<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 6, 1994
REGISTRATION NO. 33-54913
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
PRIMESOURCE CORPORATION
(FORMERLY PHILLIPS & JACOBS, INCORPORATED)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
PENNSYLVANIA 5043 23-1430030
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
------------------------
FAIRWAY CORPORATE CENTER, SUITE 222,
4350 HADDONFIELD ROAD,
PENNSAUKEN, NEW JERSEY 08109
(609) 488-4888
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
<TABLE>
<S> <C>
MR. WILLIAM A. DEMARCO BARRY C. MAULDING, ESQ.
FAIRWAY CORPORATE CENTER, SUITE 222 KOLL CENTER BELLEVUE, SUITE 1900
4350 HADDONFIELD ROAD 500 - 108TH AVE. N.E.
PENNSAUKEN, NEW JERSEY 08109 BELLEVUE, WA 98004
(609) 488-4888 (206) 450-6550
</TABLE>
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
WITH COPIES TO:
<TABLE>
<S> <C>
DAVID E. BEAVERS, ESQ. RICHARD B. DODD, ESQ.
ANN CUDDY RODA, ESQ. MARK R. BEATTY, ESQ.
STRADLEY, RONON, STEVENS & YOUNG PRESTON GATES & ELLIS
2600 ONE COMMERCE SQUARE 5000 COLUMBIA CENTER
PHILADELPHIA, PA 19103-7098 701 FIFTH AVENUE
SEATTLE, WA 98104-7078
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC:
SEPTEMBER 1, 1994
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: / /
------------------------
This registration statement shall hereafter become effective in accordance
with the provisions of Section 8(a) of the Securities Act of 1933.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
EXHIBIT INDEX
(a) EXHIBIT NUMBER AND DESCRIPTION
<TABLE>
<CAPTION>
FOOTNOTES
---------
<S> <C> <C>
2.1 Form of Agreement and Plan of Distribution executed by and between *
Momentum Distribution, Inc. and VWR Corporation (filed with General
Form for Registration of Securities on Form 10 filed November 13,
1989 and including Amendment #1 on Form 8 filed December 6, 1989;
Amendment #2 on Form 8 filed January 19, 1990; Amendment #3 on Form 8
filed February 9, 1990; and Amendment #4 on Form 8 filed March 2,
1990, File No. 0-18112)
2.2 Stock Purchase Agreement, dated September 1, 1993, for the sale of *
the stock of VWR Textiles & Supplies Inc., a wholly-owned subsidiary
of Momentum Corporation, to Hanes Companies, Inc. (filed as exhibit 2
to Form 8-K dated September 15, 1993, File No. 0-18112)
2.3 Stock Acquisition Agreement, dated September 30, 1993, for the sale *
of the stock of Momentum Textiles Inc., a wholly-owned subsidiary of
Momentum Corporation, to Textile Acquisition Inc. (filed as exhibit 2
to Form 8-K dated October 15, 1993, File No. 0-18112)
2.4 Agreement and Plan of Reorganization dated as of May 27, 1994 by and (3)
between Momentum Corporation and Phillips & Jacobs, Incorporated
(Annex A to proxy Statement/Prospectus)
2.5 Form of Plan of Merger by and between Momentum Corporation and (3)
Phillips & Jacobs, Incorporated (Annex B to Proxy
Statement/Prospectus)
3.1 Amended and Restated Articles of Incorporation of PrimeSource (3)
Corporation
3.2 PrimeSource Corporation Bylaws (3)
5 Opinion of Stradley, Ronon, Stevens & Young Re: legality of shares (3)
being issued
8.1 Opinion of Stradley, Ronon, Stevens & Young Re certain tax matters
8.2 Opinion of Preston Gates & Ellis Re certain tax matters
10.1 Form of Phillips & Jacobs, Incorporated 1993 Long Term Incentive Plan (3)
(Annex H to Proxy Statement/Prospectus)
10.2 Form of Phillips & Jacobs, Incorporated Directors Indemnification (1)
Agreement (filed as exhibit 10.2 to Form 10)
10.3 Form of Environmental Indemnification Agreement (filed as exhibit (1)
10.3 to Form 10)
10.4 Tasty Baking Company Pension Plan (filed as exhibit 10.4 to Form 10) (1)
10.5 Form of Supplemental Executive Retirement Plan Agreement (filed as (1)
exhibit 10.5 to Form 10)
10.6 Employment Agreement between Phillips & Jacobs, Incorporated and J.F. (1)
Mullan (filed as exhibit 10.6 to Form 10)
10.7 Employment Agreement between Phillips & Jacobs, Incorporated and F.G. (1)
Heinkel (filed as exhibit 10.7 to Form 10)
10.8 Employment Agreement between Phillips & Jacobs, Incorporated and D.M. (1)
Zewiske (filed as exhibit 10.8 to Form 10)
10.9 Employment Agreement between Phillips & Jacobs, Incorporated and W.A. (1)
DeMarco (filed as exhibit 10.9 to Form 10)
</TABLE>
II-1
<PAGE> 3
<TABLE>
<CAPTION>
FOOTNOTES
---------
<S> <C> <C>
10.10 Amended and Restated Employment and Non-Competition Agreement between (2)
Dixie Type and D.G. Garner (filed as exhibit 10.10 to 1993 Form 10-K)
10.11 Form of Tax Matters Agreement between Tasty Baking Company and (1)
Phillips & Jacobs, Incorporated (filed as exhibit 10.11 to Form 10)
10.12 Agreement among Employers Participating in Certain Qualified Plans (1)
between Tasty Baking Company and Phillips & Jacobs, Incorporated
(filed as exhibit 10.12 to Form 10)
10.13 Phillips & Jacobs, Incorporated 401(k) Savings Plan and Trust (2)
Agreement (filed as exhibit 10.14 to 1993 Form 10-K)
10.14 Amendment No. 1 to Agreement Among Employers Participating in Certain (3)
Qualified Plans (Exhibit 10.12 above) dated December 17, 1993
10.15 Trust Agreement dated as of November 17, 1989 between Phillips &
Jacobs, Incorporated and Meridian Trust Company relating to
Supplemental Executive Retirement Plan (Exhibit 10.5 above)
10.16 Phillips & Jacobs, Incorporated 1993 Replacement Option Plan (P&J (3)
Spin-off) (Annex I to Proxy Statement/Prospectus)
10.17 Revolving Credit and Term Loan Agreement among Phillips & Jacobs, its (1)
subsidiaries and First Fidelity Bank, N.A., Pennsylvania (filed as
Exhibit 10.14 to Form 10)
10.18 First Amendment to Revolving Credit and Term Loan Agreement listed as (3)
Exhibit 10.17
10.19 Agreement and Plan of Distribution (see Exhibit 2.1) *
10.20 Momentum Distribution Inc. 1989 Long-term Incentive Stock Plan as *
amended June 4, 1991 (filed with Registration Statement on Form S-8,
File No. 33-43920)
10.21 Momentum Distribution Inc. Retirement Plan as amended through March *
1, 1992 (filed as exhibit 10.5 to 1991 Form 10-K, File No. 0-18112,
dated March 29, 1992)
10.22 Amendment to Exhibit 10.21, Momentum Distribution Inc. Retirement *
Plan, effective January 1, 1992 (filed as exhibit 10.15 to 1992 Form
10-K, File No. 0-18112, dated March 30, 1993)
10.23 Momentum Distribution Inc. Executive Bonus Plan, dated March 1, 1990 *
(filed as exhibit 10.7 to 1990 Form 10-K, File No. 0-18112, dated
March 28, 1991)
10.24 Amended and Restated Agreements relating to compensation in the event *
of a change in control of Momentum Distribution Inc. between Momentum
Distribution Inc. and each of John H. Goddard, Jr. and Patsy R.
Turnipseed, effective February 26, 1990 (filed as exhibit 10.9 to
1990 Form 10-K, File No. 0-18112, dated March 28, 1991)
10.25 Amendment to Exhibit 10.24, Amended and Restated Agreements relating *
to compensation in the event of a change in control of Momentum
Distribution Inc. and each of John H. Goddard, Jr. and Patsy R.
Turnipseed, executed December 11, 1992 (filed as exhibit 10.14 to
1992 Form 10-K, File No. 0-18112, dated March 30, 1993)
10.26 Momentum Distribution Inc. Revised and Restated Employee Stock *
Ownership Plan and Trust, effective January 1, 1992 (filed as exhibit
10.12 to 1992 Form 10-K, File No. 0-18112, dated March 29, 1993)
10.27 Restated Momentum Distribution Inc. Supplemental Benefits Plan, *
effective April 22, 1991 (filed as exhibit 10.13 to 1992 Form 10-K,
File No. 0-18112, dated March 30, 1993)
10.28 Momentum Money-Maker 401(k) Retirement Plan and Trust as Amended and *
Restated January 1, 1992 (filed as exhibit 10.16 to 1992 Form 10-K,
File No. 0-18112, dated March 30, 1993)
</TABLE>
II-2
<PAGE> 4
<TABLE>
<CAPTION>
FOOTNOTES
---------
<S> <C> <C>
10.29 Momentum Graphics Bonus Plan, effective January 1, 1992 (filed as *
exhibit 10.17 to 1992 Form 10-K, File No. 0-18112, dated March 30,
1993)
10.30 Employment Agreement between Momentum Distribution Inc. and Mr. *
Richard E. Engebrecht dated December 9, 1992 (filed as exhibit 10.19
to 1992 Form 10-K, File No. 0-18112, dated March 30, 1993)
10.31 1993 Momentum Corporation 1993 Executive Incentive Plan (filed as *
exhibit 10.1 to 1993 Form 10-K, File No. 0-18112, dated March 29,
1994)
11 Computation of Per Share Income (Loss) of Phillips & Jacobs, (3)
Incorporated for the three years ended December 31, 1993 and the
quarters ended March 31, 1994 and 1993
21 Subsidiaries of the Registrant (3)
23.1 Consent of Coopers & Lybrand (3)
23.2 Consent of Ernst & Young (3)
23.3 Consent of McGladrey & Pullen (3)
23.4 Consent of Deloitte & Touche (3)
23.5 Consent of Stradley, Ronon, Stevens & Young (included in Exhibit 8.1)
23.6 Consent of Preston Gates & Ellis
23.7 Consent of Berwind Financial Group, Inc. is included in Annex E to (3)
the Proxy Statement/Prospectus
23.8 Consent of Piper Jaffray Inc. is included in Annex G to the Proxy (3)
Statement/ Prospectus
99.1 Consent of Named Director: Richard E. Engebrecht (3)
99.2 Consent of Named Director: John H. Goddard (3)
99.3 Consent of Named Director: Jerrold B. Harris (3)
99.4 Consent of Named Director: Gary MacLeod (3)
99.5 Consent of Named Director: Andrew V. Smith (3)
99.6 Consent of Named Director: James H. Wiborg (3)
99.7 Consent of Named Director: Edward N. Patrone (3)
</TABLE>
- ---------------
* Incorporated by reference from indicated filing.
(1) Filed with General Form for Registration of Securities on Form 10 filed by
Phillips & Jacobs, Incorporated on May 12, 1993, and as subsequently amended
by filings on Form 8 filed May 28, 1993, July 7, 1993 and July 13, 1993,
File No. 0-21750.
(2) Filed as exhibits to the Phillips & Jacobs, Incorporated annual report on
Form 10-K for the year ended December 31, 1993, dated March 25, 1993, File
No. 0-21750.
(3) Filed as exhibits to the registration statement on Form S-4 filed by
Phillips & Jacobs, Incorporated on August 4, 1994, registration no.
33-54913.
(b) FINANCIAL STATEMENT SCHEDULES
Opinion of Coopers & Lybrand with regard to financial statement schedules
of Phillips & Jacobs, Incorporated
Schedule VIII. Valuation of Qualifying Accounts of Phillips & Jacobs,
Incorporated
Schedule IX. Short-Term Borrowing of Phillips & Jacobs, Incorporated
II-3
<PAGE> 5
Signatures
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-4 and has duly caused this
amendment to the registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Philadelphia,
Commonwealth of Pennsylvania on September 1, 1994.
PRIMESOURCE CORPORATION
By /s/ James F. Mullan
--------------------------------------
James F. Mullan
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
amendment to the registration statement has been signed by the following
persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
NAME TITLE DATE
<S> <C> <C>
/s/ James F. Mullan President and Chief Executive Officer September 1, 1994
- ---------------------------- and Director of PrimeSource
James F. Mullan Corporation (Principal Executive Officer)
/s/ William A. DeMarco Vice President and Chief Financial September 1, 1994
- ---------------------------- Officer and Treasurer of PrimeSource
William A. DeMarco Corporation (Principal Financial
Officer and Principal Accounting
Officer)
/s/ Richard E. Engebrecht Chairman of the Board and Director of September 1, 1994
- ---------------------------- PrimeSource Corporation
Richard E. Engebrecht
/s/ Philip J. Baur, Jr. Vice Chairman of the Board of September 1, 1994
- ---------------------------- Directors and Director of PrimeSource
Philip J. Baur, Jr. Corporation
</TABLE>
II-4
<PAGE> 6
<TABLE>
<S> <C> <C>
/s/ John H. Goddard Executive Vice President and Director September 1, 1994
- ---------------------------- of PrimeSource Corporation
John H. Goddard
/s/ Fred C. Aldridge, Jr. Director of PrimeSource Corporation September 1, 1994
- ----------------------------
Fred C. Aldridge, Jr.
/s/ Jerrold B. Harris Director of PrimeSource Corporation September 1, 1994
- ----------------------------
Jerrold B. Harris
/s/ Nelson G. Harris Director of PrimeSource Corporation September 1, 1994
- ----------------------------
Nelson G. Harris
/s/ Gary MacLeod Director of PrimeSource Corporation September 1, 1994
- ----------------------------
Gary MacLeod
Director of PrimeSource Corporation September , 1994
- ---------------------------- --
Edward N. Patrone
/s/ John M. Pettine Director of PrimeSource Corporation September 1, 1994
- ----------------------------
John M. Pettine
/s/ Andrew V. Smith Director of PrimeSource Corporation September 1, 1994
- ----------------------------
Andrew V. Smith
/s/ James H. Wiborg Director of PrimeSource Corporation September 1, 1994
- ----------------------------
James H. Wiborg
</TABLE>
II-5
<PAGE> 7
EXHIBIT INDEX
EXHIBIT NUMBER AND DESCRIPTION
<TABLE>
<CAPTION>
PAGE NUMBER
-----------
<S> <C> <C>
8.1 Opinion of Stradley, Ronon, Stevens & Young Re certain tax matters
8.2 Opinion of Preston Gates & Ellis Re certain tax matters
23.6 Consent of Preston Gates & Ellis
</TABLE>
<PAGE> 1
EXHIBIT 8.1
September 1, 1994
Board of Directors
Phillips & Jacobs, Incorporated
Fairway Corporate Center, Suite 222
4350 Haddonfield Road
Pennsauken, NJ 08109
Re: COMBINATION OF PHILLIPS & JACOBS, INCORPORATED
("PHILLIPS") AND MOMENTUM CORPORATION ("MOMENTUM") IN
A REORGANIZATION DESCRIBED IN SECTION 368(A)(1)(A) OF
THE INTERNAL REVENUE CODE OF 1986,AS AMENDED (THE
"CODE")
------------------------------------------------------
Ms. von Seldeneck and Gentlemen:
You have requested our opinion as to certain federal income
tax consequences of the combination of Phillips and Momentum whereby Momentum
will merge with and into Phillips, and each outstanding share of Momentum
common stock, par value $1.00 per share, will be converted into .71 shares of
Phillips common stock, par value $.01 per share and the right to receive a cash
payment in lieu of the issuance of fractional shares (the "Merger"). In
connection with the Merger, we understand that the articles of incorporation of
Phillips will be amended to increase the number of shares of authorized
capital, to change its corporate name and to make certain other changes. All
terms used herein unless otherwise defined are used as defined in the Agreement
and Plan of Reorganization entered into between Momentum and Phillips as of May
27, 1994 (the "Agreement").
<PAGE> 2
Board of Directors
Phillips & Jacobs, Incorporated
September 1, 1994
Page 2
On August 1, 1993, Tasty Baking Company ("TBC") distributed
all the shares of Phillips Common Stock (the "Phillips Common Stock"), to its
shareholders in a transaction (the "Distribution") intended to qualify for
nonrecognition of gain or loss pursuant to Section 355 of the Code.
Immediately prior to the Distribution, TBC Investment Company, a wholly owned
subsidiary of TBC and owner of 100% of the issued and outstanding Phillips
Common Stock liquidated and distributed all of its assets, including the
Phillips Common Stock, subject to its liabilities, to TBC pursuant to an
Agreement and Plan of Merger (the "Liquidation"). Concurrently with the
Liquidation and prior to the Distribution, Phillips adopted a Plan of
Recapitalization (the "Recapitalization") pursuant to which Phillips exchanged,
by means of a reclassification under the Pennsylvania Business Corporation Law,
5,000,000 shares of its common stock (having a par value of $.01 per share) for
252,001 shares of its common stock (having a par value of $1.00 per share)
issued and outstanding prior to the effective date of the Recapitalization. On
June 30, 1993, our firm rendered a legal opinion as counsel to TBC and Phillips
to the effect that no gain or loss would be recognized to Phillips, TBC and
TBC's shareholders for federal income tax purposes as a result of the
Distribution, Liquidation and Recapitalization (the "1993 Opinion").
In rendering our opinion with respect to the Merger, we
reviewed and relied upon (a) the Agreement adopted by the Phillips and Momentum
Boards of Directors on May 27, 1994; (b) the Merger Agreement adopted by the
Phillips and Momentum Boards of Directors on May 27, 1994; (c) the
registration statement on Form S-4, including the prospectus and joint proxy
statement of Phillips and Momentum contained therein, which was declared
effective by the Securities and Exchange Commission on August 5, 1994;
(d) certain representations concerning the Merger made to us by Phillips and
Momentum in a letter dated September 1, 1994, (the "Representation Letter");
(e) all other documents, financial and other reports and corporate minutes
which we deemed relevant or appropriate; and (f) all matters referred to in
the 1993 Opinion.
Our review of items (a) through (e) of the preceding paragraph
has been without independent investigation. We have also relied upon the
truth, authenticity, accuracy and completeness of all documents, certifications
and instruments examined and the statements, covenants, representations and
warranties contained therein, the genuineness of all documents submitted to us
as originals, the conformity of the originals of
<PAGE> 3
Board of Directors
Phillips & Jacobs, Incorporated
September 1, 1994
Page 3
all documents submitted to us as certified or photostatic copies and the due
execution and delivery of all documents where execution and delivery are
pre-requisites to the effectiveness thereof.
Based on the foregoing and provided the Merger is carried out
in accordance with, and qualifies as a statutory merger pursuant to, the
applicable laws of the Commonwealth of Pennsylvania and the State of Delaware,
the Merger Agreement, and the Representation Letter, it is our opinion that:
1. The Merger will constitute a reorganization within
the meaning of Section 368(a)(1)(A) of the Code. Both Phillips and Momentum
will be a "party to a reorganization" within the meaning of section 368(b) of
the Code.
2. No gain or loss will be recognized to Phillips upon
receipt of the assets of Momentum in exchange for Phillips common stock.
(Section 1032(a) of the Code).
3. The basis of the Momentum assets in the hands of
Phillips will be the same as the basis of the Momentum assets in the hands of
Momentum immediately prior to the transaction. (Section 362(b) of the Code).
4. The holding period of the Momentum assets received by
Phillips will include the period during which such assets were held by Momentum
(Section 1223(2) of the Code).
5. Pursuant to Section 381(a) of the Code and Treasury
Regulation Section 1.381(a)-1, Phillips will succeed to and take into account
the items (i.e., tax attributes) of Momentum described in Section 381(c) of the
Code. These items will be taken into account by Phillips subject to the
conditions and limitations specified in Sections 381, 382, 383, and 384 of the
Code and the Treasury regulations thereunder.
6. As provided by Section 381(c)(2) of the Code and
Treasury Regulation section 1.381(c)(2)-1, Phillips will succeed to and take
into account the earnings and profits, or deficit in earnings and profits, of
Momentum as of the date of the transfer. Any deficit in earnings and profits
of Momentum or Phillips may be used only to offset earnings and profits
accumulated after the date of transfer. Any earnings and profits of Momentum
or Phillips accumulated before the date of transfer will be used to
<PAGE> 4
Board of Directors
Phillips & Jacobs, Incorporated
September 1, 1994
Page 4
offset any deficit in earnings and profits incurred after the transfer.
7. The Merger will not have a Material Adverse Effect on
the federal income tax consequences of the Distribution to the Phillips'
shareholders.
We express no opinion as to whether the Merger will have a
Material Adverse Effect on the federal income tax consequences of the 1990
distribution of the stock of Momentum Distribution, Inc. by VWR Corporation
which was the subject of a private letter ruling issued by the Internal Revenue
Service on February 23, 1990.
Our opinions are based upon the Code, as amended, the
applicable Treasury Regulations promulgated thereunder, the present positions
of the Internal Revenue Service as set forth in published revenue rulings and
revenue procedures and existing judicial decisions, all of which are subject to
change either prospectively or retroactively in such a fashion as to have a
Material Adverse Effect upon the conclusions reached in our opinions as
aforesaid. In rendering our opinion based on the foregoing, you should be
aware that our opinion is not binding upon the Internal Revenue Service or any
court and there is no assurance that the Internal Revenue Service would not
successfully assert a contrary opinion upon an audit of the relevant tax return
of any party to the Merger or shareholder thereof, or otherwise.
Our opinions are conditioned upon the performance by Phillips
and Momentum of their undertakings in the Representation
<PAGE> 5
Board of Directors
Phillips & Jacobs, Incorporated
September 1, 1994
Page 5
Letter. These opinions are being rendered to Phillips and may be relied upon
only by Phillips and its shareholders.
We hereby consent to the filing of this opinion letter as an Exhibit to
the registration statement on Form S-4 filed by Phillips with the Securities
and Exchange Commission in connection with the Merger, and to any reference to
our firm in the Proxy Statement/Prospectus forming a part thereof as legal
counsel for Phillips who have passed upon certain federal income tax matters
relating to the Merger.
Very truly yours,
STRADLEY, RONON, STEVENS & YOUNG
By: /s/ WILLIAM PILLING, III
-----------------------------------------
William S. Pilling, III, a Partner
<PAGE> 1
EXHIBIT 8.2
[LETTERHEAD OF PRESTON GATES & ELLIS]
September 1, 1994
Momentum Corporation
Koll Center Bellevue
500 108th Avenue N.E.
Bellevue, Washington 98004
Re: MOMENTUM CORPORATION: MERGER OF MOMENTUM INTO PHILLIPS & JACOBS,
INCORPORATED
Dear Sir or Madam:
This opinion is being delivered to you in connection with Section
7.3(e) of the Agreement and Plan of Reorganization (the "Agreement") by and
between MOMENTUM CORPORATION ("Momentum"), a Delaware corporation, and PHILLIPS
& JACOBS, INCORPORATED ("Phillips"), a Pennsylvania corporation, dated as of
May 27, 1994.
Except as otherwise provided, capitalized items referred to herein
have the same meaning as set forth in the Agreement. All Section references
unless otherwise indicated are to the Internal Revenue Code of 1986, as amended
(the "Code").
Pursuant to the Agreement, Momentum will merge with and into Phillips,
(the "Merger"), which will be renamed PrimeSource Corporation ("PrimeSource").
Phillips shareholders will retain their ownership of Phillips Shares under the
name of PrimeSource. Each outstanding share of Momentum common stock, par
value $1.00 per share, will be converted into .71 shares of PrimeSource common
stock, par value $.01 per share and the right to receive a cash payment in lieu
of the issuance of fractional shares, and as a result thereof the identity and
separate existence of Momentum will cease. In connection with the Merger, the
Articles of Incorporation of Phillips will be amended to increase the number of
shares of authorized capital, to change its corporate name and to make certain
other changes.
We have acted as legal counsel to Momentum in connection with the
Merger. As such, and for the purposes of rendering this opinion, we have
examined and are relying upon, without independent investigation or review
thereof, the truth and accuracy, at all times, of the statements, covenants,
representations and warranties contained in the following documents:
<PAGE> 2
September 1, 1994
Page 2
1. The Agreement adopted by the Phillips and Momentum Boards of
Directors as of May 27, 1994;
2. The registration statement on Form S-4, including the
prospectus and joint proxy statement of Phillips and Momentum contained
therein, which was declared effective by the Securities and Exchange Commission
on August 5, 1994;
3. Representations made to us by Momentum and Phillips in a
letter reproduced as Exhibit A hereto; and
4. Such other instruments and documents related to the formation,
organization, and operation of Momentum and Phillips, the consummation of the
Merger, and the transactions contemplated thereby as we deemed necessary or
appropriate.
In connection with rendering this opinion, we have assumed or obtained
representations (and are relying thereon without independent investigation or
review) that:
1. Original documents (including signatures) are authentic,
documents submitted to us as copies conform to the original documents and there
has been, or will be by the Closing Date of the Merger), due execution and
delivery of all documents where execution and delivery are prerequisites to
effectiveness thereof; and
2. The Merger will be effective under the applicable laws of the
Commonwealth of Pennsylvania and the State of Delaware.
Based on our examination of the foregoing items and subject to the
assumptions, exceptions, limitations, and qualifications set forth herein, we
are of the opinion that:
1. The Merger will constitute a reorganization within the meaning
of Section 368(a)(1)(A) of the Code. Both Momentum and Phillips will be a
"party to the reorganization" within the meaning of Section 368(b) of the Code;
2. No gain or loss will be recognized by holders of Momentum
Shares, except that a Momentum stockholder who receives cash in the Merger in
lieu of a fractional interest in PrimeSource Shares will be treated for federal
income tax purposes as having received cash in redemption of such fractional
share interest. The stockholder will recognize gain or loss as of the
Effective Time equal to the difference between the amount of cash received and
the portion of the stockholder's adjusted tax basis in the Momentum Share
allocable to such fractional interest. Any gain or loss generally will be
capital gain or loss if the stockholder holds the Momentum Shares as
<PAGE> 3
September 1, 1994
Page 3
a capital asset at the Effective Time and will be long-term capital gain if the
holding period for the fractional interest deemed to be received and then
redeemed is more than one year;
3. The aggregate tax basis of PrimeSource Shares received in the
Merger will equal the aggregate tax basis of Momentum Shares exchanged
therefor, reduced by any amount allocable to any fractional share interest of
Momentum shareholders for which cash is received;
4. No gain or loss will be recognized to Momentum in connection
with the Merger;
5. Provided that the Momentum Shares are held as a capital asset
at the Effective Time, the holding period of PrimeSource Shares will include
the holding period of Momentum Shares; and
6. The tax basis of the Momentum assets in the hands of
PrimeSource will be the same as the basis of such assets in the hands of
Momentum immediately prior to the Effective Time and PrimeSource will generally
succeed to and take into account the tax attributes of Momentum.
In addition to the assumptions set forth above, this opinion is
subject to the exemptions, limitations and qualifications set forth below:
1. This opinion represents and is based upon our best judgment
regarding the application of federal income tax laws arising under the Code,
existing judicial decisions, administrative regulations and published rulings
and procedures. Our opinion is not binding upon the Internal Revenue Service
or the courts and there is no assurance that the Internal Revenue Service could
not successfully assert a contrary opinion. Furthermore, no assurance can be
given that future legislation, judicial or administrative changes, either on a
prospective or retroactive basis, would not adversely effect the accuracy of
the conclusions stated herein.
2. This opinion addresses only the classification of the Merger
as a reorganization under Section 368 of the Code and does not address any
other federal, state, local or foreign tax consequences that may result from
the Merger or any other related transactions.
3. No opinion is expressed as to any transaction other than the
Merger as described in this opinion.
4. This opinion has been delivered to you for the purpose of
satisfying the conditions set forth in the Agreement and is intended solely for
your benefit; except as provided in the next sentence, it may not be relied
upon for any other purpose or by any other person or entity and it may not be
made available to any other person or entity without our prior written consent.
Very truly yours,
PRESTON GATES & ELLIS
By /s/ Charles H. Purcell
-----------------------
Charles H. Purcell
<PAGE> 1
EXHIBIT 23.6
CONSENT OF PRESTON GATES & ELLIS
We hereby consent to the filing of our opinion letter as an exhibit
to the Registration Statement filed by PrimeSource Corporation with the
Securities and Exchange Commission in connection with the Merger, and to any
reference to our firm in the Proxy Statement/Prospectus forming a part thereof
as legal counsel for Momentum who will pass upon certain federal income tax
matters relating to the Merger.
Very truly yours,
PRESTON GATES & ELLIS
By /s/ Richard B. Dodd
-------------------
Richard B. Dodd
