Exhibit 99.2
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
FOILMARK, INC.,
FOILMARK ACQUISITION CORPORATION
AND
HOLOPAK TECHNOLOGIES, INC.
DATED AS OF NOVEMBER 17, 1998
TABLE OF CONTENTS
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Preamble................................................................................................... 1
ARTICLE 1.................................................................................................. 1
1.1 Merger........................................................................................ 1
1.2 Time and Place of Closing..................................................................... 1
1.3 Effective Time................................................................................ 1
ARTICLE 2.................................................................................................. 2
2.1 Charter....................................................................................... 2
2.2 Bylaws........................................................................................ 2
2.3 Directors and Officers........................................................................ 2
2.4 Effects of the Merger......................................................................... 2
ARTICLE 3.................................................................................................. 2
3.1 Conversion of Shares.......................................................................... 2
3.2 Shares Held by Foilmark or Holopak............................................................ 2
3.3 Fractional Shares............................................................................. 3
3.4 Conversion of Stock Options................................................................... 3
3.5 Dissenting Shares............................................................................. 4
ARTICLE 4.................................................................................................. 4
4.1 Exchange Procedures........................................................................... 4
4.2 Rights of Former Shareholders................................................................. 5
4.3 Investment of Exchange Fund................................................................... 5
4.4 Termination of Exchange Fund.................................................................. 6
ARTICLE 5.................................................................................................. 6
5.1 Organization, Standing, and Power............................................................. 6
5.2 Authority; No Breach By Agreement............................................................. 6
5.3 Capital Stock................................................................................. 7
5.4 Foilmark Subsidiaries......................................................................... 7
5.5 SEC Filings; Financial Statements............................................................. 8
5.6 Absence of Undisclosed Liabilities............................................................ 8
5.7 Absence of Certain Changes or Events.......................................................... 9
5.8 Tax Matters................................................................................... 9
5.9 Assets........................................................................................ 11
5.10 Intellectual Property......................................................................... 11
5.11 Compliance with Laws.......................................................................... 12
5.12 Labor Relations............................................................................... 12
5.13 Employee Benefit Plans........................................................................ 13
5.14 Material Contracts............................................................................ 14
5.15 Legal Proceedings............................................................................. 15
5.16 Statements True and Correct................................................................... 15
5.17 Accounting, Tax and Regulatory Matters........................................................ 15
5.18 State Takeover Laws........................................................................... 16
5.19 Charter Provisions............................................................................ 16
5.20 Millennium Capability......................................................................... 16
5.21 Third Party Consents and Governmental Approvals............................................... 16
5.22 Authority of Foilmark Sub..................................................................... 16
5.23 Fairness Opinion.............................................................................. 16
5.24 Environmental Matters......................................................................... 17
5.25 HSR Act....................................................................................... 17
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ARTICLE 6.................................................................................................. 17
6.1 Organization, Standing, and Power............................................................. 17
6.2 Authority; No Breach By Agreement............................................................. 17
6.3 Capital Stock................................................................................. 18
6.4 Holopak Subsidiaries.......................................................................... 18
6.5 SEC Filings; Financial Statements............................................................. 19
6.6 Absence of Undisclosed Liabilities............................................................ 20
6.7 Absence of Certain Changes or Events.......................................................... 20
6.8 Tax Matters................................................................................... 20
6.9 Assets........................................................................................ 22
6.10 Intellectual Property......................................................................... 23
6.11 Compliance with Laws.......................................................................... 23
6.12 Labor Relations............................................................................... 24
6.13 Employee Benefit Plans........................................................................ 24
6.14 Material Contracts............................................................................ 25
6.15 Legal Proceedings............................................................................. 26
6.16 Statements True and Correct................................................................... 26
6.17 Accounting, Tax and Regulatory Matters........................................................ 27
6.18 State Takeover Laws........................................................................... 27
6.19 Charter Provisions............................................................................ 27
6.20 Millennium Capability......................................................................... 27
6.21 Third Party Consents and Governmental Approvals............................................... 27
6.22 Fairness Opinion.............................................................................. 27
6.23 Environmental Matters......................................................................... 27
6.24 HSR Act....................................................................................... 28
ARTICLE 7.................................................................................................. 28
7.1 Affirmative Covenants of Foilmark and Holopak................................................. 28
7.2 Negative Covenants of Foilmark and Holopak.................................................... 28
7.4 Adverse Changes in Condition.................................................................. 30
7.4 Reports....................................................................................... 30
ARTICLE 8.................................................................................................. 31
8.1 Registration Statement; Proxy Statement; Shareholder Approval................................. 31
8.2 Exchange Listing.............................................................................. 31
8.3 Applications; Antitrust Notification.......................................................... 31
8.4 Filings with State Offices.................................................................... 31
8.5 Agreement as to Efforts to Consummate......................................................... 32
8.6 Investigation and Confidentiality............................................................. 32
8.7 Press Releases................................................................................ 32
8.8 No-Solicitation............................................................................... 32
8.9 State Takeover Laws........................................................................... 33
8.10 Charter Provisions............................................................................ 33
8.11 Indemnification and Insurance................................................................. 33
8.12 No Recourse................................................................................... 34
8.13 Conversion of Non-Voting Stock................................................................ 34
8.14 Credit Facilities............................................................................. 34
8.15 Filing of S-8................................................................................. 34
8.16 Environmental Report.......................................................................... 34
8.17 Employment Agreement.......................................................................... 34
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ARTICLE 9.................................................................................................. 35
9.1 Conditions to Obligations of Each Party....................................................... 35
9.2 Conditions to Obligations of Holopak.......................................................... 36
9.3 Conditions to Obligations of Foilmark......................................................... 38
ARTICLE 10................................................................................................. 39
10.1 Termination................................................................................... 39
10.2 Effect of Termination......................................................................... 40
10.3 Non-Survival of Representations and Warranties................................................ 40
ARTICLE 11................................................................................................. 41
11.1 Definitions................................................................................... 41
11.2 Expenses...................................................................................... 46
11.3 Brokers and Finders........................................................................... 47
11.4 Entire Agreement.............................................................................. 47
11.5 Amendments.................................................................................... 47
11.6 Waivers....................................................................................... 47
11.7 Assignment.................................................................................... 48
11.8 Notices....................................................................................... 48
11.9 Governing Law................................................................................. 49
11.10 Counterparts.................................................................................. 49
11.11 Captions...................................................................................... 49
11.12 Interpretations............................................................................... 49
11.13 Enforcement of Agreement...................................................................... 49
11.14 Severability.................................................................................. 49
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LIST OF EXHIBITS
EXHIBIT NUMBER DESCRIPTION
--------------- -------------------------------------------------------------------------------------------------
2.1 The Certificate of Incorporation of Foilmark Sub
2.2 Bylaws of Foilmark Sub
8.17 Form of Employment Agreement with ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
9.1(i) Form of Voting Agreement, among Foilmark, ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Bradford and other principal
stockholders
9.2(j) Form of Registration Rights Agreement
9.2(o)(i) Terms of Consulting Agreement with ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
9.2(o)(ii) Terms of Employment Agreement with ▇.▇. ▇▇▇▇
9.2(o)(iii) Terms of Employment Agreement with ▇▇▇▇▇▇ ▇▇▇▇▇▇
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
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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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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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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
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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
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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 ▇▇▇▇▇'▇
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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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,
6
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.
7
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
8
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.
9
(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.
10
(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
11
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
12
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.
13
(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
14
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.
15
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 ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & 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.
16
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
17
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
18
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
19
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.
20
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
22
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
23
(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.
24
(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
25
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
26
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 ▇▇▇▇▇▇▇▇ & 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
27
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
28
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
29
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.
30
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
32
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
33
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 ▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇.
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 ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. to be effective as of the Effective Time in
substantially the form attached hereto as Exhibit 8.17.
34
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
35
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.
36
(d) OPINION OF COUNSEL. Holopak shall have received an opinion of ▇▇▇▇▇▇▇▇,
▇▇▇▇▇ & ▇▇▇▇▇▇, 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 ▇▇▇▇▇▇▇▇ & 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 ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 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) ▇▇▇▇▇ CONSENT. Foilmark shall have obtained the written Consent of
▇▇▇▇▇▇▇ ▇▇▇▇▇ 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, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 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.
37
(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 ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, 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 ▇.▇. ▇▇▇▇, 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇, 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.
38
(d) OPINION OF COUNSEL. Foilmark shall have received an opinion of Battle
▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ &
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
39
(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.
40
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.
41
"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
42
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 ▇▇▇▇▇▇▇ Act, as added by Title II of
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ 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
43
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
44
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
45
other taxes, assessments, charges, fares, or impositions, including interest,
penalties, and additions imposed thereon or with respect thereto.
"TRADING DAY" shall mean any day other than a day on which the New York
Stock Exchange is closed.
(b) The terms set forth below shall have the meanings ascribed thereto in
the referenced sections:
Effective Time Section 1.3
Foilmark Contracts Section 5.14
Foilmark ERISA Plan Section 5.13
Foilmark Benefit Plans Section 5.13
Holopak Contracts Section 6.14
Holopak ERISA Plan Section 6.13
Holopak Benefit Plans Section 6.13
Holopak Options Section 3.4
Closing Section 1.2
ERISA Affiliate Section 5.14(b)
Exchange Agent Section 4.1
Stock Merger Consideration Section 3.1(c)
Cash Merger Consideration Section 3.1(c)
Merger Section 1.1
SEC Section 5.5
Tax Opinion Section 10.1(h)
Acquisition Transaction Section 8.8
Acquisition Transaction Proposal Section 8.8
(c) Any singular term in this Agreement shall be deemed to include the
plural, and any plural term the singular. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitation."
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.
46
(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 ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., L.L.C. as to
Foilmark and except for ▇▇▇▇▇▇▇▇ & 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.
47
11.7 ASSIGNMENT. Except as expressly contemplated hereby, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law or otherwise) without
the prior written consent of the other Party. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the Parties and their respective successors and assigns.
11.8 NOTICES. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, by registered or certified mail, postage pre-paid, or by
courier or overnight carrier, to the persons at the addresses set forth below
(or at such other address as may be provided hereunder), and shall be deemed to
have been delivered as of the date so delivered:
Foilmark:
Foilmark, Inc.
▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Chairman and President
Copy to Counsel:
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Holopak:
Holopak Technologies, Inc.
▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
President and Chief
Executive Officer
Copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇▇ Ventures Limited
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to Counsel:
Battle ▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇ ▇▇▇▇▇
48
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
49
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto as of the day and year first above written.
ATTEST: FOILMARK, INC.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
--------------------------------------- ---------------------------------------
Secretary By: President
ATTEST: FOILMARK ACQUISITION CORPORATION
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
--------------------------------------- ---------------------------------------
Secretary By: President
ATTEST: HOLOPAK TECHNOLOGIES, INC.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------- ---------------------------------------
Secretary By: President
50
EXHIBIT 2.1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
------------------------
I, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, 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.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
SECRETARY OF STATE
2966881 8100 AUTHENTICATION: 9406642
981439046 DATE: 11-16-98
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, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ of ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
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 ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇.
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.
IN WITNESS WHEREOF, the undersigned has signed this Certificate of
Incorporation on this 16th day of November, 1998.
FOILMARK ACQUISITION CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇, Sole Incorporator
2
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.
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, may call a special meeting of stockholders in
accordance with the provisions of the Certificate of
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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.
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
3
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
5
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
6
(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.
7
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
8
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.
9
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 ▇ ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
(the "Company"), and ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., an individual with a residence address
of ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("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.
(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.
2
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
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
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
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.
▇ ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: Chairman of the Board
(b) to Executive at:
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
FOILMARK, INC.
By:______________________________________
Title:
EXECUTIVE:
________________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
7
SCHEDULE A
FORMULA: BONUS/BUDGET COMPARISON
For each fiscal year during the Employment Period, the Board of Directors,
in its sole discretion, shall establish a budget for pretax income in accordance
with generally accepted accounting principles consistently applied ("GAAP") and
the formulaic portion of Executive's bonus will vary as a percentage of Base
Salary in relation to the percentage achievement of that budget as follows:
PERCENTAGE OF PORTION PERCENTAGE OF BASE SALARY EARNED AS
BUDGET ATTAINED FORMULAIC PORTION
--------------------------------------------------------------- -------------------------------------
Less than 80%.................................................. 0%
80%............................................................ 15%
90%............................................................ 25%
100%........................................................... 35%
110%........................................................... 45%
120%........................................................... 55%
130%........................................................... 65%
140% and above................................................. 75%
For a percentage of budget achievement between the benchmarks, the
percentage of the Base Salary shall be linearly interpolated, provided that no
bonus shall be paid for achievement less than 80% of budget and the maximum
formulaic portion of bonus shall be 75% of Base Salary in any event. In the case
of a partial fiscal year, the Company shall adjust the bonus to correspond to
the Company's budget and the Base Salary for the portion of the applicable
fiscal year that shall be included in the Employment Period. Notwithstanding the
foregoing, the initial bonus period (the "Initial Bonus Period") shall be the
period starting with the Bonus Starting Date and ending on December 31, 1999,
and the Company shall use its budget for that period (a copy of which the
Company has provided to the Executive) to determine the eligibility for a bonus,
and then apply the applicable bonus percentage to that portion of the annual
Base Salary thereafter. Subsequent bonus periods shall begin on each January 1,
thereafter and end with the last day of the Company's fiscal year, and the
Company shall prepare a budget for that period and determine the Executive's
eligibility for a bonus in the manner described for the Initial Bonus Period.
The bonus program shall continue with each Renewal Period as defined in Section
1 of the Agreement, with the bonus periods corresponding to the Company's fiscal
year. Bonuses shall continue to be calculated as described in this Schedule.
8
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 ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. 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.
(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
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ to serve as Chairman of the Board; (iii) to cause the Board to
establish an Executive Committee, which shall consist of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, of which ▇▇▇▇▇▇ ▇.
▇▇▇▇▇ shall be the Chairman; (iv) to cause the Board to establish a Compensation
Committee, which shall consist of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, of which ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall be the Chairman;
and (v) to cause the Board to establish an Audit Committee, which shall consist
of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ Share, of which
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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
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
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.
FOILMARK, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
-----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
CHIEF EXECUTIVE OFFICER
4
HOLOPAK STOCKHOLDERS:
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
OVERSEAS PRIVATE INVESTOR PARTNERS BRADFORD VENTURE PARTNERS, L.P.
By: ------------------------------------- By: -------------------------------------
------------------------------------------ ------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. Share
------------------------------------------ ------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
FOILMARK STOCKHOLDERS:
------------------------------------------ ------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------ ------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
------------------------------------------ ------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------ ------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
5
SCHEDULE A
FOILMARK STOCKHOLDERS
PRIOR TO EFFECTIVENESS AFTER EFFECTIVENESS
OF MERGER OF MERGER
-------------------------------- ---------------------------
NO. OF NO. OF PERCENTAGE
HOLDER SHARES(1) PERCENTAGE INTEREST SHARES INTEREST
--------------------------------------------------------- --------- --------------------- ------------ -------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 527,477 12.6%
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. 490,659 11.7%
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ 244,696 5.9%
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ 212,409 5.1%
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 158,834 3.8%
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 10,000 *
WPI Group, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 5,000 *
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 131,022 3.1%
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
------------------------
1 Includes shares underlying stock options
6
SCHEDULE B
HOLOPAK STOCKHOLDERS
PRIOR TO EFFECTIVENESS OF AFTER EFFECTIVENESS OF
MERGER MERGER
------------------------- ---------------------------
NO. OF PERCENTAGE NO. OF PERCENTAGE
HOLDER SHARES INTEREST SHARES INTEREST
------------------------------------------ ---------- ------------- ------------ -------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 17,880 *
c/o Bradford Ventures, Ltd.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Bradford Venture Partners, L.P. 753,086 22.5%
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Overseas Private Investor Partners 753,086(2) 22.5%
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇-▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 66,667 2.0%
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. Share 2,000 *
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ 8,000 *
c/o DelaFoil, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 17,880 *
▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
------------------------
* Less than one percent.
------------------------
2 Class A Common Stock
7
SCHEDULE C
HOLOPAK DESIGNEES
DIRECTOR CLASS TERM ENDING
------------------------------------------------------------------------ ----- ------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇.........................................................
▇▇▇▇▇ ▇. ▇▇▇▇▇▇.........................................................
▇▇▇▇▇▇ ▇. Share.........................................................
▇▇▇▇▇ ▇▇▇▇▇.............................................................
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇......................................................
8
SCHEDULE D
FOILMARK DESIGNEES
DIRECTOR CLASS TERM ENDING
------------------------------------------------------------------------ ----- ------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇......................................................
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇.........................................................
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.........................................................
▇▇▇▇▇▇▇ ▇▇▇▇▇▇..........................................................
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.......................................................
9
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 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. 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
2
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
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
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 ▇▇▇▇ ▇▇▇) 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 ▇▇▇▇ ▇▇▇) 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
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
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.
FOILMARK, INC.
By:
------------------------------------------
Name:
Title:
BRADFORD VENTURE PARTNERS, L.P.
By: Bradford Associates, General Partner
7
By:
------------------------------------------
Name:
Title:
OVERSEAS PRIVATE INVESTOR PARTNERS
By: Overseas Private Investors, Ltd., General
Partner
By:
------------------------------------------
Name:
Title:
[Names of certain other holders to come]
8
EXHIBIT 9.2(O)(I)
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Term............................ One year consulting agreement.
Compensation.................... $105,000 per annum.
Options......................... Foilmark, Inc. will grant to ▇▇. ▇▇▇▇▇▇, 20,000 options to
purchase Foilmark Inc. common stock.
Title........................... Consultant.
EXHIBIT 9.2(O)(II)
▇▇▇▇▇▇ ▇. ▇▇▇▇
Term............................ One year employment agreement.
Compensation.................... $145,000 per annum.
Bonus........................... ▇▇. ▇▇▇▇ will be entitled to a bonus in accordance with a
budget for pretax income established by the Board of
Directors. ▇▇. ▇▇▇▇'▇ bonus will vary as a percentage of
his salary in relation to the percentage achievement of
that budget.
Options......................... Foilmark, Inc. will grant to ▇▇. ▇▇▇▇, 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
EXHIBIT 9.2(O)(III)
▇▇▇▇▇▇ ▇▇▇▇▇▇
Term............................ One and one-half year employment agreement.
Compensation.................... $100,000 per annum.
Options......................... Foilmark, Inc. will grant to ▇▇. ▇▇▇▇▇▇, 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.
EXHIBIT 9.2(O)(IV)
LIST OF FOILMARK INDIVIDUALS WITH WHOM FOILMARK
SHALL ENTER INTO INDEMNIFICATION AGREEMENTS
▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
EXHIBIT 9.2(N)
LIST OF FOILMARK INDIVIDUALS RECEIVING STOCK OPTIONS
▇▇▇▇▇ ▇. ▇▇▇▇▇..................................................... 15,000
▇▇▇▇▇▇▇ ▇▇▇▇▇▇..................................................... 12,000
▇▇▇▇▇▇ ▇▇▇▇▇▇...................................................... 8,000
▇▇▇▇▇ ▇▇▇▇▇▇▇...................................................... 4,500
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.................................................... 4,500
▇▇▇▇▇ ▇▇▇▇▇........................................................ 4,000
▇▇▇▇▇▇▇ ▇▇▇▇▇▇..................................................... 3,500
▇▇▇▇▇ ▇▇▇▇▇▇▇▇..................................................... 3,500
▇▇▇▇ ▇▇▇▇▇▇▇....................................................... 2,500
▇▇▇▇▇▇ ▇▇▇▇........................................................ 2,500
▇▇▇▇ ▇▇▇▇▇▇▇....................................................... 2,500
TOTAL.............................................................. 62,500
EXHIBIT 9.3(I)
LIST OF HOLOPAK INDIVIDUALS RECEIVING STOCK OPTIONS
▇▇▇▇ ▇▇▇▇▇▇▇....................................................... 8,000
▇▇▇▇▇▇ ▇▇▇▇▇▇...................................................... 6,000
Serge ▇▇▇▇▇........................................................ 7,000
▇.▇. ▇▇▇▇.......................................................... 10,000
Marc Woonter....................................................... 6,000
▇▇▇▇ ▇▇▇▇▇......................................................... 5,500
▇▇▇▇▇ ▇▇▇▇▇▇....................................................... 20,000
TOTAL.............................................................. 62,500
EXHIBIT 9.3(J)
LIST OF HOLOPAK INDIVIDUALS WITH WHOM FOILMARK
SHALL ENTER INTO INDEMNIFICATION AGREEMENTS
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ Share
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
