<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 22, 1999
REGISTRATION STATEMENT NO.
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------------
FOILMARK, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
3490
(Primary Standard Industrial Classification Code Number)
113101034
(IRS Employer Identification Number)
5 MALCOLM HOYT DRIVE
NEWBURYPORT, MASSACHUSETTS 01950
(978) 462-7300
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
FRANK J. OLSEN, JR.
PRESIDENT
5 MALCOLM HOYT DRIVE
NEWBURYPORT, MASSACHUSETTS 01950
(978) 462-7300
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
COPIES TO:
STEPHEN J. CARLOTTI, ESQ. CARL A. DE BRITO, ESQ.
HINCKLEY, ALLEN & SNYDER BATTLE FOWLER LLP
1500 FLEET CENTER 75 EAST 55(TH) STREET
PROVIDENCE, RI 02903 NEW YORK, NY 10022
TELEPHONE NO.:(401) 274-2000 TELEPHONE NO.:(212) 856-7000
FACSIMILE NO.: (401) 277-9600 FACSIMILE NO.: (212) 856-7817
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the Registration Statement becomes effective.
If the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
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CALCULATION OF REGISTRATION FEE
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<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION FEE
SECURITIES TO BE REGISTERED REGISTERED (1) UNIT (2) PRICE (2) (3)
<S> <C> <C> <C> <C>
Common Stock, par value $0.01 per share..... 3,715,935 $1.56 $4,852,453 $1,349
</TABLE>
(1) Based upon an estimate of the maximum number of shares of common stock, par
value $0.01 per share (the "HoloPak Common Stock"), of HoloPak Technologies,
Inc. ("HoloPak") which will each be exchanged for 1.11 shares of common
stock, $0.01 par value (the "Foilmark Common Stock"), of Foilmark, Inc.
("Foilmark") pursuant to the merger described herein.
(2) Calculated in accordance with Rule 457(f)(l) and Rule 457(f)(3) under the
Securities Act based on the aggregate market value on March 18, 1999 of the
shares of HoloPak Common Stock expected to be canceled in connection with
the merger and computed by deducting $4,752,057, representing $1.42
multiplied by 3,346,519 from (i) the product of (A) the average of the high
and low prices of HoloPak Common Stock as reported on the Nasdaq National
Market on March 18, 1999 ($2.87) and (B) 3,346,519, representing the maximum
number of shares of HoloPak Common Stock expected to be canceled in
connection with the merger.
(3) The registration fee of $1,349 was calculated pursuant to Rule 457(f) under
the Securities Act, as follows: .000278 multiplied by the proposed maximum
aggregate offering price. $2,204.87 was paid on December 22, 1998 pursuant
to Exchange Act Rule 0-11.
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT WILL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(A)
MAY DETERMINE.
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MERGER PROPOSED--YOUR VOTE IS VERY IMPORTANT [LOGO]
[LOGO]
</TABLE>
The Boards of Directors of Foilmark, Inc. and HoloPak Technologies, Inc.
have approved a merger that would result in Holopak becoming owned by Foilmark.
The proposed merger would create a more diverse manufacturer of hot-stamping
foils, holographic films and images and metallized paper with greater geographic
market potential. Foilmark and HoloPak shares of common stock trade on the
Nasdaq National Market under the symbols "FLMK" and "HOLO", respectively.
If the merger is completed, HoloPak stockholders will receive 1.11 Foilmark
shares and $1.42 in cash for each HoloPak share. Foilmark stockholders will
continue to own their existing shares after the merger.
We estimate that the shares of Foilmark common stock to be issued to HoloPak
stockholders will represent approximately 47% of the outstanding Foilmark common
stock after the merger. Likewise, Foilmark shares held by Foilmark stockholders
before the merger will represent approximately 53% of the outstanding Foilmark
shares after the merger.
Stockholders of Foilmark are being asked, at Foilmark's special meeting of
stockholders, to approve the folowing:
- the issuance of Foilmark shares in the merger;
- the amendment of Foilmark's certificate of incorporation to increase the
number of authorized shares of Foilmark common stock;
- the amendment of Foilmark's certificate of incorporation to remove article
eight, which contains provisions requiring the vote of 80% of the
outstanding shares of Foilmark common stock to approve some transactions;
and
- the amendment of Foilmark's certificate to remove article nine, which
contains cumulative voting for directors.
[LOGO]
Frank J. Olsen, Jr.
Chairman, Chief Executive Officer and President
Foilmark, Inc.
Stockholders of HoloPak are being asked, at HoloPak's special meeting of
stockholders, to approve the merger.
The merger cannot be completed unless stockholders of both companies approve
it. YOUR VOTE IS VERY IMPORTANT.
There are risks involved in the merger. In determining whether to approve
the merger, you should consider such risks. FOR A DETAILED DESCRIPTION OF THE
RISKS INVOLVED IN THE MERGER, YOU SHOULD READ THE SECTION OF THE JOINT PROXY
STATEMENT-PROSPECTUS ENTITLED "RISK FACTORS" ON PAGE 11.
HoloPak stockholders may demand appraisal rights, but Foilmark stockholders
may not. For more detail on how a HoloPak stockholder may demand appraisal
rights, you should read the section entitled "Dissenters' Appraisal Rights" on
page 67 of the joint proxy statement-prospectus.
Whether or not you plan to attend a meeting, please take the time to vote on
the proposal(s) submitted to stockholders at your meeting by completing and
mailing the enclosed proxy card to us. If you sign, date and mail your proxy
card without indicating how you wish to vote, your proxy will be counted as a
vote in favor of the proposal(s) submitted at your meeting. If you fail to
return your card, the effect will be a vote against the merger and the other
proposals unless you attend in person and vote at the meeting.
The dates, times and places of the meetings are:
For FOILMARK stockholders:
APRIL 21, 1999
9:30 A.M.
MARRIOTT LONG WHARF
296 STATE STREET
BOSTON, MA 02109
For HOLOPAK stockholders:
APRIL 21, 1999
8:00 A.M.
OFFICES OF BATTLE FOWLER LLP
75 EAST 55TH ST., NEW YORK, NY 10022
[LOGO]
Robert J. Simon
Chairman of the Board of Directors
HoloPak Technologies, Inc.
NEITHER THE SEC NOR ANY STATE SECURITIES REGULATORS HAVE APPROVED THE FOILMARK
COMMON STOCK TO BE ISSUED IN THE MERGER OR DETERMINED IF THIS JOINT PROXY
STATEMENT-PROSPECTUS IS ACCURATE OR ADEQUATE. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
JOINT PROXY STATEMENT-PROSPECTUS DATED MARCH 22, 1999
AND FIRST MAILED TO STOCKHOLDERS ON MARCH 23, 1999.
<PAGE>
THIS JOINT PROXY STATEMENT-PROSPECTUS PROVIDES YOU WITH DETAILED INFORMATION
ABOUT THE PROPOSED MERGER. WE ENCOURAGE YOU TO READ THIS DOCUMENT CAREFULLY. IN
ADDITION, YOU MAY OBTAIN INFORMATION ABOUT OUR COMPANIES FROM DOCUMENTS WE HAVE
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
THIS JOINT PROXY STATEMENT--PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE
THAT ARE NOT PRESENTED IN OR DELIVERED WITH THIS JOINT PROXY
STATEMENT--PROSPECTUS. THESE DOCUMENTS ARE AVAILABLE, WITHOUT CHARGE, UPON ORAL
OR WRITTEN REQUEST BY ANY PERSON, INCLUDING ANY BENEFICIAL OWNER OF SHARES OF
HOLOPAK COMMON STOCK OR FOILMARK COMMON STOCK, TO WHOM THIS JOINT PROXY
STATEMENT--PROSPECTUS HAS BEEN DELIVERED, IN THE CASE OF DOCUMENTS RELATING TO
HOLOPAK, FROM HOLOPAK TECHNOLOGIES, INC., 9 COTTERS LANE, EAST BRUNSWICK, NEW
JERSEY 08816, (732) 238-2883, ATTENTION: CORPORATE SECRETARY, AND IN THE CASE OF
DOCUMENTS RELATING TO FOILMARK, FROM FOILMARK, INC., 5 MALCOM HOYT DRIVE,
NEWBURYPORT, MASSACHUSETS 01950, ATTENTION: CORPORATE SECRETARY. IN ORDER TO
ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY SUCH REQUEST SHOULD BE MADE BY
APRIL 9, 1999.
<PAGE>
[LOGO]
------------------------
FOILMARK, INC.
5 MALCOLM HOYT DRIVE
NEWBURYPORT, MASSACHUSETTS 01950
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 21, 1999
------------------------
TO THE STOCKHOLDERS OF FOILMARK, INC.:
NOTICE IS HEREBY GIVEN that a special meeting of Foilmark, Inc. stockholders
will be held on April 21, 1999, at 9:30 a.m. local time, at the Marriott Long
Wharf, 269 State Street, Boston, Massachusetts 02109 for the following purposes:
- To consider and vote upon a proposal to issue up to 3,715,935 shares of
common stock of Foilmark under a merger agreement dated November 17, 1998,
among Foilmark, Foilmark Acquisition Corporation, a wholly-owned
subsidiary of Foilmark, and HoloPak Technologies, Inc. The merger
agreement provides that HoloPak will merge into Foilmark Acquisition. The
merger is described fully in the merger agreement and the enclosed joint
proxy statement--prospectus.
- To consider and vote upon a proposal to adopt an amendment to Foilmark's
certificate of incorporation which will become effective at the same time
as the merger. This amendment will increase the number of authorized
shares of Foilmark common stock from 10,000,000 to 15,000,000, as more
fully described in the enclosed joint proxy statement--prospectus.
- To consider and vote upon a proposal to adopt an amendment to Foilmark's
certificate of incorporation to remove article eight, as more fully
described in the enclosed joint proxy statement--prospectus.
- To consider and vote upon a proposal to adopt an amendment to Foilmark's
certificate of incorporation to remove article nine, as more fully
described in the enclosed joint proxy statement-prospectus.
Except as specified above, proxies will only be voted as to matters which
are incidental to the conduct of the Foilmark special meeting.
The Foilmark board approved the merger agreement and recommended that
Foilmark stockholders approve the issuance of shares of Foilmark common stock to
HoloPak stockholders.
The issuance of shares of Foilmark common stock to HoloPak stockholders
requires the affirmative vote of the holders of a majority of the outstanding
shares of Foilmark common stock entitled to vote on the issuance. Adoption of
the amendment to Foilmark's certificate of incorporation to increase Foilmark's
number of authorized shares of common stock requires the affirmative vote of the
holders of a majority of the outstanding shares of Foilmark common stock
entitled to vote on the amendment. Adoption of the amendment to Foilmark's
certificate of incorporation to remove article eight and the amendment to
Foilmark's certificate of incorporation to remove article nine requires the
affirmative vote of the holders of at least 80% of the outstanding shares of
Foilmark common stock entitled to vote on those amendments. Approval of the
issuance and the amendments to Foilmark's certificate of incorporation are
independent and are not conditioned on the approval of the other proposals.
Foilmark does not intend to effect the amendment to its certificate of
incorporation to increase the number of authorized shares of common stock if the
merger is not completed.
<PAGE>
When Foilmark and HoloPak signed the merger agreement, directors, officers
and other stockholders of Foilmark, who together own approximately 42% of
Foilmark's outstanding common stock, agreed to vote in favor of the issuance and
the amendments to Foilmark's certificate of incorporation.
The close of business on March 12, 1999 has been fixed as the record date
for determining those stockholders entitled to vote at the Foilmark special
meeting. Only stockholders of record on the Foilmark record date are entitled to
notice of and to vote at the Foilmark special meeting.
By order of the Board of Directors
/s/ Carol J. Robie
Carol J. Robie
Secretary
March 22, 1999
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING IN PERSON, PLEASE
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU
ATTEND THE SPECIAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE
PREVIOUSLY RETURNED YOUR PROXY CARD.
THE BOARD OF DIRECTORS OF FOILMARK UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE FOR APPROVAL OF THE ISSUANCE AND THE AMENDMENTS TO THE FOILMARK CERTIFICATE
OF INCORPORATION. SOME MEMBERS OF THE FOILMARK BOARD HAVE INTERESTS IN THE
MERGER THAT ARE DIFFERENT FROM AND IN ADDITION TO THE INTERESTS OF THE FOILMARK
STOCKHOLDERS. SEE "THE MERGER--INTERESTS OF CERTAIN PERSONS IN THE MERGER".
<PAGE>
[LOGO]
------------------------
HOLOPAK TECHNOLOGIES, INC.
9 COTTERS LANE
EAST BRUNSWICK, NEW JERSEY 08816
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 21, 1999
TO OUR STOCKHOLDERS:
You are invited to be present either in person or by proxy at the special
meeting of stockholders of HoloPak Technologies, Inc. to be held on April 21,
1999, at 8:00 a.m., local time, at the offices of Battle Fowler LLP, 75 East
55th Street, New York, New York 10022 for the following purpose:
- To consider and vote upon a proposal to approve the merger agreement dated
November 17, 1998 among HoloPak, Foilmark, Inc. and Foilmark Acquisition
Corporation, a wholly-owned subsidiary of Foilmark.
The merger agreement provides that:
- HoloPak will merge into Foilmark Acquisition. Foilmark Acquisition will be
the surviving corporation in the merger and will continue to be a
wholly-owned subsidiary of Foilmark.
- Each outstanding share of common stock of HoloPak, will be converted into
the right to receive 1.11 shares of Foilmark common stock and $1.42 in
cash plus additional cash for any fractional shares of HoloPak common
stock without interest.
- Foilmark will assume each option or other right to purchase or receive
shares of HoloPak common stock under stock options, stock appreciation or
other similar rights.
Except as specified above, proxies will only be voted as to matters which
are incidental to the conduct of the HoloPak special meeting.
When Foilmark and HoloPak signed the merger agreement, officers and
stockholders of HoloPak, who together own approximately 45.3% of HoloPak's
outstanding common stock, agreed to vote in favor of the merger.
The board of directors of HoloPak has fixed the close of business on March
12, 1999 as the record date for determining HoloPak stockholders entitled to
notice of, and to vote at, the HoloPak special meeting. Only holders of record
of shares of HoloPak common stock at the close of business on the HoloPak record
date are entitled to notice of, and to vote at, the HoloPak special meeting.
THE HOLOPAK BOARD HAS UNANIMOUSLY DETERMINED THAT THE MERGER IS FAIR TO AND
IN THE BEST INTERESTS OF THE HOLOPAK STOCKHOLDERS, HAS APPROVED THE MERGER
AGREEMENT AND RECOMMENDS THAT THE STOCKHOLDERS OF HOLOPAK VOTE FOR APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT. Some members of the HoloPak board have
interests in the merger that are different from and in addition to the interests
of the HoloPak stockholders. See "The Merger--Interests of Certain Persons in
the Merger".
Approval of the merger agreement requires the vote of the holders of a
majority of the outstanding shares of HoloPak common stock entitled to vote at
the special meeting.
The HoloPak board hopes you will find it convenient to attend the HoloPak
special meeting in person, but whether or not you plan to attend, please sign,
date and return the enclosed proxy in the
<PAGE>
enclosed envelope to assure that your shares of HoloPak common stock are
represented at the HoloPak special meeting. If mailed in the United States, the
enclosed envelope requires no postage. Returning your proxy does not deprive you
of your right to attend the HoloPak special meeting and vote your shares in
person.
By order of the Board of Directors,
/s/ Arthur Karmel
Arthur Karmel
SECRETARY
East Brunswick, New Jersey
March 22, 1999
<PAGE>
TABLE OF CONTENTS
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PAGE
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SUMMARY.................................................................................................... 1
RISK FACTORS............................................................................................... 11
You will not know the value of the merger consideration at the time of the HoloPak special meeting....... 11
If the merger fails to qualify as a reorganization, stockholders of HoloPak may incur taxes on the
Foilmark stock they receive in the merger.............................................................. 11
We may not be able to integrate the businesses of Foilmark and HoloPak................................... 11
Foilmark's increased level of indebtedness may limit its operating flexibility........................... 12
We made forward-looking statements in this joint proxy statement-prospectus. These forward-looking
statements may be inaccurate........................................................................... 12
FOILMARK SPECIAL MEETING................................................................................... 14
Matters To Be Considered................................................................................. 14
Proxies; Revocation of Proxies........................................................................... 14
Solicitation Of Proxies.................................................................................. 15
Record Date And Voting Rights............................................................................ 15
HOLOPAK SPECIAL MEETING.................................................................................... 16
Matters To Be Considered................................................................................. 16
Proxies; Revocation of Proxies........................................................................... 16
Solicitation Of Proxies.................................................................................. 16
Record Date And Voting Rights............................................................................ 17
THE MERGER................................................................................................. 18
Background Of The Merger................................................................................. 18
Recommendation Of The Foilmark Board And Foilmark's Reasons For The Merger............................... 21
Opinion Of Foilmark's Financial Advisor.................................................................. 23
Recommendation Of The HoloPak Board And HoloPak's Reasons For The Merger................................. 27
Opinion Of HoloPak's Financial Advisor................................................................... 30
Shared Projections Of Revenues And Earnings.............................................................. 34
Interests Of Certain Persons In The Merger; Potential Conflicts Of Interest.............................. 35
Security Ownership Of Beneficial Owners Of HoloPak Stock................................................. 40
THE MERGER AGREEMENT....................................................................................... 42
Conversion Of Stock; Treatment Of Options................................................................ 42
Exchange Of Certificates; Fractional Shares.............................................................. 43
Time Of The Merger....................................................................................... 44
Representations And Warranties........................................................................... 44
Conduct Of Business Pending The Merger And Other Agreements.............................................. 45
Conditions To Completion Of The Merger................................................................... 47
Regulatory Approvals Required For The Merger............................................................. 49
Material Federal Income Tax Consequences................................................................. 50
Accounting Treatment..................................................................................... 52
Termination Of The Merger Agreement...................................................................... 52
Solicitation............................................................................................. 53
Extension, Waiver And Amendment Of The Merger Agreement.................................................. 54
Employee Benefits And Plans.............................................................................. 55
Stock Exchange Listing................................................................................... 55
Expenses................................................................................................. 55
</TABLE>
i
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PAGE
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RELATED AGREEMENTS......................................................................................... 56
Description Of Foilmark And HoloPak Shareholder Agreements............................................... 56
MANAGEMENT AND OPERATIONS AFTER THE MERGER................................................................. 57
Foilmark................................................................................................. 57
Foilmark Acquisition..................................................................................... 57
PRICE RANGE OF COMMON STOCK AND DIVIDENDS.................................................................. 58
SOURCE OF FUNDS............................................................................................ 59
INFORMATION ABOUT FOILMARK................................................................................. 59
Foilmark's Business...................................................................................... 59
Management And Additional Information.................................................................... 60
INFORMATION ABOUT HOLOPAK.................................................................................. 60
HoloPak's Business....................................................................................... 60
Management And Additional Information.................................................................... 61
FOILMARK CAPITAL STOCK AND COMPARISON OF STOCKHOLDER RIGHTS................................................ 61
Description Of Foilmark Capital Stock.................................................................... 61
Comparison Of Rights Of Foilmark Stockholders And HoloPak Stockholders................................... 62
AMENDMENTS TO FOILMARK'S SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION.......................... 64
Amendment To Foilmark's Certificate Of Incorporation To Increase Authorized Shares....................... 64
Reasons For And Effect Of Amendment To Increase Authorized Shares........................................ 64
Vote Required............................................................................................ 64
Amendment To Foilmark Certificate Of Incorporation To Remove Provisions Requiring 80% Vote............... 65
Reasons For And Effect Of Amendment To Remove Provisions Requiring 80% Vote.............................. 65
Vote Required............................................................................................ 65
Amendment To Foilmark Certificate Of Incorporation To Eliminate Cumulative Voting........................ 66
Reasons For And Effect Of Amendment to Eliminate Cumulative Voting....................................... 66
Vote Required............................................................................................ 66
Recommendation Of The Board.............................................................................. 66
DISSENTERS' APPRAISAL RIGHTS............................................................................... 67
LEGAL MATTERS.............................................................................................. 69
EXPERTS.................................................................................................... 69
STOCKHOLDER PROPOSALS...................................................................................... 69
AVAILABLE INFORMATION...................................................................................... 70
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE.......................................................... 71
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS.......................................................... 73
</TABLE>
ii
<PAGE>
<TABLE>
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APPENDICES
Appendix A Agreement And Plan Of Merger
Appendix B-1 Opinion Of McFarland Dewey & Co., LLC To The Foilmark Board Of Directors
Dated November 17, 1998
Appendix B-2 Confirmation Of Opinion Of McFarland Dewey & Co., LLC To The Foilmark Board
Of Directors Dated March 18, 1999
Appendix C-1 Opinion Of Schroder & Co. Inc. To The Holopak Board Of Directors Dated
November 17, 1998
Appendix C-2 Confirmation Of Opinion Of Schroder & Co. Inc. To The Holopak Board Of
Directors Dated March 17, 1999
Appendix D Second Amended And Restated Foilmark Certificate Of Incorporation
Appendix E HoloPak Shareholder Agreement
Appendix F Foilmark Shareholder Agreement
Appendix G Section 262 Of The Delaware General Corporation Law
</TABLE>
iii
<PAGE>
SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THE JOINT PROXY
STATEMENT--PROSPECTUS AND MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS
IMPORTANT TO YOU. TO UNDERSTAND THE MERGER FULLY AND FOR A MORE COMPLETE
DESCRIPTION OF THE LEGAL TERMS OF THE MERGER, WE URGE YOU TO CAREFULLY READ THE
ENTIRE JOINT PROXY STATEMENT--PROSPECTUS AND THE OTHER DOCUMENTS TO WHICH THIS
DOCUMENT REFERS. SEE "THE MERGER" AND "INCORPORATION OF CERTAIN INFORMATION BY
REFERENCE" (PAGES 18 AND 71). WE HAVE INCLUDED PAGE REFERENCES IN PARENTHESES TO
DIRECT YOU TO A MORE COMPLETE DESCRIPTION OF THE TOPICS PRESENTED IN THE
SUMMARY.
WE'VE ATTACHED THE MERGER AGREEMENT TO THIS DOCUMENT AS APPENDIX A. PLEASE
READ THE MERGER AGREEMENT. IT IS THE LEGAL DOCUMENT THAT GOVERNS THE MERGER.
DESCRIPTION OF THE COMPANIES (PAGES 59 AND 60)
Foilmark, Inc.
5 Malcolm Hoyt Drive
Newburyport, Massachusetts 01950
(978) 462-7300
Foilmark manufactures, markets and distributes hot-stamp foils, films and
application systems and supplies and produces holographic foil.
HoloPak Technologies, Inc.
9 Cotters Lane
East Brunswick, New Jersey 08816
(732) 238-2883
HoloPak manufactures and distributes hot-stamp foils in the United States,
and manufactures laminated foil and direct metallized paper in Canada and
produces holographic foil.
DESCRIPTION OF THE MERGER
We propose the merger of HoloPak into a subsidiary of Foilmark. Foilmark
will continue its operations as they are currently conducted, with its corporate
headquarters in Newburyport, Massachusetts. We expect to complete the merger in
the first half of 1999.
THE MERGER CONSIDERATION
HOLOPAK STOCKHOLDERS. HoloPak stockholders will have the right to receive
from Foilmark, for each share of HoloPak common stock, 1.11 shares of Foilmark
common stock and $1.42 in cash. Foilmark will not issue fractional shares.
Instead, HoloPak stockholders will receive cash for any fractional share of
Foilmark common stock owed to them, without interest.
You will have to surrender your HoloPak stock certificate in order to
receive your Foilmark stock certificate. At the time of the merger, your HoloPak
stock certificate will represent the right to receive 1.11 shares of Foilmark
common stock for each share of HoloPak common stock you own. You do not have to
do this now; you will receive written instructions after we have completed the
merger.
FOILMARK STOCKHOLDERS. After the merger, you will continue to own your
shares of Foilmark common stock. You will not need to surrender your certificate
or exchange your shares for new ones.
RIGHT TO DEMAND AN APPRAISAL OF YOUR SHARES (PAGE 67)
FOILMARK. Foilmark stockholders have no appraisal rights with respect to
the merger.
HOLOPAK. Under Delaware law, HoloPak stockholders who have a right to vote,
but do not vote to approve the merger agreement, and who follow the procedures
prescribed by Delaware law, may
1
<PAGE>
require HoloPak to pay the fair value for their shares. Fair value is determined
under Delaware law. However, it is a condition to the merger that the holders of
not more than 10% of the outstanding shares of HoloPak common stock may dissent
from and demand appraisal rights with respect to the merger.
RISKS OF THE MERGER (PAGE 11)
There are risks that the combination of the businesses of Foilmark and
HoloPak may not be successful. These risks include:
- the fact that the exchange ratio is a fixed number and amount and will not
be adjusted if there is any increase or decrease in the price of HoloPak
common stock or Foilmark common stock;
- the fact that, if the merger fails to qualify as a reorganization, HoloPak
stockholders may incur tax liability;
- problems that may arise with respect to integrating the operations and
management of HoloPak into Foilmark; and
- the fact that Foilmark will incur increased debt in order to pay the cash
portion of the merger consideration.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER (PAGE 50)
FOILMARK STOCKHOLDERS. As your shares of Foilmark common stock remain
unchanged, the merger will not cause you to recognize any gain or loss with
respect to those shares for United States federal income tax purposes.
HOLOPAK STOCKHOLDERS. We expect that for United States federal income tax
purposes, although you will not recognize gain or loss as a result of your
receiving shares of Foilmark common stock in exchange for your shares of HoloPak
common stock, you will recognize income or gain, but not loss, as a result of
your receiving cash as part of the merger consideration. In addition, if you
receive cash for fractional shares of Foilmark common stock, you will also
recognize gain or loss as though you received the fractional share of Foilmark
common stock in exchange and then sold it.
THIS TAX TREATMENT MAY NOT APPLY TO EVERY HOLOPAK STOCKHOLDER. DETERMINING
THE ACTUAL TAX CONSEQUENCES OF THE MERGER TO YOU MAY BE COMPLICATED. THEY WILL
DEPEND ON YOUR SPECIFIC SITUATION AND ON VARIABLES NOT WITHIN OUR CONTROL. YOU
SHOULD CONSULT YOUR OWN TAX ADVISOR FOR A FULL UNDERSTANDING OF THE MERGER'S TAX
CONSEQUENCES.
MATERIAL DIFFERENCES IN THE RIGHTS OF HOLOPAK AND FOILMARK STOCKHOLDERS (PAGE
62)
The rights of Foilmark stockholders are governed by Delaware law and
Foilmark's certificate of incorporation and by-laws. The rights of HoloPak
stockholders are governed by Delaware law and HoloPak's certificate of
incorporation and by-laws. When the merger is completed, HoloPak stockholders
will become stockholders of Foilmark and their rights will be governed by
Delaware law and Foilmark's certificate of incorporation and by-laws.
OWNERSHIP OF FOILMARK FOLLOWING THE MERGER
After the merger, former HoloPak stockholders will own approximately 47% of
the outstanding shares of Foilmark common stock and present Foilmark
stockholders will own approximately 53% of the outstanding shares of Foilmark
common stock. These percentages do not include options to purchase shares of
Foilmark common stock and are subject to adjustment for fractional shares and as
a result of any exercise by HoloPak stockholders of appraisal rights.
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<PAGE>
UNAUDITED COMPARATIVE PER COMMON SHARE DATA
The following table shows information about our income per common share and
book value per share, and similar information reflecting the merger. We refer to
this information as pro forma information. The historical book value per share
was calculated by dividing stockholders' equity by the number of shares of
common stock outstanding at the end of the period. The pro forma equivalent per
share amounts were calculated using the pro forma combined per share data of
Foilmark and HoloPak, multiplied by the 1.11 exchange ratio. The pro forma
combined book value per share was calculated by dividing pro forma combined
stockholders' equity by the number of shares of Foilmark common stock
outstanding at the end of the period. The pro forma equivalent per share
presentation for HoloPak assumes the merger had been effective at the beginning
of the period. No cash dividends have been declared or paid on Foilmark common
stock or HoloPak common stock for the periods presented.
We expect that we will incur merger and integration charges as a result of
combining our companies. We also anticipate that the merger will provide the
combined company with financial benefits that include reduced operating expenses
and opportunity to earn more revenue. The pro forma information, while helpful
in illustrating the financial characteristics of the new company under one set
of assumptions, doesn't reflect these expenses or benefits and, accordingly,
doesn't attempt to predict or suggest future results. It also doesn't
necessarily reflect what the historical results of the new company would have
been had our companies been combined.
The information in the following tables is based on, and should be read
together with the historical financial information that we've presented in our
prior securities filings with the Securities and Exchange Commission. This
historical financial information has also been incorporated into this document
by reference. See "Incorporation of Certain Information by Reference" on page
71.
UNAUDITED COMPARATIVE PER COMMON SHARE DATA OF FOILMARK AND HOLOPAK
<TABLE>
<CAPTION>
FOILMARK PRO FORMA COMBINED HOLOPAK PRO FORMA EQUIVALENT
----------- ------------------------- ----------- -------------------------
<S> <C> <C> <C> <C>
For the twelve month period ended December
31, 1998:
Earnings (loss) from continuing operations
per share:
Basic..................................... $ 0.09 $ 0.08 $ (0.22) $ 0.09
Diluted................................... $ 0.09 $ 0.08 $ (0.22) $ 0.09
Book value per share........................ $ 3.68 $ 2.94 $ 7.39 $ 3.26
For the twelve month period ended December
31, 1997:
Earnings (loss) from continuing operations
per share:
Basic..................................... $ 0.35 $ 0.29 $ (0.04) $ 0.32
Diluted................................... $ 0.35 $ 0.28 $ (0.04) $ 0.31
Book value per share........................ $ 3.59 $ 2.88 $ 7.74 $ 3.20
</TABLE>
COMPARATIVE PER SHARE MARKET PRICE INFORMATION (PAGE 59)
Shares of Foilmark and HoloPak common stock are listed on the Nasdaq
National Market. On November 17, 1998, the last trading day before we announced
the merger, Foilmark common stock closed at $2.00 per share and HoloPak common
stock closed at $2.63 per share. On March 19, 1999, the most recent date that
shares traded prior to the printing of this joint proxy statement--prospectus,
Foilmark common stock closed at $1.56 per share and HoloPak common stock closed
at $2.81 per share.
The market value of the merger consideration that HoloPak stockholders will
receive for each of their shares of HoloPak common stock would be $3.64 based on
Foilmark's closing stock price on November 17, 1998 and $3.15 based on
Foilmark's closing stock price on March 19, 1999, the most
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recent practicable date prior to the printing of this joint proxy
statement--prospectus. YOU SHOULD OBTAIN CURRENT STOCK PRICE QUOTATIONS FOR
FOILMARK COMMON STOCK AND HOLOPAK COMMON STOCK.
SHAREHOLDER AGREEMENTS (PAGE 56)
When Foilmark and HoloPak signed the merger agreement, the HoloPak directors
and other stockholders, who together own approximately 45.3% of the outstanding
shares of HoloPak common stock, agreed to vote in favor of the merger.
When Foilmark and HoloPak signed the merger agreement, the Foilmark
directors and other stockholders, who together own approximately 42% of the
outstanding shares of Foilmark common stock, agreed to vote in favor of the
issuance and the amendments to Foilmark's certificate of incorporation.
OTHER RELATED AGREEMENTS (PAGE 35)
VOTING AGREEMENT. The Foilmark and HoloPak directors, some officers and
other stockholders, who together will own approximately 43% of outstanding
Foilmark common stock, have agreed to enter into a voting agreement at the time
of the merger.
The voting agreement provides that, after the merger, the parties will vote
for:
- the election of Robert J. Simon as the non-executive Chairman of Foilmark;
- fixing the board of directors of Foilmark at ten;
- the election of Frank J. Olsen, Jr., Edward Sullivan, Thomas R. Schwarz,
Michael Foster and Michael Bertuch as Foilmark directors;
- the election of Robert J. Simon, James I. Rooney, President of HoloPak,
Michael S. Mathews, Harvey Share and Brian Kelly as Foilmark directors;
and
- the election of some of these directors to serve on the committees of the
board of directors of Foilmark.
Although the directors and some officers and stockholders of Foilmark and
HoloPak have agreed to vote their shares for the directors named in the
agreement, the actual ability of the parties to control the election of
directors depends upon the number of votes cast in any given election. The
voting agreement is attached as Exhibit 9.1(i) to the merger agreement.
REGISTRATION RIGHTS AGREEMENT. Bradford Venture Partners, L.P., the
beneficial owner of approximately 22.5% of the outstanding shares of HoloPak
common stock, and Overseas Private Investor Partners, the beneficial owner of
approximately 22.5% of the outstanding shares of HoloPak common stock, and some
other stockholders of HoloPak will be granted registration rights for the shares
of Foilmark common stock to be issued to them in the merger.
EMPLOYMENT AGREEMENTS. At the time of the merger, Frank J. Olsen, Jr. will
enter into an employment agreement with Foilmark, under which he will continue
to serve as President and Chief Executive Officer. At the same time, James L.
Rooney will enter into a consulting agreement with Foilmark and will serve as a
consultant to Foilmark, and Joseph T. Webb and Arthur Karmel will enter into
employment agreements with Foilmark and will serve as senior executives of
Foilmark.
INTERESTS OF DIRECTORS AND OFFICERS IN THE MERGER THAT DIFFER FROM YOUR
INTERESTS (PAGES 35 AND 37)
FOILMARK. A number of directors and officers of Foilmark have interests in
the merger as directors and/or employees that are different from, or in addition
to, yours as a Foilmark stockholder.
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<PAGE>
HOLOPAK. A number of directors and officers of HoloPak have interests in
the merger as directors and/or employees that are different from, or in addition
to, yours as a HoloPak stockholder.
EXECUTIVE OFFICERS OF FOILMARK AFTER THE MERGER (PAGE 57)
The present executive officers of Foilmark will remain the executive
officers of Foilmark after the merger.
RECORD DATE FOR SPECIAL MEETINGS; VOTE REQUIRED FOR APPROVAL OF PROPOSALS;
REVOCATION OF PROXIES BY FOILMARK AND HOLOPAK STOCKHOLDERS (PAGES 14 AND 16)
FOILMARK STOCKHOLDERS. You can vote at the Foilmark special meeting of
stockholders if you owned Foilmark common stock at the close of business on
March 12, 1999, the Foilmark record date. Failing to vote is the same as a vote
against approval of the issuance and the amendments to Foilmark's certificate of
incorporation. You may revoke your proxy at any time before Foilmark takes a
vote at the special meeting.
On the Foilmark record date, there were 4,183,700 shares of Foilmark common
stock outstanding. You can cast one vote for each share of Foilmark common stock
you owned on that date. For each of the proposals to be approved by the Foilmark
stockholders, the following votes must be obtained:
- The holders of a majority of the outstanding shares of Foilmark common
stock must vote to approve the issuance of Foilmark common stock and to
adopt the amendment to Foilmark's certificate of incorporation to increase
the number of authorized shares of common stock of Foilmark; and
- The holders of 80% of the outstanding shares of Foilmark common stock must
vote to adopt the amendments to Foilmark's certificate of incorporation to
remove each of article eight and article nine of the certificate of
incorporation.
Foilmark will not effect the issuance or the amendment to Foilmark's
certificate of incorporation to increase the number of authorized shares unless
the merger is completed.
HOLOPAK STOCKHOLDERS. If you owned shares of HoloPak common stock as of the
close of business on March 12, 1999, the HoloPak record date, you are entitled
to vote on approval of the merger agreement. On the HoloPak record date, there
were 3,346,519 shares of HoloPak common stock outstanding. You can cast one vote
at the HoloPak special meeting for each share of HoloPak common stock you owned
on the HoloPak record date.
The vote of the holders of a majority of the outstanding shares of HoloPak
common stock on the HoloPak record date is required to approve the merger
agreement. Failing to vote is the same as a vote against approval and adoption
of the merger agreement.
You may revoke your proxy at any time before HoloPak takes a vote at the
special meeting.
CONVERSION OF HOLOPAK STOCK OPTIONS (PAGE 42)
Options or other rights to buy or receive shares of HoloPak common stock,
whether under stock options, stock appreciation or other similar rights granted
under HoloPak's stock option plans or other agreements, that are outstanding
immediately before the merger, will be converted into options to buy Foilmark
common stock.
OPINIONS OF FINANCIAL ADVISORS (PAGES 23 AND 30)
FOILMARK STOCKHOLDERS. In deciding to approve the merger, the Foilmark
board considered the opinion of McFarland Dewey dated November 17, 1998 and
confirmed on March 18, 1999, as to the
5
<PAGE>
fairness, from a financial point of view, of the consideration to be paid by
Foilmark to the holders of shares of HoloPak common stock. We have attached to
this document McFarland Dewey's opinion as Appendix B-1 and the confirmation of
such opinion as Appendix B-2.
HOLOPAK STOCKHOLDERS. In deciding to approve the merger, the HoloPak board
considered the opinion of its financial advisor, Schroders dated November 17,
1998 and confirmed on March 17, 1999, as to the fairness, from a financial point
of view, of the consideration received in the merger to the stockholders of
HoloPak as of the date thereof. We have attached to this document Schroders'
opinion as Appendix C-1 and the confirmation of such opinion as Appendix C-2.
CONDITIONS TO COMPLETION OF THE MERGER (PAGE 47)
Foilmark and HoloPak will complete the merger if the following conditions
are met. This is not a complete list of the conditions to the merger. For a
complete list of conditions to completion of the merger, refer to page 47 of
this joint proxy statement--prospectus. Some of these conditions include:
- HoloPak stockholders approve the merger agreement and Foilmark
stockholders approve the issuance of shares of Foilmark common stock as
part of the merger consideration;
- There is no injunction or legal restraint blocking the merger;
- The Nasdaq National Market has approved the listing of the shares of
Foilmark common stock to be issued in the merger;
- HoloPak stockholders owning not more than 10% of all HoloPak common stock
will have demanded appraisal rights;
- Foilmark, some substantial HoloPak and Foilmark stockholders and some of
their directors and officers have entered into certain related agreements
such as the voting agreement, the registration rights agreement and the
employment, consulting and indemnification agreements;
- The registration statement filed with the Securities and Exchange
Commission to register the shares of Foilmark common stock to be issued to
HoloPak stockholders as part of the merger consideration remains
effective;
- Foilmark will have granted options to purchase 125,000 shares of Foilmark
common stock, to some of the directors, officers and key employees of each
of Foilmark and HoloPak; and
- Foilmark's by-laws by shall have been amended to set the size of the
Foilmark board of directors at ten.
TERMINATION OF THE AGREEMENT; EXPENSES (PAGES 52 AND 55)
Foilmark and HoloPak may agree in writing at any time to terminate the
merger agreement without completing the merger. Also, the merger agreement may
be terminated if:
- The merger has not been completed by April 30, 1999. However, the merger
can't be terminated if the failure to complete it by that time is because
the party that wants to terminate the merger agreement has violated it;
- Foilmark or HoloPak breaches the merger agreement in a way that would
entitle the other not to consummate the merger, and the breaching party
doesn't correct the breach within 30 days;
- The stockholders of Foilmark or HoloPak fail to adopt the merger
agreement; or
- Foilmark or HoloPak enter into an agreement similar to the merger
agreement or publicly announce that they intend to enter into a
transaction similar to the merger with a third party or
6
<PAGE>
the board of directors of Foilmark or HoloPak withdraws its recommendation
or approval of the merger.
If the merger agreement is terminated, Foilmark and HoloPak will pay their
own fees and expenses, except that they will evenly divide the costs and
expenses incurred in printing and mailing this document. If we complete the
merger, Foilmark will pay all fees and expenses incurred as a result of the
merger, including fees and expenses incurred by HoloPak. If Foilmark or HoloPak
terminates the merger agreement because its board of directors has caused
Foilmark and HoloPak to enter into an agreement like the merger agreement with a
third party, or has publicly announced that it intends to do so and does so
within 135 days from termination of the merger agreement, or has withdrawn its
approval or recommendation of this merger, then that party will pay to the other
a fee of $750,000 not later than five days after termination. Subject to
compliance with their fiduciary duties, the parties have agreed not to actively
seek or encourage offers from third parties. However, if either party receives
an offer from a third party, then it must tell the other party.
WAIVER AND AMENDMENT (PAGE 54)
Foilmark and HoloPak may amend the merger agreement, and may waive their
right to require the other to adhere to its terms and conditions. However,
Foilmark and HoloPak may not do so after stockholder approval of the merger, if
the amendment or waiver reduces or changes the merger consideration that will be
received by HoloPak stockholders, unless they approve such amendment or waiver.
As of the date of this joint proxy statement--prospectus, Foilmark and HoloPak
do not intend to waive any of the conditions to completion of the merger.
ACCOUNTING TREATMENT (PAGE 52)
The merger will be treated as a purchase of HoloPak by Foilmark for
accounting purposes.
REGULATORY APPROVALS (PAGE 49)
There are no federal, state or local regulatory approvals required in order
to complete the merger.
SOURCE OF FUNDS (PAGE 59)
Foilmark will pay the cash payment and fractional share cash payment, if
any, of the merger consideration, in the aggregate amount of approximately
$4,800,000 from working capital of the combined businesses and from drawing on
its revolving line of credit with Fleet National Bank.
SELECTED FINANCIAL DATA
The following tables show summarized historical financial data for each of
us and also show similar pro forma information giving effect to the merger. The
pro forma information reflects the purchase method of accounting.
We expect that we will incur merger and integration charges as a result of
combining our companies. We also anticipate that the merger will provide the
combined company with financial benefits that include reduced operating expenses
and the opportunity to earn more revenue. The pro forma information, while
helpful in illustrating the financial characteristics of the new company under
one set of assumptions, doesn't reflect these expenses or benefits and,
accordingly, doesn't attempt to predict or suggest future results. It also
doesn't necessarily reflect what the historical results of the new company would
have been had our companies been combined.
The information in the following tables is based on historical financial
information that we've presented in our prior Securities and Exchange Commission
filings. You should read all of the summary financial information we provide in
the following tables in connection with this historical financial
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<PAGE>
information and with the more detailed financial information which has been
incorporated into this document by reference. See "Incorporation of Certain
Information by Reference" on page 71. Foilmark's financial statements,
incorporated herein by reference, for the periods ended December 31, 1998, 1997
and 1996 were audited by KPMG LLP, independent certified public accountants. The
Foilmark historical information for fiscal years ended December 31, 1995 and
1994 were derived from audited financial statements. HoloPak's financial
statements, incorporated herein by reference, for the periods ended March 31,
1998, 1997 and 1996 were audited by Deloitte & Touche LLP, independent certified
public accountants. The HoloPak historical information for fiscal years ended
March 31, 1995 and 1994 were derived from audited financial statements.
8
<PAGE>
SELECTED CONSOLIDATED HISTORICAL AND PRO FORMA FINANCIAL DATA OF FOILMARK AND
ITS SUBSIDIARIES
The selected consolidated historical financial information presented below,
as of and for each of the five years in the period ended December 31, 1998, has
been derived from the historical consolidated financial statements of Foilmark.
Foilmark's selected financial data should be read in conjunction with the
financial statements and the notes thereto included in Foilmark's current report
on Form 8-K dated March 1, 1999 and filed on March 3, 1999.
The unaudited selected pro forma financial data combine Foilmark's
historical results with HoloPak's historical results, in each case, as of or for
the twelve months ended December 31, 1998 giving effect to the merger as if it
had occurred at the beginning of the period indicated. See "Incorporation of
Certain Information by Reference" and "Unaudited Pro Forma Condensed Financial
Information".
FOILMARK, INC. AND SUBSIDIARIES
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA COMBINED
TWELVE MONTHS ENDED
DECEMBER 31, YEARS ENDED DECEMBER 31
--------------------- ---------------------------------------------------------
1998 1998 1997(A) 1996 1995(B) 1994(C)
--------------------- --------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA--
CONTINUING OPERATIONS
Revenue........................................ $ 64,470 $ 30,886 $ 33,379 $ 29,692 $ 26,656 $ 20,349
Operating income............................... 1,957 1,181 2,824 707 3,438 2,556
Net income..................................... 621 357 1,475 189 1,895 1,409
Earnings per share............................. 0.08 0.09 0.35 0.05 0.47 0.47
Weighted average shares outstanding............ 7,895 4,173 4,161 4,142 3,999 2,900
FINANCIAL CONDITION
Total assets................................... 45,819 29,821 32,082 40,332 37,952 26,449
Long-term debt................................. 12,588 9,106 10,750 12,165 10,732 3,401
Working capital................................ 20,139 10,625 11,757 12,782 11,766 10,120
Total stockholders' equity..................... 23,162 15,366 14,978 18,250 19,243 16,178
Book value per share........................... 2.93 3.68 3.59 4.40 4.65 4.17
</TABLE>
- ------------------------------
(a) On October 15, 1997, Foilmark announced the discontinuance of the
manufacture of hot stamping equipment. Discontinuation of the hot stamping
line resulted in a one-time charge of $3,894,400 and $892,076 loss from
operations, net of tax benefit, equal to a total loss of $4,786,476, net of
tax benefit.
(b) On August 21, 1995, Foilmark acquired substantially all of the assets and
assumed certain liabilities of Imtran Industries, Inc. The acquired assets
consist primarily of equipment and other property used in the manufacture
and distribution of pad pricing equipment.
(c) Effective October 1, 1994, Foilmark acquired all of the outstanding stock of
West Foils, Inc., a California corporation engaged in the distribution of
foils, for $750,000 in cash and 153,847 shares of the common stock of
Foilmark.
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<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA OF HOLOPAK AND ITS SUBSIDIARIES
The selected consolidated historical financial information presented below,
as of and for each of the five years in the period ended March 31, 1998, has
been derived from the historical consolidated financial statements of HoloPak.
The selected consolidated historical financial information presented below for
the nine months ended December 31, 1998 and 1997 is taken from unaudited
financial statements that include all adjustments, which in the opinion of
HoloPak management are only of a normal recurring nature, and which HoloPak
management considers necessary for a fair presentation of the results of
operations for these periods. Operating results for the nine months ended
December 31, 1998 presented below are not necessarily indicative of the results
that may be expected for the entire year ending March 31, 1999. HoloPak's
selected financial data presented below should be read in conjunction with the
financial statements and the notes thereto included in HoloPak's Annual Report
on Form 10-K for the year ended March 31, 1998 and HoloPak's Quarterly Reports
on Form 10-Q for the periods ended December 31, 1998 and 1997.
HOLOPAK TECHNOLOGIES, INC. AND SUBSIDIARIES
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
DECEMBER 31, FISCAL YEAR ENDED MARCH 31,
------------------------ -----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1998 1997 1998 1997 1996 1995 1994
----------- ----------- --------- --------- --------- --------- ---------
INCOME STATEMENT DATA-- CONTINUING
OPERATIONS
Revenues................................ $ 25,013 $ 29,384 $ 37,955 $ 40,960 $ 43,954 $ 45,866 $ 45,350
Operating (loss) income................. (314) 288 (212) (259) 963 3,544 3,689
Net (loss) income....................... (318) 156 (264) (200) 512 2,063 2,077
Earnings (loss) per share............... (0.10) 0.05 (0.08) (0.11) 0.09 0.59 (0.19)
Weighted-average number of common shares
and common share equivalents
outstanding........................... 3,348 3,348 3,348 3,352 3,518 3,518 3,518
FINANCIAL CONDITION
Working capital......................... $ 11,630 $ 12,423 $ 11,686 $ 11,560 $ 13,272 $ 12,256 $ 10,954
Total assets............................ 29,442 32,303 30,761 33,966 36,474 40,901 38,878
Long-term debt, including current
maturities............................ 1,175 1,518 1,080 2,833 4,585 6,338 6,600
Stockholders' equity.................... 24,723 25,919 25,574 26,012 26,506 27,002 25,012
Book value per share.................... 7.39 -- -- -- -- -- --
</TABLE>
10
<PAGE>
RISK FACTORS
IN ADDITION TO OTHER INFORMATION IN THIS JOINT PROXY STATEMENT--PROSPECTUS,
THE FOLLOWING RISKS SHOULD BE CONSIDERED BY HOLOPAK STOCKHOLDERS IN DECIDING
WHETHER TO APPROVE THE MERGER AGREEMENT, AND BY THE FOILMARK STOCKHOLDERS IN
DECIDING WHETHER TO APPROVE THE ISSUANCE OF COMMON STOCK OF FOILMARK TO HOLOPAK
STOCKHOLDERS AND THE ADOPTION EACH OF THE AMENDMENTS TO FOILMARK'S CERTIFICATE
OF INCORPORATION.
YOU WILL NOT KNOW THE VALUE OF THE MERGER CONSIDERATION AT THE TIME OF THE
HOLOPAK SPECIAL MEETING.
The value of the merger consideration on the date of this joint proxy
statement--prospectus may not be the same as on the date of the HoloPak special
meeting and the Foilmark special meeting, or the time of the merger. At the time
of the HoloPak special meeting, holders of HoloPak common stock will not know
the exact value of the Foilmark common stock that they will receive when the
merger is completed. The exchange ratio of 1.11 shares of Foilmark common stock
per one share of HoloPak common stock is a fixed number and amount and will not
be adjusted in the event of any increase or decrease in the price of Foilmark
common stock between the date of the merger agreement and the time of the
merger. As a result, the market value of Foilmark common stock received by
HoloPak stockholders in the merger could vary depending on fluctuations in the
value of the Foilmark common stock between the date of the merger agreement and
the time of the merger. The market value may fluctuate because of changes in the
business, operations or prospects of Foilmark, market assessments of the
likelihood that Foilmark and HoloPak will complete the merger, the timing of the
completion of the merger and general market and economic conditions. For
example, during the twelve month period ending on March 19, 1999, the closing
price of HoloPak common stock varied from a low of $1.53 to a high of $3.63, and
ended that period at $2.81, and the closing price of Foilmark common stock
varied from a low of $1.31 to a high of $4.50 and ended that period at $1.56.
See "Range of Common Stock Prices and Dividends". WE URGE YOU TO OBTAIN CURRENT
MARKET QUOTATIONS FOR HOLOPAK COMMON STOCK AND FOILMARK COMMON STOCK.
IF THE MERGER FAILS TO QUALIFY AS A REORGANIZATION, STOCKHOLDERS OF HOLOPAK MAY
INCUR TAXES ON THE FOILMARK STOCK THEY RECEIVE IN THE MERGER.
If the merger is not treated as a reorganization within the meaning of the
Internal Revenue Code, the merger may be taxable to HoloPak and its
stockholders. If the merger qualifies as a reorganization, it will generally be
tax free to HoloPak and its stockholders, except with respect to the cash
payment and any additional cash for fractional shares, and except that HoloPak
stockholders exercising appraisal rights will be taxed, generally, on any excess
of the cash received over their basis in the shares and the amount of cash
received. Foilmark and HoloPak have received opinions from their respective
counsel, dated as of the date of this joint proxy statement--prospectus, that,
if carried out under the terms of the merger agreement, the merger will be
treated as a reorganization for United States federal income tax purposes. In
rendering their opinions, counsel to Foilmark and HoloPak have relied upon
certain representations, and will rely upon a confirmation of those
representations at closing, including representations by Foilmark, Foilmark
Acquisition Corporation and HoloPak. If these representations are untrue,
incorrect or incomplete, the merger may not be treated as a reorganization
within the meaning of the Internal Revenue Code. These opinions will be
confirmed as of the effective time of the merger. You should be aware that
opinions of counsel are not binding on the Internal Revenue Service or courts of
law. See "The Merger Agreement--Material Federal Income Tax Consequences".
WE MAY NOT BE ABLE TO INTEGRATE THE BUSINESSES OF FOILMARK AND HOLOPAK.
Because the businesses of Foilmark and HoloPak are roughly equivalent in
total assets, net revenues and number of employees, it may be more difficult for
them to integrate their corporate cultures and operations than if HoloPak's
business was much smaller or larger than Foilmark's business. Foilmark and
HoloPak may not realize the benefits expected from the integration of their
product lines, business strategies, manufacturing, operating systems and
marketing programs. The merger
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<PAGE>
involves the integration of two companies that have previously operated
independently. The composition of the new board of directors, involving five
current members of the board of each of Foilmark and HoloPak, could result in
serious differences in the vision for the future direction of Foilmark after the
merger. Foilmark and HoloPak may encounter difficulties when integrating their
respective operations. Because the merger will significantly increase Foilmark's
product line and customer base, the expanded role of the consolidation of
functions and integration of departments will present a significant challenge to
the management of Foilmark. Foilmark may also encounter difficulties when
integrating personnel with disparate business backgrounds. Due to the
uncertainty of operations following the merger, HoloPak may lose key personnel,
customers or suppliers due to the merger. There can be no assurance that the
benefits of the merger will be realized or that the integration will be
successful and timely implemented.
FOILMARK'S INCREASED LEVEL OF INDEBTEDNESS MAY LIMIT ITS OPERATING FLEXIBILITY.
Foilmark will be required to allocate a greater portion of its cash flow to
pay interest expenses on its increased indebtedness to be incurred from drawing
on its line of credit with Fleet National Bank to pay part of the cash portion
of the merger consideration, which will reduce its available cash flow for other
purposes. Also, the fact that Foilmark will experience increased leverage may
affect its ability to obtain additional financing for working capital, capital
expenditures, acquisitions or other purposes and therefore affect its ability to
compete. Foilmark is required under its current loan facility with Fleet
National Bank to maintain certain financial ratios and satisfy certain financial
tests. For the quarter ended December 31, 1998, Foilmark obtained a waiver from
Fleet for non-compliance with one of its financial ratios. Its increased
indebtedness as a result of the merger might cause Foilmark to be unable to
maintain the financial ratios or meet the financial tests required to be met
under the loan agreement.
WE MADE FORWARD-LOOKING STATEMENTS IN THIS JOINT PROXY STATEMENT-PROSPECTUS.
THESE FORWARD-LOOKING STATEMENTS MAY BE INACCURATE.
This joint proxy statement--prospectus contains certain statements that are
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All
statements other than statements of historical facts included in this joint
proxy statement--prospectus, including statements that use terminology such as
estimate, expect, intend, anticipate, believes, may, will, continue and similar
expressions, are forward-looking statements. Although Foilmark and HoloPak
believe that the assumptions upon which the forward-looking statements contained
in this joint proxy statement--prospectus are based are reasonable, any of the
assumptions could prove to be inaccurate and, as a result, the forward-looking
statements based on those assumptions also could be incorrect. All phases of
Foilmark's and HoloPak's operations involve risks and uncertainties, many of
which are outside Foilmark's and HoloPak's control and any one of which, or a
combination of which, could materially affect the results of Foilmark's
operations and whether the forward-looking statements ultimately prove to be
correct. Important factors that could cause actual results to differ materially
from Foilmark's and HoloPak's expectations include:
- continued or increased competitive pressures, including price-cutting
strategies, from existing competitors and/or new entrants;
- risks involved in integrating Foilmark's and HoloPak's operations;
- unanticipated costs related to Foilmark's growth and operating strategy;
- the effectiveness of capital investments and marketing strategies of
Foilmark following the merger;
- unexpected loss or retirement of one or more key members of management;
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- inability to negotiate favorable terms with suppliers due in part to lack
of availability of raw materials;
- increases in interest rates or the cost of borrowing or a default under
any material debt agreements;
- deterioration in general economic conditions;
- adverse determinations in connection with pending or future litigation or
other material claims and judgments;
- inability to achieve profitable future sales;
- the unavailability of funds for capital expenditures;
- governmental factors affecting operations, markets, products, services and
prices;
- the ability of Foilmark and HoloPak to have its computer systems comply
with year 2000 requirements; and
- other risks discussed in this joint proxy statement--prospectus or
described from time to time in Foilmark's or HoloPak's filings with the
Securities and Exchange Commission.
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FOILMARK SPECIAL MEETING
MATTERS TO BE CONSIDERED
The purpose of the Foilmark special meeting is to:
- approve the issuance of up to 3,715,935 shares of Foilmark common stock to
HoloPak stockholders as described in the merger agreement among Foilmark,
Foilmark Acquisition Corporation and HoloPak;
- adopt an amendment to Foilmark's certificate of incorporation to increase
the number of authorized shares of Foilmark common stock from 10,000,000
to 15,000,000;
- adopt an amendment to Foilmark's certificate of incorporation to remove
article eight, which contains provisions requiring the vote of the holders
of 80% of outstanding Foilmark common stock to approve some transactions;
and
- adopt an amendment to Foilmark's certificate of incorporation to remove
article nine, which allows Foilmark stockholders to vote cumulatively for
directors.
Foilmark stockholders may also be asked to vote upon a proposal to adjourn
or postpone the Foilmark special meeting. An adjournment or postponement could
be used to allow for extra time to solicit additional votes to approve the
issuance and the amendments to Foilmark's certificate of incorporation.
Management knows of no other business to be brought before the Foilmark special
meeting. If other matters do properly come before the Foilmark special meeting,
however, it is intended that shares of Foilmark common stock represented by
proxies in the accompanying form will be voted, or not voted, by the persons
named in the proxies in their discretion. No proxy that is voted against
approval of the issuance or the amendments to Foilmark's certificate of
incorporation will be voted in favor of such adjournment or postponement.
PROXIES; REVOCATION OF PROXIES
The accompanying form of proxy is for use at the Foilmark special meeting if
a Foilmark stockholder is unable or does not wish to attend in person.
The proxy may be revoked by a Foilmark stockholder at any time before it is
voted at the meeting by:
- submitting to the Secretary of Foilmark written notice of revocation or a
properly executed proxy of a later date;
- submitting a signed proxy bearing a later date; or
- attending the Foilmark special meeting and electing to vote in person.
Attendance at the Foilmark special meeting will not, by itself, revoke a
proxy. Written notices of revocation and other communications regarding the
revocation of Foilmark proxies should be addressed to Foilmark, Inc., 5 Malcolm
Hoyt Drive, Newburyport, Massachusetts 01950, Attention: Corporate Secretary.
Brokers who hold shares of Foilmark common stock in street name for
customers who are the beneficial owners of those shares may not give a proxy to
vote those shares to approve the issuance and adopt the amendments to Foilmark's
certificate of incorporation without specific instructions from its customers.
All shares of Foilmark common stock represented by valid proxies and not revoked
before they are exercised, will be voted in the manner specified in those
proxies. If no specification is made, the proxies will be voted in favor of the
matters to be voted upon at the Foilmark special meeting, including approval of
the issuance and the amendments to Foilmark's certificate of incorporation.
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SOLICITATION OF PROXIES
The entire cost of soliciting proxies from Foilmark stockholders will be
paid by Foilmark, except that HoloPak and Foilmark have each agreed to pay
one-half of the printing costs and filing fees relating to this joint proxy
statement--prospectus and related materials. In addition to soliciting proxies
by mail, Foilmark will request banks, brokers and other record holders to send
proxies and proxy materials to the beneficial owners of Foilmark common stock
and secure their voting instructions, if necessary. Foilmark will reimburse such
holders of record for their reasonable expenses in so doing. Foilmark has also
made arrangements with MacKenzie Partners to assist it in soliciting proxies
from banks, brokers and nominees, and has agreed to pay up to $10,000 plus
expenses for such services. If necessary, Foilmark may also use several of its
regular employees, who will not be specially compensated, to solicit proxies
from stockholders, either personally or by telephone, telegram, facsimile,
letter or special delivery letter.
RECORD DATE AND VOTING RIGHTS
As required by Delaware law, Foilmark's by-laws and the rules of the Nasdaq
National Market, March 12, 1999 has been fixed as the record date for
determination of Foilmark stockholders entitled to notice of and to vote at the
Foilmark special meeting. Accordingly, only holders of shares of Foilmark common
stock of record at the close of business on the Foilmark record date will be
entitled to notice of and to vote at the Foilmark special meeting. At the close
of business on the Foilmark record date, there were 4,183,700 shares of Foilmark
common stock held by approximately 65 holders of record. Each share of Foilmark
common stock outstanding on the Foilmark record date entitles its holder to one
vote.
The presence, in person or by proxy, of shares of Foilmark common stock
representing a majority of Foilmark shares outstanding and entitled to vote on
the Foilmark record date is necessary to constitute a quorum at the Foilmark
special meeting. Shares of Foilmark common stock present in person at the
Foilmark special meeting but not voting will be counted as present at the
Foilmark special meeting for purposes of determining the presence or absence of
a quorum for the transaction of business. Shares of Foilmark common stock for
which Foilmark has received proxies indicating that its holders have abstained,
will be counted as present at the Foilmark special meeting for purposes of
determining the presence or absence of a quorum for the transaction of business.
Under Delaware law, Foilmark will make available, during normal business hours
either at the place where the Foilmark special meeting is to be held, or at a
place within the city where the Foilmark special meeting is to be held, at least
ten days before the Foilmark special meeting, a complete list of the
stockholders entitled to vote at the Foilmark special meeting, including the
address of each Foilmark stockholder and the number of shares registered in the
name of each Foilmark stockholder.
Under the rules of the Nasdaq National Market and Foilmark's certificate of
incorporation, approval of the issuance requires the affirmative vote of a
majority of the outstanding shares of Foilmark common stock entitled to vote at
the Foilmark special meeting. The adoption of the amendment to Foilmark's
certificate of incorporation to increase the number of authorized shares
requires the affirmative vote of the holders of a majority of the outstanding
shares of Foilmark common stock entitled to vote at the Foilmark special
meeting. The adoption of the amendment to remove article eight of Foilmark's
certificate of incorporation and the amendment to remove article nine of
Foilmark's certificate of incorporation requires the affirmative vote of the
holders of at least 80% of the outstanding shares of Foilmark common stock
entitled to vote at the Foilmark special meeting.
Additional information with respect to beneficial ownership of Foilmark
common stock by persons and entities owning more than 5% of its stock and more
detailed information with respect to beneficial ownership of Foilmark common
stock by Foilmark's directors and executive officers is incorporated by
reference to Foilmark's annual report on Form 10-K for the year ended December
31, 1997. Additionally, information with respect to Foilmark's directors and
executive officers, executive compensation and some related transactions of and
by such persons is incorporated by reference to Foilmark's Annual Report on Form
10-K for the year ended December 31, 1997. See "Incorporation of Certain
Information by Reference".
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HOLOPAK SPECIAL MEETING
MATTERS TO BE CONSIDERED
At the HoloPak special meeting, HoloPak stockholders will be asked to
consider and vote upon the approval of the merger agreement. HoloPak
stockholders may also be asked to vote upon a proposal to adjourn or postpone
the HoloPak special meeting, which adjournment or postponement could be used for
the purpose of approving additional time for the solicitation of additional
votes to approve the merger. The persons named as proxies by a HoloPak
stockholder may propose and vote for one or more adjournments or postponements
of the HoloPak special meeting, including adjournments to permit further
solicitations of proxies in favor of any proposal. No proxy that is voted
against the approval of the merger will be voted in favor of an adjournment or
postponement. Except as specified above, proxies will only be voted on matters
incidental to the conduct of the HoloPak special meeting.
Management of HoloPak knows of no other matter to be brought before the
HoloPak special meeting other than as referred to in this document. If any other
business should properly come before the HoloPak special meeting, the persons
named in the proxy will vote upon those matters in their discretion.
PROXIES; REVOCATION OF PROXIES
Shares of HoloPak common stock represented by properly executed proxies
received in time for the HoloPak special meeting will be voted in the manner
specified in those proxies. For voting purposes at the HoloPak special meeting,
only shares voted in favor of the proposal to approve the merger agreement,
including properly signed proxies not containing voting instructions, will be
counted as votes in favor of this proposal. Failing to submit a proxy or voting
in person or abstaining from voting will have the same effect as voting against
the proposal to approve the merger agreement. In addition, brokers who hold
shares of HoloPak common stock in street name for customers who are the
beneficial owners of those shares may not give a proxy to vote those shares
without specific instructions from their customers. Signed broker non-votes will
be counted as votes against the proposal to approve the merger agreement.
The grant of a proxy on the enclosed HoloPak form of proxy does not stop a
HoloPak stockholder from voting in person. A HoloPak stockholder may revoke a
proxy at any time before its exercise by:
- filing with the Secretary of HoloPak a signed revocation of proxy;
- submitting a signed proxy bearing a later date; or
- appearing at the HoloPak special meeting and voting in person.
Attendance at the HoloPak special meeting will not, by itself, constitute
revocation of a proxy.
SOLICITATION OF PROXIES
For a discussion of the allocation of the cost of printing and filing this
joint proxy statement-- prospectus and the materials used in this solicitation
of proxies, see "Foilmark Special Meeting-- Solicitation of Proxies". In
addition to solicitation by mail, the directors, officers and employees of
HoloPak may solicit proxies from stockholders of HoloPak by telephone or
telegram or in person. Arrangements will also be made with brokerage houses and
other custodians, nominees and fiduciaries to forward solicitation material to
HoloPak stockholders. HoloPak will reimburse these custodians, nominees and
fiduciaries for their reasonable out-of-pocket expenses incurred. HoloPak has
engaged Mackenzie Partners to represent it in connection with the solicitation
of proxies at a cost of up to $5,000, plus expenses for those services. You
should not send stock certificates with your proxy card.
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RECORD DATE AND VOTING RIGHTS
HoloPak has fixed the close of business on March 12, 1999 as the record date
for determination of HoloPak stockholders entitled to notice of and to vote at
the HoloPak special meeting. On the HoloPak record date, 3,346,519 shares of
HoloPak common stock were outstanding and held by approximately 132 holders of
record. Holders of record of HoloPak common stock on the HoloPak record date are
each entitled to one vote per share on each matter to be considered at the
HoloPak special meeting.
The presence at the HoloPak special meeting, either in person or by proxy,
of the holders of a majority of the HoloPak common stock entitled to vote on the
merger will constitute a quorum at the HoloPak special meeting. Shares of
HoloPak common stock represented at the HoloPak special meeting but not voting
will be treated as present at the HoloPak special meeting for purposes of
determining the presence or absence of a quorum for the transaction of business.
Shares of HoloPak common stock for which proxies have been received but with
respect to which holders of shares have abstained, will be treated as present at
the HoloPak special meeting for purposes of determining the presence or absence
of a quorum for the transaction of business. As required by Delaware law,
HoloPak will make available, during normal business hours either at the place
where the HoloPak special meeting is to be held, or at a place within the city
where the HoloPak special meeting is to be held, at least ten days before the
HoloPak special meeting, a complete list of the stockholders entitled to vote at
the HoloPak special meeting, including the address of each HoloPak stockholder
and the number of shares registered in the name of each HoloPak stockholder.
The affirmative vote of the holders of a majority of the outstanding shares
of HoloPak common stock on the HoloPak record date is required to approve the
merger agreement.
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THE MERGER
BACKGROUND OF THE MERGER
The following paragraphs describe the history of the decision of Foilmark
and Holopak to enter into the merger agreement.
During the second half of 1994, the HoloPak board met to discuss HoloPak's
stock price performance. The board had noticed that the stock had been
consistently undervalued, and decided that the HoloPak stockholders might
realize a more fair measure of HoloPak's value if they explored the possibility
of a sale, merger or other combination. The HoloPak board hired Schroders to act
as HoloPak's exclusive financial advisor to explore a possible sale, merger or
other strategic combination involving HoloPak. Schroders explored this
possibility during the period of June 1994 to March 1995. During this period,
none of the parties contacted submitted definitive binding proposals to HoloPak.
Throughout 1996 and 1997, the HoloPak board decided that HoloPak would no
longer actively search for business combinations and that management would
re-focus its attention on operations. The HoloPak board, however, remained open
to the possibility of a combination or strategic, alliance, but did not receive
any definitive binding proposals from any interested parties.
On June 22, 1998, Frank J. Olsen, Jr., President and Chief Executive Officer
of Foilmark, initiated a conversation with Thomas Bryson of McFarland Dewey,
financial advisor to Foilmark, stating his belief that Foilmark needed to expand
its product line, manufacturing capacity and sales penetration to foster
Foilmark's growth and maintain Foilmark's competitive position. Mr. Olsen
suggested that a possible strategic alliance with HoloPak might satisfy such
needs.
On July 10, 1998, Mr. Bryson contacted Robert J. Simon, Chairman of the
HoloPak board, by telephone. Mr. Bryson advised Mr. Simon that McFarland Dewey
represented Foilmark and that Foilmark may be interested in pursuing a strategic
alliance with HoloPak.
On July 15, 1998, Mr. Bryson met with Mr. Simon. At this meeting, it was
suggested that Frank J. Olsen, Jr., President and Chief Executive Officer of
Foilmark and James L. Rooney, President and Chief Executive Officer of HoloPak,
meet to discuss a possible transaction between Foilmark and HoloPak.
During late July 1998, Mr. Simon had individual conversations with each
member of the HoloPak board to inform them of the initial discussions with
Foilmark.
On August 11, 1998, Mr. Rooney had an initial meeting with Mr. Olsen at
Foilmark's offices in Newburyport, Massachusetts and toured Foilmark's
facilities. At such meeting, Messrs. Rooney and Olsen discussed a possible
strategic alliance and the positive aspects of such an alliance or merger.
On August 27, 1998, at a meeting in New York City, Mr. Bryson introduced Mr.
Olsen to Mr. Simon. At such meeting, Messrs. Bryson, Olsen and Simon had
informal discussions regarding the possibility and desirability of a transaction
between HoloPak and Foilmark.
During September 1998, Messrs. Bryson, Olsen and Simon had a number of
meetings and telephone conversations to discuss a possible acquisition of
HoloPak by Foilmark.
On September 22, 1998, Foilmark and HoloPak entered into a confidentiality
agreement. Foilmark and HoloPak agreed to make available to the other non-public
information about itself on a confidential basis.
At a September 25, 1998 meeting of the HoloPak board, Mr. Simon reviewed the
discussions he had with Messrs. Bryson and Olsen. The HoloPak board considered
and discussed a possible transaction with Foilmark. The HoloPak board did not
reach a decision at this meeting, but decided that
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Mr. Simon should continue to discuss a possible transaction with Messrs. Bryson
and Olsen and report back to the HoloPak board once Mr. Simon and HoloPak
management conducted due diligence.
On September 29, 1998, Mr. Simon and representatives of Schroders met with
Mr. Olsen and McFarland Dewey at Foilmark's offices to review Foilmark's legal,
operational and accounting documents and discuss the business with senior
management. They also toured Foilmark's facilities.
On October 1, 1998, Mr. Simon and HoloPak management had a telephone
conversation with Messrs. Bryson and Olsen to further discuss the possible terms
of a transaction and due diligence.
On October 7, 1998, certain members of Foilmark management and Mr. Bryson
toured HoloPak's facilities in East Brunswick, New Jersey.
On October 8, 1998, certain members of the management of HoloPak and
Foilmark, Mr. Bryson and a representative of Schroders met at a hotel in
Princeton, New Jersey to share information concerning the business and
operations of each of Foilmark and HoloPak.
During the week of October 26, 1998 and continuing through the second week
of November 1998, representatives of senior management of HoloPak and Schroders
and Battle Fowler LLP, legal counsel to HoloPak, conducted extensive due
diligence of Foilmark. During the same time period, representatives of senior
management of Foilmark conducted an extensive due diligence examination of
HoloPak, assisted in varying degrees by representatives of McFarland Dewey, KPMG
LLP, independent auditors to Foilmark, and Hinckley, Allen & Snyder, legal
counsel to Foilmark. During this period, Foilmark and HoloPak and their
representatives were provided with access to information, oral management
presentations, legal presentations and access to the facilities of the other and
their subsidiaries.
On October 28, 1998, at the regular quarterly meeting of the Foilmark board,
Mr Olsen reviewed Foilmark's strategic options for expanding Foilmark's
business. He reviewed two possible alternatives: doing nothing or pursuing an
acquisition of HoloPak. He also reviewed with the Foilmark board the state of
the industry. The Foilmark board concluded that a merger with HoloPak
represented the best opportunity at that time to achieve the strategic goal of
increasing the size of Foilmark's business. The Foilmark board noted the
opportunities presented by the merger, including the ability to reduce costs
through rationalization of facilities, increased volumes and economies of scale.
The Foilmark board requested Foilmark's management to produce a plan for the
integration of the businesses that would enable an assessment of the likelihood
of achieving the benefits anticipated by the merger.
During the week of November 2, 1998, senior management of HoloPak and Battle
Fowler began negotiations of a definitive agreement and plan of merger and other
agreements contemplated by the merger with Foilmark and Hinckley, Allen &
Snyder. These negotiations continued through November 17, 1998.
Throughout the negotiation period, there were discussions of merger terms at
some of the meetings listed above and in numerous telephone conversations among
the parties. The fundamental premise of the negotiations was a combination of
relative equals in a transaction which had a likelihood of minimizing any
recognition of taxable gain to the respective stockholders. The negotiations
then centered around the amount of stock and amount of cash that would comprise
the total merger consideration that HoloPak stockholders would receive, ranging
from 53% of the combined equity plus $0.75 in cash per share to 47% of the
combined equity plus and $1.42 in cash per share, respectively. These
negotiations were driven by the anticipated cash needs of the combined business
after a merger and the desire that the stock issuance not be dilutive to
Foilmark stockholders. Further discussions resulted in a final agreement whereby
HoloPak stockholders will, following the merger, represent approximately 47% of
the shares of the combined company and receive as merger consideration 1.11
shares of Foilmark common stock and $1.42 in cash per share of HoloPak common
stock.
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On November 14, 1998, Mr. Simon called a special meeting of the HoloPak
board. At this meeting, Mr. Simon discussed with the HoloPak board the terms of
the proposed merger with Foilmark. At this meeting, the HoloPak board determined
to have a special meeting on November 17, 1998 to further discuss the proposed
merger with Foilmark.
On November 17, 1998, the HoloPak board held a special meeting to review,
with the assistance of Battle Fowler and Schroders, the proposed merger, the
merger agreement and the Foilmark shareholder agreement. At this meeting,
HoloPak's management and legal advisors made presentations to the HoloPak board
concerning the merger. In addition, Schroders reviewed with the HoloPak board
the financial analyses performed by Schroders in connection with the proposed
merger and delivered to the board an oral opinion to the effect that the
consideration to be received by the HoloPak stockholders in the proposed merger
was fair, from a financial point of view, to the HoloPak stockholders. Schroders
confirmed their oral opinion in writing on November 17, 1998. The opinion of
Schroders is attached to this joint proxy statement-prospectus as Appendix C-1.
HoloPak stockholders are urged to read the full text of that opinion. Following
the HoloPak board's review of the contemplated transaction, the HoloPak board
unanimously approved the proposed merger, the merger agreement and the Foilmark
shareholder agreement. The board also authorized the execution of the merger
agreement and the Foilmark shareholder agreement in substantially the form
presented to the HoloPak board, giving Holopak management the discretion to make
immaterial changes to these agreements without the board's express approval. The
board determined that the merger agreement be voted on by HoloPak stockholders,
and that the HoloPak board recommend that such stockholders approve the merger
agreement. One of the reasons the Holopak board approved the merger with
Foilmark, rather than determining to continue its independent operations, was
because the HoloPak board believed that the merger would provide greater value
to the Holopak stockholders. See "Recommendation of the HoloPak Board and
HoloPak's Reasons for the Merger."
On November 17, 1998, the Foilmark board met to discuss the acquisition of
HoloPak. The Foilmark board received the oral opinion of McFarland Dewey, that
the merger was fair, from a financial point of view, to Foilmark stockholders.
McFarland Dewey confirmed its oral opinion in writing on November 17, 1998. The
opinion of McFarland Dewey is attached to this joint proxy statement-prospectus
as Appendix B-1. At this meeting, Foilmark management and Hinckley, Allen &
Snyder made presentations to the Foilmark board concerning the merger and
assisted in the Foilmark board's review of the proposed merger agreement and the
HoloPak and Foilmark shareholder agreements. Following the Foilmark board's
review of the merger, the Foilmark board unanimously approved the merger and the
proposed merger agreement and related transactions, and determined that the
Foilmark board recommend to the Foilmark stockholders the approval of the
issuance and the amendments to Foilmark's certificate of incorporation.
On November 17, 1998, HoloPak, Foilmark and Foilmark Acquisition signed the
merger agreement. On that same day, HoloPak and the directors, executive
officers and substantial stockholders of Foilmark signed the HoloPak shareholder
agreement. Also on November 17, 1998, Foilmark and substantial stockholders and
all of the directors of HoloPak signed the Foilmark shareholder agreement.
On November 18, 1998, HoloPak and Foilmark issued a joint press release
announcing the execution of the merger agreement, the Foilmark shareholder
agreement and the HoloPak shareholder agreement.
On March 17, 1999, Schroders delivered to the HoloPak board its confirmation
of the continued fairness of its opinion, dated March 17, 1999, as to the
fairness as of such date, from a financial point of view, of the consideration
to be received by the holders of shares of HoloPak common stock pursuant to the
merger.
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On March 18, 1999, McFarland Dewey delivered to the Foilmark board its
confirmation of the continued fairness of its opinion, dated March 18, 1999, as
to the fairness as of such date, from a financial point of view, of the
consideration to be paid by Foilmark in the merger.
RECOMMENDATION OF THE FOILMARK BOARD AND FOILMARK'S REASONS FOR THE MERGER
The Foilmark board believes that the merger presents a unique opportunity to
combine two complementary foil manufacturers to create a premier company with
the capability to offer a full range of products in many of the nation's most
attractive markets through a powerful distribution network.
In reaching its decision to approve the merger agreement, the Foilmark board
consulted with Foilmark management, as well as with its financial, accounting
and legal advisors, and considered a variety of factors, including the
following:
- The Foilmark board's familiarity with and review of Foilmark's business,
operations, financial condition, earnings and prospects;
- The consistency of the merger with Foilmark's long-term business strategy;
- The anticipated effectiveness of the merger in allowing Foilmark to
enhance stockholder value by achieving efficiencies and expanding market
opportunities;
- The business, operations, financial condition, earnings, earnings
projections and business prospects of HoloPak. In making its
determination, the Foilmark board took each of these factors into account
along with the results of Foilmark's due diligence review of HoloPak's
business. The Foilmark board considered each factor with no single factor
predominantly influencing its decision;
- The scale, scope, strength and diversity of operations and products that
could be achieved by combining Foilmark and HoloPak;
- The complementary nature of the businesses of Foilmark and HoloPak and the
anticipated improved stability of the combined company's businesses and
earnings in varying economic and market climates in comparison to
Foilmark's business before the merger;
- The anticipated financial impact of the proposed transaction on the
combined company's future financial performance. See "Risk Factors -- We
made forward-looking statements in this joint proxy statement prospectus.
These forward-looking statements may be inaccurate." The projections of
future financial performance of the combined companies were reviewed in
the context of their inherent uncertainty and therefore the Foilmark board
gave this factor no greater weight than the other factors considered;
- The expectation that the merger would result in approximately $1,100,000
in cost savings to be achieved in the first full year and an additional
$600,000 in the second year of combined operations, including a more
advantageous cost structure relative to Foilmark's business before the
merger. The potential for revenue enhancements was discussed but not
included in the projections considered by the Foilmark board. See
"Management and Operations After the Merger";
- The belief of Foilmark's senior management and the Foilmark board that
Foilmark and HoloPak share a common vision with respect to manufacturing
and stockholder value and that their managements and employees possess
complementary skills and expertise;
- The Foilmark board's belief that the business and financial advantages
contemplated in connection with the merger were likely to be achieved
within the first two years of combined operations. In particular, the
Foilmark board took into account management's view that the complementary
operations of HoloPak and Foilmark would facilitate integration;
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- The fact that integration of the managements of Foilmark and HoloPak would
allow Foilmark to acquire personnel with additional expertise and
established reputations in the foil industry;
- The structure of the merger and the terms of the merger agreement,
including the fact that the fixed ratio of 1.11 shares of Foilmark common
stock per share of HoloPak common stock provides certainty as to the
number of shares of Foilmark common stock to be issued in the merger. In
making this determination, the Foilmark board took into account both the
possibility of changes in relative market values of Foilmark common stock
and HoloPak common stock prior to the closing and the possible
consequences of such changes. In particular, the Foilmark board weighed
these risks against the benefits of the merger and the fact that the
long-term strategic advantages of the merger outweighed the risk of
interim changes in relative market values of Foilmark common stock and
HoloPak common stock. The merger is intended to qualify as a
reorganization under the Internal Revenue Code for purchase accounting
treatment;
- The proposed arrangements with members of management of Foilmark and
HoloPak, including the fact that Mr. Simon would serve as the
non-executive Chairman of the board of directors of Foilmark after the
merger and Mr. Olsen would continue to serve as President and Chief
Executive Officer of Foilmark after the merger;
- The Foilmark board after the merger would include equal numbers of current
Foilmark directors and HoloPak directors, including Messrs. Simon and
Olsen;
- That Mr. Olsen would enter into an employment agreement with Foilmark. See
"--Interests of Certain Persons in the Merger" and "Management and
Operations After the Merger"; and
- The opinion of McFarland Dewey dated November 17, 1998 and confirmed on
March 18, 1999, that the merger consideration to be paid to the HoloPak
stockholders was fair from a financial point of view to Foilmark
stockholders. See "--Opinions of Foilmark's Financial Advisor."
In reaching its decision to approve the merger and recommend to Foilmark
stockholders to approve the issuance and each of the amendments to Foilmark's
certificate of incorporation, the Foilmark board also considered the following
potentially negative factors:
- The inherent challenges to combining the business of two corporations, the
difficulty of fully realizing synergies from the merger, including cost
savings and operating efficiencies and the attendant risk that management
resources may be diverted from other strategic opportunities and from
operational matters for an extended period of time;
- The poor performance of and financial difficulties experienced by HoloPak,
including a net loss of approximately $120,000 for the six months ended
September 30, 1998;
- The increased level of borrowings required by Foilmark to finance the
payment of the cash portion of the merger consideration;
- The fact that some of McFarland Dewey's measurements of comparable
financial values did not support a value of $3.64 per share of HoloPak
common stock;
- The fact that McFarland Dewey's confirming opinion dated March 18, 1999 is
based on market values of Foilmark common stock that may be subject to
fluctuation between the date of this joint proxy statement--prospectus and
the time of the merger; and
- That some members of Foilmark's management and the Foilmark board have
interests in the merger that are in addition to and not necessarily
aligned with the interests in the merger of Foilmark stockholders
generally.
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<PAGE>
The Foilmark board chose to approve the merger because, in the opinion of
the board, the strategic nature of the merger and the strategic benefits of the
merger outweighed the risks of completing the transaction. In particular, in the
Foilmark board's opinion, the likelihood of a significant fluctuation in the
relative market value of Foilmark common stock in the period between the date of
McFarland Dewey's opinion and the date of the merger is limited by the weak
financial results of both companies as well as the apparent lack of investor
interest in the transaction, demonstrated by the low trading volume of the
common stock of each company. Additionally, because of the strategic nature of
the transaction, the Foilmark board, in reliance upon McFarland Dewey's opinion
and based upon some of McFarland Dewey's financial analyses, considered the
acquisition of HoloPak at a value of $3.64 per share to be in the best interests
of the Foilmark stockholders even though some financial measures indicated a
value less than $3.64 per share.
Although the Foilmark board considered other information, the above
discussion lists all material factors considered by the Foilmark board. In
reaching its determination to approve the merger, the Foilmark board did not
assign any relative or specific weights to the foregoing factors, and individual
directors may have given differing weights to different factors. The Foilmark
board is unanimous in its recommendation that Foilmark stockholders vote for
approval of the issuance and the amendments to Foilmark's certificate of
incorporation.
OPINION OF FOILMARK'S FINANCIAL ADVISOR
McFarland Dewey delivered its oral opinion on November 17, 1998 to the
Foilmark board and confirmed it in writing on November 17, 1998. Their opinion
stated that, as of November 17, 1998, the merger consideration was fair from a
financial point of view to the Foilmark stockholders. McFarland Dewey confirmed
its opinion in writing on March 18, 1999.
THE FULL TEXT OF MCFARLAND DEWEY'S OPINION, WHICH SETS FORTH THE ASSUMPTIONS
MADE, PROCEDURES FOLLOWED, MATTERS CONSIDERED AND LIMITS ON THE REVIEW
UNDERTAKEN, IS ATTACHED AS APPENDIX B-1 AND THE WRITTEN CONFIRMATION OF THIS
OPINION IS ATTACHED AS APPENDIX B-2 AND ARE INCORPORATED BY REFERENCE INTO THIS
JOINT PROXY STATEMENT--PROSPECTUS. MCFARLAND DEWEY HAS CONSENTED TO THE
REFERENCES TO ITS OPINION IN THIS JOINT PROXY STATEMENT--PROSPECTUS AND TO THE
INCLUSION OF THE ITS OPINION AND THE WRITTEN CONFIRMATION OF SUCH OPINION AS
APPENDIX B-1 AND B-2 HERETO, RESPECTIVELY. IN GIVING ITS CONSENT, MCFARLAND
DEWEY DOES NOT ADMIT THAT IT COMES WITHIN THE CATEGORY OF PERSONS WHOSE CONSENT
IS REQUIRED UNDER SECTION 7 OF THE SECURITIES ACT OF 1933 AND THE RULES AND
REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION. MCFARLAND DEWEY'S OPINION
WAS PROVIDED TO THE FOILMARK BOARD FOR ITS INFORMATION, IS DIRECTED ONLY TO THE
FAIRNESS OF THE MERGER CONSIDERATION FROM A FINANCIAL POINT OF VIEW TO THE
FOILMARK STOCKHOLDERS AND IS NOT A RECOMMENDATION TO ANY FOILMARK STOCKHOLDER AS
TO HOW A STOCKHOLDER SHOULD VOTE AT THE FOILMARK SPECIAL MEETING. FOILMARK
STOCKHOLDERS ARE URGED TO READ MCFARLAND DEWEY'S OPINION IN ITS ENTIRETY.
The summary set forth below is not a complete description of the analyses
underlying McFarland Dewey's opinion or the presentation made by McFarland Dewey
to the Foilmark board. The preparation of a fairness opinion is a complex
analytic process involving various determinations as to the most appropriate and
relevant methods of financial analysis and the application of those methods to
the particular circumstances and, therefore, a fairness opinion is not readily
susceptible to partial analysis or summary description. In arriving at its
opinion, McFarland Dewey did not attribute any particular weight to any analysis
or factor considered by it, but rather made qualitative judgments as to the
significance and relevance of each analysis and factor. Accordingly, McFarland
Dewey believes that its analysis must be considered as a whole and that
selecting portions of its analysis, without considering all analyses, would
create an incomplete view of the process underlying its opinion.
In performing the analysis, numerous assumptions were made with respect to
industry performance, general business, economic, market and financial
conditions and other matters, many of which are
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<PAGE>
beyond the control of McFarland Dewey, Foilmark or HoloPak. Any estimates
contained in the analysis performed by McFarland Dewey are not necessarily
indicative of actual values or future results, which may be significantly more
or less favorable than suggested by such analyses. Additionally, estimates of
the value of businesses or securities do not purport to be appraisals or to
reflect the prices at which such businesses or securities might actually be
sold. These analyses and estimates are subject to substantial uncertainty.
McFarland Dewey's analyses should not be viewed as wholly determinative of the
decision of the Foilmark board or Foilmark's management with respect to the
fairness of the financial terms of the merger.
In arriving at its opinion, McFarland Dewey:
- reviewed certain publicly available business and financial information
relating to Foilmark and HoloPak which McFarland Dewey deemed to be
relevant;
- reviewed certain confidential information, including financial forecasts
furnished to McFarland Dewey by Foilmark and HoloPak, relating to the
business, earnings, cash flow, assets, liabilities and prospects of
Foilmark and HoloPak where both Foilmark and HoloPak project increasing
revenues and profitability, as well as approximately $1,700,000 in total
annual expense reduction divided among raw material costs, administrative
and personnel costs and occupancy costs, to be achieved within the first
two years of combined operations which is expected to result from the
merger;
- conducted discussions with members of senior management and
representatives of Foilmark and HoloPak concerning the matters described
above, as well as their businesses and prospects, before and after giving
effect to the merger and the total annual expense reduction;
- visited the facilities of both Foilmark and HoloPak;
- reviewed the market prices and valuation multiples for Foilmark shares
outstanding and HoloPak shares outstanding and compared them with those of
certain publicly traded companies which McFarland Dewey deemed to be
relevant;
- reviewed the results of operations of Foilmark and HoloPak and compared
them with those of certain publicly traded companies which McFarland Dewey
deemed to be relevant;
- compared the proposed financial terms of the merger with the financial
terms of certain other transactions which McFarland Dewey deemed to be
relevant;
- participated in certain discussions and negotiations among representatives
of Foilmark and HoloPak and their financial, accounting and legal
advisors;
- reviewed the impact of the merger on the combined company which reflected
the impact of purchase accounting upon the projected Foilmark earnings and
balance sheet;
- reviewed a draft of the merger agreement dated November 12, 1998; and
- reviewed such other financial studies and analyses and took into account
such other matters as McFarland Dewey deemed relevant, including McFarland
Dewey's assessment of general economic, market and monetary conditions.
In preparing its opinion, McFarland Dewey assumed and relied on the accuracy
and completeness of all information supplied or otherwise made available to
McFarland Dewey, discussed with or reviewed by or for McFarland Dewey, or
publicly available. McFarland Dewey did not assume any responsibility for
independently verifying such information. McFarland Dewey has not independently
evaluated or appraised any of the assets or liabilities of either of Foilmark or
HoloPak and has not been furnished with any such evaluation or appraisal.
McFarland Dewey assumed that the financial forecast information and the total
annual expense reduction have been reasonably prepared or
24
<PAGE>
reviewed and reflect the best currently available estimates and judgment of
Foilmark's or HoloPak's management as to the expected future financial
performance of Foilmark or HoloPak. and the total annual expense reduction.
McFarland Dewey also assumed that the merger will be accounted for as a purchase
under generally accepted accounting principles and that it will qualify as a
partial tax-free reorganization for U.S. federal income tax purposes. McFarland
Dewey also assumed that the final form of the merger agreement would be
substantially similar to the last draft reviewed by McFarland Dewey.
McFarland Dewey's opinion is based upon market, economic and other
conditions as they existed on, and could be evaluated as of, the date of such
opinion. McFarland Dewey assumed that no material third party approvals
regarding Foilmark or HoloPak in respect to any contracts or otherwise will be
necessary.
Based on the closing price on the Nasdaq National Market of Foilmark common
stock on November 16, 1998 of $2.00, the financial terms result in merger
consideration for HoloPak of $3.64 per HoloPak share.
The following is a brief summary of the material analyses prepared by
McFarland Dewey in connection with the rendering of its opinion.
DISCOUNTED CASH FLOW ANALYSIS. McFarland Dewey calculated, using a
discounted cash flow methodology, a range of per share equity values for HoloPak
based on assumptions regarding HoloPak's growth for the years 1998 to 2002,
using a range of 2002 terminal values based on net income multiples from 10x to
14x and a range of discount rates from 12% to 16%. Based on its analysis,
McFarland Dewey derived a summary reference range of implied per share equity
values of HoloPak common stock of $4.69 to $6.02.
STOCK PRICE HISTORY. McFarland Dewey examined the history of the trading
prices and their relative relationships for both HoloPak common stock and
Foilmark common stock for the latest three years and compared such to the Nasdaq
Industrial Index and Russell 2000 Index. This information was prepared to
provide background information about the stock prices of Foilmark and HoloPak
over the periods indicated as both companies similarly under-performed the two
indices.
COMPARISON OF SELECTED COMPARABLE COMPANIES. McFarland Dewey compared the
trading multiples for HoloPak to corresponding multiples of a select group of
manufacturing companies consisting of Foilmark, Inc., CFC International, Inc.,
Advanced Deposition Technologies, Advanced Materials Group, Inc., and Outlook
Group Corporation. These manufacturing companies were selected based on their
SIC codes, in consultation with Foilmark management and on McFarland Dewey's
independent judgment.
The ratio of HoloPak's price to earnings for projected next fiscal year's
net income was 12.5, based on the intra-day price of HoloPak common stock on
November 16, 1998 of $2.00.
The following tables summarize the results of McFarland Dewey's company
comparable analyses.
IMPLIED PER SHARE EQUITY VALUES OF HOLOPAK COMMON STOCK BASED
ON COMPARABLE COMPANIES PRICE TO EARNINGS RATIOS
<TABLE>
<CAPTION>
HOLOPAK ESTIMATED IMPLIED VALUE PER
1999 EARNINGS SHARE OF HOLOPAK
PRICE TO EARNINGS PER SHARE COMMON STOCK
------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Median Multiple: 8.0x $ 0.16 = $ 1.28
Average: 8.1x $ 0.16 = $ 1.30
</TABLE>
This measurement was deemed less important because of HoloPak's lack of
profitability over the past few years and because of the strategic nature of the
transaction.
25
<PAGE>
IMPLIED PER SHARE EQUITY VALUES OF HOLOPAK COMMON STOCK BASED
ON COMPARABLE COMPANIES ENTERPRISE VALUES TO EBITDA
<TABLE>
<CAPTION>
HOLOPAK ESTIMATED IMPLIED VALUE PER
ENTERPRISE VALUE 1999 EBITDA SHARE OF HOLOPAK
TO EBITDA PER SHARE COMMON STOCK
------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Median Multiple: 4.9x $ 1.06 = $ 5.19
Average: 4.1x $ 1.06 = $ 4.35
</TABLE>
IMPLIED PER SHARE EQUITY VALUES OF HOLOPAK COMMON STOCK BASED
ON COMPARABLE COMPANIES EQUITY VALUES TO BOOK VALUES
<TABLE>
<CAPTION>
HOLOPAK ESTIMATED IMPLIED VALUE PER
EQUITY VALUE TO 1999 BOOK VALUE SHARE OF HOLOPAK
BOOK VALUE PER SHARE COMMON STOCK
------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Median Multiple: 0.7x $ 7.68 = $ 5.37
Average: 1.0x $ 7.68 = $ 7.68
</TABLE>
ANALYSIS OF SELECTED COMPARABLE TRANSACTIONS. McFarland Dewey reviewed
certain publicly available information regarding thirty-two select manufacturing
related acquisitions and calculated historical revenues, EBITDA and book value
multiples for such transactions. McFarland Dewey chose these comparable
transactions based on the SIC codes of the companies, in consultation with
Foilmark management and on McFarland Dewey's independent judgment. Based on
HoloPak's last twelve months negative earnings before interest and taxes, or
EBIT, and net income, McFarland Dewey did not consider EBIT and net income as a
useful comparison.
The following tables summarize the results of McFarland Dewey's analysis of
transactions comparable to the merger.
IMPLIED PER SHARE EQUITY VALUES OF HOLOPAK COMMON STOCK BASED
ON COMPARABLE TRANSACTIONS-TRANSACTION VALUES AS MULTIPLES OF LATEST TWELVE
MONTHS REVENUES
<TABLE>
<CAPTION>
TRANSACTION VALUES HOLOPAK ESTIMATED IMPLIED VALUE PER
AS MULTIPLES OF 1998 REVENUES SHARE OF HOLOPAK
LTM REVENUES PER SHARE COMMON STOCK
--------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Median Multiple: 0.6x $ 10.51 = $ 6.31
Average: 0.7x $ 10.51 = $ 7.36
</TABLE>
IMPLIED PER SHARE EQUITY VALUES OF HOLOPAK COMMON STOCK BASED
ON COMPARABLE TRANSACTIONS--TRANSACTION VALUES AS MULTIPLES OF LATEST TWELVE
MONTHS EBITDA
<TABLE>
<CAPTION>
TRANSACTION VALUES HOLOPAK ESTIMATED IMPLIED VALUE PER
AS MULTIPLES OF 1998 EBITDA SHARE OF HOLOPAK
LTM EBITDA PER SHARE COMMON STOCK
--------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Median Multiple: 5.0x $ 0.52 = $ 2.58
Average: 7.8x $ 0.52 = $ 4.03
</TABLE>
IMPLIED PER SHARE EQUITY VALUES OF HOLOPAK COMMON STOCK BASED
ON COMPARABLE TRANSACTIONS--TRANSACTION VALUES AS MULTIPLES OF BOOK VALUES
<TABLE>
<CAPTION>
TRANSACTION VALUES HOLOPAK ESTIMATED IMPLIED VALUE PER
AS MULTIPLES OF 1998 BOOK VALUE SHARE OF HOLOPAK
BOOK VALUES PER SHARE COMMON STOCK
------------------- ------------------- -----------------
<S> <C> <C> <C> <C>
Median Multiple: 1.3x $ 7.52 = $ 9.78
Average: 2.1x $ 7.52 = $ 15.80
</TABLE>
26
<PAGE>
No company or transaction used in the above analysis as a comparison was
identical to Foilmark or HoloPak. Accordingly, an analysis of the results of the
comparison is not purely mathematical; rather it involves complex considerations
and judgments concerning differences in historical and projected financial and
operating characteristics of the comparable acquired companies and other factors
that could affect the acquisition value of such companies and Foilmark.
EARNINGS PER SHARE ANALYSIS AND BALANCE SHEET EFFECT. McFarland Dewey
estimated the accretion or dilution that the merger would have on pro forma
earnings per share of Foilmark indicated by the projections prepared by the
managements of Foilmark and HoloPak and by the total annual expense reduction
for the remainder of fiscal year 1999, and fiscal year 2000 and thereafter,
resulting from the merger. McFarland Dewey also estimated the impact that the
merger would have on the projected pro forma balance sheet of Foilmark,
including a potential write-down of long term assets resulting from purchase
accounting. The analysis indicated that the merger would result in pro forma
earnings per share accretion of approximately 17% and 30% for the stockholders
of Foilmark, based on the projections of both companies for the 1999 and 2000
fiscal years, respectively.
Under a letter agreement dated January 27, 1997 between Foilmark and
McFarland Dewey, Foilmark agreed to pay McFarland Dewey a quarterly financial
advisory retainer and a success fee based upon completion of certain advisory
assignments and/or transactions. During 1998, McFarland Dewey worked as
financial advisor to Foilmark in connection with a potential merger transaction
with HoloPak as well as in connection with other transactions. During 1997,
McFarland Dewey received $83,333 for financial advisory services relating to the
operations of Foilmark and $14,420 for reimbursement of out-of-pocket expenses.
This letter agreement was modified on November 4, 1998, in which Foilmark agreed
to pay McFarland Dewey a cash fee of $350,000 upon closing of the merger. No
separate fee is payable for McFarland Dewey's opinion. During 1998, McFarland
Dewey received $58,333 for financial advisory services relating to the
operations of Foilmark and $10,233 for reimbursement of out-of-pocket expenses.
Additionally, Foilmark agreed to reimburse McFarland Dewey for reasonable
out-of-pocket expenses, including, without limitation, reasonable fees and
disbursements of its legal counsel. Foilmark has also agreed to indemnify
McFarland Dewey and related persons for liabilities related to or arising out of
its engagement, including liabilities under the federal securities laws.
Foilmark retained McFarland Dewey based upon McFarland Dewey's experience
and expertise. McFarland Dewey, as part of its investment banking business, is
engaged in the valuation of businesses and securities in connection with mergers
and acquisitions, competitive bids, private placements and valuations for
corporate and other purposes.
McFarland Dewey has, in the past, provided financial advisory and financing
services to Foilmark and may provide such services to Foilmark after the merger
and/or its affiliates and may receive fees for the rendering of such services.
RECOMMENDATION OF THE HOLOPAK BOARD AND HOLOPAK'S REASONS FOR THE MERGER
In reaching its determination that the merger is fair to and in the best
interests of HoloPak stockholders, the HoloPak board consulted with its
management, Schroders and legal counsel. Below are all of the material factors
that the HoloPak board considered to be important in reaching this
determination:
- That the consideration to be paid in the merger represents a premium,
based on the per share closing price of Foilmark common stock of $2.00 on
November 17, 1998, the ratio of 1.11 shares of Foilmark common stock per
share of HoloPak common stock and the $1.42 in cash, for the shares of
HoloPak common stock of approximately 38%, 67%, 94% and 138% over the
closing prices of $2.63 per share of HoloPak common stock on November 17,
1998, $2.18 per share of
27
<PAGE>
HoloPak common stock on November 13, 1998, $1.88 per share of HoloPak
common stock on November 6, 1998 and $1.53 per share of HoloPak common
stock on October 13, 1998, respectively;
- The alternative to continuing to operate HoloPak under management's
business plan, the prospects of HoloPak if it remained independent, the
value to HoloPak stockholders if it remained independent and the timing
and likelihood of achieving additional value from this alternative, and
the possibility that this alternative might not lead to a higher present
value to HoloPak stockholders than the intended value of 1.11 shares of
Foilmark common stock, plus $1.42 in cash to be received by the HoloPak
stockholders in the merger. See "--Background of the Merger";
- The reputation and growth potential of Foilmark, the strategic business
fit of Foilmark with the business of HoloPak and fact that the merger
enables HoloPak stockholders to own shares in a company with proven
management, diverse businesses and markets;
- The HoloPak board's review and analysis of HoloPak's business, operations,
financial condition, earnings and prospects, as well as the economic and
competitive environments facing HoloPak, which the HoloPak board believed
supported its decision to pursue the merger;
- For a period after the merger, Foilmark would have a board of directors
which would be one-half composed of all of the existing directors of
HoloPak;
- That after the merger, Mr. Simon will be the non-executive Chairman of
Foilmark;
- The commitment of Mr. Olsen to continue his employment with Foilmark and
the compatibility and strength of the senior management team of the two
companies;
- The fact that the receipt by the HoloPak stockholders of Foilmark common
stock in exchange for their shares of HoloPak common stock would be
tax-free and that only the cash part of the merger consideration would be
potentially subject to federal income tax when received;
- The presentation of Schroders, and its written opinion dated November 17,
1998 and confirmed on March 17, 1999 as to the fairness of the
consideration to be received by holders of shares of HoloPak common stock
under the merger agreement as discussed in "--Opinions of HoloPak's
Financial Advisors";
- That, after the merger, HoloPak stockholders will be able to participate
in the potential growth of Foilmark;
- The fact that Bradford Venture Partners, Overseas Private Investor
Partners, and the directors and some executive officers of HoloPak,
representing approximately 45.3% of the issued and outstanding shares of
HoloPak common stock, support and have agreed to vote for the merger;
- The fact that HoloPak stockholders would, after the merger, own
approximately 47% of Foilmark;
- That the merger agreement permits HoloPak to consider unsolicited written
proposals from non-affiliates if required in the exercise of the HoloPak
board's fiduciary duties. The merger agreement permits HoloPak to furnish
information to, enter into discussions and negotiations with such parties
and to terminate the merger agreement, subject to certain conditions,
including the payment of significant fees to Foilmark (see "The Merger
Agreement--Effective Time", "-- Solicitation", "--Termination of the
Merger Agreement" and "--Expenses");
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<PAGE>
- That the merger and the merger agreement were approved by the HoloPak
Board following an active search by HoloPak for a business combination in
late 1995, and after remaining open to a business combination, strategic
alliance or other similar transaction during 1996 and 1997. Following
Foilmark's indication of interest in pursuing a transaction with HoloPak,
the HoloPak board determined, after discussing with Schroders current
market conditions and HoloPak's historical efforts to find an appropriate
business combination or strategic alliance, that the risks attendant to a
delay of the proposed merger in order to find another business
combination, strategic alliance or other similar transaction outweighed
any reasonably expected additional benefits from such other possible
transaction;
- That the HoloPak board considered the fact that Schroders' fairness
opinion was based upon market values that are subject to change. This fact
was one reason the HoloPak board requested Schroders to deliver to the
HoloPak board an update of the opinion prior to the mailing of this joint
proxy statement-prospectus. The HoloPak board considered, in light of the
foregoing factors, the fact that the market values are subject to change
not to be dispositive of its determination that the merger is fair to and
in the best interests of the stockholders of HoloPak; and
- That at September 30, 1998, HoloPak's per share book value was $7.44,
which is $3.80 greater than the $3.64 effective per share merger
consideration that HoloPak stockholders will receive in the merger, and
that the HoloPak board had concluded that there was no impairment of the
recorded book value of Holopak's long-lived assets at September 30, 1998.
However, in determining to recommend the merger to Holopak stockholders,
the HoloPak board also considered that the shares of HoloPak common stock
have historically traded at prices less than book value, that there has
been historically low trading volume in the shares of HoloPak common stock
evidencing limited investor interest, that the consideration to be
received by HoloPak stockholders in the merger represented a premium over
historical trading prices as discussed above, and that the HoloPak
stockholders will be able to participate in the potential growth of
Foilmark after the merger. The HoloPak board of directors determined that
the overall benefits of the merger to HoloPak stockholders outweighed the
fact that the merger consideration was less than HoloPak's book value at
September 30, 1998.
Set forth are other material factors that the HoloPak board considered in
reaching this determination and which weighed against the HoloPak board's
support of the merger:
- That some members of HoloPak's management and the HoloPak board have
interests in the merger that are in addition to and not necessarily
aligned with the interests in the merger of HoloPak stockholders
generally;
- The loss of complete independence that would result from HoloPak surviving
in the merger as a subsidiary of Foilmark;
- The possibility that if the merger were not completed, the price of the
shares of HoloPak common stock could decline below HoloPak's trading price
after the announcement of the merger, resulting from an averse market
perception resulting from the inability to complete the merger;
- The terms of the merger agreement that set forth the restrictions on the
conduct of HoloPak's business pending closing, conditions to closing and
the significant fees and expenses that would become payable in the event
of a termination of the merger agreement under some circumstances;
- The significant costs involved in connection with consummating the merger
and substantial management time and effort required to effectuate the
merger and the substantial costs that HoloPak would be required to expense
if the merger were not consummated; and
29
<PAGE>
- That the exchange ratio of 1.11 shares of Foilmark common stock per one
share of HoloPak common stock is a fixed number and will not be adjusted
in the event of an increase or decrease in the price of Foilmark common
stock between the date of the merger agreement and the completion of the
merger.
The foregoing discussion of the information and factors considered by the
HoloPak board is not intended to be exhaustive. In view of the wide variety of
factors that the HoloPak board considered when it evaluated the proposed merger,
the HoloPak board did not assign relative weights to the foregoing factors or
determine that any factor was of particular importance. Rather, the HoloPak
board made its recommendation based on all of the information presented to and
considered by it.
OPINION OF HOLOPAK'S FINANCIAL ADVISOR
Schroders was retained by HoloPak to advise the HoloPak board with respect
to the fairness, from a financial point of view, to the holders of HoloPak
common stock of the merger consideration to be received by the HoloPak
stockholders in the merger.
In arriving at its opinion, Schroders, among other things:
- reviewed:
- HoloPak's annual report on Form 10-K for the fiscal year ended March
31, 1998;
- HoloPak's quarterly report on Form 10-Q for the quarter ended September
30, 1998; and
- HoloPak's proxy statement dated July 30, 1998,
- reviewed:
- Foilmark's annual report on Form 10-K for the fiscal year ended
December 31, 1997;
- Foilmark's quarterly report on Form 10-Q for the quarter ended
September 30, 1998; and
- Foilmark's proxy statement dated April 10, 1998,
- reviewed HoloPak's near-term quarterly financial forecast dated September
8, 1998 prepared by management of HoloPak for the period beginning the
first quarter of fiscal year 1999 through the last quarter of fiscal year
2000;
- reviewed Foilmark's quarterly financial forecast dated September 19, 1998,
as presented by McFarland Dewey and prepared by management of Foilmark,
for the six month period ended December 31, 1998 and the years ended
December 31, 1999 and 2000;
- visited the principal offices and operating facilities of HoloPak and
Foilmark and conducted discussions with the senior management of Foilmark
and HoloPak concerning their historical and projected financial results as
presented and described above;
- performed various financial analyses, as Schroders deemed appropriate, of
HoloPak using generally accepted analytical methodologies, including:
- the application to the financial results of HoloPak of the public
trading multiples of companies which Schroders deemed comparable;
- the application to the financial results of HoloPak of the multiples
reflected in recent merger and acquisition transactions for businesses
which Schroders deemed reasonably comparable;
- a comparison of the premiums received by manufacturing companies in
merger and acquisition transactions and other merger and acquisition
transactions, which Schroders deems appropriate, with enterprise values
ranging from $5 million to $20 million over the period
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<PAGE>
from January 1, 1995 to date to the premium over HoloPak's share price
implied by the merger consideration;
- a comparison of the relative contributions of HoloPak and Foilmark to
the combined company upon completion of the merger on a historical and
projected basis;
- reviewed the historical exchange ratio of Foilmark's share price to
HoloPak's, assuming no premium; and
- evaluated the pro forma impact of the merger on the earnings per share
and consolidated capitalization of Foilmark;
- reviewed the historical trading prices and volumes of the shares of
HoloPak common stock and the Foilmark common stock from November 13, 1996
to November 13, 1998;
- reviewed the draft merger agreement dated November 11, 1998;
- held discussions with the managements of HoloPak and Foilmark regarding
the prospects of their companies, the strategic rationales for the merger,
and the prospects of Foilmark after the merger, including the synergies
that may be achieved thereby;
- reviewed the purchase accounting treatment for the merger under GAAP with
an independent public accounting firm unrelated to the merger as well as
limited discussions with HoloPak's independent auditors; and
- performed such other financial studies, analyses, inquiries and
investigations as Schroders deemed appropriate.
In its review and analysis and in formulating its opinion, Schroders assumed
and relied upon the accuracy and completeness of all information supplied or
otherwise made available to it by Foilmark or HoloPak or obtained by Schroders
from other sources, and upon the assurance of Foilmark's and HoloPak's
managements that they were not aware of any information or facts that would make
the information provided to Schroders incomplete or misleading. Schroders
assumed that information relating to the prospects of Foilmark and HoloPak,
including financial projections and operating synergies, reflected the best
currently available judgments and estimates of the managements of Foilmark and
HoloPak as to their likely future financial performance, independently or as a
combined company. Schroders relied upon the assessments by the managements of
Foilmark and HoloPak of their ability to retain key employees. Schroders also
relied upon the assessments by the managements of HoloPak and Foilmark about
their technologies and products, the timing and risks associated with the
integration of HoloPak with Foilmark and the validity of, and risks associated
with, HoloPak's and Foilmark's existing and future products and technologies.
Schroders did not attempt to independently verify any of this information.
Schroders did not undertake an independent appraisal of the assets or
liabilities of HoloPak or Foilmark, nor was Schroders furnished with any of
these appraisals.
For purposes of rendering its opinion, Schroders assumed that, in all
respects material to its analyses, the representations and warranties of each
party contained in the merger agreement are true and correct, that each party
will perform all of the covenants and agreements required to be performed by it
under the merger agreement and that all conditions to the completion of the
merger will be satisfied without waiver thereof. Schroders further assumed that
all material governmental, regulatory or other consents and approvals will be
obtained, and that in the course of obtaining any necessary governmental,
regulatory or other consents and approvals, or any amendments, modifications or
waivers to any documents to which any of HoloPak or Foilmark is a party, as
contemplated by the merger agreement, no restrictions will be imposed or
amendments, modifications or waivers made that would have any material adverse
effect on the contemplated benefits to the combined company.
31
<PAGE>
Schroders noted that its opinion was based upon financial, economic, market
and other conditions as they existed on the date of its opinion. Schroders
disclaimed any undertaking or obligation to advise any person of any change in
any fact or matter affecting its opinion which may come or be brought to its
attention after the date of the opinion unless specifically requested to do so
by HoloPak.
Schroders noted that its opinion is not a recommendation to the HoloPak
board or any stockholder about the merger agreement or whether to vote in favor
of the merger. Schroders was not engaged as an agent or fiduciary of the HoloPak
stockholders or of any other third party. Schroders expressed no opinion as to
the structure, terms or effect of any other aspect of the merger or the merger
agreement.
THE FULL TEXT OF THE WRITTEN OPINION OF SCHRODERS, DATED NOVEMBER 17, 1998
AND CONFIRMED AS OF MARCH 17, 1999, WHICH SETS FORTH THE ASSUMPTIONS MADE,
MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN, IS ATTACHED HERETO
AS APPENDIX C-1 AND C-2, RESPECTIVELY, AND IS INCORPORATED HEREIN BY REFERENCE.
HOLDERS OF HOLOPAK COMMON STOCK ARE URGED TO READ THIS OPINION CAREFULLY IN ITS
ENTIRETY. THE SUMMARY OF THE OPINION OF SCHRODERS SET FORTH IN THIS JOINT PROXY
STATEMENT--PROSPECTUS IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT
OF ITS OPINION.
In preparing its opinion, Schroders performed a variety of financial and
comparative analyses, including those described below. It is difficult to
prepare and summarize a fairness opinion because of the complex analytic process
involving consideration of different methods of financial analyses and
application of those methods to the particular circumstances. Schroders did not
attribute any particular weight to any analysis or factor but made qualitative
judgments as to the significance and relevance of each analysis and factor.
Schroders believes that its analyses must be considered as a whole. Selecting
portions of Schroders analyses without considering all analyses could create a
misleading or incomplete view of the processes underlying such analyses and
opinion.
In its analyses, Schroders made numerous assumptions with respect to
HoloPak, industry performance, general business, economic, market and financial
conditions and other matters, many of which are beyond the control of HoloPak.
The estimates contained in such analyses and the valuation ranges resulting from
any particular analysis are not necessarily indicative of actual values or
predictive of future results or values, which may be significantly more or less
favorable than those suggested by such analyses. In addition, analyses relating
to the value of businesses or securities are not appraisals and do not reflect
the prices at which businesses or securities actually may be sold. Accordingly,
such analyses and estimates are subject to substantial uncertainty. Schroders'
opinion and analyses were only one of many factors considered by the HoloPak
board in its evaluation of the merger and should not be viewed as determinative
of the views of the HoloPak board or management of HoloPak with respect to the
merger consideration or the merger.
The following is a summary of all material analyses performed by Schroders
in connection with its opinion.
ANALYSIS OF COMPARABLE PUBLICLY TRADED COMPANIES. Using publicly available
information, Schroders compared selected historical operating data and selected
stock market data of HoloPak to the corresponding data of the following publicly
traded companies which Schroders considered reasonably comparable to HoloPak.
Given the lack of publicly-traded companies that engage in HoloPak's three
businesses, foil, metallized paper and films and holography, Schroders selected
the following comparable companies which are involved in at least one of
HoloPak's businesses:
- CFC International, Inc. and Foilmark, Inc.--foil-related companies;
- Advanced Deposition Technologies, Inc.--metallized paper and film-related
company; and
- American Banknote Corporation and American Bank Note Holographics,
Inc.--holography-related companies.
32
<PAGE>
Schroders performed a market analysis of HoloPak and its comparable
companies using closing market prices as of November 13, 1998. Because HoloPak
had negative earnings per share, earnings before interest and taxes and earnings
before interest, taxes, depreciation and amortization, for the latest twelve
month period ending September 30, 1998, a comparison of historical earnings per
share, earnings before interest and taxes, or EBIT, and earnings before
interest, taxes, depreciation and amortization, or EBITDA, of HoloPak with those
of the comparable companies was not meaningful. The analyses that Schroders
believed to be meaningful were:
- the market value plus total debt minus total cash of each of the
comparable companies and HoloPak as multiples of projected EBIT for the
twelve months ending December 31, 1999:
- the market value of each of the comparable companies and HoloPak as
multiples of projected net income for the twelve months over the period
from January 1, 1995 to date: and
- the application of the above results times a 35% control premium, which
reflects the average premium paid in transactions between $5 million and
$20 million over the last five years.
Based on these analyses, Schroders calculated an implied equity value for
the HoloPak common stock of between $2.80 and $3.25 per share.
ANALYSIS OF MERGER AND ACQUISITION TRANSACTIONS. Schroders analyzed certain
publicly available information relating to selected merger and acquisition
transactions since 1992 which Schroders deemed reasonably comparable because of
similar operating characteristics, including:
- similar raw material input like plastic;
- similar or related finished product like coated plastic; and
- similar or related end-use like packaging/decorating.
Although these transactions were reviewed for comparison purposes, none of
these transactions was considered directly comparable to the proposed merger.
The transactions analyzed by Schroders are shown in the following table:
<TABLE>
<CAPTION>
DATE OF
TARGET ACQUIROR TRANSACTION
- ---------------------------- ------------------------- ------------------
<S> <C> <C>
Ropak Corp. LinPac Mouldings Ltd. March 1995
CFI Industries Inc. Ivex Packaging Corp. May 1996
SunCoast Industries, Inc. Kerr Group, Inc. January 1998
UltraPak, Inc. Ivex Packaging Corp. March 1998
</TABLE>
Schroders computed the offer per share multiplied by total common shares
outstanding and the equity cost plus latest reported total debt, capitalized
leases, preferred stock and minority interest minus total cash and cash
equivalents paid in such transactions and divided the adjusted price by the
acquired company's latest twelve months EBITDA immediately prior to the
acquisition, which resulted in a range of acquisition multiples of latest twelve
months EBITDA of 4.0x to 5.0x. Due to HoloPak's negative latest twelve months
EBIT and net income, acquisition multiples of EBIT and net income were deemed
not meaningful by Schroders for the purpose of this analysis. Based on these
analyses, Schroders calculated an implied equity value of the HoloPak common
stock of between $2.65 and $3.25 per share.
PREMIUM ANALYSIS. Because HoloPak is a manufacturing business and because
of the size of the merger, Schroders considered the premiums paid over the stock
price of acquired manufacturing companies as well as premiums paid in merger and
acquisition transactions with enterprise values ranging from $5 million to $20
million. Schroders analyzed the premiums paid over the stock price of acquired
manufacturing companies for which publicly-disclosed information was available
since January, 1995 for 353 merger and acquisition transactions. Schroders also
analyzed 56 merger and acquisition transactions with enterprise values ranging
from $5 to $20 million for which publicly-disclosed information was
33
<PAGE>
available since January, 1995 based on stock prices one day, one week and one
month prior to the announcement of each transaction. Schroders performed the
premium analysis using a benchmark date of November 13, 1998 with respect to the
HoloPak common stock based on Foilmark's share price of $2.06 on November 13,
1998.
<TABLE>
<CAPTION>
HOLOPAK
---------------------- MANUFACTURING TRANSACTIONS
PERIOD PRIOR TO NOVEMBER 13, 1998 PRICE PREMIUM COMPANIES $5 MILLION--$20 MILLION
- ------------------------------------------------------- --------- ----------- ----------------- -------------------------
<S> <C> <C> <C> <C>
One Day................................................ $ 2.00 85.5% 30.8% 27.2%
One Week............................................... $ 1.88 97.3% 36.9% 34.3%
One Month.............................................. $ 1.66 123.5% 44.8% 34.5%
</TABLE>
CONTRIBUTION ANALYSIS. Schroders analyzed and compared the respective
contributions of sales, EBITDA, EBIT and net income for the twelve months ended
September 30, 1998 of HoloPak and Foilmark to Foilmark after the merger.
Schroders analyzed the contributions of total assets as of September 22, 1998
and of market capitalization as of November 13, 1998 of HoloPak and Foilmark.
<TABLE>
<CAPTION>
HOLOPAK
ECONOMIC MEASURE (AT AND FOR THE TWELVE MONTHS ENDED ---------------------------------------------
SEPTEMBER 30, 1998) OWNERSHIP % CONTRIBUTION % DIFFERENCE
- ----------------------------------------------------------------------- --------------- --------------- -----------
<S> <C> <C> <C>
Latest Twelve Months Total Assets...................................... 47.1% 49.7% (2.6%)
Latest Twelve Months Sales............................................. 47.1% 53.3% (6.2%)
Latest Twelve Months EBITDA............................................ 47.1% 36.6% 10.5%
Latest Twelve Months EBIT.............................................. 47.1% (48.6%) 95.7%
Latest Twelve Months Net Income........................................ 47.1% (158.9%) 206.0%
Market Capitalization (at November 19, 1998)........................... 47.1% 45.6% 1.5%
</TABLE>
HoloPak has agreed to pay Schroders aggregate fees equal to $200,000 for its
fairness opinion. Schroders will be paid $175,000 of this amount only if the
merger is completed. HoloPak has also agreed to reimburse Schroders for
reasonable out-of-pocket expenses incurred by Schroders in performing its
services, including the reasonable fees and expenses of its outside legal
counsel. HoloPak agreed to indemnify Schroders against liabilities relating to
its engagement, including liabilities under the federal securities laws. Since
January 1, 1997, Schroders has been engaged by HoloPak to provide a fairness
opinion for a sale transaction. To date, Schroders has received approximately
$28,000 for its fairness opinion services.
Schroders values businesses and their securities in connection with mergers
and acquisitions, underwritings, secondary distributions of listed and unlisted
securities, private placements, estate, corporate and other purposes. HoloPak
selected Schroders to render its opinion because it is a nationally recognized
investment banking firm that has substantial experience in transactions like the
merger.
SHARED PROJECTIONS OF REVENUES AND EARNINGS
During the due diligence process, HoloPak and Foilmark exchanged, and
provided to their financial advisors, projections of future financial
performance in September 1998. These financial projections included estimates of
net revenues and earnings per share of each of the companies for their fiscal
years ending 1999 and 2000, which are set forth below.
<TABLE>
<CAPTION>
EARNINGS PER SHARE
NET REVENUES
-------------------------------- --------------------
1999 2000 1999 2000
--------------- --------------- --------- ---------
<S> <C> <C> <C> <C>
HoloPak $ 36.8 million $ 40.4 million $ 0.06 $ 0.30
Foilmark $ 37.2 million $ 40.6 million $ 0.50 $ 0.60
</TABLE>
In January 1999, in connection with the confirmation of the fairness
opinions of McFarland Dewey and Schroders, HoloPak and Foilmark further
exchanged, and provided to their financial advisors,
34
<PAGE>
revised projections of future financial performance. These projections included
revised estimates of net revenues and earnings per share of HoloPak and Foilmark
for their fiscal years ending 1999 and 2000, which are set forth below.
<TABLE>
<CAPTION>
EARNINGS PER SHARE
NET REVENUES
-------------------------------- --------------------
1999 2000 1999 2000
--------------- --------------- --------- ---------
<S> <C> <C> <C> <C>
HoloPak $ 33.8 million $ 38.8 million $ (0.05) $ 0.27
Foilmark $ 34.7 million $ 38.2 million $ 0.36 $ 0.46
</TABLE>
In January 1999, Foilmark requested revised projections from HoloPak for
fiscal year 2000 with assumptions based upon increased competitive pricing
conditions and reduced volume with several larger customers. These projections
included revised estimates of net revenues of $37.4 million and earnings per
share of $0.21 of HoloPak for HoloPak's fiscal year ending 2000.
THESE PROJECTIONS WERE NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE OR
COMPLIANCE WITH PUBLISHED GUIDELINES ESTABLISHED BY THE SECURITIES AND EXCHANGE
COMMISSION OR THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING
PROJECTIONS. NEITHER THE AUDITORS OF HOLOPAK OR FOILMARK NOR ANY OTHER
INDEPENDENT ACCOUNTANTS HAVE COMPILED, EXAMINED OR PERFORMED ANY PROCEDURES WITH
RESPECT TO THESE PROJECTIONS, NOR HAVE THEY EXPRESSED ANY OPINION OR ANY OTHER
FORM OF ASSURANCE ON SUCH INFORMATION OR ITS ACHIEVABILITY. NEITHER THE AUDITORS
OF HOLOPAK OR FOILMARK NOR ANY OTHER INDEPENDENT ACCOUNTANTS ASSUME
RESPONSIBILITY FOR, AND DISCLAIM ANY ASSOCIATION WITH, THE AFOREMENTIONED
PROJECTIONS. THESE PROJECTIONS ARE INCLUDED IN THIS JOINT PROXY
STATEMENT-PROSPECTUS SOLELY BECAUSE THIS INFORMATION WAS EXCHANGED AS PART OF
THE COMPANIES' DILIGENCE AND THEIR ON-GOING DIALOGUES WITH THEIR FINANCIAL
ADVISORS. EXCEPT AS REQUIRED UNDER THE FEDERAL SECURITIES LAWS, HOLOPAK AND
FOILMARK DISCLAIM ANY DUTY TO UPDATE THESE PROJECTIONS. IN ADDITION, BECAUSE THE
PROJECTIONS ARE INHERENTLY SUBJECT TO SIGNIFICANT ECONOMIC AND COMPETITIVE
UNCERTAINTIES AND CONTINGENCIES BEYOND THE CONTROL OF EACH COMPANY, THERE CAN BE
NO ASSURANCE THAT THE PROJECTIONS WILL BE REALIZED. ACTUAL RESULTS MAY BE EITHER
HIGHER OR LOWER THAN THE PROJECTIONS.
INTERESTS OF CERTAIN PERSONS IN THE MERGER; POTENTIAL CONFLICTS OF INTEREST
Some members of Foilmark's and HoloPak's management and some members of the
boards of directors of each of Foilmark and HoloPak have interests in the merger
that are in addition to their interests as stockholders of Foilmark or HoloPak.
INTERESTS OF FOILMARK PERSONS IN THE MERGER.
EMPLOYMENT AGREEMENT. Foilmark agreed to offer to enter into an employment
agreement with Frank J. Olsen, Jr. A copy of his employment agreement is
attached as Exhibit 8.17 to the merger agreement.
Mr. Olsen's employment agreement is for a term of five years starting from
the date of the merger. During the employment period, Mr. Olsen will serve as
Chief Executive Officer and President of Foilmark. Mr. Olsen will also serve on
the Foilmark board. During the employment period, Mr. Olsen will receive an
annual salary of $260,000 plus bonus. Pursuant to the merger agreement, Mr.
Olsen will be granted stock options to acquire 15,000 shares of Foilmark common
stock, such grants to be made on the date of completion of the merger. These
stock options will vest under the vesting schedule set forth under the Foilmark
amended and restated 1996 Stock option plan, or another Foilmark stock option
plan with reasonably similar terms and provisions as agreed upon by Foilmark and
HoloPak.
Under Mr. Olsen's employment agreement, upon the termination of his
employment other than for cause or for reason of death or disability, he will be
entitled to a severance package for a period equal to the greater of the
remainder of the initial employment period or any renewal period or 3
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<PAGE>
years after the date of termination monthly payments of an amount equal to
one-twelfth of his then current annual base salary and pro-rated annual target
bonus and continuation of all benefits.
In addition, upon a termination as a result of a terminating event, all of
Mr. Olsen's stock options will vest immediately. The employment agreement
prohibits Mr. Olsen from disclosing confidential information and competing with
Foilmark during his employment period and for specified periods thereafter.
INDEMNIFICATION AGREEMENTS. Foilmark will enter into indemnification
agreements with the following existing directors and/or executive officers of
Foilmark:
- Thomas R. Schwarz
- Frank J. Olsen, Jr.
- Philip Leibel
- Michael Foster
- Edward Sullivan
- Michael Bertuch
- Glenn R. Regan
- Douglas Parker
These persons will be directors and/or executive officers of Foilmark after
the merger. These indemnification agreements will indemnify such persons in
their capacity as directors and/or executive officers of Foilmark. Foilmark will
indemnify those persons who were or are a party or are threatened to be made a
party to any pending or completed action, suit or proceeding, whether criminal,
civil, administrative or investigative, to the full extent authorized and
permitted by the Delaware law.
GRANT OF FOILMARK STOCK OPTIONS. In addition to the 15,000 options to
purchase shares of Foilmark common stock to be granted to Mr. Olsen, Foilmark
will grant the following options to purchase shares of Foilmark common stock
under the Foilmark stock option plan to other officers and directors of
Foilmark:
<TABLE>
<CAPTION>
NAME NUMBER OF OPTIONS
- -------------------------------------------------------------------------- -------------------
<S> <C>
Wilhelm 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
</TABLE>
VOTING AGREEMENT. The voting agreement will be entered into by the
following stockholders of HoloPak, representing approximately 45.3% of the
outstanding shares of HoloPak common stock as of the date hereof:
- Robert J. Simon, Chairman of the HoloPak board;
- Bradford Venture Partners;
- Overseas Private Investor Partners;
- James L. Rooney, President and Chief Executive Officer of HoloPak and a
director of HoloPak;
- Harvey S. Share, a director of HoloPak;
- Brian Kelly, a director of HoloPak; and
- Michael S. Mathews, a director of HoloPak.
36
<PAGE>
The following stockholders of Foilmark will also enter into the voting
agreement, representing approximately 42% of the outstanding shares of Foilmark
common stock as of the date hereof:
- Frank J. Olsen, Jr.;
- Carol Robie, Vice President-Administration of Foilmark and a director of
Foilmark;
- Michael Foster, a director of Foilmark;
- Martin A. Olsen, a director of Foilmark;
- Leonard Mintz, a former director of Foilmark;
- Edward Sullivan, a director of Foilmark;
- Thomas Schwarz, a director of Foilmark;
- Kenneth Harris, Vice President-Pad Printing Operations and a director of
Foilmark; and
- Michael Bertuch, a director of Foilmark.
Under the voting agreement, the above-listed stockholders will vote all of
their shares of Foilmark common stock to:
- cause the Foilmark board to be fixed at ten;
- name directors to those classes consisting of:
- four class I directors, consisting of two HoloPak designees and two
Foilmark designees,
- 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 designee;
- elect Mr. Simon as the Chairman of the Foilmark board;
- cause the Foilmark board to establish an executive committee, which will
consist of Mr. Simon, Mr. Mathews, Mr. Frank Olsen and Mr. Foster, of
which Mr. Simon will be the Chairman;
- cause the Foilmark board to establish a compensation committee, which will
consist of Mr. Schwarz, Mr. Sullivan, Mr. Mathews and Mr. Simon, of which
Mr. Schwarz will be the Chairman; and
- cause the Foilmark board to establish an audit committee, which will
consist of Mr. Foster, Mr. Kelly, Mr. Share and Michael Bertuch, of which
Mr. Bertuch will be the Chairman.
The initial Foilmark designees to the Foilmark board will be Mr. Olsen, Mr.
Bertuch, Mr. Schwarz, Mr. Sullivan and Mr. Foster. The initial HoloPak designees
to the Foilmark board will be Mr. Simon, Mr. Rooney, Mr. Share, Mr. Kelly and
Mr. Mathews. All future Foilmark designees to the Foilmark board will be made by
Frank J. Olsen, Jr. All future HoloPak designees to the Foilmark board will be
made by Bradford Associates.
Even though the voting agreement provides for a specific composition of the
Foilmark board and its committees after the merger, and the parties to the
voting agreement will agree to vote their shares for these directors, the
ability of the parties to elect those directors will depend upon the total
number of votes cast at each election of directors. The ability of the parties
to elect these directors will also depend upon the number of directors to be
elected at any given time.
After the merger, approximately 43.2% of Foilmark common stock will be
subject to the voting agreement, assuming no exercise of appraisal rights or
outstanding options and excluding fractional shares.
INTERESTS OF HOLOPAK PERSONS IN THE MERGER.
EMPLOYMENT/CONSULTING AGREEMENTS. After the merger, the existing employment
agreements of Arthur Karmel, Chief Financial Officer of HoloPak, Joseph T. Webb,
Chief Operating Officer of HoloPak and James L. Rooney, President and Chief
Executive Officer of HoloPak, will terminate, and no severance payments will be
made in connection with the termination of their agreements.
37
<PAGE>
Except as set forth in this section of the joint proxy statement-prospectus,
none of Messrs. Karmel, Webb or Rooney, nor any other officer or director of
HoloPak, will be entitled to any payments or benefits as a result of the change
of control of HoloPak.
When the merger is completed, Foilmark will enter into a one-year consulting
agreement with Mr. Rooney. Mr. Rooney will be compensated at a rate of $105,000
per year under this agreement. Foilmark has agreed to grant to Mr. Rooney
options to purchase 20,000 shares of Foilmark common stock under the Foilmark
1996 stock option plan.
Foilmark will enter into a one-year employment agreement with Mr. Webb. Mr.
Webb will be employed in a senior executive position with Foilmark under this
agreement. Mr. Webb will be compensated at a rate of $145,000 per year under
this agreement. Mr. Webb will be entitled to a bonus in accordance with a budget
for pretax income established by the Foilmark board. Mr. Webb's bonus will vary
as a percentage of his salary in relation to the percentage achievement of that
budget. Foilmark has agreed to grant to Mr. Webb options to purchase 10,000
shares of Foilmark common stock under the Foilmark 1996 Stock Option Plan.
When the merger is completed, Foilmark will enter into a one and one-half
year employment agreement with Mr. Karmel, under which Mr. Karmel will be
employed in a senior executive position with Foilmark. Mr. Karmel will be
compensated at a rate of $100,000 per year under this agreement-- Foilmark has
agreed to grant to Mr. Karmel options to purchase 6,000 shares of Foilmark
common stock under the Foilmark 1996 stock option plan.
GRANT OF FOILMARK STOCK OPTIONS. In addition to the options to purchase
shares of Foilmark common stock to be granted to Messrs. Rooney, Webb and
Karmel, Foilmark will grant the following options to purchase shares of Foilmark
common stock to other officers of HoloPak and its subsidiaries under the
Foilmark 1996 stock option plan:
<TABLE>
<CAPTION>
NAME NUMBER OF OPTIONS
- -------------------------------------------------------------------------- -------------------
<S> <C>
John Duplica, National Sales Manager of HoloPak........................... 8,000
Serge Roger, President of Alubec Industries, Inc., a subsidiary of
HoloPak................................................................. 7,000
Marc Woontner, Vice President-Sales and Marketing of HoloPak.............. 6,000
Andy Zweig, Vice President-Technology of HoloPak.......................... 5,500
</TABLE>
INDEMNIFICATION; DIRECTORS AND OFFICERS INSURANCE. The merger agreement
provides that all legal and contractual rights to indemnification and
limitations on liability for acts or omissions occurring prior to the merger of
the current or former directors, officers, employees, representatives and
agents, including persons who become directors or officers after the date of the
merger agreement and before the merger of HoloPak, and its subsidiaries, or any
agreement for indemnification by HoloPak or any of its subsidiaries of any
person in effect on the date of the merger agreement, will survive the merger
and will continue in full force and effect in accordance with their terms.
The merger agreement also provides that, for six years following the merger,
Foilmark will maintain HoloPak's directors' and officers' liability insurance
policies currently in effect. Foilmark can instead provide coverage under
different policies for the benefit of these persons, so long as their terms are
not less advantageous than those under their current policies. Foilmark is not
required to expend in any one year more than 250% of the annual premiums
currently paid by HoloPak for this insurance. If the annual premiums of this
insurance coverage exceed this amount, Foilmark will have to obtain a policy
with the greatest coverage available for a cost at least equal to such amount.
Foilmark will advance all expenses to any person incurred by enforcing the
indemnity or other obligations described in this paragraph.
38
<PAGE>
INDEMNIFICATION AGREEMENTS. Foilmark will enter into indemnification
agreements with each of the following existing directors and/or executive
officers of HoloPak:
- Brian Kelly
- Harvey Share
- James Rooney
- Arthur Karmel
- Joseph Webb
- Robert Simon
- Michael Mathews
These persons, after the merger, will be directors and/or executive officers
of Foilmark. These indemnification agreements will provide that Foilmark
indemnify each person 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
criminal, civil, administrative or investigative, to the full extent authorized
and permitted by Delaware law.
REGISTRATION RIGHTS AGREEMENT. Shares of Foilmark common stock issued in
the merger may be traded freely and without restriction by those HoloPak
stockholders not deemed to be affiliates of HoloPak. An affiliate of HoloPak is
a person who directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, HoloPak. Any
subsequent transfer of shares of Foilmark common stock received by any person
who is an affiliate of HoloPak at the time the merger is voted on will require
either:
- the further registration of the Foilmark common stock to be transferred;
- compliance with Rule 145 promulgated under the Securities Act (permitting
limited sales under certain circumstances); or
- the availability of another exemption from registration.
Accordingly, Bradford Venture Partners, the beneficial owner of
approximately 22.5% of the outstanding shares of HoloPak common stock, Overseas
Private Investor Partners, the beneficial owner of approximately 22.5% of the
outstanding shares of HoloPak common stock, and some other stockholders of
HoloPak to be mutually agreed upon between HoloPak and Foilmark may be deemed to
be affiliates of HoloPak before the merger. These stockholders and some other
stockholders of HoloPak have been granted demand and piggy-back registration
rights by Foilmark. Robert J. Simon, Chairman of the HoloPak board, is a partner
of Bradford Associates, a Delaware general partnership. Bradford Associates is a
general partner of Bradford Venture Partners. Mr. Simon is also the Chairman of
the board of directors of Overseas Private Investors, Ltd., the managing partner
of Overseas Private Investor Partners. See "--Security Ownership Of Beneficial
Owners Of HoloPak Stock".
All expenses associated with the registration of Foilmark common stock under
the registration rights agreement will be paid by Foilmark, except for
underwriting discounts and commissions. In addition, Foilmark has agreed to
indemnify the stockholders holding registration rights for liability arising out
of information contained in a registration statement, except for information
provided by these stockholders. Similarly, the stockholders holding registration
rights have agreed to indemnify Foilmark for information furnished by them to
Foilmark for use in a registration statement.
VOTING AGREEMENT. The voting agreement will be entered into by some
substantial HoloPak stockholders, who represent in the aggregate approximately
45.3% of the outstanding shares of HoloPak common stock, and the Foilmark voting
stockholders, which represent in the aggregate approximately 42% of the
outstanding shares of Foilmark common stock. See "Interests of Foilmark Persons
in the Merger".
39
<PAGE>
CONSULTING AGREEMENT. HoloPak and Transfer Print Foils, Inc., a subsidiary
of HoloPak, entered into an agreement with Bradford Associates in February 1990
that was restated in October 1991. Under this agreement, Bradford Associates
provides various financial consulting services to HoloPak and Transfer Print for
a term of ten years. Mr. Simon is a partner of Bradford Associates. HoloPak is
obligated to pay Bradford Associates a monthly fee of $16,667.67 under the
agreement, plus reasonable out-of-pocket expenses. During the year ended March
31, 1998, HoloPak paid Bradford Associates $200,000. On November 17, 1998,
HoloPak, Transfer Print and Bradford Associates amended the consulting agreement
in order to extend its term to March 1, 2004, with automatic renewals for
successive one-year terms unless notice of termination is given by either party
to the other at least 120 days prior to the close of the then-current one-year
period. Under the merger agreement, Foilmark has agreed to guarantee the payment
obligation of HoloPak under the consulting agreement.
SECURITY OWNERSHIP OF BENEFICIAL OWNERS OF HOLOPAK STOCK
The information in the following table is furnished as of March 17, 1999,
and shows all persons who are known to HoloPak to be the beneficial owner of 5%
or more of any class of HoloPak's voting securities. The table also shows
ownership of HoloPak common stock by its directors, some of its executive
officers, and all of its executive officers and directors as a group. This
information is based on a review of statements filed with the Securities and
Exchange Commission pursuant to Sections 13(d), 13(f), and 13(g) of the Exchange
Act with respect to the shares of HoloPak common stock, except for information
about HoloPak's directors and officers. As of March 17, 1999, there were
3,346,519 shares of HoloPak common stock outstanding. Percentages of less than
one percent have been omitted. Unless otherwise indicated, the shares listed in
the table are owned directly by the individual or entity, or by both the
individual and the individual's spouse, and the individual or entity has sole
voting and investment power as to shares shown or, in the case of the
individual, such power is shared with the individual's spouse. The options
referred to in the footnotes to the table are currently exercisable or
exercisable within 60 days after March 17, 1999.
Some of the shares listed below are deemed to be owned beneficially by more
than one stockholder under the applicable rules of the Securities and Exchange
Commission. Accordingly, the sum of the ownership percentages listed exceeds
100%.
<TABLE>
<CAPTION>
AMOUNT
OF
BENEFICIAL PERCENT OF
NAME AND ADDRESS OWNERSHIP CLASS
- ------------------------------------------------------------------------------------------ ---------- -------------
<S> <C> <C>
Robert J. Simon(1)(2)(3)(4)(6)............................................................ 1,524,052 45.5%
Barbara M. Henagan(1)(2)(3)(5)............................................................ 1,508,524 45.0%
Bradford Venture Partners, L.P.(1)(2)..................................................... 753,086 22.5%
Overseas Private Investor Partners(3)(7).................................................. 753,086 22.5%
James L. Rooney(9)........................................................................ 100,000 3.0%
Harvey S. Share........................................................................... 2,000 *
Brian Kelly(8)............................................................................ 8,000 *
Michael S. Mathews(4)..................................................................... 17,880 *
Joseph T. Webb(10)........................................................................ 21,000 *
Marc O. Woontner (11)..................................................................... 25,151 *
Directors and executive officers as a group (7 persons)(1)(3)(12)......................... 1,700,435 50.8%
</TABLE>
- ------------------------
* less than 1%.
(1) The amounts shown for Mr. Simon and Ms. Henagan include the shares of
HoloPak common stock owned of record by Bradford Venture Partners, as to
which they may be deemed to share beneficial ownership due to their having
voting and dispositive power over those shares of HoloPak
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<PAGE>
common stock. Bradford Associates, a general partnership of which Mr. Simon
and Ms. Henagan are the partners, is the sole general partner of Bradford
Venture Partners.
(2) The address of the stockholder is 44 Nassau Street, Princeton, New Jersey
08542.
(3) The amounts shown for Mr. Simon and Ms. Henagan include the shares of
HoloPak common stock owned of record by Overseas Private Investor Partners,
as to which each may be deemed to share beneficial ownership due to having
voting power over such shares of HoloPak common stock. Mr. Simon serves as
chairman of the board of directors of the corporation that acts as the
managing partner of Overseas Private Investor Partners. Bradford Associates
holds a 1% partnership interest in Overseas Private Investor Partners, which
may increase upon the satisfaction of certain contingencies related to the
overall performance of Overseas Private Investor Partners' investment
portfolio, and also acts as an investment advisor for Overseas Private
Investor Partners.
(4) The amount shown includes 12,000 shares of HoloPak common stock that may be
acquired under options that are currently exercisable.
(5) The amount shown for Ms. Henagan includes 2,352 shares of HoloPak common
stock that she owns of record as trustee under two trusts for the benefit of
two relatives of Ms. Henagan.
(6) The stockholder is also a director of HoloPak.
(7) The address of the stockholder is Clarendon House, Church Street, Hamilton
5-31, Bermuda.
(8) Represents 8,000 shares of HoloPak common stock that may be acquired under
options that are currently exercisable.
(9) Represents 100,000 shares of HoloPak common stock that may be acquired under
options that are currently exercisable or exercisable within 60 days.
(10) Includes 9,000 shares of HoloPak common stock that may be acquired under
options that are currently exercisable.
(11) Represents 25,151 shares of HoloPak common stock that may be acquired under
options that are exercisable within 60 days.
(12) The amount shown includes 134,818 shares of HoloPak common stock that may
be acquired under options that are currently exercisable or exercisable
within 60 days.
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<PAGE>
THE MERGER AGREEMENT
The following summary of the material terms and provisions of the merger
agreement is qualified in its entirety by reference to the merger agreement
attached as Appendix A to this joint proxy statement--prospectus and is
incorporated herein by reference.
CONVERSION OF STOCK; TREATMENT OF OPTIONS
Under the merger agreement, at the time of the merger the shares of the
companies will be converted as follows:
- each share of Foilmark common stock outstanding immediately before the
time of the merger will remain outstanding from and after the time of the
merger;
- each share of common stock of Foilmark Acquisition outstanding immediately
before to the time of the merger will remain outstanding from and after
the time of the merger and as of the time of the merger will constitute
the only outstanding shares of capital stock of Foilmark Acquisition; and
- each share of HoloPak common stock, excluding shares held by HoloPak and
its subsidiaries or Foilmark and its subsidiaries outstanding at the time
of the merger and excluding dissenting shares, will cease to be
outstanding and will be converted into and exchanged for the right to
receive 1.11 shares of Foilmark common stock; and $1.42 in cash plus
additional cash for any fractional shares, without interest.
Because the exchange ratio is fixed and because the market price of Foilmark
common stock prior to the time of the merger may fluctuate, the value of the
shares of Foilmark common stock that HoloPak stockholders will receive in the
merger may increase or decrease, both before and after the merger. Each
outstanding share of HoloPak common stock owned by Foilmark, Foilmark
Acquisition or their subsidiaries or by HoloPak or its subsidiaries, if any,
will be automatically canceled at the time of the merger and will cease to
exist, and no Foilmark common stock or other consideration will be delivered in
exchange for those shares.
At the time of the merger, each HoloPak stock option granted either under
the HoloPak stock plans or otherwise, which are outstanding, whether or not
exercisable, will be converted into and become rights with respect to Foilmark
common stock. Foilmark will 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 after the merger:
- the Foilmark board and its compensation committee will be substituted for
the HoloPak board and its stock option committee administering such stock
plans;
- 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;
- the number of shares of Foilmark common stock subject to a HoloPak option
will equal to the number of shares of HoloPak common stock subject to such
HoloPak option immediately before the time of the merger multiplied by
1.11; and
- the per share exercise price under each HoloPak option will 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.
Foilmark will not issue any fraction of a share of Foilmark common stock
upon exercise of HoloPak options. Any fraction of a share of Foilmark common
stock that otherwise would be subject to a converted HoloPak option will
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
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<PAGE>
value of one share of Foilmark common stock at the time of exercise of such
HoloPak option and the per share exercise price of such HoloPak option. The
market value of one share of Foilmark common stock at the time of exercise of a
HoloPak option will be the last sale price of the Foilmark common stock on the
Nasdaq National Market on the last trading day preceding the date of exercise.
Each HoloPak option which is an incentive stock option will be adjusted as
required by the Internal Revenue Code, and the corresponding regulations, so as
not to constitute a modification, extension or renewal of the option, within the
meaning of the Internal Revenue Code.
After the merger, Foilmark will deliver to the participants in each HoloPak
stock plan and other holders of HoloPak options notice setting forth such
participant's rights. The grants subject to the HoloPak options will continue
and will comply with the terms of each HoloPak option to ensure that, to the
extent required by, and subject to the provisions of, such HoloPak stock plan,
HoloPak options which qualified as incentive stock options prior to the time of
the merger continue to qualify as incentive stock options after the time of the
merger. At or prior to the time of the merger, Foilmark will reserve for
issuance sufficient shares of Foilmark common stock for delivery upon exercise
of HoloPak options assumed by it.
If the outstanding shares of HoloPak common stock or Foilmark common stock
are increased, decreased, changed into or exchanged for a different number or
kind of shares or securities as a result of a reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split, or other
similar change in capitalization, an appropriate and proportionate adjustment
will be made to the exchange ratio.
EXCHANGE OF CERTIFICATES; FRACTIONAL SHARES
Foilmark will appoint ChaseMellon Shareholder Services to act as exchange
and paying agent in the merger. Before the merger, Foilmark will deposit with
ChaseMellon:
- certificates representing Foilmark common stock which immediately before
the merger represent a number of shares of Foilmark common stock required
to be issued in exchange for the outstanding shares of HoloPak common
stock, together with sufficient cash to make payments for fractional
shares of HoloPak common stock; and
- cash in an amount sufficient to pay the cash part of the merger
consideration. This cash will not be used for any other purpose except as
provided for in the merger agreement.
No more than five business days after the merger, Foilmark will cause
ChaseMellon to mail to each holder of a certificate or certificates which before
the merger represented outstanding shares of HoloPak common stock materials
which will specify that delivery will be effected, and risk of loss and title to
the certificates representing shares of HoloPak common stock will pass, only
upon proper delivery of these certificates to ChaseMellon. Instructions for use
in surrendering the HoloPak share certificates in exchange for the merger
consideration will also be included. After the merger, each holder of shares of
HoloPak common stock, other than shares to be canceled or dissenting shares,
will surrender their HoloPak share certificates to ChaseMellon and will receive
in exchange the merger consideration. HoloPak stockholders will also receive,
upon surrender of their HoloPak share certificates, cash for any fractional
share of Foilmark common stock without interest. Foilmark will not be obligated
to deliver the Foilmark common stock or the cash part of the merger
consideration until a HoloPak stockholder surrenders its HoloPak share
certificate. The HoloPak share certificate surrendered will be duly endorsed as
ChaseMellon may reasonably require. Neither Foilmark nor ChaseMellon will be
liable to any former HoloPak stockholder for any amount properly delivered to a
public official under applicable abandoned property, escheat or similar laws.
Each HoloPak stockholder who would otherwise have been entitled to receive a
fraction of a share of Foilmark common stock will receive cash without interest
rounded to the nearest whole cent in an
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<PAGE>
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. The market
value of one share of Foilmark common stock will be the last sale price of
Foilmark common stock on the Nasdaq National Market on the business day before
the merger occurs. No HoloPak stockholder will be entitled to dividends, voting
rights, or any other rights as a shareholder of Foilmark with respect to any
fractional shares.
HOLOPAK COMMON STOCK CERTIFICATES SHOULD NOT BE RETURNED WITH THE ENCLOSED
PROXY AND SHOULD NOT BE FORWARDED TO CHASEMELLON UNLESS AND UNTIL THE HOLOPAK
STOCKHOLDER RECEIVES A LETTER OF TRANSMITTAL FOLLOWING THE TIME OF THE MERGER.
Until the HoloPak share certificates are surrendered after the merger,
holders of such certificates or receipts will earn but will not be paid
dividends or other distributions declared after the merger on Foilmark common
stock into which their shares have been converted. When such certificates or
receipts are surrendered, any unpaid dividends or other distributions will be
paid, without interest. After the merger, there will be no transfers on the
stock transfer books of HoloPak of shares of HoloPak common stock outstanding
immediately before the merger. If the HoloPak share certificates are presented
after the merger, they will be canceled and exchanged for the relevant
certificate representing the applicable shares of Foilmark common stock.
If a HoloPak share certificate has been lost, stolen or destroyed,
ChaseMellon will issue the merger consideration on receipt of appropriate
evidence as to its loss, theft or destruction and appropriate evidence as to its
ownership by the claimant. ChaseMellon will also require the claimant to post
bond as indemnity against any claim that may be made against Foilmark with
respect to the certificate.
Foilmark stockholders will not be required to exchange certificates
representing their shares of Foilmark common stock or otherwise take any action
as a result of the completion of the merger.
THERE IS NO NEED FOR FOILMARK STOCKHOLDERS TO SUBMIT THEIR SHARE
CERTIFICATES TO FOILMARK, HOLOPAK, CHASEMELLON OR ANY OTHER PERSON.
TIME OF THE MERGER
The merger will become effective on the date and at the time the certificate
of merger reflecting the merger becomes effective with the Secretary of State of
the State of Delaware. Foilmark, Foilmark Acquisition and HoloPak will use their
reasonable efforts to file the certificate of merger with the Secretary of State
of the State of Delaware as soon as practicable but in any event not later than
five business days after the later to occur of:
- the effective time, 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, or
- the date on which the stockholders of HoloPak approve the merger agreement
and the stockholders of Foilmark approve the issuance.
If the merger is not completed on or before April 30, 1999, the merger
agreement may be terminated by either of Foilmark or HoloPak, unless the failure
to effect the merger by such date is due to the failure of the party seeking to
terminate the merger agreement to perform or observe the covenants and
agreements of that party. See "--Conditions to Completion of the Merger".
REPRESENTATIONS AND WARRANTIES
The merger agreement contains representations and warranties of Foilmark and
of HoloPak as to:
- the corporate organization and existence of each party and its
subsidiaries;
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<PAGE>
- the undertaking of all action necessary such that the performance and
completion of the merger agreement will not result in any impairment or
restriction on or of the rights of Foilmark or HoloPak stockholders;
- the capitalization of each party and its subsidiaries;
- the corporate power and authority of each party;
- the entry into the merger agreement will not create a conflict or breach
with the certificate of incorporation and by-laws of each party,
applicable law, or certain material agreements;
- third-party consents and governmental approvals;
- the timely filing and/or availability and accuracy of each party's reports
and filings of required reports and filings with the Securities and
Exchange Commission;
- the receipt of McFarland Dewey's and Schroder's opinions as to the
financial fairness of the merger consideration;
- each party's financial statements;
- the absence of undisclosed liabilities;
- the absence of material changes in each party's business since September
30, 1998;
- the absence of undisclosed liens on each party's assets;
- the absence of material legal proceedings and injunctions;
- the filing and accuracy of each party's tax returns;
- the absence of any condition that would prevent the merger from qualifying
for purchase accounting treatment;
- each party's employee benefit plans and related matters;
- each party's compliance with applicable law;
- the validity of certain contracts, the truthfulness of statements made,
and the absence of any material defaults;
- the ownership of intellectual property;
- absence of any undisclosed unfair labor practices;
- insurance coverage compliance;
- the absence of environmental liabilities;
- the inapplicability to the merger to any state anti-takeover law;
- each party's year 2000 risk management plan;
- the qualification of the merger as a reorganization under the Internal
Revenue Code; and
- that neither of Foilmark or HoloPak is controlled by another entity and/or
has total assets or annual net sales in excess of $100 million.
CONDUCT OF BUSINESS PENDING THE MERGER AND OTHER AGREEMENTS
Under the merger agreement, until the time of the merger or the termination
of the merger agreement, unless the prior written consent of the other is
obtained, Foilmark and HoloPak must:
- operate their businesses in the usual, regular and ordinary course;
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<PAGE>
- use their reasonable efforts to preserve intact their business
organizations and assets and maintain their rights and franchises; and
- use their best efforts to not do anything that would materially adversely
affect the ability of any party to obtain any consents required for the
transactions contemplated under the merger agreement, or materially
adversely affect the ability of any party to perform its covenants and
agreements under the merger agreement.
Foilmark and HoloPak have agreed under the merger agreement to file and
cause their subsidiaries to file all reports required to be filed by it with
regulatory authorities between the date of the merger agreement and the time of
the merger and will deliver to the other copies of all reports promptly after
they are filed. If financial statements are contained in any such reports filed
with the Securities and Exchange Commission, the 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 stockholders' equity and cash flows for the periods then ended in
accordance with GAAP. As of their respective dates, these reports filed with the
Securities and Exchange Commission will comply in all material respects with the
federal securities laws and will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated in light of the
circumstances under which they were made, or necessary in order to not make the
statements misleading. Any financial statements contained in any other reports
to another regulatory authority will be prepared in accordance with laws
applicable to those reports.
Foilmark and HoloPak have further agreed to give the other access to all of
its properties, books, contracts, commitments and records and to furnish
information concerning its businesses, properties and personnel, subject to the
restrictions and for the purposes set forth in the merger agreement.
The merger agreement also provides that, subject to the adoption of the
amendment to Foilmark's certificate to increase the number of authorized shares
of common stock by the Foilmark stockholders, Foilmark will increase the number
of authorized shares of Foilmark common stock from 10,000,000 to 15,000,000
shares.
Both Foilmark and HoloPak have agreed to give written notice promptly to the
other upon becoming aware of the occurrence or impending occurrence of any event
or circumstance relating to it or any of its subsidiaries which:
- is reasonably likely to have, individually or in the aggregate, a material
adverse effect on it, or
- would cause or constitute a material breach of any of its representations,
warranties, or covenants contained in the merger agreement, and to use its
reasonable efforts to prevent or promptly to remedy the same.
Each of Foilmark and HoloPak has agreed that, without the prior written
consent of the other, which consent will not be unreasonably withheld,
conditioned or delayed, it and its subsidiaries will not do or agree or commit
to do, any of the following:
- amend its certificate of incorporation or by-laws except an amendment to
Foilmark's certificate to increase its authorized common stock to
15,000,000 shares; or
- incur any additional debt obligation in excess of an aggregate of $50,000
on a consolidated basis; or
- 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 declare or pay any dividend or make any other
distribution in respect of its capital stock; or
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<PAGE>
- except pursuant to the exercise of stock options issue, sell or encumber
additional shares of any capital stock; or
- recapitalize its capital stock or 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 consideration; or
- 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 in any person
other than a wholly-owned subsidiary, or otherwise acquire direct or
indirect control over any person, other than in connection with
foreclosures in the ordinary course of business, or the creation of new
wholly-owned subsidiaries organized to conduct or continue activities
otherwise permitted by the merger agreement; or
- grant any increase in compensation or benefits to any employees or
officers; or
- enter into or amend any employment contract with any person; or
- purchase or sell any real property or other material asset in an amount in
excess of $35,000 individually or $250,000 in the aggregate; or
- adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization; or
- adopt any new employee benefit plan or terminate or withdraw from, or make
any material change in or to, any existing employee benefit plans; or
- 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
- commence any litigation, settle any litigation in excess of $50,000
individually or $200,000 in the aggregate; or
- enter into, terminate or materially modify or amend any contract including
any capital expenditures involving the payment of $35,000 individually or
$250,000 in the aggregate, or more; or
- authorize any of, or commit to agree to any of, the foregoing.
CONDITIONS TO COMPLETION OF THE MERGER
Each party's obligation to complete the merger is subject to the
satisfaction or waiver, where permissible under the merger agreement, of the
following conditions at or prior to the time of the merger:
STOCKHOLDER APPROVAL. HoloPak stockholders will have approved the merger
agreement, and the stockholders of Foilmark will have approved the issuance.
REGULATORY APPROVALS. All consents of, filings and registrations with, and
notifications to, all regulatory authorities required for completion of the
merger will have been obtained or made and will be in full force and effect and
all waiting periods required by law will have expired. No consent obtained from
any regulatory authority which is necessary to complete the merger will be
conditioned or restricted in a manner, including requirements relating to the
raising of additional capital or the disposition of assets which in the
reasonable judgment of the Foilmark board or the HoloPak board would so
materially adversely impact the economic or business benefits of the merger
that, had that condition or restriction been known, would not, in its reasonable
judgment, have entered into the merger agreement.
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CONSENTS AND APPROVALS. Each party will have obtained any and all consents
required for completion of the merger.
LEGAL PROCEEDINGS. No court or governmental or regulatory authority of
competent jurisdiction will 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 completion of the
merger.
REGISTRATION STATEMENT. A registration statement on Form S-4 under the
Securities Act will have been declared effective by the Securities and Exchange
Commission, no stop orders suspending the effectiveness of the registration
statement will have been issued, no action, suit, proceeding or investigation by
the Securities and Exchange Commission to suspend the effectiveness thereof will
have been initiated and be continuing, and all necessary approvals under state
securities laws, or the Securities Act or Exchange Act relating to the issuance
or trading of the shares of Foilmark common stock issuable under the merger will
have been received.
EXCHANGE LISTING. The shares of Foilmark common stock to be issued in the
merger will have been approved for listing on the Nasdaq National Market.
DISSENTING STOCKHOLDERS. Before the time of the merger, holders of not more
than 10% in the aggregate of all shares of HoloPak common stock will not have
dissented under Delaware law.
VOTING AGREEMENT. Foilmark and some Foilmark and HoloPak stockholders, who
will become holders of Foilmark common stock, will have entered into a voting
agreement. See "The Merger--Interests Of Certain Persons In The Merger".
REPRESENTATIONS. The representations and warranties of Foilmark, Foilmark
Acquisition and HoloPak will be true and correct as of the date of the merger
agreement and as of the merger as though made at the time of the merger.
PERFORMANCE OF AGREEMENTS. Foilmark, Foilmark Acquisition and HoloPak will
have performed all obligations required to be performed by them under the merger
agreement at or prior to the time of the merger.
CERTIFICATES. Foilmark and HoloPak will have delivered to the other
certificates regarding:
- satisfaction of the conditions related to the accuracy of the
representations and warranties of each party;
- the performance of agreements and covenants under the merger agreement;
and
- the resolutions of the board of directors of each of Foilmark and HoloPak
authorizing the merger agreement.
ACCOUNTANTS' LETTERS. Foilmark and HoloPak will have received letters from
KPMG LLP and Deloitte & Touche LLP containing language customarily obtained for
registration statements.
OPINIONS OF COUNSEL. Foilmark and HoloPak will have delivered to the other
an opinion of counsel satisfactory to the other.
MATERIAL ADVERSE CHANGES. There will have been no material adverse changes
in the financial or other condition, operations, assets or business of either of
Foilmark or HoloPak since the date of the merger agreement.
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The obligation of Foilmark to effect the merger is subject to the
satisfaction or waiver, where permissible under the merger agreement, of the
following additional conditions at or prior to the time of the merger:
OPTION GRANTS. Foilmark will have caused its board of directors to grant
stock options to purchase an aggregate of 62,500 shares of Foilmark common stock
to the persons and in the amounts set forth on exhibit 9.2 (n) of the merger
agreement.
INDEMNIFICATION AGREEMENTS. Foilmark will have entered into indemnification
agreements with the persons set forth on exhibit 9.3(j) to the merger agreement.
AFFILIATE LETTERS. Foilmark will have received a letter from all persons
who were on the date of the merger agreement or who will become at the merger,
affiliates of Foilmark.
The obligation of HoloPak to complete the merger is subject to the
satisfaction or waiver, where permissible under the merger agreement, of the
following additional conditions at or prior to the time of the merger:
AMENDMENT OF BY-LAWS; BOARD COMPOSITION. Foilmark will have amended its
by-laws to establish the size of the Foilmark board at ten and will have taken
all necessary action to elect the nominees set forth in the voting agreement.
REGISTRATION RIGHTS AGREEMENT. Foilmark will have entered into a
registration rights agreement with Bradford Venture Partners, Overseas Private
Investor Partners and certain other holders of HoloPak common stock.
OPTION GRANTS. Foilmark will have caused its board of directors to grant
stock options to purchase an aggregate of 62,500 shares of Foilmark common stock
to some HoloPak employees and in the amounts set forth on exhibit 9.3(i) of the
merger agreement.
TERMINATION OF VOTING AGREEMENTS. A voting agreement entered into among
some substantial stockholders of Foilmark and Foilmark and a voting agreement
entered into among Steven Meredith, Kenneth Harris and Foilmark under an asset
purchase agreement, both dated August 21, 1995, will have been terminated.
ANCILLARY AGREEMENTS. Foilmark will have offered to enter into:
- a consulting agreement with James L. Rooney dated the date of the merger;
- an employment agreement with J.T. Webb dated the date of the merger;
- an employment agreement with Arthur Karmel, dated the date of the merger;
and
- indemnification agreements with each of the persons set forth on exhibit
9.2(o)(iv) of the merger agreement.
- Foilmark will have delivered a guarantee in a form reasonably acceptable
to Bradford Associates under which Foilmark will guarantee the payments of
Foilmark Acquisition under the consulting agreement.
No assurance can be provided as to whether all of the other conditions
precedent to the merger will be satisfied or waived by the party permitted to do
so.
REGULATORY APPROVALS REQUIRED FOR THE MERGER
Foilmark and HoloPak have agreed to use their reasonable best efforts to
obtain all regulatory approvals required to complete the transactions
contemplated by the merger agreement.
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Foilmark and HoloPak are not aware of any material governmental approvals or
actions that are required prior to the parties' completion of the merger. The
Hart-Scott-Rodino Act is not applicable to the merger. If any additional
governmental approvals or actions are required, those approvals or actions will
be sought. There can be no assurance, however, that any additional approvals or
actions will be obtained.
If the Department of Justice or the Federal Trade Commission were to
commence an antitrust action, it would not deter the merger unless a court so
orders. In reviewing the merger, the DOJ could analyze the merger's effect on
competition differently than either Foilmark and HoloPak, and thus it is
possible that the DOJ could reach a different conclusion regarding the merger's
competitive effects. The DOJ's failure to commence an antitrust action may not
prevent the filing of antitrust actions by private persons or state attorneys
general.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the anticipated material United States federal
income tax consequences of the merger to HoloPak stockholders who hold HoloPak
common stock as a capital asset. The summary is based on the Internal Revenue
Code, Treasury Regulations under the Code, administrative rulings and court
decisions in effect as of the date hereof, all of which may change at any time,
possibly with retroactive effect. This summary is not a complete description of
all of the tax consequences of the merger and, in particular, may not address
United States federal income tax considerations applicable to stockholders
subject to special treatment under United States federal income tax law,
including:
- foreign persons;
- financial institutions;
- dealers in securities;
- insurance companies;
- tax-exempt entities;
- holders who acquired their shares of HoloPak common stock under the
exercise of an employee stock option or right or otherwise as
compensation; and
- holders who hold HoloPak common stock as part of a hedge, straddle or
conversion transaction. In addition, no information is provided in this
document about the tax consequences of the merger under applicable
foreign, state or local laws.
HOLDERS OF HOLOPAK COMMON STOCK ARE URGED TO CONSULT WITH THEIR TAX ADVISORS
REGARDING THE PARTICULAR TAX CONSEQUENCES OF THE MERGER TO THEM, INCLUDING THE
EFFECTS OF UNITED STATES FEDERAL, STATE, LOCAL, FOREIGN, AND OTHER TAX LAWS.
In connection with the filing of the registration statement, Hinckley, Allen
& Snyder and Battle Fowler have delivered opinions, dated the date of the
registration statement, addressing the United States federal income tax
consequences of the merger. Such opinions have been rendered on the basis of the
facts, representations and assumptions set forth or referred to in those
opinions and in reliance upon factual representations contained in certificates
of officers of Foilmark, Foilmark Acquisition and HoloPak. The opinions are to
the effect that, for United States federal income tax purposes:
(1) The merger will constitute a reorganization under the Internal Revenue
Code, and Foilmark, Foilmark Acquisition and HoloPak will each be a
party to the reorganization;
(2) No gain or loss will be recognized by HoloPak stockholders as a result
of the exchange of their HoloPak common stock for Foilmark common stock.
A HoloPak stockholder will recognize income or gain but not loss in
connection with the receipt of $1.42 per share of HoloPak common stock.
A HoloPak stockholder who receives cash for a fractional share of
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Foilmark common stock will recognize gain or loss as if the stockholder
received the fractional share of Foilmark common stock in the exchange
and then sold it; and
(3) No gain or loss will be recognized by Foilmark, Foilmark Acquisition or
HoloPak as a result of the merger except for amounts resulting from any
required change in accounting methods and any income and deferred gain
recognized under the Treasury Regulations used under the Internal
Revenue Code.
Hinckley, Allen & Snyder and Battle Fowler are expected to confirm such
opinions in writing as of the date of the merger. The tax opinions delivered or
to be confirmed are not binding on the Internal Revenue Service or courts of
law. The parties do not intend to request a ruling from the IRS with respect to
the merger. If either Foilmark or HoloPak fails to confirm their opinions, or
Foilmark or HoloPak determines to waive the condition to its obligation to
complete the merger and the material federal income tax consequences to Foilmark
stockholders or HoloPak stockholders are different from those described above,
Foilmark or HoloPak will resolicit approval of the Foilmark stockholders or the
HoloPak stockholders before completing the merger.
As a result of the cash part of the merger consideration, a HoloPak
stockholder should recognize capital gain but not loss for United States federal
income tax purposes equal to the excess of the sum of the fair market value of
the Foilmark common stock and the amount of cash received in the merger for its
HoloPak common stock over the tax basis in the shares of HoloPak common stock
surrendered in the exchange, but not in excess of the amount of cash received.
Such capital gain will be long-term capital gain if the holding period for the
HoloPak common stock is greater than one year at the time of the merger. The
holding period of a share of Foilmark common stock received in the merger will
include the HoloPak stockholder's holding period in the HoloPak common stock
surrendered.
Any cash received for a fractional share of Foilmark common stock will be
treated as the receipt of such fractional share of Foilmark common stock and
then the redemption of such fractional share. As a result of the cash received
for a fractional share of Foilmark common stock, a HoloPak stockholder should
recognize capital gain or loss for United States federal income tax purposes
equal to the excess of the amount of cash received for a fractional share of
Foilmark common stock over the portion of the tax basis in the HoloPak common
stock allocable to such fractional share of Foilmark common stock. Such capital
gain or loss will be long-term capital gain or loss if the holding period for
the HoloPak common stock is greater than one year at the time of the merger. The
holding period of a share of Foilmark common stock received in the merger,
including a fractional share of Foilmark common stock deemed received and
redeemed as described above, will include the HoloPak stockholder's holding
period in the HoloPak common stock.
UNITED STATES REAL PROPERTY INTEREST. The interests in HoloPak held by the
HoloPak stockholders are not United States real property interests under the
Internal Revenue Code, as of the time of the merger. HoloPak will provide
Foilmark with a statement that the interests in HoloPak held by the stockholders
of HoloPak are not United States real property interests in accordance with the
Treasury Regulations issued under the Internal Revenue Code. If any HoloPak
stockholder that is a foreign person requests a statement from HoloPak that the
stockholder's interest in HoloPak is not a United States real property interest,
HoloPak will provide its statement to the stockholder and the IRS in accordance
with the Treasury Regulations issued under the Internal Revenue Code.
INFORMATION REPORTING AND BACKUP WITHHOLDING. Cash payments in respect of
HoloPak common stock may be subject to information reporting to the IRS and to a
31% backup withholding tax. Backup withholding will not apply to a payment to a
holder of HoloPak common stock or other payee if a stockholder or payee
completes and signs the substitute Form W-9 which will be included as part of
the transmittal letter, or otherwise proves to Foilmark and ChaseMellon that it
is exempt from backup withholding. If the stockholder or payee is a foreign
person, the foreign person will need to complete and sign a Form W-8,
Certificate of Foreign Status, in order to be exempt from back-up withholding.
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HOLOPAK STOCKHOLDERS EXERCISING APPRAISAL RIGHTS. Battle Fowler's opinion
addressing the United States federal income tax consequences of the merger
includes an opinion to the effect that income, gain or loss will be recognized
by Holopak stockholders who exercise appraisal rights with respect to their
shares of HoloPak common stock with that gain or loss generally constituting
capital gain or loss if the stockholder holds its HoloPak common stock as a
capital asset and if, after exercising appraisal rights, owns no shares of
Foilmark common stock, either actually or constructively within the meaning of
the Internal Revenue Code. However, if the payment that the stockholder receives
as a result of exercising appraisal rights is
- essentially equivalent to a dividend; or
- has the effect of a distribution or a dividend,
within the meaning of the Internal Revenue Code, then such HoloPak stockholder
will generally recognize ordinary dividend income for federal income tax
purposes in an amount equal to the lesser of its allocable share of the
Holopak's then current or accumulated earnings and profits, or the entire amount
of cash so received and will treat any excess of the cash received over its
allocable shares of the HoloPak's current and accumulated earnings and profits
as a return of capital, and then as income or gain from the disposition of the
shares of HoloPak common stock.
ACCOUNTING TREATMENT
It is anticipated that the merger will be accounted for as a purchase
transaction in accordance with GAAP. Under such method of accounting, Foilmark
Acquisition will be treated as the acquiror of the HoloPak business. See
"--Conditions to Completion of the Merger".
The unaudited pro forma financial information contained in this joint proxy
statement--prospectus has been prepared using the purchase accounting method to
account for the merger. See "Summary-- Unaudited Comparative Per Share Data" and
"Unaudited Pro Forma Condensed Combined Financial Information".
TERMINATION OF THE MERGER AGREEMENT
The merger agreement may be terminated and the merger abandoned at any time
prior to the time of the merger:
- By mutual consent of the HoloPak board and the Foilmark board; or
- By the board of directors of either of HoloPak or Foilmark in the event of
a material breach by the other of any representation or warranty contained
in the merger agreement continuing for 30 days after the written notice to
the breaching party of such breach; or
- By the board of directors of either of HoloPak or Foilmark in the event of
a material breach by the other of any covenant or agreement contained in
the merger agreement continuing for 30 days after written notice to the
breaching party of such breach; or
- By the board of directors of either of HoloPak or Foilmark in the event
any consent of any regulatory authority required for completion of the
merger will have been denied by final nonappealable action or if it is not
appealed within the time limit for appeal, or the stockholders of Foilmark
or HoloPak fail to approve the merger agreement; or
- By either the HoloPak board or the Foilmark board if the merger has not
been completed by April 30, 1999, if the failure to complete the merger on
or before such date is not caused by any breach of the merger agreement by
the party electing to terminate; or
- By either the HoloPak board or the Foilmark board in the event that any of
the conditions to the obligations of such party to complete the merger
cannot be satisfied or fulfilled by April 30, 1999; or
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<PAGE>
- By the HoloPak board, 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 merger agreement; or
- By the HoloPak board, as a result of the Foilmark board having withdrawn
or materially modified its approval or recommendation of the merger to its
stockholders and HoloPak is not in breach of the merger agreement; or
- By the HoloPak board, 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
merger agreement; or
- By the Foilmark board, 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 merger agreement; or
- By the Foilmark board, as a result of the HoloPak board having withdrawn
or materially modified its approval or recommendation of the merger to its
stockholders and Foilmark is not in breach of the merger agreement; or
- By the Foilmark board, 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
merger agreement.
An acquisition transaction is a transaction involving any of the following
involving Foilmark or any of its subsidiaries or HoloPak or any of its
subsidiaries:
- any direct or indirect acquisition or purchase of more than 20% of any
class of equity securities of Foilmark or HoloPak;
- any merger, consolidation, share exchange, recapitalization, business
combination or other similar transaction involving Foilmark or HoloPak;
- 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
- any tender offer or exchange offer for 25% or more of the outstanding
shares of Foilmark common stock or HoloPak common stock.
An acquisition transaction proposal means any offer or proposal for, or any
indication of interest in, an acquisition transaction.
SOLICITATION
Unless the merger agreement is terminated as discussed under "Termination of
the Merger Agreement", Holopak, Foilmark and their subsidiaries will not, nor
will Holopak, Foilmark or any of their subsidiaries, direct any of their
officers, directors, employees, representatives, agents or affiliates to
initiate, solicit or encourage or enter into, or maintain or continue
discussions or negotiate with any person in furtherance of, an acquisition
transaction. This will not prevent the Holopak board or the Foilmark board from
furnishing information to, or entering into discussions or negotiations with,
any person that makes an unsolicited written proposal for an acquisition
transaction, if the Holopak board or the Foilmark board, after consultation with
and based upon the advice of outside legal counsel, determines in good faith
that the failure to engage in those negotiations or discussions, or to disclose
non-public information, would be a breach of the Holopak board's or the Foilmark
board's, fiduciary duties. Before taking any action, Holopak or Foilmark must
deliver written notice to the other within 24 hours after receiving a proposal
that it is taking action. Holopak or Foilmark will promptly deliver
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to the other a copy of any acquisition transaction proposal and promptly notify
the other of any indication that any person is considering an acquisition
transaction proposal or of any request for non-public information relating to
Holopak or Foilmark, or their subsidiaries, by any person that may be
considering making, or has made, an acquisition transaction proposal.
If the merger agreement is terminated by the Foilmark board because of:
- the entry by HoloPak into an agreement with a third party with respect to
an acquisition transaction; or
- the withdrawal by the HoloPak board of its approval or recommendation of
the merger to the HoloPak stockholders; or
- a public announcement by HoloPak that it intends to enter into an
agreement with respect to an acquisition transaction proposal and within
135 days following such termination, Holopak enters into an agreement,
then HoloPak will pay Foilmark $750,000 within five business days of termination
of the merger agreement.
If the merger agreement is terminated by the HoloPak board because of:
- the entry by Foilmark into an agreement with a party with respect to an
acquisition transaction; or
- the withdrawal by the Foilmark board of its approval or recommendation of
the merger to the Foilmark stockholders; or
- a public announcement by Foilmark that it intends to enter into an
agreement with respect to an acquisition transaction proposal and within
135 days following termination, Foilmark enters into an agreement,
then Foilmark will pay HoloPak $750,000 within five business days of termination
of the merger agreement.
EXTENSION, WAIVER AND AMENDMENT OF THE MERGER AGREEMENT
EXTENSION AND WAIVER. At any time prior to the merger, Foilmark and HoloPak
may:
- extend the time for the performance of any of the obligations or other
acts of the other party;
- waive any inaccuracies in the representations and warranties contained in
the merger agreement or in any document delivered under the merger
agreement; and
- waive compliance with any of the agreements or conditions contained in the
merger agreement; except that after any approval of the merger by the
respective stockholders of Foilmark or HoloPak, there may not be, without
further approval of such stockholders, any extension or waiver of the
merger agreement which reduces the amount or changes the form of the
consideration to be delivered to the HoloPak stockholders.
AMENDMENT. The merger agreement may be amended by Foilmark and HoloPak at
any time subject to applicable laws. After any approval of the merger agreement
by the HoloPak stockholders or approval of the issuance by the Foilmark
stockholders, there may not be made any amendment to the merger agreement that
requires further approval by the HoloPak or Foilmark stockholders without their
further approval.
EMPLOYEE BENEFITS AND PLANS
After the merger, the employee or director benefit plans, arrangements or
agreements maintained, or contributed to, as of the date of the merger
agreement, by HoloPak and certain affiliates and by
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Foilmark and certain affiliates will remain in effect with respect to employees
of HoloPak or Foilmark covered by such plans at the time of the merger until
such time as Foilmark may adopt new benefit plans.
STOCK EXCHANGE LISTING
Foilmark has agreed to list the shares of Foilmark common stock to be issued
in the merger on the Nasdaq National Market.
EXPENSES
The merger agreement provides that if the merger is completed, Foilmark will
pay all fees and expenses incurred by each of Foilmark, Foilmark Acquisition and
HoloPak. If the merger is not consummated, each of Foilmark and HoloPak will pay
its own expenses in connection with the merger. If the merger is not completed,
Foilmark and HoloPak will divide equally the payment of all printing costs and
filing fees and registration fees paid to the Securities and Exchange Commission
in connection with the merger.
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<PAGE>
RELATED AGREEMENTS
DESCRIPTION OF FOILMARK AND HOLOPAK SHAREHOLDER AGREEMENTS
FOILMARK SHAREHOLDER AGREEMENT. When Foilmark and HoloPak entered into the
merger agreement, the HoloPak directors and other stockholders of HoloPak
entered into the Foilmark shareholder agreement with Foilmark and Foilmark
Acquisition. Under the Foilmark shareholder agreement:
- Bradford Venture Partners, which owns approximately 22.5% of the
outstanding shares of HoloPak common stock;
- Overseas Private Investor Partners, which owns approximately 22.5% of the
outstanding shares of HoloPak common stock; and
- Brian Kelly, Michael S. Mathews, James L. Rooney, Harvey S. Share and
Robert J. Simon, each of whom are directors of HoloPak and who
collectively own approximately 0.3% of the outstanding shares of HoloPak
common stock;
have agreed to vote all of their shares of HoloPak common stock in favor of the
merger. As a result of the Foilmark shareholder agreement, holders of
approximately 45.3% of the outstanding shares of HoloPak common stock have
agreed to vote in favor of the merger.
HOLOPAK SHAREHOLDER AGREEMENT. When Foilmark and HoloPak entered into the
merger agreement, the Foilmark directors and other stockholders of Foilmark
entered into the HoloPak shareholder agreement with HoloPak. Under the HoloPak
shareholder agreement:
- Martin A. Olsen,
- Frank J. Olsen, Jr.,
- Leonard Mintz,
- Wilhelm Kutsch,
- Carol J. Robie,
- Edward Sullivan,
- Michael Foster,
- Thomas R. Schwarz,
- Kenneth Harris and
- Philip Leibel,
have agreed to vote all of their shares of Foilmark common stock in favor of the
issuance. In addition, these stockholders have also agreed to vote in favor of
each of the amendments to Foilmark's certificate of incorporation. As a result,
holders of approximately 42% of the outstanding shares of Foilmark common stock
have agreed to vote in favor of the issuance.
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MANAGEMENT AND OPERATIONS AFTER THE MERGER
FOILMARK
BOARD OF DIRECTORS. Under the voting agreement, the individuals named below
will comprise the Foilmark Board at the time of the merger and will serve
through the annual meeting in the year shown.
<TABLE>
<CAPTION>
FOILMARK DESIGNEES TERM ENDING HOLOPAK DESIGNEES TERM ENDING
- ------------------------ ------------------ ------------------------ ------------------
<S> <C> <C> <C>
Frank J. Olsen, Jr. 2001 Robert J. Simon 2001
Edward Sullivan 2000 James L. Rooney 2000
Michael Foster 1999 Harvey S. Share 1999
Michael Bertuch 1999 Brian Kelly 2001
Thomas R. Schwarz 2001 Michael S. Mathews 2000
</TABLE>
COMMITTEES. Under the voting agreement, the Foilmark board will establish
certain committees as follows:
- an executive committee which will consist of Robert J. Simon, Michael S.
Mathews, Frank J. Olsen, Jr. and Michael Foster;
- a compensation committee, which will consist of Thomas R. Schwarz, Edward
Sullivan, Michael S. Mathews and Robert J. Simon; and
- an audit committee, which will consist of Michael Foster, Michael Bertuch,
Brian Kelly and Harvey Share.
EXECUTIVE OFFICERS. At the time of the merger, Mr. Simon will become the
non-executive Chairman of the board of directors and Mr. Olsen will remain
President and Chief Executive Officer of Foilmark. Mr. Karmel and Mr. Webb will
be employed by Foilmark as senior executives, and Mr. Rooney will provide
consulting services to Foilmark under a consulting agreement. See "The
Merger--Interests of Certain Persons in the Merger".
Except as discussed above, key staff positions to be held by Foilmark
management and HoloPak management have not yet been finally determined. Before
completion of the merger, decisions may be made with respect to the management
and operations of Foilmark, including the selection of executive officers and
other senior management.
Information about the current Foilmark directors and executive officers can
be found in Foilmark's proxy statement, which is incorporated by reference into
Foilmark's Annual Report on Form 10-K for the year ended December 31, 1997,
which is incorporated here by reference. Information about the current HoloPak
directors and executive officers, some of whom will serve as directors on the
Foilmark board after the merger, can be found in HoloPak's proxy statement,
which is incorporated by reference into HoloPak's annual report on Form 10-K for
the year ended March 31, 1998. Foilmark's and HoloPak's annual reports on Form
10-K are incorporated by reference into this joint proxy statement-- prospectus.
See "Incorporation of Certain Information By Reference".
Foilmark's corporate headquarters will remain in Newburyport, Massachusetts.
FOILMARK ACQUISITION
At the time of the merger, the board of directors and officers of Foilmark
Acquisition will be the same as before the merger. Additional persons may be
elected or appointed after the merger and will serve as the directors of
Foilmark Acquisition after the merger in accordance with its by-laws.
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PRICE RANGE OF COMMON STOCK AND DIVIDENDS
FOILMARK. Foilmark common stock is listed on the Nasdaq National Market and
traded under the symbol FLMK. The following table sets forth, for the periods
indicated, the high and low reported closing sale prices per share of Foilmark
common stock as reported on the Nasdaq Composite Transactions reporting system.
Foilmark common stock
<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
<S> <C> <C>
Quarter Ended March 31, 1996................................................. $ 6.50 $ 3.62
Quarter Ended June 30, 1996.................................................. $ 4.75 $ 3.37
Quarter Ended September 30, 1996............................................. $ 4.50 $ 2.62
Quarter Ended December 31, 1996.............................................. $ 3.37 $ 2.12
Quarter Ended March 31, 1997................................................. $ 3.18 $ 1.87
Quarter Ended June 30, 1997.................................................. $ 4.75 $ 2.81
Quarter Ended September 30, 1997............................................. $ 4.00 $ 2.87
Quarter Ended December 31, 1997.............................................. $ 4.00 $ 2.93
Quarter Ended March 31, 1998................................................. $ 4.50 $ 2.75
Quarter Ended June 30, 1998.................................................. $ 4.12 $ 2.75
Quarter Ended September 30, 1998............................................. $ 3.00 $ 1.62
Quarter Ended December 31, 1998.............................................. $ 2.25 $ 1.31
Quarter Ending March 31, 1999 (through March 19, 1999)....................... $ 2.31 $ 1.50
</TABLE>
Foilmark has never paid dividends on its capital stock. Foilmark intends to
retain earnings to finance future operations and expansion and does not expect
to pay any cash dividends within the foreseeable future. The timing and amount
of future dividends will depend upon earnings, cash requirements, the financial
condition of Foilmark and its subsidiaries, applicable government regulations
and other factors deemed relevant by the Foilmark board. The merger agreement
restricts the cash dividends that may be paid on Foilmark common stock before
completion of the merger. See "The Merger--Conduct of Business Pending the
Merger".
On November 17, 1998, the last full trading day prior to the joint public
announcement by HoloPak and Foilmark that they had entered into the merger
agreement, the closing price of Foilmark common stock as reported on the Nasdaq
National Market was $2.00 per share. On March 19, 1999, the most recent
practicable date prior to the printing of this joint proxy
statement--prospectus, the closing price of Foilmark common stock as reported on
the Nasdaq National Market was $1.56.
HOLOPAK. HoloPak common stock is listed on the Nasdaq National Market and
traded under the symbol HOLO. The following table sets forth the high and low
closing sales prices for HoloPak common stock for the periods indicated, as
reported on the Nasdaq Composite Transactions reporting system.
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HoloPak common stock
<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
<S> <C> <C>
Quarter Ended March 31, 1996................................................. $ 5.25 $ 3.75
Quarter Ended June 30, 1996.................................................. $ 4.63 $ 3.87
Quarter Ended September 30, 1996............................................. $ 4.50 $ 3.37
Quarter Ended December 31, 1996.............................................. $ 3.87 $ 2.87
Quarter Ended March 31, 1997................................................. $ 3.75 $ 2.25
Quarter Ended June 30, 1997.................................................. $ 3.13 $ 2.38
Quarter Ended September 30, 1997............................................. $ 4.19 $ 2.75
Quarter Ended December 31, 1997.............................................. $ 4.13 $ 2.63
Quarter Ended March 31, 1998................................................. $ 3.25 $ 2.69
Quarter Ended June 30, 1998.................................................. $ 3.06 $ 2.13
Quarter Ended September 30, 1998............................................. $ 3.00 $ 1.63
Quarter Ended December 31, 1998.............................................. $ 3.06 $ 1.53
Quarter Ending March 31, 1999 (through March 19, 1999)....................... $ 3.63 $ 2.53
</TABLE>
HoloPak has never paid dividends on its capital stock. HoloPak intends to
retain earnings to finance future operations and expansion and does not expect
to pay any cash dividends within the foreseeable future. The merger agreement
restricts the cash dividends that may be paid on HoloPak common stock before
completion of the merger. See "The Merger--Conduct of Business Pending the
Merger".
On November 17, 1998, the last full trading day prior to the joint public
announcement by HoloPak and Foilmark that they had entered into the merger
agreement, the closing price of HoloPak common stock as reported on the Nasdaq
National Market was $2.63 per share. On March 19, 1999, the most recent
practicable date prior to the printing of this joint proxy
statement--prospectus, the closing price of HoloPak common stock as reported on
the Nasdaq National Market was $2.81.
HOLOPAK STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS PRIOR TO
VOTING ON THE MERGER.
SOURCE OF FUNDS
Foilmark will pay the cash part of the merger consideration, approximately
$4,800,000, plus any cash for fractional shares from available cash, with the
balance from working capital of Foilmark, its line of credit with Fleet National
Bank and proceeds of Massachusetts Industrial Finance Agency Industrial Revenue
Bonds. At the time of the merger, Foilmark will deposit cash in an amount equal
to the cash portion of the merger consideration plus any cash for fractional
shares with ChaseMellon to allow ChaseMellon to effect the cash payment to
HoloPak stockholders.
INFORMATION ABOUT FOILMARK
FOILMARK'S BUSINESS
Foilmark manufactures and markets foils, films, systems and supplies that
are used to mark and/or enhance the customer's items. Foilmark's primary product
is stamping foils used on greeting cards, hardback and paperback book covers,
wine labels, cosmetic and other paper and plastic packaging, household
appliances and electronics, plastic house-wares, automotive components, medical
devices and sporting cards. Foilmark manufactures foils in its Newburyport,
Massachusetts plant. Metallized hot-stamping foils, in their simplest form, are
constructed by applying a number of thin coatings to a carrier, composed of a
thin layer of vaporized aluminum, sandwiched between a top coat and an adhesive
coat. A thin layer of aluminum, or chrome, is added to create a metallic finish.
An image is
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embossed onto the coatings to create diffraction and holographic foils. The
construction of the composite, and the number of layers, varies slightly,
according to the final application.
Hot-stamping, a dry process, used for marking, labeling and decorating a
wide variety of products, uses heat and pressure to apply a design or lettering
to a flat, contoured or cylindrical shaped surface. The coatings may consist of
a single color, such as metallized gold, used for embossed lettering, or may
include complex designs, including patterns and holographic designs. The coated
side of the foil is placed against the surface to be stamped, and a die is
pressed against the other side to affix the design, and if desired, to give
texture to the design. The process requires a stamping press, stamping die or
roller, tooling for supporting or locating the part to be marked or decorated,
and stamping foil.
Foilmark also manufactures pad printing and silk screening equipment and
related supplies. Pad printing is a marking and enhancement process, in which
ink decoration is applied to a multitude of products and packaging. The pad
printing method of product identification is used extensively in the medical
device, sporting goods, appliance, advertising specialty, automotive, toy,
optical apparatus, computer equipment and components industries. Foilmark's
hot-stamp foil product line, holographic product line and pad printing
machinery, tooling and dies product line accounted for approximately 72%, 6% and
22%, respectively, of its sales for the fiscal year ended December 31, 1998.
MANAGEMENT AND ADDITIONAL INFORMATION
Some information relating to executive compensation, various benefit plans,
stock options, voting securities and the principal holders of Foilmark, certain
relationships and related transactions and other related matters as to Foilmark
is incorporated by reference or set forth in Foilmark's Annual Report on Form
10-K for the year ended December 31, 1997, incorporated in this joint proxy
statement-prospectus by reference. Stockholders desiring copies of such
documents may contact Foilmark at its address or telephone number indicated
under "Incorporation of Certain Information by Reference".
On December 21, 1998, Leonard Mintz resigned as a director and Vice
President of Foilmark. At that time, Mr. Mintz:
- consented to the grant of registration rights to Bradford Associates;
- agreed to the termination of his 1992 employment agreement with Foilmark;
and
- entered into a non-competition agreement with Foilmark expiring on
December 1, 2003.
Under the non-competition agreement, Foilmark agreed to pay Mr. Mintz:
- $14,886.50 per month for 18 months commencing January 1, 1999;
- $5,762.52 on July 1, 2000;
- $4,167 per month commencing January 1, 1999, through December 1, 2003; and
- other incidental health and related benefits.
The compensation payable to Mr. Mintz under the non-competition agreement is
substantially the same as that under Mr. Mintz's employment agreement.
INFORMATION ABOUT HOLOPAK
HOLOPAK'S BUSINESS
HoloPak, through its principal operating subsidiaries, Transfer Print and
Alubec, manufactures and distributes hot-stamp foils in the United States, and
manufactures laminated foil and direct metallized paper in Canada. Hot-stamp
foil is primarily used to decorate or label a wide variety of products such as
greeting cards, paperback book covers, cosmetics, other paper and plastic
packaging, appliances and sporting goods. Laminated foil paper is used in a
variety of consumer packaging applications. HoloPak services over 1,300
customers. HoloPak also produces holographic foil, which is a specialized type
of hot-stamp foil that is embossed with a three-dimensional image called a
hologram.
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Hot-stamping is the term that describes a decorating process performed by
transferring a coating from a film to the surface of a product by simultaneously
stamping it with heat and pressure. HoloPak manufactures the specialized foils
used for hot-stamping by coating polyester film in a multi-step process. These
foils are produced in a wide range of colors, patterns and surface finishes
designed to meet specific customer requirements. HoloPak supplies foils to its
customers who then hot stamp it to their products. In addition, HoloPak produces
holographic foil by embossing a hologram on technologically advanced base foils
specially created for this application. Holograms, which are difficult to
duplicate, make holographic foil useful as a security device for credit cards,
drivers licenses, collectible cards, checks, event tickets and other items for
which counterfeiting is a problem. The distinctive appearance of holograms and
holographic patterns also makes this type of foil appealing as a device to
increase the visibility of consumer packaging.
HoloPak was organized in 1989 to acquire Transfer Print. Although HoloPak
was organized in 1989, the business conducted by Transfer Print has been in
continuous operation since 1978. On September 27, 1991, HoloPak completed an
initial public offering in which HoloPak sold 800,000 shares of HoloPak common
stock, and some stockholders of HoloPak sold 350,000 shares of HoloPak common
stock.
On March 17, 1993, HoloPak acquired 100% of the outstanding shares of Alubec
for $5.2 million in cash and 223,000 shares of HoloPak common stock. Alubec
manufactures laminated foil paper and direct-metallized paper.
In the fiscal year ended March 31, 1998, HoloPak had two major customers
that each accounted for over 10% of HoloPak's net sales. Net sales to these two
major customers amounted to $4,201,000, or 11.1%, to Hallmark Cards and
$3,853,000, or 10.2%, to Data Card Corp.
HoloPak's executive offices are located at 9 Cotters Lane, East Brunswick,
New Jersey, 08816, and its telephone number is (732) 238-2883.
MANAGEMENT AND ADDITIONAL INFORMATION
Some information relating to executive compensation, various benefit plans,
stock options, voting securities and the principal holders of HoloPak, certain
relationships and related transactions, and other related matters as to HoloPak
is incorporated by reference or set forth in HoloPak's Annual Report on Form
10-K for the year ended March 31, 1998, incorporated herein by reference.
Stockholders desiring copies of such documents may contact HoloPak at its
address or telephone number indicated under "Incorporation of Certain
Information by Reference".
FOILMARK CAPITAL STOCK AND COMPARISON
OF STOCKHOLDER RIGHTS
As a result of the merger, HoloPak stockholders will become Foilmark
stockholders. The rights of Foilmark stockholders are governed by Delaware law
and Foilmark's certificate and by-laws.
The following is a description of Foilmark capital stock, including the
Foilmark common stock to be issued in the merger, reflecting the anticipated
state of affairs at the time of the merger. The following is also a summary of
the material differences between the rights of Foilmark stockholders and HoloPak
stockholders.
DESCRIPTION OF FOILMARK CAPITAL STOCK
AUTHORIZED CAPITAL STOCK. At the time of the merger, the authorized capital
stock of Foilmark will consist of 15,000,000 shares of Foilmark common stock, if
the amendment to Foilmark's certificate of incorporation to increase the
authorized share capital is adopted, and 500,000 shares of preferred stock. If
the amendment to Foilmark's certificate of incorporation to increase the
authorized share capital is not adopted by the Foilmark stockholders, the
authorized capital stock of Foilmark at the time of the merger will consist of
10,000,000 shares of Foilmark common stock and 500,000 of Foilmark preferred
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stock. On the Foilmark record date, 4,183,700 shares of Foilmark common stock
were outstanding. No shares of preferred stock were outstanding.
FOILMARK COMMON STOCK. The outstanding shares of Foilmark common stock are
fully paid and nonassessable. ChaseMellon is the transfer agent and registrar
for the shares of Foilmark common stock.
VOTING. Each share of Foilmark common stock entitles the holder to one vote
on all matters submitted to a vote of stockholders. Foilmark stockholders have
cumulative voting rights under Foilmark's certificate. This means that they have
the right to vote the number of shares owned by them multiplied by the number of
directors to be elected, and may allocate the total number of votes at their
discretion to one or more of the directors to be elected at any given time. If
the amendment to Foilmark's certificate of incorporation to remove article nine,
the cumulative voting provision, is adopted, Foilmark stockholders will no
longer have cumulative rights to elect directors of the Foilmark board.
DIVIDENDS. Foilmark stockholders are entitled to receive dividends, if any,
that the Foilmark board may declare out of legally available funds, subject to
restrictions that may be imposed under financing agreements and other contracts
entered into by Foilmark.
ASSETS UPON DISSOLUTION. Upon the liquidation, dissolution or winding up of
Foilmark, Foilmark stockholders are entitled to receive the assets of Foilmark
available after the payment of all debts and other liabilities.
NO PREEMPTIVE OR CONVERSION RIGHTS. Foilmark stockholders do not have any
preemptive or subscription rights to buy additional Foilmark securities.
Foilmark stockholders also do not have any rights to convert their Foilmark
common stock into other securities of Foilmark. In addition, Foilmark
stockholders do not have any right to have their shares redeemed by Foilmark.
COMPARISON OF RIGHTS OF FOILMARK STOCKHOLDERS AND HOLOPAK STOCKHOLDERS
FOILMARK'S CERTIFICATE OF INCORPORATION AND BY-LAWS AT THE TIME OF THE
MERGER WILL BE THE SAME AS THOSE OF FOILMARK TODAY PLUS, THE AMENDMENTS
DESCRIBED UNDER "AMENDMENTS TO THE FOILMARK SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION" IF THOSE AMENDMENTS ARE APPROVED BY THE FOILMARK
STOCKHOLDERS. THE RIGHTS OF FOILMARK STOCKHOLDERS ARE CURRENTLY GOVERNED BY
DELAWARE LAW AND FOILMARK'S CERTIFICATE OF INCORPORATION AND BY-LAWS, WHILE THE
RIGHTS OF HOLOPAK STOCKHOLDERS ARE GOVERNED BY DELAWARE LAW AND HOLOPAK'S
CERTIFICATE OF INCORPORATION AND BY-LAWS. IN MOST RESPECTS, THE RIGHTS OF
HOLOPAK STOCKHOLDERS ARE SIMILAR TO THOSE OF FOILMARK STOCKHOLDERS. THE
FOLLOWING IS A SUMMARY OF THE MATERIAL DIFFERENCES BETWEEN FOILMARK'S
CERTIFICATE OF INCORPORATION AND BY-LAWS AND HOLOPAK'S CERTIFICATE OF
INCORPORATION AND THE BY-LAWS. THIS SUMMARY IS NOT A COMPLETE DISCUSSION OF, AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO, FOILMARK'S CERTIFICATE OF
INCORPORATION AND BY-LAWS, HOLOPAK'S CERTIFICATE OF INCORPORATION AND BY-LAWS
AND THE DELAWARE LAW.
CAPITAL STOCK. Foilmark's certificate provides that the authorized capital
stock of Foilmark consists of 10,000,000 shares of Foilmark common stock and
500,000 shares of Foilmark preferred stock. HoloPak's certificate provides that
the authorized capital stock of HoloPak consists of 10,000,000 shares of HoloPak
common stock, 2,000,000 shares of Class A common stock, 700,000 shares of
non-voting Class B common stock and 10,000,000 shares of preferred stock.
At or prior to the time of the merger, if approved by Foilmark stockholders
Foilmark's certificate of incorporation will be amended so that the authorized
capital stock of Foilmark will consist of 15,000,000 shares of Foilmark common
stock. See "Amendments to Foilmark's Second Amended and Restated Certificate of
Incorporation".
DIRECTORS. Foilmark's by-laws provide for the Foilmark board to consist of
not less than one or more than twelve members, with the exact number to be
designated by resolution of the board. Only
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persons nominated in accordance with Foilmark's by-laws may be elected to the
Foilmark board. Foilmark's by-laws provide that vacancies on the Foilmark board
may be filled by the affirmative vote of a majority of the remaining directors
then in office, though less than a quorum. Under the Foilmark's by-laws,
Foilmark stockholders have cumulative voting rights. If the amendment to
Foilmark's certificate of incorporation to remove article nine, the cumulative
voting provision, is adopted, Foilmark stockholders will no longer have
cumulative rights to elect directors of the Foilmark board.
The Foilmark board is a classified board, divided into three classes, each
class consisting of approximately one third of the whole number of the board of
directors. Each class is elected for a term of one, two or three years.
The HoloPak by-laws provide for the HoloPak board to consist of not less
than one or more than twelve members, with the exact number to be fixed from
time to time by a by-law adopted by the HoloPak stockholders or by the HoloPak
board. The HoloPak by-laws provide that vacancies and newly created
directorships resulting from an increase in the authorized number of directors
on the HoloPak board may be filled by the affirmative vote of a majority of the
remaining directors then in office, though less than a quorum, or by a sole
remaining director, and the HoloPak stockholders may elect a director at any
time to fill any vacancy not filled by the HoloPak board. The HoloPak board does
not have staggered terms.
RIGHT TO CALL SPECIAL MEETINGS OF STOCKHOLDERS. The Foilmark by-laws
provide that special meetings of the Foilmark stockholders may be called by the
chairman of the Foilmark board, the President of Foilmark, a majority of the
Foilmark board or by the President or Secretary at the request of the holders of
not less than 25% of all the outstanding shares of Foilmark entitled to vote at
the meeting.
The HoloPak by-laws provide that special meetings of stockholders of HoloPak
may be called by a majority of the HoloPak board, the chairman of the board, the
President at the request, in writing, of stockholders owning a majority of the
amount of the entire capital stock of HoloPak outstanding and entitled to vote.
COMMITTEES. Foilmark has established four standing committees of the Board
of Directors:
- the executive committee;
- the compensation committee;
- the audit committee; and
- the stock option committee.
After the merger, the voting agreement will set forth the identity and
composition of the committees of the board. For a more detailed description of
the voting agreement and the committees of the Foilmark board after the merger,
see "The Merger Agreement--Interests of Certain Persons in the Merger".
CUMULATIVE VOTING. Foilmark stockholders have cumulative voting rights
under Foilmark's certificate. If the amendment to Foilmark's certificate to
remove article nine, the cumulative voting provision, is adopted, then Foilmark
stockholders will no longer have cumulative voting rights to elect directors.
See "Amendments to Foilmark's Second Amended and Restated Certificate of
Incorporation--Amendment to Eliminate Cumulative Voting.
Holders of HoloPak common stock do not have cumulative voting rights.
FISCAL YEAR. Foilmark' fiscal year end is December 31. HoloPak's fiscal
year end is March 31.
STOCKHOLDER RIGHTS PLAN. Neither Foilmark nor HoloPak has a stockholder
rights plan.
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AMENDMENTS TO FOILMARK'S SECOND AMENDED
AND RESTATED CERTIFICATE OF INCORPORATION
AMENDMENT TO FOILMARK'S CERTIFICATE OF INCORPORATION TO INCREASE AUTHORIZED
SHARES
The merger agreement provides that, immediately before the merger,
Foilmark's certificate will be amended in accordance with Delaware law to
increase the number of authorized shares of Foilmark common stock from
10,000,000 to 15,000,000.
REASONS FOR AND EFFECT OF AMENDMENT TO INCREASE AUTHORIZED SHARES
On Foilmark's record date, there were 4,183,700 shares of Foilmark common
stock outstanding and an additional 5,817,300 shares of Foilmark common stock
were reserved for issuance. Approximately 3,715,935 shares of Foilmark common
stock will be issued in the merger and approximately 125,000 additional shares
of Foilmark common stock will be reserved for the granting of options to
purchase Foilmark common stock to some of the officers and employees of Foilmark
and HoloPak. After the merger, approximately 2,000,000 shares of Foilmark common
stock will be available for issuance in the absence of any increase in the
authorized capital.
The increase in authorized shares of Foilmark common stock will provide
additional shares for general corporate purposes, including stock dividends and
stock splits, raising additional capital, issuance under employee and director
stock plans and possible future acquisitions. There are, however, no current
plans, understandings or arrangements for issuing a material number of
additional shares of Foilmark common stock from the additional shares proposed
to be authorized pursuant to this amendment to Foilmark's certificate of
incorporation.
The issuance of shares of Foilmark common stock in the merger, including the
additional shares that would be authorized if this amendment is adopted, may
dilute the present equity ownership position of current holders of Foilmark
common stock. The issuance of additional Foilmark capital stock may be made
without stockholder approval, unless otherwise required by applicable laws or
stock exchange regulations. This amendment might also have the effect of
discouraging an attempt by another person or entity, through the acquisition of
a substantial number of shares of Foilmark common stock, to acquire control of
Foilmark with a view to consummating a merger, sale of all or any part of
Foilmark's assets, or a similar transaction, because the issuance of new shares
could be used to dilute the stock ownership of such person or entity.
VOTE REQUIRED
Adoption of this amendment requires the affirmative vote of the holders of a
majority of the shares of Foilmark common stock outstanding on Foilmark's record
date. Abstentions and brokers voting without stockholder direction will have the
same effect as votes against such adoption. See "Foilmark Special
Meeting--Record Date and Voting Rights". If this amendment is approved, Foilmark
intends to file with the Secretary of State of the State of Delaware a
certificate of amendment to Foilmark's certificate of incorporation relating to
the increase in authorized shares at the time of the merger. APPROVAL OF THE
ISSUANCE IS NOT CONDITIONED UPON ADOPTION OF THIS AMENDMENT. Foilmark does not
intend to effect this amendment if the merger is not completed.
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AMENDMENT TO FOILMARK CERTIFICATE OF INCORPORATION TO REMOVE PROVISIONS
REQUIRING 80% VOTE
Foilmark's certificate of incorporation is proposed to be amended to remove
article eight. Article eight of Foilmark's certificate of incorporation concerns
a voting provision which requires the approval of 80% of the outstanding shares
of Foilmark common stock with respect to:
- the entry by Foilmark into an agreement of merger or consolidation with a
substantial shareholder whereby Foilmark would merge into such substantial
shareholder;
- the sale or other disposition of all or substantially all of Foilmark's
assets;
- amendment of some of the provisions of Foilmark's certificate, including
articles eight and nine; and
- issuance of shares of Foilmark common stock to a substantial shareholder.
Foilmark's existing certificate of incorporation, which includes article
eight, is attached to this joint proxy statement--prospectus as Appendix D.
REASONS FOR AND EFFECT OF AMENDMENT TO REMOVE PROVISIONS REQUIRING 80% VOTE
Article eight was intended to create a hurdle to any transaction between
Foilmark and a holder of 10% or more of the outstanding shares of Foilmark
common stock. The desired result was to discourage a potential bidder from
acquiring Foilmark, or control over Foilmark, in a transaction that could be
considered by the Foilmark board not in the best interests of the stockholders
of Foilmark, by requiring the approval of the holders of at least 80% of the
outstanding shares of Foilmark common stock rather than a simple majority
approval. However, since the time of adoption of Foilmark's certificate of
incorporation containing article eight, Foilmark has instituted a staggered
board, which adversely affects a hostile bidder's ability to obtain control of
the board in a single election. Additionally, a section of Delaware law, which
Foilmark has opted to be governed by, provides anti-takeover protection by
restricting the Foilmark board's ability to enter into transactions with
substantial stockholders under specified circumstances. In addition, in the
merger, some of the officers and directors of Foilmark and HoloPak will enter
into the voting agreement, which will generally control identity and composition
of the Foilmark board for at least five years after the merger. See "The
Merger--Interest of Certain Persons in the Merger". The Foilmark board may also
decide to pursue transactions of a nature identified in article eight at some
point in the future although at the present time it has no defininte plans to do
so. The removal of article eight will allow the Foilmark board greater
flexibility in considering these transactions. The overall effect of both the
requirement of a 80% approval to the entry by Foilmark into a transaction with a
substantial stockholder; and a staggered board scheme is to deter and defend
against unwanted takeovers of control of Foilmark. Given the above, as well as
the increased market capitalization that Foilmark will gain as a result of the
issuance of Foilmark common stock in connection with the merger, the board views
article eight as superfluous and a potential impediment to a future transaction
which the board may support and which may be in the best interests of Foilmark
stockholders.
VOTE REQUIRED
The adoption of this amendment requires the affirmative vote of the holders
of at least 80% of the outstanding shares of Foilmark common stock entitled to
vote at the Foilmark special meeting. Abstentions and brokers voting without
stockholder direction will have the same effect as votes against such adoption.
See "Foilmark Special Meeting--Record Date and Voting Rights". Assuming that the
Foilmark stockholders vote to adopt this amendment, Foilmark intends to file a
certificate of incorporation of amendment to its certificate to remove article
eight. APPROVAL OF THE ISSUANCE IS NOT CONDITIONED UPON ADOPTION OF THIS
AMENDMENT. Even if the merger is not completed, Foilmark intends to effect this
amendment if adopted.
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AMENDMENT TO FOILMARK CERTIFICATE OF INCORPORATION TO ELIMINATE CUMULATIVE
VOTING
The Foilmark certificate of incorporation is proposed to be amended so that
article nine be removed. Article nine allows Foilmark stockholders to vote
cumulatively for the election of directors. Foilmark's existing certificate of
incorporation, which includes article nine, is attached to this joint proxy
statement-prospectus as Appendix D.
REASONS FOR AND EFFECT OF AMENDMENT TO ELIMINATE CUMULATIVE VOTING
The Foilmark board of directors voted unanimously to adopt this amendment
because Foilmark has a staggered board scheme. A staggered board has an
anti-takeover effect because less than all the directors are up for election at
one time, making it impossible for a hostile bidder to elect a majority of
directors on a board in a single contested election. Cumulative voting has an
anti-takeover effect because it provides a holder of a minority block of shares
the right to elect a particular director or directors. Both cumulative voting
and a staggered board have an anti-takeover effect. However, a staggered board
lessens the effect of cumulative voting as it reduces the number of directors to
be elected at any given annual stockholder meeting and therefore requires a
larger number of shares to be cumulated in order to elect a director. Cumulative
voting allows a stockholder as many votes as the number of votes which a
stockholder would be entitled to cast for the election of directors multiplied
by the number of directors to be elected, and a stockholder may cast all votes
for one candidate for director or distribute the votes among all directors to be
elected, thus allowing a significant minority stockholder the ability to elect
one or more directors under certain circumstances. With Foilmark's staggered
board, only a stockholder owning at least 33% of Foilmark's outstanding shares,
or 25% in a year in which four directors are to be elected, would have the
ability to elect one of three, or four, directors up for election during any
given year. The board decided that, because the impact of cumulative voting is
offset by a staggered board and because the staggered board and cumulative
voting are duplicative as protective devices, cumulative voting was not useful
and should be removed.
The ability of the stockholders who are parties to the voting agreement to
control the composition of the board of Foilmark following the merger will
depend on the actual number of shares voted in any election and the number of
directors to be elected at any given time whether or not a cumulative voting
provision of the Foilmark certificate of incorporation remians in effect.
However, the likelihood that the parties to the voting agreement will actually
control the election of Foilmark directors following the merger will be
increased if cumulative voting is eliminated.
VOTE REQUIRED
The adoption of this amendment to Foilmark's certificate of incorporation
requires the affirmative vote of 80% of the outstanding shares of Foilmark
common stock entitled to vote at the Foilmark special meeting. Abstentions and
brokers voting without stockholder direction will count as votes against such
adoption. See "Foilmark Special Meeting--Record Date and Voting Rights".
Assuming that the Foilmark stockholders vote to adopt this amendment, Foilmark
intends to file a certificate of amendment to Foilmark's certificate of
incorporation to remove article nine. APPROVAL OF THE ISSUANCE IS NOT
CONDITIONED UPON ADOPTION OF THIS AMENDMENT. Even if the merger is not
completed, Foilmark intends to effect this amendment.
RECOMMENDATION OF THE BOARD
THE FOILMARK BOARD HAS UNANIMOUSLY APPROVED THE AMENDMENTS TO FOILMARK'S
CERTIFICATE OF INCORPORATION AND RECOMMENDS THAT FOILMARK STOCKHOLDERS VOTE FOR
ADOPTION OF THE AMENDMENTS. Some members of the Foilmark board have interests in
the merger that are different from and in addition to the interests of Foilmark
stockholders. See "The Merger--Interests of Certain Persons in the Merger."
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DISSENTERS' APPRAISAL RIGHTS
FOILMARK. Foilmark stockholders are not entitled to demand appraisal rights
under Delaware law in connection with the merger. See "Foilmark Capital Stock
and Comparison of Stockholder Rights-- Comparison of Rights of Foilmark
Stockholders and HoloPak Stockholders".
HOLOPAK. HoloPak stockholders are entitled to demand appraisal rights under
section 262 of Delaware law in connection with the merger if they comply with
the statutory procedures summarized in this document.
Only a holder of record of HoloPak common stock is entitled to assert
appraisal rights for the shares registered in his name. A person having a
beneficial interest in shares of HoloPak common stock held of record in the name
of another person, such as a broker or nominee, must act promptly to cause the
record holder to follow the steps summarized below properly and in a timely
manner to properly demand appraisal rights.
THE FOLLOWING SUMMARY IS A DISCUSSION OF THE MATERIAL TERMS OF SECTION 262,
HOWEVER, IT IS NOT A COMPLETE STATEMENT OF THE LAW PERTAINING TO APPRAISAL
RIGHTS UNDER DELAWARE LAW AND IS QUALIFIED IN ITS ENTIRETY BY THE FULL TEXT OF
SECTION 262 WHICH IS REPRINTED IN ITS ENTIRETY AS APPENDIX G TO THIS JOINT PROXY
STATEMENT--PROSPECTUS. ALL REFERENCES IN SECTION 262 AND IN THIS SUMMARY TO A
STOCKHOLDER OR HOLDER ARE TO THE RECORD HOLDER OF THE SHARES OF HOLOPAK COMMON
STOCK AS TO WHICH APPRAISAL RIGHTS ARE ASSERTED.
Under Delaware law, holders of shares of HoloPak common stock who follow the
procedures set forth in section 262 will be entitled to have their shares
appraised by the Delaware Chancery Court and to receive payment in cash of the
fair value of such shares, exclusive of any element of value arising from the
accomplishment or expectation of the merger, together with a fair rate of
interest, if any, as determined by the court.
Under section 262, where a proposed merger is to be submitted for approval
at a meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, must notify each of its stockholders who was a stockholder on the
record date of the meeting, that appraisal rights are so available, and must
include in that notice a copy of section 262. This joint proxy
statement--prospectus constitutes such notice to the holders of shares. Any
stockholder who wishes to exercise appraisal rights or who wishes to preserve
his right to do so should review the following discussion and Appendix G
carefully, because failure to timely and properly comply with the procedures
specified will result in the loss of appraisal rights under Delaware law.
A HOLOPAK STOCKHOLDER WISHING TO EXERCISE APPRAISAL RIGHTS MUST DELIVER TO
HOLOPAK, BEFORE THE VOTE ON THE MERGER, A WRITTEN DEMAND FOR APPRAISAL OF HIS
SHARES AND CANNOT VOTE FOR THE MERGER. A PROXY OR VOTE AGAINST THE MERGER
AGREEMENT WILL NOT CONSTITUTE A DEMAND. A HOLOPAK STOCKHOLDER WISHING TO
EXERCISE APPRAISAL RIGHTS MUST BE THE RECORD HOLDER OF HIS SHARES ON THE DATE
THE WRITTEN DEMAND FOR APPRAISAL IS MADE AND MUST CONTINUE TO HOLD HIS SHARES OF
RECORD THROUGH THE DATE OF THE MERGER. ACCORDINGLY, A HOLOPAK STOCKHOLDER WHO IS
THE RECORD HOLDER OF SHARES ON THE DATE THE WRITTEN DEMAND FOR APPRAISAL IS
MADE, BUT WHO THEREAFTER TRANSFERS SUCH SHARES BEFORE THE MERGER, WILL LOSE ANY
RIGHT TO APPRAISAL AS TO THOSE SHARES.
A demand for appraisal should be executed by or on behalf of the holder of
record, fully and correctly, as such holder's name appears on such holder's
stock certificates. If the shares are owned of record in a fiduciary capacity,
such as by a trustee, guardian or custodian, execution of the demand should be
made in that capacity, and if the shares are owned of record by more than one
person as in a joint tenancy or tenancy in common, the demand should be executed
by or on behalf of all joint owners. An authorized agent, including one or more
joint owners, may execute a demand for appraisal on behalf of a holder of
record. The agent must identify the record owner or owners and expressly
disclose the fact that, in executing the demand, the agent is agent for such
owner or owners.
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A record holder such as a broker who holds shares as nominee for several
beneficial owners may exercise appraisal rights with respect to the shares held
for one or more beneficial owners while not exercising such rights with respect
to the shares held for other beneficial owners. In such case, the written demand
should set forth the number of shares as to which appraisal is sought. When no
number of shares is expressly mentioned the demand will be presumed to cover all
shares held in the name of the record owner. If a stockholder holds shares
through a broker who in turn holds the shares through a central securities
depository nominee, such as Cede & Co., a demand for appraisal of shares must be
made by or on behalf of the depository nominee and must identify the depository
nominee as record holder. Stockholders who hold their shares in brokerage
accounts or other nominee forms and who wish to exercise appraisal rights are
urged to consult with their brokers to determine the appropriate procedures for
the making of a demand for appraisal by such a nominee.
ALL WRITTEN DEMANDS FOR APPRAISAL SHOULD BE SENT OR DELIVERED TO HOLOPAK, AT
9 COTTERS LANE, EAST BRUNSWICK, NEW JERSEY 08816, ATTENTION: ARTHUR KARMEL,
SECRETARY.
Within 10 days after the merger, Foilmark will notify each stockholder who
has properly asserted appraisal rights under section 262 and has not voted in
favor of or consented to the merger.
Within 120 days after the merger, but not after that time, Foilmark or any
stockholder who has complied with the statutory requirements summarized above
may file a petition in the Delaware Chancery Court demanding a determination of
the fair value of the shares. Foilmark is under no obligation to and has no
present intention to file a petition with respect to the appraisal of the fair
value of the shares. Accordingly, it is the obligation of the stockholders to
initiate all necessary action to demand their appraisal rights within the time
prescribed in section 262.
Within 120 days after the merger, any stockholder who has complied with the
requirements for exercise of appraisal rights will be entitled, upon written
request, to receive from Foilmark a statement setting forth the aggregate number
of shares with respect to which demands for appraisal have been received and the
aggregate number of holders of those shares. These statements must be mailed
within ten days after a written request therefor has been received by Foilmark.
If a petition for an appraisal is filed in time, at the hearing on such
petition the Delaware Court will determine which stockholders are entitled to
appraisal rights. The Delaware Court may require the stockholders who have
demanded an appraisal for their shares and who hold stock represented by
certificates to submit their stock certificates to the Register in Chancery for
notation on the shares of the appraisal proceedings. If any stockholder fails to
comply with this direction, the Delaware Court may dismiss the proceedings as to
such stockholder.
If a petition for an appraisal is filed in time, after a hearing on such
petition, the Delaware Chancery Court will determine the stockholders entitled
to appraisal rights and will appraise the fair value of their shares, exclusive
of any element of value arising from the accomplishment or expectation of the
merger, together with a fair rate of interest, if any, to be paid upon the
amount determined to be the fair value. Stockholders considering seeking
appraisal should be aware that the fair value of their shares as determined
under section 262 could be more than, the same as or less than the value of the
consideration they would receive in the merger if they did not seek appraisal of
their shares. Investment banking opinions as to fairness from a financial point
of view are not necessarily opinions as to fair value under section 262.
The Delaware Chancery Court will determine the amount of interest, if any,
to be paid upon the amounts to be received by persons whose shares have been
appraised. The costs of the action may be determined by the Delaware Chancery
Court and taxed upon the parties as the Delaware Chancery Court deems equitable.
Upon application of a stockholder, the Delaware Chancery Court may also order
that all or a portion of the expenses incurred by any stockholder in connection
with an appraisal, including, reasonable attorneys' fees and the fees and
expenses of experts used in the appraisal proceeding, be charged pro rata
against the value of all of the shares entitled to appraisal.
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Any HoloPak stockholder who has demanded an appraisal in compliance with
section 262 will not, after the merger, be entitled to vote his shares for any
purpose or be entitled to the payment or dividends or other distributions on
those shares except dividends or other distributions payable to holders of
record of shares as of a record date prior to the merger.
If any HoloPak stockholder who properly demands appraisal of his shares
under section 262 fails to demand, or withdraws or loses, appraisal rights, as
provided under Delaware law the shares of such stockholder will be converted to
the right to receive the merger consideration. A stockholder will lose or
withdraw, his appraisal rights if no petition for appraisal is filed within 120
days after the merger, or if the stockholder withdraws his demand for appraisal.
Any withdrawal attempted more than 60 days after such date will require the
written approval of Foilmark. No appraisal proceeding pending in the Court of
Chancery will be dismissed without the approval of the Court.
FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTION 262 FOR DEMANDING APPRAISAL
RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS, IN WHICH EVENT A STOCKHOLDER WILL
BE ENTITLED TO RECEIVE THE MERGER CONSIDERATION. IN VIEW OF THE COMPLEXITIES OF
THE FOREGOING PROVISIONS OF DELAWARE LAW, HOLOPAK STOCKHOLDERS WHO ARE
CONSIDERING DISSENTING FROM THE MERGER MAY WISH TO CONSULT LEGAL COUNSEL.
LEGAL MATTERS
The validity of the Foilmark common stock to be issued in connection with
the merger will be passed upon by Hinckley, Allen & Snyder. Certain matters with
respect to the merger will be passed upon by Battle Fowler.
EXPERTS
The consolidated financial statements and financial statement schedule of
Foilmark and its subsidiaries incorporated in this joint proxy
statement--prospectus by reference to the Foilmark annual report on Form 10-K
for the year ended December 31, 1997 and Foilmark's current report on Form 8-K
dated March 1, 1999 for the year ended December 31, 1998 have been so
incorporated by reference in this joint proxy statement--prospectus in reliance
on the report of KPMG, independent auditors, given upon the authority of said
firm as experts in accounting and auditing.
The consolidated financial statements and the related financial statement
schedule incorporated in this joint proxy statement--prospectus by reference
from HoloPak's Annual Report on Form 10-K for the year ended March 31, 1998 have
been audited by Deloitte & Touche LLP, independent auditors, as stated in their
reports which are incorporated in this joint proxy-statement-prospectus by
reference, and have been so incorporated in reliance upon the reports of such
firm given upon their authority as experts in accounting and auditing.
Representatives of KPMG and Deloitte & Touche LLP, will be present at the
Foilmark special meeting and the HoloPak special meeting. These representatives
will have the opportunity to make a statement if they desire to do so and are
expected to be available to respond to appropriate questions.
STOCKHOLDER PROPOSALS
FOILMARK. Stockholders of Foilmark may submit proposals to be considered
for stockholder action at the 1999 annual meeting of stockholders if they do so
in accordance with applicable regulations of the Securities and Exchange
Commission. Any such proposals must have been received no later than December
10, 1998 in order to be considered for inclusion in Foilmark 1999 proxy
materials for the 1999 annual meeting of stockholders.
HOLOPAK. Due to the merger, HoloPak does not currently expect to hold a
1999 annual meeting of stockholders. If the merger is not completed, and a
meeting is held, any proposals of HoloPak stockholders intended to be presented
at the 1999 annual meeting must be received by the secretary of
69
<PAGE>
HoloPak no later than April 15, 1999 in order to be considered for inclusion in
the HoloPak proxy materials relating to that meeting.
AVAILABLE INFORMATION
Foilmark has filed with the Securities and Exchange Commission a
registration statement under the Securities Act that registers the distribution
to HoloPak stockholders of the shares of Foilmark common stock. The registration
statement, including the attached exhibits and schedules, contains additional
relevant information about Foilmark and Foilmark common stock. The rules and
regulations of the Securities and Exchange Commission allow us to omit some
information included in the registration statement from this joint proxy
statement--prospectus. In addition, Foilmark and HoloPak file reports, proxy
statements and other information with the Securities and Exchange Commission
under the Exchange Act. You may read and copy this information at the following
locations of the Commission:
<TABLE>
<CAPTION>
<S> <C> <C>
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661-2511
</TABLE>
Please call the Securities and Exchange Commission at 1-800-SEC-0330 for
further information on the public reference rooms. You may also obtain copies of
this information by mail from the Public Reference Section of the Securities and
Exchange Commission, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549,
at prescribed rates.
The Securities and Exchange Commission also maintains an Internet world wide
web site that contains reports, proxy statements and other information about
issuers, like Foilmark and HoloPak, who file electronically with the Securities
and Exchange Commission. The address of that site is http://www.sec.gov.
Reports, proxy statements and other information about Foilmark and HoloPak
may be inspected at the offices of the NASD, 1745 K Street, N.W., Washington,
D.C.
70
<PAGE>
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Securities and Exchange Commission allows Foilmark and HoloPak to
incorporate by reference information into this joint proxy
statement--prospectus. This means that Foilmark and HoloPak can disclose
important information to you by referring you to another document filed
separately with the Securities and Exchange Commission. The information
incorporated by reference is considered to be a part of this joint proxy
statement--prospectus, except for any information that is superseded by
information that is included directly in this document.
This joint proxy statement--prospectus incorporates by reference the
documents listed below that Foilmark and HoloPak have previously filed with the
Securities and Exchange Commission. They contain important information about
Foilmark and HoloPak and their financial condition.
The following documents previously filed by Foilmark with the Securities and
Exchange Commission (File No. 000-24234) under the Exchange Act are incorporated
herein by reference:
<TABLE>
<CAPTION>
FOILMARK SEC FILINGS PERIOD
- --------------------------------------------- ---------------------------------------------
<S> <C>
Annual Report on Form 10-K Year ended December 31, 1997
Quarterly Reports on Form 10-Q and Quarter ended March 31, 1998, as filed May
Form 10-Q/A 11, 1998; quarter ended June 30, 1998, as
filed August 14, 1998; quarter ended
September 30, 1998 as filed November 11, 1998
and amended and filed on March 1, 1999
Current Reports on Form 8-K Dated November 17, 1998 and filed on November
25, 1998; dated March 1, 1999 and filed March
3, 1999
Proxy Statement Dated April 9, 1998 for its Annual Meeting of
Stockholders held on May 13, 1998
(incorporated by reference in the Foilmark
10-K)
</TABLE>
The following documents previously filed by HoloPak with the Securities and
Exchange Commission (File No. 001-19453) under the Exchange Act are incorporated
herein by reference:
<TABLE>
<CAPTION>
HOLOPAK SEC FILINGS PERIOD
- --------------------------------------------- ---------------------------------------------
<S> <C>
Annual Report on Form 10-K and Form 10-K/A Year ended March 31, 1998
Quarterly Reports on Form 10-Q and Form Quarter ended June 30, 1998, as filed August
10-Q/A 14, 1998; quarter ended September 30, 1998,
as filed November 13, 1998 and amended and
filed on March 2, 1999; and quarter ended
December 31, 1998, as filed February 12, 1999
Current Report on Form 8-K Dated November 17, 1998 and filed on November
25, 1998
Proxy Statement Dated July 29, 1998 for its Annual Meeting of
Stockholders held on September 25, 1998 (that
has been incorporated by reference in the
HoloPak Form 10-K)
</TABLE>
In addition, all documents filed by Foilmark or HoloPak under the Exchange
Act after the date of this joint proxy statement--prospectus and before the
HoloPak special meeting and the Foilmark special meeting will be deemed to be
incorporated by reference into this joint proxy statement--prospectus and to be
a part of from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference will be deemed to be modified or superseded for
purposes of this joint proxy statement--prospectus to
71
<PAGE>
the extent that a statement contained in the joint proxy statement--prospectus
or in any other subsequently filed document that is or is deemed to be
incorporated by reference in the joint proxy statement--prospectus modifies or
supersedes such previous statement. Any statement so modified or superseded will
not be deemed to constitute a part in the joint proxy statement--prospectus
except as so modified or superseded.
All information contained or incorporated by reference in this joint proxy
statement--prospectus relating to HoloPak and its subsidiaries, has been
supplied by HoloPak, and all such information relating to Foilmark and its
subsidiaries has been supplied by Foilmark.
Foilmark and HoloPak incorporate by reference additional documents that
either company may file with the Securities and Exchange Commission between the
date of this joint proxy statement--prospectus and the dates of the Foilmark
special meeting and the HoloPak special meeting. These documents include
periodic reports, such as Annual Reports on Form 10-K, Quarterly Reports on Form
10-Q and Current Reports on Form 8-K, as well as proxy statements.
You can obtain any of the documents incorporated by reference in this
document through Foilmark or HoloPak, as the case may be, or from the Securities
and Exchange Commission through the Securities and Exchange Commission's web
site at the address described above. Documents incorporated by reference are
available from the companies without charge, excluding any exhibits to those
documents unless the exhibit is specifically incorporated by reference as an
exhibit in this joint proxy statement--prospectus. You can obtain documents
incorporated by reference in this joint proxy statement--prospectus by
requesting them in writing or by telephone from the appropriate company at the
following addresses:
<TABLE>
<CAPTION>
FOILMARK HOLOPAK
<S> <C>
Investor/Public Relations Investor/Public Relations
5 Malcom Hoyt Drive 9 Cotters Lane
Newburyport, Massachusetts 01950 East Brunswick, New Jersey 08816
(978) 462-7300 (732) 238-2883
</TABLE>
If you request any incorporated documents from us, we will mail them to you
by first class mail, or another equally prompt means, within one business day
after we receive your request.
We have not authorized anyone to give any information or make any
representation about the merger or our companies that is different from, or in
addition to, that contained in this joint proxy statement--prospectus or in any
of the materials that we've incorporated into this document. Therefore, if
anyone does give you information of this sort, you should not rely on it. If you
are in a jurisdiction where offers to exchange or sell, or solicitations of
offers to exchange or purchase, the securities offered by this document or the
solicitation of proxies is unlawful, or if you are a person to whom it is
unlawful to direct these types of activities, then the offer presented in this
document does not extend to you. The information contained in this document
speaks only as of the date of this document unless the information specifically
indicates that another date applies.
72
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined financial statements assume the
merger between Foilmark and HoloPak is accounted for as a purchase. The pro
forma combined statements of operations combine Foilmark's historical results
for the fiscal year ended December 31, 1998 with the historical results of
HoloPak for the twelve month period ended December 31, 1998. The unaudited pro
forma combined statements of operations assume that the merger had been
consummated at the beginning of the earliest period presented.
The unaudited pro forma combined balance sheet combines Foilmark's December
31, 1998 consolidated balance sheet with HoloPak's December 31, 1998
consolidated balance sheet and assumes the merger was consummated on December
31, 1998. The merger, which is expected to be completed in the first half of
1999, provides for the exchange of 1.11 shares of Foilmark common stock plus
$1.42 for each outstanding share of HoloPak common stock.
The allocation of the purchase price of HoloPak will be revised when
additional information concerning asset and liability valuations is obtained.
Adjustments will be made during the allocation period based on detailed reviews
of fair values of assets acquired and liabilities assumed and could result in a
change to the preliminary purchase price allocation.
The pro forma financial statements are based on and derived from, and should
be read in conjunction with:
- the historical consolidated financial statements and the related notes of
Foilmark, which are incorporated by reference into this joint proxy
statement--prospectus, and
- the historical consolidated financial statements and the related notes of
HoloPak, which are incorporated by reference into this joint proxy
statement--prospectus.
See "Incorporation of Certain Information by Reference".
The unaudited pro forma statements are presented for comparative purposes
only and are not necessarily indicative of the future financial position or
results of operations of the combined company or of the combined financial
position or the results of operations that would have been realized had the
merger been consummated during the period or as of the dates for which the pro
forma statements are presented.
73
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOILMARK, INC. HOLOPAK TECHNOLOGIES,
FOR THE TWELVE- INC.
MONTH FOR THE TWELVE-MONTH
PERIOD ENDED PERIOD ENDED PRO FORMA PRO FORMA
DECEMBER 31, 1998 DECEMBER 31, 1998 ADJUSTMENTS COMBINED
------------------ ------------------------ --------------------- -------------
<S> <C> <C> <C> <C>
Net sales 30,886,135 33,584,184 -- 64,470,319
Cost of goods sold 21,839,367 27,392,490 (1,362,054) (7) 47,869,803
Selling and administrative
expenses 7,865,290 7,006,252 (228,233) (7) 14,643,309
------------------ ------------ ----------- -------------
Operating income (loss) 1,181,478 (814,558) 1,590,287 1,957,207
------------------ ------------ ----------- -------------
Other income (expense)
Interest (expense) income (726,265) 37,025 (290,036) (8)(9) (979,276)
Other 23,363 -- -- 23,363
------------------ ------------ ----------- -------------
(702,902) 37,025 (290,036) (955,913)
------------------ ------------ ----------- -------------
Income (loss) before income
taxes 478,576 (777,533) 1,300,251 1,001,294
(Provision) benefit for
income taxes (121,834) 39,384 (298,042) (10) (380,492)
------------------ ------------ ----------- -------------
Income (loss) from
continuing operations 356,742 (738,149) 1,002,209 620,802
------------------ ------------ ----------- -------------
------------------ ------------ ----------- -------------
Earnings per common share:
Basic and diluted $ 0.09 $ (0.22) $ 0.08
------------------ ------------ -------------
------------------ ------------ -------------
Weighted average common
shares outstanding 4,173,139 3,347,689 7,895,536
------------------ ------------ -------------
------------------ ------------ -------------
</TABLE>
See accompanying notes to unaudited pro forma combined financial statements
74
<PAGE>
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
<TABLE>
<CAPTION>
HOLOPAK TECHNOLOGIES,
FOILMARK, INC. INC. PRO FORMA PRO FORMA
DECEMBER 31, 1998 DECEMBER 31, 1998 ADJUSTMENTS COMBINED
------------------ ------------------------ --------------- ----------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents....................... $ 470,894 $ 3,116,367 $(2,116,367)(4) $1,470,894
Accounts receivable--net........................ 4,896,086 4,952,507 -- 9,848,593
Inventories..................................... 8,134,490 6,620,266 -- 14,754,756
Other current assets............................ 748,610 516,073 -- 1,264,683
Deferred acquisition costs...................... 261,482 -- -- 261,482
Income tax receivable........................... 50,872 110,950 -- 161,822
Deferred income taxes........................... 718,602 125,000 -- 843,602
------------------ ------------ --------------- ----------
Total current assets........................ 15,281,036 15,441,163 (2,116,367) 28,605,832
------------------ ------------ --------------- ----------
Property, plant and equipment, net.............. 9,088,889 7,410,144 (4,879,087)(3) 11,619,946
Bond and mortgage financing costs............... 364,226 -- -- 364,226
Intangible assets, net.......................... 4,262,331 6,448,819 (6,448,819)(3) 4,262,331
Non-current notes receivable.................... 78,432 -- -- 78,432
Other assets.................................... 745,958 142,013 -- 887,971
------------------ ------------ --------------- ----------
Total assets................................ $29,820,872 $29,442,139 (13,444,273) $45,818,738
------------------ ------------ --------------- ----------
------------------ ------------ --------------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of notes payable--
stockholders.................................. $ 119,827 $ -- -- $ 119,827
Current installments of other long-term debt.... 428,792 1,175,000 -- 1,603,792
Accounts payable and accrued expenses........... 2,432,045 2,635,982 -- 5,068,027
Customer deposits............................... 1,507,514 -- -- 1,507,514
Current liabilities of discontinued
operations.................................... 167,817 -- -- 167,817
------------------ ------------ --------------- ----------
Total current liabilities................... 4,655,995 3,810,982 -- 8,466,977
------------------ ------------ --------------- ----------
Long-term debt
Notes payable to stockholders, net of current
installments.................................. 534,605 -- -- 534,605
Other long-term debt, net of current
installments.................................. 8,571,066 -- 3,482,351(5) 12,053,417
------------------ ------------ --------------- ----------
9,105,671 3,482,351 12,588,022
Deferred income taxes............................. 693,560 907,705 -- 1,601,265
------------------ ------------ --------------- ----------
Total liabilities........................... 14,455,226 4,718,687 3,482,351 22,656,264
------------------ ------------ --------------- ----------
Stockholders' equity:
Common stock.................................... 41,796 35,495 1,664(6) 78,955
Additional paid-in capital...................... 13,434,445 22,228,094 (14,468,425)(6) 21,194,114
Retained earnings............................... 1,889,405 4,984,212 (4,984,212)(6) 1,899,405
Cumulative translation adjustment............... (1,252,864) 1,252,864(6) --
Less: common stock held in treasury at cost..... (1,271,485) 1,271,485(6) --
------------------ ------------ --------------- ----------
Total stockholders' equity.................. 15,365,646 24,723,452 (16,926,624) 23,162,474
------------------ ------------ --------------- ----------
Total liabilities and stockholders'
equity.................................... $29,820,872 $29,442,139 $(13,444,273) $45,818,738
------------------ ------------ --------------- ----------
------------------ ------------ --------------- ----------
</TABLE>
See accompanying notes to unaudited pro forma combined financial statements.
75
<PAGE>
NOTES TO THE PRO FORMA COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
1. The unaudited pro forma combined financial statements reflect the
acquisition by Foilmark of all outstanding common stock of HoloPak. Each
outstanding share of HoloPak common stock will be converted into 1.11 shares of
Foilmark common stock and $1.42 in cash. The conversion price utilized in the
pro forma financial statements was $2.098214. This average is based on the
Foilmark common stock trading history three days before and three days after
November 18, 1998. The aggregate estimated purchase price is calculated as
follows:
<TABLE>
<S> <C>
Issuance of 3,715,935 Foilmark common stock at
$2.098214 per share............................. $ 7,796,828
3,347,689 HoloPak shares at $1.42 per share....... 4,753,718
Estimated transaction expenses.................... 845,000
-----------
Estimated Purchase Price.......................... $13,395,546
-----------
-----------
</TABLE>
2. Foilmark's fiscal year ends on December 31 and HoloPak's fiscal year ends
on March 31. In the accompanying unaudited combined pro forma statements of
operations, the results of Foilmark's fiscal year ended December 31, 1998 have
been combined with the unaudited results of operations of HoloPak for the twelve
month period ended December 31, 1998. The unaudited pro forma statement of
operations for the period ended December 31, 1998 has been derived from the
audited financial statements of Foilmark as of and for the year ended December
31, 1998 and the unaudited financial statements of HoloPak as of and for the
twelve month period ended December 31, 1998. HoloPak's unaudited statement of
operations as of and for the twelve month period ended December 31, 1998 was
derived from the unaudited interim financial statements of HoloPak for the
three-month periods ended March 31, 1998, June 30, 1998, September 30, 1998 and
December 31, 1998.
3. This adjustment reflects the excess of net assets acquired over the
estimated purchase price.
The following is a calculation:
<TABLE>
<S> <C>
Estimated Purchase Price.......................... $13,395,546
-----------
Net book value of net assets acquired............. $24,723,452
Preliminary purchase accounting adjustments:
Write-off of acquired goodwill.................. (6,448,819)
-----------
Adjusted net book value of net assets acquired.... 18,274,633
-----------
Excess of adjusted net book value of net assets
acquired over the Estimated Purchase Price...... ($4,879,087)
-----------
-----------
</TABLE>
The merger is being accounted for under the purchase method and a
preliminary allocation by Foilmark of the purchase price has been presented in
the pro forma combined financial statements. The net book value of the
historical net assets of HoloPak was adjusted to reflect the write-off of
acquired goodwill. The adjusted net book value of the net assets acquired from
HoloPak exceeds the estimated purchase price by $4,879,087. In accordance with
purchase accounting, this amount has been allocated to reduce property, plant
and equipment.
The allocation of the purchase price of HoloPak will be revised when
additional information concerning asset and liability valuations is obtained.
Adjustments will be made during the allocation period based on detailed reviews
of fair values of assets acquired and liabilities assumed and could result in a
change to the preliminary purchase price allocation. While we do not expect any
material changes in the allocation of the purchase price, a final allocation of
the purchase price to the HoloPak
76
<PAGE>
NOTES TO THE PRO FORMA COMBINED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
assets acquired and liabilities assumed is dependent upon certain valuations and
studies that have not yet commenced.
4. This entry represents the payment of cash from current available funds to
the shareholders of the HoloPak common stock.
5. This adjustment represents additional borrowings under Foilmark's line of
credit facility of $3,482,351 for the purpose of financing the remaining cash
portion of the estimated purchase price.
6. These adjustments represent the issuance of 3,715,935 of Foilmark common
stock at an assumed price of $2.098214 (see Note 1) and the elimination of
HoloPak's stockholders' equity accounts.
7. These entries reflect the reduction of depreciation and amortization
expenses for the effect of the excess of net assets acquired over the estimated
purchase price applied to the long-term assets, namely property, plant and
equipment. The remaining net book value of $2,531,057, is being depreciated over
an average life of three to four years.
Total goodwill amortization expense for HoloPak was eliminated, as HoloPak's
goodwill will be written off in accordance with purchase accounting.
The following is a calculation of the new basis of property, plant and
equipment:
<TABLE>
<S> <C>
HoloPak property, plant and equipment acquired.................. $7,410,144
Excess of adjusted net book value of net assets acquired over
the estimated purchase price.................................. (4,879,087)
----------
----------
Remaining pro forma property, plant and equipment............... 2,531,057
----------
</TABLE>
8. This adjustment reflects the recognition of interest expense on the
additional borrowings of Foilmark to finance the estimated purchase price (see
Note 5). The interest expense was calculated based on Foilmark's incremental
borrowing rate under its line of credit facility which was LIBOR plus 2%.
9. This adjustment reflects the loss of interest income generated from the
cash and cash equivalents that were used to fund the cash portion of the
estimated purchase price (see Note 4).
10. This entry represents the adjustment to record the pro forma tax expense
for the twelve month period ended December 31, 1998. The rate utilized was the
Foilmark historical rate.
11. Pro forma per share data are based on the number of Foilmark common
stock and common stock equivalents that would have been outstanding had the
merger occurred on the earliest date presented.
12. Certain amounts have been reclassified to conform to the pro forma
presentation.
77
<PAGE>
Exhibit 99.2
APPENDIX A
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
<TABLE>
<CAPTION>
PAGE
---------
<S> <C> <C>
Preamble.................................................................................................. A-1
ARTICLE 1................................................................................................. A-1
1.1 Merger....................................................................................... A-1
1.2 Time and Place of Closing.................................................................... A-1
1.3 Effective Time............................................................................... A-1
ARTICLE 2................................................................................................. A-2
2.1 Charter...................................................................................... A-2
2.2 Bylaws....................................................................................... A-2
2.3 Directors and Officers....................................................................... A-2
2.4 Effects of the Merger........................................................................ A-2
ARTICLE 3................................................................................................. A-2
3.1 Conversion of Shares......................................................................... A-2
3.2 Shares Held by Foilmark or Holopak........................................................... A-2
3.3 Fractional Shares............................................................................ A-3
3.4 Conversion of Stock Options.................................................................. A-3
3.5 Dissenting Shares............................................................................ A-4
ARTICLE 4................................................................................................. A-4
4.1 Exchange Procedures.......................................................................... A-4
4.2 Rights of Former Shareholders................................................................ A-5
4.3 Investment of Exchange Fund.................................................................. A-5
4.4 Termination of Exchange Fund................................................................. A-6
ARTICLE 5................................................................................................. A-6
5.1 Organization, Standing, and Power............................................................ A-6
5.2 Authority; No Breach By Agreement............................................................ A-6
5.3 Capital Stock................................................................................ A-7
5.4 Foilmark Subsidiaries........................................................................ A-7
5.5 SEC Filings; Financial Statements............................................................ A-8
5.6 Absence of Undisclosed Liabilities........................................................... A-8
5.7 Absence of Certain Changes or Events......................................................... A-9
5.8 Tax Matters.................................................................................. A-9
5.9 Assets....................................................................................... A-11
5.10 Intellectual Property........................................................................ A-11
5.11 Compliance with Laws......................................................................... A-12
5.12 Labor Relations.............................................................................. A-12
5.13 Employee Benefit Plans....................................................................... A-13
5.14 Material Contracts........................................................................... A-14
5.15 Legal Proceedings............................................................................ A-15
5.16 Statements True and Correct.................................................................. A-15
5.17 Accounting, Tax and Regulatory Matters....................................................... A-15
5.18 State Takeover Laws.......................................................................... A-16
5.19 Charter Provisions........................................................................... A-16
5.20 Millennium Capability........................................................................ A-16
5.21 Third Party Consents and Governmental Approvals.............................................. A-16
5.22 Authority of Foilmark Sub.................................................................... A-16
5.23 Fairness Opinion............................................................................. A-16
5.24 Environmental Matters........................................................................ A-17
5.25 HSR Act...................................................................................... A-17
</TABLE>
A-i
<PAGE>
<TABLE>
<CAPTION>
PAGE
---------
<S> <C> <C>
ARTICLE 6................................................................................................. A-17
6.1 Organization, Standing, and Power............................................................ A-17
6.2 Authority; No Breach By Agreement............................................................ A-17
6.3 Capital Stock................................................................................ A-18
6.4 Holopak Subsidiaries......................................................................... A-18
6.5 SEC Filings; Financial Statements............................................................ A-19
6.6 Absence of Undisclosed Liabilities........................................................... A-20
6.7 Absence of Certain Changes or Events......................................................... A-20
6.8 Tax Matters.................................................................................. A-20
6.9 Assets....................................................................................... A-22
6.10 Intellectual Property........................................................................ A-23
6.11 Compliance with Laws......................................................................... A-23
6.12 Labor Relations.............................................................................. A-24
6.13 Employee Benefit Plans....................................................................... A-24
6.14 Material Contracts........................................................................... A-25
6.15 Legal Proceedings............................................................................ A-26
6.16 Statements True and Correct.................................................................. A-26
6.17 Accounting, Tax and Regulatory Matters....................................................... A-27
6.18 State Takeover Laws.......................................................................... A-27
6.19 Charter Provisions........................................................................... A-27
6.20 Millennium Capability........................................................................ A-27
6.21 Third Party Consents and Governmental Approvals.............................................. A-27
6.22 Fairness Opinion............................................................................. A-27
6.23 Environmental Matters........................................................................ A-27
6.24 HSR Act...................................................................................... A-28
ARTICLE 7................................................................................................. A-28
7.1 Affirmative Covenants of Foilmark and Holopak................................................ A-28
7.2 Negative Covenants of Foilmark and Holopak................................................... A-28
7.4 Adverse Changes in Condition................................................................. A-30
7.4 Reports...................................................................................... A-30
ARTICLE 8................................................................................................. A-31
8.1 Registration Statement; Proxy Statement; Shareholder Approval................................ A-31
8.2 Exchange Listing............................................................................. A-31
8.3 Applications; Antitrust Notification......................................................... A-31
8.4 Filings with State Offices................................................................... A-31
8.5 Agreement as to Efforts to Consummate........................................................ A-32
8.6 Investigation and Confidentiality............................................................ A-32
8.7 Press Releases............................................................................... A-32
8.8 No-Solicitation.............................................................................. A-32
8.9 State Takeover Laws.......................................................................... A-33
8.10 Charter Provisions........................................................................... A-33
8.11 Indemnification and Insurance................................................................ A-33
8.12 No Recourse.................................................................................. A-34
8.13 Conversion of Non-Voting Stock............................................................... A-34
8.14 Credit Facilities............................................................................ A-34
8.15 Filing of S-8................................................................................ A-34
8.16 Environmental Report......................................................................... A-34
8.17 Employment Agreement......................................................................... A-34
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
PAGE
---------
<S> <C> <C>
ARTICLE 9................................................................................................. A-35
9.1 Conditions to Obligations of Each Party...................................................... A-35
9.2 Conditions to Obligations of Holopak......................................................... A-36
9.3 Conditions to Obligations of Foilmark........................................................ A-38
ARTICLE 10................................................................................................ A-39
10.1 Termination.................................................................................. A-39
10.2 Effect of Termination........................................................................ A-40
10.3 Non-Survival of Representations and Warranties............................................... A-40
ARTICLE 11................................................................................................ A-41
11.1 Definitions.................................................................................. A-41
11.2 Expenses..................................................................................... A-46
11.3 Brokers and Finders.......................................................................... A-47
11.4 Entire Agreement............................................................................. A-47
11.5 Amendments................................................................................... A-47
11.6 Waivers...................................................................................... A-47
11.7 Assignment................................................................................... A-48
11.8 Notices...................................................................................... A-48
11.9 Governing Law................................................................................ A-49
11.10 Counterparts................................................................................. A-49
11.11 Captions..................................................................................... A-49
11.12 Interpretations.............................................................................. A-49
11.13 Enforcement of Agreement..................................................................... A-49
11.14 Severability................................................................................. A-49
</TABLE>
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<PAGE>
LIST OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- --------------- -------------------------------------------------------------------------------------------------
<S> <C>
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
</TABLE>
A-iv
<PAGE>
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.
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 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
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<PAGE>
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.
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.
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<PAGE>
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 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.
(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
A-3
<PAGE>
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.
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
A-4
<PAGE>
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 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.
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<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 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,
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<PAGE>
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 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.
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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.
(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 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
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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 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.
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(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.
(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 Section341(f) to have Code
Section341(f)(2) apply to any disposition of a subsection (f) asset (as that
term is defined in Code Section341(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 Section168(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 Section168(h).
(m) No Foilmark Company is required to include any adjustment pursuant
to Code Section481(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 Code Section338 (or any predecessor provisions)
has been made by any Foilmark Company with respect to any of its assets or
properties.
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(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 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 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
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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);
(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
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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 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 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.
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(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 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
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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.
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.
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5.18 STATE TAKEOVER LAWS. Each Foilmark 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").
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 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.
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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.
Section90,601, et seq. ("CERCLA"), the Resource Conservation and Recovery
Act, as amended, 42 U.S.C. Section6901, et seq. ("RCRA"), the Toxic
Substances Control Act, as amended, 15 U.S.C. Section2601, et seq., the
Hazardous Materials Transportation Act, as amended, 49 U.S.C. Section1801 et
seq., the Occupational Safety and Health Act, 29 U.S.C. Section651, 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.
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
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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 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 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
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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.
(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
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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 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.
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To the Knowledge of Holopak, there is no pending or proposed audit 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, 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.
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(k) No Holopak Company has consented (nor will any of them consent prior to
the Closing) pursuant to Code Section341(f) to have Code Section341(f)(2) apply
to any disposition of a subsection (f) asset (as that term is defined in Code
Section341(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 Section168(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 Section168(h).
(m) No Holopak Company is required to include any adjustment pursuant to
Code Section481(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 Code Section338 (or any predecessor provisions) has
been made by any Holopak 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
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 SectionSection1.897-2(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 Section1.1445-2(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 SectionSection1.897-2(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
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any of the Holopak Companies, are held under valid Contracts enforceable in
accordance with their respective terms, 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 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
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(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 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.
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(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.
(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.
(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
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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 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
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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.
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 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
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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. Section90,601 et seq. ("CERCLA"), the
Resource Conservation and Recovery Act, as amended, 42 U.S.C. Section6901, et
seq. ("RCRA"), the Toxic Substances Control Act, as amended, 15 U.S.C.
Section2601, et seq., the Hazardous Materials Transportation Act, as amended, 49
U.S.C. Section1801 et seq., the Occupational Safety and Health Act, 29 U.S.C.
Section651, 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 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
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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 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 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
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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 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.
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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 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.
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.
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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.
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
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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, 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 prior to the Effective Time now existing in
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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 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.
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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 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
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gain or loss as a consequence of the Merger (except for amounts 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 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.
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(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 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.
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(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 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 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.
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(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.
(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
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(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 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).
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.
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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.
"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.
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"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.
"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 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
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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.
"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, 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
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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 years,
including, but not limited to, recognizing the year 2000 as a leap year,
providing correct results when moving backwards and forwards between the 20(th)
and 21(st) 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
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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 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.
"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
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<PAGE>
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:
<TABLE>
<S> <C>
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
</TABLE>
(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."
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.
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<PAGE>
(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.
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 condition or breach or a waiver of any other condition
or of the breach of any other term of this Agreement.
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<PAGE>
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:
<TABLE>
<S> <C>
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
</TABLE>
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<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.
REMAINING PAGE LEFT BLANK INTENTIONALLY
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<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.
<TABLE>
<S> <C> <C>
ATTEST: FOILMARK, INC.
/s/ Philip Leibel /s/ Frank J. Olsen, Jr.
- --------------------------------------- ---------------------------------------
Secretary By: President
ATTEST: FOILMARK ACQUISITION CORPORATION
/s/ Philip Leibel /s/ Frank J. Olsen, Jr.
- --------------------------------------- ---------------------------------------
Secretary By: President
ATTEST: HOLOPAK TECHNOLOGIES, INC.
/s/ Arthur Karmel /s/ James L. Rooney
- --------------------------------------- ---------------------------------------
Secretary By: President
</TABLE>
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<PAGE>
MERGER AGREEMENT
EXHIBIT 2.1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "FOILMARK ACQUISITION CORPORATION", FILED IN THIS OFFICE ON THE
SIXTEENTH DAY OF NOVEMBER, A.D. 1998, AT 11 O'CLOCK A.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE COUNTY
RECORDER OF DEEDS.
<TABLE>
<S> <C> <C>
/s/ EDWARD J. FREEL
---------------------------------------------
Edward J. Freel
SECRETARY OF STATE
</TABLE>
2966881 8100 AUTHENTICATION: 9406642
981439046 DATE: 11-16-98
<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.
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.
<PAGE>
IN WITNESS WHEREOF, the undersigned has signed this Certificate of
Incorporation on this 16th day of November, 1998.
<TABLE>
<S> <C> <C>
FOILMARK ACQUISITION CORPORATION
By: /s/ JANE E. COHEN
-----------------------------------------
Jane E. Cohen, Sole Incorporator
</TABLE>
2
<PAGE>
MERGER AGREEMENT
EXHIBIT 2.2
BY-LAWS
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 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.
<PAGE>
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.
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,
2
<PAGE>
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 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.
3
<PAGE>
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
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.
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.
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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.
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
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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.
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
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(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.
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
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution of allotment of any rights, or 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.
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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.
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
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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.
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.
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MERGER AGREEMENT
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.
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.
<PAGE>
(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 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.
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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 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.
3
<PAGE>
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 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 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
4
<PAGE>
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
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.
5
<PAGE>
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.
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.
6
<PAGE>
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.
7
<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:
<TABLE>
<CAPTION>
PERCENTAGE OF PORTION PERCENTAGE OF BASE SALARY EARNED AS
BUDGET ATTAINED FORMULAIC PORTION
- --------------------------------------------------------------- -------------------------------------
<S> <C>
Less than 80%.................................................. 0%
80%............................................................ 15%
90%............................................................ 25%
100%........................................................... 35%
110%........................................................... 45%
120%........................................................... 55%
130%........................................................... 65%
140% and above................................................. 75%
</TABLE>
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.
8
<PAGE>
MERGER AGREEMENT
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 (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.
<PAGE>
(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
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 shall give
2
<PAGE>
appropriate direction to the Company's transfer agent with respect to
removal of 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.
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 first above 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 as 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
3
<PAGE>
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 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 1.05 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.
<TABLE>
<S> <C> <C>
FOILMARK, INC.
By:
-----------------------------------------
Frank J. Olsen, Jr.
CHIEF EXECUTIVE OFFICER
</TABLE>
4
<PAGE>
HOLOPAK STOCKHOLDERS:
<TABLE>
<S> <C>
- ------------------------------------------
Robert J. Simon
OVERSEAS PRIVATE INVESTOR PARTNERS BRADFORD VENTURE PARTNERS, L.P.
By: ------------------------------------- By: -------------------------------------
- ------------------------------------------ ------------------------------------------
James L. Rooney Harvey S. Share
- ------------------------------------------ ------------------------------------------
Brian Kelly Michael S. Mathews
</TABLE>
FOILMARK STOCKHOLDERS:
<TABLE>
<S> <C>
- ------------------------------------------ ------------------------------------------
Frank J. Olsen, Jr. Thomas R. Schwarz
- ------------------------------------------ ------------------------------------------
Martin A. Olsen Carol Robie
- ------------------------------------------ ------------------------------------------
Edward Sullivan Kenneth Harris
- ------------------------------------------ ------------------------------------------
Leonard Mintz Michael Foster
- ------------------------------------------
Michael Bertuch
</TABLE>
5
<PAGE>
SCHEDULE A
FOILMARK STOCKHOLDERS
<TABLE>
<CAPTION>
PRIOR TO EFFECTIVENESS AFTER EFFECTIVENESS
OF MERGER OF MERGER
-------------------------------- ---------------------------
NO. OF NO. OF PERCENTAGE
HOLDER SHARES(1) PERCENTAGE INTEREST SHARES 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>
- ------------------------
1 Includes shares underlying stock options
6
<PAGE>
SCHEDULE B
HOLOPAK STOCKHOLDERS
<TABLE>
<CAPTION>
PRIOR TO EFFECTIVENESS OF AFTER EFFECTIVENESS OF
MERGER MERGER
------------------------- ---------------------------
NO. OF PERCENTAGE NO. OF PERCENTAGE
HOLDER SHARES INTEREST SHARES 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 753,086(2) 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
</TABLE>
- ------------------------
* Less than one percent.
- ------------------------
2 Class A Common Stock
7
<PAGE>
SCHEDULE C
HOLOPAK DESIGNEES
<TABLE>
<CAPTION>
DIRECTOR CLASS TERM ENDING
- ------------------------------------------------------------------------ ----- ------------
<S> <C> <C>
Robert J. Simon.........................................................
James L. Rooney.........................................................
Harvey S. Share.........................................................
Brian Kelly.............................................................
Michael S. Mathews......................................................
</TABLE>
8
<PAGE>
SCHEDULE D
FOILMARK DESIGNEES
<TABLE>
<CAPTION>
DIRECTOR CLASS TERM ENDING
- ------------------------------------------------------------------------ ----- ------------
<S> <C> <C>
Frank J. Olsen, Jr......................................................
Michael Bertuch.........................................................
Edward Sullivan.........................................................
Michael Foster..........................................................
Thomas R. Schwarz.......................................................
</TABLE>
9
<PAGE>
MERGER AGREEMENT
EXHIBIT 9.2(J)
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.
(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
<PAGE>
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 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.
2
<PAGE>
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,
(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).
3
<PAGE>
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 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;
(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]
4
<PAGE>
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 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
5
<PAGE>
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.
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
6
<PAGE>
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.
(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.
<TABLE>
<S> <C> <C>
FOILMARK, INC.
By:
------------------------------------------
Name:
Title:
BRADFORD VENTURE PARTNERS, L.P.
By: Bradford Associates, General Partner
</TABLE>
7
<PAGE>
<TABLE>
<S> <C> <C>
By:
------------------------------------------
Name:
Title:
OVERSEAS PRIVATE INVESTOR PARTNERS
By: Overseas Private Investors, Ltd., General
Partner
By:
------------------------------------------
Name:
Title:
[Names of certain other holders to come]
</TABLE>
8
<PAGE>
MERGER AGREEMENT
EXHIBIT 9.2(O)(I)
JAMES L. ROONEY
<TABLE>
<S> <C>
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.
</TABLE>
<PAGE>
MERGER AGREEMENT
EXHIBIT 9.2(O)(II)
JOSEPH T. WEBB
<TABLE>
<S> <C>
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
</TABLE>
<PAGE>
MERGER AGREEMENT
EXHIBIT 9.2(O)(III)
ARTHUR KARMEL
<TABLE>
<S> <C>
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.
</TABLE>
<PAGE>
MERGER AGREEMENT
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>
MERGER AGREEMENT
EXHIBIT 9.2(N)
LIST OF FOILMARK INDIVIDUALS RECEIVING STOCK OPTIONS
<TABLE>
<S> <C>
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
</TABLE>
<PAGE>
MERGER AGREEMENT
EXHIBIT 9.3(I)
LIST OF HOLOPAK INDIVIDUALS RECEIVING STOCK OPTIONS
<TABLE>
<S> <C>
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
</TABLE>
<PAGE>
MERGER AGREEMENT
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
<PAGE>
APPENDIX B-1
November 17, 1998
Board of Directors
Foilmark, Inc.
5 Malcolm Hoyt Drive
Newburyport, MA 01950
Attention: Mr. Frank J. Olsen, Jr.
Chairman of the Board
Gentlemen:
FOILMARK, Inc. ("FOILMARK") and HOLOPAK Technologies, Inc. ("HOLOPAK") have
proposed entering into an Agreement and Plan of Merger [among FOILMARK, its
wholly owned subsidiary ("Merger Sub") and HOLOPAK,] as outlined in the latest
draft dated November 15, 1998 (the "Merger Agreement") pursuant to which HOLOPAK
will be merged into FOILMARK in a transaction (the "Merger") in which each
outstanding share of HOLOPAK's common stock, (the "HOLOPAK Shares"), will be
converted into the right to receive 1.11 shares (the "Exchange Ratio") [as set
forth in the Merger Agreement] of the common stock of FOILMARK, (the "FOILMARK
Shares") and one dollar and forty two cents ($1.42) in cash.
You have asked us whether, in our opinion, the financial terms of the Merger
are fair from a financial point of view to the shareholders of FOILMARK, other
than HOLOPAK and its affiliates.
In arriving at the opinion set forth below, we have, among other things:
(1) Reviewed certain publicly available business and financial information
relating to FOILMARK and HOLOPAK that we deemed to be relevant;
(2) Reviewed certain confidential information furnished to us by FOILMARK,
including financial forecasts relating to the business, earnings, cash
flow, assets, liabilities and prospects of FOILMARK and HOLOPAK, as well
as the amount and timing of the cost savings projected by management to
result from the Merger (the "Expected Expense Reductions");
(3) Conducted discussions with members of senior management and
representatives of FOILMARK and HOLOPAK concerning the matters described
in clauses 1 and 2 above, as well as their respective businesses and
prospects before and after giving effect to the Merger and the Expected
Expense Reductions;
(4) Visited the facilities of both FOILMARK and HOLOPAK;
(5) Reviewed the market prices and valuation multiples for FOILMARK Shares
and HOLOPAK Shares and compared them with those of certain publicly
traded companies that we deemed to be relevant;
(6) Reviewed the results of operations of FOILMARK and HOLOPAK and compared
them with those of certain publicly traded companies that we deemed to be
relevant;
(7) Compared the proposed financial terms of the Merger with the financial
terms of certain other transactions that we deemed to be relevant;
(8) Assisted in certain discussions and negotiations among representatives
of FOILMARK and HOLOPAK and their financial and legal advisors;
(9) Reviewed the potential pro forma financial impact of the Merger;
B-1-1
<PAGE>
(10) Reviewed the latest draft Merger Agreement which we are advised
reflects in all material aspects the final Merger Agreement; and
(11) Reviewed such other financial studies and analyses and took into
account such other matters as we deemed necessary, including our
assessment of general economic, market and monetary conditions.
In preparing our opinion, we have assumed and relied on the accuracy and
completeness of all information supplied or otherwise made available to us for
discussion with or review, as well as all information publicly available, and we
have not assumed any responsibility for independently verifying such information
nor have we undertaken an independent evaluation or appraisal of any of the
assets or liabilities of FOILMARK or HOLOPAK or been furnished with any such
evaluation or appraisal. With respect to the financial forecast information and
the Expected Expense Reductions furnished to or discussed with us by FOILMARK or
HOLOPAK, we have assumed that they have been reasonably prepared and reflect the
best currently available estimates and judgment of FOILMARK's or HOLOPAK's
management as to the expected future financial performance of FOILMARK or
HOLOPAK, as the case may be, and the Expected Expense Reductions. We have
further assumed that the Merger will be accounted for as a purchase under
generally accepted accounting principles and that it will qualify as a partial
tax-free reorganization for U.S. federal income tax purposes.
Our opinion is necessarily based upon market, economic and other conditions
as they exist and can be evaluated on, and on the information made available to
us as of, the date hereof. We have assumed that in the course of obtaining the
necessary regulatory or other consents or approvals (contractual or otherwise)
for the Merger, no restrictions, including any divestiture requirements or
amendments or modifications, will be imposed that will have a material adverse
effect on the contemplated benefits of the Merger.
We are acting as financial advisor to FOILMARK in connection with the Merger
and will receive a fee from FOILMARK for our services, which is contingent upon
the consummation of the Merger. We will receive no separate fee for this
opinion. We have, in the past, provided financial advisory services to FOILMARK,
and may continue to do so, and have received, and may receive, fees for the
rendering of such services. In addition, FOILMARK has agreed to indemnify us for
certain liabilities arising out of our engagement.
This opinion is for the use and benefit of the Board of Directors of
FOILMARK. Our opinion does not address the merits of the underlying decision by
FOILMARK to engage in the Merger and does not constitute a recommendation to any
stockholder as to how such stockholder should vote on the proposed Merger or any
matter related thereto.
We are not expressing any opinion herein as to the prices at which FOILMARK
Shares or HOLOPAK Shares will trade following the announcement or consummation
of the Merger.
On the basis of and subject to the foregoing, we are of the opinion that, as
of the date hereof, the financial terms of the Merger are fair from a financial
point of view to the shareholders of FOILMARK, other than HOLOPAK and its
affiliates.
<TABLE>
<S> <C> <C>
Very truly yours,
by: /s/ ALAN ROBERTS MCFARLAND
-----------------------------------------
Alan Roberts McFarland, Member
</TABLE>
B-1-2
<PAGE>
APPENDIX B-2
PASTE-UP LOGO
March 18, 1999
Board of Directors
Foilmark, Inc.
5 Malcolm Hoyt Drive
Newburyport, Massachusetts 01950
Gentlemen:
On November 17, 1998 McFarland Dewey expressed its opinion that the merger
and corresponding exchange ratio of Holopak Technologies, Inc. ("Holopak") by
Foilmark, Inc. ("Foilmark") was fair to the shareholders of Foilmark from a
financial point of view. In reaffirming such opinion, as of the date hereof, we
have reviewed our prior opinion and its supporting materials in light of the
changes since November in market prices and conditions. We reviewed a draft of
the joint proxy statement-prospectus dated March 16, 1999. We also held several
discussions since November 17, 1998 with various members of Foilmark's
management as well as Holopak's management concerning the business and financial
condition of the respective companies.
Following the above review, as of the date hereof, we reaffirm our opinion
dated November 17, 1998.
<TABLE>
<S> <C> <C>
Very truly yours,
McFarland Dewey & Co. LLC
by: /s/ THOMAS BRYSON
-----------------------------------------
Thomas Bryson, Member
</TABLE>
B-2-1
<PAGE>
APPENDIX C-1
November 17, 1998
The Board of Directors of Holopak Technologies, Inc.
c/o Robert J. Simon
One Rockefeller Plaza
New York, NY 10020
Members of the Board of Directors:
We understand that Holopak Technologies, Inc. ("Holopak" or the "Company")
and Foilmark, Inc. ("Foilmark") will enter into an Agreement and Plan of Merger
substantially similar to a draft agreement dated as of November 11, 1998 (the
"Merger Agreement"), whereby Foilmark Acquisition Corporation, a wholly-owned
subsidiary of Foilmark, will merge with Holopak (the "Transaction"). The Merger
Agreement will provide, among other things, that each share of Holopak common
stock issued and outstanding prior to the effective time of the Transaction
("Holopak Common Stock") will be converted into the right to receive 1.11 shares
of Foilmark common stock, par value $0.01 per share (the "Stock Merger
Consideration"), and one dollar and forty-two cents ($1.42) in cash (the "Cash
Merger Consideration" and, together with the Stock Merger Consideration, the
"Merger Consideration").
You have requested our opinion, as investment bankers, as to the fairness,
from a financial point of view, of the Merger Consideration to be received by
the holders of Holopak Common Stock in the Transaction (the "Opinion"). It is
understood that the Opinion shall be used by you solely in connection with your
consideration of the fairness of the Merger Consideration to be received by
holders of Holopak Common Stock and for no other purpose, and that Holopak will
not furnish the Opinion or any other material prepared by Schroder & Co. Inc.
("Schroders") to any other person or persons or use or refer to the Opinion for
any other purpose without Schroders' prior written approval. Schroders
understands and agrees that its Opinion may be referred to and reproduced in
full in connection with any proxy document mailed to Holopak common shareholders
or other soliciting document.
Schroders, as part of its investment banking business, is regularly engaged
in the valuation of businesses and their securities in connection with mergers
and acquisitions, negotiated underwritings, secondary distributions of listed
and unlisted securities, private placements and valuations for estate, corporate
and other purposes. Schroders has not acted as financial advisor to Holopak in
connection with the Transaction described above.
In connection with our opinion set forth herein, we have, among other
things:
i. Reviewed the Company's Annual Report on Form 10-K filed with the
Securities and Exchange Commission for the fiscal year ended March 31,
1998; the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1998; and the Proxy Statement of the Company dated July
30, 1998;
ii. Reviewed Foilmark's Annual Report on Form 10-K filed with the
Securities and Exchange Commission for the fiscal year ended December
31, 1997; its Quarterly Report on Form 10-Q for the quarter ended
September 30, 1998; and the Proxy Statement of Foilmark dated April 10,
1998;
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<PAGE>
Board of Directors
Holopak Technologies, Inc.
November 17, 1998
Page 2 of 4
iii. Reviewed Holopak's near term quarterly financial forecast dated
September 8, 1998, prepared by management of the Company, for the
period beginning the first quarter of fiscal year 1999 (quarter ended
June 30, 1998) through the last quarter of fiscal year 2000 (quarter
ended March 31, 2000);
iv. Reviewed Foilmark's quarterly financial forecast dated September 19,
1998, as presented by MacFarland Dewey & Co., LLC (financial advisor to
Foilmark) and prepared by management of Foilmark, for the six month
period ended December 31, 1998, and the years ended December 31, 1999
and 2000;
v. Visited the principal offices and operating facilities of both the
Company and Foilmark (together, the "Parties") and conducted discussions
with the senior managements of the Parties concerning their historical
and projected financial results as presented and described in (i), (ii),
(iii) and (iv) above;
vi. Performed various financial analyses, as we deemed appropriate, of
Holopak using generally accepted analytical methodologies, including:
(i) the application to the financial results of Holopak of the public
trading multiples of companies which we deemed comparable; (ii) the
application to the financial results of Holopak of the multiples
reflected in recent merger and acquisition ("M&A") transactions for
businesses which we deemed reasonably comparable; (iii) the comparison
of premiums received by manufacturing companies in M&A transactions and
other M&A transactions, which we deemed appropriate, with enterprise
values ranging from $5 million to $20 million over the last five years
to the premium over Holopak's share price implied by the Merger
Consideration; (iv) the comparison of relative contributions of Holopak
and Foilmark to the combined company upon consummation of the
Transaction on a historical and projected basis; (v) a review of the
historical exchange ratio of Foilmark's share price to Holopak's share
price assuming no premium; and (vi) an evaluation of the pro forma
impact of the Transaction on the earnings per share and consolidated
capitalization of Foilmark;
vii. Reviewed the historical trading prices and volumes of the Parties'
common stocks from November 13, 1996 to November 13, 1998;
viii. Reviewed the draft Merger Agreement dated November 11, 1998;
ix. Held discussions with the managements of Holopak and Foilmark regarding
the prospects of their respective companies, the strategic rationales
for the Transaction, and the joint prospects of the combined company,
including synergies that may be achieved thereby;
x. Reviewed the purchase accounting treatment for the Transaction under
generally accepted accounting principles, with an independent public
accounting firm unrelated to the Transaction as well as with the
Company's independent auditors; and
xi. Performed such other financial studies, analyses, inquiries and
investigations as we deemed appropriate.
In our review and analysis and in formulating our opinion, we have assumed
and relied upon the accuracy and completeness of all information supplied or
otherwise made available to us by the Parties or obtained by us from other
sources, and upon the assurance of the Parties' managements that they are not
aware of any information or facts that would make the information provided to us
incomplete or misleading. With respect to the information relating to the
prospects of Holopak and Foilmark (including
C-1-2
<PAGE>
Board of Directors
Holopak Technologies, Inc.
November 17, 1998
Page 3 of 4
the projected financial results as discussed in (iii) and (iv) above) and the
joint prospects of the combined company, we have assumed, without independent
investigation, that such information reflects the best currently available
judgments and estimates of the managements of the Parties as to their likely
future financial performance, independently or as a combined company, as the
case may be. We have relied upon the assessment by the managements of the
Parties of their ability to retain key employees of Holopak and Foilmark. We
have also relied upon, without independent verification, the assessment by the
managements of the Parties of Holopak's and Foilmark's technologies and
products, the timing and risks associated with the integration of Holopak with
Foilmark and the validity of, and risks associated with, Holopak's and
Foilmark's existing and future products and technologies. We have not attempted
to independently verify any of such information. We have not undertaken an
independent appraisal of the assets or liabilities (contingent or otherwise) of
Holopak or Foilmark, nor have we been furnished with any such appraisals.
For purposes of rendering our opinion, we have assumed that, in all respects
material to our analysis, the representations and warranties of each party
contained in the Merger Agreement are true and correct, that each party will
perform all of the covenants and agreements required to be performed by it under
the Merger Agreement and that all conditions to the consummation of the
Transaction will be satisfied without waiver thereof. We have further assumed
that all material governmental, regulatory or other consents and approvals will
be obtained and that in the course of obtaining any necessary governmental,
regulatory or other consents and approvals, or any amendments, modifications or
waivers to any documents to which any of Holopak or Foilmark are a party, as
contemplated by the Merger Agreement, no restrictions will be imposed or
amendments, modifications or waivers made that would have any material adverse
effect on the contemplated benefits to the combined company.
Our opinion is necessarily based upon financial, economic, market and other
conditions as they exist and can be evaluated by us on the date hereof. We
disclaim any undertaking or obligation to advise any person of any change in any
fact or matter affecting our opinion which may come or be brought to our
attention after the date of the opinion unless specifically requested to do so.
Our opinion does not constitute a recommendation as to any action the Board
of Directors of the Company or any shareholder of the Company should take in
connection with the Merger Agreement or any aspect thereof or alternative
thereto. Without limitation to the foregoing, this letter does not constitute a
recommendation to any shareholder with respect to whether to vote in favor of
the Transaction, and should not be relied upon by any shareholder as such. In
rendering our opinion, we have not been engaged as an agent or fiduciary of the
Company's shareholders or of any other third party. Our opinion relates solely
to the fairness, from a financial point of view, to the holders of Holopak
Common Stock of the Merger Consideration to be received in the Transaction. We
express no opinion herein as to the structure, terms or effect of any other
aspect of the Transaction or the Merger Agreement.
C-1-3
<PAGE>
Board of Directors
Holopak Technologies, Inc.
November 17, 1998
Page 4 of 4
Based upon and subject to all the foregoing, we are of the opinion, as
investment bankers, that as of the date hereof, the Merger Consideration to be
received by the holders of Holopak Common Stock in the Transaction is fair, from
a financial point of view, to such holders.
<TABLE>
<S> <C> <C>
Very truly yours,
SCHRODER & CO. INC.
By: /s/ PETER J. HICKS
-----------------------------------------
Peter J. Hicks
Managing Director
</TABLE>
C-1-4
<PAGE>
APPENDIX C-2
PASTE-UP LOGO
March 17, 1999
The Board of Directors of Holopak Technologies, Inc.
c/o Robert J. Simon
One Rockefeller Plaza, Suite 1722
New York, NY 10020
Members of the Board of Directors:
As of November 17, 1998, Schroder & Co. Inc. ("Schroders") delivered to you
a fairness opinion (the "Fairness Opinion"), which is incorporated herein by
this reference, as investment bankers as to the fairness, from a financial point
of view, of the Merger Consideration to be received by the holders of Holopak
Common Stock in the Transaction.
You have requested that Schroders confirm that the opinion set forth in the
Fairness Opinion remains true and correct as of the date hereof. All capitalized
terms used herein and not otherwise defined herein shall have the meanings
ascribed to them in the Fairness Opinion.
Schroders hereby confirms, subject to and based on all of the assumptions,
limitations and qualifications set forth in the Fairness Opinion and such other
updated and/or additional information that Schroders believed was necessary or
appropriate to render this letter that Schroders is of the opinion, as
investment bankers, that, as of the date hereof, the Merger Consideration to be
received by the holders of Holopak Common Stock in the Transaction is fair to
such holders from a financial point of view.
This letter may be reproduced in full in the Joint Proxy
Statement/Prospectus of Holopak Technologies, Inc. and Foilmark, Inc. pertaining
to the Transaction.
<TABLE>
<S> <C> <C>
Very truly yours,
SCHRODER & CO. INC.
By: /s/ PETER J. HICKS
-----------------------------------------
Peter J. Hicks
Managing Director
</TABLE>
C-2-1
<PAGE>
APPENDIX D
SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
FOILMARK, INC.
ORIGINAL CERTIFICATE FILED UNDER THE NAME OF KENSOL/FOILMARK, INC. WITH THE
SECRETARY OF STATE ON DECEMBER 31, 1991. FIRST RESTATED CERTIFICATE FILED UNDER
THE NAME OF KENSOL/FOILMARK, INC. WITH THE SECRETARY OF STATE ON OCTOBER 15,
1993.
Foilmark, Inc., a corporation organized and existing under and by virtue of
the General Corporation Law of the State of Delaware, hereby certifies that this
Restated Certificate of Incorporation was duly adopted by the stockholders in
accordance with the provisions of Sections 242 and 245 of Title VIII of the
Delaware Code.
This Restated Certificate of Incorporation restates, integrates and amends
the Certificate of Incorporation to read as herein set forth in full:
FIRST: The name of the corporation (herein after "Corporation") is
Foilmark, Inc.
SECOND: The address of its registered office in the State of Delaware is:
1209 Orange Street, in the City of Wilmington, County of New Castle. The name of
its registered agent at such address is The Corporation Trust Company.
THIRD: The purposes of the Corporation are:
(a) To engage in a business for holding the shares of corporations
manufacturing and selling materials and machines for the hot stamping
industry, and to carry on all acts or activities incidental and related
thereto.
(b) To conduct research and development for the hot stamping industry.
(c) To engage in any lawful act or activity for which corporation may be
organized under the General Corporation Law of Delaware.
FOURTH: The aggregate number of shares which the Corporation is authorized
to issue is 10,500,000 shares: 10,000,000 shares of which are Common Stock, with
a par value of one cent ($.01) per share, and 500,000 shares of which are
Preferred Stock, with a par value of one cent ($.01) per share.
FIFTH: The express terms of the Preferred Stock are as follows:
1. DESIGNATION: All shares of the Preferred Stock of any particular series
shall be identical with each other in all respects, except as to the date
from which dividends thereon shall be cumulative. All shares of Preferred
Stock shall be of equal rank with each other, regardless of series, and
shall be identical with each other in all other respects, except as herein
provided. Preferred Stock shall be issued in series, running "A" to "Z",
with such distinctive serial designation as shall be stated by resolution of
the Board of Directors who shall have full discretion in respect to
Preferred Stock then unissued or in the treasury of the Corporation by
adopting an amendment to the Certificate of Incorporation designating the
following terms and conditions:
(a) to fix or change the number of shares constituting the particular
series;
(b) to fix or change the rate or amount per annum at which the holders of
the shares of the particular series shall be entitled to receive
dividends, the dates on which such dividends shall be payable and the
date or dates from which such dividends shall be cumulative;
D-1
<PAGE>
(c) to fix or change the amount or amounts per share for the particular
series payable to the holders thereof, in case of dissolution,
liquidation, or winding up of the corporation;
(d) to fix or change the redemption rights and price or prices per share for
the particular series;
(e) to fix or change the sinking fund requirements, if any, for the
particular series, which may require the Corporation to set aside or
provide a sinking fund out of earnings or otherwise for the purchase or
redemption of the shares of such series;
(f) to determine whether or not the shares of the particular series shall be
made convertible into other shares of the Corporation, to set the
conversion price or prices, or the rates of exchange at which such
conversion may be made, and the terms and conditions upon which any such
conversion rights may be exercised;
(g) to determine whether or not there shall be restrictions on the issuance
of shares of the particular series or of any other class or series; and
(h) to include additional shares of Preferred Stock which the Corporation is
authorized to issue in the particular series.
2. DIVIDEND RIGHTS. (a) The holders of Preferred Stock at the time outstanding
shall be entitled to receive, out of any funds legally available for the
payment of dividends, if, when and as declared by the Board of Directors,
cash dividends, preferential as set forth in the next succeeding paragraph
of this Subdivision 2, at the rate or amount per annum and payable on the
dates fixed for the particular series by the Board of Directors.
(b) Such dividends shall be cumulative, in the case of all shares of a
particular series, from the date or dates fixed by the Board of
Directors. No dividend or other distribution (other than a dividend
payable in Common Shares of the Corporation) shall be declared, paid, or
made on the Common Shares of the Corporation, and none of the common
Shares shall be purchased or otherwise acquired for consideration by the
corporation, until the full cumulative dividends on all the outstanding
shares of all series of the Preferred Stock up to the end of the current
dividend period shall have been declared and paid or shall have been
declared and a sum sufficient for payment thereof by the Board of
Directors. Accrued dividends on the Preferred Stock shall bear no
interest.
(c) If the amount declared by the Board of Directors to be paid as dividends
on all outstanding shares of the Preferred Stock shall be insufficient to
pay the full dividends, including accumulations, on all outstanding
shares of all series, such amount shall be paid on the shares of each
series only in the ratio which the full dividend, including
accumulations, on all outstanding shares of all series would bear to the
full dividend, including accumulations, on all outstanding shares of all
series.
(d) The holders of the Preferred Stock shall not be entitled to receive any
dividends thereon other than the dividends referred to in this
Subdivision 2.
3. LIQUIDATION RIGHTS. In the event of any liquidation, dissolution or winding
up of the Corporation, whether voluntary or involuntary, then before any
distribution shall be made to the holders of Common Shares of the
Corporation, the holders of shares of each particular series of Preferred
Stock outstanding shall be entitled to receive such amount as shall have
been fixed by the Board of Directors, plus an amount in the case of each
such share equal to all accrued and unpaid dividends thereon up to the date
of payment of the final amount due thereon. Such amounts shall be payable
without interest. After such payment to the holders of Preferred Stock, the
remaining assets of the Corporation shall be divided and distributed among
the holders of Common Shares then outstanding according to their respective
interests. If the amount available for payment to the holders of outstanding
shares of Preferred Stock upon any liquidation, dissolution or winding up of
the
D-2
<PAGE>
Corporation shall be insufficient to pay the amounts theretofore specified
in this Subdivision 3 to the holders of all outstanding shares of Preferred
Stock, the amount shall be distributed on the outstanding shares of each
particular series in the ratio which the maximum amount payable on the
outstanding shares of such particular series bears to the maximum amount
payable on the outstanding shares of all series. Neither the consolidation
or merger of the Corporation with or into any other corporation or
corporations, nor the merger of any corporation or corporations into the
Corporation, nor a reorganization of the Corporation, or the sale or
transfer by the Corporation of all or any part of its assets, shall be
regarded as a liquidation, dissolution, or winding up of the Corporation
within the meaning of this Subdivision 3.
4. REDEMPTION RIGHTS. (a) The Corporation, at the option of the Board of
Directors, may redeem the whole or any part of the shares of Preferred Stock
at the time outstanding or the whole or part of any particular series
thereof, at any time and from time to time, by paying, in the case of the
Preferred Stock of each particular series, such redemption price therefore
as shall have been fixed by the Board of Directors plus an amount in the
case of each share so to be redeemed, equal to all accrued and unpaid
dividends thereon up to the date of redemption.
(b) If at any time less than all of the outstanding shares of Preferred
Stock shall be called for redemption, the Board of Directors may select
the particular series to be redeemed and if less than all of the
outstanding shares of a particular series are to be called for
redemption, the shares so to be redeemed shall be selected by lot or pro
rata.
(c) Notice of every such redemption shall be given by the Corporation by
mailing a copy of such notice at least 30 days prior to the date fixed
for such redemption to each of the holders of record of the shares of
Preferred Stock to be redeemed, at their respective addresses appearing
on the books of the Corporation. From and after the date fixed in such
notice as the date of redemption (unless default shall be made by the
Corporation in providing moneys for payment of the redemption price), all
dividends on the shares of Preferred Stock thereby called for redemption
shall cease to accrue, and all rights of the holders as shareholders of
the Corporation (except the right to receive payment of said redemption
price and accrued and unpaid dividends to the date of redemption) shall
cease to determine; or if the date shall be the date (which date shall be
the date of redemption or prior thereto) on which the Corporation shall
deposit with a bank or trust company doing business in the State of
Delaware, as Paying Agent, moneys sufficient in the amount to pay at the
office of such Paying Agent, on the date of redemption of the redemption
price, together with accrued and unpaid dividends to the date of
redemption of such Paying Agent and the intention of the Corporation to
deposit said moneys is made known on or before the date of redemption
with such Paying Agent, all dividends on the shares of Preferred Stock so
called for redemption shall cease to accrue and all rights of the holders
thereof as shareholders of the Corporation (except the right to receive
from said Paying Agent said redemption price and accrued and unpaid
dividends to the date of redemption, and the right, if any, to convert
shares thereof into Common Shares of the Corporation) shall thereupon
cease to determine, and by the deposit of said moneys with said Paying
Agent the shares of Preferred Stock so called for redemption shall be
redeemed. Any moneys so deposited with said Paying Agent which shall
remain unclaimed by the holders of the shares of Preferred Stock so
called for redemption shall be paid by said Paying Agent to the
Corporation, and thereafter the holders of the shares of Preferred Stock
so called for redemption shall look only to the Corporation for payment.
(d) So long as all cumulative dividends on the shares of Preferred Stock of
all series at the time outstanding are paid or declared and set apart for
payment for all past dividend period, the Corporation shall have the
right at any time or from time to time, to purchase all or any part of
the shares of Preferred Stock of any series, either at public or private
sale, at a price not in excess of the current redemption price per share,
plus accrued dividends and plus an amount equal to usual and customary
brokerage commissions payable in connection with the purchase thereof.
D-3
<PAGE>
5. VOTING RIGHTS: The holders of the Preferred Stock shall, subject to the
provision of the Regulations of the Corporation and the statutes of Delaware
relating to the fixing of a record date, be entitled to one vote for each
share of Preferred Stock held by them, respectively, for the election of
directors and for all other purposes, but shall not be entitled to any
other, or special, or restrictive voting rights of any kind whatsoever,
except only as and when and to the extend required by statute, and in the
case of Preferred Stock of each particular series, as and when and to the
extent as shall have been fixed by the Board of Directors.
6. No holder of Preferred Stock shall be entitled, as such holder or as a
matter of right, to subscribe for a purchase any part of any new or
additional issue of stock of any class or series, and whether issued for
cash, property, services, or otherwise.
7. Subject to an in accordance with the provisions of this Fifth Article, there
is hereby created the following series of Preferred Shares: (To be inserted,
when authorized, by Resolution of the Board of Directors)
SIXTH: No stockholder shall have any preemptive right to subscribe to an
additional issue of stock or to any security convertible into such stock.
SEVENTH: In furtherance and not in limitation of the powers conferred by the
laws of the State of Delaware, the Board of Directors is expressly authorized to
make, alter, amend and repeal the By-laws, including: fixing the size of the
Board of Directors, filing vacancies on the Board, designating when special
meetings of the stockholders may be called, and eliminating the rights of
stockholders to act by less than unanimous consent in lieu of a meeting.
EIGHTH: The vote of 80% of the outstanding shares shall be necessary to
approve the terms of a merger or consolidation of the Corporation into a
substantial shareholder or its affiliates of associates as defined in the
federal securities law; for the sale or other disposition of all, or
substantially all, of the Corporation's assets; for amendment of Articles
Seventh, Eighth or Ninth of the Certificate of Incorporation; for the issuance
or transfer of shares of common or preferred stock to a substantial shareholder,
except the issuance of employee stock options and grants in accordance with a
plan qualified under the Internal Revenue Code of 1986 or as amended; and for
the voluntary dissolution of the Corporation. A substantial shareholder is any
person or entity which, as of the record date for the determination of
stockholders entitled to vote on any of the aforesaid transactions, is the
beneficial owner of 10% or more of the outstanding shares of the Company
entitled to vote, including any shares to which the shareholder has the right to
acquire pursuant to any agreement, or upon the conversion or similar rights as
well as shares owned by an "affiliate" or "associate" as defined under the
federal securities laws.
NINTH: The election of directors shall be by cumulative voting such that
each shareholder of record shall be eligible to cast a number of votes equal to
the number of shares held by the shareholder multiplied by the number of
directors to be elected.
TENTH: The directors and officers shall have limited liability and rights of
indemnification to the full extend permitted by the General Corporation Law of
the State of Delaware, as it exists on the date hereof or may hereafter be
amended, and any other applicable law. The Corporation shall indemnify any
person who was or is a party to any threatened, pending or completed action,
suit or proceeding, by reason of the fact that he is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise,
against expenses (including attorneys fees), judgments, fines and amounts paid
in settlements actually and reasonable incurred in connection with such actions.
The Board of Directors is hereby empowered to contract in advance to indemnify
such persons.
D-4
<PAGE>
Executed this 18th day of December, 1998, in the name of the Corporation by
its President and its Assistant Secretary, who declare under the penalty of
perjury that the facts stated therein are true and that this instrument is the
act and deed of the Corporation.
<TABLE>
<S> <C> <C>
FOILMARK, INC.
/s/ FRANK J. OLSEN, JR.
---------------------------------------------
Frank J. Olsen, Jr., President
ATTEST:
/s/ PHILIP LEIBEL
- ------------------------------
Philip Leibel, Assistant
Secretary
</TABLE>
D-5
<PAGE>
APPENDIX E
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 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
E-1
<PAGE>
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 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.
E-2
<PAGE>
(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 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.
E-3
<PAGE>
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.
(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 55(th) 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
E-4
<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 jury with respect to any
claim or proceeding related to or arising out of this Agreement or any of the
transactions contemplated hereby.
E-5
<PAGE>
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.
<TABLE>
<S> <C> <C>
HOLOPAK TECHNOLOGIES, INC.
By: /s/ JAMES L. ROONEY
-----------------------------------------
Name:
TITLE:
SHAREHOLDERS
By: /s/ MARTIN A. OLSEN
-----------------------------------------
Name: Martin A. Olsen
By: /s/ FRANK J. OLSEN, JR.
-----------------------------------------
Name: Frank J. Olsen, Jr.
By: /s/ LEONARD MINTZ*
-----------------------------------------
Name: Leonard Mintz
By: /s/ WILHELM P. KUTSCH
-----------------------------------------
Name: Wilhelm P. Kutsch
By: /s/ PHILIP LEIBEL
-----------------------------------------
Name: Philip Leibel
By: /s/ CAROL T. ROBIE
-----------------------------------------
Name: Carol T. Robie
By: /s/ EDWARD SULLIVAN
-----------------------------------------
Name: Edward Sullivan
By: /s/ MICHAEL FOSTER
-----------------------------------------
Name: Michael Foster
</TABLE>
* by Addendum dated November 30, 1998
E-6
<PAGE>
<TABLE>
<S> <C> <C>
By: /s/ THOMAS SCHWARZ
-----------------------------------------
Name: Thomas Schwarz
By: /s/ KENNETH HARRIS
-----------------------------------------
Name: Kenneth Harris
</TABLE>
ACKNOWLEDGED
TO AS TO SECTION 7:
FOILMARK, INC.
<TABLE>
<S> <C>
BY: /S/ FRANK J. OLSEN, JR.
-------------------------
TITLE: PRESIDENT AND
CHIEF EXECUTIVE
OFFICER
</TABLE>
E-7
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF NUMBER OF SHARES
SHAREHOLDER SHARES UNDERLYING OPTIONS(1)
- ------------------------------------------------------------------------ ------------- -------------------------
<S> <C> <C>
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
Leonard Mintz........................................................... 244,696 10,000
89 Blueberry Lane
Westwood, MA 02090
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
</TABLE>
- ------------------------
1 These options have been included in the number of shares.
E-8
<PAGE>
APPENDIX F
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, 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
F-1
<PAGE>
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 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.
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<PAGE>
(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 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
F-3
<PAGE>
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.
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
(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
F-4
<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 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 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.
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<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.
<TABLE>
<S> <C> <C>
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: PRESIDENT
SHAREHOLDERS
/s/ ROBERT J. SIMON
-----------------------------------------
Name: Robert J. Simon
BRADFORD VENTURE PARTNERS, L.P.
By: Bradford Associates, Its General Partner
/s/ ROBERT J. SIMON
-----------------------------------------
Name: Robert J. Simon
By: /s/ ROBERT J. SIMON
-----------------------------------------
OVERSEAS PRIVATE INVESTOR PARTNERS
By: Overseas Private Investors, Ltd., Its General
Partner
/s/ ROBERT J. SIMON
-----------------------------------------
By: /s/ ROBERT J. SIMON
-----------------------------------------
/s/ BRIAN KELLY
-----------------------------------------
Name: Brian Kelly
/s/ MICHAEL S. MATHEWS
-----------------------------------------
Name: Michael S. Mathews
/s/ HARVEY S. SHARE
-----------------------------------------
Name: Harvey S. Share
/s/ JAMES L. ROONEY
-----------------------------------------
Name: James L. Rooney
</TABLE>
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<PAGE>
Acknowledged
as to Section 2(d) and 7
<TABLE>
<S> <C>
HOLOPAK TECHNOLOGIES, INC.
BY: /S/ JAMES L. ROONEY
-------------------------------------------
TITLE:
</TABLE>
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<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF NUMBER OF SHARES
SHAREHOLDER SHARES UNDERLYING OPTIONS(1)
- ------------------------------------------------------------------------ ------------- -------------------------
<S> <C> <C>
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...................................... 753,086(2)
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
</TABLE>
- ------------------------
1 These options have been included in the number of shares.
2 Class A Common Stock.
F-8
<PAGE>
APPENDIX G
SECTION262. APPRAISAL RIGHTS
(a) Any stockholder of a corporation of this State who holds shares of stock
on the date of the making of a demand pursuant to the provisions of subsection
(d) of this section with respect to such shares, who continuously holds such
shares through the effective date of the merger or consolidation, who has
otherwise complied with the provisions of subsection (d) of this Section and who
has neither voted in favor of the merger or consolidation nor consented thereto
in writing pursuant to Section228 of this Chapter shall be entitled to an
appraisal by the Court of Chancery of the fair value of his shares of stock
under the circumstances described in subsections (b) and (c) of this Section. As
used in this Section, the word "stockholder" means a holder of record of stock
in a stock corporation and also a member of record of a non-stock corporation;
the words "stock" and "share" mean and include what is ordinarily meant by those
words and also membership or membership interest of a member of a non-stock
corporation; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to Sections 251, 252, 254, 257, 258, 263 or 264 of this
Chapter;
(1) provided, however, that no appraisal rights under this Section shall
be available for the shares of any class or series of stock which stock, or
depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at the
meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no appraisal
rights shall be available for any shares of stock of the constituent
corporation surviving a merger if the merger did not require for its
approval the vote of the stockholders of the surviving corporation as
provided in subsection (f) of Section 251 of this Chapter.
(2) Notwithstanding the provisions of subsection (b)(1) of this Section,
appraisal rights under this section shall be available for the shares of any
class or series of stock of a constituent corporation if the holders thereof
are required by the terms of an agreement of merger or consolidation
pursuant to Sections 251, 252, 254, 257, 258, 263 and 264 of this Chapter to
accept for such stock anything except (i) shares of stock of the corporation
surviving or resulting from such merger or consolidation, or depository
receipts in respect thereof; (ii) shares of stock of any other corporation
or depository receipts in respect thereof, which shares of stock or
depository receipts at the effective date of the merger or consolidation
will be either listed on a national securities exchange or designated as a
market system security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or held of record by more than 2,000
holders; (iii) cash in lieu of fractional shares or fractional depository
receipts described in the foregoing clauses (i) and (ii); or (iv) any
combination of the shares of stock, depository receipts and cash in lieu of
fractional shares, or fractional depository receipts described in the
foregoing clauses (i), (ii) and (iii) of this subsection.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under Section 253 of this Chapter is not owned by
the parent corporation immediately prior to the merger, appraisal rights
shall be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this Section shall be available for the shares of any
class or series of its stock as a result of an amendment to its
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<PAGE>
certificate of incorporation, any merger or consolidation in which the
corporation is a constituent corporation or the sale of all or substantially all
of the assets of the corporation. If the certificate of incorporation contains
such a provision, the procedures of this Section, including those set forth in
subsections (d) and (e), shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this Section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record date for
such meeting with respect to shares for which appraisal rights are available
pursuant to subsections (b) or (c) hereof that appraisal rights are
available for any or all of the shares of the constituent corporations, and
shall include in such notice a copy of this Section. Each stockholder
electing to demand the appraisal of his shares shall deliver to the
corporation, before the taking of the vote on the merger or consolidation, a
written demand for appraisal of his shares. Such demand will be sufficient
if it reasonably informs the corporation of the identity of the stockholder
and that the stockholder intends thereby to demand the appraisal of his
shares. A proxy or vote against the merger or consolidation shall not
constitute such a demand. A stockholder electing to take such action must do
so by a separate written demand as herein provided. Within 10 days after the
effective date of such merger or consolidation, the surviving or resulting
corporation shall notify each stockholder of each constituent corporation
who has complied with the provisions of this subsection and has not voted in
favor of or consented to the merger or consolidation of the date that the
merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to Section 228
or Section 253 of this Chapter, the surviving or resulting corporation,
either before the effective date of the merger or consolidation or within 10
days thereafter, shall notify each of the stockholders entitled to appraisal
rights of the effective date of the merger or consolidation and that
appraisal rights are available for any or all of the shares of the
constituent corporation, and shall include in such notice a copy of this
Section. The notice shall be sent by certified or registered mail, return
receipt requested, addressed to the stockholder at his address as it appears
on the records of the corporation. Any stockholder entitled to appraisal
rights may, within 20 days after the date of mailing of the notice, demand
in writing from the surviving or resulting corporation the appraisal of his
shares. Such demand will be sufficient if it reasonably informs the
corporation of the identity of the stockholder and that the stockholder
intends thereby to demand the appraisal of his shares.
(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied with
the provisions of subsections (a) and (d) hereof and who is otherwise entitled
to appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw his demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not voted
in favor of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the stockholder within 10 days after
his written request for such a statement is received by the surviving or
resulting corporation or within 10 days after expiration of the period for
delivery of demands for appraisal under subsection (d) hereof, whichever is
later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the
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<PAGE>
Register in Chancery in which the petition was filed a duly verified list
containing the names and addresses of all stockholders who have demanded payment
for their shares and with whom agreements as to the value of their shares have
not been reached by the surviving or resulting corporation. If the petition
shall be filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by one or more publications at
least one week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publications
as the Court deems advisable. The forms of the notices by mail and by
publication shall be approved by the Court, and the costs thereof shall be borne
by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with the provisions of this Section and who have
become entitled to appraisal rights. The Court may require the stockholders who
have demanded an appraisal for their shares and who hold stock represented by
certificates to submit their certificates of stock to the Register in Chancery
for notation thereon of the pendency of appraisal proceedings; and if any
stockholder fails to comply with such direction, the Court may dismiss the
proceedings as to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest which the surviving or resulting corporation would have had to pay
to borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of the Section and who has submitted his
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that he is
not entitled to appraisal rights under this Section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholder entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and in the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any other state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all of
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who had demanded his appraisal rights as provided in subsection (d)
of the Section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of the Section, or if such stockholder shall deliver
to the
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<PAGE>
surviving or resulting corporation a written withdrawal of his demand for an
appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this Section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of the Court, and
such approval may be conditioned upon such terms as the Court deems just.
(1) The shares of the surviving or resulting corporation into which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
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<PAGE>
[LOGO]
156 FIFTH AVENUE, 9TH FLOOR
NEW YORK, NY 10010
(212) 929-5500 (COLLECT)
OR
CALL TOLL-FREE (800) 322-2885
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law authorizes
indemnification of directors and officers of a Delaware corporation under
certain circumstances against expenses, judgments and the like in connection
with an action, suit or proceeding. Article Tenth of the Registrant's Second
Amended and Restated Certificate of Incorporation and Article Tenth of the
Registrant's Restated By-Laws provides for indemnification of directors and
officers.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- -----------------------------------------------------------------------------------------------------
<C> <S>
2.1 Agreement and Plan of Merger dated as of November 17, 1998 is incorporated herein by reference to the
Company's Current Report on Form 8-K filed with the Commission on November 25, 1988.
3.1 Restated Certificate of Incorporation of the Company dated as of October 14, 1993 is incorporated
herein by reference to the Company's Registration Statement on Form S-1 filed with the Commission on
October 25, 1993.
3.2 Restated By-Laws of the Company are incorporated herein by reference to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1997 and filed with the Commission on March 27,
1998.
3.3 Specimen Stock Certificate of the Company is incorporated herein by reference to the Company's
Current Report on Form 8-K filed with the Commission on May 24, 1994.
3.4 Restated Certificate of Incorporation of the Company is incorporated herein by reference to the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1995 and filed with the
Commission.
3.5 Restated By-Laws of the Company dated as of May 5, 1995 are incorporated herein by reference to the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1995 and filed with the
Commission.
3.6 Second Amended and Restated Certificate of Incorporation dated as of November 20, 1998.
5.1 Opinion of Hinckley, Allen & Snyder, counsel to the Company, dated as of March 22, 1999, regarding
the legality of the Common Stock.
8.1 Opinion of Hinckley, Allen & Snyder, counsel to the Company, dated March 22, 1999 regarding tax
matters.
8.2 Opinion of Battle Fowler LLP, counsel to HoloPak Technologies, Inc., dated as of March 22, 1999,
regarding tax matters.
9.1 Voting Agreement dated as of November 17, 1994 between the Company, Martin A. Olsen, Florence J.
Olsen, Frank J. Olsen, Carol J. Robie, Leonard A. Mintz and Edward Sullivan is incorporated herein by
reference to the Company's Current Report on Form 8-K filed with the Commission on November 30, 1994.
10.1 Form of Employment Agreement of the Company is incorporated herein by reference to the Company's
Registration Statement on Form S-1 filed with the Commission on October 25, 1993.
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- -----------------------------------------------------------------------------------------------------
<C> <S>
10.2 1993 Stock Option Plan is incorporated herein by reference to Amendment No. 2 to the Company's
Registration Statement on Form S-1 filed with the Commission on May 9, 1994.
10.3 Technical Collaboration Agreement between the Company and Arrow Coated Products Ltd. dated as of
December 18, 1992 is incorporated herein by reference to the Company's Registration Statement on Form
S-1 filed with the Commission on October 25, 1993.
10.4 Agreement for the Purchase of Patents by and between the Company and Leonard Mintz dated March 12,
1992 is incorporated herein by reference to the Company's Registration Statement on Form S-1 filed
with the Commission on October 25, 1993.
10.5 Registration Rights Agreement between the Company and Leonard Mintz dated as of March 17, 1992 is
incorporated herein by reference to Amendment No. 1 to the Company's Registration Statement on Form
S-1 filed with the Commission on December 3, 1993.
10.6 Waiver Agreement between the Company and Leonard Mintz is incorporated herein by reference to
Amendment No. 1 to the Company's Registration Statement on Form S-1 filed with the Commission on
December 3, 1993.
10.7 Stockholders Agreement is incorporated herein by reference to Amendment No. 1 to the Company's
Registration Statement on Form S-1 filed with the Commission on December 3, 1993.
10.8 Form of Employee Stock Grant Agreement is incorporated herein by reference to Amendment No. 2 to the
Company's Registration Statement on Form S-1 filed with the Commission on May 9, 1994.
10.9 Form of Promissory Note and Schedule of Notes is incorporated herein by reference to Amendment No. 2
to the Company's Registration Statement on Form S-1 filed with the Commission on May 9, 1994.
10.10 Form of Shareholder Note and Schedule of Notes is incorporated herein by reference to Amendment No. 2
to the Company's Registration Statement on Form S-1 filed with the Commission on May 9, 1994.
10.11 China Sales and Distribution Agreement between the Company and X.D. Trading and Consulting Company
dated as of October 25, 1993 is incorporated herein by reference to Amendment No. 3 to the Company's
Registration Statement on Form S-1 filed with the Commission on June 17, 1994.
10.12 Sales and Licensing Agreement between the Company and Embossing Technology Limited dated as of
November 10, 1994 is incorporated herein by reference to the Company's Current Report on Form 8-K
filed with the Commission on November 30, 1994.
10.13 Registration Rights Agreement between the Company and Edward Sullivan dated as of November 17, 1994
is incorporated herein by reference to the Company's Current Report on Form 8-K filed with the
Commission on November 30, 1994.
10.14 Industrial Revenue Bond Loan Agreement is incorporated herein by reference to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1995 and filed with the Commission.
10.15 1995 Employee Stock Purchase Plan is incorporated herein by reference to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1995 and filed with the Commission.
10.16 1995 Employee Stock Option Plan is incorporated herein by reference to the Company's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1995 and filed with the Commission.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- -----------------------------------------------------------------------------------------------------
<C> <S>
10.17 Asset Purchase Agreement between Imtran Industries, Inc. et al. and the Company dated as of August 3,
1995 is incorporated herein by reference to the Company's Current Report on Form 8-K filed with the
Commission on September 1, 1995.
10.18 Registration Rights Agreement between Foilmark, Inc. and Martin A. Olsen dated as of December 31,
1995 is incorporated herein by reference to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995 and filed with the Commission on March 30, 1996.
10.19 Amended and Restated Employee Stock Purchase Plan dated as of January 31, 1996 is incorporated herein
by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1995
and filed with the Commission on March 30, 1996.
10.20 Amended and Restated Employee Stock Option Plan dated as of January 31, 1996 is incorporated herein
by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1995
and filed with the Commission on March 30, 1996.
10.21 Annual Incentive Compensation Plan dated as of January 20, 1996 is incorporated herein by reference
to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1996 and filed with
the Commission on April 30, 1996.
10.22 Waiver and Amendment to Loan Agreement between the Company and Fleet Bank dated as of March 20, 1997
is incorporated herein by reference to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996 and filed with the Commission on April 14, 1997.
10.23 Consulting Agreement between the Company and Edward Sullivan dated as of January 1, 1999.
10.24 Lease Agreement between the Company and Edward G. Molin dated as of April 21, 1997 is incorporated
herein by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
1997 and filed with the Commission on August 12, 1997.
10.25 Lease Agreement between the Company and Parker Street Realty Trust dated as of July 1, 1997 is
incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997 and filed with the Commission on August 12, 1997.
10.26 Lease Agreement between the Company and Faircourt Realty Co. dated as of April 1, 1997 is
incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997 and filed with the Commission on August 12, 1997.
10.27 1997 Non-Employee Director Stock Plan dated as of April 11, 1997 is incorporated herein by reference
to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997 and filed with the
Commission on August 12, 1997.
10.28 Shareholder Agreement between the Company and certain shareholders of HoloPak Technologies, Inc.
dated as of November 17, 1998 is incorported herein by reference to the Company's Current Report on
Form 8-K filed with the Commission on November 25, 1998.
10.29 Shareholder Agreement between certain substantial shareholders of the Company and HoloPak
Technologies, Inc. dated as of November 17, 1998 is incorporated herein by reference to the Company's
Current Report on Form 8-K filed with the Commission on November 25, 1998.
10.30 Non-Competition Agreement by and between the Company and Leonard Mintz dated as of December 21, 1998.
21.1 Subsidiaries of the Company.
23.1 Consent of KPMG LLP.
23.2 Consent of Deloitte & Touche LLP.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- -----------------------------------------------------------------------------------------------------
<C> <S>
23.3 Consent of Hinckley, Allen & Snyder (included in the opinion filed as Exhibit 5.1).
23.4 Consent of Battle Fowler LLP (included in the opinion filed as Exhibit 8.2).
24.1 Power of Attorney (contained on Page II-6).
99.1 Foilmark, Inc. Form of Proxy
99.2 HoloPak Technologies, Inc. Form of Proxy
(b) Financial Statement Schedule
(1) Financial Statement Schedules
Other schedules are omitted because of the absence of conditions under which they are required or because the
required information is given in the financial statements or notes thereto.
(c) Report, Opinion or Appraisal
(1) Fairness Opinion of McFarland Dewey & Co., LLC dated as of November 17, 1998 is incorporated by
reference from Appendix B-1 to Foilmark's joint proxy statement-prospectus filed as a part of this
registration statement on Form S-4.
(2) Confirmation of Fairness Opinion of McFarland Dewey & Co., LLC dated as of March 18, 1999 is
incorporated by reference from Appendix B-2 to Foilmark's joint proxy statement-prospectus filed as a
part of this registration statement on Form S-4.
</TABLE>
ITEM 22. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change in such information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at the time shall be deemed to be the
initial bona fide offering hereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
(c) Insofar as indemnification for liabilities under the Securities Act may
be permitted to directors, officers and controlling persons of Foilmark and
HoloPak pursuant to the foregoing provision or otherwise Foilmark and HoloPak
have been advised that, in the opinion of the Commission, such indemnification
is against public policy as expressed in the Securities Act and is therefore
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the parties of expenses incurred or paid
by a director, officer or controlling person in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, Foilmark and HoloPak
will, unless in the opinion of their respective counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
(d) The undersigned registrant hereby undertakes that prior to any public
reoffering of the securities registered hereunder through use of a prospectus
which is a part of this registration statement, by any person or party who is
deemed to be an underwriter within the meaning of Rule 145(c), the issuer
undertakes that such reoffering prospectus will contain the information called
for by the applicable registration form with respect to reofferings by persons
who may be deemed underwriters, in addition to the information called for by the
other items of the applicable form.
(e) The undersigned registrant hereby undertakes that every prospectus: (i)
that is filed pursuant to paragraph (d) immediately preceding, or (ii) that
purports to meet the requirements of Sections 10(a)(3) of the Securities Act and
is used in connection with an offering of securities subject to Rule 415, will
be filed as a part of an amendment to the registration statement and will not be
used until such amendment is effective, and that, for purposes of determining
any liability under the Securities Act, each such post-effective amendment shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(f) The undersigned registrants hereby undertake to respond to requests for
information that is incorporated by reference into the prospectus within one
business day of receipt of such request, and to send the incorporated documents
by first class mall or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request. The
undersigned registrant hereby undertakes to supply by means of a post-effective
amendment all information concerning a transaction, and the company being
acquired involved therein, that was not the subject of and included in the
registration statement when it became effective.
(g) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities Act, the registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of East Brunswick, State of
New Jersey, on March 19, 1999.
<TABLE>
<S> <C> <C>
FOILMARK, INC.
By: /S/ FRANK J. OLSEN, JR.
-----------------------------------------
Name: Frank J. Olsen, Jr.
Title: PRESIDENT AND CHIEF EXECUTIVE
OFFICER
</TABLE>
Each person whose individual signature appears below hereby authorizes and
appoints Frank J. Olsen, Jr., Philip Leibel, Stephen J. Carlotti and Paul Bork,
and each of them, with full power of substitution and full power to act without
the other, as his true and lawful attorney-in-fact and agent to act in his name,
place and stead and to execute in the name and on behalf of each person,
individually and in each capacity stated below, and to file, this Registration
Statement on Form S-4 and any and all amendments to this Registration Statement
on Form S-4 under the Securities Act of 1933, with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that said attorney-in-fact, or
their substitute or substitutes, may do or cause to be done by virtue hereof and
granting said attorney-in-fact, and each of them, full power and authority to do
and perform any and all acts necessary or incidental to the performance and
execution of the powers herein expressly granted.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and as of
the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
<C> <S> <C>
Chairman of the Board of
/s/ FRANK J. OLSEN, JR. Directors, Chief
- ------------------------------ Executive Officer and March 19, 1999
Frank J. Olsen, Jr. President
/s/ PHILIP LEIBEL Chief Financial Officer,
- ------------------------------ Vice President--Finance March 19, 1999
Philip Leibel and Assistant Secretary
/s/ WILHELM P. KUTSCH Senior Vice President and
- ------------------------------ Director March 19, 1999
Wilhelm P. Kutsch
/s/ EDWARD SULLIVAN Vice President and Director
- ------------------------------ March 19, 1999
Edward Sullivan
/s/ CAROL J. ROBIE Vice President, Secretary
- ------------------------------ and Director March 19, 1999
Carol J. Robie
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
<C> <S> <C>
/s/ KENNETH HARRIS Vice President and Director
- ------------------------------ March 19, 1999
Kenneth Harris
/s/ MARTIN A. OLSEN Chairman of the Board
- ------------------------------ Emeritus and Director March 19, 1999
Martin A. Olsen
/s/ MICHAEL J. BERTUCH Director
- ------------------------------ March 19, 1999
Michael J. Bertuch
/s/ MICHAEL FOSTER Director
- ------------------------------ March 19, 1999
Michael Foster
/s/ THOMAS R. SCHWARZ Director
- ------------------------------ March 19, 1999
Thomas R. Schwarz
</TABLE>
II-7
<PAGE>
Exhibit 3.6
SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
FOILMARK, INC.
ORIGINAL CERTIFICATE FILED UNDER THE NAME OF KENSOL/FOILMARK, INC. WITH THE
SECRETARY OF STATE ON DECEMBER 31, 1991. FIRST AMENDED AND RESTATED CERTIFICATE
FILED UNDER THE NAME OF KENSOL/FOILMARK, INC. WITH THE SECRETARY OF STATE ON
OCTOBER 15, 1993.
Foilmark, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware, hereby certifies
that this Second Amended and Restated Certificate of Incorporation was duly
adopted by the stockholders in accordance with the provisions of Sections 242
and 245 of Title VIII of the Delaware Code.
This Second Amended and Restated Certificate of Incorporation restates,
integrates and amends the Certificate of Incorporation to read as herein set
forth in full:
FIRST: The name of the corporation (herein after "Corporation") is
Foilmark, Inc.
SECOND: The address of its registered office in the State of Delaware
is: 1209 Orange Street, in the City of Wilmington, County of New Castle. The
name of its registered agent at such address is The Corporation Trust Company.
THIRD: The purposes of the Corporation are:
(a) To engage in a business for holding the shares of corporations
manufacturing and selling materials and machines for the hot
stamping industry, and to carry on all acts or activities
incidental and related thereto.
(b) To conduct research and development for the hot stamping industry.
(c) To engage in any lawful act or activity for which corporation may
be organized under the General Corporation Law of Delaware.
FOURTH: The aggregate number of shares which the Corporation is
authorized to issue is 10,500,000 shares: 10,000,000 shares of which are Common
Stock, with a par value of one cent ($.01) per share, and 500,000 shares of
which are Preferred Stock, with a par value of one cent ($.01) per share.
<PAGE>
Exhibit 3.6
FIFTH: The express terms of the Preferred Stock are as follows:
1. DESIGNATION: All shares of the Preferred Stock of any
particular series shall be identical with each -----------
other in all respects, except as to the date from which
dividends thereon shall be cumulative. All shares of Preferred
Stock shall be of equal rank with each other, regardless of
series, and shall be identical with each other in all other
respects, except as herein provided. Preferred Stock shall be
issued in series, running "A" to "Z", with such distinctive
serial designation as shall be stated by resolution of the
Board of Directors who shall have full discretion in respect
to Preferred Stock then unissued or in the treasury of the
Corporation by adopting an amendment to the Certificate of
Incorporation designating the following terms and conditions:
(a) to fix or change the number of shares constituting
the particular series;
(b) to fix or change the rate or amount per annum at
which the holders of the shares of the particular series
shall be entitled to receive dividends, the dates on which
such dividends shall be payable and the date or dates from
which such dividends shall be cumulative;
(c) to fix or change the amount or amounts per share for
the particular series payable to the holders thereof, in
case of dissolution, liquidation, or winding up of the
corporation;
(d) to fix or change the redemption rights and price or
prices per share for the particular series;
(e) to fix or change the sinking fund requirements, if
any, for the particular series, which may require the
Corporation to set aside or provide a sinking fund out of
earnings or otherwise for the purchase or redemption of
the shares of such series;
(f) to determine whether or not the shares of the
particular series shall be made convertible into other
shares of the Corporation, to set the conversion price or
prices, or the rates of exchange at which such conversion
may be made, and the terms and conditions upon which any
such conversion rights may be exercised;
(g) to determine whether or not there shall be
restrictions on the issuance of shares of the particular
series or of any other class or series; and
(h) to include additional shares of Preferred Stock
which the Corporation is authorized to issue in the
particular series.
2. DIVIDEND RIGHTS. (a) The holders of Preferred Stock at the
time outstanding shall be entitled to receive, out of any funds
legally available for the payment of dividends, if, when
2
<PAGE>
Exhibit 3.6
and as declared by the Board of Directors, cash dividends,
preferential as set forth in the next succeeding paragraph of this
Subdivision 2, at the rate or amount per annum and payable on the
dates fixed for the particular series by the Board of Directors.
(b) Such dividends shall be cumulative, in the case of
all shares of a particular series, from the date or dates
fixed by the Board of Directors. No dividend or other
distribution (other than a dividend payable in Common
Shares of the Corporation) shall be declared, paid, or
made on the Common Shares of the Corporation, and none of
the common Shares shall be purchased or otherwise acquired
for consideration by the corporation, until the full
cumulative dividends on all the outstanding shares of all
series of the Preferred Stock up to the end of the current
dividend period shall have been declared and paid or shall
have been declared and a sum sufficient for payment
thereof by the Board of Directors. Accrued dividends on
the Preferred Stock shall bear no interest.
(c) If the amount declared by the Board of Directors to
be paid as dividends on all outstanding shares of the
Preferred Stock shall be insufficient to pay the full
dividends, including accumulations, on all outstanding
shares of all series, such amount shall be paid on the
shares of each series only in the ratio which the full
dividend, including accumulations, on all outstanding
shares of all series would bear to the full dividend,
including accumulations, on all outstanding shares of all
series.
(d) The holders of the Preferred Stock shall not be
entitled to receive any dividends thereon other than the
dividends referred to in this Subdivision 2.
3. LIQUIDATION RIGHTS. In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, then before any distribution shall be made to the
holders of Common Shares of the Corporation, the holders of shares
of each particular series of Preferred Stock outstanding shall be
entitled to receive such amount as shall have been fixed by the
Board of Directors, plus an amount in the case of each such share
equal to all accrued and unpaid dividends thereon up to the date of
payment of the final amount due thereon. Such amounts shall be
payable without interest. After such payment to the holders of
Preferred Stock, the remaining assets of the Corporation shall be
divided and distributed among the holders of Common Shares then
outstanding according to their respective interests. If the amount
available for payment to the holders of outstanding shares of
Preferred Stock upon any liquidation, dissolution or winding up of
the Corporation shall be insufficient to pay the amounts theretofore
specified in this Subdivision 3 to the holders of all outstanding
shares of Preferred Stock, the amount shall be distributed on the
outstanding shares of each particular series in the ratio which the
maximum amount payable on the outstanding shares of such particular
series bears to the maximum amount payable on the outstanding shares
of all series. Neither the consolidation or merger of the
Corporation with or into any other corporation or corporations, nor
the merger of any corporation or corporations into the Corporation,
nor a reorganization of the Corporation, or the sale or transfer by
the Corporation of all or any part of its assets, shall be regarded
as a liquidation, dissolution, or winding up of the Corporation
within the meaning of this Subdivision 3.
3
<PAGE>
Exhibit 3.6
4. REDEMPTION RIGHTS. (a) The Corporation, at the option of the
Board of Directors, may redeem the whole or any part of the shares
of Preferred Stock at the time outstanding or the whole or part of
any particular series thereof, at any time and from time to time, by
paying, in the case of the Preferred Stock of each particular
series, such redemption price therefore as shall have been fixed by
the Board of Directors plus an amount in the case of each share so
to be redeemed, equal to all accrued and unpaid dividends thereon up
to the date of redemption.
(b) If at any time less than all of the outstanding shares of
Preferred Stock shall be called for redemption, the Board of Directors
may select the particular series to be redeemed and if less than all of
the outstanding shares of a particular series are to be called for
redemption, the shares so to be redeemed shall be selected by lot or
pro rata.
(c) Notice of every such redemption shall be given by the
Corporation by mailing a copy of such notice at least 30 days prior to
the date fixed for such redemption to each of the holders of record of
the shares of Preferred Stock to be redeemed, at their respective
addresses appearing on the books of the Corporation. From and after the
date fixed in such notice as the date of redemption (unless default
shall be made by the Corporation in providing moneys for payment of the
redemption price), all dividends on the shares of Preferred Stock
thereby called for redemption shall cease to accrue, and all rights of
the holders as shareholders of the Corporation (except the right to
receive payment of said redemption price and accrued and unpaid
dividends to the date of redemption) shall cease to determine; or if
the date shall be the date (which date shall be the date of redemption
or prior thereto) on which the Corporation shall deposit with a bank or
trust company doing business in the State of Delaware, as Paying Agent,
moneys sufficient in the amount to pay at the office of such Paying
Agent, on the date of redemption of the redemption price, together with
accrued and unpaid dividends to the date of redemption of such Paying
Agent and the intention of the Corporation to deposit said moneys is
made known on or before the date of redemption with such Paying Agent,
all dividends on the shares of Preferred Stock so called for redemption
shall cease to accrue and all rights of the holders thereof as
shareholders of the Corporation (except the right to receive from said
Paying Agent said redemption price and accrued and unpaid dividends to
the date of redemption, and the right, if any, to convert shares
thereof into Common Shares of the Corporation) shall thereupon cease to
determine, and by the deposit of said moneys with said Paying Agent the
shares of Preferred Stock so called for redemption shall be redeemed.
Any moneys so deposited with said Paying Agent which shall remain
unclaimed by the holders of the shares of Preferred Stock so called for
redemption shall be paid by said Paying Agent to the Corporation, and
thereafter the holders of the shares of Preferred Stock so called for
redemption shall look only to the Corporation for payment.
(d) So long as all cumulative dividends on the shares of
Preferred Stock of all series at the time outstanding are paid or
declared and set apart for payment for all past dividend period, the
Corporation shall have the right at any time or from time to time, to
purchase all or any part of the shares of Preferred Stock of any
series, either at public or
4
<PAGE>
Exhibit 3.6
private sale, at a price not in excess of the current redemption price
per share, plus accrued dividends and plus an amount equal to usual and
customary brokerage commissions payable in connection with the purchase
thereof.
5. VOTING RIGHTS: The holders of the Preferred Stock shall, subject to
the provision of the Regulations of the Corporation and the statutes of
Delaware relating to the fixing of a record date, be entitled to one
vote for each share of Preferred Stock held by them, respectively, for
the election of directors and for all other purposes, but shall not be
entitled to any other, or special, or restrictive voting rights of any
kind whatsoever, except only as and when and to the extend required by
statute, and in the case of Preferred Stock of each particular series,
as and when and to the extent as shall have been fixed by the Board of
Directors.
6. No holder of Preferred Stock shall be entitled, as such holder or as
a matter of right, to subscribe for a purchase any part of any new or
additional issue of stock of any class or series, and whether issued
for cash, property, services, or otherwise.
7. Subject to an in accordance with the provisions of this Fifth
Article, there is hereby created the following series of Preferred
Shares: (To be inserted, when authorized, by Resolution of the Board of
Directors)
SIXTH: No stockholder shall have any preemptive right to subscribe to
an additional issue of stock or to any security convertible into such stock.
SEVENTH: In furtherance and not in limitation of the powers conferred
by the laws of the State of Delaware, the Board of Directors is expressly
authorized to make, alter, amend and repeal the By-laws, including: fixing the
size of the Board of Directors, filing vacancies on the Board, designating when
special meetings of the stockholders may be called, and eliminating the rights
of stockholders to act by less than unanimous consent in lieu of a meeting.
EIGHTH: The vote of 80% of the outstanding shares shall be necessary to
approve the terms of a merger or consolidation of the Corporation into a
substantial shareholder or its affiliates of associates as defined in the
federal securities law; for the sale or other disposition of all, or
substantially all, of the Corporation's assets; for amendment of Articles
Seventh, Eighth or Ninth of the Certificate of Incorporation; for the issuance
or transfer of shares of common or preferred stock to a substantial shareholder,
except the issuance of employee stock options and grants in accordance with a
plan qualified under the Internal Revenue Code of 1986 or as amended; and for
the voluntary dissolution of the Corporation. A substantial shareholder is any
person or entity which, as of the record date for the determination of
stockholders entitled to vote on any of the aforesaid transactions, is the
beneficial owner of 10% or more of the outstanding shares of the Company
entitled to vote, including any shares to which the shareholder has the right to
acquire pursuant to any agreement, or upon the conversion or similar rights as
well as shares owned by an "affiliate" or "associate" as defined under the
federal securities laws.
5
<PAGE>
Exhibit 3.6
NINTH: The election of directors shall be by cumulative voting such
that each shareholder of record shall be eligible to cast a number of votes
equal to the number of shares held by the shareholder multiplied by the number
of directors to be elected.
TENTH: The directors and officers shall have limited liability and
rights of indemnification to the fullest extent permitted by the General
Corporation Law of the State of Delaware, as it exists on the date hereof or may
hereafter be amended, and any other applicable law. The Corporation shall
indemnify any person who was or is a party to any threatened, pending or
completed action, suit or proceeding, by reason of the fact that he is or was a
director, officer, employee or agent of the Corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise, against expenses (including attorneys fees), judgments, fines
and amounts paid in settlements actually and reasonable incurred in connection
with such actions. The Board of Directors is hereby empowered to contract in
advance to indemnify such persons.
Executed this 20th day of November, 1998, in the name of the
Corporation by its President and its Assistant Secretary, who declare under the
penalty of perjury that the facts stated therein are true and that this
instrument is the act and deed of the Corporation.
FOILMARK, INC.
/s/
---------------------------------
Frank J. Olsen, Jr., President
ATTEST:
/S/
- ----------------------------------
Philip Leibel, Assistant Secretary
6
<PAGE>
EXHIBIT 5.1
March 22, 1999
Board of Directors
Foilmark, Inc.
5 Malcolm Hoyt Drive
Newburyport, MA 01950
Ladies and Gentlemen:
We have acted as counsel to Foilmark, Inc., a Delaware corporation
("Foilmark"), in connection with the preparation and filing of the Registration
Statement of the Company on Form S-4 (the "Registration Statement") relating to
the registration under the Securities Act of 1933, as amended (the "Securities
Act"), of shares of common stock, par value $.01 per share (the "Common Stock")
of the Company to be issued (the "Issuance") to stockholders of HoloPak
Technologies, Inc., a Delaware corporation ("HoloPak"), pursuant to the terms of
an Agreement and Plan of Merger (the "Merger Agreement") dated as of November
17, 1998, by and among the Company, HoloPak and Foilmark Acquisition
Corporation, a Delaware corporation and a wholly-owned subsidiary of the Company
("Foilmark Sub"), pursuant to which HoloPak will merge with and into Foilmark
Sub (the "Merger"). Capitalized terms defined in the Merger Agreement and used
but not otherwise defined herein are used herein as so defined in the Merger
Agreement.
In so acting, we have examined originals or copies, certified or
otherwise identified to our satisfaction, of the Registration Statement,
including the proxy statement and prospectus contained therein (the "Proxy
Statement-Prospectus"), the Merger Agreement and such corporate records,
agreements, documents and other instruments, and such certificates or comparable
documents of public officials and of officers and representatives of Foilmark,
and have made such inquiries of such officers and representatives, as we have
deemed relevant and necessary as a basis for the opinions hereinafter set forth.
In such examination, we have assumed the genuineness of all signatures,
the legal capacity of natural persons, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified, conformed or photostatic copies and the
authenticity of the originals of such latter documents. As to all questions of
fact material to this opinion that have not been
<PAGE>
Board of Directors of Foilmark, Inc.
March 22, 1999
Page 2
independently established, we have relied upon certificates or comparable
documents of officers and representatives of Foilmark and Foilmark Sub and upon
the representations and warranties of Foilmark and Foilmark Sub contained in the
Merger Agreement.
Based on the foregoing, and subject to the qualifications stated
herein, we are of the opinion that, subject to the approval of the Issuance by
the holders of a majority of Foilmark's stockholders at the special Shareholder
Meeting of Foilmark, the shares of Common Stock to be issued pursuant to the
Merger Agreement and registered pursuant to the Registration Statement have been
duly authorized and, when issued as contemplated by the Merger Agreement, will
be validly issued, fully paid and nonassessable.
The opinions expressed herein are limited to the corporate laws of the
State of Delaware, and we express no opinion as to the effect on the matters
covered by this letter of the laws of any other jurisdiction.
This letter nor any copies thereof, may not be furnished to a third
party, filed with a governmental agency, quoted, cited or otherwise referred to,
for any purpose other than in connection with the Merger and the Issuance,
without our prior written consent.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to this firm under the heading
"Legal Opinions" in the Proxy Statement-Prospectus, without admitting that we
are "experts" under the Securities Act of 1933 or the rules and regulations
promulgated thereunder with respect to any part of the Registration Statement.
Very truly yours,
/s/
Hinckley, Allen & Synder
<PAGE>
Exhibit 8.1
March 22, 1999
Board of Directors
Foilmark, Inc.
5 Malcolm Hoyt Drive
Newburyport, MA 01950
Ladies and Gentlemen:
You have requested our opinion regarding certain federal income tax
consequences of the merger (the "Merger") of HoloPak Technologies, Inc., a
Delaware corporation ("HoloPak"), with and into Foilmark Acquisition Corporation
("Foilmark Sub"), a Delaware corporation and a wholly-owned subsidiary of
Foilmark, Inc., a Delaware corporation ("Foilmark" collectively with HoloPak and
Foilmark Sub sometimes referred to as the "Companies") as described in that
certain Agreement and Plan of Merger by and among Foilmark, Foilmark Sub and
HoloPak dated as of November 17, 1998 (the "Merger Agreement"). This opinion is
being delivered to you pursuant to Section 9.1(g) of the Merger Agreement. All
capitalized terms used herein and not otherwise defined shall have the same
meaning ascribed in the Merger Agreement, unless the context otherwise requires.
In rendering this opinion, we have examined all such certificates,
documents and instruments as we have deemed necessary to enable us to render the
opinions expressed below. In this respect we have examined originals or
photographic, photostatic or certified copies of, among other things, the
following:
1. The Merger Agreement;
2. The Registration Statement on Form S-4;
3. Certificates of Good Standing and Legal Existence of each of the
Companies issued by the Office of the Secretary of the State of
Delaware;
4. Such other instruments and documents related to the formation,
organization and operation of Foilmark, HoloPak and Foilmark Sub
and related to the consummation of the Merger and the transactions
contemplated thereby as we have deemed necessary or appropriate.
<PAGE>
Board of Directors of Foilmark, Inc.
March 22, 1999
Page 2
In rendering this opinion, we have relied as to factual matters upon
certificates, statements and representations of officers and employees of
Foilmark, HoloPak and Foilmark Sub and the representations and warranties of the
Companies in the Merger Agreement and the other instruments signed and delivered
on behalf of the Companies in connection with the Closing. We are relying on
certificates executed by you and by the other Companies to the effect that the
representations and warranties of the Companies contained in the Merger
Agreement and the Ancillary Agreements are true and correct as of the date
hereof, and that the Companies have complied with all conditions and covenants
required to be complied with under the Merger Agreement and the Ancillary
Agreements. We are assuming that the Merger occurs as contemplated in the Merger
Agreement and the Registration Statement.
We have assumed the genuineness of all signatures, the authenticity of
all documents submitted to us as originals, the conformity to original documents
of all documents submitted to us as certified or photostatic copies, the
authenticity of the originals of such latter documents, the legal capacity of
all natural persons executing the documents and the accuracy and completeness of
all corporate records made available to us by the Companies.
We have assumed that you have obtained all necessary approvals and have
full authority to consummate the transaction contemplated by the Merger
Agreement, including but not limited to all governmental approvals as necessary.
We have made such examination of federal law as we have deemed relevant
for purposes of this opinion, but we have not made any review of the laws of any
other jurisdiction. Accordingly, we express no opinion as to the laws of any
state or jurisdiction other than the laws of the United States.
The opinions herein expressed are qualified to the extent that the
validity and enforceability of any provisions in the Merger Agreement and the
Ancillary Agreements or any other agreements as to which an opinion is expressed
herein, or any rights granted to you pursuant to any of those agreements, are
subject to and affected by (i) principles of public policy, (ii) general
equitable principles and (iii) applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws
affecting the enforcement of creditors' rights generally.
For purposes of this opinion, the definitions of the terms "knowledge"
and "known" as such terms relate to this firm are based solely on (i) our
internal investigation, which consisted solely of a review of our files relating
to the transaction, (ii) the knowledge of attorneys who are currently members or
employees of this firm who are directly involved in representation of the
Companies and (iii) reliance as to matters of fact on representations of the
Companies through inquiry of their officers and examination of relevant
documents furnished to us through such
<PAGE>
Board of Directors of Foilmark, Inc.
March 22, 1999
Page 3
inquiry, including without limitation the corporate minute books and stock
books, Certificates of Incorporation and By-laws of the Companies.
Based upon the facts and statements set forth above, our examination
and review of the documents referred to above and subject to the assumptions and
limitations set forth herein, we are of the opinion that, for federal income tax
purposes:
1. The Merger will constitute a "reorganization" within the meaning
of Section 368(a)(1)(A) and 368(a)(2)(D) of the Internal Revenue
Code of 1986, as amended (the "Code").
2. Each of Foilmark, Foilmark Sub and HoloPak will be a "party to the
reorganization" within the meaning of Section 386(b) of the Code.
3. No gain or loss will be recognized by HoloPak Stockholders as a
result of the exchange of HoloPak Common Stock for Foilmark Common
Stock pursuant to the Merger, although HoloPak Stockholders will
recognize income or gain (but not loss) in connection with the
receipt of the Cash Payment of $1.42 per share of HoloPak Common
Stock tendered, and a HoloPak Stockholder who receives cash in
lieu of a fractional share of Foilmark Common Stock will recognize
gain or loss with respect to such cash as if the stockholder
received the fractional share of Foilmark Common Stock in the
exchange and then sold it.
4. No gain or loss will be recognized by Foilmark, Foilmark Sub or
HoloPak as a result of the Merger (except for amounts resulting
from any required charge in accounting methods and any income and
deferred gain recognized pursuant to the Treasury Regulations used
under Section 1502 of the Code).
We express no opinion concerning any tax consequences of the Merger
other than those specifically set forth herein. This opinion is limited to the
United States federal income tax consequences of the Merger as described in the
Merger Agreement. We render no opinion with regard to any state or local tax
implications of the transactions contemplated or the tax consequences applicable
to any individual shareholder in light of such shareholder's particular
circumstances.
No opinion is expressed with respect to any transaction other than the
Merger or with respect to the Merger, if the Merger is not completed in
accordance with the Merger Agreement the assumptions contained herein are not
accurate.
The opinions expressed herein are based on current provisions of the
Code, the Treasury Regulations promulgated thereunder, published pronouncements
of the Internal Revenue Service and case law, any of which may be changed at any
time with retroactive effect. No opinion
<PAGE>
Board of Directors of Foilmark, Inc.
March 22, 1999
Page 4
expressed herein is binding on the U.S. Internal Revenue Service or the Courts.
Any change in any applicable laws or the facts and circumstances surrounding the
Merger or any inaccuracy in the statements, facts, assumptions and
representations on which we have relied, may affect the continuing validity of
the opinion set forth herein. We assume no responsibility to inform you of any
such change or inaccuracy that may occur or come to our attention.
This opinion is rendered to you in connection with the transactions
contemplated by the Merger Agreement and may not be relied upon or furnished to
any other person in any context not related to the Merger. This opinion may not
be quoted by you in any document, instrument or other writing, in whole or in
part, without the prior written consent of this firm.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to this firm and the discussion of
such opinion in the Registration Statement, and to the reference to our firm
under the headings "Material Federal Income Tax Consequences" and "Legal
Opinions" in the Proxy Statement-Prospectus, without admitting that we are
"experts" under the Securities Act of 1933 or the rules and regulations
promulgated thereunder with respect to any part of the Registration Statement.
Very truly yours,
/s/
---------------------
Hinckley, Allen & Snyder
<PAGE>
Exhibit 8.2
[Battle Fowler LLP Letterhead]
March 22, 1999
Holopak Technologies, Inc.
9 Cotters Lane
P.O. Box 538
East Brunswick, NJ 08816
Attention: James L. Rooney
Re: FOILMARK, INC. ACQUISITION OF HOLOPAK TECHNOLOGIES, INC.
Ladies and Gentlemen:
This opinion is being provided to you pursuant to Section
9.1(g) of the Agreement and Plan of Merger, dated as of November 17, 1998 (the
"Agreement"), by and among Foilmark, Inc., a Delaware corporation ("Parent"),
Foilmark Acquisition Corporation, a Delaware corporation that is a wholly-owned
subsidiary of Parent ("Merger Sub"), and Holopak Technologies, Inc., a Delaware
corporation ("Company"). Pursuant to the terms of the Agreement, the Company
will merge with and into Merger Sub (the "Merger"), with Merger Sub being the
surviving corporation. In the Merger, any outstanding shares of common stock,
$.01 par value, of Company and Class A common stock, $.01 par value, of Company
("Company Common Stock") held by stockholders (other than Parent, Merger Sub,
any other subsidiary of Parent, Company or any subsidiary of Company) will be
converted into 1.11 shares of common stock, without par value, of Parent
("Parent Common Stock") and $1.42 of cash per share of Company Common Stock in
accordance with the terms of the Agreement. In addition, any shares of Company
Common Stock held by Parent, Merger Sub, any other Subsidiary of Parent, Company
or any subsidiary of Company will be canceled and the separate corporate
existence of the Company will thereupon cease. No stock of Merger Sub will be
used in the transaction. Company Common Stock is the only outstanding class of
Company capital stock.
<PAGE>
March 22, 1999
Except as otherwise provided, capitalized terms not defined
herein have the meanings set forth in the Agreement or in the Officer's
Certificates Relating to Tax Treatment (the "Officers' Certificates") delivered
to us by Parent, Merger Sub and Company containing certain representations made
by them. All section references, unless otherwise indicated, are to the Internal
Revenue Code of 1986, as amended (the "Code").
We have acted as U.S. counsel to Company in connection with
the Merger. As such, and for the purpose of rendering this opinion, we have
examined originals, certified copies or copies otherwise identified to our
satisfaction as being true copies of the original of the following documents
(including all exhibits and schedules attached thereto):
(a) the Agreement;
(b) the Officers' Certificates; and
(c) such other instruments and documents related to the formation,
organization and operation of Parent, Merger Sub and Company and related to the
consummation of the Merger and the transactions contemplated thereby as we have
deemed necessary or appropriate.
In connection with rendering this opinion, we have with your
permission assumed, without any independent investigation or review thereof, the
following:
1. The Merger will be consummated in accordance with the terms
of the Agreement, and the Officers' Certificates will be true, correct and
complete at the time of the consummation of the Merger;
2. That original documents (including signatures) are
authentic; that documents submitted to us as copies conform to the original
documents; and that there is (or will be prior to the Closing) due execution and
delivery of all documents where due execution and delivery are a prerequisite to
the effectiveness thereof;
3. That all representations, warranties and statements made or
agreed to by Parent, Merger Sub and Company, and the management, employees,
officers, directors and stockholders thereof in connection with the Merger,
including but not limited to those set forth in the Agreement (including the
exhibits) and the Officers' Certificates are true and accurate at all relevant
times; and that all covenants contained in such documents are performed without
waiver or breach of any material provision thereof; and
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<PAGE>
March 22, 1999
4. That appraisal rights will not be exercised with respect to
more than 10% of the Company Common Stock; and
5. That there is no plan or intention on the part of Parent
or any of its affiliates, directly or indirectly, to reacquire any shares of
Parent Common Stock issued in the Merger, other than as part of an ongoing
stock repurchase program conducted by Parent. Prior to the Merger, there has
not been an acquisition of Company Common Stock by a person related to Parent
(within the meaning of Treasury Regulation Section 1.368-1(e)(3)) and,
following the Merger, there will not be a disposition of shares of Parent
Common Stock received in the Merger to a person related to Parent (within the
meaning of that regulation) directly or indirectly, other than as part of an
ongoing stock repurchase program conducted by Parent.
Based on our examination of the foregoing items and subject to
the limitations, qualifications, assumptions and caveats set forth herein, we
are of the opinion that for Federal income tax purposes:
The Merger will be a reorganization within the meaning of
Sections 368(a)(1)(A) and (a)(2)(D) of the Code.
Parent, Merger Sub and Company will each be a party to the
reorganization within the meaning of Section 368(b) of the
Code.
No gain or loss will be recognized by stockholders of Company
as a result of the exchange of shares of Company Common Stock
for shares of Parent Common Stock pursuant to the Merger,
except to the extent that the Company stockholders receive
cash in the exchange. Stockholders of Company who receive a
combination of cash and shares of Parent Common Stock will not
recognize any loss sustained on the exchange, but will
recognize income or gain.
Company stockholders who receive cash in lieu of fractional
shares of Parent Common Stock will recognize gain or loss as
if they had received the fractional share of Parent Common
Stock in the Merger and then sold it.
Income, gain or loss will be recognized by Company
stockholders who exercise appraisal rights with respect to
their shares of Company Common Stock with that gain or loss
generally constituting capital gain or loss if the stockholder
holds its Company Common Stock as a capital asset and if,
after exercising appraisal rights, owns no shares of Parent
Common Stock, either actually or constructively within the
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<PAGE>
March 22, 1999
meaning of Section 318 of the Code. However, if the payment
that the stockholder receives as a result of exercising
appraisal rights is essentially equivalent to a dividend,
within the meaning of Section 302 of the Code or has the
effect of a distribution or a dividend, within the meaning of
Section 356(a)(2) of the Code, then such Company stockholder
will generally recognize ordinary dividend income for federal
income tax purposes in an amount equal to the lesser of its
allocable share of the Company's current and accumulated
earnings and profits, or the entire amount of cash so received
and will treat any excess of the cash received over its
allocable share of the Company's current and accumulated
earnings and profits as a return of capital, and then as
income or gain from the disposition of the shares of Company
Common Stock.
None of Parent, Merger Sub or Company will recognize a gain or
loss on the Merger (except for amounts resulting from any
required change in accounting methods and any income and
deferred gain recognized pursuant to the Treasury Regulations
issued under Section 1502 of the Code).
This opinion does not address the various state, local or
foreign tax consequences that may result from the Merger. In addition, no
opinion is expressed as to any Federal income tax consequence of the Merger,
including the character of any income or gain attributable to any cash received,
except as specifically set forth herein, and this opinion may not be relied upon
except by Company and its stockholders, with respect to the consequences
specifically discussed herein.
This opinion addresses only the general tax consequences of
the Merger expressly described above and does not address any tax consequence
that might result to a stockholder in light of its particular circumstances,
such as stockholders who are dealers in securities, who are subject to the
alternative minimum tax provisions of the Code, who are foreign persons or who
acquired their shares in connection with stock option or stock purchase plans or
in other compensatory transactions.
No opinion is expressed as to any transaction other than the
Merger as described in the Agreement or to any other transaction whatsoever
including the Merger if all the transactions described in the Agreement are not
consummated in accordance with the terms of the Agreement and without waiver of
any material provision thereof. To the extent any of the representations,
warranties, statements and assumptions material to our opinion and upon which we
have relied are not complete, correct, true and accurate in all material
respects at all relevant times, our opinion would be adversely affected and
should not be relied upon.
4
<PAGE>
March 22, 1999
This opinion represents only our best judgment as to the
Federal income tax consequences of the Merger and is not binding on the Internal
Revenue Service or the courts. The conclusions are based on the Code, existing
judicial decisions, administration regulations and published rulings in effect
as of the date that this opinion is dated. These authorities may change or be
revised between the date hereof and the date the Merger is consummated. No
assurance can be given that future legislative, judicial or administrative
changes would not adversely affect the accuracy of the conclusions stated
herein. Furthermore, by rendering this opinion, we undertake no responsibility
to advise you of any new developments in the application or interpretation of
the Federal income tax laws.
This opinion has been delivered to you for the purposes set
forth in Section 9.1(g) of the Agreement and may not be distributed or
otherwise made available to any other person or entity without our prior
written consent. We hereby consent to the filing of this opinion as Exhibit
8.2 to the Registration Statement on Form S-4 (File No. 333- ) of
Foilmark filed with the Securities and Exchange Commission (the "Registration
Statement"), the discussion of such opinion in the Registration Statement,
and to the reference to Battle Fowler LLP under the captions "Legal Matters"
and "Material Federal Income Tax Consequences" in the Registration Statement.
Sincerely,
/s/
---------------------
5
<PAGE>
Exhibit 10.23
CONSULTING AGREEMENT
This Consulting Agreement ("Agreement") is made and entered into as of
this 1st day of January, 1999, by and between Foilmark, Inc., a Delaware
corporation (the "Company") having a place of business at 5 Malcolm Hoyt Drive,
Newburyport, Massachusetts 01950 and Edward Sullivan ("Consultant"), an
individual having an address of 257 Promenade East, Montgomery, TX 77356.
W I T N E S S E T H:
WHEREAS, the term of Consultant's Consulting Agreement ran through
December 31, 1998, and
WHEREAS, the Company is desirous of continuing to retain the services
of Consultant to advise it in connection with its sales management and strategy
and to continue to generally supervise the WestFoils, Inc.
operation.
NOW, THEREFORE, in consideration of the promises and agreements herein
contained and for other good and valuable consideration, the receipt whereof is
hereby acknowledged, it is hereby agreed as follows:
1. ENGAGEMENT. Corporation hereby engages Consultant to perform the
duties and to provide the services described in this Agreement upon the terms
and conditions set forth herein and the Consultant hereby accepts such
engagement.
2. TERM. The Consultant's services will commence upon the date hereof
and unless earlier terminated, as hereinafter provided, will continue in effect
until December 31, 1999 (the "Termination Date") and for successive one year
renewal terms thereafter upon the parties written consent not less than thirty
(30) days prior to the Termination Date or any subsequent termination date.
3. DUTIES. The Consultant will provide advise to the Company in
conjunction with sales management, strategic sales objectives, general
supervision of its WestFoils subsidiary, including the attendance at sales and
other meetings requested by the Company from time to time, and such further
consulting services as the Company may request. The Company acknowledges that
Consultant will not be obligated in any monthly period to provide more than
sixty (60) hours of consulting services, pursuant to this Agreement. The Company
acknowledges that Consultant has relocated his principal residence from
California to Texas and, as a result, will not be in a position to provide
day-to-day supervision of its WestFoils, Inc. subsidiary. Consultant agrees to
devote at least one (1) week per month to the supervision of the business and
affairs of WestFoils, Inc.
4. COMPENSATION. For all services rendered hereunder, Company agrees to
pay to Consultant, an amount equal to fifty percent (50%) of the average
compensation payable to Consultant pursuant to his Employment Agreement for the
years [1995 and 1996]. Such salary
<PAGE>
shall be paid in equal bi-weekly installments. Consultant will be entitled to
participate in and receive the fringe benefits offered by the Company to its
senior executives.
5. EXPENSES. Consultant shall be reimbursed on a monthly basis for all
reasonable out-of-pocket travel and telephone expenses incurred by Consultant in
connection with the business of the Company, provided that Consultant provides
the Company with receipt detailing any such expenditures. The Company agrees to
continue any existing lease or to lease or purchase a new automobile for use by
the Consultant in connection with the business of the Company. Maintenance,
insurance and operating expenses shall be paid by the Company or, if paid by the
Consultant, shall be reimbursed by the Company upon presentation of expense
vouchers. This automobile shall be in accordance with the Company's standard
formula and policy for employee automobiles, but shall be at least comparable to
the one presently used by the Consultant. Consultant agrees that except that at
the request of the Company he will not incur any unreasonable out-of-pocket
expenses in connection with any one trip or undertaking.
6. CONSULTANT RESPONSIBILITIES. The Consultant shall be responsible for
paying all required taxes withholding any amounts required by Federal or state
law for maintaining his own insurance, including, without limitation, Federal
income taxes, Social Security, state tax and other state requirements. The total
cost to the Company's engagement of the Consultant to provide the services
contemplated hereunder shall be the compensation set forth in Section 5 hereof.
7. TERMINATION.
a. The Company may terminate this Agreement: (i) upon Consultant's
death; (ii) at any time, for (A) Consultant's willful failure or refusal to
substantially perform his obligations under this Agreement or other acts or
omissions constituting gross neglect or dereliction of his duties hereunder, or
(B) fraud, dishonesty or other acts or omissions constituting a crime involving
moral turpitude by Consultant, or (iii) upon Consultant's disability, subject to
the provisions of Paragraph 10. Termination under subsection 8(a)(ii) of this
Agreement shall not operate as waiver of the rights and remedies available to
the Company under law.
b. Consultant may terminate this Agreement: (i) at any time, for cause,
upon written notice of willful failure or refusal of the Company to
substantially perform its obligations under this Agreement; (ii) upon
Consultant's disability subject to the provisions of Paragraph 8. Termination
under this provisions shall not operate as a waiver of the rights and remedies
available to the Employee under law.
c. In the event of termination of this Agreement for any reason, in
addition to the other payments that may be required hereunder, the Company shall
be obligated to pay Consultant or his estate, as the case may be, all salary and
other compensation earned or accrued up to the date of termination. In the event
of termination of the consulting relationship resulting from the Company's
willful failure or refusal to substantially perform its obligations under this
Agreement, the Consultant shall receive the total compensation and other
benefits under this Agreement through December 31, 1999 as liquidated damages.
2
<PAGE>
d. In the event of the death of the Consultant, all salary, bonus or
other payments (if any) due under this Agreement shall be payable to
Consultant's estate.
8. DEATH. In the event of Consultant's death during the term hereof,
Consultant's legal representative shall be entitled to receive the compensation
due Consultant through the last day of the calendar month in which his death
occurred.
9. DISABILITY. The Company or Consultant shall have the right to
terminate this Agreement, if Consultant shall be ill or so disabled as to
substantially impair his ability to discharge his obligations under this
Agreement for a period of four (4) successive months or eight (8) months in the
aggregate during the term hereof. The right to terminate this Agreement, if
because of disability, to be effective, must be exercised while Consultant's
disability continues.
10. DISCLOSURE OF INFORMATION.
a. For purposes of this Agreement, Proprietary Information is all
information utilized by the Company, and its Affiliates in their business.
Proprietary Information shall not include information which (i) is now or
hereafter in the public domain, (ii) was known to Consultant, other than as a
result of his ownership or employment by the Company, prior to the date hereof,
or (iii) is disclosed to Consultant by a third party not bound by any duty of
confidentiality to the Company. Proprietary Information shall specifically (but
not exclusively) include the following: the identification of all customers,
suppliers, products, or employees; all contracts; all financial affairs; all
business records or reports; all inventions, trade secrets, processes, or
methods of design, distribution, procurement or manufacturer. Proprietary
Materials shall mean all documents, papers, or other materials containing
Proprietary Information.
b. Consultant agrees that any Proprietary Information which Consultant
obtains, develops, or otherwise acquires in the course of the performance of his
duties hereunder shall be deemed to be confidential in character. Consultant
will not use any Proprietary Information or disclose it to any other party at
any time, except in the ordinary course of his duties with the Company or with
the written consent of the Board of Directors of the Company or as may be
required under any state or federal law, rule or regulation or by a court of
competent jurisdiction. This restriction shall apply during the period of this
Agreement and thereafter.
c. All Proprietary Materials shall be the exclusive property of the
Company and its Affiliates. Upon termination of this Agreement for any reason
whatsoever, Consultant agrees to not take any Proprietary Materials with him,
and to turn over to the Company all Proprietary Materials in his possession and
control.
d. This paragraph shall be binding upon Consultant's heirs, successors,
and legal representatives.
11. INVENTIONS.
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<PAGE>
a. Any and all inventions, products, improvements, processes,
manufacturing methods or techniques, formulas, designs or styles (collectively
hereinafter referred to as "inventions"), made, developed or created by
Consultant (alone or in conjunction with others, during regular hours of work or
otherwise) during the term of this Agreement which may be directly or indirectly
useful in, or relate to, any business of the Company or its Affiliates or tests
being carried on by them, shall be the Company's exclusive property and at all
times shall be made available to the Board of Directors of the Company or such
persons as may be so designated by the Board of Directors.
b. Consultant will, upon the Company's request, execute any documents
reasonably necessary or advisable in the opinion of the Company's counsel to
direct issuance of patents to the Company or its Affiliates with respect to such
inventions as are to be the Company's exclusive property under this section or
to vest in the Company or its Affiliates title to such inventions, the expense
of securing any patents, however, to be borne by the Company.
c. Consultant will keep confidential and will hold for the Company's
and its Affiliates' sole benefit any invention which is to be theirs exclusively
under this section for which no patent is issued.
d. This nondisclosure provisions contained in Paragraph 11 of this
Agreement shall specifically apply to said Inventions.
12. NON-COMPETITION. Consultant recognizes that the services to be
rendered by his pursuant to the terms of this Agreement are special, unique and
of an extraordinary character. Consultant therefore agrees that during the term
of this Agreement and for three (3) years following the date of termination,
Consultant agrees that he will not, directly or indirectly, alone or as a member
of a partnership or as an officer, director, stockholder, agent or employee of
any other corporation:
a. Intentionally do any act which is likely or intended to impair the
business or good will of the Company or its Affiliates.
b. Intentionally do any act or thing which is likely or intended to
deprive the Company or its Affiliates of the goodwill of suppliers, customers,
employees and others having business relations.
c. Solicit the employment of or otherwise induce any person who is
currently employed by the Company or its Affiliates to leave the Company.
d. Solicit sales of products of the type sold by the Company and its
Affiliates from any present or former customers of the Company or its
Affiliates.
e. Engage in competition with the business of the Company or its
Affiliates.
f. Consultant understands and agrees that the covenants made by him in
paragraph 10 through 12 of this Agreement are being made in view of the unique
and essential nature of
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<PAGE>
the services Consultant is to perform hereunder and the irreparable injury that
would befall the Company and its Affiliates should Consultant compete with or
serve a competitor of the Company or its Affiliates.
13. AFFILIATES OF THE COMPANY. "Affiliates" shall mean Foilmark, Inc.
and its U.S.-based subsidiaries which are controlled or under common control by
Foilmark.
14. NO PRIOR RESTRICTIONS. Consultant warrants that he is not subject
to any restrictive covenants or non-disclosure agreements with any former
employers or other third parties that will in any way interfere with his
performance under this Agreement, and agrees to indemnify the Company and its
Affiliates from any such claims.
15. EFFECT OF WAIVER. The waiver of either party or a breach of any
provisions of this Agreement shall not operate or be construed as a waiver of
any subsequent breach thereof.
16. BINDING/ASSIGNMENT. This Agreement shall be binding upon
Consultant, his heirs, executors, administrators and legal representatives. The
rights and benefits of the Company under this Agreement shall be transferable,
and all covenants and agreements hereunder shall inure to the benefit of an be
enforceable by or against its successors and assigns. However, such transfer
shall not relieve the Company of any liability under the terms of the Agreement.
17. NOTICE. Any notice required or permitted to be given under this
Agreement shall be given in writing and sent by certified or registered mail or
delivered in person; in the case of the Company, at Foilmark, Inc.'s offices in
Melville, New York, and in the case of Consultant to Consultant's residence as
indicated in the Company records, or to such other address as the parties hereto
may hereafter designate in writing.
18. ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties respecting the engagement of Consultant by the Company and
supersedes any and all prior employment agreements existing between Consultant
and the Company, whether oral or written, and shall govern all subsequent
relationships between them. This Agreement may be changed only by an agreement
in writing signed by the party against whom enforcement of any change is sought.
19. GOVERNING LAW. This Agreement shall be governed by the laws of the
Commonwealth of Massachusetts. In the event any provision of this Agreement is
invalid, illegal or unenforceable for any reason, such provision shall be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting or impairing the remainder of such provision or any other
provision of this Agreement.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first-above mentioned.
FOILMARK, INC.
By: /s/
-------------------------------
Frank J. Olsen, Jr., President
By: /s/
-------------------------------
Edward Sullivan, Consultant
6
<PAGE>
NON-COMPETITION AGREEMENT
-------------------------
This Non-Competition Agreement made and entered into as of this 21st day
of December, 1998 by and between Leonard Mintz ("Mintz"), of 89 Blueberry
Lane, Westwood, Massachusetts and Foilmark, Inc., ("Foilmark"), a Delaware
corporation, with its principal lace of business in 5 Malcolm Hoyt Drive,
Newburyport, MA.
RECITALS
On March 17, 1992, Franklin Manufacturing Corporation ("Franklin") and
Mintz entered into an Employment Agreement (the acquired Franklin and assumed
its obligations under the Employment Agreement. In 1997, Foilmark elected to
sell its hot stamping foil machine products lines. It is unclear whether
Foilmark has breached or terminated the Employment Agreement. In any case,
Foilmark and Mintz are now desirous of terminating the Employment Agreement
without cause. However, for all intents and purposes, the non-competition
provisions contained in Paragraph 17 of the Employment Agreement expire upon
the termination of the Employment Agreement, and Foilmark, desires that Mintz
agree to an extension of the non-competition provisions of the Employment
Agreement.
NOW THEREFORE, in consideration of the promises and agreements herein
contained and for other good and valuable consideration, the receipt and
sufficiency whereof is hereby acknowledged, Foilmark and Mintz agree as
follows:
1. TERMINATION OF EMPLOYMENT AGREEMENT. Effective upon the date hereof
and except as hereinafter specifically provided in paragraph 2 hereof, the
Employment Agreement is terminated, except that Foilmark shall continue to
pay Mintz until December 31, 1998 compensation in accordance with the
Employment Agreement.
2. NON-COMPETITION. Mintz and Foilmark agree that the Employment
Agreement shall be null and void except that Paragraph 15 and 16 of the
Employment Agreement shall survive and be deemed part of this Agreement.
Mintz further agrees that during the term of this Agreement, Mintz will not
directly or indirectly, alone or as a member of a partnership or as an
officer, director, stockholder, agent or employee of another corporation (a)
intentionally do any act or thing likely or intended to impair the business
or goodwill of Foilmark or its affiliates, (b) intentionally do any act or
thing which is likely or intended to deprive Foilmark or its affiliates of
the goodwill
<PAGE>
of its suppliers, customers, employees and other having business relations
with it, (c) solicit the employment of or otherwise induce any person who is
currently employed by Foilmark or its affiliates to leave Foilmark, (d)
solicit sales or products of the type manufactured or sold by Foilmark and
its affiliates from any present or former customers of Foilmark or its
affiliates, or (e) engage in any competition with the business of Foilmark
or its affiliates; provided, however, that nothing in this Agreement or the
Employment Agreement shall prohibit Mintz from participating or being engaged
in any business involved in the manufacture and sale of hot stamp foil
machines of any type.
3. TERMINATION DATE. Except as otherwise provided herein, this
Agreement shall terminate on December 1, 2003.
4. CONSIDERATION. In consideration of Mintz's agreement not to compete
as provided in Paragraph 2 of this Agreement, Foilmark agrees to (a) pay
Mintz on the first of each month (i) the sum of $14,886.50. (Fourteen
Thousand Eight Hundred Eighty Six Dollars and 50 Cents) in eighteen (18)
equal installments commencing on January 1, 1999 and (ii) one last
installment of $5,762.52 payable on July 1, 2000. Foilmark shall also pay
Mintz $4,167 per month in sixty (60) equal installments commencing on January
1, 1999 and ending on December 1, 2003. The payments of $14,886.50 set forth
in this paragraph shall be increased effective as of January 1 of each year
commencing January 1, 1999 by a percentage equal to the increase, if any,
during the preceding calendar year in the Consumer Price Index-Wage Earners
for Boston, Massachusetts, as announced by the United States Bureau of Labor
Statistics (base year 1967=100) or, if no such index exists, the index most
comparable; (b) pay Mintz the sum of $20,000.00 (Twenty Thousand Dollars) on
or before December 31, 1999; (c) (i) continue to pay the lease and all
maintenance, insurance, operating, and other expenses with respect to Mintz's
present automobile (or a comparable automobile) until the current lease for
said automobile expires and (ii) thereafter allow Mintz to purchase said
vehicle at the lease option purchase price and (whether Mintz purchases such
vehicle or not) provide Mintz, until July 12, 2000, with a car allowance
equal to the cost of the lease, insurance, maintenance, operating, and other
expenses being paid by Foilmark on Mintz's behalf as of said expiration; (d)
provide Mintz and pay the expenses associated with his car phone in an
amount not to exceed $170 (One Hundred Seventy and 00/100 Dollars) per month
until July 12, 2000; (e) (i) until July 12, 2000, make available to Mintz and
his spouse the medical and dental coverage currently provided to them
pursuant to Foilmark's medical and dental plan and (ii) until July 12, 2000,
contribute to the plan on Mintz's and his spouses's behalf as will ensure
that Mintz and his spouse shall not be required to contribute an amount or
amounts to the plan in excess of that which they
2
<PAGE>
currently contribute; (3) after July 12, 2000, make available for so long as
Mintz or his wife so desire the same health and dental coverage currently
provided to Mintz and his spouse provided that Mintz or his spouse make all
contributions with respect to such coverage (or reimburse Foilmark such
amount or amounts as it contributes on behalf of Mintz and his spouse). Mintz
shall be entitled to no other benefits from Foilmark. In the event that Mintz
should die before all of the payments required to be made by Foilmark
pursuant to this paragraph 4(a), (b), (c), and (d) have been made, Foilmark
shall continue to make such payments to Mintz's estate. In the event that
Mintz should die before all of the commitments required of Foilmark by this
paragraph 4(d) and (e) have been fulfilled, Foilmark shall continue to
fulfill such commitments insofar as they relate to Mintz's spouse. To
illustrate, should Mintz die prior to July 12, 2000, Foilmark shall continue
to make available to his spouse until July 12, 2000, the medical and dental
coverage currently provided to her and contribute until July 12, 2000, on her
behalf such amount or amounts as are necessary to continue such coverage.
Similarly, in the event Mintz die after July 12, 2000, Foilmark shall
continue to make such coverage available to Mintz's spouse provided that she
contributes (or reimburses Foilmark for) such amount or amounts as are
necessary to continue such coverage. Foilmark shall make no withholdings
whatsoever from any payment to be made pursuant to this paragraph 4.
5. INDEMNIFICATION AGREEMENT. Mintz agrees to waive any claim he may
have for back pay due to him from Foilmark. In return, Foilmark agrees that
the Indemnification Agreement between Mintz, Kensol/Foilmark, Inc. a Delaware
corporation, and others dates February 21, 1992, shall be null and void.
6. INJUNCTIVE RELIEF. Mintz agrees and acknowledges that any breach of
Paragraph 2 of this Agreement or paragraphs 15 and 16 of the Employment
Agreement by Mintz shall not be adequately compensated by damages at law and,
therefore, Foilmark shall be entitled to, in addition to any other remedies
that may be available to it, equitable relief in a court or equity by
injunction or otherwise without the necessity of proving actual damage to
Foilmark for any breach.
7. STOCK REDEMPTION. The parties recognize that Mintz and the Leonard
A. Mintz and Tina Mintz Charitable Remainder Trust (the "Trust") own
substantial stock in Foilmark. Foilmark agrees as further consideration of
the promises of Mintz set forth herein, that in the event it redeems at any
time the stock of any stockholder other than Mintz or the Trust, it shall
offer to redeem Mintz's and the Trust's stock upon the same terms and
conditions and in the same proportion as the amount of stock to be redeemed
of the other stockholder bears to the total amount of
3
<PAGE>
stock owned by that stockholder. In other words, if the other stockholder
owns 10 shares of Foilmark stock and Foilmark intends to redeem 5 shares, it
shall offer to redeem half of Mintz's stock on the same terms and conditions
it proposes to redeem the other stockholder's stock. This obligation shall
continue until Mintz, the Trust, his estate, or heirs no longer own any
Foilmark stock.
8. "PIGGYBACK" RIGHTS. Foilmark also agrees and recognizes that it
conferred upon Mintz certain "demand" and "piggyback" registration rights
with regard to Mintz's Foilmark stock pursuant to a Registration Agreement
between Foilmark and Mintz dated March 17, 1992. Foilmark acknowledges that
Mintz transferred some of his Foilmark stock to the Trust in 1995 and that it
agreed that said piggyback and demand rights attached to such stock after it
was transferred to the Trust. Foilmark agrees that should Mintz transfer
additional Foilmark stock to the Trust, the same piggyback and demand
registration rights shall attach to such stock after such transfer.
9. WAIVER. Failure by either party to require performance of any term
or obligation of this Agreement and the waiver by either party of any breach
of this Agreement, shall not be deemed a waiver of such term or obligation
and shall not foreclose subsequent enforcement of such term or obligation,
nor be deemed a waiver of any subsequent breach.
10. RELEASES AND INDEMNIFICATION. (a) In further consideration of the
obligations of Mintz set forth in this Agreement, Foilmark, on behalf of its
predecessors, successors, assigns, subsidiaries, officers, directors,
shareholders, employees, agents and representatives (hereinafter the
"RELEASORS"), hereby releases and forever discharges Mintz, his
representatives, agents, heirs, successors, assigns, and estate, (hereinafter
the "RELEASEES") and agrees to indemnify him and them and hold him and them
harmless from any and all actions or causes of action, suits, claims,
complaints, contracts, liabilities, agreements, promises, debts and damages,
whether existing or contingent, known or unknown, which the RELEASORS or any
other person or entity has, had, or ever had against any of the RELEASEES or
any of them, including without limitation any action taken or not taken by
Mintz as a director, officer, stockholder or employee of Foilmark, Franklin,
or Kensol Olsenmark, Inc. from the beginning of this world to the present,
and any obligation arising out of the closing documentation relating to the
sale of Franklin, Franklin Pacific Machine and Manufacturing Company, Inc.,
and various machinery to Foilmark or its predecessor on or about February 21,
1992. (b) In consideration of the promises and agreements of Foilmark herein
contained, Mintz, on behalf of himself, his heirs, administrators
4
<PAGE>
and assigns, hereby releases and forever discharges Foilmark, its officers,
directors, subsidiaries, successors and assigns from any and all actions,
causes of action, suits, claims, complaints, contracts, liabilities,
agreements, promises, debts, damages, whether existing or contingent, known
or unknown, which Mintz has had or ever had against Foilmark or any of the
foregoing persons arising out of or relating to his Employment Agreement.
Nothing in this paragraph 10 shall be deemed to release Foilmark from its
obligations under this Non-Competition Agreement.
11. RESIGNATION FROM BOARD OF DIRECTORS. In return for the
consideration from Foilmark set forth herein, Mintz agrees to resign
forthwith from the Board of Directors of Foilmark, and effective upon the
date hereof, that certain voting agreement between Mintz and certain other
stockholders of Foilmark dated November 17, 1994, copy attached hereto as
Exhibit A, is hereby terminated insofar as Mintz is concerned.
12. BREACH. In the event that Foilmark fails to make any payment or
otherwise breaches any provision of paragraph 4 of this Agreement, all sums
due thereunder shall become immediately due and payable together with interest
at 1-1/2% per month, and the costs of collection, including any attorneys'
fees incurred by Mintz, his estate, or heirs as a result of such breach.
13. SUCCESSORS. This Agreement shall be binding upon and shall inure
to the benefit of Foilmark, Mintz and any of their respective successors,
affiliates, heirs, executors, administrators, legal representatives and
assigns.
14. MODIFICATION. No provisions of this Agreement shall be changed or
modified nor shall this Agreement be discharged in whole or part except by an
agreement in writing signed by both parties.
15. NOTICES. Any and all notices under this Agreement shall be in
writing, and if to Foilmark shall be duly given if mailed to Foilmark at the
address set forth above or such other address as Foilmark may hereafter
designate in writing for this purpose, and if to Mintz shall be duly given if
mailed to the address set forth above or such other address as Mintz may
hereafter designate in writing for this purpose.
16. SEVERABILITY. In the event that any one or more provisions of this
Agreement shall be held invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not effect any other
portion of this Agreement, and this Agreement shall be construed as if such
provisions had never been contained herein.
5
<PAGE>
17. COMPLETE AGREEMENT. This Agreement represents the complete agreement
of the parties with respect to the subject matter contained herein. All prior
agreements of the parties with respect to the subject matter of this
Agreement are hereby terminated, except as herein provided.
18. GOVERNING LAW. This Agreement shall be deemed made under the laws of
the Commonwealth of Massachusetts and for all purposes shall be construed and
enforced in accordance with said laws.
FOILMARK, INC.
By: /s/ Frank Olsen, Jr.
-----------------------------------------
/s/ Leonard Mintz
-----------------------------------------
LEONARD MINTZ
The undersigned being parties to that certain Voting Agreement with
Leonard Mintz, dated November 17, 1994, Exhibit A, hereby release Mintz from
any further obligations thereunder.
/s/ Martin A. Olsen /s/ Frank Olsen, Jr.
- ------------------------------- -----------------------------------------
Martin A. Olsen Frank Olsen, Jr.
/s/ Florence J. Olsen /s/ Carole J. Robie
- ------------------------------- -----------------------------------------
Florence J. Olsen Carole J. Robie
/s/ Martin A. Olsen
- -------------------------------
Executive for Florence J. Olsen
6
<PAGE>
EXHIBIT
A
<PAGE>
VOTING AGREEMENT BETWEEN
CERTAIN SHAREHOLDERS OF
FOILMARK, INC.
THIS AGREEMENT is made this 17th day of November, 1994, by and among
Martin A. Olsen, Florence J. Olsen, Frank J. Olsen, Jr., Carol J. Robie and
Leonard A. Mintz (collectively, the "Shareholders") and Edward Sullivan
("Sullivan").
WITNESSETH:
WHEREAS, the Shareholders own as of the date of this Agreement an
aggregate number of shares in excess of 40% of the issued and outstanding
shares of the capital stock of Foilmark, Inc. ("Foilmark")'
WHEREAS, Foilmark is entering into an Agreement of Exchange ("Exchange
Agreement") with West Foils, Inc. ("West Foils") and Sullivan, pursuant to
which, Sullivan, as the sole shareholder of all the issued and outstanding
common stock of West Foils, shall exchange all of his shares in West Foils
for common stock in Foilmark and $750,000;
WHEREAS, the Shareholders now wish to agree to vote on and after the
consummation of the Exchange Agreement for the election of Edward Sullivan as
director of Foilmark; and
WHEREAS, Sullivan now wishes to agree to vote on and after the
consummation of the Exchange Agreement for the election of the Shareholders
as directors of Foilmark.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree:
1. DIRECTOR VOTE. On and after the consummation of the Exchange Agreement
for the term of this Agreement, the Shareholders and Sullivan agree that they
shall each vote their shares of Common Stock of Foilmark for the election as
directors of Foilmark each of the above-named Shareholders who is, at the
time of such election, (a) the owner of issued and outstanding Common Stock
of Foilmark, and (b) an officer or employee of the Corporation or any of its
subsidiaries or affiliates; and (ii) the Shareholders agree that they shall
each vote their shares of Foilmark Common Stock for the election of Sullivan
as a director of Foilmark provided that at the time of such election Sullivan
is (a) an owner of Foilmark Common Stock and (b) an officer or employee of
Foilmark or any of its subsidiaries or affiliates, including, without
limitation, West Foils.
2. TERM. The Term of this Agreement is 10 years unless the parties agree
otherwise.
3. VALIDITY. If any term or provision of this Agreement, with the
application thereof to any person or circumstance, shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement or application to
other persons and circumstances shall not be affected thereby, and each term
and provision hereof shall be enforced to the fullest extent permitted by law.
<PAGE>
4. NOTICE. All notices hereunder shall be in writing, and shall be duly
given, by personal delivery, by registered or certified mail, return-receipt
requested, by telecopier or by a nationally recognized overnight courier
service, to the following addresses:
If to the Stockholders: With Copy to:
- -----------------------
c/o Foilmark, Inc. Barry C. Maloney, Esq.
40 Melville Park Road Maloney & Burch
Melville, NY 11747 1100 Connecticut Avenue, N.W.
Washington, D.C. 20036
If to Sullivan: With Copy to:
- ---------------
Edward Sullivan Anthony Ciasulli, Esq.
West Foils, Inc. Morgan, Lewis & Bockius
2150 Anchor Court 801 South Grand Avenue
Newbury Park, CA 91320 Los Angeles, CA 90017-3189
All notices shall be deemed to have been given or made when personally
delivered; or if mailed as aforesaid upon the earlier of receipt or three
business days after being deposited in the mail; or if telecopied as
aforesaid upon dispatch; or if by courier service, the business day following
dispatch.
5. WAIVER. The provisions of this Agreement may be waived only by an
instrument in writing signed by Sullivan and all of the Shareholders, or
their transferees, as the case may be. No failure or delay by any party in
exercising any right or remedy hereunder shall operate as a waiver thereof,
and a waiver of a particular right or remedy on one occasion shall not be
deemed a waiver of any other right or remedy, or a waiver on any subsequent
occasion.
6. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with, and shall be governed by, the laws of the State of Delaware.
7. COUNTERPARTS. This Agreement may be executed in several counterparts
which, when executed and delivered by all parties hereto, shall be binding on
all parties hereto and shall constitute one agreement, notwithstanding that
all parties have not signed the same counterpart.
8. DISPUTE RESOLUTION. If a dispute arises under this Agreement that is
not settled promptly in the ordinary course of business, the parties shall
seek to resolve any such dispute between them, first, by negotiating promptly
with each other in good faith in face-to-face negotiations. If the parties
are unable to resolve the dispute between them within twenty (20) business
days (or such period as the parties shall otherwise agree), then such dispute
shall be submitted to binding arbitration in accordance with the General
Commercial Rules of the American Arbitration Association in Suffolk County,
New York. Arbitration shall apply the laws of Delaware. The decision and
award of the arbitrator shall be final and binding and may be entered into
any court of competent jurisdiction for enforcement, as necessary.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
/s/ Edward Sullivan
- -----------------------------
Edward Sullivan
SHAREHOLDERS
/s/ Martin A. Olsen
- -----------------------------
Martin A. Olsen
/s/ Frank J. Olsen, Jr.
- -----------------------------
Frank J. Olsen, Jr.
/s/ Florence J. Olsen
- -----------------------------
Florence J. Olsen
/s/ Carol J. Robie
- -----------------------------
Carol J. Robie
/s/ Leonard A. Mintz
- -----------------------------
Leonard A. Mintz
<PAGE>
EXHIBIT 21.1
Foilmark, Inc.
Subsidiaries of the Company
Foilmark Acquisition Corp. - Delaware corporation
Foilmark Manufacturing Corp. - Delaware corporation
<PAGE>
EXHIBIT 23.1
The Board of Directors
Foilmark, Inc. and Subsidiaries:
We consent to incorporation by reference in the registration statement on
Form S-4 of Foilmark, Inc. and subsidiaries of our report dated February 18,
1999, relating to the consolidated balance sheets of Foilmark, Inc. and
subsidiaries as of December 31, 1998 and 1997 and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
years in the three-year period ended December 31, 1998 and the related schedule,
which reports appear in the Current Report on Form 8-K filed by Foilmark on
March 3, 1999.
We consent to incorporation by reference in the registration statement on
Form S-4 of Foilmark, Inc. and subsidiaries of our report dated March 3, 1998,
relating to the consolidated balance sheets of Foilmark, Inc. and subsidiaries
as of December 31, 1997 and 1996 and the related statements of operations,
stockholders' equity and cash flows for each of the years in the three-year
period ended December 31, 1997 and the related schedule, which report appears in
the December 31, 1997 Annual Report to Stockholders on Form 10-K of Foilmark,
Inc.
We consent to the reference to our firm under the heading "Experts" in the
registration statement.
/s/
KPMG LLP
Melville, New York
March 19, 1999
<PAGE>
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of Foilmark, Inc. on Form S-4 of our reports dated June 29, 1998, appearing in
the Annual Report on Form 10-K of HoloPak Technologies, Inc. for the year ended
March 31, 1998, and to the reference to us under the heading "Experts" in the
Prospectus, which is part of this Registration Statement.
/s/ DELOITTE & TOUCHE LLP
Parsippany, New Jersey
March 18, 1999
<PAGE>
FOILMARK, INC.
PROXY
This proxy is solicited by the board of directors of Foilmark, Inc. for
the special meeting of stockholders to be held on April 21, 1999.
I am a holder of common stock of Foilmark, Inc. I appoint Frank J. Olsen,
Jr., Philip Leibel, Stephen J. Carlotti and Paul Bork, and each of them, with
full power of substitution, to vote all shares of my common stock for which I
am entitled to vote through the execution of a proxy for the special meeting
of stockholders of Foilmark to be held on April 21, 1999 at 9:30 a.m., local
time, at the Marriott Long Wharf, 296 State Street, Boston, Massachusetts
02109 or at any adjournment or postponement of the special meeting. I
authorize and instruct Messrs. Olsen, Leibel, Carlotti and Bork to vote as I
have directed below.
I understand that returned proxy cards will be voted:
-- as specified on the matters listed on the reverse;
-- in accordance with the board of directors' recommendations where no
specification is made; and
-- in accordance with the judgment of the proxies on any other matters
that may properly come before the meeting.
Please mark your choice like this: /X/
I hereby acknowledge that I have received the notice of special meeting
of stockholders and the proxy statement furnished with the notice.
I may revoke this proxy at any time before the special meeting.
If the merger is completed, HoloPak stockholders will receive 1.11 shares
of Foilmark common stock and $1.42 in cash for each HoloPak share.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
PLEASE MARK
YOUR VOTES AS
INDICATED IN
THIS EXAMPLE /X/
THE BOARD OF DIRECTORS
OF FOILMARK RECOMMENDS
A VOTE FOR EACH OF THE
FOLLOWING.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
1. To consider and vote upon a proposal to issue up to 3,715,935 shares of / / / / / /
Foilmark common stock under the merger agreement dated November 17, 1998
among Foilmark, Foilmark Acquisition Corporation and Holopak Technologies,
Inc. under which Holopak will merge into Foilmark Acquisition.
2. To consider and vote upon a proposal to adopt an amendment to Foilmark's / / / / / /
certificate of incorporation to become effective in connection with the
merger, to increase the number of authorized shares of Foilmark common
stock from 10,000,000 to 15,000,000. Foilmark does not intend to effect
this amendment if the merger is not completed.
3. To consider and vote upon a proposal to adopt an amendment to Foilmark's / / / / / /
certificate of incorporation to remove article eight of Foilmark's
certificate of incorporation. Foilmark intends to effect this amendment
even if the merger is not completed.
4. To consider and vote upon a proposal to adopt an amendment to Foilmark's / / / / / /
certificate of incorporation to remove article nine of Foilmark's certificate
of incorporation. Foilmark intends to effect this amendment even if the merger
is not completed.
</TABLE>
PRINT AND SIGN YOUR NAME BELOW EXACTLY AS IT APPEARS HEREON
AND DATE THIS CARD. WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE,
AS SUCH. JOINT OWNERS SHOULD EACH SIGN. IF A CORPORATION,
PLEASE SIGN AS FULL CORPORATE NAME BY PRESIDENT OR
AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY AUTHORIZED PERSON.
Signature (title, if any)
--------------------------
Signature, if held jointly
--------------------------
Dated, 1999
---------------------------------------------
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE TODAY. YOU MAY REVOKE THIS PROXY AT ANY TIME PRIOR TO THE TAKING
OF A VOTE ON THE MATTERS HEREIN.
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
HOLOPAK TECHNOLOGIES, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF HOLOPAK
TECHNOLOGIES, INC. FOR
THE SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 21, 1999.
I am a holder of common stock of HoloPak Technologies, Inc. I appoint Robert
J. Simon and Arthur Karmel with full power of substitution, to vote all shares
of my common stock for which I am entitled to vote through the execution of a
proxy at the special meeting of stockholders of HoloPak to be held on April 21,
1999 at 8:00 a.m., local time, at the offices of Battle Fowler LLP, 75 East 55th
Street, New York, NY 10022 or any adjournment or postponement. I authorize and
instruct Messrs. Simon and Karmel to vote in the manner directed below.
I understand that returned proxy cards will be voted
- as specified on the reverse;
- in accordance with the Board of Directors' recommendation where no
specification is made; and
- in accordance with the judgment of the proxies on any other matters that
may properly come before the meeting.
I understand that I may revoke this proxy at any time before the special
meeting.
I further acknowledge receipt of the notice of special meeting of
stockholders and the proxy statement.
If the merger is completed, HoloPak stockholders will receive 1.11 shares of
Foilmark stock and $1.42 in cash for each HoloPak share.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
- --------------------------------------------------------------------------------
TRIANGLE FOLD AND DETACH HERE TRIANGLE
<PAGE>
Please mark your vote as indicated in this example /X/
1. To consider and vote upon a proposal to approve and adopt the Agreement
and Plan of Merger, dated November 17, 1998, among HoloPak, Foilmark,
Inc., and Foilmark Acquisition Corporation.
/ / FOR / / AGAINST / / ABSTAIN
Print and sign your name below exactly as it appears on this proxy card
and date this card. When signing as attorney, executor, administrator,
trustee or guardian, please give your full title. Joint owners should
each sign. If a corporation, please sign as full corporate name by
president or authorized officer. If a partnership, please sign in
partnership name by authorized person.
Signature (title, if any) ________________________ Signature, if held jointly
________________________ Dated ________________________________________, 1999
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE TODAY. YOU MAY REVOKE THIS PROXY AT ANY TIME PRIOR TO THE TAKING OF A
VOTE ON THE MATTER STATED IN THIS PROXY CARD.
- --------------------------------------------------------------------------------
TRIANGLE FOLD AND DETACH HERE TRIANGLE
