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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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SCHEDULE 14D-9
(Rule 14d-101)
Solicitation/Recommendation Statement Under Section 14(d)(4)
of the Securities Exchange Act of 1934

(Amendment No. ____)

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PrimeSource Corporation
(Name of Subject Company)

PrimeSource Corporation
(Name of Persons Filing Statement)

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Common Stock, Par Value $0.01 Per Share
(Including Associated Stock Purchase Rights)
(Title of Class of Securities)

741593107
(CUSIP Number of Class of Securities)

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Barry C. Maulding
Vice President and General Counsel
PrimeSource Corporation
355 Treck Drive
Seattle, Washington 98188-7603
(206) 394-5582

(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of the Person Filing Statement)

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Copy to:
David E. Beavers, Esq.
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103
(215) 564-8036

[ ] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.

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Item 1. Subject Company Information

The name of the subject company is PrimeSource Corporation, a Pennsylvania
corporation (together with its subsidiary, the "Company"), and the address of
the Company's principal executive offices is Fairway Corporate Center, Suite
222, 4350 Haddonfield Road, Pennsauken, New Jersey 08109. The telephone number
of the Company at its principal executive offices is (856) 488-4888.

The title of the class of equity securities to which this Solicitation/
Recommendation Statement relates is the Common Stock, par value $0.01 per
share, of the Company (the "Shares"). Unless the context indicates otherwise,
all references to Shares shall include the associated rights issued pursuant
to the Rights Agreement, dated as of February 1, 2001, as amended, between the
Company and American Stock Transfer & Trust Company, as Rights Agent. As of
September 10, 2001, 6,357,806 Shares were issued and outstanding.

Item 2. Identity and Background of Filing Person

The name, business address and telephone number of the Company, the person
filing this Solicitation/Recommendation Statement, are set forth in Item 1
above, which information is incorporated herein by reference. The Company is
the subject company.

This statement relates to a tender offer (the "Offer") disclosed in the
Tender Offer Statement on Schedule TO (the "Schedule TO"), dated September 11,
2001, of FPF Acquisition Corp, a Pennsylvania corporation ("Purchaser"), a
wholly-owned subsidiary of Enovation Graphic Systems, Inc., a Delaware
Corporation ("Enovation"), which is a wholly-owned subsidiary of Fuji Photo
Film U.S.A., Inc., a New York corporation ("Fuji"), which is a wholly-owned
subsidiary of FUJIFILM America, Inc., a Delaware corporation ("Fuji -
America"), which is a wholly-owned subsidiary of Fuji Photo Film Co., Ltd., a
Japanese corporation ("Fuji - Japan"), to purchase any and all issued and
outstanding Shares at a price of $10.00 per Share, net to the seller in cash
without interest thereon (the "Offer Price"), upon the terms and subject to
the conditions set forth in that certain Offer to Purchase dated as of
September 11, 2001 (the "Offer to Purchase") and the related Letter of
Transmittal (the "Letter of Transmittal"). The Offer to Purchase indicates
that the principal executive offices of Purchaser, Enovation, Fuji and Fuji -
America are located at 555 Taxter Road, Elmsford, New York 10523. The Offer to
Purchase indicates that the principal executive offices of Fuji - Japan are
located at 26-30 Nishiazabu 2-Chome, Tokyo, Japan 106-8620.

The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of September 4, 2001, among Purchaser, Fuji, Enovation and the Company (the
"Merger Agreement"), which provides, among other things, for the making of the
Offer by Purchaser and, subject to the conditions and upon the terms of the
Merger Agreement, for the subsequent merger of Purchaser with and into the
Company (the "Merger"), pursuant to which the separate corporate existence of
Purchaser shall cease and the Company shall continue as the "Surviving
Corporation", a wholly-owned subsidiary of Enovation and an indirect, wholly-
owned subsidiary of Fuji.

Pursuant to the Merger Agreement, each Share outstanding at the Effective
Time (other than Shares held by the Company as treasury stock or Shares
beneficially owned by Fuji, Enovation or Purchaser or any of Fuji's
subsidiaries, all of which will be cancelled, and other than Shares that are
held by shareholders, if any, who properly exercise their dissenters rights
under the Pennsylvania Business Corporation Law ("PBCL")) will be converted
into the right to receive the Merger Consideration. Shareholders who perfect
their dissenters rights under the PBCL will be entitled to the amounts
determined pursuant to such proceedings. See "The Offer--Dissenters Rights" in
the Offer to Purchase which is incorporated herein by reference.

Item 3. Past Contacts, Transactions, Negotiations and Agreements

Conflicts Of Interest. Except as described or referred to below, there
exists on the date hereof no material agreement, arrangement or understanding
and no actual or potential conflict of interest between the Company or its
affiliates and (i) the Company or its executive officers, directors or
affiliates or (ii) Fuji, Enovation, Purchaser or their respective executive
officers, directors or affiliates.

Certain contracts, agreements, arrangements and understandings between the
Company and certain of its directors, executive officers and affiliates are
described in the Company's Information Statement attached

hereto as ANNEX B in the sections entitled "Agreements with Certain Officers,"
"Director Compensation," and "Executive Officer Compensation." The Information
Statement is attached hereto as ANNEX B and is incorporated herein by
reference. Certain of these contracts, agreements, arrangements and
understandings will be affected by the Merger, as described below.

In connection with the transactions contemplated by the Merger, the
following agreements were entered into: the Confidentiality Agreement, the
Merger Agreement, an Employment Agreement, four Cancellation Agreements, the
Amendment 2001-2 to the PrimeSource Supplemental Executive Retirement Plan and
Amendment No. 1 to the Rights Agreement. All of such agreements are discussed
in detail below. Except as expressly provided herein, all capitalized terms
utilized but not defined herein shall have the meanings ascribed to them in
the Merger Agreement.

The Merger Agreement. The summary of the material terms of the Merger
Agreement set forth in the section entitled "The Offer - The Merger Agreement"
of the Offer to Purchase is incorporated by reference herein. The summary of
the Merger Agreement contained in the Offer to Purchase and the summary of
such terms contained in this document are qualified in their entirety by
reference to the Merger Agreement, a copy of which is filed as Exhibit (d)(1)
to the Schedule TO and is incorporated herein by reference.

Confidentiality Agreement. The following summary is qualified in its
entirety by reference to the complete text of the Confidentiality Agreement,
dated December 11, 2000 between the Company, Fuji and Heartland Imaging
Companies, Inc. (the "Confidentiality Agreement"), a copy of which is filed as
Exhibit (d)(2) to the Schedule TO and is incorporated herein by reference.

Effective December 11, 2000, Fuji, the Company and Heartland Imaging
Companies, Inc. entered into the Confidentiality Agreement pursuant to which
each of the parties agreed to keep confidential certain information provided
to it by any of the other parties to the Confidentiality Agreement. Each of
the parties also agreed to use any confidential information only for the
purpose of evaluating their future business relationship and not for any other
purpose. Each party retained all proprietary rights, including all patent
rights, in the information disclosed pursuant to the Confidentiality
Agreement. All obligations under the Confidentiality Agreement terminate five
years from the effective date of the Confidentiality Agreement.

Treatment of Stock Options. The Merger Agreement provides that, immediately
prior to the Effective Time of the Merger, other than with respect to certain
persons subject to Section 16(b) of the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), the Company will pay each holder of a
then-outstanding stock option to purchase Shares an amount in cash equal to the
number of Shares subject to each option, whether or not vested or exercisable,
multiplied by the excess, if any, of $10.00 over the per share exercise price of
each such option less the amount of any applicable tax required to be withheld.
Upon payment of such amounts, the options will be deemed cancelled. Several of
the Company's executive officers and directors hold options to acquire Shares.
Please see the Information Statement attached hereto as Annex B.

Employment Agreement. In connection with the transactions contemplated by
the Merger Agreement, on September 4, 2001, Mr. James F. Mullan, Chairman of
the Board, President and Chief Executive Officer of the Company entered into
an Employment and Noncompetition Agreement (the "Employment Agreement") with
Enovation. The Employment Agreement will only be effective upon the purchase
of the Shares by Purchaser pursuant to the Offer. A copy of the Employment
Agreement is filed as Exhibit (d)(3) to the Schedule TO and is incorporated
herein by reference. The summary of the Employment Agreement contained herein
is qualified in its entirety by reference to the Employment Agreement.

The Employment Agreement provides for a term ending on March 31, 2004, with
possible earlier termination as provided therein, and provides for an initial
base salary of $275,000 per year with such base salary to be increased to
$285,000 on April 1, 2002 and $295,000 on April 1, 2003. Mr. Mullan will also
be entitled to receive an annual incentive bonus. For the fiscal year ending
March 31, 2002, he will be guaranteed a bonus in an amount equal to $175,000
multiplied by the fraction of the year ended March 31, 2002 for which he is
employed by Enovation. Thereafter, receipt of any bonus will be contingent
upon the attainment of certain performance criteria to be established in the
future and shall not exceed $190,000 (of which $95,000 is guaranteed) for the
fiscal year ended March 31, 2003 and $205,000 for the fiscal year ended March
31, 2004, with the opportunity for the receipt of a special bonus upon the
termination of the

Employment Agreement on March 31, 2004 upon the achievement of certain
additional performance criteria for the fiscal year ending March 31, 2004 to
be established in good faith by Mr. Mullan and the Enovation Board of
Directors prior to March 31, 2002.

The Employment Agreement provides that in the event of termination of Mr.
Mullan's employment by Enovation without cause prior to the expiration of his
period of employment he will be entitled to receive the remaining base salary
due to him under the terms of the Employment Agreement for the balance of the
term of the Employment Agreement, any guaranteed and earned bonuses due him
and continued participation in such employee benefit plans in which he was
participating at the time of his termination. Mr. Mullan's employment may be
terminated for "cause" in which case he will be entitled to receive only
amounts due him through the date of his termination. "Cause" is defined for
purposes of the Employment Agreement as (i) a material act of fraud or
dishonesty which reflects adversely on Enovation or directly affects
Enovation, (ii) a material failure to comply with material applicable laws or
regulations which reflects adversely on Enovation or directly affects
Enovation, (iii) any violation of the noncompetition provisions set forth in
the Employment Agreement, or (iv) a determination by the board of directors of
Enovation that Mr. Mullan has materially failed to perform his duties or has
materially breached any provision of the Employment Agreement.

Pursuant to the terms of the Employment Agreement, Mr. Mullan has agreed to
maintain the confidentiality of trade secrets and other confidential
information both during his period of employment and thereafter. During his
period of employment (which shall include the period, if any, that Enovation
is required to make severance payments to Mr. Mullan) and for two years
thereafter he has also agreed that he will not compete with, injure or
disparage or solicit any employees of, Enovation or any of its subsidiaries
and affiliates.

Cancellation of Existing Employment Contracts. Pursuant to the terms of
existing employment agreements between the Company and each of Messrs. James F.
Mullan, William A. DeMarco, Edward W. Padley and Donald James Purcell,
consummation of the Offer will constitute a "Change in Control" of the Company
entitling each executive to receipt of payments thereunder if their employment
by the Company is terminated, either by the Company or the executive, during the
period of two years following the Change in Control. In connection with the
execution of the Merger Agreement, the Company entered into Cancellation
Agreements with each of the four officers which provide for the cancellation of
their existing employment agreements, effective upon the consummation of the
Offer. In exchange for such cancellation, Messrs. Mullan, DeMarco, Padley and
Purcell will receive lump sum cash payments in the amount of $980,000, $435,000,
$475,000 and $420,000, respectively. The amount of these payments was derived by
multiplying two (2) times the sum of the executive's current base salary and
bonus awarded for 2000. Under the terms of the employment agreements, if the
executive left the employ of the Company within two (2) years after a Change in
Control (other than as a result of a termination for cause as defined in the
employment agreement), he would be entitled to receive, in monthly payments, two
years of salary, bonus and other compensation, plus normal fringe benefits (or
the value of fringe benefits if they cannot reasonably be continued).

Employee Benefits. The Merger Agreement provides that Enovation will review
all of the Company's existing employee benefit plans and, in deciding whether
to amend or terminate such plans, will consider the general welfare of the
Company's employees; provided that Fuji and the Surviving Corporation shall
each have the right in its sole discretion to amend or terminate any of the
Company's plans in accordance with law. Fuji has agreed that it will, and it
will cause the Surviving Corporation to, cause service rendered by employees
of the Company and its subsidiaries prior to the Effective Time to be
considered for vesting and eligibility purposes under all similar employee
benefit plans and arrangements of Fuji and the Surviving Corporation to the
same extent it was considered under the plans of the Company provided that
there shall be no duplication of benefits. Employees of the Company will not
be subject to any pre-existing condition limitations, exclusions or waiting
periods under any health plan of Fuji or the Surviving Corporation or its
subsidiaries for any condition for which they were covered under the similar
plan of the Company in which they participated prior to the Effective Time.
Employees will receive credit under such plans for any co-payments made and
deductibles satisfied prior to the Effective Time.

The Surviving Corporation expressly agreed to apply the lesser of (i) any
and all reserves and accruals for post-retirement medical benefits established
on the Company's books in the normal course as of the consummation of the
Offer and (ii) the liability required to be established in accordance with the
provisions of the Financial Accounting Standards Board for current retirees
(and their eligible beneficiaries) receiving benefits and to current employees
(and their eligible beneficiaries) eligible for future benefits upon such
terms as the Surviving Corporation may determine.

Indemnification; Directors' and Officers' Insurance. After the Effective
Time, Fuji will, and will cause the Surviving Corporation to, indemnify, to
the fullest extent permitted by the PBCL and the Company's articles of
incorporation and bylaws, the present and former officers and directors of the
Company in respect of any losses, claims, damages, liabilities and expenses
(including reasonable fees and expenses of legal counsel) arising out of
actions or omissions occurring at or prior to the Effective Time, including
the transactions contemplated by the Merger Agreement.

For a period of not less than six years after the Effective Time, Fuji will
cause to be maintained in effect the current officers' and directors'
liability insurance maintained by the Company on the date of the Merger
Agreement (provided that Fuji may substitute therefor policies with reputable
and financially sound carriers having at least the same coverage and amounts,
and containing terms and conditions which are no less advantageous to the
persons currently covered by such policies as the insured) with respect to
facts or circumstances occurring at or prior to the Effective Time to the
extent that such liability insurance can be maintained annually at a cost to
Fuji not greater than 150% of the current annual premium.

Fuji shall reimburse all expenses, including reasonable attorney's fees,
incurred by any person in successfully enforcing the obligations of Fuji and
the Surviving Corporation under these provisions.

Amendment to Supplemental Executive Retirement Plan. In connection with the
approval of the Merger Agreement and the execution of the four Cancellation
Agreements described above, the Company amended its Supplemental Executive
Retirement Plan ("SERP") to exclude from the definition of "Compensation"
under the plan the amounts to be received by the four executive officers in
accordance with the terms of the Cancellation Agreements.

Funding of Trust in Connection with SERP. The Company has entered into a
Trust Agreement with a major bank for the benefit of the participants in the
SERP. Under this Trust Agreement, the Company is obligated to deposit sufficient
funds with the trustee to enable it to purchase annuity contracts to fund the
SERP in the event of a change or potential change in control of the Company. The
transactions contemplated by the Merger Agreement will constitute a change in
control and will result in the funding of the Trust. Messrs. Mullan, Goddard,
Padley, DeMarco and Purcell are the only current employees who are participants
in the SERP. The total amount by which the Trust will be funded is $2.26 million
which includes amounts for the benefit of the current employee participants and
certain retired employees who are also participants.

Prior Agreements with Fuji. For many years the Company has served as a non-
exclusive dealer of Fuji's Graphic Systems Division to market and sell Fuji's
graphic arts and electronic imaging products. The Company serves as such a
dealer pursuant to separate Dealer Agreements between Fuji and numerous branch
offices of the Company, each of which is assigned a primary area of
responsibility. The Dealer Agreements are generally terminable by the Company on
90 days prior notice and may be terminated by Fuji if, among other things, the
particular branch office of the Company fails to achieve annual mutually agreed
upon purchase targets for Fuji's products or specified percentages thereof for
two successive calendar quarters. Fuji has advised the Company that the Company
is the Fuji Graphic Systems Division's largest dealer. For the years 1999 and
2000 and the six months ended June 30, 2001, Fuji has advised the Company that
its revenues under the Dealer Agreements totaled approximately $79,517,000,
$87,711,000 and $42,667,000, respectively.

Item 4. The Solicitation or Recommendation

Recommendation of the Board. The Board of Directors of the Company (the
"Board"), at a special meeting held on September 4, 2001, by unanimous vote
(1) determined that the Merger Agreement and the transactions contemplated
thereby, including the Offer and the Merger, are, in the belief of the Board,
fair to and in the best interests of the Company and its shareholders, (2)
approved the Merger Agreement and the transactions contemplated thereby,
including the Offer and the Merger, and declared their advisability, and (3)
recommended that the Company's shareholders accept the Offer and tender their
Shares thereunder, and, if required by applicable law, approve and adopt the
Merger Agreement and the consummation of the Merger. A copy of the joint press
release issued by the Company and Fuji announcing the Merger Agreement and the
Offer is filed hereto as Exhibit (a)(3) and is incorporated herein by
reference.

Background of the Transaction. For many years the Company has served as a
non-exclusive dealer of Fuji to market and sell pre-press supplies and
equipment to the printing and publishing industries in the United States. In
connection with this relationship, management of the Company and Fuji would
meet or discuss over the telephone, with some frequency, business and industry
conditions affecting the graphic arts supply industry and printing and
publishing industries in the United States.

In November 2000, James F. Mullan, CEO and President of the Company,
discussed with representatives of Fuji the potential benefits of meeting to
discuss industry conditions and strategic options regarding the structure of
the distribution channel for pre-press supplies and equipment to the printing
and publishing industries in the United States. At or about this time, Mr.
Mullan had been contacted by Robert J. Gourley, the principal of Heartland
Imaging Companies, Inc. ("Heartland"), another large Fuji dealer, to discuss
the possibility of combining Heartland and the Company, with the possible
financial assistance or equity participation of Fuji. A meeting was scheduled
for December 11, 2000 at Fuji's headquarters in Elmsford, New York, in advance
of which both the Company and Heartland provided certain financial information
to Fuji.

At the December 11 meeting in Elmsford, Mr. Mullan met with Stanley E.
Freimuth, Executive Vice President and Chief Operating Officer of Fuji, Samuel
C. Monroe, Jr., Director, Business Strategies, Daniel C. Maffeo, Vice
President and General Manager, Graphic Systems Division and Mr. Gourley to
discuss conditions affecting the graphic arts industry generally and to
explore potential options to respond to changes in the industry. Messrs.
Mullan and Gourley asked if Fuji would consider investing in, or financing the
possible combination of, the Company and RJG Holding Company, Inc. ("RJG"),
the parent company of Heartland. Fuji indicated its willingness to consider
such a transaction. At this meeting, the Confidentiality Agreement was signed
by the parties. Subsequent to this meeting, the Company prepared and delivered
to Fuji additional financial information and analyses regarding its business
and the industry generally.

At the Company's regular meeting of its Board of Directors on December 20,
2000, Mr. Mullan reported on the meeting on December 11. Without taking any
formal action, the Board authorized the continuation of these exploratory
discussions.

On January 29, 2001, Mr. Mullan and William A. DeMarco, Vice President and
Chief Financial Officer of the Company, met with Mr. Gourley and Tom Prater,
RJG's Chief Financial Officer, and Messrs. Freimuth, Monroe and Maffeo in
Elmsford, New York. At the meeting, the parties discussed issues that could
arise as a result of, and the potential operating and financial impact of, a
possible transaction. During the period from late January through April, 2001,
from time to time Fuji requested and the Company supplied additional
information. During this period, Mr. Mullan had several conversations with
Messrs. Freimuth and/or Maffeo regarding the status of Fuji's deliberations
and was generally informed that Fuji was still evaluating its position.

In mid to late April 2001, Messrs. Freimuth and Monroe advised Mr. Mullan
that Fuji would not make an investment in, or finance the combination of, the
Company and RJG as previously discussed, but was considering making a proposal
to acquire the Company, and that Fuji was continuing its internal analysis.
Mr. Mullan was also informed that Fuji was considering making proposals to
acquire RJG and Graphic Systems, Inc., another large Fuji graphic arts dealer,
but that any proposal to acquire the Company would not be contingent on Fuji's
acquiring either of the other companies. In mid May 2001, Messrs. Freimuth,
Monroe and Maffeo informed Mr. Mullan by telephone that Fuji was interested in
pursuing a possible transaction with

the Company and that it was submitting to the Fuji-Japan Board of Directors
for approval at its next meeting a proposal which would be subject to further
approval if a definitive agreement were negotiated.

On or about June 8, 2001, Mr. Freimuth telephoned Mr. Mullan to inform him
that Fuji-Japan had given preliminary approval for Fuji to proceed with the
possible acquisition of the Company and to recommend that the Company engage a
financial advisor to assist in negotiation of the financial terms of a
possible transaction. Mr. Mullan reported this information to the Executive
Committee of the Board of Directors on June 15, 2001. The Executive Committee
then authorized the engagement of Berwind Financial, L.P. ("Berwind") as
financial advisor to the Company. Shortly thereafter, Berwind was engaged as
financial advisor to the Company and Mr. Mullan informed Fuji of this
engagement on June 26, 2001. During this timeframe, Fuji submitted to the
Company a due diligence request list with respect to the Company's legal and
financial affairs.

On June 26, 2001, representatives from Bear, Stearns & Co. Inc. ("Bear
Stearns"), financial advisor to Fuji, contacted Berwind by telephone. Berwind
informed Bear Stearns that it was meeting with the Company the following day
to review discussions between the parties to date and the Company's business,
and thereafter would be ready to commence negotiations.

On June 27, 2001, Messrs. Freimuth and Mullan met in Edison, New Jersey to
discuss tentatively Mr. Mullan's employment arrangements with the subsidiary
of Fuji to be formed to own the Company and any other acquired dealers in the
event a transaction was successfully negotiated and completed.

In the initial telephone negotiations between Berwind and Bear Stearns on
June 28, 2001, Bear Stearns suggested an equity value of approximately $9.00 per
share. Berwind met with Bear Stearns on July 6, 2001 to discuss valuation of the
Company and informed Bear Stearns that a price of $9.00 per share was not
acceptable and that the Company believed that a higher price was more
appropriate given the Company's operating performance and market position. In a
number of telephone conferences on July 9, involving at different times
representatives of the Company, Berwind, Bear Stearns and Fuji, after a number
pricing proposals and counter proposals, Company management and Fuji management
agreed in principle on an equity value of $69 million, or approximately $10.53
per share (after taking into account the cost of cancellation of outstanding
stock options), subject to approval of their respective Boards of Directors,
satisfactory completion of due diligence and negotiation of a mutually
satisfactory definitive merger agreement.

The Board of Directors of the Company met by telephone conference on July
10, 2001 at which time Mr. Mullan reported to the Board that preliminary
merger negotiations with Fuji commenced in mid-June and that price
negotiations have resulted in a tentative figure of $69 million for the equity
of the Company subject to completion of due diligence, negotiation of a
satisfactory definitive merger agreement and other material terms and
conditions and approvals by the Board of Directors of Fuji-Japan and the
Company's Board of Directors. The Board authorized management to move forward
with the process with Fuji.

On July 11, 2001 a first draft of a proposed Agreement and Plan of Merger
was delivered by Fuji's legal counsel to Stradley, Ronon, Stevens & Young,
LLP, special legal counsel to the Company. Thereafter, the parties actively
negotiated the terms and conditions of the proposed agreement through August
30, 2001. During this period, Fuji continued its legal and financial due
diligence and the Company continued to provide requested information.

On August 2, 2001, the Board of Directors of the Company met by conference
telephone. Mr. Mullan briefed the Board on the status of negotiations with
Fuji and the timetable for the potential transaction. The Board discussed the
impact of the potential transaction on the employment agreements with senior
executives.

On August 9, 2001, representatives of Fuji and Mr. Mullan met in Elmsford,
New York to discuss Mr. Mullan's employment arrangements and form of
employment agreement with Enovation and to address certain issues which the
Company had with regard to the provisions in the draft merger agreement
relating to employee benefits. The principal terms of Mr. Mullan's employment
agreement were agreed to, subject to negotiation of a mutually acceptable
definitive employment agreement, the negotiation of which continued through
late August, and the negotiation, signing and closing under a definitive
merger agreement. In mid-August 2001, Fuji and Mr. Mullan agreed that, subject
to the consummation of the proposed transaction, the

Company's employment agreements with each of Messrs. Mullan, DeMarco, Donald
James Purcell and Edward W. Padley should be canceled.

On August 14, 2001, Mr. Maffeo spoke by telephone with Mr. Mullan and
advised him of the concerns about a number of matters which were raised in the
report on the financial due diligence prepared by Fuji's independent auditors,
including questions about the adequacy of the Company's reserves for inventory
and accounts receivable of the Company's 74% owned subsidiary, Canopy, LLC
("Canopy"), which had been formed in July, 2000 with Xeikon America, Inc., the
owner of the remaining 26% interest in Canopy, to market and service Xeikon
Digital Printing Systems in the United States and Canada. Mr. Mullan responded
that Fuji's concerns regarding Canopy and other matters required further
explanation and clarification.

On August 15, 2001, senior Fuji executives participated in a conference
telephone call with Mr. DeMarco to discuss further the concerns raised as a
result of Fuji's due diligence review. Among the matters discussed by Mr.
DeMarco was the basis for and adequacy of the Canopy inventory and receivables
reserves and the potential costs associated with the proposals for unwinding
Canopy which the Company and Xeikon were negotiating. Later in the day on
August 15, Mr. Freimuth telephoned Mr. Mullan and informed him that prior to
the conference call earlier that day with Mr. DeMarco, Fuji was planning to
request a purchase price reduction of more than $10 million, but that, as a
result of the clarifications and explanations provided by the Company on these
issues, Fuji proposed that the purchase price be reduced by $3.64 million to
$65.36 million for the equity of the Company, or $10.00 per share. Mr. Mullan
said he would consider this proposal.

On August 21, 2001, both the Compensation Committee and the Board of
Directors of the Company met. The Compensation Committee reviewed the costs
associated with cancellation of the employment agreements for the four
principal executive officers of the Company in connection with the change of
control, and developed a consensus as to the appropriate consideration to be
paid to the executives if a definitive transaction were concluded and the
employment agreements canceled.

At the meeting of the Board of Directors which followed, the Compensation
Committee reviewed its preliminary conclusions with the Board. Mr. Mullan
reviewed with the Board negotiations leading to the proposed reduction in
purchase price which Fuji would offer. He also reviewed the status of
negotiations on a number of open issues, including the minimum number of
Shares required to be tendered in order to consummate the Offer and the amount
of any termination fee and cap on expense reimbursement which Fuji would be
entitled to receive in the event the merger agreement were terminated and the
circumstances entitling Fuji to such payments. Legal counsel and Berwind were
present at this meeting and reviewed the terms and conditions of the draft
merger agreement, including certain open points, and a preliminary analysis of
the fairness of a transaction with an equity value of $65.36 million, or
$10.00 per share (after taking into account the cost of cancellation of
outstanding stock options). The Board authorized management to continue
negotiating with Fuji. Thereafter, between August 21 and September 4, 2001,
such issues were negotiated by Fuji and the Company and their respective legal
counsel, and successive drafts of the merger agreement were prepared and
negotiated.

After the close of the trading on the Nasdaq National Market on August 30,
2001, counsel for the Company and Fuji discussed the day's trading activity for
the Shares, including the significant increase in price and above average
volume. They concluded that the issuance of a press release by the Company
regarding the negotiations with Fuji would be appropriate. On the morning of
August 31, 2001, prior to the opening of trading, counsel for Fuji confirmed
that the Board of Directors of Fuji-Japan had approved the transaction earlier
that day, and the Company thereupon issued a press release announcing the
negotiations to be acquired by Fuji in a transaction that would pay each of the
Company's shareholders $10.00 per Share in cash.

On September 4, 2001, both the Compensation Committee of the Board of
Directors of the Company and the Board of Directors met with legal and
financial advisors to review the terms of the Merger Agreement and other
matters. Berwind presented a written report with regard to the fairness of the
proposed transaction and delivered its written fairness opinion. The
Compensation Committee presented a report recommending Board approval of the
amount of payments to be made to Messrs. Mullan., DeMarco, Padley, and Purcell
in cancellation of their existing employment agreements, approving payment of
a proportional bonus to executives and senior management based upon the bonus
accrual maintained by the Company in the

ordinary course as of the end of the month immediately preceding consummation
of the tender offer and certain other related actions. After discussion, the
Board of Directors unanimously determined that the Merger Agreement and the
transactions contemplated thereby, including the Offer and the Merger, were in
the best interest of the Company, its shareholders and other constituencies
which the Board thought appropriate for its consideration under the
circumstances, and recommended that the shareholders of the Company accept the
Offer and approve and adopt the Merger Agreement and the consummation of the
Merger contemplated thereby in the event shareholder approval were necessary
to consummate the Merger. Thereafter, the parties signed the Merger Agreement,
Mr. Mullan signed his employment agreement with Enovation, and Fuji and the
Company issued a joint press release announcing the signing of the definitive
Merger Agreement.

Material And Information Considered With Respect To The Merger

Berwind Analysis. On September 4, 2001, Berwind delivered its written
opinion to the Board, that, as of such date and based upon the assumptions
made, matters considered and limitations on the review set forth therein, the
consideration to be received by holders of Shares pursuant to the Offer and
the Merger is fair from a financial point of view to such holders.

THE FULL TEXT OF BERWIND'S OPINION, WHICH SETS FORTH THE ASSUMPTIONS MADE,
MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEW SET FORTH THEREIN, IS
ATTACHED AS ANNEX A HERETO AND IS INCORPORATED BY REFERENCE HEREIN. THE
DESCRIPTION OF BERWIND'S OPINION BELOW SETS FORTH THE MATERIAL TERMS OF THE
OPINION. HOLDERS OF SHARES ARE URGED TO, AND SHOULD, READ CAREFULLY SUCH
OPINION IN ITS ENTIRETY. THE FOLLOWING SUMMARY OF BERWIND'S OPINION IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE OPINION.

Berwind's opinion is addressed to the Board of Directors and addresses only
the fairness from a financial point of view of the consideration to be
received by holders of Shares pursuant to the Offer and the Merger. The
opinion does not constitute, nor should it be construed as, a recommendation
to any shareholder as to whether he or she should tender his or her shares
pursuant to the Offer.

In connection with the preparation of the opinion, Berwind, among other
things:

(a) reviewed the historical financial performance, current financial
position and general prospects of the Company;

(b) studied and analyzed the stock market trading history of the
Company's Shares;

(c) considered the terms and conditions of the Offer and the Merger as
compared with the terms and conditions of certain acquisition
transactions involving business-to-business industrial distributors;

(d) met with certain members of the Company's senior management to
discuss its operations, historical financial statements and future
prospects; and

(e) conducted such other financial analyses, studies and investigations
as it deemed appropriate.

In preparing its opinion, Berwind assumed and relied on the accuracy and
completeness of all information supplied or otherwise made available to it,
discussed with or reviewed by it, or publicly available. Berwind did not
assume any responsibility for independently verifying such information or
undertaking an independent evaluation or appraisal of the assets or
liabilities of the Company, nor was it furnished with any such independent
evaluation or appraisal. In addition, Berwind has not assumed any obligation
to conduct, nor did it conduct, any physical inspection of the properties or
facilities of the Company. In connection with the preparation of its opinion,
Berwind was not engaged nor authorized by the Company or the Board of
Directors to solicit, nor has Berwind solicited, third-party indications of
interest for the acquisition of all or any part of the Company. No limitations
were imposed by the Company on Berwind with respect to the investigations made
or procedures followed in rendering its opinion.

Berwind's opinion is necessarily based upon market, economic and other
conditions as they existed and could be evaluated, and on the information made
available to Berwind as of the date of the opinion and speaks to no other
period.

The following is a summary of the material analyses utilized by Berwind in
connection with the opinion.

Valuation of the Company.

Premiums Paid Analysis. Berwind performed a Premiums Paid Analysis for the
Company based upon the review and analysis of the range of premiums paid in
acquisitions for majority ownership positions for the period between January
1, 1998 through August 30, 2001 and between January 1, 2000 through August 30,
2001 ("Recent Transactions") involving companies (i) with enterprise values
between $100 million and $500 million and (ii) with enterprise values between
$100 million and $300 million. For the period from January 1, 1998 through
August 30, 2001 Berwind reviewed a total of 797 selected transactions and for
the period from January 1, 2000 through August 30, 2001 Berwind reviewed a
total of 319 selected transactions. Using information obtained from Thomson
Financial Services and other publicly available information, Berwind obtained
the premium of the offer price per share relative to the target company's
stock price one day, one week, and one month prior to the date of announcement
of the transaction (the "Announcement"). The following range is the median and
mean of premiums that were offered to the target company's stock prior to
Announcement:

Enterprise Value Between $100 million and $500 million

Median Mean Offer
------ ---- -----

One Day.................................. 25.9% 36.7% 78.6%
One Week................................. 32.9% 40.5% 145.1%
One Month................................ 43.3% 57.7% 145.7%

Enterprise Value Between $100 million and $300 million

Median Mean Offer
------ ---- -----

One Day.................................. 25.8% 36.1% 78.6%
One Week................................. 33.2% 40.3% 145.1%
One Month................................ 44.4% 52.9% 145.7%

Recent Transactions: Enterprise Value Between $100 million and $500 million

Median Mean Offer
------ ---- -----

One Day.................................. 30.9% 45.3% 78.6%
One Week................................. 38.8% 44.5% 145.1%
One Month................................ 46.6% 54.8% 145.7%

Recent Transactions: Enterprise Value Between $100 million and $300 million

Median Mean Offer
------ ---- -----

One Day.................................. 31.3% 45.2% 78.6%
One Week................................. 38.1% 45.7% 145.1%
One Month................................ 46.5% 56.4% 145.7%

Discounted Cash Flow Analysis. Based on Company management financial
forecasts, Berwind performed a Discounted Cash Flow Analysis (i.e., analysis
of the present value of the forecasted unlevered after-tax cash flows) for the
Company for the five year period ending December 31, 2005. Berwind used
discount rates (determined through the use of the Capital Asset Pricing Model)
ranging from 12.5% to 15.0%, a terminal value based on the perpetuity method
and a range of perpetuity growth rates of 2.0% to 4.0%. Based upon the
foregoing Berwind determined a reference range for an implied value per Share
of $3.14 to $7.09, with a midpoint of $4.97 (as compared to the Offer at
$10.00).

Financial Sponsor Transaction Analysis. Using the financial forecasts
developed in connection with the Discounted Cash Flow Analysis described
above, Berwind performed a Financial Sponsor Transaction Analysis for the
Company. For purposes of this analysis, Berwind assumed a Financial Sponsor
would require a return of 30% to 40% on invested capital. Berwind assumed an
initial financing structure of a maximum

total debt to latest twelve months ("LTM") earnings before interest, taxes,
depreciation and amortization ("EBITDA") ratio of 3.5x with the remaining
purchase price provided by a Financial Sponsor in the form of an equity
investment. Berwind then calculated the per share equity value using a
residual value multiple of 6.0x forecasted 2005 EBITDA. Based on the 6.0x
residual value EBITDA multiple and rates of return on the equity investment
ranging from 30% to 40%, the implied Share value ranged from $3.00 to $4.49
(as compared to the Offer at $10.00).

Comparable Company Analysis. Berwind compared certain financial and
operating ratios for the Company with the corresponding financial and
operating ratios for a group of publicly traded business-to-business
industrial distributors. For the purpose of its analysis, the following
companies were used as companies comparable to the Company: Genuine Parts Co.,
W W Grainger, Inc., Arrow Electronics Inc., Avnet, Inc., Anixter International
Inc., Ikon Office Solutions, Inc., MSC Industrial Direct Co., Inc., Hughes
Supply Inc., Watsco Inc., Pioneer Standard Electronics Inc., Applied
Industrial Technologies, Global Imaging Systems Inc., Lawson Products Inc.,
NCH Corp., Keystone Automotive Industries Inc., Noland Co., Jaco Electronics
Inc., Industrial Distribution Group Inc., and DXP Enterprises, Inc.,
(collectively the "Comparable Companies"). For each of the Comparable
Companies, Berwind calculated price-to-earnings multiples based on the
Comparable Companies' LTM earnings, estimated earnings for current fiscal year
and estimated earnings per share for the next fiscal year. This analysis
resulted in the following multiples:

Range of Multiples Median Offer
------------------ ------ -----

LTM earnings............................. 1.6-40.7x 12.5x 18.2x
Estimated current year earnings.......... 10.8-43.9x 15.6x 19.3x
Estimated forward year earnings.......... 9.8-23.3x 14.1x 14.0x

Berwind also calculated enterprise value multiples (defined as market value
of equity plus net debt and preferred stock less excess cash and marketable
securities) based on LTM sales, LTM EBITDA and LTM earnings before interest
and taxes ("EBIT"). This analysis resulted in the following multiples:

Range of Multiples Median Offer
------------------ ------ -----

LTM Sales................................ 0.13-0.91x 0.41x 0.21x
LTM EBITDA............................... 3.0-14.1x 6.8x 8.4x
LTM EBIT................................. 3.5-26.3x 8.9x 11.1x

To calculate the trading multiples utilized in the Comparable Company
Analysis, Berwind used publicly available information concerning the
historical and projected financial performance of the Comparable Companies,
including public historical financial information and consensus analysts'
earnings estimates.

None of the Comparable Companies is, of course, identical to the Company and
therefore no directly comparable public company exists and conclusions as to
the valuation of the Company based on the Comparable Company method is
limited. Accordingly, a complete analysis of the results of the foregoing
calculations cannot be limited to a quantitative review of such results and
involves complex considerations and judgments concerning differences in
financial and operating characteristics. In addition, the multiples of stock
price to estimated earnings for the Comparable Companies is based on
projections prepared by research analysts using only publicly available
information. Accordingly, such estimates may or may not prove to be accurate.

Industry Transactions Analysis. Using publicly available information,
Berwind analyzed transactions involving business-to-business industrial
distribution companies since January, 1997 (the "Industry Transaction Group")
and since January, 2000 (the "Recent Transaction Group"). Specifically,
Berwind reviewed the following transactions for the Industry Transaction
Group: Kennametal Inc.'s acquisition of Jlk Direct Distribution Inc., Wilmar
Industries, Inc.'s acquisition of Barnett Inc., Parker-Hannifin Corp.'s
acquisition of Wynns International, Inc., Avnet Inc.'s acquisition of Savoir
Technology Group, Inc., Guardian Industries Corp.'s acquisition of Cameron
Ashley Building Products, Inc., a Private Group's acquisition of Wilmar
Industries, Inc., Hagemeyer NV's acquisition of Vallen Corp., Alliedsignal
Inc.'s acquisition of Tristar Aerospace Co., Aftermarket Technology Corp.'s
acquisition of All Transmission Parts, Inc., Labtec Inc.'s acquisition of
Connector Resources Unlimited, Inc., a Private Group's acquisition of White
Cap Industries, Inc., Rankin Automotive Group, Inc.'s acquisition of Allied
Distributing Co., Fairchild Corp.'s

acquisition of Banner Aerospace, Inc., Invacare Corp.'s acquisition of
Suburban Ostomy Supply Co., Inc., Unisource Worldwide Inc.'s acquisition of
Chemed Corp., Henry Schein, Inc.'s acquisition of Sullivan Dental Products,
Inc., and the Home Depot, Inc.'s acquisition of Maintenance Warehouse/America
Corp. Berwind reviewed the following transactions for the Recent Transactions
Group: Kennametal Inc.'s acquisition of Jlk Direct Distribution Inc., Wilmar
Industries, Inc.'s acquisition of Barnett Inc., Parker-Hannifin Corp.'s
acquisition of Wynns International, Inc., Avnet Inc.'s acquisition of Savoir
Technology Group, Inc., and Guardian Industries Corp.'s acquisition of Cameron
Ashley Building Products, Inc.

The companies analyzed in the Industry Transaction Group and the Recent
Transactions Group differ materially from the Company due to product mix,
profit margins, revenue size, and market capitalization determined by equity
value and enterprise value. Berwind also noted that assumptions and
comparisons regarding growth prospects, synergy opportunities, and industry
and financial market conditions at the time of the Industry Transactions and
the Offer and Merger cannot be quantified; therefore conclusions as to the
valuation of the Company based on these transactions is limited. Berwind
calculated the transaction values for the target companies based on financial
results for the LTM immediately preceding the announcement of each of the
respective transactions including equity value-to-LTM net income, enterprise
value-to-LTM EBIT and enterprise value-to-LTM EBITDA. The analysis resulted in
the following multiples:

Median
Median Industry Recent
Transactions Transactions Offer
------------ ------------ -----

Equity Value/LTM Net Income.............. 16.0x 13.4x 18.2x
Enterprise Value/LTM EBIT................ 11.1x 8.9x 11.1x
Enterprise Value/LTM EBITDA.............. 9.0x 6.7x 8.4x

No company utilized in the Industry Transaction Analysis is identical to the
Company nor is any transaction identical to the Offer and the Merger. The
Company differs in some cases markedly from the Industry Transactions. An
analysis of the results, therefore, requires complex considerations and
judgments regarding the financial and operating characteristics, size and
number of outstanding shares in the public market of the Company and the
companies involved in the Industry Transactions, as well as other facts that
could affect their publicly traded and/or transaction values. The numerical
results are not in themselves meaningful in analyzing the contemplated
transaction as compared to Industry Transactions.

The summary set forth above does not purport to be a complete description of
the analysis presented by Berwind. The preparation of a fairness opinion is a
complex process and is not necessarily susceptible to partial analysis or
summary description. Berwind believes that selecting any portion of its
analysis or of the summary set forth above, without considering the analyses
as a whole, would create an incomplete view of the process underlying
Berwind's opinion. In arriving at its opinion, Berwind considered the results
of all such analyses. The analyses performed by Berwind are not necessarily
indicative of actual values or actual future results, which may be
significantly more or less favorable than those suggested by such analyses.
The analyses do not purport to be appraisals or to reflect the prices at which
the Company might actually be sold or the prices at which the Shares may trade
at any time in the future. Such analyses were prepared solely for the purposes
of Berwind's providing its opinion to the Board as to the fairness, from a
financial point of view, of the consideration to be received in the Offer and
the Merger by holders of Shares. Because such analyses are inherently subject
to uncertainty, being based upon numerous factors and events, including,
without limitation, factors related to general economic and competitive
conditions beyond the control of the parties or their respective advisors,
none of Berwind, the Company, or any other person assumes responsibility if
future results or actual values are materially different from those forecast.
The foregoing summary does not purport to be a complete description of the
analysis performed by Berwind and is qualified by reference to the written
opinion dated as of September 4, 2001 of Berwind as attached as Annex A to the
Schedule 14D-9.

Reasons for Recommendation. During its consideration of the possible
transaction with Fuji, the Board of Directors concluded that the transaction
is fair to and in the best interests of the Company, its shareholders and
other constituencies which the Board considered appropriate for its
consideration under the

circumstances. In making its decision, the Board consulted with management and
financial and legal advisors, and considered a number of factors many of which
are described below.

The printing industry over the last several years has changed dramatically
with the movement from analog to digital technology. As a result, the
Company's revenues from the sale of traditional supply products, including
film, have declined and profits have been negatively affected. This movement
affects the economics and cost structure of the industry generally, so that
further consolidation in the industry may be necessary to improve or maintain
profitability. Thus, the changes in technology are creating pressure on the
profits and the total sales volume for dealers in the graphic arts supply
industry. In addition to technological changes, the economic conditions in the
United States generally, and the printing industry in particular, over the
past year, have had an adverse effect on demand for consumable graphic arts
supply products and equipment. It is these industry dynamics that caused the
Company's management to pursue a strategy other than continued independence
and growth through acquisitions.

The challenge for both manufacturers and dealers is to determine how to cope
with these changes affecting the distribution channel. There is a need both to
reduce costs and to develop the new digital technology product line. The
Company's investment in Canopy with Xeikon, an affiliate of a premier
manufacturer of digital presses, was intended to respond to the need to
develop the digital technology product line.

In viewing these trends, the Company's management and Board of Directors
have concluded that the Company does not have the resources to continue the
investments that were necessary to develop the digital technology product line
and, at the same time, cope with the continuing cost pressures in a fashion
that would provide a satisfactory return for shareholders. They concluded that
the Company would need a strong partner to help meet these challenges.
Management believes that Fuji can provide the resources necessary to enhance
the Company's value-added strategy in serving its customers.

The Board of Directors also considered that the price of the Company's
Shares consistently failed to reflect, what in its view was, the fair value of
the equity of the enterprise based on the Company's ability to generate cash
from operations. The Offer provides an opportunity to shareholders to realize
a fair value for their investments, and a value which the Board and management
did not perceive as being otherwise achievable in the foreseeable future.

In approving the Offer and the Merger and making its recommendation that all
shareholders tender their Shares pursuant to the Offer, the Board considered a
number of other factors including the following:

o Other strategic options, including the possibility of combining with
other dealers and remaining independent.

o The potential strategic value of the Company to an organization with
greater financial resources, such as Fuji, which is in a better position
to develop and market the digital technology product line.

o The substantial premium over recent market prices represented by the
Offer Price.

o The fact that the conditions to Fuji's obligations to consummate the
Offer and Merger are customary, and not unduly burdensome.

o The risk of failing to obtain regulatory clearance under anti-trust laws
was perceived to be small.

o The fact that the Offer and Merger are not subject to any financing
contingency and that the Offer Price is payable solely in cash.

o The Company's financial condition, results of operations and business and
strategic objectives, as well as the risks involved in achieving those
objectives.

o The financial and valuation analyses of the Company presented to the
Board by Berwind, including market prices and financial data relating to
other companies engaged in business-to-business industrial distribution
and the prices and premiums paid in recent selected acquisitions of
companies engaged in business-to-business industrial distribution.

o The fairness opinion of Berwind, which was confirmed in a written
opinion, dated September 4, 2001, to the effect that, as of the date of
the opinion, the consideration of $10.00 per Share, net to the
shareholder in cash, proposed to be received in the Offer and the Merger
by the shareholders of the Company pursuant to the Merger Agreement is
fair, from a financial point of view, to such Shareholders. The full text
of Berwind's written opinion, which sets forth the procedures followed,
the limitations of the review undertaken and the assumptions made by
Berwind in rendering the opinion, is attached as ANNEX A hereto and
incorporated herein by reference. The Board was aware that Berwind
becomes entitled to the fees described in Item 5 below upon consummation
of the Offer. SHAREHOLDERS ARE URGED TO READ THE OPINION CAREFULLY AND IN
ITS ENTIRETY.

o The terms and conditions of the Merger Agreement, including, without
limitation, that the terms of the Merger Agreement will not prevent other
third parties from making proposals to the Company after the execution of
the Merger Agreement, that Fuji has limited rights to terminate the Offer
or the Merger Agreement, and the limited circumstances under which the
Company would be required to pay Fuji a termination fee of $3.0 million
plus reimbursement of expenses up to $2.0 million if the transaction does
not close.

o The likelihood that the Offer and the Merger would be consummated,
including consideration of Fuji's experience, reputation and financial
condition, as well as the Company's past dealings with Fuji.

o The structure of the transaction, which is designed, among other things, to
result in the holders of the Shares receiving, at the earliest practicable
time, the consideration paid in the Offer. The Board was aware that the
consideration received by shareholders in the Offer and the Merger would be
taxable to such holders for federal income tax purposes.

o The availability to the Company's shareholders of dissenters' rights in
the Merger under applicable provisions of the PBCL.

In view of the wide variety of factors considered in connection with its
evaluation of the Offer and the Merger, the Board did not find it practicable
to, and did not, quantify or otherwise attempt to assign relative weights to
the specific factors considered in reaching its respective determinations.
After weighing these considerations, the Board, by unanimous vote, determined
that the Merger Agreement and the transactions contemplated thereby, including
the Offer and the Merger are, in the belief of the Board, fair to and in the
best interests of the shareholders of the Company, approved the Merger
Agreement and the transactions contemplated thereby, including the Offer and
the Merger, and declared their advisability and recommends that the Company's
shareholders tender their Shares in the Offer and, as required by applicable
law, approve and adopt the Merger Agreement and the Merger.

The foregoing discussion is not intended to be exhaustive, but it is
believed to include the material factors considered by the Board.

Intent to Tender. To the best of the Company's knowledge, all of its
executive officers, directors, affiliates or subsidiaries currently intend to
tender all Shares which are held of record or beneficially owned by such
persons pursuant to the Offer.

Item 5. Persons/Assets Retained, Employed or to be Compensated

Pursuant to an engagement letter dated July 2, 2001 (the "Engagement
Letter"), the Company retained Berwind to act as financial advisor to the
Company and to render a fairness opinion in connection with the Offer and the
Merger. Berwind is an investment banking and financial advisory firm with
experience in the valuation of businesses and their securities in connection
with mergers and acquisitions, private placements and valuations for various
corporate purposes. Berwind represented a predecessor to the Company in a
financial advisory relationship in 1994.

Pursuant to the terms of the Engagement Letter, the Company has paid Berwind
a fee of $50,000 upon its retention and $200,000 for the rendering of its
opinion as to whether the consideration to be received by holders of Shares
pursuant to the Offer and Merger is fair from a financial point of view to
such holders.

Berwind will be paid, at closing, a fee of 0.50% of the total consideration
(the value of all amounts paid in the Offer and the Merger), less the fees
paid for rendering its opinion. In addition to any fees payable to Berwind
pursuant to the Engagement Letter, the Company has agreed to reimburse Berwind
for its reasonable out-of-pocket expenses in connection with its services and
for the rendering of its opinion. The Company has also agreed to indemnify
Berwind, its affiliates and each of its directors, officers, agents, employees
and controlling persons against certain liabilities, including liabilities
under U.S. federal securities laws.

Item 6. Interest in Securities of the Subject Company

No transactions in the Shares have been effected during the past 60 days by
the Company or any subsidiary or, to the best of the Company's knowledge, by
any executive officer, director or affiliate of the Company.

Item 7. Purposes of the Transaction; Plans or Proposals

Except as described elsewhere in this Solicitation/Recommendation Statement,
no negotiation is underway by the Company in response to the Offer that
relates to (i) a tender offer or other acquisition of the Company's securities
by the Company, any subsidiary of the Company, or any other person, (ii) any
extraordinary transaction, such as a merger, reorganization or liquidation
involving the Company or any of its subsidiaries, (iii) any purchase, sale or
transfer of a material amount of assets of the Company or any of its
subsidiaries, or (iv) any material change in the present dividend rate or
policy, or indebtedness or capitalization of the Company.

Except as described elsewhere in this Solicitation/Recommendation Statement,
there are no transactions, board resolutions, agreements in principle or
signed contracts in response to the Offer that relate to or would result in
the occurrence of one of the events referred to in the preceding paragraph.

During the months of June through August, 2001, the Company and its joint
venture partner in Canopy met on a number of occasions to discuss approaches
to dealing with the performance of Canopy which, due to a number of reasons,
was below expectations of the partners. Mr. Mullan met on July 6, 2001 with
the Executive Chairman of Xeikon at which time Xeikon requested that the
Company consider an amicable unwinding of Canopy. Mr. Mullan informed Xeikon
that he would need to discuss this request with the Board of Directors of the
Company. Mr. Mullan briefed the Board of Directors on July 10, 2001 regarding
these discussions and subsequently informed representatives of Fuji that, at
the request of Xeikon, the liquidation of Canopy was being discussed by the
partners and was likely to occur. Management of the Company met with Xeikon in
Belgium on July 25, 2001 for the purpose of discussing specific proposals for
the unwinding of Canopy in a fashion that would serve the best interests of
both partners. On August 2, 2001, the Board of Directors expressly authorized
management to negotiate the unwinding of Canopy. On August 24, 2001, Messrs.
Mullan and DeMarco met with representatives of Xeikon in Chicago and concluded
negotiations on an agreement in principal for the unwinding and liquidation of
Canopy, which was approved by the Board of Directors of the Company on
September 4, 2001.

Item 8. Additional Information

Designation of Persons to be Elected to the Board. The information
statement attached as ANNEX B hereto is being furnished in connection with the
possible designation by Fuji, pursuant to the Merger Agreement, of certain
persons to be appointed to the Board other than at a meeting of the Company's
shareholders.

United States Anti-Trust Compliance. Under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and the rules that have
been promulgated thereunder by the Federal Trade Commission (the "FTC"),
certain acquisition transactions may not be consummated unless certain
information has been furnished to the Antitrust Division of the Department of
Justice (the "Antitrust Division") and the FTC and certain waiting period
requirements have been satisfied. The purchase of Shares pursuant to the Offer
is subject to such requirements.

Pursuant to the requirements of the HSR Act, Fuji has advised the Company
that it filed a Notification and Report Form with respect to the Offer and
Merger with the Antitrust Division and the FTC on September 7, 2001. Under the
provisions of the HSR Act applicable to the Offer, the purchase of Shares may
not be consummated until the expiration of a 15-calendar day waiting period
following the filing by Fuji. As a result, the waiting period applicable to
the purchase of Shares pursuant to the Offer would be scheduled to expire at
11:59 p.m., New York City time, on September 24, 2001. However, prior to such
time, the Antitrust Division or the FTC may extend the waiting period by
requesting additional information or documentary material relevant to the
Offer from Purchaser. If such a request is made, the waiting period will be
extended until 11:59 p.m., New York City time, on the tenth day after
substantial compliance by Purchaser with such request. Thereafter, such
waiting period can be extended only by court order or by agreement of the
parties.

Shares will not be accepted for payment or paid for pursuant to the Offer
until the expiration or early termination of the applicable waiting period
under the HSR Act. See "The Offer - Certain Legal Matters; Regulatory
Approvals - United States Antitrust Compliance" in the Offer to Purchase. Any
extension of the waiting period will not give rise to any withdrawal rights
not otherwise provided for by applicable law. See "The Offer - Withdrawal
Rights" in the Offer to Purchase. If Purchaser's acquisition of Shares is
delayed pursuant to a request by the Antitrust Division or the FTC for
additional information or documentary material pursuant to the HSR Act, the
Offer will be extended in certain circumstances. See "The Offer - Terms of the
Offer" in the Offer to Purchase.

The Antitrust Division and the FTC scrutinize the legality under the
antitrust laws of transactions such as the acquisition of Shares by Purchaser
pursuant to the Offer. At any time before or after the consummation of any
such transactions, the Antitrust Division or the FTC could take such action
under the antitrust laws of the United States as it deems necessary or
desirable in the public interest, including seeking to enjoin the purchase of
Shares pursuant to the Offer or seeking divestiture of the Shares so acquired
or divestiture of substantial assets of Fuji or the Company. Private parties
(including individual States of the United States) may also bring legal
actions under the antitrust laws of the United States. The Company does not,
and Purchaser has advised the Company that it does not, believe that the
consummation of the Offer will result in a violation of any applicable
antitrust laws. However, there can be no assurance that a challenge to the
Offer on antitrust grounds will not be made, or if such a challenge is made,
what the result will be.

Pennsylvania "Short-Form" Merger Statute. Pursuant to Section 1924 of the
PBCL, if a corporation that is party to a merger owns 80% or more of the
outstanding shares of a constituent corporation to a merger, no approval of
the shareholders of such constituent corporation is required. If Purchaser
acquires 80% or more of the Shares in the Offer, it will be able to consummate
the Merger as a short-form merger without holding a meeting of the Company's
shareholders. It is a condition to consummation of the Offer that 80% or more
of the Shares outstanding on the Expiration Date of the Offer are properly
tendered and not withdrawn (the "Minimum Condition"). In the event less than
80% of the Shares are tendered but the parties elect to waive the Minimum
Condition, the Merger cannot be consummated until the Company holds a special
meeting of shareholders (and solicits proxies for such meeting in compliance
with the requirements of the Exchange Act and regulations promulgated
thereunder) and the Company's shareholders vote to approve the Merger, which
will take substantially more time than consummation of a short-form merger.

Dissenters' Rights. No dissenters' rights are available in connection with
the Offer. However, if the Merger is submitted to shareholders for approval or
is consummated in accordance with the requirements of the Pennsylvania short-
form merger statute, shareholders who have not tendered their shares in the
Offer will be entitled to certain rights under Subchapter 15D of the PBCL,
including the right to dissent and obtain payment of the fair value of their
Shares. Under the PBCL, dissenting shareholders who comply with the applicable
statutory procedures will be entitled to receive a judicial determination of
the "fair value" of their Shares immediately prior to the Effective Time of
the Merger but excluding any change in value in anticipation of the Merger.
Shareholders would also be entitled to receive interest on such amounts from
the date of consummation of the Merger. Shareholders should realize that the
amount determined to be the fair value in any appraisal proceeding may be
higher or lower than the amount to be paid pursuant to the Offer or in the
Merger.

Articles of Incorporation. Article VIII of the Company's Amended and
Restated Articles of Incorporation provides that a "Major Transaction" (as
such term is defined in Article VII of the Amended and Restated Articles of
Incorporation) requires the affirmative vote of at least two-thirds of the
outstanding Shares unless such Major Transaction is first approved by a
majority of the "Disinterested Directors" (as such term is defined in Article
VII) prior to any party to the Major Transaction becoming a 10% Stockholder.
On September 4, 2001, the Merger Agreement was approved by a unanimous vote of
all of the Directors, all of whom were Disinterested Directors. As such, the
two-thirds voting provision will not be applicable to the Merger.

Rights Agreement; Amendment. The Company's Rights Agreement, dated as of
February 1, 2001, by and between the Company and American Stock Transfer &
Trust Company (the "Rights Agreement"), provides that certain transactions,
including the Offer and the Merger, will cause the issuance of right
certificates. At a special meeting of the Board on September 4, 2001, the
Board unanimously approved the Merger Agreement and the transactions
contemplated thereby, and effective September 4, 2001, the Company and
American Stock Transfer & Trust Company, as Rights Agent, executed an
amendment to the Rights Agreement (the "Amendment"). The Amendment exempts the
Offer and the Merger from the provisions of the Rights Agreement. None of
Fuji, Purchaser, or Enovation or any of their affiliates shall be deemed an
"Acquiring Person" as such term is defined in the Rights Agreement, no
"Distribution Date" shall occur nor will any rights become exercisable. The
foregoing summary is qualified in its entirety by the provisions of the
Amendment, which is filed as Exhibit (e)(4) hereto and incorporated herein by
reference.

Item 9. Material to Be Filed as Exhibits

The following Exhibits are filed herewith:

(a)(1) Offer to Purchase (incorporated by reference to Exhibit (d)(1) of
Purchaser's Schedule TO, filed with the Commission on September 11,
2001).

(a)(2) Letter of Transmittal (incorporated by reference to Exhibit (a)(2) of
Purchaser's Schedule TO, filed with the Commission on September 11,
2001).

(a)(3) Joint Press Release issued by Fuji and the Company on September 4,
2001, announcing the Merger and the Offer (incorporated by reference
to the Company's Schedule 14D-9, filed by the Company with the
Commission on September 4, 2001).

(a)(4) Opinion of Berwind Financial L.P., dated September 4, 2001 (included as
ANNEX A to this Schedule 14D-9).*

(a)(5) Information Statement of the Company (included as ANNEX B to this
Schedule 14D-9).*

(a)(6) Recommendation Letter of PrimeSource Corporation dated September 11,
2001.*

(e)(1) Agreement and Plan of Merger dated as of September 4, 2001, by and
among Purchaser, Fuji, Enovation and the Company (incorporated by
reference to Exhibit (d)(1) of Purchaser's Schedule TO, filed with the
Commission on September 11, 2001).

(e)(2) Confidentiality Agreement, dated as of December 11, 2000, by and among
Fuji, the Company and Heartland Imaging Companies, Inc. (incorporated
by reference to Exhibit (d)(2) of Purchaser's Schedule TO, filed with
the Commission on September 11, 2001).

(e)(3) Employment and Noncompetition Agreement, entered into on September 4,
2001, by and between James F. Mullan and Enovation (incorporated by
reference to Exhibit (d)(3) of Purchaser's Schedule TO, filed with the
Commission on September 11, 2001).

(e)(4) Amendment No. 1 to Rights Agreement, effective as of September 4,
2001.

(e)(5) Cancellation Agreement between the Company and James F. Mullan

(e)(6) Cancellation Agreement between the Company and William A. DeMarco

(e)(7) Cancellation Agreement between the Company and Edward W. Padley

(e)(8) Cancellation Agreement between the Company and Donald James Purcell

(e)(9) 2001-2 Amendment to the PrimeSource Supplemental Executive Retirement
Plan

ANNEX A Opinion of the Berwind Financial Group dated September 4, 2001.

ANNEX B Information Statement of the Company.

- ---------------
* Included in materials being distributed to shareholders

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
accurate.

PRIMESOURCE CORPORATION

By: /s/ JAMES F. MULLAN
-----------------------------------
James F. Mullan
Chairman of the Board, President and
Chief Executive Officer

Dated: September 11, 2001

[LETTERHEAD OF BERWIND FINANCIAL, L.P.]

ANNEX A

September 4, 2001

The Board of Directors
PrimeSource Corporation
Fairway Corporate Center, Suite 222
4350 Haddonfield Road
Pennsauken, New Jersey 08109

Dear Sirs:

We understand that PrimeSource Corporation (the "Company") and Fuji Photo
Film U.S.A., Inc., ("Parent"), Enovation Graphic Systems Inc., a wholly-owned
subsidiary of Parent ("EGS"), and FPF Acquisition Corp., a wholly-owned
subsidiary of EGS ("Merger Subsidiary") will enter into an Agreement and Plan
of Merger dated September 4, 2001 (the "Merger Agreement") pursuant to which
(i) the Merger Subsidiary would commence a tender offer (the "Tender Offer")
for all the outstanding shares (other than shares beneficially owned by the
Merger Subsidiary) of the Company's common stock, par value $0.01 per share
(the "Company Shares"), for $10.00 per share (the "Consideration") and (ii)
the Merger Subsidiary would be merged with and into the Company in a merger
(the "Merger"), in which each of the Company Shares not acquired in the Tender
Offer, other than Company Shares held in treasury or as to which dissenters'
rights have been perfected, would be converted into the right to receive the
Consideration. The Tender Offer and the Merger, taken together, are referred
to as the "Transaction".

You have asked us whether, in our opinion, the Consideration to be received
by holders of the Company Shares pursuant to the Transaction is fair from a
financial point of view to such holders.

Berwind Financial, L.P., as part of its investment banking business,
regularly is engaged in the valuation of assets, securities and companies in
connection with various types of asset and security transactions, including
mergers, acquisitions, going-private transactions, private placements and
valuations for various other purposes, and in the determination of adequate
consideration in such transactions. We have been retained by you for the
purpose of providing this opinion. We have not been authorized by the Company
or the Board of Directors to solicit, nor have we solicited, third-party
indications of interest for acquisition of all or any part of the Company.

In arriving at our opinion, we have, among other things: (i) reviewed the
historical financial performance, current financial position and general
prospects of the Company, (ii) reviewed the Merger Agreement, (iii) studied
and analyzed the stock market trading history of the Company, (iv) considered
the terms and conditions of the Transaction as compared with the terms and
conditions of certain acquisition transactions involving publicly traded
business-to-business industrial distributors, (v) met with certain members of
the Company's senior management to discuss its operations, historical
financial statements and future prospects, and (vi) conducted such other
financial analyses, studies and investigations as we deemed appropriate.

Our opinion is given in reliance on information and representations made or
given by the Company, and its officers, directors, auditors, counsel and other
agents, and on filings, releases and other information issued by the Company
including financial statements, financial projections and stock price data as
well as certain information from recognized independent sources. We have not
independently verified the information concerning the Company or other data,
which we have considered in our review and, for purposes of the opinion set
forth below, we have assumed and relied upon the accuracy and completeness of
all such information and data. Additionally, we assume that the Tender Offer
and Merger are in all respects lawful under applicable law.

3000 CENTRE SQUARE WEST, 1500 MARKET STREET, PHILADELPHIA, PENNSYLVANIA 19102,
PHONE (215) 575-2400 FAX (215) 564-5402
Member National Association of Securities Dealers

A-1

The Board of Directors
September 4, 2001
Page 2

With regard to financial and other information relating to the general
prospects of the Company, we have assumed that such information has been
reasonably prepared and reflects the best currently available estimates and
judgments of the management of the Company as to the Company's most likely
future performance.

Our opinion is based upon information provided to us by the management of
the Company, as well as market, economic, industry, financial and other
conditions as they exist and can be evaluated only as of the date hereof and
speaks to no other period. Our opinion pertains only to the financial
consideration of the Transaction and is provided for the information and
assistance of the Board of Directors. Our opinion does not constitute a
recommendation to the Board of Directors and does not constitute a
recommendation to the Company's shareholders as to whether such shareholders
should tender any Company Shares pursuant to the Tender Offer.

On the basis of, and subject to the foregoing, we are of the opinion that,
as of the date hereof, the Consideration to be received by the holders of
Company Shares pursuant to the Transaction is fair from a financial point of
view to such holders.

Sincerely,
/s/ BERWIND FINANCIAL, L.P.
BERWIND FINANCIAL, L.P.

A-2

ANNEX B

PRIMESOURCE CORPORATION
FAIRWAY CORPORATE CENTER
4350 HADDONFIELD ROAD
SUITE 222
PENNSAUKEN, NEW JERSEY 08109

INFORMATION STATEMENT PURSUANT TO
SECTION 14(f) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14f-1 THEREUNDER

This Information Statement is being furnished to holders of the common
stock, par value $0.01 per share (individually, a "Share" and collectively,
the "Shares"), of PrimeSource Corporation, a Pennsylvania corporation (the
"Company") on or about September 11, 2001, as part of the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
with respect to the tender offer by FPF Acquisition Corp. ("Purchaser"), a
Pennsylvania corporation and a wholly-owned subsidiary of Enovation Graphic
Systems, Inc. ("Enovation") which is a wholly-owned subsidiary of Fuji Photo
Film U.S.A., Inc. ("Fuji"), a wholly-owned subsidiary of FUJIFILM America,
Inc. ("Fuji - America") which is a wholly owned subsidiary of Fuji Photo Film
Co., Ltd. ("Fuji - Japan") to the holders of record of the Shares. All
references to "Shares" include the associated common stock purchase rights
issued pursuant to the Rights Agreement, dated as of February 1, 2001, as
amended, between the Company and American Stock Transfer and Trust Company, as
Rights Agent. Capitalized terms used and not otherwise defined herein shall
have the meaning ascribed to them in the Schedule 14D-9. Fuji - Japan, Fuji -
America, Fuji, Enovation and Purchaser are collectively referred to herein as
the "Fuji Companies" and each individually as a "Fuji Company."

You are receiving this Information Statement in connection with the possible
election of persons designated by Fuji (the "Designees") to seats on the Board
of Directors of the Company (the "Board of Directors"). Pursuant to the terms
of the Merger Agreement, after the purchase of, and payment for, shares by
Purchaser pursuant to the Offer, Fuji shall be entitled to designate such
number of directors, rounded up to the next whole number, on the Board as is
equal to the product of the total number of directors on the Board (giving
effect to any increase in the size of the board as a result of any designees)
multiplied by the percentage that the aggregate number of shares owned by the
Purchaser bears to the total number of shares then outstanding. The Company
shall, upon Parent's request, take all action necessary either to increase the
size of the Board or promptly secure the resignations of such number of its
incumbent directors, or both, as is necessary to enable Designees to be so
elected, and shall use its best efforts to cause Designees to be so elected.
At such time, the Company will use its best efforts to cause Designees to
constitute the same percentage (rounded up to the next whole number) as is on
the Board or each committee of the Board, and each board of directors of each
subsidiary of the Company.

In the event the Designees are designated to the Board, then, until the
Effective Time, the Company shall use its best efforts to cause the Board to
have at least three members who served on the Board of the Company on the date
the Merger Agreement was executed (the "Continuing Directors"). Following the
election or appointment of Designees and prior to the Effective Time, any
amendment to the Merger Agreement, any termination of the Merger Agreement by
the Company, any extension by the Company of the time for performance of any
of the obligations or other acts of Fuji, Enovation or Purchaser or waiver of
any of the Company's rights under the Merger Agreement will require the
concurrence of the Continuing Directors. In the event there are no Continuing
Directors, any of the foregoing actions will require only the approval of a
majority vote of the entire Board of Directors.

This Information Statement is required by Section 14(f) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 14f-1
thereunder. You are urged to read this Information Statement carefully.
However, you are not required to take any action. Information is being
provided for solely informational purposes and not in connection with a vote
of the Company's shareholders.

B-1

Pursuant to the Merger Agreement, on September 11, 2001, Purchaser commenced
the Offer. The Offer is scheduled to expire on October 9, 2001 unless extended
by Purchaser in accordance with the terms of the Offer. The information
contained in or incorporated by reference in this Information Statement
concerning Fuji, Purchaser, Enovation, Fuji - America and Fuji - Japan and the
Designees has been furnished to the Company by Fuji, Enovation and Purchaser.
The Company has no knowledge that would indicate that any of such information
or that any statement based upon such sources is untrue. Any failure by Fuji,
Enovation or Purchaser to update such information, or any failure by the Fuji,
Enovation or Purchaser to disclose events which may have occurred and which
may affect the significance or accuracy of such information, but which are
unknown to the Company, may affect the accuracy or completeness of the
information concerning Fuji, Enovation, Purchaser or the Designees supplied
from such sources. The Company does not assume any responsibility for the
accuracy or completeness of such information.

The common stock of the Company is the only class of voting securities of
the Company outstanding. Each Share has one vote. As of September 10, 2001,
6,357,806 Shares were issued and outstanding.

BOARD OF DIRECTORS

General

The Board of Directors is currently comprised of seven members. Pursuant to
the Company's Articles of Incorporation (the "Articles of Incorporation"),
directors are divided into three classes. All directors of the Company hold
office until the election and qualification of their successors.

Designees of Fuji

As of the date of this Information Statement, Purchaser has not determined
who will be its Designees but Fuji has informed the Company that it will
choose the Designees from the directors and executive officers listed in
Schedule I to the Purchaser's Offer to Purchase, a copy of which is being
mailed to shareholders of the Company. The information with respect to such
individuals in Schedule I is hereby incorporated by reference. Fuji has
informed the Company that each of the individuals listed in Schedule I of the
Offer to Purchase has consented to act as a director of the Company, if so
designated.

Based solely on the information set forth in Schedule I of the Offer to
Purchase filed by Purchaser, none of the persons listed on Schedule I of the
Offer to Purchase or any associate or majority-owned subsidiary of the persons
so listed (1) beneficially owns or has any right to acquire, directly or
indirectly, any Shares, (2) has any familial relationship with any director or
executive officer of the Company, or (3) has been involved in any transactions
with the Company or any of its directors, executive officers, affiliates or
associates which are required to be disclosed pursuant to the rules and
regulations of the Securities and Exchange Commission.

Fuji has informed the Company that, to the best of its knowledge, none of
the individuals listed on Schedule I of the Offer to Purchase has, during the
last five years, (1) been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or (2) been a party to any
judicial or administrative proceeding during the past five years (except for
matters that were dismissed without sanction or settlement) that resulted in a
judgment, decree or final order enjoining the person from future violations
of, or prohibiting activities subject to, federal or state securities laws, or
a finding of any violation of federal or state securities laws.

It is expected that Fuji's designees may assume office at any time following
the purchase by Purchaser of Shares pursuant to the Offer, which purchase
cannot be earlier than October 9, 2001. This step will be accomplished at a
meeting or by written consent of the Board providing that the size of the
Board will be increased and/or sufficient numbers of current directors will
resign. It is currently not known which of the current directors of the
Company will resign.

CURRENT BOARD OF DIRECTORS OF THE COMPANY

Set forth below, for each director of the Company, is information regarding
the expiration of each director's current term as director, their age, as of
September 10, 2001, position(s) with the Company, the period they have served
as a director, any family relationship with any other director or executive
officer of

B-2

the Company, if any, and the directorships currently held by them in
corporations whose shares are publicly registered.

Terms Expiring in 2002

Philip J. Baur, Jr., age 70, retired, has served as a director of the
Company since 1965 and has been Vice Chairman of the Board since 1994. Mr.
Baur held senior executive positions with Tasty Baking Company and has also
served as a director of Tasty Baking Company since 1954 and served as its
Chairman of the Board from 1981 to 1998.

Edward N. Patrone, age 66, retired, was a senior consultant to Alco Standard
Corporation, a national distributor of paper and office products, from 1991 to
1997. From 1988 through 1991, he was President and Chief Executive Officer of
Paper Corporation of America. He is also a director of Compucom Corporation
and Global Imaging Corp.

Terms Expiring in 2003

Fred C. Aldridge, Jr., age 68, has served as a director of the Company since
1993. He is a practicing attorney in Philadelphia, Pennsylvania. Mr. Aldridge
is also President and a director of a private charitable foundation, Vice
President, Special Counsel of the Delaware Investments Family of Funds, and a
director of Tasty Baking Company.

John M. Pettine, age 58, has served as a director of the Company since 1981.
Mr. Pettine is Executive Vice President and Chief Financial Officer of Tasty
Baking Company and has been its Chief Financial Officer or Vice President of
Finance since 1983. He is also a director of Tasty Baking Company.

Terms Expiring in 2004

Gary MacLeod, age 68, is Chairman and Treasurer of MagnaDrive Corporation, a
company manufacturing and marketing patented torque management devices. Mr.
MacLeod was Chairman and/or Chief Executive Officer of Laird Norton Trust
Company, a private trust and investment management company, from 1975 to 1993
and from 1995 to 1999, when he became Chairman Emeritus. Mr. MacLeod became a
director of PrimeSource Corporation in 1994.

James F. Mullan, age 62, has been President of the Company and has served as
a member of its Board of Directors since 1982. Mr. Mullan was also elected
Chief Executive Officer of the Company in 1991 and Chairman of the Board in
2000.

Klaus D. Oebel, age 60, is President of Oebel Associates, Inc., a management
consulting firm. He was previously President of the Communications Systems
Group of Aydin Corporation, systems integrator and manufacturer of electronic
data transfer products, from 1996 to November 1997. For the previous 18 years,
he was an international management consultant specializing in developing and
implementing organizational strategies. Mr. Oebel served as a consultant to
the Company in the 1984-96 time period.

Executive Officers Who Are Not Directors

William A. DeMarco, age 55, has served as Vice President and Chief Financial
Officer of the Company since 1994.

Barry C. Maulding, age 56, has served as Vice President, General Counsel and
Corporate Secretary of the Company since 1994.

B-3

COMMITTEES OF THE BOARD OF DIRECTORS

The Company's Board of Directors has standing Executive, Nominating, Audit/
Pension, and Compensation Committees. The members of each committee and the
functions performed thereby are outlined below:

Executive Committee

Mr. Fred C. Aldridge, Jr., Chairman
Mr. Gary MacLeod
Mr. James F. Mullan
Mr. John M. Pettine

Two meetings were held during 2000.

Functions: Authority to exercise all the powers of the Board of Directors
between meetings of the Board, except to the extent limited by law
and certain other exceptions specified in the enabling resolution.

Nominating Committee

Mr. Philip J. Baur, Jr., Chairman
Mr. James F. Mullan
Mr. Edward N. Patrone

One meeting was held during 2000.

Functions:

1. Make recommendations to the Board as to selection of the Chairman
and Vice Chairman of the Board, the Chief Executive Officer and the
President.

2. Receive, review, and maintain files of individuals qualified to be
recommended as nominees for election as directors and present
recommendations to the Board of Directors as replacement directors
are required.

3. Review, at least annually, the capability of each incumbent director
as to health, availability to serve, conflicts of interest, and
other factors relevant to qualifications.

4. Present annually to the Board of Directors, a list of those
individuals recommended for nomination for election to the Board of
Directors.

5. Present recommendations to the Board of Directors as new committees
may be created or as replacement committee members may be required.

The Nominating Committee will consider shareholders' recommendations of
nominees for election to the Board if the recommendations are accompanied by
comprehensive written information relating to the recommended individual's
business experience and background and by a consent signed by the individual
stating that he or she desires to be a nominee and to serve on the Board of
Directors. Recommendations should be sent to the Corporate Secretary of the
Company by December 31, 2001 to be considered in connection with the 2002
annual meeting of shareholders.

Audit/Pension Committee

Mr. Gary MacLeod, Chairman
Mr. Fred C. Aldridge, Jr.
Mr. Klaus D. Oebel

Two meetings were held during 2000. Several telephone conferences were also
held, primarily in connection with the release of quarterly financial results.
The members of the Committee are independent, as that term is defined by the
National Association of Securities Dealers listing standards.

B-4

Functions:

1. Make recommendations to the Board on the selection and termination
of independent auditors.

2. Meet with the independent auditors and financial management of the
Company to review the scope of the proposed audit for the current
year and the audit procedures to be utilized.

3. Review with the independent auditors and management the adequacy of
the Company's internal auditing, accounting, and financial controls.

4. Review the quarterly and annual financial statements with the
independent auditors to determine that the independent auditors are
satisfied with the disclosure and content of the financial
statements to be presented to the Shareholders. Management has the
primary responsibility for the Company's financial statements and
the overall reporting process and internal controls. Any significant
changes in accounting principles are to be reviewed by the
Committee.

5. Periodically review with the independent auditors and the Company's
financial and legal personnel any significant litigation and the
performance of the risk management function of the Company.

6. Review and make recommendations to the Board of Directors with
respect to the performance of third parties responsible for the
administration and investment of retirement plan funds. The
Committee is responsible for approving the hiring and termination of
investment advisors and portfolio managers.

7. Review proposed amendments to all retirement plans.

Audit/Pension Committee Report

The Audit/Pension Committee met with the Company's independent auditors, in
person or by conference telephone call, on several occasions during 2000 and
early 2001. In accordance with SEC rules, the Audit/Pension Committee has (1)
reviewed and discussed the audited financial statements and internal controls
with management, (2) discussed with the independent auditors the matters
required to be discussed by Statement on Auditing Standards No. 61, and (3)
received from the auditors disclosures regarding the auditors' independence
and discussed the auditors' independence with them. Based on these meetings
and review, and in reliance upon the representations made to the Committee,
the Committee has recommended to the Board of Directors that the Company's
audited financial statements be included in the Company's Form 10-K filing
with the SEC for the year ended December 31, 2000.

Gary MacLeod, Chairman
Fred C. Aldridge, Jr.
Klaus D. Oebel

March 13, 2001

B-5

Compensation Committee

Mr. John M. Pettine, Chairman
Mr. Philip J. Baur, Jr.
Mr. Edward N. Patrone

Two meetings were held during 2000.

Functions:

1. Formulate and adopt the Company's policy on executive compensation
including the operation and administration of all compensation
practices affecting senior management.

2. Recommend compensation for executive officers of the Company.

3. Review or make proposals concerning stock purchase, savings plans
and similar employee benefits. Review all other employee benefits as
they affect senior management and make recommendations to the Board
of Directors.

4. Review management's recommendations with respect to the
participants, targets and potential bonus payouts specified in any
management bonus plans applicable to senior management. Review and
recommend Board approval of any bonus plans or bonus targets for
elected officers of the Company.

5. Make grants or awards under all stock-based incentive plans of the
Company and otherwise exercise all discretionary action with respect
to those plans.

6. Recommend benefit levels in the Company's retirement program.

7. The Chairman of the Committee is authorized to recommend, for
adoption and execution by the President, any amendment to any
retirement plan or employee welfare benefit plan which is necessary
to maintain the qualification and tax-exempt status of such plan
under the Internal Revenue Code and does not materially affect
benefit levels.

8. Recommend directors' fees and retainers.

The entire Board of Directors of the Company met four times during 2000.
Attendance at the Board of Directors and Board Committee meetings was 100% for
all incumbent directors as a group during 2000. Each incumbent director
attended all of the aggregate number of Board meetings and meetings of the
committees on which he served.

DIRECTOR COMPENSATION

Each director receives for services an annual retainer of $10,000. In
addition, the directors receive fees of $800 for attending Board of Directors'
meetings ($1,600 per meeting if an additional day of travel is required), fees
of $500 for attending Board Committee meetings, and, when applicable,
reimbursement of travel expenses in connection with meetings. The Chairman of
the Executive Committee receives an annual retainer of $2,000 and the Chairman
of each standing Committee of the Board receives an annual retainer of $1,000.
Director James F. Mullan receives no annual Board or Committee retainers and
also receives no meeting fees.

The Board of Directors, following the recommendation of its Compensation
Committee, established a $22,000 annual retainer for Mr. Richard Engebrecht
(the former Chairman) effective January 1, 1998 for his services to the
Company as Chairman of the Board. This retainer was in lieu of the normal
director's $10,000 annual retainer and in addition to normal meeting fees and
Board Committee retainers that a non-employee director would normally receive.
This special arrangement ended in May 2000 when Mr. Mullan became Chairman of
the Board.

B-6

EXECUTIVE OFFICER COMPENSATION

The following table sets forth the compensation paid by the Company to its
Chief Executive Officer and the four other highest paid executive officers of
the Company (the "Named Executive Officers") for services rendered during the
last three calendar years.

SUMMARY COMPENSATION TABLE(1)

Long-Term
Compensation
Annual Compensation Awards
--------------------------------- --------------------
Name and Restricted
Principal Position Other Annual Stock Stock All Other
at December 31, 2000 Year Salary Bonus Compensation Awards Options Compensation(2)
-------------------- ---- ------ ----- ------------ ----------- ------- ---------------
($) ($) ($) ($) (#) ($)

James F. Mullan.................. 2000 290,000 175,000 -- -- -- 450
Chairman, President 1999 275,000 190,000 -- -- 15,000 450
and CEO 1998 275,000 170,000 -- -- 15,000 450

John H. Goddard, Jr.............. 2000 221,500(3) 65,000(3) -- -- -- 450
President & CEO 1999 210,000 90,000 -- -- 7,000 450
Canopy, LLC (3) 1998 210,000 75,000 -- -- 7,500 450

Edward W. Padley................. 2000 142,500 85,000 -- -- -- 450
Vice President & GM, 1999 135,000 75,000 -- -- 5,000 450
Central Region 1998 135,000 70,000 -- -- 7,500 450

William A. DeMarco............... 2000 142,500 65,000 -- -- -- 450
Vice President & CFO 1999 135,000 70,000 -- -- 5,000 450
1998 135,000 65,000 -- -- 7,500 450

D. James Purcell................. 2000 142,500 60,000 -- -- -- 450
Vice President & GM, 1999 135,000 45,000 -- -- 5,000 450
Eastern Region 1998 135,000 60,000 -- -- 7,500 450

- ---------------
(1) This table does not include a column for Long-Term Incentive Plan Payouts.
There is no amount to report in the column for Long-Term Incentive Plan
Payouts, and the amount of Other Annual Compensation paid to the named
executive officers was in each case for perquisites which are not
reportable since they did not exceed 10% of salary and bonus for any named
executive officer.
(2) Consists of matching contributions by the Company under its 401(k)
retirement plan.
(3) Mr. Goddard was Executive Vice President of the Company, an uncompensated
position after June 30, 2000, until June 12, 2001 when he resigned his
positions with the Company and Canopy. From July 1, 2000 through December
31, 2000, Canopy, LLC, 74% owned by the Company, paid Mr. Goddard's full
salary. $35,000 of the $65,000 bonus for 2000 was paid by the Company in
connection with services through June 30, 2000 and the balance of this
bonus was paid by Canopy.

Compensation Committee Report on Executive Compensation

The Company's compensation programs for executive officers are administered
by the Compensation Committee of the Board. The Committee is composed of three
directors, none of whom is an executive officer of the Company. All issues
pertaining to compensation of executive officers of the Company are submitted
to the full Board of Directors for final approval, although the Committee has
authority to grant stock options and award restricted stock under the
Company's stock plan.

The Compensation Committee of the Board of Directors of the Company adopted
the following policy on executive compensation on March 13, 2001.

Compensation Policies Applicable to Executive Officers. The purpose of
PrimeSource's executive compensation program is to attract, retain and
motivate qualified executives to manage the business of PrimeSource to
maximize profits and shareholder value. Executive compensation in the
aggregate is made up principally of the executive's annual base salary, a
bonus and awards of restricted stock or stock options

B-7

under PrimeSource's 1993 Long-Term Incentive Plan. PrimeSource's Compensation
Committee (the "Committee") annually considers and makes recommendations to
the full Board of Directors as to executive compensation, including changes in
base salary and bonuses.

Consistent with the above-noted purposes of the executive compensation
program, it is the policy of the Committee, in recommending the aggregate
annual compensation of executive officers of PrimeSource, to consider the
overall performance of PrimeSource, the performance of the operating unit or
area for which the executive has responsibility, and the individual
contribution and performance of the executive. The performance of PrimeSource
and the operating unit or area for which the executive has responsibility are
significant factors in determining aggregate compensation. PrimeSource's
compensation program focuses on PrimeSource's strategic direction, corporate
performance measures, and specific corporate goals. The corporate performance
measures the Committee considers include sales, gross profits, earnings, and
comparisons of sales, gross profits and earnings with prior years and with
budgets.

A substantial portion of the annual compensation of the executives is
directly related to corporate performance. Bonuses are calculated and awarded
based upon both objective formulas and subjective business judgment. Different
formulas are applied to the executives depending on their areas of
responsibility. In the Committee's opinion, the performance by management in
2000 was strong, given the competitive circumstances, and particularly
noteworthy was the continued improvement of the balance sheet and the
formation of Canopy, the joint venture with Xeikon. Bonuses for 2000
represented approximately 32% to 60% of the total annual compensation for the
Chief Executive Officer and each of the four senior executives who report to
him. 2000 bonuses for the four senior executives and the Chief Executive
Officer were determined, in part, by formulas established at the beginning of
2000, and 2001 target bonuses have also been based on formulas established
early in 2001.

In determining an executive's annual salary, the Committee considers both
corporate and personal performance criteria, competitive compensation levels,
the economic environment and changes in the cost of living, and (with respect
to officers other than the Chief Executive Officer) relies heavily upon the
recommendation of the Chief Executive Officer. The Committee then exercises
business judgment based on all these criteria and the purposes of the
executive compensation program. The Committee retains the power to waive
performance criteria under any compensation program.

It is the Committee's belief that the Company's long-term incentive programs
should strongly align executive incentives with the interests of shareholders.
The Committee and Board believe the executives of the Company have done an
exceptional job of responding to the challenges presented by a dynamic
industry environment and in making strategic acquisitions. In 2000, the
Committee hired a nationally recognized compensation consulting firm to review
the cash compensation of the Chief Executive Officer and the four senior
executives who report to him. The findings in this report were considered in
December 2000 when the Committee established salary levels for 2001 for the
senior executive group. No stock options were awarded in 2000 to any executive
pending a review by the outside consulting firm of the portion of the
Company's bonus program for senior executives that pertains to equity, with
emphasis on what useful role restricted stock awards might serve. Based upon
the preliminary recommendations from that consulting firm, the Committee
anticipates implementing a performance-based incentive plan that would give
the senior executive group the opportunity to earn restricted stock of the
Company over a period of years.

The Company's existing stock option are not directly tied to performance
factors.

The Committee has reviewed the employment agreements with the senior
executives and has determined that they have not had an effect on their
compensation levels.

Compensation of the Chief Executive Officer. Mr. Mullan joined PrimeSource
in 1970, became President in 1982, Chief Executive Officer in 1991, and
Chairman of the Board in 2000. He currently holds all three of these positions
and receives no additional remuneration for serving as a member of or Chairman
of the Board of Directors. For 2000, Mr. Mullan received a base salary of
$290,000. This base salary was increased to $315,000 for 2001. In addition,
pursuant to the bonus program applicable to him, he was awarded a bonus of
$175,000 for 2000, a decrease from his 1999 bonus of $190,000. Mr. Mullan's
2000 bonus represents 2% of PrimeSource's 2000 consolidated pre-tax income.
The Committee also recommended

B-8

that Mr. Mullan be given the opportunity to earn a target bonus for 2001 equal
to 80% of his base salary if the Company achieves a targeted earnings per
share set by the Board of Directors and if Mr. Mullan meets specified
objectives that have been determined by the Board to be of strategic
importance to the Company.

The Compensation Committee
John M. Pettine, Chairman
Philip J. Baur, Jr.
Edward N. Patrone

March 13, 2001

Compensation Committee Interlocks and Insider Participation

For fiscal year 2000, the Company's Compensation Committee consisted of
Directors John M. Pettine, Philip J. Baur, Jr. and Edward N. Patrone, none of
whom were officers or employees or former officers or employees of the Company.

Executive Bonus Plans

Executive bonus plans are administered by the Compensation Committee of the
Board. As noted above in the Compensation Committee Report, these plans are
specifically tailored for each senior executive and may or may not involve a
pre-set formula and may or may not have a maximum amount for the bonus the
executive can be awarded. The Committee may authorize annual cash or deferred
awards to any full-time salaried management employee of the Company but
typically permits the President of the Company the discretion to make awards,
if any, to key managers.

Stock Option Plan

The Company has a 1993 Long-Term Incentive Plan under which stock options
are granted from time to time to key employees and officers. As of September
10, 2001, approximately 219,000 shares were available for future grants to
officers and key employees under this 1993 Plan. The Company has never granted
stock appreciation rights of any kind.

No stock options were granted or exercised in 2000.

B-9

Option Year-End Value Table

The following table sets forth information concerning the value of options
held by the Chief Executive Officer and the other Named Executive Officers at
December 31, 2000.

Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at Fiscal Year-End at Fiscal Year-End(1)
--------------------------- ---------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------

James F. Mullan.................. 93,750 21,250 $N/A $N/A
John H. Goddard, Jr.............. 42,986 10,875 N/A N/A
Edward W. Padley................. 15,670 8,750 N/A N/A
William A. DeMarco............... 21,250 8,750 N/A N/A
D. James Purcell................. 17,750 8,750 N/A N/A

- ---------------
(1) The exercise price of all outstanding options exceeded the fair market
value of the shares of Common Stock underlying the options at December 31,
2000.

Retirement Plans

The Company has an IRS qualified defined benefit retirement plan ("Pension
Plan") which nearly all employees of the Company are eligible to participate
in. Amounts expensed for the Pension Plan or contributed to the Pension Plan
are computed on an aggregate actuarial basis and cannot be individually
allocated. The remuneration covered by the Pension Plan includes salaries and
bonuses paid to the Named Executives Officers. Compensation of all non-
executive officer employees covered by the Pension Plan includes salaries,
commissions and bonuses. Benefits under the Pension Plan are computed by
multiplying a percentage (based on number of years of service) times the
highest average remuneration paid over a consecutive 60-month period within
the last 120 months of employment with the Company. Benefits under the Pension
Plan are subject to reduction for Social Security and are presently restricted
under the Internal Revenue Code to a maximum of $140,000 per year. The
Internal Revenue Code also limits the level of compensation which may be used
to determine benefits under these qualified plans to $170,000 per year. As of
March 1, 2001, Messrs. Mullan, Goddard, Padley, DeMarco and Purcell had 31,
13, 8, 20 and 6 years, respectively, of credited service under this Pension
Plan. Additional benefits may be payable to these five officers under the
Supplemental Executive Retirement Plan ("SERP") described below.

The following table, applicable only to executive officers Mullan, Goddard,
Padley, DeMarco and Purcell, shows the approximate annual retirement benefits
which will be payable in total under the Pension Plan, Social Security, and
the SERP at the normal retirement age of 65 (assuming continuation of the
plans). The SERP was adopted by the Board in 1989, and was amended as of March
1, 2000 to add a 25-year formula for full benefits. Messrs. Goddard, Padley
and Purcell were not participants in the SERP prior to March 1, 2000.

Final Average 25 or More
Remuneration Years of Service
------------ ----------------

$150,000 $ 67,500
200,000 90,000
250,000 112,500
300,000 135,000
350,000 157,500
400,000 180,000
450,000 202,500
500,000 225,000

The SERP is designed and intended to encourage designated key executives to
continue in the service of the Company by providing them upon their retirement
with a supplemental retirement benefit equal to the difference between (i) 45%
of the average of the 60 highest consecutive calendar months compensation paid
by the Company during the 120 calendar months immediately preceding the
executive's separation from

B-10

service, and (ii) the sum of the executive's primary Social Security benefits
and the payments which the executive would be eligible to receive from the
Pension Plan on a single life annuity basis, and this difference is then
multiplied by a fraction, the numerator of which is the number of years of
credited service under the SERP and the denominator is 25. Mr. Goddard has 13
years of credited service under this SERP, and Messrs. Padley and Purcell each
have 7 years. Upon completion of 5 years of credited service, the participant
is vested in a benefit based on the formula above, but does not receive the
full benefit under the formula until he has 25 years of credited service. Only
Messrs. Mullan and DeMarco are currently entitled to receive the full benefit
under the SERP. A surviving spouse is also entitled to certain benefits under
the SERP. Messrs. Mullan, Padley, DeMarco and Purcell are the only current
employees who have been designated to participate in the SERP. Mr. Goddard and
three former employees (or their heirs) also participate in the SERP.

The Company has entered into a Trust Agreement with a major bank for the
benefit of the participants in the SERP. Under this Trust Agreement, the
Company is obligated to deposit sufficient funds with the trustee to enable it
to purchase annuity contracts to fund the SERP in the event of a change or
potential change in control of the Company. The transactions contemplated by
the Merger Agreement will constitute a change in control and will result in
the funding of the Trust. Messrs. Mullan, Padley, DeMarco and Purcell are the
only current employees who are participants in the SERP. The total amount by
which the Trust will be funded is $2.26 million which includes amounts for the
benefit of current employee participants and certain retired employees who are
also participants.

The Company has a 401(k) Savings Plan that covers all of its employees.
Under this plan the Company matches employee contributions up to $450 per
year.

Under the terms of a 1990 agreement with VWR Scientific Products Corp., VWR
has agreed to pay two-thirds of all amounts payable to former PrimeSource
Chairman and director Richard Engebrecht under the Momentum Supplemental
Benefits Plan, a supplemental benefits plan for certain designated Momentum
executive officers to whom the Internal Revenue Code Sections 415 and 401 limits
may apply, and the Company as successor to Momentum will pay the remaining
one-third. The Company has guaranteed payment of the two-thirds payable by VWR
and, likewise, VWR has guaranteed payment of the one-third payable by the
Company. In 1993 Mr. Engebrecht ceased being a regular employee of Momentum
Corporation and began drawing retirement pay under both the Pension Plan ($9,044
per month) and the Momentum Supplemental Benefits Plan ($8,489 per month).

B-11

AGREEMENTS WITH CERTAIN OFFICERS

Each of the five Named Executive Officers (other than Mr. Goddard) has an
employment agreement with the Company. Messrs. Mullan and DeMarco entered into
their present agreements in December 1996 and Messrs. Padley and Purcell entered
into theirs in December 1997. Under these agreements, each officer would
continue to receive an amount equal to his annual salary and average prior
bonuses for one year (two years for Mr. Mullan) after termination of his
employment under the following circumstances: (a) termination by the Company
except for cause or upon death, retirement, or disability, (b) termination by
the executive because his authority or duties are changed so as to be
inconsistent with his training and experience, or (c) termination by the
executive because of a breach of his employment agreement by the Company. These
agreements provide one additional year of salary continuation (for executives
other than Mr. Mullan) if the executive's employment is ended in a setting
involving a "change of control" of the Company. The current salaries are as
follows: Mullan, $315,000; Padley, $152,500; DeMarco, $152,500; and Purcell,
$150,000. This payment would be in addition to any other damages which the
executive may suffer as a result of such termination. Beginning July 1, 2000,
Mr. Goddard's salary was paid by Canopy. In June 2001, Mr. Goddard resigned from
the Board of Directors of the Company and from all officer positions with the
Company and Canopy on terms and conditions entitling him to receive one year's
salary and benefit continuation and bonuses, and his stock options will continue
to vest through June 28, 2002 and will be exercisable for 90 days after that
date.

Each of the ongoing employment agreements described above for Messrs.
Mullan, DeMarco, Padley and Purcell is being terminated effective upon
consummation of the Offer and payment of the amounts provided in certain
cancellation agreements dated as of September 4, 2001. In consideration of
the cancellation of their respective employment agreements, the Company will
make the following lump sum payments: Mr. Mullan - $980,000; Mr. DeMarco -
$435,000; Mr. Padley - $475,000, and Mr. Purcell - $420,000.

B-12

PERFORMANCE GRAPH

The following graph compares the cumulative total shareholder return on
PrimeSource stock with the NASDAQ Composite Index and the NASDAQ Non-Financial
Index for the period from December 31, 1995 through December 31, 2000. The
graph assumes $100 invested on December 31, 1995 in PrimeSource stock, the
NASDAQ Composite Index and the NASDAQ Non-Financial Stocks Index. Total
shareholder return assumes reinvestment of dividends. The stock price
performance is not necessarily indicative of future price performance.

[line graph]

12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
-------- -------- -------- -------- -------- --------

PrimeSource $ 100.00 $ 138.44 $ 174.97 $ 126.68 $ 99.59 $ 96.36
NASDAQ Companies $ 100.00 $ 123.04 $ 150.69 $ 212.51 $ 394.92 $ 237.62
NASDAQ Non-Financial $ 100.00 $ 121.48 $ 142.56 $ 208.73 $ 408.72 $ 238.48

AUDIT FEES

Audit Fees. The aggregate fees charged by PricewaterhouseCoopers LLP for
the audit of the Company's 2000 annual financial statements and the review of
the Company's quarterly financial statements included in the Company's
quarterly reports on Form 10-Q during 2000 were $242,500.

Financial Information Systems Design and Implementation Fees. PrimeSource
incurred no fees with PricewaterhouseCoopers LLP for professional services
relating to designing or implementing the Company's computer accounting
systems or operating or supervising the operation of the Company's information
systems during 2000.

All Other Fees. PricewaterhouseCoopers LLP charged an aggregate of $28,200
during 2000 for all other services provided to the Company not included in the
preceding two paragraphs. These services were primarily required annual audits
of various qualified employee benefit plans.

B-13

The Audit/Pension Committee has considered whether the provision of services
by PricewaterhouseCoopers LLP to the Company in addition to the audit of the
Company's annual financial statements and the review of the Company's
quarterly financial statements impair the independence of such accounting
firm. The Audit/Pension Committee has determined that providing such services
is compatible with PricewaterhouseCoopers LLP maintaining its independence.

SHAREHOLDER PROPOSALS

In order for proposals of shareholders to be considered for inclusion in the
Proxy Statement and proxy for the 2002 annual meeting of the shareholders,
said proposals must be received by the Corporate Secretary of the Company not
later than December 9, 2001.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and holders of more than ten percent of the
Company's Common Stock to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of Common
Stock of the Company. SEC regulations require the filing parties to furnish
the Company with copies of all Section 16(a) forms they file. To the Company's
knowledge, during the fiscal year ended December 31, 2000, based on a review
of the information furnished to the Company, all parties subject to Section
16(a) timely complied with the filing requirements except a Form 4 filing by
director Philip Baur to report a gift of Company stock to certain relatives
that was filed subsequent to the filing deadline.

B-14

SECURITY OWNERSHIP

The following table sets forth, as of September 10, 2001, all shareholders
of the Company who were known by the Company to own beneficially more than 5%
of the outstanding Shares, each director of the Company, each Named Executive
Officer, and all directors and executive officers as a group. As required by
SEC regulations, also shown are Shares over which the named person could
acquire such powers within 60 days by exercising stock options under the
Company's stock option plans.

Amount and Nature of Beneficial
Ownership(1)
Name and Address ----------------------------------------
of Beneficial Owner Direct Indirect Total(2) Percent
- ------------------- ------- -------- -------- -------

Greenway Partners, L.P................................................... 519,446 -- 519,446 8.2
277 Park Avenue, 27th Floor
New York, NY 10172
John C. Dimmer........................................................... 322,631 -- 322,631 5.1
7505 112th SW
Tacoma, WA 98498
Annette J. Brenner....................................................... 330,849 -- 330,849 5.2
Fred H. Brenner
514 N. Wynnewood Avenue
Wynnewood, PA 19096

Name of Director Acquirable
or Executive Officer Within
- -------------------- 60 Days
Fred C. Aldridge, Jr..................................................... 23,866 -- 35,591 * 11,725
Philip J. Baur, Jr....................................................... -- 49,451(3) 55,201 * 5,750
William A. DeMarco(4).................................................... 2,492 33 23,775 * 21,250
Gary MacLeod............................................................. 8,113 2,586(5) 16,449 * 5,750
James F. Mullan(4)....................................................... 20,844 1,417 116,011 1.8 93,750
Klaus D. Oebel........................................................... -- -- 2,750 * 2,750
Edward W. Padley......................................................... -- 17 15,687 * 15,670
Edward N. Patrone........................................................ -- 1,000(6) 6,750 * 5,750
John M. Pettine.......................................................... 18,350 31 24,131 * 5,750
D. James Purcell......................................................... 1,261 241 19,252 * 17,750
All directors and executive officers as a group (11 persons)............. 74,926 54,776 321,087 4.9 191,385

- ---------------
* Represents less than 1% of the outstanding shares.
(1) Except as otherwise indicated, beneficial ownership represents sole voting
and sole investment power with respect to the Shares.
(2) Represents the total Shares over which the named person has any voting or
investment power and includes the Shares in the "Acquirable Within 60 Days"
column.
(3) This amount represents:

a) 8,144 Shares in a trust of which Mr. Baur has sole voting and
investment power;

b) 7,196 Shares owned by the Philippian Foundation, a charitable
foundation of which Mr. Baur is trustee and has sole voting and
investment power;

c) 7,191 Shares owned by Mr. Baur's spouse;

d) 21,537 Shares held in a trust (for the benefit of Mr. Baur's children)
for which Mr. Baur shares voting and investment power; and

e) 5,383 Shares in an IRA at a stock brokerage firm.

This indirect total for Mr. Baur does not include 116,287 Shares in
trusts for which Mr. Baur is the sole income beneficiary but has no
voting or investment power.

(footnotes continued on next page)

B-15

(footnotes continued from previous page)

(4) Does not include 64,678 Shares owned on September 4, 2001 by the Company's
401(k) Savings Plan and held in a trust for the benefit of employees
participating in the Plan. Messrs. Mullan and DeMarco are two of the three
plan trustees. The employees have the sole power to direct the voting of
these Shares, therefore the trustees disclaim beneficial ownership of these
Shares.
(5) Mr. MacLeod shares voting and investment power as co-trustee of trusts that
holds these Shares. Mr. MacLeod has no beneficial interest in these Shares.
(6) Mr. Patrone disclaims beneficial ownership of these 1,000 Shares owned by
his spouse. These Shares have been listed under indirect ownership as
required by SEC rules.

B-16