
(c) This Section 8.11 shall survive the consummation of the Merger at the
Effective Time, is intended to benefit Foilmark, Foilmark Sub, Holopak and the
Indemnified Parties, and shall be binding on all of their respective successors
and assigns.
8.12 No Recourse. Notwithstanding any of the terms of provisions
of this Agreement, (i) Holopak agrees that neither it nor any person acting on
its behalf may assert any claims or cause of actions against any officer or
director of Foilmark Sub or Foilmark or any stockholder of Foilmark and (ii)
Foilmark and Foilmark Sub agree that neither of them nor any person acting on
their behalf may affect any claim or cause of action against Holopak or any
officer or director of Holopak or any stockholder of Holopak in connection with
or arising out of this Agreement or the transactions contemplated hereby,
including the breach or alleged breach of any representation or warranty made by
Holopak herein.
8.13 Conversion of Non-Voting Stock. As soon as practicable
following the execution and delivery of this Agreement, and, in any event, prior
to the record date
49
781485.1
<PAGE>
for the Holopak Shareholder's Meeting, all shares of Holopak Class A Common
Stock shall have been converted into shares of Holopak Common Stock.
8.14 Credit Facilities. Following the Effective Time, Foilmark
shall review its existing credit agreements, and facilities, and following such
review, shall consider refinancing its existing bank debt with bank debt
provided by Fleet and/or Corestates.
8.15 Filing of S-8. Promptly following the Effective Time,
Foilmark shall file with the SEC a registration statement on Form S-8 (or any
successor form) with respect to shares of Foilmark Common Stock underlying the
125,000 options granted pursuant to Sections 9.2(n) and 9.3(i) hereof to those
persons set forth on Exhibits 9.2(n) and 9.3(i).
8.16 Environmental Report. On and after the execution and delivery
of this Agreement and up to and including the Effective Time, Holopak shall have
provided to Foilmark any additional Remedial Action Progress Reports with
respect to the condition of the property located at 9 Cotters Lane, New
Brunswick, New Jersey.
8.17 Employment Agreement. As soon as practicable following
the execution and delivery of this Agreement, Foilmark shall offer to enter into
an Employment Agreement with Frank J. Olsen, Jr. to be effective as of the
Effective Time in substantially the form attached hereto as Exhibit 8.17.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 .Conditions to Obligations of Each Party. The respective
obligations of each Party to perform this Agreement and consummate the Merger
and the other transactions contemplated hereby are subject to the satisfaction
of the following conditions, unless waived pursuant to Section 11.6 of this
Agreement:
(a) Shareholder Approval. The shareholders of each of Foilmark
and Holopak shall have duly adopted or approved this Agreement, and the
consummation of the transactions contemplated hereby, including the
Merger, as and to the extent required by Law, by the provisions of any
governing instruments, and by the rules of the NASD.
(b) Regulatory Approvals. All Consents of, filings and
registrations with, and notifications to, all Regulatory Authorities
required for consummation of the Merger shall have been obtained or made
and shall be in full force and effect and all waiting periods required by
Law shall have expired. No Consent obtained from any Regulatory Authority
which is necessary to consummate the transactions contemplated hereby
shall be conditioned or restricted in a manner (including requirements
relating to the raising of additional capital or the disposition of
50
781485.1
<PAGE>
Assets) which in the reasonable judgment of the Board of Directors of
Foilmark or Holopak would so materially adversely impact the economic or
business benefits of the transactions contemplated by this Agreement
that, had such condition or restriction been known, would not, in its
reasonable judgment, have entered into this Agreement.
(c) Consents and Approvals. Each Party shall have obtained any
and all Consents required for consummation of the Merger (other than
those referred to in Section 9.1(b) of this Agreement) or for the
preventing of any Default under any Contract or Permit of such Party
except where such Default would not have a Material Adverse Effect on
such party. No Consent so obtained which is necessary to consummate the
transactions contemplated hereby shall be conditioned or restricted in a
manner which in the reasonable judgment of the Board of Directors of
Foilmark or Holopak would so materially adversely impact the economic or
business benefits of the transactions contemplated by this Agreement
that, had such condition or restriction been known, would not, in its
reasonable judgment, have entered into this Agreement.
(d) Legal Proceedings. No court or governmental or regulatory
authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any Law or Order (whether temporary,
preliminary or permanent) or taken any other action which prohibits,
restricts or makes illegal consummation of the transactions contemplated
by this Agreement.
(e) Registration Statement. The Registration Statement shall
be effective under the 1933 Act, no stop orders suspending the
effectiveness of the Registration Statement shall have been issued, no
action, suit, proceeding or investigation by the SEC to suspend the
effectiveness thereof shall have been initiated and be continuing, and
all necessary approvals under state securities Laws, or the 1933 Act or
1934 Act relating to the issuance or trading of the shares of Foilmark
Common Stock issuable pursuant to the Merger shall have been received.
(f) Exchange Listing. The shares of Foilmark Common Stock
issuable pursuant to the Merger shall have been approved for listing on
the Nasdaq National Market.
(g) Tax Matters. Each Party shall have received a written
opinion of its counsel, in form reasonably satisfactory to such Party
(the "Tax Opinions"), to the effect that (i) the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Internal
Revenue Code, (ii) the exchange in the Merger of Holopak Common Stock for
Foilmark Common Stock will not give rise to gain or loss to the
shareholders of Holopak with respect to such exchange (except to the
extent of any cash received), and (iii) none of Foilmark, Foilmark Sub or
Holopak will recognize gain or loss as a consequence of the Merger
(except for amounts
51
<PAGE>
resulting from any required change in accounting methods and any income
and deferred gain recognized pursuant to Treasury regulations issued
under Section 1502 of the Internal Revenue Code). In rendering such Tax
Opinion, such counsel shall be entitled to rely upon representations of
officers of Foilmark and Holopak reasonably satisfactory in form and
substance to such counsel.
(h) Dissenting Shareholders. Immediately prior to the
Effective Time holders of not more than ten percent (10%) in the
aggregate of all shares of Holopak Common Stock shall not have demanded
appraisal pursuant to the DGCL.
(i) Voting Agreement. Foilmark and certain holders of Foilmark
Common Stock as of the date hereof and certain holders of Holopak Common
Stock who will become as of the Effective Time holders of Foilmark Common
Stock shall have entered into a Voting Agreement substantially in the
form attached hereto as Exhibit 9.1(i) (the "Voting Agreement"), which
shall provide, among other things, for the Board of Directors of Foilmark
to establish, immediately following the Effective Time, three committees
of the Board of Directors, an Executive Committee, a Compensation
Committee, and an Audit Committee, each of which consist of members as
set forth in the Voting Agreement.
9.2 .Conditions to Obligations of Holopak. The obligations of
Holopak to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by Holopak pursuant to Section 11.6(a) of
this Agreement:
(a) Representations and Warranties. For purposes of this
Section 9.2(a), the accuracy of the representations and warranties of
Foilmark set forth in this Agreement shall be assessed as of the date of
this Agreement and as of the Effective Time with the same effect as
though all such representations and warranties had been made on and as of
the Effective Time (provided that representations and warranties which
are confined to a specified date shall speak only as of such date). The
representations and warranties of Foilmark set forth in Section 5.3 of
this Agreement shall be true and correct. There shall not exist (i)
inaccuracies in the representations and warranties of Foilmark set forth
in this Agreement or (ii) breaches of agreements and covenants of
Foilmark set forth in this Agreement, such that the aggregate effect of
such inaccuracies or breaches would have or be reasonably likely to have,
a Material Adverse Effect on Foilmark; provided that, for purposes of
this sentence only, those representations and warranties which are
qualified by references to "material" or "Material Adverse Effect" shall
be deemed not to include such qualifications.
(b) Performance of Agreements and Covenants. Each and all of
the agreements and covenants of Foilmark to be performed and complied
with
52
<PAGE>
pursuant to this Agreement and the other agreements contemplated hereby
prior to the Effective Time shall have been duly performed and complied
with in all material respects.
(c) Certificates. Foilmark shall have delivered to Holopak (i)
a certificate, dated as of the Effective Time and signed on its behalf by
its chief executive officer and its chief financial officer, to the
effect that the conditions set forth in Section 9.2 of this Agreement as
relates to Foilmark and in Section 9.2(a) and 9.2(b) of this Agreement
have been satisfied, and (ii) certified copies of resolutions duly
adopted by Foilmark's Board of Directors and shareholders evidencing the
taking of all corporate action necessary to authorize the execution,
delivery and performance of this Agreement, and the consummation of the
transactions contemplated hereby, all in such reasonable detail as
Holopak and its counsel shall request.
(d) Opinion of Counsel. Holopak shall have received an opinion
of Hinckley, Allen & Snyder, counsel to Foilmark, dated as of the
Closing, in form and substance reasonably satisfactory to Holopak and its
counsel.
(e) Accountant's Letters. Holopak shall have received from
KMPG Peat Marwick "comfort" letters containing language customarily
obtained for registration statements in connection with the registration
of equity securities on Form S-4 dated not more than five days prior to
(i) the date of the Joint Proxy Statement and (ii) the Effective Time,
with respect to certain financial information regarding Foilmark, in form
and substance reasonably satisfactory to Holopak.
(f) Fairness Opinion. Holopak shall have received from
Schroder & Co., Inc. a letter, dated not more than five business days
prior to the date of the Proxy Statement, to the effect that, in the
opinion of such firm, the consideration to be received by Holopak
shareholders in connection with the Merger is fair, from a financial
point of view, to such shareholders.
(g) Stock Options. The compensation or other relevant
committee of Foilmark's Board of Directors shall have taken, or caused
to be taken, all actions, and done, or cause to be done, all things
necessary, proper, or advisable to effect the conversion of all Holopak
Options into rights with respect to Foilmark Common Stock, as
contemplated by Section 3.4 hereof without any other change in the terms
of stock options, stock appreciation or other similar rights granted
under the Foilmark Stock Plans, including, but not limited to, any
acceleration of the vesting under the Foilmark Stock Plans.
(h) Amendment of By-Laws; Board Composition. Foilmark shall
have amended its By-Laws to establish the size of its Board of Directors
to ten (10). Foilmark shall have received the resignations of certain
Foilmark directors and the Board of Directors or stockholders of Foilmark
shall have taken all
53
<PAGE>
necessary action to elect certain nominees to the Board of Directors of
Foilmark selected by Holopak, so that the Foilmark Board of Directors
immediately after the Effective Time will consist of five (5) directors
nominated by Foilmark and five (5) directors nominated by Holopak of
which Robert J. Simon shall be the Chairman.
(i) Material Adverse Changes. There shall have been no
Material Adverse Change in the condition (financial or otherwise),
operations, assets or business of Foilmark since the date of this
Agreement.
(j) Registration Rights Agreement. Foilmark shall have entered
into a Registration Rights Agreement in substantially the form attached
hereto as Exhibit 9.2(j) dated as of the Effective Time (the
"Registration Rights Agreement") with Bradford Venture Partners, L.P.
("Bradford"), Overseas Private Investor Partners and certain other
holders of Holopak Common Stock as Bradford and Foilmark shall mutually
and reasonably agree in writing.
(k) Mintz Consent. Foilmark shall have obtained the written
Consent of Leonard Mintz reasonably satisfactory to Holopak to the grant
of registration rights to Bradford in accordance with the Registration
Rights Agreement.
(l) Termination of Voting Agreements. A Voting Agreement
entered into as of November 17, 1994 by and among certain shareholders of
Foilmark with regard to the election of directors, and an agreement dated
as of August 21, 1995 pursuant to an Asset Purchase Agreement of the same
date by and among Foilmark, Steven Meredith and Kenneth Harris with
regard to the election of one director of Foilmark shall have been
terminated.
(m) Consulting Agreement. Foilmark shall have delivered a
guarantee in a form reasonably acceptable to Bradford Associates pursuant
to which Foilmark agrees to guarantee the payments of Foilmark Sub under
a Consulting Agreement, dated as of October 1, 1991, and amended as of
the date hereof, by and among Holopak, Transfer Point Foils, Inc. and
Bradford Associates.
(n) Option Grants. Foilmark shall have caused its Board of
Directors (or a committee thereof) to grant stock options to purchase an
aggregate of Sixty Two Thousand Five Hundred (62,500) shares of Foilmark
Common Stock under the Foilmark Amended and Restated 1996 Stock Option
Plan (or such other Foilmark Stock Option Plan with reasonably similar
terms and provisions as shall be agreed upon in writing by Foilmark and
Holopak) to the persons set forth on Exhibit 9.2 (n) in the respective
amounts set forth opposite their names.
(o) Ancillary Agreements/Offers of Employment. (i) Foilmark
shall have offered to enter into a Consulting Agreement with James L.
Rooney, dated as of the Effective Time, on such terms as set forth on the
form attached hereto as
54
781485.1
<PAGE>
Exhibit 9.2(o)(i) and in form and substance reasonably satisfactory to
Holopak and its counsel; (ii) Foilmark shall have offered to enter into
an Employment Agreement with J.T. Webb, dated as of the Effective Time,
on such terms as set forth on the form attached hereto as Exhibit
9.2(o)(ii) and in form and substance reasonably satisfactory to Holopak
and its counsel; (iii) Foilmark shall have offered to enter into an
Employment Agreement with Arthur Karmel, dated as of the Effective Time,
on such terms as set forth on the form attached hereto as Exhibit
9.2(o)(iii) and in form and substance reasonably satisfactory to Holopak
and its counsel; and (iv) Foilmark shall have entered into
Indemnification Agreements in a form reasonably acceptable to Foilmark
and Holopak, with each of the persons set forth on Exhibit 9.2(o)(iv).
9.3 .Conditions to Obligations of Foilmark. The obligations of
Foilmark to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by Foilmark pursuant to Section 11.6(b) of
this Agreement:
(a) Representations and Warranties. For purposes of this
Section 9.3(a), the accuracy of the representations and warranties of
Holopak set forth in this Agreement shall be assessed as of the date of
this Agreement and as of the Effective Time with the same effect as
though all such representations and warranties had been made on and as of
the Effective Time (provided that representations and warranties which
are confined to a specified date shall speak only as of such date). The
representations and warranties of Holopak set forth in Section 6.3 of
this Agreement shall be true and correct. There shall not exist
inaccuracies in the representations and warranties of Holopak set forth
in this Agreement (including the representations and warranties set forth
in Sections 6.3.) such that the aggregate effect of such inaccuracies
has, or is reasonably likely to have, a Material Adverse Effect on
Holopak; provided that, for purposes of this sentence only, those
representations and warranties which are qualified by references to
"material" or "Material Adverse Effect" shall be deemed not to include
such qualifications.
(b) Performance of Agreements and Covenants. Each and all of
the agreements and covenants of Holopak to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby
prior to the Effective Time shall have been duly performed and complied
with in all material respects.
(c) Certificates. Holopak shall have delivered to Foilmark (i)
a certificate, dated as of the Effective Time and signed on its behalf by
its chief executive officer and its chief financial officer, to the
effect that the conditions set forth in Section 9.3 of this Agreement as
relates to Holopak and in Section 9.3(a) and 9.3(b) of this Agreement
have been satisfied, and (ii) certified copies of resolutions duly
adopted by Holopak's Board of Directors and shareholders
55
781485.1
<PAGE>
evidencing the taking of all corporate action necessary to authorize the
execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby, all in such
reasonable detail as Foilmark and its counsel shall request.
(d) Opinion of Counsel. Foilmark shall have received an
opinion of Battle Fowler LLP, counsel to Holopak, dated as of the
Effective Time, in form and substance reasonably acceptable to Foilmark
and its counsel.
(e) Accountant's Letters. Foilmark shall have received from
Deloitte & Touche "comfort" letters containing language customarily
obtained for registration statements in connection with the registration
of equity securities on Form S-4 dated not more than five days prior to
(i) the date of the Joint Proxy Statement and (ii) the Effective Time,
with respect to certain financial information regarding Holopak, in form
and substance reasonably satisfactory to Foilmark, which letters shall be
based upon customary specified procedures undertaken by such firm.
(f) Fairness Opinion. Foilmark shall have received from
McFarland Dewey & Co., L.L.C. a letter, dated not more than five business
days prior to the date of the Proxy Statement, to the effect that, in the
opinion of such firm, the consideration to be received by Foilmark
shareholders in connection with the Merger is fair, from a financial
point of view, to such shareholders.
(g) Stock Options. The compensation or other relevant
committee of Holopak's Board of Directors shall have taken, or caused to
be taken, all actions, and done, or cause to be done, all things
necessary, proper, or advisable to effect the conversion of all Holopak
Options into rights with respect to Foilmark Common Stock, as
contemplated by Section 3.4 hereof, without any other change in the terms
of the Holopak Options.
(h) Material Adverse Changes. There shall have been no
Material Adverse Change in the Condition (financial or otherwise),
operations, assets or business of Holopak since the date of this
Agreement.
(i) Option Grants. Foilmark shall have caused its Board of
Directors (or a committee thereof) to grant stock options to purchase an
aggregate of Sixty Two Thousand Five Hundred (62,500) shares of Foilmark
Common Stock under the Foilmark Amended and Restated 1996 Stock Option
Plan (or such other Foilmark Stock Option Plan with reasonably similar
terms and provisions as shall be agreed upon in writing by Foilmark and
Holopak) to the persons set forth on Exhibit 9.3(i) in the respective
amounts set forth opposite their names.
56
781485.1
<PAGE>
(j) Ancillary Agreements/Offers of Employment. Foilmark shall
have entered into Indemnification Agreements in a form reasonably
acceptable to Foilmark and Holopak with each of the persons listed on
Exhibit 9.3(j).
(k) Affiliate Letters. Foilmark shall have received from all
persons who, to the Knowledge of Holopak, as of the date of this
Agreement are, or who prior to the Effective Time become, "affiliates" of
Holopak for purposes of Rule 145 under the 1933 Act, to deliver to
Foilmark a letter identifying that such persons may be deemed
"affiliates" for purposes of Rule 145 under the 1933 Act.
ARTICLE 10
TERMINATION
10.1 Termination. Notwithstanding any other provision of this
Agreement, and notwithstanding the adoption or approval of this Agreement by the
shareholders of Foilmark and Holopak or both, this Agreement may be terminated
and the Merger abandoned at any time prior to the Effective Time:
(a) By mutual consent of the Board of Directors of Holopak
and the Board of Directors of Foilmark; or
(b) By the Board of Directors of either Party in the event of
a material breach by the other Party of any representation or warranty
contained in this Agreement which cannot be or has not been cured within
30 days after the giving of written notice to the breaching Party of such
breach; or
(c) By the Board of Directors of either Party in the event of
a material breach by the other Party of any covenant or agreement
contained in this Agreement which cannot be or has not been cured within
30 days after the giving of written notice to the breaching Party of such
breach; or
(d) By the Board of Directors of either Party in the event (i)
any Consent of any Regulatory Authority required for consummation of the
Merger and the other transactions contemplated hereby shall have been
denied by final nonappealable action of such authority or if any action
taken by such authority is not appealed within the time limit for appeal,
or (ii) the shareholders of Foilmark or Holopak fail to adopt or approve
this Agreement and the transactions contemplated hereby as required by
the applicable laws of Delaware and the rules of the NASD at the
Shareholders' Meetings where the transactions were presented to such
shareholders for adoption or approval and voted upon; or
(e) By the Board of Directors of either Party in the event
that the Merger shall not have been consummated by April 30, 1999, if the
failure to consummate the transactions contemplated hereby on or before
such date is not
57
<PAGE>
caused by any breach of this Agreement by the Party electing to
terminate pursuant to this Section 10.1(e); or
(f) By the Board of Directors of either Party in the event
that any of the conditions precedent to the obligations of such Party to
consummate the Merger cannot be satisfied or fulfilled by the date
specified in Section 10.1(e) of this Agreement; or
(g) By the Board of Directors of Holopak, as a result of
Foilmark having entered into an agreement or an agreement in principle
with respect to any Acquisition Transaction (and Holopak is not in breach
of the Agreement); or
(h) By the Board of Directors of Holopak, as a result of the
Board of Directors of Foilmark having withdrawn or materially modified
its approval or recommendation of the Merger to its stockholders (and
Holopak is not in breach of the Agreement); or
(i) By the Board of Directors of Holopak, as a result of a
public announcement by Foilmark that Foilmark intends to enter into an
agreement with respect to an Acquisition Transaction Proposal (and
Holopak is not in breach of the Agreement); or
(j) By the Board of Directors of Foilmark, as a result of
Holopak having entered into an agreement or an agreement in principle
with respect to any Acquisition Transaction (and Foilmark is not in
breach of the Agreement); or
(k) By the Board of Directors of Foilmark, as a result of the
Board of Directors of Holopak having withdrawn or materially modified its
approval or recommendation of the Merger to its stockholders (and
Foilmark is not in breach of the Agreement); or
(l) By the Board of Directors of Foilmark, as a result of a
public announcement by Holopak that Holopak intends to enter into an
agreement with respect to an Acquisition Transaction Proposal (and
Foilmark is not in breach of the Ageement).
58
781485.1
<PAGE>
10.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.1 of this Agreement, this
Agreement shall become void and have no effect, except that (i) the provisions
of Sections 10.2, 8.6(b) and 11.2 of this Agreement shall survive any such
termination and abandonment, and (ii) a termination pursuant to Sections
10.1(b), 10.1(c) or 10.1(f) of this Agreement shall not relieve the breaching
Party from Liability for an uncured willful breach of a representation,
warranty, covenant, or agreement giving rise to such termination.
10.3 Non-Survival of Representations and Warranties. The
respective representations and warranties of the Parties shall not survive the
Effective Time.
ARTICLE 11
MISCELLANEOUS
11.1 Definitions.
(a) Except as otherwise provided herein, the capitalized
terms set forth below shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Affiliate" of a Person shall mean: (i) any other Person
directly, or indirectly through one or more intermediaries, controlling,
controlled by or under common control with such Person; (ii) any officer,
director, partner, employer, or direct or indirect beneficial owner of
any 10% or greater equity or voting interest of such Person; or (iii) any
other Person for which a Person described in clause (ii) acts in any such
capacity.
"Agreement" shall mean this Agreement and Plan of Merger,
including the Exhibits, schedules and Disclosure Memoranda delivered
pursuant hereto and incorporated herein by reference.
"Assets" of a Person shall mean all of the assets, properties,
businesses and rights of such Person of every kind, nature, character and
description, whether real, personal or mixed, tangible or intangible,
accrued or contingent, or otherwise relating to or utilized in such
Person's business, directly or indirectly, in whole or in part, whether
or not carried on the books and records of such Person, and whether or
not owned in the name of such Person and wherever located.
59
781485.1
<PAGE>
"Business Day" shall mean any day other than a day on which
banks in the City of New York are authorized or obligated to be closed.
"Certificate of Merger" shall mean the Certificate of Merger
to be executed by each of Foilmark Sub and Holopak and filed with the
Secretary of State of the State of Delaware relating to the Merger as
contemplated by Section 1.3 of this Agreement.
"Closing Date" shall mean the date on which the Closing
occurs.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Confidentiality Agreement" shall mean that certain
Confidentiality Agreement, dated September 22, 1998, between Foilmark and
Holopak.
"Consent" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person
pursuant to any Contract, Law, Order, or Permit.
"Contract" shall mean any written or oral agreement,
arrangement, authorization, commitment, contract, indenture, instrument,
lease, obligation, plan, practice, restriction, understanding or
undertaking of any kind or character, or other document to which any
Person is a party or that is binding on any Person or its capital stock,
Assets or business.
"Default" shall mean (i) any breach or violation of or default
under any Contract, Order or Permit, (ii) any occurrence of any event
that with the passage of time or the giving of notice or both would
constitute a breach or violation of or default under any Contract, Order
or Permit, or (iii) any occurrence of any event that with or without the
passage of time or the giving of notice would give rise to a right to
terminate or revoke, change the current terms of, or renegotiate, or to
accelerate, increase, or impose any Liability under, any Contract, Order
or Permit.
"DGCL" shall mean the Delaware General Corporation Law.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"Exhibits" 1 through 2, inclusive, shall mean the Exhibits so
marked, copies of which are attached to this Agreement. Such Exhibits are
hereby incorporated by reference herein and made a part hereof, and may
be referred to in this Agreement and any other related instrument or
document without being attached hereto.
60
781485.1
<PAGE>
"Foilmark Capital Stock" shall mean collectively, the Foilmark
Common Stock, and any other class or series of capital stock of Foilmark.
"Foilmark Common Stock" shall mean the common stock , without
par value, of Foilmark.
"Foilmark Companies" shall mean, collectively, Foilmark and
all Foilmark Subsidiaries.
"Foilmark Disclosure Memorandum" shall mean the written
information entitled "Foilmark Corporation Disclosure Memorandum"
delivered prior to the date of this Agreement to Holopak describing in
reasonable detail the matters contained therein and, with respect to each
disclosure made therein, specifically referencing each Section of this
Agreement under which such disclosure is being made. Information
disclosed with respect to one Section shall not be deemed to be disclosed
for purposes of any other Section not specifically referenced with
respect thereto. Where any representation or warranty contained in the
Agreement is limited or qualified by the materiality of the matters as to
which the representation or warranty is given, the inclusion of any
matter in the Disclosure Memorandum does not constitute a determination
by Foilmark that such matters are material.
"Foilmark Financial Statements" shall mean (i) the
consolidated balance sheets (including related notes and schedules, if
any) of Foilmark as of September 30, 1998, and as of December 31, 1997,
December 31, 1996 and December 31, 1995, and the related statements of
income, changes in shareholders' equity, and cash flows (including
related notes and schedules, if any) and for the period ended September
30, 1998 and for each of the three fiscal years ended December 31, 1997,
December 31, 1996 and December 31, 1995, as filed by Foilmark in SEC
Documents, and (ii) the consolidated balance sheets of Foilmark
(including related notes and schedules, if any) and related statements of
income, changes in shareholders' equity, and cash flows (including
related notes and schedules, if any) included in SEC Documents filed with
respect to periods ended subsequent to September 30, 1998.
"Foilmark Stock Plans" shall mean the existing stock option
and other stock-based compensation plans of Foilmark designated as
follows: 1996 Amended and Restated Employee Stock Option Plan; 1996
Amended and Restated Employee Stock Purchase Plan; and 1997 Non-Employee
Director Stock Plan.
"Foilmark Subsidiaries" shall mean the Subsidiaries of
Foilmark, which shall include the Foilmark Subsidiaries described in
Section 5.4 of this Agreement and any corporation or other organization
acquired as a Subsidiary of
61
781485.1
<PAGE>
Foilmark following the date hereof and held as a Subsidiary by Foilmark
at the Effective Time.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"Holopak Capital Stock" shall mean, collectively, the Holopak
Common Stock, and any other class or series of capital stock of Holopak.
"Holopak Common Stock" shall mean the common stock $.01 par
value of Holopak and Class A common stock $.01 par value of Holopak.
"Holopak Companies" shall mean, collectively, Holopak and all
Holopak Subsidiaries.
"Holopak Disclosure Memorandum" shall mean the written
information entitled "Holopak Technologies, Inc. Disclosure Memorandum"
delivered prior to the date of this Agreement to Foilmark describing in
reasonable detail the matters contained therein and, with respect to each
disclosure made therein, specifically referencing each Section of this
Agreement under which such disclosure is being made. Information
disclosed with respect to one Section shall not be deemed to be disclosed
for purposes of any other Section not specifically referenced with
respect thereto. Where the representation or warranty contained in the
Agreement is limited or qualified by the materiality of the matters as to
which the representation or warranty is given, the inclusion of any
matter in the Disclosure Memorandum does not constitute a determination
by Holopak that such matters are material.
"Holopak Financial Statements" shall mean (i) the consolidated
statements of condition (including related notes and schedules, if any)
of Holopak as of September 30, 1998, March 31, 1998, 1997 and 1996, and
the related statements of income, changes in shareholders' equity, and
cash flows (including related notes and schedules, if any) for the period
ended September 30, 1998 and for each of the three years ended March 31,
1998, 1997 and 1996, as filed by Holopak in SEC Documents, and (ii) the
consolidated statements of condition of Holopak (including related notes
and schedules, if any) and related statements of income, changes in
shareholders' equity, and cash flows (including related notes and
schedules, if any) included in SEC Documents filed with respect to
periods ended subsequent to September 30, 1998.
"Holopak Preferred Stock" shall mean the no par value
preferred stock of Holopak.
62
781485.1
<PAGE>
"Holopak Stock Plans" shall mean the existing stock option
and other stock-based compensation plans of Holopak designated as follows:
Holopak 1993 Non-Qualified Stock Option Plan.
"Holopak Subsidiaries" shall mean the Subsidiaries of Holopak
and any corporation or other organization acquired as a Subsidiary of
Holopak following the date hereof and held as a Subsidiary by Holopak at
the Effective Time.
"HSR Act" shall mean Section 7A of the Clayton Act, as added
by Title II of the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.
"Intellectual Property" shall mean copyrights, patents,
trademarks, service marks, service names, trade names, technology rights
and licenses, computer software (including any source or object codes
therefor or documentation relating thereto), trade secrets, franchises,
know-how, inventions, and other intellectual property rights.
"Internal Revenue Code" shall mean the United States Internal
Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder.
"Joint Proxy Statement" shall mean the proxy statement used by
Foilmark and Holopak to solicit the adoption or approval of their
respective shareholders of the transactions contemplated by this
Agreement, which shall include the prospectus of Foilmark relating to the
issuance of the Foilmark Common Stock to holders of Holopak Common Stock.
"Knowledge" as used with respect to a Person (including
references to such Person being aware of a particular matter) shall mean
those facts that are known or should reasonably have been known in the
reasonable exercise of their duties by the President, Chief Financial
Officer, Chief Accounting Officer, and Vice Presidents of such Person.
"Law" shall mean any code, law, ordinance, regulation,
reporting or licensing requirement, rule, or statute applicable to a
Person or its Assets, Liabilities or business, including those
promulgated, interpreted or enforced by any Regulatory Authority.
"Liability" shall mean any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost or expense
(including costs of investigation, collection and defense), claim,
deficiency, guaranty or endorsement of or by any Person (other than
endorsements of notes, bills, checks, and drafts presented for collection
or deposit in the ordinary course of business) of any type,
63
781485.1
<PAGE>
whether accrued, absolute or contingent, liquidated or unliquidated,
matured or unmatured, or otherwise.
"Lien" shall mean any conditional sale agreement, default of
title, easement, encroachment, encumbrance, hypothecation, infringement,
lien, mortgage, pledge, reservation, restriction, security interest,
title retention or other security arrangement, or any adverse right or
interest, charge, or claim of any nature whatsoever of, on, or with
respect to any property or property interest, other than (i) Liens for
current property Taxes not yet due and payable, and (iii) Liens which do
not materially impair the use of or title to the Assets subject to such
Lien.
"Litigation" shall mean any action, arbitration, cause of
action, claim, complaint, criminal prosecution or demand letter, or
notice (written or oral) by any Person of governmental or other
examination or investigation, hearing, inquiry, administrative or other
proceeding alleging potential Liability, or any Regulatory Authority or
other federal, state or local governmental agency or department
requesting information relating to or affecting a Party, its business,
its Assets (including Contracts related to it), or the transactions
contemplated by this Agreement.
"Material Adverse Effect" on a Party shall mean an event,
change or occurrence which, individually or together with any other
event, change or occurrence, has a material adverse impact on (i) the
financial position, business, or results of operations of such Party and
its Subsidiaries, taken as a whole, or (ii) the ability of such Party to
perform its obligations under this Agreement or to consummate the Merger
or the other transactions contemplated by this Agreement, provided that
"material adverse impact" shall not be deemed to include the impact of
(a) changes in Laws of general applicability or interpretations thereof
by courts or governmental authorities, (b) changes in generally accepted
accounting principles or regulatory accounting principles, (c) actions
and omissions of a Party (or any of its Subsidiaries) taken with the
prior informed written Consent of the other Party in contemplation of the
transactions contemplated hereby, and (z) the Merger on the operating
performance of the Parties, including expenses incurred by the Parties in
consummating the transactions contemplated by this Agreement.
"Material" and "material" for purposes of this Agreement shall
be determined in light of the facts and circumstances of the matter in
question; provided that any specific monetary amount stated in this
Agreement shall determine materiality in that instance.
"Millennium Capable" shall mean capable of accurately
processing Date Data without error or interruption caused by such Date
Data, where dates are before, after and during December 31, 1999, the
year 2000 and subsequent
64
781485.1
<PAGE>
years, including, but not limited to, recognizing the year 2000 as a
leap year, providing correct results when moving backwards and forwards
between the 20th and 21st century, and functioning without error or
interruption related to or caused by such Date Data. "Date Data" means
any information relating to dates expressed in days, months and calendar
years.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"Nasdaq National Market" shall mean the Nasdaq Stock Market's
National Market of the National Association of Securities Dealers
Automated Quotations System.
"Operating Property" shall mean any property owned by the
Party in question or by any of its Subsidiaries or in which such Party or
Subsidiary holds a security interest, and, where required by the context,
includes the owner or operator of such property, but only with respect to
such property.
"Order" shall mean any administrative decision or award,
decree, injunction, judgment, order, quasi-judicial decision or award,
ruling, or writ of any federal, state, local or foreign or other court,
arbitrator, mediator, tribunal, administrative agency or Regulatory
Authority.
"Party" shall mean either Foilmark or Holopak, and "Parties"
shall mean both Foilmark and Holopak.
"Permit" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a
party or that is or may be binding upon or inure to the benefit of any
Person or its securities, Assets or business.
"Person" shall mean a natural person or any legal, commercial
or governmental entity, such as, but not limited to, a corporation,
general partnership, joint venture, limited partnership, limited
liability company, trust, business association, group acting in concert,
or any person acting in a representative capacity.
"Registration Statement" shall mean the Registration Statement
on Form S-4, or other appropriate form, including any pre-effective or
post-effective amendments or supplements thereto, filed with the SEC by
Foilmark under the 1933 Act with respect to the shares of Foilmark Common
Stock to be issued to the shareholders of Holopak in connection with the
transactions contemplated by this Agreement.
"Regulatory Authorities" shall mean, collectively, the NASD,
the SEC, the Federal Trade Commission, the United States Department of
Justice, and all
65
781485.1
<PAGE>
other federal, state, county, local or other governmental or regulatory
agencies, authorities, instrumentalities, commissions, boards or bodies
having jurisdiction over the Parties and their respective Subsidiaries
(including but not limited to foreign governmental and regulatory
agencies).
"Representative" shall mean any investment banker, financial
advisor, attorney, accountant, consultant, or other representative of a
Person.
"Rights" shall mean all arrangements, calls, commitments,
Contracts, options, rights to subscribe to, scrip, understandings,
warrants, or other binding obligations of any character whatsoever
relating to, or securities or rights convertible into or exchangeable
for, shares of the capital stock of a Person or by which a Person is or
may be bound to issue additional shares of its capital stock or other
Rights.
"SEC Documents" shall mean all forms, proxy statements,
registration statements, reports, schedules, and other documents filed,
or required to be filed, by a Party or any of its Subsidiaries with any
Regulatory Authority pursuant to the Securities Laws.
"Securities Laws" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act
of 1940, as amended, the Trust Indenture Act of 1939, as amended, and the
rules and regulations of any Regulatory Authority promulgated thereunder.
"Shareholders' Meetings" shall mean the respective meetings of
the shareholders of Foilmark and Holopak to be held pursuant to Section
8.1 of this Agreement, including any adjournment or adjournments thereof.
"Significant Subsidiary" shall mean any present or future
consolidated Subsidiary of the Party in question, the assets of which
constitute ten percent (10%) or more of the consolidated assets of such
Party as reflected on such Party's consolidated statement of condition
prepared in accordance with GAAP.
"Stock Plans" shall mean the Foilmark Stock Plans and the
Holopak Stock Plans.
"Subsidiaries" shall mean all those corporations,
associations, or other business entities of which the entity in question
either (i) owns or controls 50% or more of the outstanding equity
securities either directly or through an unbroken chain of entities as to
each of which 50% or more of the outstanding equity securities is owned
directly or indirectly by its parent (provided, there shall not be
included any such entity the equity securities of which are owned or
controlled in a fiduciary capacity), or (ii) in the case of partnerships,
serves as a general partner.
66
781485.1
<PAGE>
"Surviving Corporation" shall mean Foilmark Sub as the
surviving corporation resulting from the Merger.
"Tax Return" shall mean any report, return, information
return, or other information required to be supplied to a taxing
authority in connection with Taxes, including any return of an affiliated
or combined or unitary group that includes a Party or its Subsidiaries.
"Tax" or "Taxes" shall mean any federal, state, county, local,
or foreign income, profits, franchise, gross receipts, payroll, sales,
employment, use, property, withholding, excise, occupancy, value added
and other taxes, assessments, charges, fares, or impositions, including
interest, penalties, and additions imposed thereon or with respect
thereto.
"Trading Day" shall mean any day other than a day on which the
New York Stock Exchange is closed.
(b) The terms set forth below shall have the meanings ascribed
thereto in the referenced sections:
Effective Time Section 1.3
Foilmark Contracts Section 5.14
Foilmark ERISA Plan Section 5.13
Foilmark Benefit Plans Section 5.13
Holopak Contracts Section 6.14
Holopak ERISA Plan Section 6.13
Holopak Benefit Plans Section 6.13
Holopak Options Section 3.4
Closing Section 1.2
ERISA Affiliate Section 5.14(b)
Exchange Agent Section 4.1
Stock Merger Consideration Section 3.1(c)
Cash Merger Consideration Section 3.1(c)
Merger Section 1.1
SEC Section 5.5
Tax Opinion Section 10.1(h)
Acquisition Transaction Section 8.8
Acquisition Transaction Proposal Section 8.8
(c) Any singular term in this Agreement shall be deemed to
include the plural, and any plural term the singular. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed followed by the words "without limitation."
67
781485.1
<PAGE>
11.2 Expenses.
(a) Except as otherwise provided in this Section 11.2, if this
Agreement is terminated, each of the Parties shall bear and pay all direct costs
and expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including filing, registration and application fees,
printing fees, and fees and expenses of its own financial or other consultants,
investment bankers, accountants, and counsel (collectively, "Expenses") except
that each of the Parties shall bear and pay one-half of the filing fees payable
in connection with the Registration Statement and the Joint Proxy Statement and
printing costs incurred in connection with the printing of the Registration
Statement and the Joint Proxy Statement. If the Merger is consummated, Foilmark
shall bear and pay all Expenses incurred by it and Holopak and their respective
Subsidiaries in connection with the transaction contemplated hereunder.
(b) Holopak agrees to pay Foilmark a fee in immediately available
funds equal to $750,000, promptly, but in no event later than five (5) business
days in the event that the Agreement is terminated pursuant to Sections 10.1(j)
or 10.1(k); or in the event that this Agreement is terminated pursuant to
Section 10.1(l) and within one hundred and thirty five (135) days following such
termination, Holopak enters into an agreement with respect to any Acquisition
Transaction.
(c) Foilmark agrees to pay Holopak a fee in immediately available
funds equal to $750,000, promptly, but in no event later than five (5) business
days in the event that the Agreement is terminated pursuant to Sections 10.1(g)
or 10.1(h); or in the event that this Agreement is terminated pursuant to
Section 10.1(i) and within one hundred and thirty five (135) days following such
termination, Foilmark enters into an agreement with respect to any Acquisition
Transaction.
(d) In the event of the termination and abandonment of this
Agreement pursuant to Section 10.1 of this Agreement, this Agreement shall
become void and have no effect, and no party shall be liable or have any
obligation to the other as a result hereof except that (i) the provisions of
this Section 10.2 and 8.6(b) and 11.2 of this Agreement shall survive any such
termination and abandonment, and (ii) a termination pursuant to Sections
10.1(b), 10.1(c) or 10.1(f) of this Agreement shall not relieve the breaching
Party from Liability for an uncured willful breach of a representation,
warranty, covenant, or agreement giving rise to such termination.
11.3 Brokers and Finders. Except for McFarland Dewey & Co., L.L.C.
as to Foilmark and except for Schroder & Co. Inc. as to Holopak, each of the
Parties represents and warrants that neither it nor any of its officers,
directors, employees, or Affiliates has employed on its behalf any broker or
finder or incurred any Liability for any financial advisory fees, investment
bankers' fees, brokerage fees, commissions, or finders' fees in connection with
this Agreement or the transactions contemplated hereby.
68
781485.1
<PAGE>
11.4 Entire Agreement. Except as otherwise expressly provided
herein, this Agreement (including the documents and instruments referred to
herein) constitutes the entire agreement between the Parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral (except, as to Section
8.6(b) of this Agreement, for the Confidentiality Agreement). Nothing in this
Agreement expressed or implied, is intended to confer upon any Person, other
than the Parties or their respective successors, any rights, remedies,
obligations, or liabilities under or by reason of this Agreement.
11.5 Amendments. To the extent permitted by Law, this Agreement
may be amended by a subsequent writing signed by each of the Parties upon the
approval of the Boards of Directors of each of the Parties, whether before or
after shareholder approval of this Agreement has been obtained; provided, that
after any such approval by the holders of Foilmark Common Stock or the holders
of Holopak Common Stock, there shall be made no amendment that requires further
approval by such shareholders without the further approval of such shareholders.
11.6 Waivers.
(a) Prior to or at the Effective Time, Holopak, acting
through its Board of Directors, chief executive officer or other authorized
officer, shall have the right to waive any Default in the performance of any
term of this Agreement by Foilmark, to waive or extend the time for the
compliance or fulfillment by Foilmark of any and all of its obligations under
this Agreement, and to waive any or all of the conditions precedent to the
obligations of Holopak under this Agreement, except any condition which, if not
satisfied, would result in the violation of any Law. No such waiver shall be
effective unless in writing signed by a duly authorized officer of Holopak and
delivered to Foilmark.
(b) Prior to or at the Effective Time, Foilmark, acting
through its Board of Directors, chief executive officer or other authorized
officer, shall have the right to waive any Default in the performance of any
term of this Agreement by Holopak, to waive or extend the time for the
compliance or fulfillment by Holopak of any and all of its obligations under
this Agreement, and to waive any or all of the conditions precedent to the
obligations of Foilmark under this Agreement, except any condition which, if not
satisfied, would result in the violation of any Law. No such waiver shall be
effective unless in writing signed by a duly authorized officer of Foilmark and
delivered to Holopak.
(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
Party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained in
this Agreement in one or more instances shall be deemed to be or construed as a
further or continuing waiver of such
69
781485.1
<PAGE>
condition or breach or a waiver of any other condition or of the breach of any
other term of this Agreement.
11.7 Assignment. Except as expressly contemplated hereby, neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any Party hereto (whether by operation of Law or otherwise)
without the prior written consent of the other Party. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the Parties and their respective successors and assigns.
11.8 Notices. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
by hand, by facsimile transmission, by registered or certified mail, postage
pre-paid, or by courier or overnight carrier, to the persons at the addresses
set forth below (or at such other address as may be provided hereunder), and
shall be deemed to have been delivered as of the date so delivered:
Foilmark:
Foilmark, Inc.
4 Malcolm Hoyt Drive
Newburyport, MA 01950
Telecopy No.: (978) 463-8651
Attention: Frank J. Olsen, Jr.
Chairman and President
Copy to Counsel:
Hinckley, Allen & Snyder
1500 Fleet Center
Providence, Rhode Island 02903
Telecopy No.: (401) 277-9600
Attention: Stephen J. Carlotti
Holopak:
Holopak Technologies, Inc.
9 Cotters Lane
P.O. Box 538
East Brunswick, NJ 08816
Telecopy No.: (732) 238-9684
Attention: James L. Rooney,
President and Chief Executive
Officer
Copy to:
Robert J. Simon
Bradford Ventures Limited
One Rockefeller Plaza
New York, NY 10020
Telecopy No.: (212) 218-6901
Copy to Counsel:
Battle Fowler LLP
75 East 55th Street
New York, NY 10022
Telecopy No.: (212) 856-7817
Attention: Carl A. de Brito
70
781485.1
<PAGE>
11.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Delaware without regard to
any applicable conflicts of Laws.
11.10 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
11.11 Captions. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
11.12 Interpretations. Neither this Agreement nor any uncertainty
or ambiguity herein shall be construed or resolved against any party, whether
under any rule of construction or otherwise. No party to this Agreement shall be
considered the draftsman. The parties acknowledge and agree that this Agreement
has been reviewed, negotiated and accepted by all parties and their attorneys
and shall be construed and interpreted according to the ordinary meaning of the
words used so as fairly to accomplish the purposes and intentions of all parties
hereto.
11.13 Enforcement of Agreement. The Parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the Parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
11.14 Severability. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
71
781485.1
<PAGE>
REMAINING PAGE LEFT BLANK INTENTIONALLY
72
781485.1
<PAGE>
IN WITNESS WHEREOF, each of the Parties has caused this Agreement
to be executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto as of the day and year first above written.
ATTEST: FOILMARK, inc.
/s/ Philip Leibel By: /s/ Frank J. Olsen, Jr.
- ----------------------- ------------------------------
Secretary President
ATTEST: FOILMARK ACQUISITION CORPORATION
/s/ Philip Leibel By: /s/ Frank J. Olsen, Jr.
- ------------------------ ------------------------------
Secretary President
ATTEST: HOLOPAK TECHNOLOGIES, INC.
/s/ Arthur Karmel By: /s/ James L. Rooney
- ------------------------ -----------------------------
Secretary President
73
781485.1
<PAGE>
CERTIFICATE OF INCORPORATION
OF
FOILMARK ACQUISITION CORPORATION
The undersigned, in order to form a corporation for the purpose
hereinafter stated, under and pursuant to the provisions of the General
Corporation Law of Delaware, hereby certifies that:
1. The name of the Corporation is FOILMARK ACQUISITION CORPORATION.
2. The registered office and registered agent of the Corporation is The
Corporation Trust Company, 1209 Orange Street, County of New Castle, Wilmington,
Delaware 19801.
3. The purpose of the Corporation is to own capital stock in other
corporations and to engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of Delaware.
4. The total number of shares of stock that the Corporation is
authorized to issue is 1,000 shares of Common Stock, par value $.01 per share.
5. The name and address of the incorporator is Jane E. Cohen, Hinckley,
Allen & Snyder, 28 State Street, Boston, Massachusetts, 02109.
6. The Board of Directors of the Corporation, acting by majority vote,
may alter, amend or repeal the By-Laws of the Corporation.
7. The Directors may be elected by resolution or consent of a majority
of stockholders, without separate written ballots as such.
8. No director of the Corporation shall be liable to the Corporation or
its stockholders for monetary damages for breach of his or her fiduciary duty as
a director, provided that nothing contained in this Article shall eliminate or
limit the liability of a director (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
the law, (iii) under Section 174 of the General Corporation Law of the State of
Delaware or (iv) for any transaction from which the director derived an improper
personal benefit.
781476.1
<PAGE>
9. Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or any of creditor or stockholders thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 279 of Title 8 of the Delaware Code or on the
application of trustees in order a meeting of the creditors or class of
creditors and/or of the stockholders or class of stockholders of this
Corporation as this case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three-fourths in value of the
creditors or class of creditors, and/or the stockholders or class of
stockholders of this Corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this Corporation as a consequence of
such compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders, of this Corporation, as the case
may be, and also on this Corporation.
IN WITNESS WHEREOF, the undersigned has signed this Certificate of
Incorporation on this 16th day of November, 1998.
FOILMARK ACQUISITION CORPORATION
---------------------------------
Jane E. Cohen, Sole Incorporator
<PAGE>
2
EXHIBIT 2.2
B Y - L A W S
OF
FOILMARK ACQUISITION CORPORATION
ARTICLE I
OFFICES
Section 1.01 Registered Office. The registered office shall be in the
City of Wilmington, County of New Castle, State of Delaware.
Section 1.02 Other Offices. The corporation may also have offices at
such other places both within and without the State of Delaware as the board of
Directors may from time to time determine or the business of the corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 2.01 Meetings of Stockholders. All meetings of the stockholders
shall be held in Newburyport, Massachusetts, at such place as may be fixed from
time to time by the board of directors, or at such other place either within or
without the State of Delaware as shall be designated from time to time by the
board of directors and stated in the notice of the meeting or in a duly executed
waiver of notice thereof.
Section 2.02 Annual Meetings of Stockholders. Annual meetings of
stockholders shall be held on the third Wednesday of March, unless such day is a
legal holiday, (in which case the meeting will be held on the next secular day
following), or on such other date and at such other time as shall be designated
from time to time by the board of directors and stated in the notice of the
meeting, at which they shall elect by a plurality vote a board of directors, and
transact such other business as may properly be brought before the meeting.
Section 2.03 Notice of Annual Meeting. Written notice of the annual
meeting stating the place, date and hour of the meeting shall be given to each
stockholder entitled to vote at such meeting not less than ten (10) nor more
than sixty (60) days before the date of the meeting.
Section 2.04 List of Stockholders. The officer who has charge of the
stock ledger of the corporation shall prepare and make, at least ten (10) days
before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and showing the
address of each stockholder and the number of shares registered in the name of
each stockholder. Such list shall be open to the examination of any stockholder,
for any purpose
<PAGE>
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Section 2.05 Special Meetings of Stockholders. Special meetings of the
stockholders for any purpose or purposes, unless otherwise prescribed by statute
may be called by the Chairman of the Board or the President and shall be called
by the Chairman of the Board or Secretary at the request in writing of the board
of directors, or at the request in writing of stockholders owning 50% in amount
of the entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
Section 2.06 Notice of Special Meetings of Stockholders. Written notice
of a special meeting stating the place, date and hour of the meeting and the
purpose or purposes for which the meeting is called, shall be given not less
than ten nor more than sixty days before the date of the meeting, to each
stockholder entitled to vote at such meeting.
Section 2.07 Quorum. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholder for the
transaction of business except as otherwise provided by statute or by the
Certificate of Incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have the power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 2.08 Majority Voting. When a quorum is present at any meeting,
the vote of the holders of a majority of the stock having voting power present
in person or represented by proxy shall decide any question brought before such
meeting, unless the question is one upon which by express provision of the
statutes or of the Certificate of Incorporation, a different vote is required in
which case such express provision shall govern and control the decision of such
question.
Section 2.09 Voting Rights. Unless otherwise provided in the
Certificate of Incorporation each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of the
capital stock having voting power held by such stockholder, but no proxy shall
be voted on after three years from its date, unless allowed by the laws of the
State of Delaware or unless the proxy provides for a longer period.
2
<PAGE>
Section 2.10 Stockholders Consent. Any action required to be taken at
any annual or special meeting of stockholders of the corporation, or any action
which may be taken at any annual or special meeting of such stockholders, may be
taken without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
Section 3.01 Election of Directors. The number of directors which shall
constitute the whole board shall be not less than one, or as the board of
directors or the stockholders shall determine by resolution. The directors shall
be elected at the annual meeting of the stockholders, except as provided in
Section 3.02 of this Article. Directors need not be stockholders.
Section 3.02 Vacancies on Board of Directors. Vacancies and newly
created directorships resulting from any increase in the authorized number of
directors may be filled by the affirmative vote of the stockholders, a majority
of the directors then in office, though less than a quorum, or by a sole
remaining director, and the directors so chosen shall hold office until the next
annual meeting of stockholders. If at any time, by reason of death or
resignation or other cause, the corporation should have no directors in office,
then any officer or any stockholder or an executor, administrator, trustee or
guardian of a stockholder, or other fiduciary entrusted with like responsibility
for the person or estate of a stockholder, may call a special meeting of
stockholders in accordance with the provisions of the Certificate of
Incorporation or these By-Laws, or may apply to the Court of Chancery for a
decree summarily ordering an election as provided by law.
Section 3.03 Powers of Board of Directors. The business of the
corporation shall be managed by its board of directors which may exercise all
such powers of the corporation and do all such lawful acts and things as are not
by statute or by the Certificate of Incorporation or by these By-Laws directed
or required to be exercised or done by the stockholders.
Section 3.04 Meetings of Board of Directors. The board of directors of
the corporation may hold meetings, both regular and special, either within or
without the State of Delaware.
Section 3.05 First Meeting of Board of Directors. The first meeting of
each newly elected board of directors shall be held at such time and place as
shall be fixed by the vote of the stockholders or incorporators and no notice of
such meeting shall be necessary to the newly elected directors in order legally
to constitute the meeting, provided a quorum shall be present. In the event of
the failure of the stockholders or the incorporators to fix the time or place of
such first meeting of the newly elected board of directors, or in the event such
meeting is not held at
3
<PAGE>
the time and place so fixed by the stockholders or the incorporators, the
meeting may be held at such time and place as shall be specified in a notice
given as hereinafter provided for special meetings of the board of directors, or
as shall be specified in a written waiver signed by all of the directors.
Section 3.06 Regular Meetings of Board of Directors. Regular meetings
of the board of directors may be held without notice at such time and at such
place as shall from time to time be determined by the board.
Section 3.07 Special Meetings of Board of Directors. Special meetings
of the board may be called by the Chairman of the Board or the President on 48
hours' notice to each director, either personally or by mail, by telegram or by
telephone; special meetings shall be called by the Chairman of the Board or
Secretary in like manner and on like notice on the written request of two
directors unless the board consists of only one director in which case special
meetings shall be called by the President or Secretary in like manner and in
like notice on the written request of the sole director.
Section 3.08 Quorum. At all meetings of the board, a majority of the
directors, but not fewer than one, shall constitute a quorum, unless the board
consists of only one director, in which case the sole director shall constitute
a quorum, for the transaction of business and the act of a majority of the
directors present at any meeting at which there is a quorum shall be the act of
the board of directors, except as may be otherwise specifically provided by
statute or by the Certificate of Incorporation. If a quorum shall not be present
at any meeting of the board of directors the directors present thereat may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present.
Section 3.09 Director Consents. Any action required or permitted to be
taken at any meeting of the board of directors or of any committee thereof may
be taken without a meeting, if all members of the board or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the board or committee.
Section 3.10 Telephone Meetings of Board of Directors. Members of the
board of directors, or any committee designated by the board of directors, may
participate in a meeting of the board of directors, or any committee, by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at the meeting.
Section 3.11 Committee of Directors. The board of directors may, by
resolution passed by a majority of the whole board, designate one or more
committees, each committee to consist of one or more of the directors of the
corporation. The board may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. In the absence or disqualification of a member of a
committee the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member. Any such
4
<PAGE>
committee, to the extent provided in the resolution of the board of directors,
shall have and may exercise all the powers and authority of the board of
directors in the management of the business and affairs of the corporation, and
may authorize the seal of the corporation to be affixed to all papers which may
require it; but no such committee shall have the power or authority, except as
allowed by the laws of the State of Delaware, in reference to:
(i) amending the Certificate of Incorporation,
(ii) adopting an agreement of merger or consolidation, unless the
resolution creating such committee expressly so provides,
(iii) recommending it to the stockholders the sale, lease or
exchange of all or substantially all of the corporation's
property and assets, unless the resolution creating such
committee expressly so provides,
(iv) recommending to the stockholders a dissolution of the
corporation or a revocation of a dissolution,
(v) amending the By-Laws of the corporation,
(vi) taking any action with respect to the issuance of the
corporation's stock, unless the resolution creating such
committee expressly so provides, and
(vii) declaring a dividend, unless the resolution creating such
committee expressly so provides.
Such committee or committees shall have such name or names as may be
determined from time to time by resolution adopted by the board of directors.
Section 3.12 Committee Minutes. Each committee shall keep regular
minutes of its meetings and report the same to the board of directors when
required.
Section 3.13 Compensation of Directors. Unless otherwise restricted by
the Certificate of Incorporation, the board of directors shall have the
authority to fix the compensation of directors. The directors may be paid their
expenses, if any, of attendance at each meeting of the board of directors and
may be paid a fixed sum for attendance at each meeting of the board of directors
or a stated salary as directed. No such payment shall preclude any director from
serving the corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be allowed like
compensation for attending committee meetings.
Section 3.14 Removal of Directors. Unless otherwise retracted by the
Certificate of Incorporation or by statute or law, any director may be removed
from office only for cause by the affirmative vote of the holders of a majority
of the voting power of all shares of the corporation entitled to vote generally
in the election of directors, voting together as a single class.
5
<PAGE>
Section 3.15 Chairman of the Board. The Chairman of the Board of
Directors, if there is one, shall be elected annually by and from the board of
directors and shall preside at all meetings of the stockholders and directors at
which he shall be present.
ARTICLE IV
NOTICES
Section 4.01 Notices. Whenever, under the provisions of the statutes or
of the Certificate of Incorporation or of these By-Laws, notice is required to
be given to any director or stockholder, it shall not be construed to require
personal notice, but such notice may be given in writing, by mail, addressed to
such director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Attendance of a person at a meeting shall constitute a waiver of notice of such
meeting, except when the person attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened.
Section 4.02 Waiver of Notice. Whenever a notice is required to be
given under the provisions of the statutes or of the Certificate of
Incorporation or of these By-Laws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto.
ARTICLE V
OFFICERS
Section 5.01 Necessary Officers. The officers of the corporation shall
be chosen by the board of directors and there shall be elected from among the
officers of the corporation, persons having the titles and exercising the duties
(as prescribed by the By-Laws or by the Board) President, Vice President,
Secretary, and Treasurer. The board of directors may also choose one or more
Vice-Presidents, Assistant Secretaries, and Assistant Treasurers. Any number of
offices may be held by the same person. No officer need be a stockholder.
Section 5.02 Election of Officers. The board of directors at its first
meeting after each annual meeting of stockholders shall choose a Chairman of the
Board, a President, a Secretary and a Treasurer.
Section 5.03 Other Officers. The board of directors may appoint such
other officers and agents as it shall deem necessary who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the board.
6
<PAGE>
Section 5.04 Officers' Salaries. The salaries of all officers and
agents of the corporation shall be fixed by the board of directors.
Section 5.05 Term of Office. The officers of the corporation shall hold
office until their successors are chosen and qualify. Any officer elected or
appointed by the board of directors may be removed at any time by the
affirmative vote of a majority of the board of directors. Any vacancy occurring
in any office of the corporation shall be filled by the board of directors.
Section 5.06 Chairman of the Board. The Chairman of the Board shall
perform such duties and have such powers additional to the foregoing as the
board of directors shall designate.
Section 5.07 President. The President shall be the Chief Executive
Officer of the corporation and shall preside at all meetings of the stockholders
and of the board of directors in the absence of the Chairman of the Board. It
shall be his duty and he shall have the power to see that all orders and
resolutions of the board of directors are carried into effect. The President, as
soon as reasonably possible after the close of each fiscal year, shall submit to
the board of directors a report of the operations of the corporation for such
year and a statement of its affairs and shall from time to time report to the
board of directors all matters within his knowledge which the interests of the
corporation may require to be brought to its notice. The President shall perform
such duties and have such powers additional to the foregoing as the board of
directors shall designate.
Section 5.08 Vice Presidents. In the absence or disability of the
President, his powers and duties shall be performed by the Vice President, if
only one, or, if more than one, by the one designated for the purpose by the
board of directors. Each Vice President shall have such other powers and perform
such other duties as the board of directors shall from time to time designate.
Section 5.09 Treasurer. The Treasurer shall keep full and accurate
accounts of receipts and disbursements in books belonging to the corporation and
shall deposit all moneys and other valuable effects in the name and to the
credit of the corporation in such depositories as shall be designated by the
board of directors or in the absence of such designation in such depositories as
he shall from time to time deem proper. He shall disburse the funds of the
corporation as shall be ordered by the board of directors, taking proper
vouchers for such disbursements. He shall promptly render to the President and
to the board of directors such statements of his transactions and accounts as
the President and board of directors respectively may from time to time require.
The Treasurer shall perform such duties and have such powers additional to the
foregoing as the board of directors may designate.
7
<PAGE>
Section 5.10 Assistant Treasurers. In the absence of disability of the
Treasurer, his powers and duties shall be performed by the Assistant Treasurer,
if one be elected, or, if more than one, by the one designated for the purpose
by the board of directors. Each Assistant Treasurer shall have such other powers
and perform such other duties as the board of directors shall from time to time
designate.
Section 5.11 Treasurer's Bonds. If required by the board of directors,
the treasurer shall give the corporation a bond (which shall be renewed every
six years) in such sum and with such surety or sureties as shall be satisfactory
to the board of directors, for the faithful performance of the duties of his
office and for the restoration to the corporation, in case of his death,
resignation, retirement or removal from office, of all books, papers, vouchers,
money and other property of whatever kind in his possession or under his control
belonging to the corporation.
Section 5.12 Secretary. The Secretary shall record in books kept for
the purpose all votes and proceedings of the stockholders and of the board of
directors at their meetings and shall perform like duties for the standing
committees when required. Unless the board of directors shall appoint a transfer
agent and/or registrar or other officer or officers for the purpose, the
Secretary shall be charged with the duty of keeping, or causing to be kept,
accurate records of all stock outstanding, stock certificates issued and stock
transfers; and, subject to such other or different rule as shall be adopted from
time to time by the board of directors, such records may be kept solely in the
stock certificate books. The Secretary shall perform such duties and have such
powers additional to the foregoing as the board of directors shall designate.
Section 5.13 Temporary and Assistant Secretaries. In the absence of the
Secretary from any meeting of the stockholders or board of directors, if there
be no Assistant Secretary, if one be elected, or, if there be more than one, the
one designated for the purpose by the board of directors, otherwise a Temporary
Secretary designated by the person presiding at the meeting, shall perform the
duties of the Secretary. Each Assistant Secretary shall have such other powers
and perform such other duties as the board of directors may from time to time
designate.
ARTICLE VI
CERTIFICATES OF STOCK
Section 6.01 Certificates of Stock. Every holder of stock in the
corporation shall be entitled to have a certificate certifying the number of
shares owned by him in the corporation, signed by or in the name of the
corporation by (a) either the Chairman of the Board of Directors, the President
or a Vice- President and (b) either the Treasurer or an Assistant Treasurer, or
the Secretary or an Assistant Secretary of the corporation.
Certificates may be issued for partly paid shares and in such case upon
the face or back of the certificates issued to represent any such partly paid
shares, the total amount of the consideration to be paid therefor, and the
amount paid thereon shall be specified.
8
<PAGE>
If the corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualification, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificates which the corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in Section 202 of the General Corporation Law of Delaware, in
lieu of the foregoing requirements, there may be set forth on the face or back
of the certificate which the corporation shall issue to represent such class or
series of stock, a statement that the corporation will furnish without charge to
each stockholder who so requests the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
Section 6.02 Signature on Stock Certificates. Where a certificate is
countersigned, (1) by a transfer agent other than the corporation or its
employee, or (2) by a registrar other than the corporation or its employee, any
other signature on the certificate may be facsimile. In case any officer,
transfer agent or registrar who has signed or whose facsimile has been placed
upon a certificate shall have ceased to be such officer, transfer agent or
registrar before such certificate is issued, it may be issued by the corporation
with the same effect as if he were such officer, transfer agent or registrar at
the date of issue.
Section 6.03 Lost Certificates. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorized such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or to give the corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the corporation
with respect to the certificate alleged to have been lost, stolen or destroyed.
Section 6.04 Transfers of Stock. Upon surrender to the corporation or
the transfer agent of the corporation of a certificate for shares duly endorsed
or accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books. The board may make such additional rules and
regulations as it may deem advisable concerning the issue and transfer of
certificates representing shares of the capital stock of the Corporation.
Section 6.05 Fixing Record Date. In order that the corporation
may determine the stockholders entitled to notice of or to vote at any meeting
of stockholders or any adjournment thereof, or to express consent to corporate
ction in writing without a meeting, or entitled to receive payment of any
dividend or other distribution of allotment of any rights, or
9
<PAGE>
entitled to exercise any rights in respect of any change, conversion or exchange
of stock or for the purpose of any other lawful action, the board of directors
may fix, in advance, a record date, which shall not be more than sixty (60) nor
less than ten (10) days before the date of such meeting, nor more than sixty
(60) days prior to any other action. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the board of directors may
fix a new record date for the adjourned meeting.
Section 6.06 Registered Stockholders. The corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the owner
of shares, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise provided
by the laws of Delaware.
ARTICLE VII
GENERAL PROVISIONS
Section 7.01 Dividends. Dividends upon the capital stock of the
corporation, subject to the provisions of applicable law, may be declared by the
board of directors at any regular or special meeting, and paid either (a) out of
its surplus, as defined by law, or (b) in case there shall be no such surplus,
out of the corporation's net profits for the fiscal year in which the dividend
is declared and/or the preceding fiscal year. If the capital of the corporation,
computed in accordance with law, shall have been diminished by depreciation in
the value of its property, or by losses, or otherwise, to an amount less than
the aggregate amount of the capital represented by the issued and outstanding
stock of all classes having a preference upon the distribution of assets, the
board of directors shall not, except as allowed by the laws of the State of
Delaware, declare and pay out of such net profits any dividends upon any shares
of any classes of the corporation's capital stock until the deficiency in the
amount of capital represented by the issued and outstanding stock of all classes
having a preference upon the distribution of assets shall have been repaired.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the Certificate of Incorporation.
Section 7.02 Reserves. Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation, or
for such other purpose as the directors may think conducive to the interest of
the corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
10
<PAGE>
Section 7.03 Annual Statement. The board of directors shall present at
each annual meeting, and at any special meeting of the Stockholders when called
for by vote of the stockholders, a full and clear statement of the business and
condition of the corporation.
Section 7.04 Checks. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.
Section 7.05 Fiscal Year. The fiscal year of the corporation shall end
on the last day of December of each year.
Section 7.06 Seal. The corporate seal shall have inscribed thereon the
name of the corporation, the year of its organization and the word "Delaware."
The seal may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.
Section 7.07 Indemnification of Officers and Directors. The corporation
shall indemnify any director, officer, employee or agent of the corporation who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, to the full extend authorized and permitted by the laws of the
State of Delaware. The corporation may purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or agent of the
corporation against any liability asserted against him and incurred by him in
any such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability under
the provisions of the General Corporation Law of the State of Delaware. The
corporation's indemnity of any person who is or was a director, officer,
employee or agent of the corporation shall be reduced by any amounts such person
may collect as indemnification under any policy of insurance purchased and
maintained on his behalf by the corporation.
The indemnification provided for herein shall not be deemed exclusive
of any other rights to which those indemnified may be entitled under any
certificate of incorporation, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person. The right of reimbursement for liabilities and expenses so imposed or
incurred shall include the right to receive such reimbursement in advance of the
final disposition of any such action, suit or proceeding upon the Corporation's
receipt of an undertaking by or on behalf of such director or officer to repay
such amount if it shall be ultimately determined that he is not entitled to be
indemnified by the Corporation pursuant to law or this Section 7.07. Neither the
amendment nor repeal of this Section 7.07, nor the adoption of any provisions of
the Certificate of Incorporation inconsistent with this Section 7.07, shall
eliminate or reduce the effect of this Section 7.07 in respect of any matter
occurring, or any cause of action, suit or claim that, but for this Section 7.07
would accrue or arise, prior to such amendment, repeal or adopting of an
inconsistent provision.
11
<PAGE>
Section 7.08 Reliance upon Books, Reports and Records. Each director,
each member of any committee designated by the Board of Directors, and each
officer of the corporation shall, in the performance of his duties, be fully
protected in relying in good faith upon the books of account or other records of
the corporation, including reports made to the corporation by any of its
officers, by an independent certified public accountant, or by an appraiser
selected with reasonable care.
Section 7.09 Inspection of Books by Stockholders. Subject to the laws
of the State of Delaware, the board of directors shall have the power to
determine from time to time and at any time whether and to what extent and at
what times and places and under what conditions and regulations the records of
account, books and stock ledgers of the corporation, or any of them, shall be
open to inspection and copying by stockholders, their agents or attorneys; and
no stockholder, his agent or attorney shall have any right to inspect or copy
any record of account or book or stock ledger, or any part thereof, of the
corporation, except as conferred by the laws of the State of Delaware, unless
and until authorized so to do by resolution of the board of directors or of the
stockholders and unless and until such stockholder agrees to comply with, and
abide by, such conditions and regulations governing inspection and copying
thereof, as determined by the board of directors.
Section 7.10 Transactions with Directors, Officers, etc. The
corporation may enter into contracts or transactions with one or more of its
directors, officers, employees or stockholders, or with any other corporation,
partnership, association, or other organization in which one or more of its
directors, officers, employees or stockholders are directors, officers,
partners, employees or stockholders, or have a financial interest, to the full
extent authorized and permitted by the laws of the State of Delaware.
ARTICLE VIII
Section 8.01 Amendments. These By-Laws may be altered, amended
or repealed or new By-Laws may be adopted by the stockholders or by the board of
directors at any regular meeting of the stockholders or of the board of
directors or at any special meeting of the stockholders or of the board of
directors if notice of such alteration, amendment, repeal or adoption of new
By-Laws be contained in the notice of such meeting, or by any consent of the
stockholders or directors executed in accordance with the Certificate of
Incorporation or these By-Laws.
<PAGE>
13
EXHIBIT 8.17
FORM OF EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of the
_____ day of ________, 1999, by and between Foilmark, Inc., a Delaware
corporation with a mailing address of 4 Mullikan Way, Newburyport, Massachusetts
(the "Company"), and Frank J. Olsen, Jr., an individual with a residence address
of 13 Country Farm Road, Stratham, NH 03885 ("Executive").
WITNESSETH:
WHEREAS, the Company is in the business of designing, developing,
manufacturing and marketing foils, films, applicating systems and supplies (the
"Business"). Executive has served as President, Chief Executive Officer and a
Director of the Company since 1992; and
WHEREAS, the Company has entered into an Agreement and Plan of Merger
with Holopak Technologies, Inc. ("Holopak") dated as of November __, 1998 which
contemplates, among other things, the merger of Holopak with and into a
wholly-owned subsidiary of the Company and under which the execution and
delivery of this Agreement is contemplated contemporaneously with the
effectiveness of the merger; and
WHEREAS, the Company desires to employ Executive and Executive desires
to accept such employment on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and mutual promises
hereinbelow set forth, the parties hereby agree as follows:
1. Employment Period. The term of this Agreement and any renewal
terms thereof (the "Employment Period") shall commence on the date hereof and,
subject to termination by Executive or the Company as hereinafter provided,
shall continue until the fifth anniversary of the date hereof. At the end of the
initial Employment Period (and any renewal period provided for herein), this
Agreement shall automatically extend for additional periods of two years (a
"Renewal Period") unless either party hereto gives written notice of non-renewal
delivered not less than six months prior to the end of the Employment Period or
any Renewal Period.
2. Employment; Duties. Subject to the terms and conditions set forth
herein, the Company hereby employs Executive to act as President and Chief
Executive Officer of the Company during the Employment Period, and Executive
hereby accepts such employment. The duties assigned and authority granted to
Executive shall be as set forth in the By-laws of the Company and consistent
with the position of President and Chief Executive Officer including but not
limited to the supervision and oversight of the business and operations of
Foilmark and Foilmark subsidiaries and such other duties as determined by its
Board of Directors from time to time. Executive shall report to the Board of
Directors and is subject to the policies and directives of the Board. Executive
agrees to use his best efforts to promote the interests of the Company and shall
devote his full time and attention to the Company's business and affairs.
Executive shall also serve as a member of the Board of Directors of the Company
pursuant to a Voting Agreement dated as of the date hereof, and such service
shall be unrelated to his employment with the Company and this Agreement.
<PAGE>
3. Salary and Bonus.
(a) Base Salary. The Company agrees to pay Executive $260,000 per
year, payable weekly in arrears. Executive's base salary shall not be decreased
during the Employment Period or any Renewal Period. In addition, no later than
___________ of each year during the Employment Period, commencing
_______________, the Board of Directors of the Company or its duly elected
Compensation Committee, subject to Board approval, shall review Executive's
annual base salary in its discretion, based upon the Company's performance and
Executive's particular contributions.
(b) Bonus. In addition to Executive's base salary, Executive may
also receive a cash bonus in an amount not exceeding one hundred percent (100%)
of the Executive's base salary, in the discretion of the Board of Directors
based upon the recommendation of the Compensation Committee of the Board of
Directors, the recommendation of which shall be made to, and acted upon by, the
Board of Directors not later than one (1) month after the publication of the
Company's audited financial statements. Seventy-five percent (75%) of such bonus
shall be based on a formulaic evaluation of actual results versus budget as set
forth on Schedule A hereto.
4. Other Benefits.
(a) Insurance and Other Benefits. Executive shall be entitled to
participate in, and shall receive the benefits available under, the Company's
insurance programs (including health, disability and life insurance) and any
ERISA benefit plans, as the same may be adopted and/or amended from time to
time, and shall receive all other fringe benefits that are provided by the
Company to other senior executives. No other officer of the Company will have
any more favorable benefits than made available to the Executive.
(b) Vacation. Executive shall be entitled to an annual vacation
of such duration as may be determined by the Board of Directors, but not less
than that generally established for other executives of Company and in no event
less than four (4) weeks, without interruption of salary.
(c) Automobile Allowance. The Company shall provide Executive
with the automobile allowance provided for the office of President and Chief
Executive Officer under the Company's automobile allowance policy. The
automobile allowance per month shall be $1,000 plus any operating allowance
under said policy ($1,200 per annum) and any excess mileage charges applicable
to any vehicle leased by Executive and used for business purposes.
(d) Reimbursement of Expenses. The Company shall reimburse
Executive for all reasonable travel, entertainment and other expenses incurred
or paid by Executive in connection with, or related to, the performance of his
duties or responsibilities under this Agreement, provided that Executive submits
to the Company substantiation of such expenses sufficient to satisfy the record
keeping guidelines promulgated from time to time by the Internal Revenue
Service.
(e) Service Fees. The Company shall reimburse Executive, in an
aggregate amount not to exceed $1,500 per year, for professional and other fees
incurred by Executive in connection with (i) an annual medical examination of
Executive and (ii) the annual planning for and preparation of
2
<PAGE>
Executive's personal income tax returns. The Company shall also reimburse
Executive for estate planning services performed during the Employment Period,
in an aggregate amount not to exceed $2,500.
(f) 280G Cap. If any amount or benefits due or paid to Executive
("Payments") would constitute an Excess Parachute Payment under Section 280G of
the Internal Revenue Code of 1986, as amended (the "Code"), such Payments shall
be reduced to the extent necessary so that no Payment to be made or benefit
provided to Executive shall be subject to the excise tax imposed under Section
4999 of the Code. The Company shall reduce or eliminate Payments which have not
yet been made before seeking reimbursement of any amounts previously paid to
Executive.
5. Termination by the Company With Cause. The Company may
terminate this Agreement with Cause upon thirty (30) days written notice to
Executive. For purposes of this Section 5, "Cause" shall mean: (a) conviction of
a felony; (b) declaration of unsound mind by a court of competent jurisdiction;
(c) gross neglect or dereliction of duty; (d) a crime involving moral turpitude;
(e) commission of an action which constitutes intentional misconduct or knowing
violation of law if such action in either event results both in an improper
substantial personal benefit and a material injury to the Company; or (f) a
breach by Executive of Sections 7 or 8 of this Agreement or a material breach of
any other provision of this Agreement. In the event of a termination with Cause,
the Executive shall be entitled under this Agreement solely to salary and
benefits accrued through date of termination.
6. Termination and Severance.
6.1 Notice/Events/Defined Terms.
(a) Termination by Executive. Executive may terminate this
Agreement at any time by providing written notice to the Company of not less
than thirty (30) days. In such event Executive shall be entitled under this
Agreement solely to salary and benefits accrued through the date of termination.
(b) Termination by the Company Without Cause. The Company may
terminate this Agreement at any time, without Cause by providing written notice
to the Executive of not less than thirty (30) days. As used in this Agreement,
the term "without Cause" shall mean termination by the Company for any reason
not specified in Section 5 hereof, other than (i) retirement upon reaching the
mandatory retirement age of sixty-five (65), or (ii) the death or disability of
Executive (for purposes of this Agreement, "disability" shall mean Executive's
incapacity due to physical or mental illness which has caused Executive to be
absent from the full-time performance of his duties with the Company for a
period of six (6) consecutive months or eight (8) months in any twelve (12)
month period). In the event of death or disability during the Employment Period,
the Executive shall be entitled under this Agreement solely to salary and
benefits accrued through the date of termination and the proceeds of life and
disability insurance in the amount of [$ ].
(c) Change in Control. A "Change in Control" will be deemed
to have occurred if: (1) a Takeover Transaction occurs; or (2) the Company
effectuates a complete liquidation or a sale or disposition of all or
substantially all of its assets. A "Change in Control" shall not be deemed to
3
<PAGE>
include, however, a merger or sale of stock, assets or business of the Company,
if Executive immediately after such event owns, or in connection with such event
immediately acquires (other than in the Executive's capacity as an equity holder
of the Employer or as a beneficiary of its employee stock ownership plan or
profit sharing plan), any stock of the buyer or any affiliate thereof which, at
the time of Executive's initial investment in such stock, had a purchase price
or fair market value greater than $100,000.
(d) Takeover Transaction. A "Takeover Transaction" shall mean
(i) a merger or consolidation of the Company with, or an acquisition of the
Company or all or substantially all of its assets by, any other corporation,
other than a merger, consolidation or acquisition in which the individuals who
were members of the Board of Directors of the Company immediately prior to such
transaction continue to constitute a majority of the Board of Directors of the
surviving corporation (or, in the case of an acquisition involving a holding
company, constitute a majority of the Board of Directors of the holding company)
for a period of not less than twelve (12) months following the closing of such
transaction, or (ii) when any person or entity or group of persons or entities
(other than any trustee or other fiduciary holding securities under an employee
benefit plan of the Company) either related or acting in concert becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act
of 1934, as amended) of securities of the Company representing more than fifty
percent (50%) of the total number of votes that may be cast for the election of
directors of the Company.
(e) Terminating Event. A "Terminating Event" shall mean: (i)
termination by the Company of the employment of Executive without Cause
occurring within twelve (12) months of a Change of Control; or (ii) resignation
of Executive from the employ of the Company, while Executive is not receiving
payments or benefits from the Company by reason of Executive's disability,
subsequent to any of the following events occurring within twelve (12) months of
a Change of Control: (A) a significant reduction in the nature or scope of
Executive's responsibilities, authorities, powers, functions or duties from the
responsibilities, authorities, powers, functions or duties exercised by
Executive immediately prior to the Change in Control; (B) a decrease in the
salary payable by the Company to Executive from the salary payable to Executive
immediately prior to the Change in Control; or (C) the relocation of the
Company's executive offices (or, if Executive is primarily located at the
Company's manufacturing facilities, such facilities) by more than 50 miles from
their current location in Newburyport, Massachusetts (unless such new location
is closer than to the Executive's then residence); provided, however, that a
Terminating Event shall not be deemed to have occurred solely as a result of
Executive being an employee of any direct or indirect successor to the business
or assets of the Company, rather than continuing as an employee of the Company,
following a Change in Control.
6.2 Severance.
(a) Without Cause. If the Company terminates this Agreement
without Cause, other than as a result of a Terminating Event, then commencing on
the date of termination of this Agreement, the Company shall provide Executive
with a severance package which shall consist of the following: (i) for a period
equal to the greater (A) of the remainder of the initial Employment Period (or
any then existing renewal period thereof) or (B) three (3) years after the date
of termination (x) payment on the first business day of each month of an amount
equal to one-twelfth of
4
<PAGE>
Executive's then current annual base salary under Section 3(a) hereof and (y)
continuation of all benefits under Section 4(a) and (ii) for a period equal to
the greater of (A) the remainder of the initial Employment Period (or any then
existing renewal period thereof) or (B) three (3) years after the date of
termination, payment on the first business day of each month of an amount equal
to one-twelfth of Executive's annual target bonus amount for the year of
termination, pro rated for the portion of the fiscal year occurring prior to
termination.
(b) With A Terminating Event. If the Company terminates this
Agreement as a result of a Terminating Event, then commencing on the date of
such termination and for a period equal to the greater of the remainder of the
initial Employment Period (or any then existing renewal period thereof) or three
(3) years after the date of termination, the Company shall provide Executive
with a severance package which shall consist of the following: (i) payment on
the first business day of each month an amount equal to one-twelfth of
Executive's then current annual base salary under Section 3(a) hereof; (ii)
payment on the first business day of each month of an amount equal to
one-twelfth of Executive's annual target bonus amount; and (iii) continuation of
all benefits under Section 4(a). In addition, if the Company terminates this
Agreement as a result of a Terminating Event, then the Company shall cause the
immediate vesting of all options and other rights granted to Executive under the
Company's stock plans.
(c) General Release. As a condition precedent to receiving any
severance payment, Executive shall execute a release of any and all claims which
Executive or his heirs, executors, agents or assigns might have against the
Company, its subsidiaries, affiliates, successors, assigns and its past, present
and future employees, officers, directors, agents and attorneys; provided,
however, that such release would not extinguish the obligations of the Company
under indemnification or similar contractual arrangements between Company and
Executive.
(d) Withholding. Subject to Section 4(f), all payments made by
the Company under Section 6.2(a) or 6.2(b) this Agreement shall be net of any
tax or other amounts required to be withheld by the Employer under applicable
law.
(e) Death or Disability. The death of the Executive during the
time the severance payments are being paid under this Section shall not
terminate the obligation of the Company to make such payments. The Company shall
continue to pay any amounts otherwise due to Executive under this Agreement for
the remainder of the period determined in Section 6.2 (a) or (b) to Executive's
estate.
(f) Effect of Non-Renewal. In the event that the Company issues
a notice of non-renewal under Section 1 hereof prior to the expiration of the
initial Employment Period, the Executive shall be entitled to receive from the
Company an amount equal to his initial Base Salary ($260,000) for a period of
two years following said initial Employment Period payable in equal monthly
installments one-twelfth of said Base Salary on the first day of each month
following said initial Employment Period.
7. Non-Competition. (a) During the term of this Agreement and (i) in
the case of termination other than as a result of a Terminating Event and
provided that Executive continues to receive the severance payments provided for
in Section 6.2(a) to which he is entitled , for the greater of the
5
<PAGE>
remainder of the Employment Period after the date of termination or three (3)
years after the date of termination or (ii) in the case of termination as a
result of a Terminating Event and provided that Executive continues to receive,
or after Executive has received, the severance payments provided for in Section
6.2(b) to which he is entitled, for the greater of the remainder of the
Employment Period after the date of termination or three (3) years after the
date of termination of this Agreement, Executive will not directly or indirectly
whether as a partner, consultant, agent, employee, co-venturer, greater than two
percent owner or otherwise or through any other person (as hereafter defined):
(A) be engaged in any business or activity which is competitive with the
business of the Company in any part of the world in which the Company is or
proposes to be (as evidenced by a directive of the Board of Directors to that
effect) at the time of Executive's termination engaged in selling its products
directly or indirectly; or (B) attempt to recruit any employee of the Company,
assist in their hiring by any other person, or encourage any employee to
terminate his or her employment with the Company; or (C) encourage any customer
of the Company to conduct with any other person any business or activity which
such customer conducts or could conduct with the Company.
(b) For purpose of this Section 7, the term "Company" shall include any
person controlling, under common control with or controlled by, the Company and
The term "Person" shall mean an individual or corporation, association or
partnership in estate or trust or any other entity or organization.
(c) Executive recognizes and agrees that because a violation by him of
this Section 7 will cause irreparable harm to the Company that would be
difficult to quantify and for which money damages would be inadequate, the
Company shall have the right to injunctive relief to prevent or restrain any
such violation, without the necessity of posting a bond.
(d) Executive expressly agrees that the character, duration and scope
of this covenant not to compete are reasonable in light of the circumstances as
they exist at the date upon which this Agreement has been executed. However,
should a determination nonetheless be made by a court of competent jurisdiction
at a later date that the character, duration or geographical scope of this
covenant not to compete is unreasonable in light of the circumstances as they
then exist, then it is the intention of both Executive and the Company that this
covenant not to compete shall be construed by the court in such a manner as to
impose only those restrictions on the conduct of Executive which are reasonable
in light of the circumstances as they then exist and necessary to provide the
Company the intended benefit of this covenant to compete.
8. Confidentiality Covenants. (a) Executive understands that Company
may impart to him confidential business information including, without
limitation, designs, financial information, personnel information, strategic
plans, product development information and the like (collectively "Confidential
Information"). Executive hereby acknowledges Company's exclusive ownership of
such Confidential Information.
(b) Executive agrees as follows: (i) only to use the Confidential
Information to provide services to the Company; (ii) only to communicate the
Confidential Information to fellow employees, agents and representatives of the
Company on a need-to-know basis; and (iii) not to otherwise disclose or use any
Confidential Information. Upon demand by the Company or upon termination of
6
<PAGE>
Executive's employment, Executive will deliver to the Company all manuals,
photographs, recordings, and any other instrument or device by which, through
which, or on which Confidential Information has been recorded and/or preserved,
which are in my Executive's possession, custody or control. Executive
acknowledges that for purposes of this Section 8 the term "Company" means any
person or entity now or hereafter during the term of this Agreement which
controls, is under common control with, or is controlled by, the Company.
(c) Executive recognizes and agrees that because a violation by
him of this Section 8 will cause irreparable harm to the Company that would be
difficult to quantify and for which money damages would be inadequate, the
Company shall have the right to injunctive relief to prevent or restrain any
such violation, without the necessity of posting a bond.
9. Governing Law. This Agreement shall be governed by and interpreted
and governed in accordance with the laws of the Commonwealth of Massachusetts.
To the extent permitted by law each of the Executive and the Company hereby
waive any right to trial by jury in any proceeding which may be brought in
respect of this Agreement.
10. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and thereof
and supersedes any and all previous agreements, written and oral, regarding the
subject matter hereof between the parties hereto. This Agreement shall not be
changed, altered, modified or amended, except by a written agreement signed by
both parties hereto.
11. Notices. All notices, requests, demands and other communications
required or permitted to be given or made under this Agreement shall be in
writing and shall be deemed to have been given if delivered by hand, sent by
generally recognized overnight courier service, telex or telecopy, or certified
mail, return receipt requested.
(a) to the Company at:
Foilmark, Inc.
4 Mullikan Way
Newburyport, Massachusetts 01950
Attn.: Chairman of the Board
(b) to Executive at:
13 Country Farm Road
Stratham, NH 03885
Any such notice or other communication will be considered to have been
given (i) on the date of delivery in person, (ii) on the third day after mailing
by certified mail, provided that receipt of delivery is confirmed in writing,
(iii) on the first business day following delivery to a commercial overnight
courier or (iv) on the date of facsimile transmission (telecopy) provided that
the giver of the notice obtains telephone confirmation of receipt.
7
<PAGE>
Either party may, by notice given to the other party in accordance with
this section, designate another address or person for receipt of notices
hereunder.
12. Severability. If any term or provision of this Agreement, or the
application thereof to any person or under any circumstance, shall to any extent
be invalid or unenforceable, the remainder of this Agreement, or the application
of such terms to the persons or under circumstances other than those as to which
it is invalid or unenforceable, shall be considered severable and shall not be
affected thereby, and each term of this Agreement shall be valid and enforceable
to the fullest extent permitted by law. The invalid or unenforceable provisions
shall, to the extent permitted by law, be deemed amended and given such
interpretation as to achieve the economic intent of this Agreement.
13. Waiver. The failure of any party to insist in any one instance or
more upon strict performance of any of the terms and conditions hereof, or to
exercise any right or privilege herein conferred, shall not be construed as a
waiver of such terms, conditions, rights or privileges, but same shall continue
to remain in full force and effect. Any waiver by any party of any violation of,
breach of or default under any provision of this Agreement by the other party
shall not be construed as, or constitute, a continuing waiver of such provision,
or waiver of any other violation of, breach of or default under any other
provision of this Agreement.
14. Successors and Assigns. This Agreement shall be binding upon the
Company and any successors and assigns of the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
FOILMARK, INC.
By:____________________________
Title:
EXECUTIVE:
_______________________________
Frank J. Olsen, Jr.
8
<PAGE>
SCHEDULE A
FORMULA: BONUS/BUDGET COMPARISON
For each fiscal year during the Employment Period, the Board of
Directors, in its sole discretion, shall establish a budget for pretax income in
accordance with generally accepted accounting principles consistently applied
("GAAP") and the formulaic portion of Executive's bonus will vary as a
percentage of Base Salary in relation to the percentage achievement of that
budget as follows:
Percentage of Portion Percentage of Base Salary Earned as
Budget Attained Formulaic Portion
Less than 80% 0%
80% 15%
-
90% 25%
100% 35%
110% 45%
120% 55%
130% 65%
140% and above 75%
For a percentage of budget achievement between the benchmarks, the percentage of
the Base Salary shall be linearly interpolated, provided that no bonus shall be
paid for achievement less than 80% of budget and the maximum formulaic portion
of bonus shall be 75% of Base Salary in any event. In the case of a partial
fiscal year, the Company shall adjust the bonus to correspond to the Company's
budget and the Base Salary for the portion of the applicable fiscal year that
shall be included in the Employment Period. Notwithstanding the foregoing, the
initial bonus period (the "Initial Bonus Period") shall be the period starting
with the Bonus Starting Date and ending on December 31, 1999, and the Company
shall use its budget for that period (a copy of which the Company has provided
to the Executive) to determine the eligibility for a bonus, and then apply the
applicable bonus percentage to that portion of the annual Base Salary
thereafter. Subsequent bonus periods shall begin on each January 1, thereafter
and end with the last day of the Company's fiscal year, and the Company shall
prepare a budget for that period and determine the Executive's eligibility for a
bonus in the manner described for the Initial Bonus Period. The bonus program
shall continue with each Renewal Period as defined in Section 1 of the
Agreement, with the bonus periods corresponding to the Company's fiscal year.
Bonuses shall continue to be calculated as described in this Schedule.
EXHIBIT 9.1(i)
FORM OF VOTING AGREEMENT
This VOTING AGREEMENT (the "Agreement") is made and entered into as
of the ____ day of _____________, 1999, by and among Foilmark, Inc., a Delaware
corporation (the "Company") and such holders of shares of common stock, par
value $.01 per share, of the Company ("Common Stock") identified on Schedule A
attached hereto (collectively, the "Foilmark Stockholders") and the holders of
shares of common stock, par value $.01 per share, of Holopak Technologies, Inc.
("Holopak") identified on Schedule B attached hereto (collectively, the "Holopak
Stockholders"). The Foilmark Stockholders and the Holopak Stockholders are
collectively hereinafter referred to as the "Shareholders".
W I T N E S S E T H:
WHEREAS, the Company entered into an Agreement and Plan of Merger
dated November __, 1998, (the "Merger Agreement") which provides for the merger
of Holopak with and into Foilmark Acquisition Corporation, a Delaware
corporation and a wholly-owned subsidiary of Foilmark ("Sub") with Sub as the
surviving corporation (the "Merger"); and
WHEREAS, pursuant to the Merger Agreement, the Merger Consideration
to be received by each Holopak Stockholder at the Effective Time of the Merger
consists of shares of Common Stock and cash; and
WHEREAS, in connection with the effectiveness of the Merger, the
Company and the Shareholders have agreed to provide for the future voting of
shares of Common Stock, solely with respect to the election of directors of the
Company; and
WHEREAS, the initial designees to the Board of Directors of the
Company designated by Bradford Associates as the representative (the "Holopak
Representative") of the Holopak Stockholders (the "Holopak Designees") are
identified on Schedule C attached hereto and the initial designees to the Board
of Directors of the Company designated by Frank J. Olsen, Jr. as the
representative (the "Foilmark Representative") of the Foilmark Stockholders (the
"Foilmark Designees") are identified on Schedule D attached hereto.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
VOTING
1.01 Each of the Foilmark Stockholders and the Holopak
Stockholders, respectively, agrees to hold all shares of voting capital stock of
the Company registered in his respective name or beneficially owned by him as of
the date hereof
781495.1
<PAGE>
(and any and all other securities of the Company legally or beneficially
acquired by such Stockholder after the date hereof (including shares of Common
Stock acquired in the Merger) (hereinafter collectively referred to as the
"Shares") subject to, and to vote the Shares in accordance with, the provisions
of this Agreement.
1.02 (a) On each occasion at which the holders of voting
capital stock of the Company meet, or act by written consent in lieu of meeting,
for the purpose of electing directors, each Shareholder agrees to vote all
Shares for the election of each Foilmark Designee and each Holopak Designee at
such time as such Designee is up for election. In the event that any of the
Foilmark or the Holopak Designees, as the case may be, ceases to serve as a
director of the Company due to death, resignation or removal of said director,
then the Foilmark Representative or Holopak Representative, as the case may be,
shall nominate an individual to replace said director. The Shareholders agree
that they shall, consistent with and subject to their fiduciary obligations as
directors, vote in their capacity as directors of the Company for such Foilmark
or Holopak Designees, as the case may be.
(b) The Company shall furnish written notice to the Shareholders at
least twenty (20) days prior to any such meeting or proposed action by written
consent in lieu of meeting. The Holopak Representative or Foilmark
Representative, as the case may be, shall furnish written notice to each of the
Shareholders and the Board, no later than fifteen (15) days following receipt of
the Company's notice of any such meeting, or proposed action by written consent
in lieu of meeting, of the name of the Foilmark or Holopak Designees designated
by them to the extent that one or more of the initial Foilmark or Holopak
Designees, as the case may be, is unable to stand for reelection for any reason.
In the absence of such notice, the directors then serving on behalf of and/or
previously nominated by the Foilmark or Holopak Representative, as the case may
be, in accordance with this Section 1.02 shall be deemed to be the Foilmark of
Holopak Representative, as the case may be.
(c) In addition, each of the Shareholders shall vote all of his
Shares on each occasion at which the holders of voting capital stock of the
Company meet, or act by written consent in lieu thereof: (i) to cause the Board
of Directors of the Company (the "Board") to be fixed at ten and to name those
classes consisting of four Class I Directors, three Class II Directors
(consisting of two Holopak Designees and one Foilmark Designee), and three Class
III Directors (consisting of one Holopak Designee and two Foilmark Designees);
(ii) to cause Robert J. Simon to serve as Chairman of the Board; (iii) to cause
the Board to establish an Executive Committee, which shall consist of Robert J.
Simon, Michael S. Mathews, Frank J. Olsen, Jr. and Michael Foster, of which
Robert J. Simon shall be the Chairman; (iv) to cause the Board to establish a
Compensation Committee, which shall consist of Thomas R. Schwarz, Edward
Sullivan, Michael S. Mathews and Robert J. Simon, of which Thomas R. Schwarz
shall be the Chairman; and (v) to cause the Board to establish an Audit
Committee, which shall consist of Michael Foster, Michael Bertuch, Brian Kelly
and Harvey Share, of which Michael Bertuch shall be the Chairman.
1.03 Each of the Foilmark Designees and the Holopak
Designees shall serve as directors of the Company shall serve until his
successor is elected and qualified or until his earlier resignation or removal.
The Shareholders shall not take, or support the taking of, any action to remove
a director nominated by a particular person or entity unless such person or
entity has
2
781495.1
<PAGE>
requested that such director be removed (in which case the Shareholders shall
cooperate in effecting such removal and electing a replacement).
1.04 Concurrently or forthwith after with the execution of
this Agreement, there shall be imprinted or otherwise placed on certificates
representing the shares of Common Stock held by the Shareholder the following
restrictive legend (the "Legend"):
"The shares represented by this Certificate are subject to the terms
and conditions of a Voting Agreement, dated as of __________, 1999,
which places certain restrictions on the voting of the shares
represented hereby. Any person accepting any interest in such shares
other than in an open market transaction shall be deemed to agree to
and shall become bound by all the provisions of such Voting
Agreement. A copy of such Voting Agreement will be furnished to the
record holder of this certificate without charge upon written request
to Foilmark, Inc. at its principal place of business."
1.05 The Company agrees that, during the term of this
Agreement, it will not remove, and will not permit to be removed (upon
registration of transfer, reissuance of otherwise), the Legend from any such
certificate and will place or cause to be placed the Legend on any new
certificate issued to represent Shares theretofore represented by a certificate
carrying the Legend; provided, however, in the event that any Shares are sold or
otherwise transferred (a) in "brokers' transactions" or in "transactions
directly with a market maker" (as those terms are used in Rule 144 under the
Securities Act of 1933, as amended (the "1933 Act")), (b) pursuant to an
effective registration under the 1933 Act, or (c) to an unaffiliated third party
in an arm's length transaction (collectively the transactions referred to in
clauses (a), (b) and (c) being hereinafter referred to as "Bona Fide Sales"),
certificates for Shares representing the Shares so sold shall not bear the
Legend and the Company will give appropriate direction to the transfer agent
with respect to reserving said legend in such case.
1.06 The provisions of this Agreement shall be binding upon
the successors in interest to any of the Shares. Except as otherwise provided in
Section 1.05 hereof, the Company shall not permit the transfer of any of the
Shares on its books or issue a new certificate representing any of the Shares
unless and until the person to whom such security is to be transferred shall
have executed a written agreement, substantially in the form of this agreement,
pursuant to which such person becomes a party to this Agreement and agrees to be
bound by all the provisions hereof as if such person were a Shareholder.
1.07 Except as provided by this Agreement, each Shareholder
shall exercise the full rights of a stockholder with respect to the Shares.
3
781495.1
<PAGE>
1.08 Should the Foilmark Representative become unable to
serve in such capacity due to death or mental incapacity, the remaining Foilmark
Designees shall, by majority vote, elect a replacement Foilmark Representative.
Should the Holopak Representative become unable to serve in such capacity for
any reason, the General Partner of Bradford Venture Partners, L.P. shall
designate a replacement Holopak Representative.
ARTICLE II
EFFECT; TERMINATION
2.01 This Agreement shall commence on the date above first written
and shall terminate in its entirety on the earlier of:
(a) the fifth anniversary of the date hereof;
(b) the date on which either the Foilmark Stockholders a a
group or the Holopak Stockholders as a group own less than five percent (5%) of
the outstanding shares of Common Stock; or
(c) the date as of which the parties hereto terminate this
Agreement by written consent of all parties hereto.
The foregoing notwithstanding, this Agreement shall not apply to and
be of no further force and effect as to any Shares which are sold or otherwise
transferred in a Bona Fide Sale.
ARTICLE III
MISCELLANEOUS
3.01 Each Shareholder represents and warrants that (a) he now owns
the Shares, free and clear of liens or encumbrances, and has not, prior to the
date of this Agreement, executed or delivered any proxy or entered into any
other voting agreement or similar arrangement other than one which has expired
or terminated prior to the date hereof, and (b) such Shareholder has full power
and capacity to execute, deliver and perform this Agreement, which has been duly
executed and delivered by, and evidences the valid and binding obligation of,
such Shareholder enforceable in accordance with its terms.
3.02 If and whenever the Shares are sold, the Shareholder or the
personal representative of the Shareholder shall do all things and execute and
deliver all documents and make all transfers and cause any transferee of the
Shares to do all things and execute and deliver all documents, as may be
necessary to consummate such sale consistent with this Agreement.
3.03 The parties hereto hereby declare that it is impossible to
measure in money the damages which will accrue to a party hereto or to their
heirs, personal representatives, or assigns by reason of a failure to perform
any of the obligations under this Agreement and agree that the terms of this
Agreement shall be specifically enforceable. If any party hereto or his heirs,
personal representatives, or assigns institutes any action or proceeding to
specifically enforce the provisions hereof, any person against whom such action
or proceeding is brought hereby waives the claim or defense therein that such
party or such personal representative has an adequate
4
781495.1
<PAGE>
remedy at law, and such person shall not offer in any such action or proceeding
the claim or defense that such remedy at law exists.
3.04 This Agreement, and the rights of the parties hereto, shall be
governed by and construed in accordance with the laws of the State of Delaware.
3.05 This Agreement may be amended only by an instrument in writing
signed by all parties hereto.
3.06 If any provision of this Agreement is held to be invalid or
unenforceable, the validity and enforceability of the remaining provisions of
this Agreement shall not be affected thereby.
3.07 This Agreement shall be binding upon the parties hereto and,
except as otherwise provided in Section 1.06 hereof, this Agreement may not be
assigned.
3.08 In the event that, subsequent to the date of this Agreement, any
shares or other securities (other than any shares or securities of another
corporation issued to the Company's stockholders pursuant to a plan of merger or
consolidation) are issued on, or in exchange for, any of the Shares held by the
Shareholders by reason of any stock dividend, stock split, consolidation of
shares, reclassification or consolidation involving the Company, such shares or
securities shall be deemed to be Shares for purposes of this Agreement.
3.09 This Agreement may be executed in one or more counterparts, each
of which will be deemed an original but all of which together shall constitute
one and the same agreement.
3.10 No waivers of any breach of this Agreement extended by any party
hereto to any other party shall be construed as a waiver of any rights or
remedies of any other party hereto or with respect to any subsequent breach.
3.11 All capitalized terms not defined herein shall have the meanings
designated in the Merger Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
FOILMARK, INC.
By: ______________________
Frank J. Olsen, Jr.
Chief Executive Officer
5
781495.1
<PAGE>
OVERSEAS PRIVATE INVESTOR BRADFORD VENTURE PARTNERS, L.P.
PARTNERS
By:__________________________ By: _____________________________
______________________________ _________________________________
James L. Rooney Harvey S. Share
______________________________ _________________________________
Brian Kelly Michael S. Mathews
HOLOPAK STOCKHOLDER:
______________________________
Robert J. Simon
6
781495.1
<PAGE>
FOILMARK STOCKHOLDERS:
______________________________ _________________________________
Frank J. Olsen, Jr. Thomas R. Schwarz
______________________________ _________________________________
Martin A. Olsen Carol Robie
______________________________ _________________________________
Edward Sullivan Kenneth Harris
______________________________ _________________________________
Leonard Mintz Michael Foster
______________________________
Michael Bertuch
7
<PAGE>
SCHEDULE A
FOILMARK STOCKHOLDERS
<TABLE>
<CAPTION>
Prior to Effectiveness After Effectiveness
of Merger of Merger
No. of Percentage Interest No. of Shares Percentage
Holder Shares1 Interest
<S> <C> <C> <C> <C>
Martin A. Olsen 527,477 12.6%
3299 Old Barn Road East
Ponte Vedra Beach, FL 32082
Frank J. Olsen, Jr. 490,659 11.7%
13 Country Farm Road
Stratham, NH 03885
Leonard Mintz 244,696 5.9%
89 Blueberry Lane
Westwood, MA 02090
Carol Robie 212,409 5.1%
53 Munroe Drive
East Hampstead, NH 03826
Edward Sullivan 158,834 3.8%
2150 Anchor Court
Newbury Park, CA 91320
Michael Foster 10,000 *
WPI Group, Inc.
1155 Elm Street
Manchester, NH 03101
Thomas Schwarz 5,000 *
60 Westcliff Road
Weston, MA 02193
Kenneth Harris 131,022 3.1%
25 Hale Street
Newburyport, MA 01950
</TABLE>
8
<PAGE>
SCHEDULE B
HOLOPAK STOCKHOLDERS
<TABLE>
<CAPTION>
Prior to Effectiveness After Effectiveness
of Merger of Merger
No. of Percentage Interest No. of Shares Percentage
Holder Shares1 Interest
<S> <C> <C> <C> <C>
Robert J. Simon 17,880 *
c/o Bradford Ventures, Ltd.
One Rockefeller Plaza
Suite 1722
New York, NY 10020
Bradford Venture Partners, L.P. 753,086 22.5%
44 Nassau Street
Princeton, NJ 08542
Overseas Private Investor Partners 753,0862 22.5%
Clarendon House
Church Street
Hamilton 5-31 Bermuda
James L. Rooney 66,667 2.0%
1272 Camelot Lane
Lemont, IL 60439
Harvey S. Share 2,000 *
250 Ridgedale Avenue
Suite R6
Florham Park, NJ 07932
Brian Kelly 8,000 *
c/o DelaFoil, Inc.
232 Shoemaker Road
Pottstown, PA 19464
Michael S. Mathews 17,880 *
193 Elm Road
Princeton, NJ 08540
- ---------------
*Less than one percent.
</TABLE>
9
<PAGE>
SCHEDULE C
HOLOPAK DESIGNEES
Director Class Term Ending
Robert J. Simon
James L. Rooney
Harvey S. Share
Brian Kelly
Michael S. Mathews
10
<PAGE>
SCHEDULE D
FOILMARK DESIGNEES
Director Class Term Ending
Frank J. Olsen, Jr.
Michael Bertuch
Thomas R. Schwarz
Edward Sullivan
Michael Foster
<PAGE>
11
FOILMARK, INC.
FORM OF REGISTRATION RIGHTS AGREEMENT
This AGREEMENT (the "Agreement") is made as of the ___th day of
____________, 1999 by and among Foilmark, Inc., a Delaware corporation (the
"Company"), and the undersigned security holders of the Company (the
"Stockholders").
BACKGROUND
The Stockholders are persons and entities that own shares of common
stock, par value $.01 per share, of the Company (the "Common Stock"). As a
condition precedent to that certain Agreement and Plan of Merger (the "Merger
Agreement") dated as of November __, 1998, by and among the Company, Foilmark
Acquisition Corporation, a Delaware corporation and a wholly-owned subsidiary of
the Company, and the HoloPak Technologies, Inc., a Delaware corporation, (i) the
Company has agreed to provide the registration rights provided for in this
Agreement to the Stockholders, and (ii) the Stockholders that may be deemed
"affiliates" for purposes of Rule 145 of the 1933 Act (as hereinafter defined)
have delivered to Foilmark certain letters acknowledging the same. In
consideration for delivering to Foilmark the Affiliate Letters, the sufficiency
of which is hereby acknowledged and recognized, the Company has agreed to grant
to the Stockholders the registration rights as provided herein.
WITNESSETH:
The parties hereto, each intending to be legally bound and in
exchange for the mutual covenants herein, agree as follows:
1. Demand Registrations.
(a) Requests for Registration. At any time, from the date hereof to
and including the seventh anniversary hereof, each Significant Stockholder (as
hereinafter defined) may demand registration (a "Demand Registration") under the
Securities Act of 1933, as amended (the "1933 Act"), of all or any portion of
the Registrable Securities (defined below) owned by such Significant
Stockholder. In order to accomplish such demand, the Significant Stockholder
shall send written notice of its demand to the Company, and such notice shall
specify the number of Registrable Securities sought to be registered. The
Significant Stockholders shall have, from the date hereof to and including the
seventh anniversary hereof, the right to a total of four Demand Registrations.
For purposes of this Agreement, "Significant Stockholder" shall mean Bradford
Venture Partners, L.P., a New Jersey limited partnership, and Overseas Private
Investors Partners, a Bermuda general partnership, and their respective
successors and assigns. The Company shall only be required to proceed with a
Demand Registration requested by a Significant Stockholder if the number of
Registrable Securities that the Stockholders (including the Significant
Stockholder requesting the Demand Registration) and the Company shall have
elected to include in such Demand Registration pursuant to this Section 1 is
equal to a minimum of 375,000 shares of Common Stock.
<PAGE>
(b) Procedure. Within 10 days after receipt of such a demand, the
Company will give written notice of such requested registration to all other
holders of Registrable Securities and will include in such registration, subject
to the allocation provisions below, all other Registrable Securities with
respect to which the Company has received written requests for inclusion within
20 days after the Company's mailing of such notice, plus any securities of the
Company that the Company chooses to include on its own behalf.
(c) Expenses. In a Demand Registration, the Company will pay the
Registration Expenses (defined below), but the Underwriting Commissions (defined
below) will be paid by those holders of Registrable Securities whose Registrable
Securities are included in the Demand Registration in proportion to any
Registrable Securities included on their behalf.
(d) Priority on Demand Registrations. If a Demand Registration is
underwritten and the managing underwriters advise the Company in writing that in
their opinion the number of Registrable Securities requested to be included
exceeds the number that can be sold in such offering, at a price reasonably
related to fair value, the Company will include in such Demand Registration (i)
first, the Registrable Securities requested to be included in such Demand
Registration by all Stockholders, including the Significant Stockholder making
the demand, pro rata on the basis of the number of Registrable Securities owned,
(ii) second, any securities that the Company desires to include on its own
behalf and (iii) third, any securities of the Company that are not Registrable
Securities and have "piggyback" registration rights. A Demand Registration shall
not be considered to be one of the Significant Stockholder's four Demand
Registrations under Section 1(a) hereof, and the Company shall pay the
Registration Expenses of such Demand Registration, if (i) the Significant
Stockholder that initiated the Demand Registration is not able to register and
sell in the Demand Registration at least 75 % of the Registrable Securities
sought to be included in the Demand Registration by such Significant
Stockholder, as specified in such Significant Stockholder's notice by which the
demand was made, or (ii) the gross proceeds of the securities included in the
Demand Registration on behalf of the Company constitute at least 20% of the
total gross proceeds of the Demand Registration.
(e) Selection of Underwriters. If any Demand Registration is
underwritten, the selection of investment banker(s) and manager(s) and the other
decisions regarding the underwriting arrangements for the offering will be made
by the Significant Stockholder demanding such registration.
(f) Contemporaneous Demand. If any holder of the Company's securities
that is not a holder of Registrable Securities under this Agreement exercises
demand registration rights to have the Company register its securities under the
1933 Act (a "Non-Stockholder Registration") within a period of 30 days before or
after the time any Significant Stockholder shall have requested a Demand
Registration, then (i) the holders of Registrable Securities that desire to be
included in the Non-Stockholder Registration and the holders of securities other
than Registrable Securities that have registration rights with respect to such
registration shall be entitled to participate in the Non-Stockholder
Registration on a pro rata basis, according to the number of shares owned by the
holders seeking to have securities included in such registration, (ii) the
Company will pay all of the Registration Expenses of the Non-Stockholder
Registration (to the extent obligated under
2
<PAGE>
its agreement with such holder) and (iii) the Non-Stockholder Registration shall
not count as a Demand Registration with respect to any Significant Stockholder
that shall have requested a Demand Registration with such time period unless the
Significant Stockholder is able to register and sell at least 75% of the
Registrable Securities sought to be registered by that Stockholder in its Demand
Registration.
(g) Withdrawal of Demand. If any holder of Registrable Securities
disapproves of the terms of the underwritten public offering, such holder may
elect to withdraw the request for a Demand Registration by providing written
notice to the Company. In the event of such withdrawal, and if such holder
reimburses the Company for its Registration Expenses arising directly from such
holder's request for a Demand Registration, such initial request shall not count
for purposes of determining the number of Demand Registrations to which the
Significant Stockholders are entitled pursuant to Section 1(a) hereof.
(h) Limitations on Demands. The Company shall be entitled to postpone
for a reasonable period of time not to exceed [90] days the filing of any
registration statement otherwise required to be prepared and filed by it if, at
the time it receives the request for a Demand Registration, the Company
determines, in its reasonable judgment, that such Demand Registration would
materially interfere with any then pending financing, acquisition, corporate
reorganization or other material transaction involving the Company and/or any of
its subsidiaries, and promptly give the Significant Stockholder(s) who have
requested registration of all or part of their Registrable Securities written
notice of such determination and the reasons therefor. In such event, the
Significant Stockholder(s) who have requested registration of all or a part of
their Registrable Securities shall have the right to withdraw the request for a
Demand Registration by giving written notice to the Company within 30 days after
receipt of the notice of postponement (and, in the event of such withdrawal,
such request shall be ignored for purposes of determining the number of Demand
Registrations to which the Significant Stockholders are entitled pursuant to
Section 1(a)).
2. Piggyback Registrations.
(a) Right to Piggyback. Whenever the Company or any other holder
proposes to register any of its securities under the 1933 Act (other than a
Demand Registration), and the registration form to be used may be used for the
registration of Registrable Securities (a "Piggyback Registration"), the Company
will give prompt written notice to all holders of Registrable Securities and
will include in such Piggyback Registration, subject to the allocation
provisions below, all Registrable Securities with respect to which the Company
has received written requests from the Stockholders for inclusion within 20 days
after the Company's mailing of such notice. The Company shall not select a form
of registration statement which imposes, for its use, limitations on the maximum
value or number of securities to be registered if these limitations would
preclude registration of the Registrable Securities that the Company has been
requested to include in such registration,
3
781486.1
<PAGE>
(b) Piggyback Expenses. In all Piggyback Registrations, the Company
will pay the Registration Expenses related to the Registrable Securities of the
Stockholders, but the Stockholders will pay the Underwriting Commissions related
to their Registrable Securities.
(c) Priority on Primary Registrations. If a Piggyback Registration is
an underwritten primary registration on behalf of the Company, and the managing
underwriters advise the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number that
can be sold in such offering, at a price reasonably related to fair value, the
Company will allocate the securities to be included as follows: first, the
securities the Company proposes to sell on its own behalf; and second,
Registrable Securities requested to be included in such registration, pro rata
on the basis of the number of Registrable Securities owned among the
Stockholders.
(d) Priority on Secondary Registrations. If a Piggyback Registration
is initiated as an underwritten secondary registration on behalf of holders of
the Company's securities (other than a Demand Registration pursuant to Section
1), and the managing underwriters advise the Company in writing that in their
opinion the number of securities requested to be included in such registration
exceeds the number that can be sold in such offering, the Company will allocate
the securities to be included as follows: first, the securities requested to be
included by the holders initiating such registration; and second, Registrable
Securities requested to be included in such registration, pro rata on the basis
of the number of Registrable Securities owned among the Stockholders.
(e) Selection of Underwriters. If any Piggyback Registration is
underwritten, the selection of investment banker(s) and manager(s) and the other
decisions regarding the underwriting arrangements for the offering will be made
by the Company if the registration is under Section 2(c) hereof, or by the
holders initiating such registration, if the registration is under Section 2(d)
hereof.
3. Holdback Agreements.
Neither any Stockholder nor the Company shall effect any public sale
or distribution of equity securities of the Company or any securities
convertible into or exchangeable or exercisable for such securities during the
seven days prior to and the 90 days after any underwritten Demand Registration
or underwritten Piggyback Registration has become effective (except as part of
such underwritten registration if required by law or by the underwriter of such
offering).
4. Registration Procedures.
Whenever the holders of Registrable Securities have requested that any
Registrable Securities be registered pursuant to Section 1 or 2 of this
Agreement, the Company will, as expeditiously as possible:
(a) prepare and file with the Securities and Exchange Commission a
registration statement with respect to such Registrable Securities and use its
best efforts to cause such
4
781486.1
<PAGE>
registration statement to become effective (provided that before filing a
registration statement or prospectus or any amendments or supplements thereto,
the Company will furnish each Stockholder with copies of all such documents
proposed to be filed);
(b) prepare and file with the Securities and Exchange Commission such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective for a period of not less than 120 days;
(c) furnish to each Stockholder such number of copies of such
registration statement, each amendment and supplement thereto and the prospectus
included in such registration statement (including each preliminary prospectus),
and such other documents as such Stockholder may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such
Stockholder;
(d) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions as
the managing underwriter(s) may reasonably request;
(e) notify each Stockholder at any time when a prospectus relating
thereto is required to be delivered under the 1933 Act within the period that
the Company is required to keep the registration statement effective of the
happening of any event as a result of which the prospectus included in such
registration statement contains an untrue statement of a material fact or omits
any fact necessary to make the statements therein not misleading, and, at the
request of any such Stockholders, the Company will prepare a supplement or
amendment to such prospectus so that, as thereafter delivered to the purchasers
of such Registrable Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state any fact necessary to make the
statements therein not misleading;
(f) cause all such Registrable Securities to be listed or included on
securities exchanges or eligible for quotation on the NASDAQ National Market
System on which similar securities issued by the Company are then listed or
included;
(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(h) enter into such customary agreements (including an underwriting
agreement in customary form) and take such other customary actions as may be
reasonably necessary to expedite or facilitate the disposition of such
Registrable Securities;
(i) obtain a "comfort" letter addressed to the Company and the
Stockholders from the Company's independent pubic accountants in customary form
and covering such matters of the type customarily covered by "comfort" letters;
5
781486.1
<PAGE>
(j) make available for inspection by any Stockholder, any underwriter
participating in any disposition pursuant to such registration statement, and
any attorney, accountant or other agent retained by any such Stockholder or
underwriter, all financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such
Stockholder, underwriter, attorney, accountant or agent in connection with such
registration statement; and
(k) [opinions of counsel to be discussed]
5. Indemnification and Contribution.
(a) The Company hereby indemnifies each Stockholder, its officers and
directors, and each person who controls such holder (within the meaning of the
1933 Act), against all losses, claims, damages, liabilities and expenses arising
out of or resulting from any untrue or alleged untrue statement of material fact
contained in any registration statement, prospectus or preliminary prospectus 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 except
insofar and to the extent as the same are caused by or contained in any
information furnished to the Company by such holder expressly for use therein or
by any such holder's failure to deliver a copy of the registration statement or
prospectus or any amendments or supplements thereto after the Company has
furnished such holder with a sufficient number of copies of the same. In
connection with an underwritten offering, the Company will indemnify the
underwriters, their officers and directors, and each person who controls such
underwriters (within the meaning of the 1933 Act) to the same extent as provided
above with respect to the indemnification of the Stockholders.
(b) In connection with any registration statement in which a
Stockholder is participating, each such holder will furnish to the Company in
writing such information as is reasonably requested by the Company for use in
any such registration statement or prospectus concerning such Stockholder and
will indemnify the Company, its directors and officers and each person who
controls the Company (within the meaning of the 1933 Act) against any losses,
claims, damages, liabilities and expenses resulting from any untrue or alleged
untrue statement of material fact or any omission or alleged omission of a
material fact required to be stated in the registration statement or prospectus
or any amendment thereof or supplement thereto or necessary to make the
statements therein not misleading, but only to the extent that such untrue
statement or omission is contained in information so furnished by such holder
specifically for use in preparing the registration statement. Notwithstanding
the foregoing, the liability of a Stockholder under this Section 5(b) shall be
limited to an amount equal to the net proceeds actually received by the
Stockholder from the sale of Registrable Securities covered by the registration
statement.
(c) Any person entitled to indemnification hereunder will (i) give
prompt notice to the indemnifying party of any claim with respect to which it
seeks indemnification and (ii) unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist with respect to such claim, permit such indemnifying party to
6
781486.1
<PAGE>
assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party. If such defense is assumed, the indemnifying party will not
be subject to any liability for any settlement made without its consent (but
such consent will not be unreasonably withheld). An indemnifying party who is
not entitled, or elects not, to assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties with
respect to such claim.
(d) If the indemnification provided for in this Section 5 is
unavailable to an indemnified party under paragraphs (a) and (b) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or Registration
Expenses (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Stockholder(s) on the
other hand from the offering of the Registrable Securities, or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company on
the one hand and the Stockholder(s) on the other in connection with the
statements or omissions that resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Stockholder(s) on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by the
Company bears to the total net proceeds from the offering (before deducting
expenses) received by the Stockholder(s), in each case as set forth in the table
on the cover page of the Prospectus. The relative fault of the Company on the
one hand and the Stockholder(s) on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or by the Stockholder(s) and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
(e) The Company and the Significant Stockholders agree that it would
not be just and equitable if contribution pursuant to this Section 5 were
determined by a pro rata allocation or by any other method of allocation that
does not take account of the equitable considerations referred to in paragraph
(d) above. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities and expenses referred to in paragraph (d)
above shall be deemed to include, subject to the limitations set forth above,
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating any claim or defending any such action, suit or
proceeding. Notwithstanding the foregoing, the liability of a Stockholder under
this Section 5(e) shall be limited to an amount equal to the net proceeds
actually received by the Stockholder from the sale of Registrable Securities
covered by the registration statement.
7
781486.1
<PAGE>
6. Participation in Underwritten Registrations.
No Stockholder may participate in any underwritten registration
hereunder unless such holder (a) agrees to sell such holder's securities on the
basis provided in any underwriting arrangements approved by the persons entitled
hereunder to approve such arrangements under Section 1(e) or 2(e) hereof, and
(b) completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
7. Definitions.
(a) The term "Registrable Securities" means (i) the Common Stock of
the Company registered in the names of the Stockholders from time to time, and
(ii) any securities issued or to be issued with respect to the securities
referred to in clause (i) of this Section 7(a) by way of a stock dividend or
stock split or, in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization. As to any particular Registrable
Securities, such securities will cease to be Registrable Securities when they
have been effectively registered under the 1933 Act and disposed of in
accordance with the registration statement covering them.
(b) The term "Registration Expenses" means all expenses incident to
the Company's performance of or compliance with this Agreement, including all
registration and filing fees, fees and expenses of compliance with securities or
blue sky laws, printing expenses, messenger and delivery expenses, expenses and
fees for listing the securities to be registered on exchanges on which similar
securities issued by the Company are then listed, and fees and disbursements of
counsel for the Company, and of all independent certified public accountants,
underwriters (other than Underwriting Commissions) and the reasonable fees and
disbursements of a single counsel for the Stockholders in the event of a Demand
Registration.
(c) The term "Underwriting Commissions" means all underwriting
discounts or commissions relating to the sale of securities of the Company, but
excludes any expenses reimbursed to underwriters.
8. Miscellaneous.
(a) Notices. All notices that are required or permitted hereunder
shall be in writing and shall be sufficient if personally delivered or sent by
mail, facsimile message or Federal Express or other delivery service. Any
notices shall be deemed given upon the earlier of the date when received at, or
the third day after the date when sent by registered or certified mail or the
day after the date when sent by Federal Express to, the address or fax number
set forth below, unless such address or fax number is changed by notice to the
other party hereto.
(b) Amendments and Waivers. The provisions of this Agreement may be
amended or terminated and the Company may take any action herein prohibited, or
omit to perform any act herein required to be performed by it, only if
previously approved in writing by the Stockholders.
8
781486.1
<PAGE>
(c) Binding Effect. This Agreement will bind and inure to the benefit
of the respective successors (including any successor resulting from a merger or
similar reorganization), assigns, heirs, and personal representatives of the
parties hereto. Without limiting the generality of the foregoing, if a
Stockholder liquidates or reorganizes such that its assets are transferred to
its own stockholders or partners or to another entity, such stockholders,
partners or entity shall succeed to all of the rights of such Stockholder
hereunder.
(d) Prior Agreements. This Agreement is the only agreement among the
Company and any of the Stockholders with respect to the subject matter hereof,
and any prior agreements between the Company and any of the Stockholders
relating to the subject matter of this Agreement are terminated as of the date
hereof and shall have no further force and effect.
(e) Governing Law. All questions concerning the construction, validity
and interpretation of this Agreement will be governed by the internal law, not
the law of conflicts, of the State of New York.
(f) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be considered to be an original instrument and
to be effective as of the date first written above. Each such copy shall be
deemed an original, and it shall not be necessary in making proof of this
Agreement to produce or account for more than one such counterpart.
(g) Interpretation. Unless the context of this Agreement clearly
requires otherwise (i) references to the plural include the singular, the
singular the plural, the part the whole, (ii) references to one gender include
all genders, (iii) "or" has the inclusive meaning frequently identified with the
phrase "and/or" and (iv) "including" has the inclusive meaning frequently
identified with the phrase "but not limited to." The section and other headings
contained in this Agreement are for reference purposes only and shall not
control or affect the construction of this Agreement or the interpretation
thereof in any respect.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first written above. This Agreement shall be
binding upon any party that execute and delivers a copy hereof, irrespective of
whether any of the parties listed below (other than the Company) do not also
become a party hereto.
FOILMARK, INC.
By:_________________________________
Name:
Title:
9
781486.1
<PAGE>
BRADFORD VENTURE PARTNERS, L.P.
By: Bradford Associates, General Partner
By:_________________________________
Name:
Title:
OVERSEAS PRIVATE INVESTOR PARTNERS
By: Overseas Private Investors, Ltd.,
General Partner
By:_________________________________
Name:
Title:
[Names of certain other holders to come]
10
781486.1
<PAGE>
Exhibit 9.2(o)(i)
James L. Rooney
Term. One year consulting agreement.
Compensation. $105,000 per annum.
Options. Foilmark, Inc. will grant to Mr. Rooney, 20,000 options
to purchase Foilmark, Inc. common stock.
Title. Consultant.
<PAGE>
Exhibit 9.2(o)(ii)
Joseph T. Webb
Term. One year employment agreement.
Compensation. $145,000 per annum.
Bonus. Mr. Webb will be entitled to a bonus in accordance with
a budget for pretax income established by the Board of
Directors. Mr. Webb's bonus will vary as a percentage
of his salary in relation to the percentage achievement
of that budget.
Options. Foilmark, Inc. will grant to Mr. Webb, 10,000 options
to purchase Foilmark, Inc. common stock.
Title. A senior executive position with Foilmark, Inc. with
such title as the Board of Directors as Foilmark, Inc.
shall determine.
<PAGE>
Exhibit 9.2(o)(iii)
Arthur Karmel
Term. One and one-half year employment agreement.
Compensation. $100,000 per annum.
Options. Foilmark, Inc. will grant to Mr. Karmel, 6,000 options
to purchase Foilmark, Inc. common stock.
Title. A senior executive position with Foilmark, Inc. with
such title as the Board of Directors as Foilmark, Inc.
shall determine.
779482.1
Exhibit 9.2(o)(iv)
List of Foilmark Individuals with whom Foilmark
Shall Enter into Indemnification Agreements
Frank J. Olsen, Jr.
Philip Leibel
Thomas R. Schwarz
Michael Foster
Edward Sullivan
Martin Olsen
Glenn Regan
Douglas Parker
<PAGE>
Exhibit 9.2(n)
List of Foilmark Individuals Receiving Stock Options
Frank J. Olsen 15,000
William Kutsch 12,000
Philip Leibel 8,000
Craig Pomeroy 4,500
Edward Sullivan 4,500
Carol Robie 4,000
Richard Zeller 3,500
Chris Christuk 3,500
Mark Bowland 2,500
Barret King 2,500
John Halotek 2,500
Total 62,500
<PAGE>
Exhibit 9.3(i)
List of Holopak Individuals Receiving Stock Options
John Duplica 8,000
Arthur Karmel 6,000
Serge Roger 7,000
J.T. Webb 10,000
Marc Woonter 6,000
Andy Zweig 5,500
James Rooney 20,000
Total 62,500
<PAGE>
Exhibit 9.3(j)
List of Holopak Individuals with whom Foilmark
Shall Enter into Indemnification Agreements
Brian Kelly
Harvey Share
James L. Rooney
Joseph T. Webb
Arthur Karmel
Robert J. Simon
Michael S. Mathews
Exhibit 99.3
SHAREHOLDER AGREEMENT, dated as of November 17, 1998, among
FOILMARK, INC, a Delaware corporation ("Parent"), FOILMARK
ACQUISITION CORPORATION, a Delaware corporation and a wholly owned
subsidiary of Parent ("Sub"), and the persons listed on Schedule A
hereto (each a "Shareholder", and, collectively, the "Shareholders")
WHEREAS, Parent, Sub and Holopak Technologies, Inc., a Delaware
corporation (the "Company"), propose to enter into an Agreement and Plan of
Merger of even date herewith (as the same may be amended or supplemented, the
"Merger Agreement") providing for the merger of the Company with and into Sub
(the "Merger");
WHEREAS, defined terms used herein and not elsewhere defined shall
have the meaning ascribed to such terms in the Merger Agreement;
WHEREAS, each Shareholder is the owner of the number of shares of
Company Common Stock set forth opposite such Shareholder's name on Schedule A
hereto; such shares of Company Common Stock, as such shares may be adjusted by
stock dividend, stock split, recapitalization, combination or exchange of
shares, merger, consolidation, reorganization or other change or transaction of
or by the Company, together with shares of Company Common Stock that may be
acquired after the date hereof by such Shareholder, including shares of Company
Common Stock issuable upon the exercise of options to purchase Parent Common
Stock (as the same may be adjusted as aforesaid), being collectively referred to
herein as the "Shares"; and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Sub have requested that the Shareholders enter into this
Agreement;
NOW, THEREFORE, to induce Parent and Sub to enter in to, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. Representations and Warranties of the Shareholders. Each
Shareholder hereby, severally and not jointly, represents and warrants to Parent
and Sub as follows:
(a) Authority. The Shareholder has all requisite power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by the Shareholder. This Agreement has been duly executed and
delivered by the Shareholder and, assuming this Agreement constitutes a valid
and binding obligation of the Parent and Sub, constitutes a valid and binding
obligation of the Shareholder enforceable against the Shareholder in accordance
with its terms, except as such enforcement may be limited by general equitable
principles and bankruptcy, insolvency, moratorium or other similar laws
affecting the rights of creditors generally. Except for the expiration or
termination of the waiting periods, if any, under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), filings with the
Securities and Exchange Commission and as set forth in Section 6.21 of the
Holopak Disclosure Memorandum,
781481.1
<PAGE>
neither the execution, delivery or performance of this Agreement by the
Shareholder nor the consummation by the Shareholder of the transactions
contemplated hereby will (i) require any filing with, or permit, authorization,
consent or approval of, any federal, state or local government or any court,
tribunal, administrative agency or commission or other governmental or
regulatory authority or agency, domestic or foreign (a "Governmental Entity"),
(ii) result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default under, or give rise to any right of
termination, amendment, cancellation or acceleration under, or result in the
creation of any pledge, claim, lien, charge, encumbrance or security interest of
any kind or nature whatsoever (a "Lien") upon any of the properties or assets of
the Shareholder under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, lease, license, permit, concession, franchise,
contract, agreement or other instrument or obligation (a "Contract") to which
the Shareholder is a party or by which the Shareholder or any of the
Shareholder's properties or assets, including the Shareholder's Shares, may be
bound or (iii) knowingly violate any judgment, order, writ, preliminary or
permanent injunction or decree (an "Order") or any statue, law, ordinance,
regulation of any Governmental Entity (a "Law") applicable to the Shareholder or
any of the Shareholder's properties or assets, including the Shareholder's
Shares.
(b) The Shares. The Shareholder's Shares and the certificates
representing such Shares are now, and at all times during the term hereof will
be, held by such Shareholder, or by a nominee or custodian for the benefit of
such Shareholder, and the Shareholder has good and marketable title to such
Shares, free and clear of any Liens, proxies, voting trusts or agreements,
understandings or arrangements, except for any such Liens or proxies arising
hereunder. The Shareholder owns no shares of Company Common Stock other than
such Shareholder's Shares and shares of Company Common Stock issuable upon the
exercise of Company Stock Options.
(c) Brokers. No broker, investment banker, financial advisor or other
person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of such Shareholder.
(d) Merger Agreement. The Shareholder understands and acknowledges
that Parent is entering into, and causing Sub to enter into, the Merger
Agreement in reliance upon the Shareholder's execution and delivery of this
Agreement.
2. Covenants of the Shareholders. Each Shareholder, severally and not
jointly, agrees as follows:
(a) Until the earlier to occur of the Effective Time or the
termination of Merger Agreement, the Shareholder shall not, except as
contemplated by the terms of this Agreement, (i) sell, transfer, pledge, assign
or otherwise dispose of, or enter into any Contract, option or other arrangement
(including any profit sharing arrangement) or understanding with respect to the
sale, transfer, pledge, assignment or other disposition of, the Shares to any
person other than Parent or Sub (except for a transfer of Shares to a trust
which unconditionally and irrevocably agrees to be bound by the terms of this
Agreement with respect to the Shares being transferred), (ii) enter into any
voting arrangement, whether by proxy, voting agreement, voting trust, power of
attorney or
2
781481.1
<PAGE>
otherwise, with respect to the Shares except as provided herein or (iii) take
any other action that would in any way restrict, limit or interfere with the
performance of its obligations hereunder or the transactions contemplated
hereby.
(b) Until the Effective Time or termination of this Agreement in
accordance with its terms, the Shareholder shall not, and the Shareholder shall
use its reasonable best efforts to cause any of its investment bankers,
financial advisers, attorneys, accountants or other representatives not to,
directly or indirectly (i) solicit, initiate or encourage (including by way of
furnishing information), or take any other action designed to facilitate, any
inquiries or the making of any proposals which constitute, or may reasonably be
expected to lead to, any Acquisition Transaction Proposal involving the Company
or (ii) participate in any discussions or negotiations regarding any such
Acquisition Transaction Proposal. Shareholder shall notify the Parent orally and
in writing of any such proposals or inquiries relating to the purchase or
acquisition of the Shares (including, without limitation, the terms and
conditions thereof and the identity of the person making it), within 24 hours of
the receipt thereof. Shareholder shall, and shall use its reasonable best
efforts to cause its investment bankers, financial advisors, attorneys,
accountants or other representatives or agents to, immediately cease and cause
to be terminated all existing activities, discussions and negotiations, if any,
with any parties conducted heretofore with respect to any Acquisition
Transaction Proposal relating to the Company other than discussions or
negotiations with the Parent.
(c) During the period commencing on the date hereof and continuing
until the first to occur of (i) the Effective Time and (ii) termination of this
Agreement in accordance with its terms, at any meeting of shareholders of the
Company called to vote upon the Merger and the Merger Agreement or at any
adjournment thereof or in any other circumstances upon which a vote, consent or
other approval (including by written consent) with respect to the Merger and the
Merger Agreement is sought, each Shareholder shall, including by initiating a
written consent solicitation if requested by Parent, vote (or cause to be voted)
such Shareholder's Shares in favor of the Merger, the adoption by the Company of
the Merger Agreement and the approval of the other transactions contemplated by
the Merger Agreement. During the period commencing on the date hereof and
continuing until the first to occur (i) the Effective Time and (ii) termination
of this Agreement in accordance with its terms, at any meeting of shareholders
of the Company or at any adjournment thereof or in any other circumstances upon
which the Shareholder's vote, consent or other approval is sought, such
Shareholder shall vote (or cause to be voted) such Shareholder's Shares against
(i) any merger agreement or merger (other than the Merger Agreement and the
Merger ), consolidation, combination, sale of all or substantially all assets,
reorganization, recapitalization, dissolution, liquidation or winding up of or
by the Company or any other Acquisition Transaction Proposal (collectively,
"Alternative Transactions") or (ii) any amendment of the Company's Certificate
of Incorporation or By-laws or other action involving the Company or any of its
subsidiaries, which amendment or other proposal or transaction would reasonably
be expected to delay, postpone impede, frustrate, prevent or nullify the Merger,
the Merger Agreement or any of the other transaction contemplated by the Merger
Agreement (collectively, "Frustrating Transactions").
(d) The holders of the Class A Common Stock of the Company shall
cause such Class A Common Stock to be converted into shares of Company Common
Stock prior to the record
3
781481.1
<PAGE>
date for the Special Meeting of Shareholders of the Company to be convened for
the purpose of approving the Merger.
3. Fiduciary Duty. Notwithstanding the restrictions set forth in
Section 2(b) hereof, any person who is a director or officer of the Company may
take such action in furtherance of the exercise of his fiduciary duties in his
capacity as a director or officer with respect to the Company as opposed to with
respect to taking action with respect to the direct or indirect ownership of any
Shares, and no such action in furtherance of the exercise of fiduciary duties
shall be deemed to be a breach of, or a violation of the restrictions set forth
in Section 2(b) hereof and the Shareholders shall not have any liability
hereunder for any such action in furtherance of the exercise of fiduciary duties
by such person in his capacity as a director or officer of the Company.
4. Further Assurances. Each Shareholder will, from time to time,
execute and deliver, or cause to be executed and delivered, such additional or
further transfers, assignments, endorsements, consents and other instruments as
Parent or Sub may reasonably request for the purpose of effectively carrying out
the transactions contemplated by this Agreement and to vest the power to vote
such Shareholder's Shares as contemplated by Section 3. Parent and Sub jointly
and severally agree to use reasonable efforts to take, or cause to be taken, all
actions necessary to comply promptly with all legal requirements that may be
imposed with respect to the transactions contemplated by this Agreement
(including legal requirements of the HSR Act, if any).
5. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Sub may
assign, in its sole discretion, any or all of its rights, interests and
obligations hereunder to Parent or to any direct or indirect wholly owned
subsidiary of Parent. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns. Each Shareholder agrees that this
Agreement and the obligations of such Shareholder hereunder shall attach to such
Shareholder's Shares and shall be binding upon any person or entity to which
legal or beneficial ownership of such Shares shall pass, whether by operation of
law or otherwise, including without limitation such Shareholder's heirs,
guardians, administrators or successors.
6. Termination. This Agreement, and all rights and obligations of the
parties hereunder, shall terminate upon the earliest of (a) the date upon which
the Merger Agreement is terminated pursuant to Section 10.1(a), (d) or (e)
thereof, (b) the Effective Time and (c) April 30, 1999.
7. Stop Transfer. The Company agrees with and covenants to Parent and
Sub that the Company shall not register the transfer of any certificate
representing any Shareholder's Shares unless such transfer is made in accordance
with the terms of this Agreement.
4
781481.1
<PAGE>
8. General Provisions.
(a) Payments. All payments required to be made to any party to this
Agreement shall be made by wire transfer of immediately available funds to an
account designated by such party at least one trading day prior to such payment.
(b) Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expense.
(c) Amendments. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
(d) Notice. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, telecopied (which
is confirmed), sent by overnight courier (providing proof of delivery ) or
mailed by registered or certified mail (returned receipt requested) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(i) if to Parent or Sub, to
Foilmark, Inc.
Malcolm Hoyt Drive
Newburyport, MA 01950
Attention: Frank J. Olsen, Jr., Chairman and President
Telecopy No: (978) 463-8651
with a copy to:
Hinckley, Allen & Snyder
1500 Fleet Center
Providence, RI 02903
Attention:Stephen J. Carlotti, Esq.
Telecopy No: (401) 277-9600
and
5
781481.1
<PAGE>
(ii) if to a Shareholder, to the address set forth under the name of
such Shareholder on Schedule A hereto.
with a copy to:
Battle Fowler, LLP
75 East 55th Street
New York, NY 10022
Attention: Carl A. de Brito, Esq.
Telecopy No: (212) 856-7818
(e) Interpretation. When a reference is made in this Agreement to a
Section, such reference shall be to a Section of this Agreement unless otherwise
indicated. The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Wherever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation".
(f) Counterparts. This 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 parties, it being understood that all
parties need not sign the same counterpart.
(g) Entire Agreement; No Third-Party Beneficiaries. This Agreement
(including the documents and instruments referred to herein) (i) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
and (ii) is not intended to confer upon any person other than the parties hereto
any rights or remedies hereunder.
(h) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware without regard to any
applicable conflicts of law.
(i) Publicity. Except as otherwise required by law, court process or
the rules of a national securities exchange or the Nasdaq National Market or as
contemplated or provided in the Merger Agreement, for so long as this Agreement
is in effect, neither any Shareholder nor Parent shall issue or cause the
publication of any press release or other public announcement with respect to
the transactions contemplated by this Agreement or the Merger Agreement without
the consent of the other parties, which consent shall not be unreasonably
withheld.
9. Shareholder Capacity. No person executing this Agreement who is or
becomes during the term hereof a director of officer of the Company makes any
agreement or understanding herein in his or her capacity as such director or
officer. Each Shareholder signs solely in his or her capacity as the record
holder and beneficial owner of, or the trustee of a trust
6
781481.1
<PAGE>
whose beneficiaries are the beneficial owners of, such Shareholder's Shares and
nothing herein shall limit or affect any actions taken by a Shareholder in its
capacity as an officer or director of the Company to the extent permitted by the
Merger Agreement.
10. Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitle to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in court of the United States located
in the State of Delaware or any Delaware State court, this being in addition to
any other remedy to which they are entitled at law or in equity. In addition,
each of the parties hereto waives any right to trial by jury with respect to any
claim or proceeding related to or arising out of this Agreement or any of the
transactions contemplated hereby.
7
781481.1
<PAGE>
IN WITNESS WHEREOF, each of Parent and Sub has caused this Agreement to be
signed by its officer thereunto duly authorized and each Shareholder has signed
this Agreement, all as of the date first written above.
FOILMARK, INC.
By: /s/ Frank J. Olsen, Jr.
---------------------------------
Name: Frank J. Olsen, Jr.
Title: Chairman and President
FOILMARK ACQUISITION CORPORATION
By: /s/ Frank J. Olsen, Jr.
---------------------------------
Name: Frank J. Olsen, Jr.
Title: Chairman and President
SHAREHOLDERS
/s/ Robert J. Simon
-------------------------------------
Name: Robert J. Simon
BRADFORD VENTURE PARTNERS, L.P.
By: Bradford Associates,
Its General Partner
By: /s/ Robert J. Simon
---------------------------------
OVERSEAS PRIVATE INVESTOR PARTNERS
By: Overseas Private Investors, Ltd.,
Its General Partner
By: /s/ Robert J. Simon
---------------------------------
8
781481.1
<PAGE>
/s/ Brian Kelly
------------------------------------
Name: Brian Kelly
/s/ Michael S. Mathews
------------------------------------
Name: Michael S. Mathews
/s/ Harvey S. Share
-----------------------------------
Name: Harvey S. Share
Acknowledged
as to Section 2(d) and 7
HOLOPAK TECHNOLOGIES, INC.
By: /s/ James L. Rooney
--------------------
Title: ____________________
9
781481.1
<PAGE>
SCHEDULE A
- ---------------------
NAME AND ADDRESS OF NUMBER OF NUMBER OF SHARES
SHAREHOLDER SHARES UNDERLYING OPTIONS1
Robert J. Simon 17,880 12,000
c/o Bradford Ventures, Ltd.
One Rockefeller Plaza
Suite 1722
New York, NY 10020
Bradford Venture Partners, L.P. 753,086
44 Nassau Street
Princeton, NJ 08542
Overseas Private Investor Partners 753,0862
Clarendon House
Church Street
Hamilton 5-31 Bermuda
James L. Rooney 66,667 66,667
1272 Camelot Lane
Lemont, IL 60439
Brian Kelly 8,000 8,000
c/o DelaFoil, Inc.
232 Shoemaker Road
Pottstown, PA 19464
Michael S. Mathews 17,880 12,000
193 Elm Road
Princeton, NJ 08540
Harvey S. Share 2,000 2,000
250 Ridgedale Avenue, Suite R6
Florham Park, NJ 07932
- --------
1 These options have been included in the number of shares.
2 Class A Common Stock.
10
781481.1
<PAGE>
Exhibit 99.4
SHAREHOLDER AGREEMENT, dated as of November 17,
1998, among HOLOPAK TECHNOLOGIES, INC, a Delaware
corporation ("Company"), , and the persons listed on
Schedule A hereto (each a "Shareholder", and, collectively,
the "Shareholders").
WHEREAS, Foilmark Inc., a Delaware corporation ("Parent"), Foilmark
Acquisition Corporation a Delaware corporation and a wholly owned subsidiary of
Parent ("Sub") and the Company, propose to enter into an Agreement and Plan of
Merger of even date herewith (as the same may be amended or supplemented, the
"Merger Agreement") providing for the merger of the Company with and into Sub
(the "Merger");
WHEREAS, defined terms used herein and not elsewhere defined shall
have the meaning ascribed to such terms in the Merger Agreement;
WHEREAS, each Shareholder is the owner of the number of shares of
Parent Common Stock set forth opposite such Shareholder's name on Schedule A
hereto; such shares of Parent Common Stock, as such shares may be adjusted by
stock dividend, stock split, recapitalization, combination or exchange of
shares, merger, consolidation, reorganization or other change or transaction of
or by the Company, together with shares of Parent Common Stock that may be
acquired after the date hereof by such Shareholder, including shares of Parent
Common Stock issuable upon the exercise of options to purchase Parent Common
Stock (as the same may be adjusted as aforesaid), being collectively referred to
herein as the "Shares"; and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, the Company has requested that the Shareholders enter into this
Agreement;
NOW, THEREFORE, to induce the Company to enter in to, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. Representations and Warranties of the Shareholders. Each
Shareholder hereby, severally and not jointly, represents and warrants to the
Company as follows:
(a) Authority. The Shareholder has all requisite power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by the Shareholder. This Agreement has been duly executed and
delivered by the Shareholder and, assuming this Agreement constitutes a valid
and binding obligation of the Company, constitutes a valid and binding
obligation of the Shareholder enforceable against the Shareholder in accordance
with its terms, except as such enforcement may be limited by general equitable
principles and bankruptcy, insolvency, moratorium or other similar laws
affecting the rights of creditors generally. Except for the expiration or
termination of the waiting periods, if any, under the Hart-Scott-Rodino
Antitrust
781484.1
<PAGE>
Improvements Act of 1976, as amended (the "HSR Act"), filings with the
Securities and Exchange Commission and as set forth in Section 5.21 of the
Foilmark Disclosure Memorandum, neither the execution, delivery or performance
of this Agreement by the Shareholder nor the consummation by the Shareholder of
the transactions contemplated hereby will (i) require any filing with, or
permit, authorization, consent or approval of, any federal, state or local
government or any court, tribunal, administrative agency or commission or other
governmental or regulatory authority or agency, domestic or foreign (a
"Governmental Entity"), (ii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default under, or give
rise to any right of termination, amendment, cancellation or acceleration under,
or result in the creation of any pledge, claim, lien, charge, encumbrance or
security interest of any kind or nature whatsoever (a "Lien") upon any of the
properties or assets of the Shareholder under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, permit,
concession, franchise, contract, agreement or other instrument or obligation (a
"Contract") to which the Shareholder is a party or by which the Shareholder or
any of the Shareholder's properties or assets, including the Shareholder's
Shares, may be bound or (iii) knowingly violate any judgment, order, writ,
preliminary or permanent injunction or decree (an "Order") or any statue, law,
ordinance, regulation of any Governmental Entity (a "Law") applicable to the
Shareholder or any of the Shareholder's properties or assets, including the
Shareholder's Shares.
(b) The Shares. The Shareholder's Shares and the certificates
representing such Shares are now, and at all times during the term hereof will
be, held by such Shareholder, or by a nominee or custodian for the benefit of
such Shareholder, and the Shareholder has good and marketable title to such
Shares, free and clear of any Liens, proxies, voting trusts or agreements,
understandings or arrangements, except for any such Liens or proxies arising
hereunder. The Shareholder owns shares of Parent Common Stock other than such
Shareholder's Shares and shares of Parent Common Stock issuable upon the
exercise of Parent Stock Options.
(c) Brokers. No broker, investment banker, financial advisor or other
person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of such Shareholder.
(d) Merger Agreement. The Shareholder understands and acknowledges
that Parent is entering into, and causing Sub to enter into, the Merger
Agreement in reliance upon the Shareholder's execution and delivery of this
Agreement.
2. Covenants of the Shareholders. Each Shareholder, severally and not
jointly, agrees as follows:
(a) Until the earlier to occur of the Effective Time or the
termination of the Merger Agreement, the Shareholder shall not, except as
contemplated by the terms of this Agreement, (i) sell, transfer, pledge, assign
or otherwise dispose of, or enter into any Contract, option or other arrangement
(including any profit sharing arrangement) or understanding with respect to the
sale, transfer, pledge, assignment or other disposition of, the Shares to any
person other than the
2
781484.1
<PAGE>
Company (except for a transfer of Shares to a trust which unconditionally and
irrevocably agrees to be bound by the terms of this Agreement with respect to
the Shares being transferred), (ii) enter into any voting arrangement, whether
by proxy, voting agreement, voting trust, power of attorney or otherwise, with
respect to the Shares except as provided herein or (iii) take any other action
that would in any way restrict, limit or interfere with the performance of its
obligations hereunder or the transactions contemplated hereby.
(b) Until the Effective Time or termination of this Agreement in
accordance with its terms, the Shareholder shall not, and the Shareholder shall
use its reasonable best efforts to cause any of its investment bankers,
financial advisers, attorneys, accountants or other representatives not to,
directly or indirectly (i) solicit, initiate or encourage (including by way of
furnishing information), or take any other action designed to facilitate, any
inquiries or the making of any proposal which constitutes, or may reasonably be
expected to lead to, any Acquisition Transaction Proposal involving the Parent
or (ii) participate in any discussions or negotiations regarding any such
Acquisition Transaction Proposal. Shareholder shall notify the Company orally
and in writing of any such proposals or inquiries relating to the purchase or
acquisition of Shares (including, without limitation, the terms and conditions
thereof and the identity of the person making it), within 24 hours of the
receipt thereof. Shareholder shall, and shall use its reasonable best efforts to
cause its investment bankers, financial advisors, attorneys, accountants or
other representatives or agents to, immediately cease and cause to be terminated
all existing activities, discussions and negotiations, if any, with any parties
conducted heretofore with respect to any Acquisition Transaction Proposal
relating to the Parent, other than discussions or negotiations with the Company.
(c) During the period commencing on the date hereof and continuing
until the first to occur of (i) the Effective Time and (ii) termination of this
Agreement in accordance with its terms, at any meeting of shareholders of the
Parent called to vote upon the Merger and the Merger Agreement or at any
adjournment thereof or in any other circumstances upon which a vote, consent or
other approval (including by written consent) with respect to the Merger and the
Merger Agreement is sought, each Shareholder shall, including by initiating a
written consent solicitation if requested by Company, vote (or cause to be
voted) such Shareholder's Shares in favor of the Merger, the adoption by Parent
of the Merger Agreement and the approval of the other transactions contemplated
by the Merger Agreement. During the period commencing on the date hereof and
continuing until the first to occur of (i) the Effective Time and (ii)
termination of this Agreement in accordance with its terms, at any meeting of
shareholders of the Parent or at any adjournment thereof or in any other
circumstances upon which the Shareholder's vote, consent or other approval is
sought, such Shareholder shall vote (or cause to be voted) such Shareholder's
Shares against (i) any merger agreement or merger (other than the Merger
Agreement and the Merger ), consolidation, combination, sale of all or
substantially all assets, reorganization, recapitalization, dissolution,
liquidation or winding up of or by the Company or any other Acquisition
Transaction Proposal (collectively, "Alternative Transactions") or (ii) any
amendment of the Parent's Certificate of Incorporation or By-laws or other
action involving the Parent or any of its Subsidiaries, which amendment or other
proposal or transaction would reasonably be expected to delay, postpone, impede,
frustrate, prevent or
3
781484.1
<PAGE>
nullify the Merger, the Merger Agreement or any of the other transaction
contemplated by the Merger Agreement (collectively, "Frustrating Transactions").
3. Fiduciary Duty. Notwithstanding the restrictions set forth in
Section 2(b) hereof, any person who is a director or officer of the Parent may
take such action in furtherance of the exercise of his fiduciary duties in his
capacity as a director or officer with respect to the Parent, as opposed to
taking action with respect to the direct or indirect ownership of any Shares,
and no such action in furtherance of the exercise of fiduciary duties shall be
deemed to be a breach of, or a violation of the restrictions set forth in
Section 2(b) hereof and the Shareholders shall not have any liability hereunder
for any such action in furtherance of the exercise of fiduciary duties by such
person in his capacity as a director or officer of the Company.
4. Further Assurances. Each Shareholder will, from time to time,
execute and deliver, or cause to be executed and delivered, such additional or
further transfers, assignments, endorsements, consents and other instruments as
the Company may reasonably request for the purpose of effectively carrying out
the transactions contemplated by this Agreement and to vest the power to vote
such Shareholder's Shares as contemplated by Section 3. The Company agrees to
use reasonable efforts to take, or cause to be taken, all actions necessary to
comply promptly with all legal requirements that may be imposed with respect to
the transactions contemplated by this Agreement (including legal requirements of
the HSR Act, if any).
5. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns. Each
Shareholder agrees that this Agreement and the obligations of such Shareholder
hereunder shall attach to such Shareholder's Shares and shall be binding upon
any person or entity to which legal or beneficial ownership of such Shares shall
pass, whether by operation of law or otherwise, including without limitation
such Shareholder's heirs, guardians, administrators or successors.
6. Termination. This Agreement, and all rights and obligations of the
parties hereunder, shall terminate upon the earliest of (a) the date upon which
the Merger Agreement is terminated pursuant to Section 10.1(a), (d) or (e)
thereof, (b) the Effective Time and (c) April 30, 1999.
7. Stop Transfer. The Parent agrees with, and covenants to, the
Company that the Parent shall not register the transfer of any certificate
representing any Shareholder's Shares unless such transfer is made in accordance
with the terms of this Agreement.
8. General Provisions.
(a) Payments. All payments required to be made to any party to this
Agreement shall be made by wire transfer of immediately available funds to an
account designated by such party at least one trading day prior to such payment.
4
781484.1
<PAGE>
(b) Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expense.
(c) Amendments. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
(d) Notice. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, telecopied (which
is confirmed), sent by overnight courier (providing proof of delivery ) or
mailed by registered or certified mail (returned receipt requested) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(i) if to the Company, to
Holopak Technologies, Inc.
9 Cotters Lane
P.O. Box 538
East Brunswick, NJ 08816
Attention:James L. Rooney, President
Telecopy No: 732-238-9460
with a copy to:
Battle Fowler, LLP
75 East 55th Street
New York, New York 10022
Attention:Carl A. de Brito, Esq.
Telecopy No: (212) 856-7818 and
(ii) if to a Shareholder, to the address set forth under the name of
such Shareholder on Schedule A hereto
with a copy to:
Hinckley, Allen & Snyder
1500 Fleet Center
Providence, RI 02903
Attention:Stephen J. Carlotti, Esq.
Telecopy No: (401) 277-9600
5
781484.1
<PAGE>
(e) Interpretation. When a reference is made in this Agreement to a
Section, such reference shall be to a Section of this Agreement unless otherwise
indicated. The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Wherever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation".
(f) Counterparts. This 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 parties, it being understood that all
parties need not sign the same counterpart.
(g) Entire Agreements; No Third-Party Beneficiaries. This Agreement
(including the documents and instruments referred to herein) (i) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
and (ii) is not intended to confer upon any person other than the parties hereto
any rights or remedies hereunder.
(h) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware without regard to any
applicable conflicts of law.
(i) Publicity. Except as otherwise required by law, court process or
the rules of a national securities exchange or the Nasdaq National Market or as
contemplated or provided in the Merger Agreement, for so long as this Agreement
is in effect, neither any Shareholder nor the Company shall issue or cause the
publication of any press release or other public announcement with respect to
the transactions contemplated by this Agreement or the Merger Agreement without
the consent of the other parties, which consent shall not be unreasonably
withheld.
9. Shareholder Capacity. No person executing this Agreement who is or
becomes during the term hereof a director of officer of the Parent makes any
agreement or understanding herein in his or her capacity as such director or
officer. Each Shareholder signs solely in his or her capacity as the record
holder and beneficial owner of, or the trustee of a trust whose beneficiaries
are the beneficial owners of, such Shareholder's Shares and nothing herein shall
limit or affect any actions taken by a Shareholder in its capacity as an officer
or director of the Parent to the extent permitted by the Merger Agreement.
10. Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitle to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in court of the United States located
in the State of Delaware or any Delaware State court, this being in addition to
any other remedy to which they are entitled at law or in equity. In addition,
each of the parties hereto waives any right to trial by
6
781484.1
<PAGE>
jury with respect to any claim or proceeding related to or arising out of this
Agreement or any of the transactions contemplated hereby.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
signed by its officer thereunto duly authorized and each Shareholder has signed
this Agreement, all as of the date firs written above.
HOLOPAK TECHNOLOGIES, INC.
By /s/ James L. Rooney
-------------------------------------
Name:
Title:
SHAREHOLDERS
/s/ Martin A. Olsen
---------------------------
Name: Martin A. Olsen
/s/ Frank J. Olsen, Jr.
---------------------------
Name: Frank J. Olsen, Jr.
/s/ Wilhelm Kutsch
---------------------------
Name: Wilhelm Kutsch
/s/ Philip Leibel
---------------------------
Name: Philip Leibel
/s/ Carol Robie
---------------------------
Name: Carol Robie
/s/ Edward Sullivan
---------------------------
Name: Edward Sullivan
7
781484.1
<PAGE>
/s/ Michael Foster
---------------------------
Name: Michael Foster
/s/ Thomas Schwarz
---------------------------
Name: Thomas Schwarz
/s/ Kenneth Harris
---------------------------
Name: Kenneth Harris
ACKNOWLEDGED
TO AS TO SECTION 7:
FOILMARK, INC.
By /s/ Frank J. Olsen, Jr.
------------------------
Title:
8
781484.1
<PAGE>
SCHEDULE A
NAME AND ADDRESS OF NUMBER OF NUMBER OF SHARES
SHAREHOLDER SHARES UNDERLYING OPTIONS1
Martin A. Olsen 527,477
3299 Old Barn Road East
Ponte Vedra Beach, FL 32082
Frank J. Olsen, Jr. 490,659 67,667
13 Country Farm Road
Stratham, NH 03885
Wilhelm Kutsch 107,697 70,867
Two Pine Meadows Drive
Exeter, NH 03833
Philip Leibel 78,163 62,733
3093 Susan Road
Bellmore, NY 17710
Carol Robie 212,409 21,100
53 Munroe Drive
East Hampstead, NH 03826
Edward Sullivan 158,834 5,000
2150 Anchor Court
Newbury Park, CA 91320
Michael Foster 10,000 5,000
WPI Group, Inc.
1155 Elm Street
Manchester, NH 03101
Thomas Schwarz 5,000 5,000
60 Westcliff Road
Weston, MA 02193
Kenneth Harris 131,022 2,500
25 Hale Street
Newburyport, MA 01950
- --------
1 These options have been included in the number of shares.
9
781484.1
