FORM 10-KSB
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended November 30, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ______________.
Commission file Number: 0-18686
PAK MAIL CENTERS OF AMERICA, INC.
(Name of small business issuer in its charter)
Colorado 89-0934575
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3033 S. Parker Road, Suite 1200, Aurora, Colorado 80014
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: 303-752-3500
Securities registered pursuant to Section 12(b) of the Exchange Act:
NONE
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock, par value $.001 per share.
Check whether the Issuer (1) filed all reports required to be
filed by Section 13 or 15(d)of the Exchange Act during the past
12 months, and (2) has been subject to such filing requirements
for the past 90 days. YES [X] NO
Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B contained in this form, and no
disclosure will be contained, to the best of Issuer's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]
The Issuer's revenues for the year ended November 30, 1995 were
$3,858,408.
The aggregate market value of the Issuer's voting stock held as
of a recent date by nonaffiliates of the Issuer cannot be
ascertained due to the absence of reliable information as to
quoted prices with respect to the Issuer's common stock.
As of February 27, 1996, the Issuer had 2,989,483 shares of its
$0.001 par value common stock issued and outstanding.
<PAGE>
Transitional small business disclosure format: YES NO [X]
PART I
ITEM 1. DESCRIPTION OF BUSINESS
(a) Business Development. Pak Mail Centers of America, Inc.
(the "Issuer" or "Company") was incorporated in the State of
Colorado on January 27, 1984. The Issuer is principally engaged in
marketing and franchising service centers and retail stores which
specialize in the shipping and packaging business ("Pak Mail
Centers"). Pak Mail Centers typically provide mailbox service,
parcel shipping and receiving, freight forwarding and other
communications services through a variety of carriers and offer a
variety of related items such as stamps, greeting cards, stationery
supplies, keys and passport photographs. On March 24, 1995, the
Company effected a reverse stock split whereby each pre-reverse
stock split share of common stock was reclassified and changed into
one-fiftieth of a share of common stock on a post-reverse stock
split basis. The total number of outstanding shares of common
stock was reduced from 149,474,125 to 2,989,483 as a result of the
reverse stock split.
(b) Business of Issuer.
(1)(2) Principal Products or Services; Distribution
Methods. The Issuer's principal business is the marketing of Pak
Mail Center franchises and its principal source of revenues is
derived from royalties and franchise fees as well as from the sale
of certain equipment, supplies, forms and materials to franchisees.
As of February 27, 1996, there were 266 individual franchises and
20 area agreements in existence.
Franchise Program
The Company offers individual franchise agreements and area
director marketing agreements. Individual franchisees are granted
the exclusive right, within a specified area, to use the Pak Mail
name and trademark as well as Pak Mail's standardized decor,
operating procedures, techniques, forms, equipment and advertising
presentation. Area directors and, under a previously offered area
franchise program, area franchisees are granted rights to sell
individual franchises for the Company in designated areas and are
required to provide site selection and start-up assistance and
continuing support for individual franchisees within those areas.
The Company locates prospective franchisees through advertising,
referrals from existing franchisees, the marketing efforts of its
area franchisees, and, to a small extent, through the use of
franchise brokers.
Franchise Agreements, Fees and Related Matters
Individual Franchises
Each individual franchisee enters into a franchise agreement
(the "Franchise Agreement") with the Company. The Franchise
Agreement requires payment of an initial franchise fee of $21,950,
<PAGE>
although franchisees who initially commit to acquire more than one
franchise are eligible for certain discounts. Individual
franchisees are also charged an initial fee ranging between $450
and $800 for a grand opening advertising and marketing program
which is provided by the Company at or around the time the
individual franchisee commences operation of a Pak Mail Center.
Under the Company's current standard Franchise Agreement,
individual franchisees pay a sliding scale monthly royalty in each
calendar year of five percent (5%) for the first $200,000 of the
franchisee's gross revenues, four and one-half percent (4.5%) for
the next $50,000 of gross revenues, four percent (4%) for the next
$50,000 of gross revenues, three and one-half percent (3.5%) for
the next $50,000 of gross revenues, and then three percent (3%) for
all subsequent gross revenues received in that calendar year. No
royalty fee is paid with respect to revenues from postage stamps.
Individual franchisees are also required to pay an advertising fee
each month in the amount of two percent (2%) of gross revenues,
with the exception of franchisees operating under agreements
entered into prior to March 1990 who are required to pay an
advertising fee of one percent (1%) of gross revenues. The
advertising fees are held in a separate legal trust under control
of the Company. These fees are used in connection with the
formulation and execution of national, regional and local
advertising and for other marketing purposes. The Company's
current standard Franchise Agreement has a term of ten years. With
the approval of the Company, the franchisee has the right to
transfer and assign the Franchise Agreement.
Area Director Marketing Agreement
The area director marketing agreement requires the payment of
a fee based upon several factors including population and other
demographic factors in the designated geographic region. The
Company may finance a portion of the fee. The area director
marketing agreement grants the right to market and sell franchises
within the specified area. Upon the sale of individual franchises
within the area, the Company typically receives 60% of the
individual franchise fee and the area director receives 40%. The
area director receives 50% of the royalties from individual
franchisees within the area. There may be variations in the terms
of specific area director marketing agreements based on special
circumstances affecting the geographic area and the area director.
Domestic Area Franchises
The Company no longer offers domestic area franchise
agreements. Under area franchise agreements previously entered
into, initial franchise fees of individual franchises within an
area are generally divided sixty percent (60%) and forty percent
(40%) between the Company and the area franchisee, respectively.
Generally, the individual franchise royalty fees are divided
equally between the Company and the area franchisee. All franchise
fees and royalties are paid directly to the Company, which then
remits the portion of fees owed to the area franchisee. For
individual franchisees in locations which are not encompassed by an
area franchise, all fees and royalties are retained by the Company.
<PAGE>
International Area Franchises
The international area franchise agreements require the
payment of an initial franchise fee based upon several factors
including population and other demographic factors in the
designated geographic region. The Company often finances a portion
of the area franchise fee. The international area franchise is
responsible for individual franchise marketing, site selection
assistance and lease negotiation, on-site training and continuing
local support of the individual franchisees within his or her area.
Generally, the division of initial franchise fees of
individual franchises within an international area and the
individual franchise royalty fees within an international area is
negotiated on a case by case basis. As of February 27, 1996, there
were four international franchise agreements in existence with
respect to geographic areas in the Mexican cities of Mexico City,
Guadalajara and Monterrey, respectively, and an area covering the
Mexican states of Baja California and Sonora. Because of the large
number of factors that exist with respect to different countries
and different geographic locations within a given country which may
affect the terms of an international area franchise agreement, the
specific terms of international area franchises may vary
significantly from oneanother.
Related Matters
The Company provides various training and support to its
franchisees. The Company furnishes to each franchisee an
operations manual, which governs system standards and contains
certain provisions designed to assure the quality of the Pak Mail
Center, and provides updates thereto. In addition, each franchisee
is required to attend a ten-day training class with regard to
packaging, pricing and available shipping and mailing services;
preparation and placement of advertising; record keeping and
systems operation; use of forms and forms management; soliciting
and servicing customers; selecting and training personnel; and
stock location and operation. There is no charge for the class,
but franchisees pay their own expenses, including travel, lodging
and meals. The Company also provides an initial advertising and
marketing program at or around the time that a franchisee opens the
Pak Mail Center.
The Company offers to franchisees various equipment, sup-
plies, forms and materials necessary or useful in connection with
the operation of the Pak Mail Center, although, with the exception
of required computer software, the franchisees are not required to
purchase such items from the Company. Prior to and upon the
opening of a new franchisee's Pak Mail Center, the Company or area
franchisee provides additional on-site training to the franchisee.
The Company maintains ongoing communications with its franchisees
designed to inform the franchisees of new services to be provided,
marketing techniques and other operational aspects of the Pak Mail
system.
<PAGE>
Services
The typical Pak Mail Center offers a wide range of services
and products for personal and business support, communications
services and convenience items and services. The type and
importance of particular services and products vary from center to
center. Prices for services and products are set by individual
franchisees and depend on competitive conditions in their
respective franchise locations.
Major services and products offered at Pak Mail Centers
include the following:
Private Mailbox Service. Pak Mail Centers offer private
mailbox rentals. Mailbox rental fees vary based on the size of the
box, the rental terms and the location of the Pak Mail Center.
Parcel Shipping and Receiving. Pak Mail Centers offer parcel
shipping service through a variety of carriers and can assist the
customer in selecting the fastest and most cost-effective method of
sending parcels. Pak Mail Centers also act as receiving agents
for parcels shipped to their customers. Pak Mail Centers advise
customers as to the packaging requirements of the various carriers,
provide packaging of items for shipment and sell packaging
materials.
Business Support Products and Services. Small businesses are
often major users of a Pak Mail Center. Pak Mail Centers provide
a small business with a variety of business services and products
such as mailbox rental, telephone message service, telecopy
transmission, copying and office supplies.
Communications Services. Pak Mail Centers offer customers a
wide range of communications services such as telecopies and wire
transfer of funds.
Convenience Items and Services. Pak Mail Centers generally
offer convenience items such as postage stamps, envelopes, rubber
stamps, passport photos and keys. Most Pak Mail Centers also offer
office supplies, greeting cards and other gift items.
Insurance. Also available at the customer's option is loss
damage insurance which can be purchased either through the
courier's insurance carrier and/or separate parcel insurance which
is available on an as-needed basis from the Company's carrier. The
insurance prices for the Company's insurance vary from those
charged by couriers.
(3) Status of Product. There has been no public
announcement of, nor has the Company otherwise made public
information about, any new product or service of the Company
requiring the investment by the Company of a material amount of its
total assets or which is otherwise material to the Company's
operations.
<PAGE>
(4) Competition. The Company and its franchisees face
competition primarily from independent service centers and other
franchised operations offering similar services. Mail Boxes Etc.
is the largest competitor. The Company's franchising approach and
the operations of a Pak Mail Center are not unique or patentable
and can be imitated by others. Although the Company and its
franchisees offer similar services to the U.S. Postal Service, such
as private mail box service and parcel handling, the U.S. Postal
Service does not offer certain of the business support,
communications and personal services offered by Pak Mail Centers.
(5) Raw Materials. The Company purchases materials for
resale to its franchisees. These materials are available from a
variety of suppliers, and the Company has not experienced any
delays in obtaining such materials.
(6) Customer Dependence. The Company does not depend
upon a single customer, or a few customers, for its revenues, the
loss of any one or more which would have a material adverse effect
on the Company.
(7) Patents, Trademarks, Licenses, Etc. The Company has
registered the name "Pak Mail" and the Pak Mail logo under federal
and, where appropriate, state law.
(8)(9) Government Regulations
The Federal Trade Commission has adopted a rule that requires
franchisors to make certain disclosures to prospective franchisees
prior to the offer or sale of franchises. This rule requires the
disclosure of information necessary for a franchisee to make an
informed decision as to whether to enter into a franchise
relationship and delineates the circumstances in which franchisors
may make predictions on future sales, income and profits. Failure
to comply with this rule constitutes an unfair or deceptive act or
practice under the Federal Trade Commission Act.
Numerous states have adopted laws regulating franchise
operations and the franchisor/franchisee relationship. Applicable
franchise laws vary from filing and disclosure requirements in the
offer and sale of franchises to the application of statutory
standards regulating the establishment and termination of franchise
relationships. Although the foregoing matters may result in some
modification of the Company's franchising activities and some
delays or failures in enforcing certain of its rights and remedies
under certain franchise agreements, such modifications, delays or
failures have not had a material adverse effect on the operations
or business of the Company to date. However, the law applicable to
franchise operations and relationships is subject to change, and
the Company is unable to predict the effect, if any, on its
operations of additional requirements or restrictions that may be
enacted or promulgated or of court decisions that may be adverse to
the franchise industry.
<PAGE>
(10) Research and Development. The Company has not
engaged in material research and development activities during its
last three years.
(11) Environmental Regulation. Compliance with federal,
state and local environmental law provisions does not have any
material effect on the capital expenditures, earnings and
competitive position of the Company.
(12) Employees. As of February 27, 1996, the Company
had 19 employees, all of whom are full time employees.
ITEM 2. DESCRIPTION OF PROPERTY
The Company's executive offices are located in approximately
12,000 square feet of office space in Aurora, Colorado under a
lease expiring in April 2000 with a base rental currently at
approximately $12,300 per month and rising to approximately $13,300
per month by the end of the term. The offices are in good
condition.
ITEM 3. LEGAL PROCEEDINGS
Irwin Jacobs v. Pak Mail Centers of America, Inc. and South
Florida Realprop, Inc. d/b/a/ Pak Mail Centers of America Southern
Region, Civil Action, File No. 95A4565-4, Cobb County, Georgia.
The complaint alleges wrongdoing on the part of the Company
regarding the termination of plaintiff s franchise agreement by the
Company. Additionally, plaintiff alleges that South Florida
Realprop, Inc. ( SFRP ) provided plaintiff with certain equipment
that SFRP did not have title to, that SFRP and PMCA somehow
inappropriately diverted potential buyers of plaintiff s franchise,
that SFRP and the Company somehow deceived plaintiff into
surrendering possession of his franchise and then inappropriately
operated the franchise under his business license, that SFRP and
PMCA wrongfully sold plaintiff s terminated franchise and did not
account to plaintiff or turn over proceeds, and that
misrepresentations were made to the purchaser of the franchise
respecting plaintiff s operation of the franchise. Plaintiff seeks
$60,000 of compensatory damages and $150,000 of punitive damages,
as well as costs, interest and attorneys fees. The case was
removed by the Company to the United States District Court for the
Northern District of Georgia on August 29, 1995 and now bears a
Civil Action No. of 1 95-CV-2190-RLV. Contemporaneously with
removal of the action, the Company filed a Motion to Stay the
Proceedings Pending Arbitration, which was granted on January 29,
1996. The Company intends to contest vigorously any arbitration
filed by Jacobs.
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted during the fourth quarter of the
fiscal year covered by this report to a vote of the Company's
security holders.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) Market Information.
The Company's common stock is sporadically traded in the over-
the-counter market. During fiscal 1995 and 1994 there was no
established trading market for the Company's common stock, and the
Company has been unable to obtain reliable information as to quoted
prices with respect to the common stock.
(b) Holders.
As of January 12, 1996, the Company had 1,197 holders of
record of its $0.001 par value common stock.
(c) Dividends.
The Company has not declared cash dividends on its common
stock in the last two years and the Company does not anticipate
paying any cash dividends in the foreseeable future.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION OR PLAN OF OPERATION
Liquidity and Capital Resources
The Company experienced cash flow deficiencies from operating
activities of $280,912 during fiscal 1995 compared to $558,911
during fiscal 1994. During fiscal 1995 the deficiency was financed
by the existing cash balance the Company maintained at the
beginning of the year and by increased payments received by the
Company on notes receivable. During fiscal 1994 the deficiency was
financed through a portion of the proceeds from the issuance of 500
shares of the Company's Series B Preferred Stock to D.P. Kelly &
Associates, L.P., an affiliate of the Company's majority
stockholder, Pak Mail Investment Partnership L.P. ("PMIP"), for the
total price of $500,000.
Working capital decreased $187,688 to negative $67,329 at
November 30, 1995. The main contributors were an increase in trade
accounts payable of $125,723 and a decrease in cash of $103,533.
The Company believes that its relationships with trade vendors are
excellent and that the Company s working capital position will not
adversely affect its ability to operate in the ordinary course. On
February 14, 1996, D.P. Kelly & Associates lent $50,000 to the Company.
D.P. Kelly & Associates has agreed to lend an additional $50,000 to
the Company, if so requested by the Company.
<PAGE>
At November 30, 1995 the average age of accounts receivable
was approximately 71 days. Accounts receivable relate primarily to
royalties from franchisees and sales of equipment, supplies and
services. Royalties are payable on a monthly basis and invoices
for equipment, supplies and services are payable within 30 days.
The Company continues to take an aggressive approach to managing
accounts receivable and reducing the average age by implementing
a proactive collection system and hiring the personnel to maintain
it.
During fiscal 1995 the Company accomplished its goal of
achieving profitability. The Company s $630,572 turnaround was a
result of increased franchise sales and royalty revenues from its
franchisees combined with a reduction in its fixed operating
expenses. In fiscal 1996, the Company expects to continue its
strategy of increasing franchise sales and royalty revenues without
increasing its fixed operating expenses.
Results of Operations
The Company recorded a profit of $2,096 in fiscal 1995
compared to a loss of $628,476 in fiscal 1994. The $630,572
increase was attributable to an increase in revenues (up 21.7% from
$3,170,997 to $3,858,408) partially offset by an increase in costs
and expenses (up 1.5% from $3,799,473 to $3,856,312).
The $687,411 increase in revenues during fiscal 1995 is primarily
attributable to increases in individual franchise fees
(up 35.2% from $678,400 to $917,210), area representative fees (up
120.8% from $147,274 to $325,177), royalties from franchisees (up
13.8% from $1,335,715 to $1,520,629), and sales of equipment,
supplies and services (up 11.2% from $920,190 to $1,023,264).
The $238,810 increase in individual franchise fees represents
more sales recognized during fiscal 1995 compared to fiscal 1994
and a differing mix of per franchise revenue recognition. The
Company awarded 51 and 46 individual franchises during fiscal 1995
and 1994, respectively. In fiscal 1994 the Company recognized
revenue on 38 of the 46 individual franchises awarded. In fiscal
1995 the Company recognized revenue on 43 of the 51 individual
franchises awarded. In addition, the revenue from five individual
franchises awarded and deferred in 1994, was recognized in fiscal
1995. There were eight individual franchises awarded but deferred
as of November 30, 1995.
The $177,903 increase in area representative fees represents
four domestic awards and one international award during fiscal 1995
compared to one domestic and one international award during fiscal
1994. In addition the Company amortized more deferred area
representative fees during fiscal 1995 than in fiscal 1994.
The $184,914 increase in royalties from franchisees is due to
an increase in the average sales volume per store and the number of
stores open and operating throughout the year.
<PAGE>
The $103,074 increase in sales of equipment, supplies and
services primarily relates to the increase in the number of new
stores opened in fiscal 1995.
The $56,839 increase in costs and expenses is primarily
attributable to increases in cost of sales of equipment, supplies
and services (up 14.1% from $782,568 to $892,654), commissions on
franchise sales (up 27.6% from $347,469 to $443,219), royalties
paid to area franchisees (up 26.1% from $278,790 to $351,663),
offset by a decrease in other selling, general and administrative
expenses (down 10.1% from $2,105,664 to $1,892,556).
The $110,086 increase in cost of sales of equipment, supplies
and services primarily relates to the increase in the number of new
stores opened in fiscal 1995.
The $95,750 increase in commissions is due primarily to the
increase in the individual franchise sales recognized during fiscal
1995.
The $72,873 increase in royalties paid to area franchisees is
due primarily to the higher proportion of stores operating within
area franchisee regions during fiscal 1995 compared to fiscal 1994.
The $213,108 decrease in other selling, general and
administrative expenses was primarily due to the elimination of the
two regional offices the Company maintained during fiscal 1994 and
a decrease in legal fees. The decrease resulting from the
elimination of the regional offices represents primarily personnel
costs, travel expenses, office rent and consulting costs.
ITEM 7. FINANCIAL STATEMENTS
See Financial Statements in this report following the
signature page.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
On December 15, 1993, the Company notified KPMG Peat Marwick
of its dismissal as principal independent accountants for the
Company. On the same date, the Company notified Ehrhardt Keefe
Steiner & Hottman PC of its appointment as the Company's principal
independent accountants. In connection with the audits for the
four fiscal years ended November 30, 1993 and the interim periods
since the fiscal year ending November 30, 1989, there have been no
disagreements between the Company and KPMG Peat Marwick on any
matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if
not resolved to the satisfaction of KPMG Peat Marwick, would have
caused it to make reference in connection with its reports to the
subject of the disagreements. None of the reports of KPMG Peat
Marwick on the Company's financial statements for any of the four
fiscal years ended November 30, 1993 contained an adverse opinion
or a disclaimer of opinion or was qualified as to uncertainty,
audit scope, or accounting principles. The decision to change
principal independent accountants was made by the Company's Board
of Directors. A copy of the letter provided by KPMG Peat Marwick
to the Company and addressed to the Securities and Exchange
Commission is incorporated by reference in the exhibits hereto.
<PAGE>
PART III
ITEM 9. DIRECTORS; EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
ACT.
(a) Identification of Directors and Executive Officers.
The present term of office of each director will expire at the
next annual meeting of shareholders. The executive officers of the
Company are elected annually at the first meeting of the Company's
Board of Directors held after each annual meeting of shareholders.
Each executive officer shall hold office until his successor
is duly elected and qualified or until his resignation or until he
shall be removed in the manner provided by the Company's Bylaws.
The name, position with the Company, the age of each director and
executive officer, and the period during which each has served are
as follows:
Principal Occupation
Name, Age and Position Director or During the Last
in the Company Officer Since Five Years
John E. Kelly, 55 September, 1989 Executive officer
(President, Chief of the Company
Executive Officer since September, 1989.
and Director)
P. Evan Lasky, 54 March, 1988 Executive officer of
(Executive Vice the Company since
President and Chief March, 1988.
Operating Officer)
Raymond S. Goshorn, 37 December, 1988 Executive officer of
(Chief Financial the Company since
Officer, Treasurer December, 1988.
and Secretary)
J. S. Corcoran, 52 September, 1989 Executive officer of
(Director) D.P. Kelly &
Associates L.P., a firm
offering management
services, since
November, 1988;
executive officer of
Envirodyne Industries,
Inc., a manufacturer of
food packaging and food
service supplies, since
June, 1989.
<PAGE>
John W. Grant, 71 September, 1989 Retired since
(Director) September, 1987.
F. Edward Gustafson, 54 September, 1989 Executive officer
(Director) of D.P. Kelly &
Associates L.P., a firm
offering management
services, since
November, 1988;
executive officer of
Envirodyne Industries,
Inc., manufacturer of
food packaging and food
service supplies, since
June, 1989; director of
Envirodyne Industries,
Inc. since December
1993; executive officer
of Viskase Corporation,
a wholly-owned
subsidiary of Envirodyne
Industries, Inc., from
February, 1990 to
August, 1993.
William F. White, 65 September, 1989 Executive officer
(Director) of Whitnell & Co., an
investment advisory
firm, since January,
1988; executive officer
of Donegal, Inc., an
investment management
firm, since January,
1991.
(b) Identification of Certain Significant Employees.
Not Applicable.
(c) Family Relationships.
Not Applicable.
<PAGE>
(d) Involvement in Certain Legal Proceedings.
J.S. Corcoran is an executive officer and F. Edward Gustafson
is an executive officer and a director of Envirodyne Industries,
Inc. ("Envirodyne"). On January 7, 1993, Envirodyne and its major
domestic subsidiaries filed voluntary petitions pursuant to Chapter
11 of the United States Bankruptcy Code. On December 31, 1993,
Envirodyne consummated a plan of reorganization and emerged from
bankruptcy.
(e) Compliance With Section 16(a) of the Exchange Act. Based
solely upon a review of Forms 3 and 4, if any, and amendments
thereto furnished to the Company during the year ended November 30,
1995 and Forms 5 and amendments thereto furnished to the Company
with respect to the year ended November 30, 1995, and upon written
representations, if any, submitted to the Company by the directors
and officers of the Company, no person who, at any time during the
year ended November 30, 1995, was a director, officer or beneficial
owner of more than ten percent of the Company's common stock failed
to file on a timely basis reports required by Section 16(a) of the
Securities Exchange Act of 1934, as amended, during the year end
November 30, 1995.
ITEM 10. EXECUTIVE COMPENSATION
Cash Compensation.
The following table shows all cash compensation paid by the
Company for services rendered during the fiscal years ended
November 30, 1995, November 30, 1994 and November 30, 1993 to the
chief executive officer of the Company (there were no other
executive officers whose annual salary and bonus exceeded $100,000):
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Name and
Principal Fiscal Other Annual
Position Year Salary Bonus Compensation
<S> <C> <C> <C> <C>
John E. Kelly 1995 $120,000 $21,895<F1> $7,980<F2>
President and
Chief Executive 1994 $114,600 $32,151<F1> $7,980<F2>
Officer
1993 $110,250 $31,500<F1> $7,980<F2>
________________
<FN>
<F1> Bonus was paid in the fiscal year indicated but with respect
to performance in the prior fiscal year.
<F2> The amount for each of fiscal 1995, 1994 and 1993 consists of
a $4,800 car allowance and $3,180 of country club dues.
</TABLE>
<PAGE>
Option/SAR Grants. The Company maintains no stock option
plan or other plan providing for stock or SAR grants. Pursuant to
a Stock Purchase Agreement dated as of July 15, 1990 (the "Stock
Purchase Agreement"), the Company has agreed to issue and sell, and
Mr. Kelly has agreed to purchase, 4,000 shares of the Company's
common stock at a price of $2.75 per share on July 15 of each of
the years 1990 through 1994. To date, with the most recent
purchase in December 1992, Mr. Kelly has purchased 12,000 shares
under the Stock Purchase Agreement at an aggregate price of
$33,000.
Compensation of Directors--Standard Arrangement.
Members of the Board of Directors, other than members who are
also officers of the Company, are entitled to receive a fee of
$2,000 per year and $250 for each attended meeting of the Board of
Directors. In practice, the Company has not paid directors' fees.
Compensation of Directors--Other Arrangements.
Not applicable.
Termination of Employment and Change of Control Arrangements.
Not applicable.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
(a) Security Ownership of Certain Beneficial Owners.
<TABLE>
The following persons are the only persons known to the
Company who on February 27, 1996, owned beneficially more than 5%
of the Company's $0.001 par value common stock, its only class of
outstanding voting securities:
<CAPTION>
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership<F1> of Class
<S> <C> <C>
Pak Mail Investment 1,800,000 60.2%
Partnership L.P.
701 Harger Road, Suite 190
Oak Brook, Illinois 60521
Janie M. D'Addio 188,833 <F2> 6.3%
c/o Security Manufacturing
Corporation
815 S. Main Street
Grapevine, Texas 76051
__________
<FN>
<F1> Beneficial owners listed have sole voting and investment
power with respect to the shares shown unless otherwise indicated.
<F2> Information with respect to Ms. D'Addio's common stock
is given to the best of the Company's knowledge.
</TABLE>
<PAGE>
(b) Security Ownership of Management.
<TABLE>
The following table shows as of February 27, 1996, the shares
of the Company's $0.001 par value common stock beneficially owned
by each director, each executive officer and by all the executive
officers and directors as a group:
<CAPTION>
Amount and Nature Percent
Name of Holder of Beneficial Ownership Of Class
<S> <C> <C>
J. S. Corcoran 1,000 <F1> * <F4>
Raymond S. Goshorn 1,000 * <F4>
John W. Grant
800
(2) (4)
F. Edward Gustafson 20,000 <F1><F3> * <F4>
John E. Kelly 12,000 * <F4>
William F. White 2,000 * <F4>
All directors and
officers as a group
(7 persons) 36,800 <F1> 1.2%
<FN>
<F1> Excludes 1,800,000 shares of common stock owned by PMIP.
Mr. Corcoran and Mr. Gustafson are officers, directors and
shareholders of Wexford Corporation, which exercises control
over PMIP, and therefore may be deemed to have the ability to
vote or dispose of securities owned by PMIP. Messrs.
Corcoran and Gustafson disclaim beneficial ownership of the
shares of common stock owned by PMIP.
<F2> Shares owned jointly by Mr. Grant and his wife.
<F3> Includes 6,000 shares of common stock owned by Mr.
Gustafson's children, for whom he acts as custodian.
<F4> Less than 1%.
</TABLE>
(c) Changes in Control. Not applicable.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a)(b) Transactions With Management and Others and Certain
Business Relationships.
During the course of fiscal 1994, D.P. Kelly & Associates,
L.P., an affiliate of PMIP of which Mr. Corcoran and Mr. Gustafson
are officers and limited partners ("D.P. Kelly & Associates"), made
cash advances to the Company in the aggregate amount of $500,000.
On November 30, 1994, the Company discharged the $500,000
obligation through the issuance of 500 shares of its Series B
Preferred Stock. The Series B Preferred Stock has a liquidation
preference of $1,000 per share and carries an annual dividend rate
<PAGE>
of 8%. The dividends are cumulative, with the timing of payment
dependent on the Company meeting certain earnings requirements.
The Series B Preferred Stock ranks senior to the Company's common
stock and on a parity with the Company s Series A Preferred Stock.
The Company purchases mailboxes from Security Manufacturing
Corporation ("Security") for resale to the Company's franchisees.
Security is controlled by Janie M. D'Addio. During fiscal 1995 and
fiscal 1994, the Company made purchases in the total
amounts of $90,120 and $61,037, respectively, from Security.
(c) Parent Companies. PMIP owns a controlling interest in
the Company through its ownership of 1,800,000 shares of common
stock, representing approximately 60.2% of the outstanding common
stock.
(d) Transactions With Promotors. Not applicable.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
(3).(i) Articles of Incorporation.
(3)(b) Bylaws incorporated by reference to Exhibit (3)(b)
of the Company's Annual Report on Form 10-K dated
March 13, 1992.
(10)(a) Letter from the Company to John E. Kelly dated
September 14, 1989 incorporated by reference to
Exhibit (10)(a) of the Company's Annual Report on
Form 10-K dated February 27, 1990.
(10)(b) Form of presently used Area Developer Agreement
incorporated by reference to Exhibit 10(b) of the
Company s Annual Report on Form 10-K dated January
23, 1995.
(10)(c) Form of presently used Individual Franchise Agree-
ment incorporated by reference to Exhibit 10(c) of
the Company s Annual Report on Form 10-K dated
January 23, 1995.
(10)(d) Agreement dated June 19, 1985, as amended August
4, 1989, by and between Security Manufacturing
Corporation and the Company incorporated by
reference to Exhibit (10)(f) of the Company's
Annual Report on Form 10-K dated February 27,
1990.
(10)(e) Pak Mail Centers of America, Inc. Management
Incentive Plan for Fiscal Year 1995.
(10)(f) Pak Mail Centers of America, Inc. Management
Incentive Plan for Fiscal Year 1994 incorporated
by reference to Exhibit (10)(f) of the Company's
Annual Report on Form 10-K dated January 23, 1995.
<PAGE>
(16)
Letter of KPMG Peat Marwick regarding change in
certifying accountant incorporated by reference to
Exhibit 16 of the Company's Form 8-K dated
February 4, 1994.
(21) Subsidiaries of the Issuer.
(b) 8-K Reports.
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities
Exchange Act of 1934, the Issuer duly has caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Dated: February 27, 1996.
PAK MAIL CENTERS OF AMERICA, INC.
a Colorado corporation
By: /s/ John E. Kelly
John E. Kelly, President and
Chief Executive Officer
By:/s/ Raymond S. Goshorn
Raymond S. Goshorn, Chief Financial
Officer, Treasurer and Secretary
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following persons
on behalf of the Issuer and in the capacities and on the dates
indicated:
Date Name and Title Signature
February 27, 1996 J. S. Corcoran /s/ J. S. Corcoran
Director
February 27, 1996 John W. Grant /s/ John W. Grant
Director
February 27, 1996 F. Edward Gustafson /s/ F.Edward Gustafson
Director
February 27, 1996 John E. Kelly /s/ John E. Kelly
Director
<PAGE>
PAK MAIL CENTERS OF AMERICA, INC. AND SUBSIDIARY
Financial Statements and
Independent Auditors' Report
November 30, 1995 and 1994
<PAGE>
PAK MAIL CENTERS OF AMERICA, INC. AND SUBSIDIARY
Index to Consolidated Financial Statements
Page
Independent Auditors' Report F - 1
Financial Statements
Consolidated Balance Sheets - November 30, 1995 and 1994 F - 2
Consolidated Statements of Operations - For the Years Ended
November 30, 1995 and 1994 F - 3
Consolidated Statements of Stockholders' Equity - For the
Years Ended November 30, 1995 and 1994 F - 4
Consolidated Statements of Cash Flows - For the Years Ended
November 30, 1995 and 1994 F - 5
Notes to Consolidated Financial Statements F - 6
<PAGE>
PAK MAIL CENTERS OF AMERICA, INC. AND SUBSIDIARY
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Pak Mail Centers of America, Inc. and Subsidiary
Aurora, Colorado
We have audited the accompanying consolidated balance sheets
of Pak Mail Centers of America, Inc. and Subsidiary as of
November 30, 1995 and 1994, and the related consolidated
statements of operations, changes in stockholders' equity,
and cash flows for the years then ended. These consolidated
financial statements are the responsibility of the
Companies' management. Our responsibility is to express an
opinion on these consolidated financial statements based on
our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable assurance
about whether the consolidated financial statements are free
of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures
in the consolidated financial statements. An audit also
includes assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects,
the financial position of Pak Mail Centers of America, Inc.
and Subsidiary as of November 30, 1995 and 1994, and the
results of their operations, and their cash flows for the
years then ended, in conformity with generally accepted
accounting principals.
Ehrhardt Keefe Steiner & Hottman PC
January 11, 1996
Denver, Colorado
F - 1
<PAGE>
PAK MAIL CENTERS OF AMERICA, INC. AND SUBSIDIARY
<TABLE>
Consolidated Balance Sheets
<CAPTION>
November 30,
1995 1994
Assets
<S> <C> <C>
Current assets
Cash and cash equivalents $ 54,299 $ 157,832
Accounts receivable, net of allowance
of $161,000 (1995) and $153,000 (1994) 335,377 306,246
Inventories 46,438 26,783
Prepaid expenses and other current assets 40,918 28,848
Total current assets 477,032 519,709
Property and equipment, net of accumulated
depreciation (Note 2) 53,542 70,921
Other assets
Notes receivable, net (Note 3) 805,585 646,922
Investments in assets held for sale
Operating - 78,424
Non-operating 33,921 23,037
Deposits and other 54,116 73,688
Deferred franchise costs, net of accumulated
amortization of $5,347 (1995) and $0 (1994) 141,258 63,638
Total other assets 1,034,880 885,709
$ 1,565,454 $ 1,476,339
Liabilities and Stockholders' Equity
Current liabilities
Current portion of long-term
debt (Note 4) $ 31,242 $ 21,084
Trade accounts payable 360,990 235,267
Accrued commissions 30,021 22,800
Other accrued expenses 89,791 83,443
Deposits from franchisees - 7,500
Due to advertising fund (Note 6) 32,317 29,256
Total current liabilities 544,361 399,350
Deferred revenue 649,351 664,891
Deferred rent - 4,928
Long-term debt (Note 4) 13,762 51,286
Commitments (Notes 6, 9 and 10)
Stockholders' equity (Note 5)
Series A redeemable preferred stock,
$1,000 par value; 8% cumulative; 1,500
shares authorized; 1,216.668 shares issued
and outstanding (liquidation preference
$1,626,268 - 1995) 1,216,668 1,216,668
Series B redeemable preferred stock,
$1,000 par value; 8% cumulative; 1,000
shares authorized; 1,000 shares issued and
outstanding (liquidation preference
$1,120,000 - 1995) 1,000,000 1,000,000
Common stock, $.001 par value; 200,000,000
shares authorized, 2,989,483 shares issued
and outstanding 2,989,483 2,989,483
Additional paid-in capital 5,026,453 5,026,453
Accumulated deficit (6,888,131) (6,890,227)
Total stockholders' equity 357,980 355,884
$ 1,565,454 $ 1,476,339
<FN>
See notes to consolidated financial statements.
</TABLE>
F - 2
<PAGE>
PAK MAIL CENTERS OF AMERICA, INC. AND SUBSIDIARY
<TABLE>
Consolidated Statements of Operations
<CAPTION>
For the Years Ended
November 30,
1995 1994
<S> <C> <C>
Revenue
Royalties from franchisees $ 1,520,629 $ 1,335,715
Sales of equipment, supplies, and services 1,023,264 920,190
Individual franchise fees 917,210 678,400
Area franchise fees, net 325,177 147,274
Gain on investment in assets held for sale - 8,222
Interest income 8,972 6,023
Other 63,156 75,173
3,858,408 3,170,997
Costs and expenses
Selling, general, and administrative 1,892,556 2,105,664
Cost of sales of equipment, supplies
and services (Note 7) 892,654 782,568
Commissions on franchise sales 443,219 347,469
Royalties paid to area franchisees 351,663 278,790
Advertising 172,985 186,503
Loss on investment in assets held for resale 45,240 52,511
Depreciation and amortization 50,620 41,950
Interest 7,375 4,018
3,856,312 3,799,473
Net income (loss) $ 2,096 $ (628,476)
Net income (loss) per common share $ * $ *
Weighted average number of common
shares outstanding 2,989,483 $ 2,989,483
* Amount less than $.01 per share.
<FN>
See notes to consolidated financial statements.
</TABLE>
F - 3
<PAGE>
PAK MAIL CENTERS OF AMERICA, INC. AND SUBSIDIARY
<TABLE>
Consolidated Statement of Stockholders' Equity
For the Years Ended November 30, 1995 and 1994
<CAPTION>
Preferred Stock Preferred Stock Additional Total
Series A Series B Common Stock paid-in Accumulated Stockholders'
Shares Amount Shares Amount Shares Amount Capital Deficit Equity
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, November 30, 1993 1,216.668 $ 1,216,668 500 $ 500,000 2,989,483 $ 2,990 $ 5,026,453 $(6,261,751) $ 484,360
Issuance of Series B
preferred stock to
D.P. Kelly & Associates
(Note 5) - - 500 500,000 - - - - 500,000
Net loss - - - - - - - (628,476) (628,476)
Balance, November 30, 1994 1,216.668 1,216,668 1,000 1,000,000 2,989,483 2,990 5,026,453 (6,890,227) 355,884
Net income - - - - - - - 2,096 2,096
Balance, November 30, 1995 1,216.668 $ 1,216,668 1,000 $1,000,000 2,989,483 $ 2,990 $ 5,026,453 $(6,888,131) $ 357,980
<FN>
See notes to consolidated financial statements.
</TABLE>
F - 4
<PAGE>
PAK MAIL CENTERS OF AMERICA, INC. AND SUBSIDIARY
<TABLE>
Consolidated Statements of Cash Flows
<CAPTION>
For the Years Ended
November 30,
1995 1994
<S> <C> <C>
Cash flows from operating activities
Net income (loss) $ 2,096 $ (628,476)
Adjustments to reconcile net income
(loss) to net cash from operating activities -
Depreciation and amortization 50,620 41,950
Provision for loss on accounts receivable 8,000 (25,935)
Provision for loss on notes receivable (1,358) (3,231)
Net loss on investment in assets held
for sale 45,240 44,289
Discount on notes receivable (3,256) 9,769
Deferred revenue, net (155,540) 19,404
Deferred rent (4,928) (12,000)
Deferred franchise costs (82,967) 12,371
Franchise fee revenue financed through
notes receivable (203,726) (160,145)
Franchise fee revenue recognized on sale of assets held for sale (19,950) -
Changes in operating assets and liabilities -
Accounts receivable (37,131) (6,274)
Inventories (19,655) 21,850
Prepaid expenses and other
current assets (12,070) 47,718
Deposits and other 18,860 (12,879)
Trade accounts payable 125,723 (11,937)
Accrued expenses 13,569 98,109
Deposits from franchisees (7,500) -
Due to advertising fund 3,061 6,506
(283,008) 69,565
Net cash (used by)
operating activities (280,912) (558,911)
Cash flows from investing activities
Capital expenditures (27,182) (59,767)
Purchase/additions of assets held for sale (34,750) (229,641)
Proceeds from sale of assets held for sale 25,000 200,500
Payments on notes receivable 241,677 114,145
Net cash provided by
investing activities 204,745 25,237
Cash flows from financing activities
Payments on long-term debt (27,366) (13,926)
Issuance of note payable - 500,000
Net cash (used in) provided
by financing activities (27,366) 486,074
Net (decrease) in cash and cash equivalents (103,533) (47,600)
Cash and cash equivalents, beginning of year 157,832 205,432
Cash and cash equivalents, end of year $ 54,299 $ 157,832
<FN>
See notes to consolidated financial statements.
</TABLE>
F - 5
<PAGE>
PAK MAIL CENTERS OF AMERICA, INC. AND SUBSIDIARY
Supplemental disclosure of cash flow information -
Cash paid during the year for interest $7,375 (1995) and $4,018 (1994).
Supplemental schedule of non-cash investing and financing
activities:
During the year ended November 30, 1995, pursuant to
the resale of two franchises, notes receivable of $52,000
were issued.
At November 30, 1995 and 1994, $140,000 and $320,844 of
notes receivable additions are included in deferred revenue,
respectively.
During the year ended November 30, 1994, pursuant to
the purchase of a franchise held for sale, the Company
assumed a note payable of $31,836.
During the year ended November 30, 1994, $26,128 of
notes receivable were written off against deferred revenue.
During the year ended November 30, 1994, pursuant to
the resale of a franchise, a note receivable in the amount
of $34,227 was reclassified to assets held for sale.
During the year ended November 30, 1994, the Company
issued 500 shares of Series B preferred stock in
satisfaction of a $500,000 note payable.
F - 6
<PAGE>
PAK MAIL CENTERS OF AMERICA, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 1 - Organization and Summary of Significant Accounting
Policies
Organization
Pak Mail Centers of America, Inc. was incorporated in
Colorado in 1984 and is engaged in the business of
marketing, franchising, and owning Pak Mail Retail and
Service Centers which specialize in custom packaging of
items to be mailed or shipped throughout the United States
and Mexico.
The consolidated financial statements include the accounts
of Pak Mail Centers of America, Inc. and its wholly owned
subsidiary, Pak Mail Crating and Freight Service,
collectively referred to as the Company. All significant
intercompany transactions and balances have been eliminated
in consolidation.
<TABLE>
The following table summarizes the number of domestic Pak
Mail Retail and Service Centers in operation during the last
two fiscal years:
<CAPTION>
November 30,
1995 1994
<S> <C> <C>
Domestic franchises:
Franchise centers in operation 249 220
Company operated service centers in operation - 2
Rights to franchise centers sold and not in operation 14 26
263 248
</TABLE>
As shown in the accompanying consolidated financial
statements, the Company realized net income of approximately
$2,100 and a net loss of approximately $628,000, for the
years ended November 30, 1995 and 1994, respectively. The
Company has sought and received assurances from an affiliate
of the majority stockholder of the Company as to its
financial ability and intent to provide ongoing financial
support so as to enable the Company to continue as a going
concern through November 30, 1996.
Cash and Cash Equivalents
The Company considers cash on hand and investments with
original maturities of three months or less to be cash
equivalents.
Inventories
Inventories consist of equipment and supplies held for
resale to franchisees for use at their store locations or
held at corporate owned stores for resale to the public and
are stated at the lower of cost (determined on the first-in,
first-out method) or market.
F - 7
<PAGE>
PAK MAIL CENTERS OF AMERICA, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 1 - Organization and Summary of Significant Accounting
Policies (continued)
Property and Equipment
Property and equipment is stated at cost. Depreciation is
computed using the straight-line method over an estimated
useful life of three years.
Investments in Assets Held for Sale
Investments in assets held for sale are stores which have
been repurchased from franchisees or built-out by the
Company and stated at cost which management believes
approximates, or is lower than, market.
Franchise Fee Revenue Recognition
The Company has awarded franchise rights under the following
franchise agreements:
. Individual franchise agreement - Right to operate one
store at a location to be determined. Franchise fees are
payable in cash or notes upon execution of agreement.
. Area franchise agreement - Right to develop stores within
a specified geographic area. Area franchise fee (based upon
estimated development potential of area) is payable in cash
and notes upon execution of agreement. Upon awarding of
individual franchises within the franchise area, the Company
typically receives 60% of the individual franchise fee and
the area developer receives 40%. The area developer
receives 50% to 60% of the royalties from individual
franchisees within the area.
. Area director marketing agreement - Right to market and
sell franchises within a specified geographic region. The
marketing fee is payable in cash and notes upon execution of
agreement. Upon selling of individual franchises within the
area, the Company typically receives 60% of the individual
franchise fee and the area director receives 40%. The area
director receives 50% of the royalties from individual
franchisees within the area.
Individual franchise fees outside a developer area are
recognized as revenue when all material services and
conditions relating to the sale have been substantially
performed by the Company and the franchise has commenced
operations.
Domestic area franchise fees are deferred and recognized as
revenue on a straight-line basis as the stores within the
area are opened or upon completion of the initial training
program depending on the terms of the agreement. Individual
franchise fees within a domestic developer area are
recognized as revenue when all material services and
conditions relating to the sale have been substantially
performed by the Company, principally site selection and
training.
F - 8
<PAGE>
PAK MAIL CENTERS OF AMERICA, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 1 - Organization and Summary of Significant Accounting
Policies (continued)
Franchise Fee Revenue Recognition (continued)
Area director marketing fees are recognized as income upon
completion of the initial training to the area director and
collection of the marketing fee. The Company has the option
to terminate the agreement before training is completed at
which time the marketing fee is refundable.
During 1993, the Company began offering foreign area
franchises outside of the United States of America. Foreign
area franchise fees are deferred and recognized as revenue
upon completion of all material services to the developer
which is initial training to the area developer and
collection of notes receivable is assured beyond a
reasonable doubt. Individual franchise fees within a
foreign developer area are recognized as revenue upon
receipt as all material services to the franchise are
performed by the foreign area developer.
Incremental development costs are deferred, but not in
excess of the deferred revenue and are expensed when the
revenue is recognized.
Royalties From Franchisees
Royalties from franchisees are based upon a percentage of
each franchisee's sales and are recognized based upon
reported sales activity by each franchisee.
Net Income (Loss) Per Common Share
Income (loss) per common share is determined by dividing net
income (loss) applicable to common stock by the weighted
average number of common shares outstanding during the year.
Common stock equivalents have been excluded as their effect
would be anti-dilutive.
Income Taxes
The Company recognizes deferred tax liabilities and assets
for the expected future tax consequences of events that have
been included in the financial statements or tax returns.
Under this method, deferred tax liabilities and assets are
determined based on the difference between the financial
statements and tax basis of assets and liabilities using the
enacted tax rates in effect for the year in which the
differences are expected to reverse. The measurement of
deferred tax assets is reduced, if necessary, by the amount
of any tax benefits that, based on available evidence, are
not expected to be realized.
Deferred Franchise Costs
Costs related to the development of the franchise operations
are capitalized and amortized over the expected period of
benefit of seven years. These costs are primarily comprised
of costs incurred to develop the franchise documents.
F - 9
<PAGE>
PAK MAIL CENTERS OF AMERICA, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 1 - Organization and Summary of Significant Accounting
Policies (continued)
Concentration of Credit Risk
Financial instruments which potentially subject the Company
to concentrations of credit risk consist of cash and cash
equivalents, and accounts and notes receivable from
franchisees, area developers and marketing directors. The
Company places its temporary cash investments in high credit
quality financial institutions. To reduce credit risk, the
Company reserves the right to terminate franchise agreements
for non-payment of amounts owed. Additionally, at November
30, 1995, $438,125 of notes receivable are offset by
comparable amounts in deferred revenue.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results
could differ from those estimates.
Note 2 - Property and Equipment
<TABLE>
Equipment consists of the following:
<CAPTION>
November 30,
1995 1994
<S> <C> <C>
Office equipment $ 228,604 $ 206,333
Furniture and fixtures 143,046 138,135
371,650 344,468
Less accumulated depreciation (318,108) (273,547)
$ 53,542 $ 70,921
</TABLE>
F - 10
<PAGE>
PAK MAIL CENTERS OF AMERICA, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 3 - Notes Receivable
Notes receivable consist of franchise fees and area
developer fees financed by the Company. The notes are
collateralized by the underlying franchise agreements and by
essentially all of the franchisees' assets incidental to the
operation of the franchise center and the majority of the
notes are personally guaranteed by the owners of each
franchise. Notes receivable consist of the following:
<TABLE>
<CAPTION>
November 30,
1995 1994
<S> <C> <C>
Non-interest-bearing notes; interest
imputed at 8%, net of unamortized
discounts of $6,513 and $9,768 at
November 30, 1995 and 1994, respectively. $ 463,936 $ 594,477
Interest-bearing notes; interest
rates from 8% to 12.5% 377,646 89,800
841,582 684,277
Less allowance for doubtful collections (35,997) (37,355)
$ 805,585 $ 646,922
</TABLE>
Notes receivable include $438,125 of financed franchise fees
and area developer fees which are included in deferred
revenue. It is the Company's policy not to impute interest
on these notes until the earnings process is complete.
Included in these notes are financed area developer fees
whose maturities are based upon the expected opening of
franchises within the area.
Future minimum principal payments to be received pursuant to
the notes are as follows:
<TABLE>
<CAPTION>
Year Ending November 30,
<S> <C>
1996 $ 307,828
1997 207,304
1998 208,405
1999 113,710
2000 4,335
$ 841,582
</TABLE>
At the time the notes receivable are executed, the Company
reserves an allowance for doubtful collections. The
provision for uncollectible amounts is continually reviewed
and adjusted to maintain the allowance at a level considered
adequate to cover future losses. The allowance is
management's best estimate of uncollectible amounts and is
determined based on historical performance of the notes
which is tracked by the Company on an ongoing basis. The
losses ultimately incurred could differ materially in the
near term from the amounts estimated in determining the
allowance.
F - 11
<PAGE>
PAK MAIL CENTERS OF AMERICA, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 4 - Long-Term Debt
<TABLE>
<CAPTION>
November 30,
1995 1994
<S> <C> <C>
Unsecured note payable, stated interest
at 3%, net of unamortized discounts of
$3,008 and $5,780 at November 30, 1995
and 1994, respectively. Due in annual
principal and interest installments
through October 1997.
$ 45,004 $ 42,232
Note payable, paid in full during
fiscal year 1995. - 30,138
45,004 72,370
Less current portion (31,242) (21,084)
The allowance for doubtful collections $ 13,762 $ 51,286
</TABLE>
<TABLE>
Maturities of long-term debt are as follows:
<CAPTION>
Year Ending November 30,
<S> <C>
1996 $ 31,242
1997 13,762
$ 45,004
</TABLE>
Note 5 - Stockholders' Equity
In January, 1995, the Board of Directors approved a 1:50
reverse stock split. All references in the accompanying
consolidated financial statements to the number of shares
and per share amounts for all periods presented have been
restated to reflect the reverse stock split.
Dividends on the Series A and Series B Preferred Stock
(Stock) accrue at 8% commencing on the date of issuance and
are payable annually, subject to certain cumulative net
income requirements, as declared by the Board of Directors,
commencing March 31, 1993 and March 31, 1995, respectively.
As of November 30, 1995, dividends of approximately $530,000
were in arrears. The Stock may be redeemed at the option of
the Company, in whole or in part, and holds a liquidation
preference at a price per share equal to $1,000 plus all
dividends accrued and unpaid to the date of redemption.
Both series of preferred stock, among other items, have
certain preferential rights related to the appraisal on the
sale of stock or assets of the Company.
F - 12
<PAGE>
PAK MAIL CENTERS OF AMERICA, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 5 - Stockholders' Equity (continued)
Mr. John Kelly, an officer of the Company, and the Company
are parties to a stock purchase agreement dated July 15,
1990 (the Stock Purchase Agreement), pursuant to which the
Company has agreed to issue and sell, and Mr. Kelly has
agreed to purchase 4,000 shares of the Company's common
stock at a price of $2.75 per share on July 15 of each of
the years 1990 through 1994. The 1994 and 1993 purchases
have not yet been consummated.
During the year ended November 30, 1994, D.P. Kelly &
Associates, an affiliate of Pak Mail Investment Partnership
L.P., loaned cash of $500,000 through a note payable which
was later converted to 500 shares of Series B preferred
stock.
Note 6 - Advertising Fund
All franchisees are required to pay a monthly advertising
fee to the Company which is used to provide national,
regional and local marketing for the franchisees. The
Company acts as agent for the advertising fees. During
fiscal year 1994, the Company created trusts to separately
account for all advertising fund activity. Certain
franchisees within various regions are co-trustees of the
trust. At November 30, 1995, the advertising fund is a
separate legal entity, and therefore, the Company is no
longer contingently liable for any fund liabilities
incurred; nor is the fund activity reflected in the
accompanying consolidated financial statements.
Note 7 - Income Taxes
The components of long-term deferred tax assets are as
follows:
<TABLE>
<CAPTION>
November 30,
1995 1994
<S> <C> <C>
Deferred tax assets
Net operating loss carryforward $ 1,857,000 $ 1,862,500
Reserves and other deferrals 55,500 52,000
Depreciation 3,500 2,500
Total deferred tax assets 1,916,000 1,917,000
Valuation allowance (1,916,000) (1,917,000)
$ - $ -
</TABLE>
At November 30, 1995, the Company has net operating loss
carryforwards for tax purposes of approximately $6,166,000.
If not used, these carryforwards will expire in varying
amounts during the years 1999 to 2009. Due to changes in
ownership in 1989, the net operating loss carryforwards may
be limited in the amount that can be utilized.
F - 13
<PAGE>
PAK MAIL CENTERS OF AMERICA, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 8 - Related Party Transactions
The Company purchases certain equipment for resale through
an exclusive supplier agreement with a stockholder and
former director of the Company. Purchases were $90,120 and
$61,037, in 1995 and 1994, respectively.
Note 9 - Employee Benefit Plan
Effective December 1, 1991, the Company established the Pak
Mail 401(k) Profit Sharing Plan (the Plan). All employees
of the Company who are 21 years of age and have completed
one year of eligibility service, as defined, may participate
in the Plan. Participants may make tax deferred
contributions in any amount up to the maximum allowable
under current federal tax laws. The Company will contribute
an amount equal to 50% of each participant's contribution,
limited to 3% of the participant's compensation as defined
in the Plan. Costs incurred by the Company in connection
with the plan were approximately $10,500 and $4,900 for the
years ended November 30, 1995 and 1994, respectively.
Note 10 - Commitments
Operating Lease Commitments
The Company leases office space and office equipment under
noncancelable operating leases. Aggregate future minimum
rental commitments for these operating leases as of November
30, 1995 are as follows:
<TABLE>
<CAPTION>
Year Ending November 30,
<S> <C>
1996 $ 161,521
1997 158,157
1998 154,794
1999 157,776
2000 79,632
$ 711,880
</TABLE>
Rental expense for 1995 and 1994 was approximately $238,000
and $227,000, respectively.
F - 14
<PAGE>
EXHIBIT INDEX
Document Page No.
(3).(i) Articles of Incorporation.
(3)(b) Bylaws incorporated by reference to
Exhibit (3)(b) of the Company's Annual
Report on Form 10-K dated March 13,
1992.
(10)(a) Letter from the Company to John E.
Kelly dated September 14, 1989
incorporated by reference to Exhibit
(10)(a) of the Company's Annual Report
on Form 10-K dated February 27, 1990.
(10)(b) Form of presently used Area Developer
Agreement incorporated by reference to
Exhibit 10(b) of the Company s Annual
Report on Form 10-K dated January 23,
1995.
(10)(c) Form of presently used Individual
Franchise Agreement incorporated by
reference to Exhibit 10(c) of the
Company s Annual Report on Form 10-K
dated January 23, 1995.
(10)(d) Agreement dated June 19, 1985, as
amended August 4, 1989, by and between
Security Manufacturing Corporation and
the Company incorporated by reference
to Exhibit (10)(f) of the Company's
Annual Report on Form 10-K dated
February 27, 1990.
(10)(e) Pak Mail Centers of America, Inc.
Management Incentive Plan for Fiscal
Year 1995.
(10)(f) Pak Mail Centers of America, Inc.
Management Incentive Plan for Fiscal
Year 1994 incorporated by reference to
Exhibit (10)(f) of the Company's
Annual Report on Form 10-K dated
January 23, 1995.
(16) Letter of KPMG Peat Marwick regarding
change in certifying accountant
incorporated by reference to Exhibit
16 of the Company's Form 8-K dated
February 4, 1994.
(21) Subsidiaries of the Issuer.
ARTICLES OF INCORPORATION
OF
PAK-MAIL STORES, INC.
The undersigned, being a natural person of the age of eighteen
(18) years of more, hereby forms a corporation under and pursuant to
the laws of the State of Colorado, and adopts the following Articles of
Incorporation:
ARTICLE I
1.1 Name. The name of the Corporation shall be: PAK-MAIL STORES, INC.
ARTICLE II
2.1 Duration. The Corporation shall have perpetual existence.
ARTICLE III
3.1 Purpose and Power. The nature of the business of the Corporation,
the purpose for which it is organized and its powers are as follows:
(a) Custom packaging and transporting of materials.
(b) To engage in the transaction of all lawful business
or pursue any other lawful purpose or purposes for which a
corporation may be organized under the laws of the State of
Colorado.
(c) To have, enjoy and exercise all of the rights, powers
and privileges now or hereafter conferred upon corporations
organized under the laws of the State of Colorado, whether now or
hereafter in effect, and whether or not herein specifically
mentioned.
3.2 No Restriction. The forgoing enumeration of purposes and
powers shall not limit or restrict in any manner the exercise of other
and further rights and powers which may now or hereafter be allowed or
permitted by law.
ARTICLE IV
4.1 Stock Classes and Shares Authorized. The authorized
capital stock of the Corporation shall be 10,000,000 shares of Common
Stock, $.01 per value.
4.2 Common Stock.
(a) After the requirements with respect to preferential
dividends on the Preferred Stock, if any, shall have been met and
after the Corporation shall have combined with all the
requirements, if any, with respect to the setting aside of sums
and sinking funds or redemption or purchase accounts, and subject
further to any other conditions which may be fixed in accordance
with the provisions of Section 3 of the Article IV, then, and not
otherwise, the holders of the Common Stock shall be entitled to
receive such dividends as may be declared from time to time by the
Board of Directors of the Corporation paid out of funds legally
available therefor.
(b) After distribution in full of the preferential
amount, if any, to be distributed to the holders of the Preferred
Stock in the event of voluntary or involuntary liquidation,
distribution or sale of assets, dissolution, or winding-up of the
Corporation, the holders of the Common Stock shall be entitled to
receive all of the remaining assets of the Corporation, tangible
and intangible, of whatever kind available for distribution to
stockholders ratably in proportion to the number of shares of the
Common Stock held by them respectively.
(c) Except any may otherwise be required by law, each
holder of the Common Stock shall have one vote on all matters
voted upon by the shareholders for each share of Common Stock
standing in his name on the books of the Corporation and entitled
to vote. In the election of the Board of Directors, cumulative
voting shall not be authorized.
4.3 Preferred Stock. Shares of Preferred Stock, if authorized
and issued, may be divided into such series as may be established, from
time to time, by the Board of Directors. The Board of Directors, from
time to time, may fix and determine the relative rights and preferences
of the shares of any series so established.
4.4 Consideration. Shares may be issued for money, property,
labor of services actually performed for the Corporation, or for any
other assets of value in accordance with the action of the Board of
Directors, whose judgment as to the value of the assets received in
return for said shares shall be conclusive. When payment of the
consideration for which shares are to be issued shall have been
received, such shares shall be deemed to be fully paid and not liable
for any further call or assessment thereon.
4.5 Pre-emptive Rights. Shareholders of the capital stock of
the Corporation shall not have the pre-emptive right to subscribe for
any shares of the capital stock of the Corporation, whether now or
hereafter authorized, or the right to acquire additional unissued or
treasury shares of the Corporation, or securities convertible into
shares or carrying stock purchase warrants or privileges.
4.6 Distributions. The Board of Directors may, from time to
time, distribute the shareholders in partial liquidation, out of stated
capital of capital surplus of the Corporation, a portion of its assets,
in cash or property, subject to the limitations set forth in the
statutes of the State of Colorado.
4.7 Recognition of Registered Shareholders. The Corporation
shall be entitled to treat the registered holder of any shares of the
Corporation as the owner thereof for all purposes, including all rights
derived from such shares, and shall not be bound to recognize any
equitable or other claim to, or interest in, such shares or rights
deriving from such shares, on the part of any other persons, including,
but without limiting the generality thereof, the purchaser, assignee or
transferee of such shares or rights deriving from such shares, unless
and until such purchaser, assignee, transferee or other person becomes
a registered holder of such shares, whether or not the Corporation
shall have either actual or constructive notice of the interest of
such purchaser, assignee, transferee or any other person. The
purchaser, assignee, or transferee of any of the shares of the
Corporation shall not be entitled: (a) to receive notice of the
meetings of the shareholders; (b) to vote at such meetings; (c)
to examine a list of the shareholders; (d) to be paid dividends or
other sums payable to shareholders; (e) to own, enjoy and exercise any
other privilege or right derived from such shares against the
Corporation, until such purchaser, assignee or transferee has become
the registered holder of such shares.
4.8 Restrictions on Transfer. The Corporation shall have the
right to impose restrictions on the transfer of all, or any part of,
its shares and may become party to agreements entered into by any of
its shareholders restricting transfer or encumbrance of any of its
shares, or subjecting any of its shares to repurchase or resale
obligations.
ARTICLE V
5.1 Board of Directors; Number. The governing board of the
Corporation shall be known as the Board of Directors. The number of
directors may be established and from time to time by increased or
decreased in such manner as shall be provided in the Bylaws of the
Corporation, provided that the number of directors shall not be less
than three (3); except that there need be only as many directors as
there are shareholders in the event that the outstanding shares are
held of record by fewer than three (3) shareholders.
5.2 Initial Directors. The initial Board of Directors shall
consist of three members, and the names and addresses of those
persons are to serve as directors until the first annual meeting of
shareholders, or until their successors shall have been elected and
qualified, are as follows:
Director Address
Wayne Pace 11059 E. Bethany Drive #211
Aurora, CO 80014
Richard Godwin C/O The Packaging Store
2312 South Colorado Blvd.
Denver, CO 80220
Dianna Hicks 11059 E. Bethany Drive #211
Aurora, CO 80014
ARTICLE VI
6.1 Related Party Transactions. No contract or other
transaction between the Corporation and one or more of its directors or
any other corporation, firm, association or entity in which one or more
of its directors are directors or officers or are financially
interested shall be either void or voidable solely because of such
relationship or interest or solely because such directors are present
at the meeting of the Board of Directors or a committee thereof which
authorizes, approves or ratifies such contract or transaction or solely
because their votes are counted for such purpose if:
(a) The fact of such relationship or interest is
disclosed to or known by the Board of Directors or committee which
authorizes, approves or ratifies the contract or transaction by
vote or consent sufficient for that purpose without counting the
votes or consents of such interested directors; or
(b) The fact of such relationship or interest is
disclosed to or known to the shareholders entitled to vote and
they authorize, approve or ratify such contract or transaction by
vote or written consent; or
(c) The contract or transaction is fair ad reasonable to the
Corporation.
Common or interested directors may be counted in determining
the presence of a quorum at a meeting of the Board of Directors or
a committee thereof which authorizes, approves or ratifies such
contract or transaction.
6.2 Corporate Opportunities. The officers, directors, and
other members of management of the Corporation shall be subject to the
doctrine of corporate opportunities only insofar as it applies to
business opportunities in which the Corporation has expressed an
interest as determined from time to time by resolutions of the Board of
Directors. When so delineated, opportunities within such areas of
interest shall be disclosed promptly to the Board of Directors. The
Board of Directors may reject any business opportunity presented to it,
and thereafter any officer, director, or other member of management may
avail himself of such opportunity. Until such time as the Corporation,
through its Board of Directors, has designated an area of interest, the
officers, directors, and other members of management shall be free to
engage in such areas of interest and the provisions hereof shall not
limit the rights of any officer, director, or member of management to
continue a business existing prior to the time that such an area of
interest has been designated.
ARTICLE VII
7.1 Registered Office and Agent. The address of the initial
registered office of the Corporation shall be 11059 E. Bethany Drive,
#211, Aurora, Colorado, 80014, and the name of the initial registered
agent of the Corporation at such address is Wayne Pace.
ARTICLE VIII
8.1 Indemnity for Direct Actions. The Corporation shall
indemnify any person who was or is a party, or is threatened to be made
a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation), by reason
of the fact that he is or was a director, officer, employee or agent of
the Corporation or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorney s fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding, if he acted in good faith and in
a manner he reasonably believed to be in the best interest of the
Corporation, and with respect to any criminal action or proceeding, had
no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order,
settlement or conviction or upon a plea of nolo contenders or its act
in good faith and in a manner which he reasonably believed to be in the
best interests of the Corporation and, with respect to any criminal
action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
8.2 Indemnity for Derivative Actions. The Corporation shall
indemnify any person who was or is a party or is threatened to be made
a party to any threatened, pending, or completed action or suit by or
in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or
agent of the Corporation or is or was serving at the request of
the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorney s fees), actually and reasonably
incurred by him in connection with the defense or settlement of such
action or suit, if he acted in good faith and in a manner he reasonably
believed to be in the best interest of the Corporation. However,
no indemnification shall be made in respect of any claim, issue, or
matter as to which such person has been adjudged to be liable for
negligence or misconduct in the performance of his duty to the
Corporation unless and only to the extent that the court in which such
action or suit was brought determines upon application that, despite
the adjudication of liability, but in view of all circumstances of the
case, such person is fairly and reasonably entitled to indemnification
for such expenses which such court deems proper.
8.3 Expenses. The extent that a director, officer, employee
or agent of the Corporation has been successful on the merits in
defense of any action, suit or proceeding referred to in Section 1 or
2 of the Article VIII, or in defense of any claim, issue or matter
therein, he shall be indemnified by the Corporation against expenses
(including attorney s fees) actually and reasonably incurred by him in
connection therewith.
8.4 Determination. Any indemnification under Section 1 or 2
of this Article VIII (unless ordered by a court), shall be made by the
Corporation only if authorized in the specific case upon a
determination that indemnification of the director, officer, employee
or agent is proper under the circumstances because he has met the
applicable standard of conduct set forth in said Section 1 or 2. Such
determination shall be a quorum consisting of directors who were not
parties to such action, suit or proceeding, or, if such a quorum is not
obtainable, or even if obtainable a quorum of disinterested directors
so directs, by independent legal counsel is a written opinion, or by
the shareholders. A director, shareholder or officer shall be deemed
disinterested in a matter if he has no interest therein other than as
a director, officer or shareholder of the Corporation, as the case may
be. The Corporation may pay the fees and expenses of the directors,
shareholders and officers, as the case may be, reasonably incurred in
connection with reaching a determination as provided above.
8.5 Advance of Expenses. Expenses (including attorney s
fees) incurred in defending a civil or criminal action, suit or
proceeding may be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding if authorized in the
manner provided in Section 4 of this Article VIII, and upon receipt of
an undertaking by or on behalf of the director, officer, employee or
agent to repay such amount unless it is ultimately determined that he
is entitled to be indemnified by the Corporation as authorized in this
Article VIII.
8.6 Other Rights. The indemnification provided under this
Article VIII shall not be deemed exclusive of any other rights to which
those indemnified may be entitled under these Articles of
Incorporation, any bylaw, agreement, vote of shareholders or
disinterested directors, or other, and any procedure provided for by
any of the foregoing, both as to action in an official capacity and as
to action while holding such office, and shall continue to apply to a
person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of the heirs, executors and administrators
of such person.
8.7 Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation or who is or was serving at the
request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by
him in any such capacity or arising out of his status as such, whether
or not the Corporation would have the power to indemnify him against
such liability under the provisions of this Article VIII.
ARTICLE IX
9.1 Shareholders Meetings. Shareholder s meetings may be
held at such time and place as stated in the Bylaws of the Corporation.
At all shareholder s meetings, ten (10%) of all shares entitled to vote
shall constitute a quorum.
ARTICLE X
10.1 Shareholder Vote. The shareholders, by vote or
concurrence of a majority of the outstanding shares of the Corporation,
or any class or series thereof, entitled to vote on the subject matter,
may take any action which, except for this Article, would require a
two-thirds vote under the Colorado Corporation Code, as amended.
ARTICLE XI
11.1 Amendment. These Articles of Incorporation may be
amended by resolution of the board of directors if no shares have been
issued. If shares have been issued, by the affirmative vote of the
holders of at lease a majority of the shares entitled to vote thereon
at a meeting duly called for that purpose, or , when authorized, when
such action is ratified by the written consent of all the shareholders
entitled to vote thereon.
ARTICLE XII
12.1 Dissolution Procedure. The Corporation shall be
dissolved upon the affirmative vote of the holders of at least a
majority of the shares entitled to vote thereon at a meeting duly
called for the purpose, or when authorized or ratified by the written
consent of the holders of all of the shares entitled to vote thereon.
12.2 Revocation. The Corporation shall revoke voluntary
dissolution proceedings upon the affirmative vote of the holders of at
least a majority of the shares entitled to vote at the meeting duly
called for that purpose, or when authorized or ratified by the written
consent of the holders of all of the shares entitled to vote thereon.
ARTICLE XIII
13.1 Incorporator. This name and address of the incorporator
of this Corporation is as follows:
Daniel C. Himelspach
150 Blake Street Building
1141 Eighteenth Street
Denver, CO 80202
Executed this 26th day of January 1984.
\s\ Daniel C. Himelspach
Daniel C. Himelspach
<PAGE>
State of Colorado )
City of ) ss.
County of Denver )
The foregoing Articles of Incorporation were acknowledged before
me this 26th day of January, 1984, by Daniel C. Himelspach, as
incorporator of Pak-Mail Stores, Inc.
WITNESS my hand and official seal.
\s\ JoAnn M. Nelson
Notary Public
My commission expires: 9-13-86
Address: 1441 18th Street #150
Denver, CO 80202
<PAGE>
ARTICLES OF AMENDMENT
OF
PAK-MAIL STORES, INC.
PAK-MAIL STORES, INC. (hereinafter Corporation ) hereby amends the
Articles of Incorporation under and pursuant to the statutes of the
State of Colorado and adopts the following Articles of Amendment.
ARTICLE I
1.1 Name. The name of the Corporation is Pak-Mail Stores,
Inc.
ARTICLE II
2.1 Amendment. The amendments of the Articles of
Incorporation are as follows:
(a) The name of the Corporation shall be changed from
Pak-Mail Stores, Inc. to Pak-Mail Centers of America, Inc.
(b) The par value of the Corporation s Common stock shall
be changed from $0.01 to $0.001.
(c) The number of shares of authorized capital stock of the
Corporation shall be increased from 10,000,000 shares to
30,000,000 shares of common stock.
ARTICLE III
3.1 Date of Adoption. The date of adoption of the Amendment
by the shareholders was effective March 17, 1984.
ARTICLE IV
4.1 Outstanding Shares. The Corporation currently has
9,295,000 shares of common stock outstanding, all of which are entitled
to vote on this Amendment.
ARTICLE V
5.1 Vote. All shares outstanding voted for this Amendment.
ARTICLE VI
6.1 Exchange. This Amendment does not provide for an exchange
reclassification or cancellation of issued shares.
7.1 State Capital. This Amendment does affect the amount of
stated capital in that it decreases the par value of the Corporation s
common stock from $0.01 to $0.01 per share and it increases the
authorized number of shares of common stock from 10,000,000 shares to
30,000,000 shares.
EXECUTED effective this 17th day of February, 1984.
Attest: PAK-MAIL STORES, INC.
\s\ Dianna Hicks By: \s\ Wayne H. Pace
Dianna Hicks, Secretary Wayne H. Pace, President
<PAGE>
STATE OF COLORADO )
CITY AND COUNTY OF ) ss.
DENVER )
Wayne H. Pace, being first duly sworn and upon oath disposes and
says that he read the foregoing Articles of Amendment and knows that
the contents thereof are true to the best of his knowledge and belief.
\s\ Wayne H. Pace
Wayne H. Pace
Subscribed and sworn to before me this 6th day of April, 1984.
My commission expires: July 18, 1985
\s\ Charles L. Coleman
Notary Public
Address: 10894 E. Wesley Avenue
Aurora, CO 80014
<PAGE>
MAIL TO:
Colorado Secretary of State
Corporations Office
1575 Sherman Street, 2nd Floor
Denver, CO 80203
(303) 866-2361
STATEMENT OF CHANGE OF REGISTERED OFFICE
OR REGISTERED AGENT OR BOTH
Pursuant to the provisions of the Colorado Corporations Code, the
Colorado Nonprofit Corporation Act and the Colorado Uniform Limited
Partnership Act of 1981, the undersigned corporation or limited
partnership organized under the laws of THE STATE OF COLORADO
submits the following statement for the purpose of changing its
registered office or its registered agent, or both, in the state of
Colorado.
First: The name of the corporation or limited partnership is:
PAK-MAIL CENTERS OF AMERICA, INC.
Second: The address of its REGISTERED OFFICE is:
2260 So. Xanadu Way, Suite 290, Aurora,Colorado 80014
Third: The name of its REGISTERED AGENT is:
Johnny M. Wilson, President
Fourth: The address of its registered office and the address of
the business office of its registered agent, as changed, will be
identical.
Fifth: The address of its place of business in Colorado is
2260 So. Xanadu, Suite 290
Aurora, CO
80014 (Note 1)
By: \s\ Johnny M. Wilson (Note 2)
IMPORTANT! PLEASE READ CAREFULLY! Its XX president
If you are a not-to-profit corporation Its registered agent (Note 3)
of a limited partnership, the form must Its general partner
be notarized. If you are a business
(profit) corporation, no notarization
is required.
State of
County of
Subscribed and sworn to before me this day of , 19 .
My commission expires:
Notary Public (Note 4)
Address
<PAGE>
MAIL TO:
Colorado Secretary of State
Corporations Office
1575 Sherman Street, 2nd Floor
Denver, CO 80203
(303) 866-2361
ARTICLE OF AMENDMENT
to the
ARTICLES OF INCORPORATION
Pursuant to the provisions of the Colorado Corporation Code, the
under-signed corporation adopts the following Articles of Amendment to
its Articles of Incorporation:
First: The name of the corporation is (Note 3):
PAK-MAIL CENTERS OF AMERICA, INC.
Second: The following amendment was adopted by the shareholders of
the corporation on May 23, 1985, in the manner presented by the
Colorado Corporation Code.
Article IV
4.1 Stock Classes and Shares Authorized. The authorized
capital stock of the Corporation shall be 100,000,000 shares of Common
Stock, $0.001 par value.
Third: The number of shares of the corporation outstanding at the
time of such adoption was 15,229,500; and the number of shares entitled
to vote thereon was 15,229,500.
Fourth: The designation and number of outstanding shares of each
class entitled to vote thereon as a class were as follows:
<TABLE>
<CAPTION>
CLASS (Note 1) NUMBER OF SHARES
<S> <C>
A 10,088,500
Fifth: The number of shares voted for such amended was 10,
088,500; and the number of shares voted against such amendment was 0.
Sixth: The number of shares of each class entitled to vote
thereon as a class voted for and against such amendment respectively
was:
CLASS (Note 1) NUMBER OF SHARES
For Against Absentation
A 10,088,500 0 5,141,000
Seventh: The manner, if not set forth in such amendment in which
any exchange re-classification, or cancellation of issued shares
provided for in the amendment shall be effected, is as follows:
(Note 2) No Change
Eighth: The manner in which such amendment effects a change in
the amount of stated capital, and the amount of stated capital is
changed by such amendment, are as follows:
(Note 2) No Change
PAK MAIL CENTERS OF AMERICA, INC.
STATE OF COLORADO By: \s\ Johnny M. Wilson
Its President
COUNTY OF ADAMS By: \s\ Dianna N. Hicks (Note 4)
Its Secretary
Subscribed and sworn to before me this 16th day of September, 1985.
My Commission expires: March 8, 1986
\s\ Ann Wilson
Notary Public
Address: 14 Sky Ranch Road
Aurora, CO 80011
<PAGE>
ARTICLE OF AMENDMENT
to the
ARTICLES OF INCORPORATION
Pursuant to the provisions of the Colorado Corporation Code, the
undersigned corporation adopts the following Articles of Amendment to
its Article of Incorporation:
First: The name of the corporation is (Note 3):
PAK-MAIL CENTERS OF AMERICA, INC.
Second: The following amendment was adopted by the shareholders of
the corporation on December 18, 1985, in the manner presented by the
Colorado Corporation Code.
Article IV
4.1 Stock Classes and Shares Authorized. The authorized
capital stock of the Corporation shall be 200,000,000 shares of Common
Stock, $0.001 par value.
Third: The number of shares of the corporation outstanding at the
time of such adoption was 45,347,369; and the number of shares entitled
to vote thereon was 45,347,369.
Fourth: The designation and number of outstanding shares of each
class entitled to vote thereon as a class were as follows:
CLASS (Note 1) NUMBER OF SHARES
A 45,347,369
Fifth: The number of shares voted for such amended was
39,384,369; and the number of shares voted against such amendment was 0.
Sixth: The number of shares of each class entitled to vote
thereon as a class voted for and against such amendment respectively
was:
CLASS (Note 1) NUMBER OF SHARES
For Against Absentation
A 39,384,369 0 5,963,000
Seventh: The manner, if not set forth in such amendment in which
any exchange re-classification, or cancellation of issued shares
provided for in the amendment shall be effected, is as follows:
(Note 2) No Change
Eighth: The manner in which such amendment effects a change in
the amount of stated capital, and the amount of stated capital is
changed by such amendment, are as follows:
(Note 2) No Change
PAK MAIL CENTERS OF AMERICA, INC.
STATE OF COLORADO By: \s\ Johnny M. Wilson
Its President
COUNTY OF ADAMS By: \s\ Dianna N. Hicks (Note 4)
Its Secretary
Subscribed and sworn to before me this 19th day of December, 1985.
My Commission expires: June 16, 1987
\s\ Susan M. Chapla
Notary Public
<PAGE>
MAIL TO:
Colorado Secretary of State
Corporations Office
1560 Broadway, Suite 200
Denver, CO 80202
(303) 866-2361
STATEMENT OF CHANGE OF REGISTERED OFFICE
OR REGISTERED AGENT OR BOTH
Pursuant to the provisions of the Colorado Corporations Code, the
Colorado Nonprofit Corporation Act and the Colorado Uniform Limited
Partnership Act of 1981, the undersigned corporation or limited
partnership organized under the laws of THE STATE OF COLORADO
submits the following statement for the purpose of changing its
registered office or its registered agent, or both, in the state of
Colorado.
First: The name of the corporation or limited partnership is:
PAK MAIL CENTERS OF AMERICA, INC.
Second: The address of its REGISTERED OFFICE is:
11059 E. Bethany Drive, Suite 221,
Aurora, CO 80014
Third: The name of its REGISTERED AGENT is:
Johnny M. Wilson
Fourth: The address of its registered office and the address of
the business office of its registered agent, as changed, will be
identical.
Fifth: The address of its place of business in Colorado is
11059 E. Bethany Dr. Ste. 211
Aurora, CO
80014 (Note 1)
By: \s\ Johnny M. Wilson (Note 2)
IMPORTANT! PLEASE READ CAREFULLY! Its president
If you are a not-to-profit corporation of Its authorized agent
a limited partnership, the form must be Its XX registered agent (Note 3)
notarized. If you are a business (profit) Its general partner
corporation, no notarization is required.
State of
County of
Subscribed and sworn to before me this day of , 19 .
My commission expires:
Notary Public (Note 4)
Address
<PAGE>
MAIL TO:
Colorado Secretary of State
Corporations Office
1560 Broadway, Suite 200
Denver, CO 80202
(303) 866-2361
ARTICLE OF AMENDMENT
to the
ARTICLES OF INCORPORATION
Pursuant to the provisions of the Colorado Corporation Code, the
undersigned corporation adopts the following Articles of Amendment to
its Article of Incorporation:
First: The name of the corporation is (Note 1):
PAK-MAIL CENTERS OF AMERICA, INC.
Second: The following amendment to the Article of Incorporation
was adopted on September 7, 1987, as prescribed by the Colorado
Corporation Code, in the manner marked with an X below.
Such amendment was adopted by the board of directors where
so shares have been issued.
XX Such amendment was adopted by a vote of the
shareholders. The number of shares voted for the amendment
was sufficient for approval.
ARTICLE XIII
A director of this corporation shall not be
personally liable to the corporation or its
shareholders for monetary damages for breach of
fiduciary duty as a director except that this
provision shall not eliminate or limit the
liability of a director to the corporation or to
its shareholders for monetary damages for (i) any
breach of the director s duty of loyalty to the
corporation or to its shareholders; (ii) acts or
omissions not in good faith or which involve
intentional misconduct or an growing violation of
law; (iii) acts specified in Section 7-5-114 of
the Colorado Corporation Code as the same may be
amended from time to time; or (iv) any
transactions from which the director derived an
improper personal benefit.
Third: The manner, if not set forth in such amendment, in which
any exchange, reclassification, or cancellation of issued shares
provided for in the amendment shall be effected, is as follows:
Fourth: The manner is which such amendment effects a change in
the amount of stated capital, and the amount of stated capital as
changed by such amendment, are as follows:
PAK MAIL CENTERS OF AMERICA, INC.
By: \s\ Johnny M. Wilson
Its President
By: \s\ Dianna N. Hicks
Its Secretary
<PAGE>
STATE OF COLORADO
STATEMENT OF CHANGE OF REGISTERED OFFICE
AND/OR REGISTERED AGENT
(1) The exact Corporate Name, current Registered Office & current
Registered Agent are:
Johnny M. Wilson
Pak-Mail Centers of America, Inc.
11059 E. Bethany Drive
Suite 211
Aurora, CO 80014
(2) The State or Country of incorporation is: Colorado
(3) The complete street address of the Corporation's REGISTERED
OFFICE shall be changed to:
10555 E. Dartmouth Avenue
Suite 360
Aurora, CO 80014
(4) The name of the Corporation's SUCCESSOR AGENT IS:
(5) The address of the Corporation s Registered Office and the
address of the Corporation's Registered Agent, as changed, will
be identical.
(6) The complete street address of the Corporation's principal
place of business in Colorado is:
10555 E. Dartmouth Avenue, Suite 360, Aurora, CO 80014
PAK MAIL CENTERS OF AMERICA, INC.
STATE OF COLORADO By: \s\ Johnny M. Wilson
COUNTY OF ARAPAHOE Its X President
Its Registered Agent
Its Authorized Agent
Subscribed and sworn to before me this 28th day of March, 1988.
My commission expires: February 27, 1991
\s\ P. Evan Lasky
Notary Public
<PAGE>
(TO BE EXECUTED IN DUPLICATE)
STATEMENT OF
CANCELLATION OF REACQUIRED SHARES
(OTHER THAN REDEEMABLE SHARES)
OF
PAK MAIL CENTERS OF AMERICA, INC.
To the Secretary of State
of the State of Colorado
Pursuant to the provision of Section 7-6-104 of the Colorado
Revised Statutes, 1973, as amended, the undersigned corporation
submits the following statement of cancellation by resolution of its
board of directors of shares of the corporation reacquired by it,
other than redeemable shares redeemed or purchased:
1. The name of the corporation is:
PAK MAIL CENTERS OF AMERICA, INC.
2. A resolution was duly adopted by the board of directors
on November 20, 1989, authorizing the cancellation of 36,000,000
shares, itemized as follows:
</TABLE>
<TABLE>
Class Series Number of Shares
<CAPTION>
<S> <C>
Common Stock N/A 102,624,125
</TABLE>
3. The aggregate number of issued shares, itemized by
classes and series and par value, if any, after giving effect to such
cancellation is 102,624,125, itemized as follows:
<TABLE>
Class Series Par Value Number of Shares
<CAPTION>
<S> <C> <C>
Common Stock N/A $0.001 102,624,125
</TABLE>
4. The amount of the stated capital of the corporation,
after giving effect to such cancellation is $102,624.00.
5. This cancellation is being effected pursuant to Section
7-6-104, Colorado Revised Statutes, 1973, as amended.
Dated April 11, 1990.
PAK MAIL CENTERS OF AMERICA, INC.
(Name of Corporation)
By: \s\ John E. Kelly
Its X President
and \s\ Raymond S. Goshorn
Its X Secretary
<PAGE>
STATE OF COLORADO )
) ss.
COUNTY OF ARAPAHOE )
I, Tonya D. Sarina, a notary public do hereby certify that on this
11th day of April, 1990, personally appeared before me, John E. Kelly
who being by me first duly sworn, declared that he is the President of
Pak Mail Centers of America, Inc. that he signed the foregoing document
as President of the corporation, and that the statements contained
therein are true.
In witness whereof I have hereunto set my hand and seal this
11th day of April, A.D. 1990.
My commission expires: May 12, 1992
\s\ Tonya D. Sarina
Notary Public
<PAGE>
MAIL TO:
Colorado Secretary of State
Corporations Section
1560 Broadway, Suite 200
Denver, CO 80202
(303) 866-2361
CERTIFICATE OF
ASSUMED OR TRADE NAME
PAK MAIL CENTERS OF AMERICA, INC. a corporation
organized under the laws of Colorado being
desirous of transacting a portion of its business under an assumed or
trade name as permitted by 7-71-101, Colorado Revised Statues hereby
certifies:
1. The corporate or limited partnership name and location of its
principal office is:
Pak Mail Centers of America, Inc
3033 So. Parker Road, Suite 1200
Aurora, CO 80014
2. The name, other than its own corporate or limited partnership
name, under which business is carried on is (Note 1):
Pak Mail Media & Marketing, Inc.
3. A brief description of the kind of business transacted under
such assumed or trade name is:
Marketing and advertising of postal and packaging center
services.
IN WITNESS WHEREOF, the undersigned
officers of said corporation have this day
executed this certificate October 23, 1990
Pak Mail Centers of America, Inc. (Note 2)
by \s\ John E. Kelly (Note 3)
Its President
Attest:
\s\ Raymond S. Goshorn
Its Secretary
<PAGE>
STATE OF COLORADO )
) ss.
COUNTY OF DENVER )
Acknowledged before me this 23rd day of October, 1990 by John E. Kelly
as President and Raymond S. Goshorn as Secretary of Pak Mail Centers
of America, Inc.
In witness whereof I have hereunto set my hand and seal
My commission expires: June 22, 1993 \s\ Karin A. Tupper
Notary Public
<PAGE>
ARTICLE OF MERGER
OF
PAK MAIL CENTERS OF AMERICA, INC.
The undersigned corporations, pursuant to section 7-7-106 of the
Colorado Revised Statutes, 1973, as amended, hereby execute the
following articles of merger:
ARTICLE ONE
The names of the corporations proposing to merge and the names of
the States under the laws of which such corporation are organized, are
as follows:
Name of Corporation State of Incorporation
Pak Mail Centers of America, Inc. Colorado
Pak Mail Services Corp. Illinois
ARTICLE TWO
The laws of the State under which such foreign corporation is
organized permit such merger.
ARTICLE THREE
The name of surviving corporation shall be Pak Mail Centers of
America, Inc. and it shall be governed by the laws of the State of
Colorado.
ARTICLE FOUR
The plan of merger is as follows:
1. The name of the subsidiary corporation is Pak Mail Services
Corp., the name of the parent corporation is Pak Mail Centers of
America, Inc. and the name of the surviving corporation is Pak Mail
Centers of America, Inc.
2. Each share of stock of Pak Mail Centers of America, Inc.,
as the parent corporation, issued and outstanding immediately prior to
the merger shall thereupon and without more continue as one share of
stock of Pak Mail Centers of America, Inc. As the surviving
corporation.
3. Each share of stock of Pak Mail Services Corp., as the
subsidiary corporation, issued and outstanding immediately prior to the
merger shall, by virtue of the merger and without any action on the
part of the holder thereof, be canceled and retired and cease to exist,
without any conversion thereof.
4. No changes in the articles of incorporation of Pak Mail
Centers of America, Inc. shall be effected by the merger.
ARTICLE FIVE
Immediately prior to the merger, the parent corporation owned one
hundred percent of the outstanding shares of each class of the
subsidiary corporation.
ARTICLE SIX
The shareholders of the subsidiary corporation have waived the
requirement that a copy of the plan of merer be mailed to such
shareholders.
ARTICLE SEVEN
All provisions of the law of the State of Colorado and the State
of Illinois applicable to the proposed merger have been complied with.
IN WITNESS WHEREOF, each of the undersigned corporations has
caused these articles of merger to be executed in its name by its
president or vice president and secretary of assistant secretary, as of
the 30th day of may, 1991.
PAK MAIL CENTERS OF AMERICA, INC.
By: \s\ John E. Kelly
John E. Kelly, President
By: \s\ Raymond S. Goshorn
Raymond S. Goshorn, Secretary
PAK MAIL SERVICES CORP.
By: \s\ John E. Kelly
John E. Kelly, President
By: \s\ Raymond S. Goshorn
Raymond S. Goshorn, Secretary
<PAGE>
STATE OF COLORADO )
) ss.
COUNTY OF ARAPAHOE )
Before me, Margo M. Adams, a Notary Public in and for the said
County and State, personnally appeared John E. Kelly, who acknowledged
before me that he is the President of Pak Mail Centers of America,
Inc., a Colorado corporation and that he signed the foregoing document
as his free and voluntary act and signed the foregoing document as his
free and voluntary act and deed for the uses and purposes therein set
forth.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this
30th day of May, A.D. 1991.
My commission expires: October 19, 1991
\s\ Margo M. Adams
Notary Public
<PAGE>
STATE OF COLORADO )
) ss.
COUNTY OF ARAPAHOE )
Before me, Margo M. Adams, a Notary Public in and for the said
County and State, personally appeared John E. Kelly, who acknowledged
before me that he is the President of Pak Mail Services Corp., an
Illinois corporation and that he signed the foregoing document as his
free and voluntary act and deed for the uses and purposes therein set
forth.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this
30th day of May, A.D. 1991.
My commission expires: October 19, 1991
\s\ Margo M. Adams
Notary Public
<PAGE>
MERGER XX COLSOLIDATION
CANCELLATION OF LIMITED PARTNERSHIP DUE TO MERGER
DOMESTIC FOREIGN PROFIT NONPROFIT
PAK MAIL SERVICES CORP.
ILLINOIS NOT QUALIFIED CORPORATION
INTO
PAK MAIL CENTERS OF AMERICA, INC. (DP871555095)
COLORADO CORPORATION
THE SURVIVOR
<PAGE>
MAIL TO:
Colorado Secretary of State
Corporations Office
1560 Broadway, Suite 200
Denver, CO 80202
(303) 866-2361
ARTICLES OF AMENDMENT
to the
ARTICLES OF INCORPORATION
Pursuant to the provisions of the Colorado Corporation Code, the
undersigned corporation adopts the following Articles of Amendment to
its Article of Incorporation:
First: The name of the corporation is (Note 1):
PAK-MAIL CENTERS OF AMERICA, INC.
Second: The following amendment to the Article of Incorporation
was adopted on September 7, 1987, as prescribed by the Colorado
Corporation Code, in the manner marked with an X below.
Such amendment was adopted by the board of directors where
so shares have been issued.
XX Such amendment was adopted by a vote of the
shareholders. The number of shares voted for the amendment
was sufficient for approval.
4.1 Stock Classes and Shares Authorized. The
authorized capital stock of the Corporation, shall
be 210,000,000 shares, to consist of 200,000,000
shares of Common Stock, $0.001 par value, and
10,000,000 of Preferred Stock, without par value.
The Board of Directors shall have the authority
to divide the Preffered Stock into series and,
within the limitations set forth in the Colorado
Corporation Code, fix and determine the relative
rights and preferences of the shares of any series
so established.
Third: The manner, if not set forth in such amendment, in which any
exchange, reclassification, or cancellation of issued shares provided
for in the amendment shall be effected, is as follows:
Not Applicable
Fourth: The manner is which such amendment effects a change in
the amount of stated capital, and the amount of stated capital as
changed by such amendment, are as follows:
Not Applicable
PAK MAIL CENTERS OF AMERICA, INC.
By: \s\ John E. Kelly
Its President
By: \s\ Raymond S. Goshorn
Its Secretary
<PAGE>
MAIL TO:
Colorado Secretary of State
Corporations Office
1560 Broadway, Suite 200
Denver, CO 80202
(303) 866-2361
STATEMENT OF CHANGE OF REGISTERED OFFICE
OR REGISTERED AGENT OR BOTH
Pursuant to the provisions of the Colorado Corporations Code, the
Colorado Nonprofit Corporation Act and the Colorado Uniform Limited
Partnership Act of 1981, the undersigned corporation or limited
partnership organized under the laws of COLORADO submits
the following statement for the purpose of changing its registered
office or its registered agent, or both, in the state of Colorado.
First: The name of the corporation or limited partnership is:
PAK MAIL CENTERS OF AMERICA, INC.
Second: The address of its REGISTERED OFFICE is:
1600 Broadway, Denver, CO 80202
Third: The name of its REGISTERED AGENT is:
The Corporation Company
Fourth: The address of its registered office and the address of
the business office of its registered agent, as changed, will be
identical.
Fifth: The address of its place of business in Colorado is
3033 So. Parker Road, Ste 1200
Aurora, CO
80014 (Note 1)
By: \s\ P. Evan Lasky (Note 2)
IMPORTANT! PLEASE READ CAREFULLY! Its Vice president
If you are a not-to-profit corporation Its authorized agent
of a limited partnership, the form must be Its registered agent(Note 3)
notarized. If you are a business (profit) Its general partner
corporation, no notarization is required.
State of COLORADO
County of ARAPAHOE
Subscribed and sworn to before me this 24th day of July, 1991.
My commission expires: My commission expires May 12, 1992
\s\ Tonya D. Sarina
Notary Public (Note 4)
3033 So. Parker Road, Ste. 1200
Aurora, CO 80014
Address
<PAGE>
(TO BE EXECUTED IN DUPLICATE)
STATEMENT OF
RESOLUTION ESTABLISHING SERIES OF SHARES
OF
PAK MAIL CENTERS OF AMERICA, INC.
To the Secretary of State
of the State of Colorado
Pursuant to the provisions of the Colorado Corporation Act, the
undersigned corporation submits the following statement for the
purpose of establishing and designating a series of shares and fixing
and determining the relative rights and preferences thereof:
1. The name of the Corporation is Pak Mail Centers of
America, Inc.
2. The attached resolution, establishing and designating a
series of shares and fixing and determining the relative rights and
preferences thereof, was duly adopted by the board of directors of
the corporation on September 3, 1991.
Dated September 3, 1991.
PAK MAIL CENTERS OF AMERICA, INC.
By: \s\ John E. Kelly
Its President
By: \s\ Raymond S. Goshorn
Its Secretary
<PAGE>
STATE OF COLORADO )
) ss.
COUNTY OF ARAPAHOE )
I, Tonya D. Sarina, a notary public, do hereby certify that on
this 3rd day of September, 1991, personally appeared before me, John
E. Kelly, who, being by me first duly sworn, described that he is the
President of Pak Mail Centers of America, Inc., that he signed the
foregoing document as President of the Corporation and that the
statements contained therein are true.
It witness whereof, I have hereunto set my hand and seal this
3rd day of September, A.D. 1991.
My commission expires: May 12, 1992
\s\ Tony D. Sarina
Notary Public
<PAGE>
RESOLUTIONS
OF
THE BOARD OF DIRECTORS
OF
PAK MAIL CENTERS OF AMERICA, INC.
Pursuant to the authority conferred upon the Board of Directors by
the Articles of Incorporation of the Corporation, the Board of
Directors of the Corporation on September 3, 1991, adopted the
following resolution creating a series of 1,500 shares of Series A
Preffered Stock, without par value:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of its
Articles of Incorporation, as amended (the "Articles of
Incorporation"), a series of Preferred Stock of the Corporation be and
it hereby is established, and that the designation thereof and the
relative rights and preferences of the shares of such series are as
follows:
1. DESIGNATION OF THE SERIES; RANK. The shares of such
series shall be designated as "Series A Preferred Stock" (the "Series
A Preferred Stock") and the number of shares constituting such series
shall be 1,500. Such number of shares may be decreased, at any time
and from time to time, by resolution of the Board of Directors;
provided that no decrease shall reduce the number of shares of Series
A Preferred Stock to a number less than that of the shares then
outstanding. The Series A Preferred Stock shall rank senior to the
Common Stock and on a parity with the Series A Preferred Stock of the
Corporation with respect to the payment of dividends and to the
distribution of assets upon liquidation, dissolution or winding up.
2. DIVIDENDS. (a) For the purposes of this Section 2, each
March 31 (other than March 31, 1994) on which any Series A Preferred
Stock shall be outstanding shall be deemed to be a "Dividend Due Date."
The holders of Series A Preferred Stock shall be entitled to receive,
if, when and as declared by the Board of Directors out of funds legally
available therefor, cumulative dividends at the rate of $80.00 per year
on each share of Series A Preferred Stock and no more, calculated on
the basis of a year of 360 days consisting of twelve 30-day months,
payable annually on each Dividend Due Date, commencing March 31, 1995,
with respect to the year or period ending on the Dividend Due Date.
Dividends on each share of Series A Preferred Stock shall accrue
and be cumulative from and after the date of issuance of such share of
Series A Preferred Stock. If more or less than one year shall have
elapsed from the date of issuance of Series A Preferred Stock to the
first Dividend Due Date after such issuance, the dividends payable on
such Dividend Due Date shall be the amount payable on each subsequent
Dividend Due Date multiplied by a fraction, the numerator of which
is the number of days from the date of issuance of the Series A
Preferred Stock to such first Dividend Due Date and the denominator of
which is 360. The record date for the payment of dividends on the
Series A Preferred Stock shall in no event be more than sixty (60) days
prior to a Dividend Due Date.
On each Dividend Due Date all dividends which shall have accrued
on each share of Series A Preferred Stock outstanding on such Dividend
Due Date shall accumulate and be deemed to become "due". Any dividend
which shall not be paid on the Dividend Due Date on which it shall
become due shall be deemed to be "past due" until such dividend shall
be paid or until the share of Series A Preferred Stock with respect
to which such dividend became due shall no longer be outstanding,
whichever is the earlier to occur. No interest, sum of money in lieu
of interest, or other property or securities shall be payable in
respect of any dividend payment or payments which are past due.
Dividends paid on shares of Series A Preferred Stock in an amount less
than the total amount of such dividends at the time accumulated and
payable on such shares shall be allocated pro rata on a share-by-share
basis among all such shares at the time outstanding.
Except as otherwise provided in the next succeeding sentence, the
cash payment of any dividend with respect to the Series A Preferred
Stock that is due or past due as to any particular year (or, in the
case of the dividend payable on March 31, 1995, the period from the
date of issuance through March 31, 1995) shall be made only to the
extent that the Corporation's net income from and after December 1,
1993 exceeds the product of $200,000 multiplied by the number of years
elapsed from December 1, 1993 through the last day of the fiscal year
next preceding the Dividend Due Date with respect to such year or
period. Notwithstanding the preceding sentence, all dividends with
respect to the Series A Preferred Stock that are due or past due shall
be payable by the Corporation in connection with the redemption or
repurchase of shares of such Series A Preferred Stock or upon the
liquidation, dissolution or winding up of the Corporation. The
determination of the Corporation's net income for purposes of this
Section 2 shall be based on the Corporation's audited financial
statements.
If a dividend upon any shares of Series A Preferred Stock, or any
other outstanding preferred stock of the Corporation ranking on a
parity with the Series A Preferred Stock as to dividends, is in
arrears, all dividends or other distributions declared upon each series
of such stock (other than dividends paid in stock of the Corporation
ranking junior to the Series A Preferred Stock as to dividends and upon
liquidation, dissolution or winding up) may only be declared pro rata
so that in all cases the amount of dividends or other distributions
declared per share on each such Series Aear to each other the same
ratio that the accumulated and unpaid dividends per share on the shares
of each such Series Aear to each other. Except as set forth above, if
a dividend upon any shares of Series A Preferred Stock, or any other
outstanding stock of the Corporation ranking on a parity with the
Series A Preferred Stock as to dividends, is in arrears: (i) no
dividends - in cash, stock or other property - may be paid or declared
and set aside for payment or any other distribution made upon any stock
of the Corporation ranking junior to the Series A Preferred Stock
as to dividends (other than dividends or distributions in stock of the
Corporation ranking junior to the Series A Preferred Stock as to
dividends and upon liquidation, dissolution or winding up); (ii) no
stock of the Corporation ranking on a parity with the Series A
Preferred Stock as to dividends may be (A) redeemed pursuant to a
sinking fund or otherwise, except (1) by means of a redemption pursuant
to which all outstanding shares of the Series A Preferred Stock and all
stock of the Corporation ranking on a parity with the Series A
Preferred Stock as to dividends are redeemed or pursuant to which a pro
rata redemption is made from all holders of the Series A Preferred
Stock and all stock of the Corporation ranking on a parity with the
Series A Preferred Stock as to dividends, the amount allocable to each
series of such stock being determined on the basis of the aggregate
liquidation preference of the outstanding shares of each series and the
shares of each Series Aeing redeemed only on a pro rata basis, or (2)
by conversion of such parity stock into, or exchange of such parity
stock for, stock of the Corporation ranking junior to the Series A
Preferred Stock as to dividends and upon liquidation, dissolution or
winding up, or (B) purchased or otherwise acquired for any
consideration by the Corporation except (1) pursuant to an acquisition
made pursuant to the terms of one or more offers to purchase all of the
outstanding shares of the Series A Preferred Stock and all stock of the
Corporation ranking on a parity with the Series A Preferred Stock as to
dividends (which offers shall describe such proposed acquisition of all
such parity stock), which offers shall each have been accepted by the
holders of at least 50% of the shares of each series or class of stock
receiving such offer outstanding at the commencement of the first such
purchase offers, or (2) by conversion of such parity stock into, or
exchange of such parity stock for, stock of the Corporation ranking
junior to the Series A Preferred Stock as to dividends and upon
liquidation, dissolution or winding up; and (iii) no stock ranking
junior to the Series A Preferred Stock as to dividends may be redeemed,
purchased, or otherwise acquired for consideration (including pursuant
to sinking fund requirements) except by conversion into or exchange for
stock of the Corporation ranking junior to the Series A Preferred
Stock as to dividends and upon liquidation, dissolution or winding up.
(b) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
paragraph (a) of this Section 2, purchase or otherwise acquire such
shares at such time and in such manner.
3. VOTING RIGHTS. Except as provided in this Section 3, the
Series A Preferred Stock shall not have any right to vote for the
election of directors or for any other purpose. So long as the Series
A Preferred Stock is outstanding, the Corporation shall not, without
the affirmative vote or consent of the holders of at least a majority
of all outstanding shares of Series A Preferred Stock voting separately
as a series, amend, alter or repeal any provision of the Articles of
Incorporation or the By-laws of the Corporation or of this Resolution
so as to adversely affect the powers, preferences or special rights of
the Series A Preferred Stock. Without the affirmative vote or consent
of the holders of at least a majority of all outstanding shares of
Series A Preferred Stock, the Corporation shall not authorize, or
increase the authorized amount of, any class or series of stock, or any
equity security convertible into stock of such class or series, ranking
senior to the Series A Preferred Stock in respect of the payment of
dividends or upon liquidation, dissolution or winding up. The Series
A Preferred Stock shall also be entitled to vote as a series (the
affirmative vote or consent of the holders of at least a majority of
the outstanding shares of Series A Preferred Stock being required) on
any reclassification of the Series A Preferred Stock and to vote on any
matter with respect to which a class or series vote by the Series A
Preferred Stock (whether together with another class or series of the
stock of the Corporation or by itself) shall be expressly required by
Colorado law and on any other matter with respect to which the
Corporation's Board of Directors shall direct (whether together with
another class or series of the stock of the Corporation or by itself)
that the Series A Preferred Stock is to be voted as a separate class or
series. A class or series vote on the part of the Series A Preferred
Stock shall, without limitation, specifically not be required (except
as otherwise required by law or resolution of the Corporation's Board
of Directors) in connection with: (i) the authorization, issuance
or increase in the authorized amount of any shares of any other class
or series of stock which ranks junior to, or on a parity with, the
Series A Preferred Stock as to dividends and upon the liquidation,
dissolution or winding up of the Corporation; (ii) the authorization,
issuance or increase in the amount of any bonds, mortgages, debentures
or other obligations of the Corporation; (iii) any merger or
consolidation involving the Corporation, except as provided in the
following paragraph; or (iv) any reclassification of any stock ranking
junior to, or on a parity with, the Series A Preferred Stock as to
dividends and upon liquidation, dissolution or winding up.
The affirmative vote or consent of the holders of a majority of
the outstanding shares of Series A Preferred Stock, voting or
consenting separately as a series, shall be required to approve any
merger or consolidation of the Corporation with or into any other
corporation in which the Corporation is not the surviving entity unless
(i) the terms of such merger or consolidation provide that the terms of
the Series A Preferred Stock shall remain unchanged and (ii) the Series
A Preferred Stock is, after such merger or consolidation, on a parity
with or senior to any other class or series of capital stock authorized
by the surviving corporation as to dividends and upon liquidation,
dissolution or winding up, other than any such class or series of
Preferred Stock of the Corporation ranking senior to the Series A
Preferred Stock either as to dividends or upon liquidation, dissolution
or winding up as may be or may have been created with the affirmative
vote or consent of the holders of at least a majority of the
outstanding shares of the Series A Preferred Stock (or the shares
into which such senior Preferred Stock is converted as a result of such
merger or consolidation). The foregoing provision shall not, however,
apply to a purchase or other acquisition of the Corporation by another
corporation in any manner which does not involve a statutory merger or
consolidation, and the Series A Preferred Stock shall have no voting
rights whatsoever in the case of any such purchase or acquisition.
With respect to the matters set forth in this Section 3, shares of
the Series A Preferred Stock entitled to vote pursuant to the terms of
such Section 3 shall be entitled to one vote per share.
4. REDEMPTION. The Series A Preferred Stock may be redeemed
at the option of the Corporation, as a whole at any time or in part
from time to time, at a price per share equal to $1,000 plus all
dividends (whether or not declared or due) accrued and unpaid to the
date of redemption (the "Redemption Price").
No sinking fund shall be established for the Series A Preferred
Stock.
Notice of any proposed redemption of shares of Series A Preferred
Stock shall be mailed by means of first class mail, postage paid,
addressed to the holders of record of the shares of Series A Preferred
Stock to be redeemed, at their respective addresses then appearing on
the books of the Corporation, at least thirty (30) but not more than
sixty (60) days prior to the date fixed for such redemption (herein
referred to as the "Redemption Date"). Each such notice shall specify
(i) the Redemption Date, (ii) the Redemption Price, (iii) the place for
payment and for delivering the stock certificate(s) and transfer
instrument(s) in order to collect the Redemption Price and (iv) the
shares of Series A Preferred Stock to be redeemed. Any notice mailed
in such manner shall be conclusively deemed to have been duly given
whether or not such notice is in fact received. If less than all the
outstanding shares of Series A Preferred Stock are to be redeemed, the
Corporation will select those to be redeemed pro rata, by lot or by a
substantially equivalent method. In order to facilitate the redemption
of the Series A Preferred Stock, the Board of Directors may fix a
record date for determination of holders of Series A Preferred Stock to
be redeemed, which shall not be more than sixty (60) days prior to the
Redemption Date with respect thereto.
The holder of any shares of Series A Preferred Stock redeemed upon
any exercise of the Corporation's redemption right shall not be
entitled to receive payment of the Redemption Price for such shares
until such holder shall cause to be delivered to the place specified in
the notice given with respect to such redemption (i) the certificates
representing such shares of Series A Preferred Stock and (ii) transfer
instrument(s) satisfactory to the Corporation and sufficient to
transfer such shares of Series A Preferred Stock to the Corporation
free of any adverse interest. No interest shall accrue on the
Redemption Price of any share of Series A Preferred Stock after its
Redemption Date.
At the close of business on the Redemption Date for any share of
Series A Preferred Stock, such share shall (provided the Redemption
Price (including any accrued and unpaid dividends to the Redemption
Date) of such share has been paid or properly provided for) be deemed
to cease to be outstanding and all rights of any person other than the
Corporation in such share shall be extinguished on the Redemption Date
for such share (including all rights to receive future dividends with
respect to such share) except for the right to receive the Redemption
Price (including any accrued and unpaid dividends to the Redemption
Date), without interest, for such share in accordance with the
provisions of this Section 4, subject to applicable escheat laws.
Subject to Section 2 hereof, the Corporation shall have the right
at any time to acquire any shares of Series A Preferred Stock from the
owner of such shares on such terms as may be agreeable to such owner.
Shares of Series A Preferred Stock may be acquired by the Corporation
from any stockholder pursuant to this paragraph without offering any
other stockholder an equal opportunity to sell his stock to the
Corporation, and no purchase by the Corporation from any stockholder
pursuant to this paragraph shall be deemed to create any right on the
part of any other stockholder to sell any shares of Series A Preferred
Stock (or any other stock) to the Corporation.
Notwithstanding the foregoing provisions of this Section 4, and
subject to the provisions of Section 2 hereof, if a dividend upon any
shares of Series A Preferred Stock is past due, (i) no shares of the
Series A Preferred Stock may be redeemed, except (A) by means of a
redemption pursuant to which all outstanding shares of the Series A
Preferred Stock are simultaneously redeemed or pursuant to which the
outstanding shares of the Series A Preferred Stock are redeemed on a
pro rata basis or (B) by conversion of shares of Series A Preferred
Stock into, or exchange of such shares for, Common Stock or any other
stock of the Corporation ranking junior to the Series A Preferred Stock
as to dividends and upon liquidation, dissolution or winding up, and
(ii) the Corporation shall not purchase or otherwise acquire any shares
of the Series A Preferred Stock, except (A) pursuant to a purchase or
exchange offer made on the same terms to all holders of the Series A
Preferred Stock or (B) by conversion of shares of Series A Preferred
Stock into, or exchange of such shares for, Common Stock or any other
stock of the Corporation ranking junior to the Series A Preferred
Stock as to dividends and upon liquidation, dissolution or winding up.
5. LIQUIDATION. In the event of any voluntary or involuntary
dissolution, liquidation or winding up of the Corporation (for the
purposes of this Section 5, a "Liquidation"), before any distribution
of assets shall be made to the holders of the Common Stock or the
holders of any other stock that ranks junior to the Series A Preferred
Stock in respect of distributions upon the Liquidation of the
Corporation, the holder of each share of Series A Preferred Stock then
outstanding shall be entitled to be paid out of the assets of the
Corporation available for distribution to its stockholders, an amount
per share equal to $1,000 plus all dividends (whether or not declared
or due) accrued and unpaid on such share on the date fixed for the
distribution of assets of the Corporation to the holders of Series A
Preferred Stock.
If upon any Liquidation of the Corporation, the assets available
for distribution to the holders of Series A Preferred Stock and any
other stock of the Corporation ranking on a parity with the Series A
Preferred Stock upon Liquidation issued by the Corporation which shall
then be outstanding (hereinafter in this paragraph called the "Total
Amount Available") shall be insufficient to pay the holders of all
outstanding shares of Series A Preferred Stock and all other such
parity stock the full amounts (including all dividends accrued and
unpaid) to which they shall be entitled by reason of such Liquidation
of the Corporation, then there shall be paid to the holders of the
Series A Preferred Stock in connection with such Liquidation of the
Corporation, an amount equal to the product derived by multiplying
the Total Amount Available by a fraction, the numerator of which shall
be the full amount to which the holders of the Series A Preferred Stock
shall be entitled under the terms of the preceding paragraph by reason
of such Liquidation of the Corporation and the denominator of which
shall be the total amount which would have been distributed by reason
of such Liquidation of the Corporation with respect to the Series A
Preferred Stock and all other stock ranking on a parity with the Series
A Preferred Stock upon Liquidation then outstanding had the Corporation
possessed sufficient assets to pay the maximum amount which the holders
of all such stock would be entitled to receive in connection with such
Liquidation of the Corporation.
The voluntary sale, conveyance, lease, exchange or transfer of all
or substantially all the property or assets of the Corporation, or the
merger or consolidation of the Corporation into or with any other
corporation, or the merger of any other corporation into the
Corporation, or any purchase or redemption of some or all of the shares
of any class or series of stock of the Corporation, shall not be deemed
to be a Liquidation of the Corporation for the purpose of this Section
5 (unless in connection therewith the Liquidation of the Corporation is
specifically approved).
The holder of any shares of Series A Preferred Stock shall not be
entitled to receive any payment owed for such shares under this Section
5 until such holder shall cause to be delivered to the Corporation: (i)
the certificate(s) representing such shares of Series A Preferred Stock
and (ii) transfer instrument(s) satisfactory to the Corporation and
sufficient to transfer such shares of the Series A Preferred Stock
to the Corporation free of any adverse interest. As in the case of the
Redemption Price, no interest shall accrue on any payment upon
Liquidation after the due dat\\thereof.
After payment of the full amount of the liquidating dividend to
which they are entitled, the holders of shares of the Series A
Preferred Stock will not be entitled to any further participation in
any distribution of assets by the Corporation.
6. PAYMENTS. Any payment which may be owed for the payment of
the Redemption Price for any shares of Series A Preferred Stock
pursuant to Section 4 or the payment of any amount distributable with
respect to any shares of Series A Preferred Stock under Section 5 shall
be deemed to have been "paid or properly provided for" upon the
earlier to occur of the date upon which a check payable to the person
entitled to receive such payment shall be (i) delivered to such person
or (ii) mailed to such person at either the address of such person then
appearing on the books of the Corporation or such other address as the
Corporation shall deem reasonable.
7. STATUS OF REACQUIRED SHARES OF Series A PREFERRED STOCK.
Shares of Series A Preferred Stock issued and reacquired by the
Corporation (including, without limitation, shares of Series A
Preferred Stock which have been redeemed pursuant to the terms of
Section 4 hereof) shall have the status of authorized and unissued
shares of Preferred Stock, undesignated as to series, subject to later
issuance.
8. FRACTIONAL SHARES. In the event the holder of Series A
Preferred Stock shall be entitled to receive a fractional interest in
a share of Series A Preferred Stock, except as otherwise provided
herein, the Corporation shall either, in the sole discretion of the
Board of Directors, (i) round such fractional interest up to the next
whole share of Series A Preferred Stock, (ii) issue a fractional share
of such stock, (iii) deliver cash in the amount of the fair market
value of such fractional interest, or (iv) issue scrip representing a
fractional share of such stock entitling the holder to receive a full
share of such stock upon the surrender of such scrip aggregating a full
share of such stock.
9. PREEMPTIVE RIGHTS. The Series A Preferred Stock is not
entitled to any preemptive or subscription rights in respect of any
securities of the Corporation;
<PAGE>
MAIL TO:
Colorado Secretary of State
Corporations Office
1575 Sherman Street, 2nd Floor
Denver, CO 80203
(303) 866-2361
STATEMENT OF CHANGE OF REGISTERED OFFICE
OR REGISTERED AGENT OR BOTH
Pursuant to the provisions of the Colorado Corporations Code, the
Colorado Nonprofit Corporation Act and the Colorado Uniform Limited
Partnership Act of 1981, the undersigned corporation or limited
partnership organized under the laws of COLORADO submits
the following statement for the purpose of changing its registered
office or its registered agent, or both, in the state of Colorado.
First: The name of the corporation or limited partnership is:
PAK-MAIL CENTERS OF AMERICA, INC.
Second: The address of its REGISTERED OFFICE is:
1675 Broadway, Denver, CO 80202
Third: The name of its REGISTERED AGENT is:
The Corporation Company
Fourth: The address of its registered office and the address of
the business office of its registered agent, as changed, will be
identical.
Fifth: The address of its place of business in Colorado is
The Corporation Company (Note 1)
By: \s\ (Note 2)
IMPORTANT! PLEASE READ CAREFULLY! Its president
If you are a not-to-profit corporation Its authorized agent
of a limited partnership, the form must Its XX registered agent (Note 3)
be notarized. If you are a business Its general partner
(profit) corporation, no notarization Its manager
is required.
<PAGE>
(TO BE EXECUTED IN DUPLICATE)
STATEMENT OF
CANCELLATION OF REACQUIRED SHARES
(OTHER THAN REDEEMABLE SHARES)
OF
PAK MAIL CENTERS OF AMERICA, INC.
To the Secretary of State
of the State of Colorado
Pursuant to the provisions of the Colorado Corporation Act, the
undersigned corporation submits the following statement for the
purpose of establishing and designating a series of shares and fixing
and determining the relative rights and preferences thereof:
1. The name of the Corporation is Pak Mail Centers of America, Inc.
2. The attached resolution, establishing and designating a
series of shares and fixing and determining the relative rights and
preferences thereof, was duly adopted by the board of directors of
the corporation on November 24, 1993.
Dated November 24, 1993.
PAK MAIL CENTERS OF AMERICA, INC.
By: \s\ John E. Kelly
Its President
By: \s\ Raymond S. Goshorn
Its Secretary
<PAGE>
STATE OF COLORADO )
) ss.
COUNTY OF ARAPAHOE )
I, Tonya D. Sarina, a notary public, do hereby certify that on
this 24th day of November, 1993, personally appeared before me, John
E. Kelly, who, being by me first duly sworn, described that he is the
President of Pak Mail Centers of America, Inc., that he signed the
foregoing document as President of the Corporation and that the
statements contained therein are true.
It witness whereof, I have hereunto set my hand and seal this
24th day of November, A.D. 1993.
My commission expires: May 12, 1996
\s\ Tony D. Sarina
Notary Public
<PAGE>
RESOLUTIONS
OF
THE BOARD OF DIRECTORS
OF
PAK MAIL CENTERS OF AMERICA, INC.
Pursuant to the authority conferred upon the Board of Directors by
the Articles of Incorporation of the Corporation, the Board of
Directors of the Corporation on November 24, 1993, adopted the
following resolution creating a series of 1,000 shares of Series B
Preffered Stock, without par value:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of its
Articles of Incorporation, as amended (the "Articles of
Incorporation"), a series of Preferred Stock of the Corporation be and
it hereby is established, and that the designation thereof and the
relative rights and preferences of the shares of such series are as
follows:
1. DESIGNATION OF THE SERIES; RANK. The shares of such
series shall be designated as "Series B Preferred Stock" (the "Series
B Preferred Stock") and the number of shares constituting such series
shall be 1,000. Such number of shares may be decreased, at any time
and from time to time, by resolution of the Board of Directors;
provided that no decrease shall reduce the number of shares of Series
B Preferred Stock to a number less than that of the shares then
outstanding. The Series B Preferred Stock shall rank senior to the
Common Stock and on a parity with the Series A Preferred Stock of the
Corporation with respect to the payment of dividends and to the
distribution of assets upon liquidation, dissolution or winding up.
2. DIVIDENDS. (a) For the purposes of this Section 2, each
March 31 (other than March 31, 1994) on which any Series B Preferred
Stock shall be outstanding shall be deemed to be a "Dividend Due Date."
The holders of Series B Preferred Stock shall be entitled to receive,
if, when and as declared by the Board of Directors out of funds legally
available therefor, cumulative dividends at the rate of $80.00 per year
on each share of Series B Preferred Stock and no more, calculated on
the basis of a year of 360 days consisting of twelve 30-day months,
payable annually on each Dividend Due Date, commencing March 31, 1995,
with respect to the year or period ending on the Dividend Due Date.
Dividends on each share of Series B Preferred Stock shall accrue
and be cumulative from and after the date of issuance of such share of
Series B Preferred Stock. If more or less than one year shall have
elapsed from the date of issuance of Series B Preferred Stock to the
first Dividend Due Date after such issuance, the dividends payable on
such Dividend Due Date shall be the amount payable on each subsequent
Dividend Due Date multiplied by a fraction, the numerator of which
is the number of days from the date of issuance of the Series B
Preferred Stock to such first Dividend Due Date and the denominator of
which is 360. The record date for the payment of dividends on the
Series B Preferred Stock shall in no event be more than sixty (60) days
prior to a Dividend Due Date.
On each Dividend Due Date all dividends which shall have accrued
on each share of Series B Preferred Stock outstanding on such Dividend
Due Date shall accumulate and be deemed to become "due". Any dividend
which shall not be paid on the Dividend Due Date on which it shall
become due shall be deemed to be "past due" until such dividend shall
be paid or until the share of Series B Preferred Stock with respect
to which such dividend became due shall no longer be outstanding,
whichever is the earlier to occur. No interest, sum of money in lieu
of interest, or other property or securities shall be payable in
respect of any dividend payment or payments which are past due.
Dividends paid on shares of Series B Preferred Stock in an amount less
than the total amount of such dividends at the time accumulated and
payable on such shares shall be allocated pro rata on a share-by-share
basis among all such shares at the time outstanding.
Except as otherwise provided in the next succeeding sentence, the
cash payment of any dividend with respect to the Series B Preferred
Stock that is due or past due as to any particular year (or, in the
case of the dividend payable on March 31, 1995, the period from the
date of issuance through March 31, 1995) shall be made only to the
extent that the Corporation's net income from and after December 1,
1993 exceeds the product of $200,000 multiplied by the number of years
elapsed from December 1, 1993 through the last day of the fiscal year
next preceding the Dividend Due Date with respect to such year or
period. Notwithstanding the preceding sentence, all dividends with
respect to the Series B Preferred Stock that are due or past due shall
be payable by the Corporation in connection with the redemption or
repurchase of shares of such Series B Preferred Stock or upon the
liquidation, dissolution or winding up of the Corporation. The
determination of the Corporation's net income for purposes of this
Section 2 shall be based on the Corporation's audited financial
statements.
If a dividend upon any shares of Series B Preferred Stock, or any
other outstanding preferred stock of the Corporation ranking on a
parity with the Series B Preferred Stock as to dividends, is in
arrears, all dividends or other distributions declared upon each series
of such stock (other than dividends paid in stock of the Corporation
ranking junior to the Series B Preferred Stock as to dividends and upon
liquidation, dissolution or winding up) may only be declared pro rata
so that in all cases the amount of dividends or other distributions
declared per share on each such series bear to each other the same
ratio that the accumulated and unpaid dividends per share on the shares
of each such series bear to each other. Except as set forth above, if
a dividend upon any shares of Series B Preferred Stock, or any other
outstanding stock of the Corporation ranking on a parity with the
Series B Preferred Stock as to dividends, is in arrears: (i) no
dividends - in cash, stock or other property - may be paid or declared
and set aside for payment or any other distribution made upon any stock
of the Corporation ranking junior to the Series B Preferred Stock
as to dividends (other than dividends or distributions in stock of the
Corporation ranking junior to the Series B Preferred Stock as to
dividends and upon liquidation, dissolution or winding up); (ii) no
stock of the Corporation ranking on a parity with the Series B
Preferred Stock as to dividends may be (A) redeemed pursuant to a
sinking fund or otherwise, except (1) by means of a redemption pursuant
to which all outstanding shares of the Series B Preferred Stock and all
stock of the Corporation ranking on a parity with the Series B
Preferred Stock as to dividends are redeemed or pursuant to which a pro
rata redemption is made from all holders of the Series B Preferred
Stock and all stock of the Corporation ranking on a parity with the
Series B Preferred Stock as to dividends, the amount allocable to each
series of such stock being determined on the basis of the aggregate
liquidation preference of the outstanding shares of each series and the
shares of each series being redeemed only on a pro rata basis, or (2)
by conversion of such parity stock into, or exchange of such parity
stock for, stock of the Corporation ranking junior to the Series B
Preferred Stock as to dividends and upon liquidation, dissolution or
winding up, or (B) purchased or otherwise acquired for any
consideration by the Corporation except (1) pursuant to an acquisition
made pursuant to the terms of one or more offers to purchase all of the
outstanding shares of the Series B Preferred Stock and all stock of the
Corporation ranking on a parity with the Series B Preferred Stock as to
dividends (which offers shall describe such proposed acquisition of all
such parity stock), which offers shall each have been accepted by the
holders of at least 50% of the shares of each series or class of stock
receiving such offer outstanding at the commencement of the first such
purchase offers, or (2) by conversion of such parity stock into, or
exchange of such parity stock for, stock of the Corporation ranking
junior to the Series B Preferred Stock as to dividends and upon
liquidation, dissolution or winding up; and (iii) no stock ranking
junior to the Series B Preferred Stock as to dividends may be redeemed,
purchased, or otherwise acquired for consideration (including pursuant
to sinking fund requirements) except by conversion into or exchange for
stock of the Corporation ranking junior to the Series B Preferred
Stock as to dividends and upon liquidation, dissolution or winding up.
(b) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
paragraph (a) of this Section 2, purchase or otherwise acquire such
shares at such time and in such manner.
3. VOTING RIGHTS. Except as provided in this Section 3, the
Series B Preferred Stock shall not have any right to vote for the
election of directors or for any other purpose. So long as the Series
B Preferred Stock is outstanding, the Corporation shall not, without
the affirmative vote or consent of the holders of at least a majority
of all outstanding shares of Series B Preferred Stock voting separately
as a series, amend, alter or repeal any provision of the Articles of
Incorporation or the By-laws of the Corporation or of this Resolution
so as to adversely affect the powers, preferences or special rights of
the Series B Preferred Stock. Without the affirmative vote or consent
of the holders of at least a majority of all outstanding shares of
Series B Preferred Stock, the Corporation shall not authorize, or
increase the authorized amount of, any class or series of stock, or any
equity security convertible into stock of such class or series, ranking
senior to the Series B Preferred Stock in respect of the payment of
dividends or upon liquidation, dissolution or winding up. The Series
B Preferred Stock shall also be entitled to vote as a series (the
affirmative vote or consent of the holders of at least a majority of
the outstanding shares of Series B Preferred Stock being required) on
any reclassification of the Series B Preferred Stock and to vote on any
matter with respect to which a class or series vote by the Series B
Preferred Stock (whether together with another class or series of the
stock of the Corporation or by itself) shall be expressly required by
Colorado law and on any other matter with respect to which the
Corporation's Board of Directors shall direct (whether together with
another class or series of the stock of the Corporation or by itself)
that the Series B Preferred Stock is to be voted as a separate class or
series. A class or series vote on the part of the Series B Preferred
Stock shall, without limitation, specifically not be required (except
as otherwise required by law or resolution of the Corporation's Board
of Directors) in connection with: (i) the authorization, issuance
or increase in the authorized amount of any shares of any other class
or series of stock which ranks junior to, or on a parity with, the
Series B Preferred Stock as to dividends and upon the liquidation,
dissolution or winding up of the Corporation; (ii) the authorization,
issuance or increase in the amount of any bonds, mortgages, debentures
or other obligations of the Corporation; (iii) any merger or
consolidation involving the Corporation, except as provided in the
following paragraph; or (iv) any reclassification of any stock ranking
junior to, or on a parity with, the Series B Preferred Stock as to
dividends and upon liquidation, dissolution or winding up.
The affirmative vote or consent of the holders of a majority of
the outstanding shares of Series B Preferred Stock, voting or
consenting separately as a series, shall be required to approve any
merger or consolidation of the Corporation with or into any other
corporation in which the Corporation is not the surviving entity unless
(i) the terms of such merger or consolidation provide that the terms of
the Series B Preferred Stock shall remain unchanged and (ii) the Series
B Preferred Stock is, after such merger or consolidation, on a parity
with or senior to any other class or series of capital stock authorized
by the surviving corporation as to dividends and upon liquidation,
dissolution or winding up, other than any such class or series of
Preferred Stock of the Corporation ranking senior to the Series B
Preferred Stock either as to dividends or upon liquidation, dissolution
or winding up as may be or may have been created with the affirmative
vote or consent of the holders of at least a majority of the
outstanding shares of the Series B Preferred Stock (or the shares
into which such senior Preferred Stock is converted as a result of such
merger or consolidation). The foregoing provision shall not, however,
apply to a purchase or other acquisition of the Corporation by another
corporation in any manner which does not involve a statutory merger or
consolidation, and the Series B Preferred Stock shall have no voting
rights whatsoever in the case of any such purchase or acquisition.
With respect to the matters set forth in this Section 3, shares of
the Series B Preferred Stock entitled to vote pursuant to the terms of
such Section 3 shall be entitled to one vote per share.
4. REDEMPTION. The Series B Preferred Stock may be redeemed
at the option of the Corporation, as a whole at any time or in part
from time to time, at a price per share equal to $1,000 plus all
dividends (whether or not declared or due) accrued and unpaid to the
date of redemption (the "Redemption Price").
No sinking fund shall be established for the Series B Preferred
Stock.
Notice of any proposed redemption of shares of Series B Preferred
Stock shall be mailed by means of first class mail, postage paid,
addressed to the holders of record of the shares of Series B Preferred
Stock to be redeemed, at their respective addresses then appearing on
the books of the Corporation, at least thirty (30) but not more than
sixty (60) days prior to the date fixed for such redemption (herein
referred to as the "Redemption Date"). Each such notice shall specify
(i) the Redemption Date, (ii) the Redemption Price, (iii) the place for
payment and for delivering the stock certificate(s) and transfer
instrument(s) in order to collect the Redemption Price and (iv) the
shares of Series B Preferred Stock to be redeemed. Any notice mailed
in such manner shall be conclusively deemed to have been duly given
whether or not such notice is in fact received. If less than all the
outstanding shares of Series B Preferred Stock are to be redeemed, the
Corporation will select those to be redeemed pro rata, by lot or by a
substantially equivalent method. In order to facilitate the redemption
of the Series B Preferred Stock, the Board of Directors may fix a
record date for determination of holders of Series B Preferred Stock to
be redeemed, which shall not be more than sixty (60) days prior to the
Redemption Date with respect thereto.
The holder of any shares of Series B Preferred Stock redeemed upon
any exercise of the Corporation's redemption right shall not be
entitled to receive payment of the Redemption Price for such shares
until such holder shall cause to be delivered to the place specified in
the notice given with respect to such redemption (i) the certificates
representing such shares of Series B Preferred Stock and (ii) transfer
instrument(s) satisfactory to the Corporation and sufficient to
transfer such shares of Series B Preferred Stock to the Corporation
free of any adverse interest. No interest shall accrue on the
Redemption Price of any share of Series B Preferred Stock after its
Redemption Date.
At the close of business on the Redemption Date for any share of
Series B Preferred Stock, such share shall (provided the Redemption
Price (including any accrued and unpaid dividends to the Redemption
Date) of such share has been paid or properly provided for) be deemed
to cease to be outstanding and all rights of any person other than the
Corporation in such share shall be extinguished on the Redemption Date
for such share (including all rights to receive future dividends with
respect to such share) except for the right to receive the Redemption
Price (including any accrued and unpaid dividends to the Redemption
Date), without interest, for such share in accordance with the
provisions of this Section 4, subject to applicable escheat laws.
Subject to Section 2 hereof, the Corporation shall have the right
at any time to acquire any shares of Series B Preferred Stock from the
owner of such shares on such terms as may be agreeable to such owner.
Shares of Series B Preferred Stock may be acquired by the Corporation
from any stockholder pursuant to this paragraph without offering any
other stockholder an equal opportunity to sell his stock to the
Corporation, and no purchase by the Corporation from any stockholder
pursuant to this paragraph shall be deemed to create any right on the
part of any other stockholder to sell any shares of Series B Preferred
Stock (or any other stock) to the Corporation.
Notwithstanding the foregoing provisions of this Section 4, and
subject to the provisions of Section 2 hereof, if a dividend upon any
shares of Series B Preferred Stock is past due, (i) no shares of the
Series B Preferred Stock may be redeemed, except (A) by means of a
redemption pursuant to which all outstanding shares of the Series B
Preferred Stock are simultaneously redeemed or pursuant to which the
outstanding shares of the Series B Preferred Stock are redeemed on a
pro rata basis or (B) by conversion of shares of Series B Preferred
Stock into, or exchange of such shares for, Common Stock or any other
stock of the Corporation ranking junior to the Series B Preferred Stock
as to dividends and upon liquidation, dissolution or winding up, and
(ii) the Corporation shall not purchase or otherwise acquire any shares
of the Series B Preferred Stock, except (A) pursuant to a purchase or
exchange offer made on the same terms to all holders of the Series B
Preferred Stock or (B) by conversion of shares of Series B Preferred
Stock into, or exchange of such shares for, Common Stock or any other
stock of the Corporation ranking junior to the Series B Preferred
Stock as to dividends and upon liquidation, dissolution or winding up.
5. LIQUIDATION. In the event of any voluntary or involuntary
dissolution, liquidation or winding up of the Corporation (for the
purposes of this Section 5, a "Liquidation"), before any distribution
of assets shall be made to the holders of the Common Stock or the
holders of any other stock that ranks junior to the Series B Preferred
Stock in respect of distributions upon the Liquidation of the
Corporation, the holder of each share of Series B Preferred Stock then
outstanding shall be entitled to be paid out of the assets of the
Corporation available for distribution to its stockholders, an amount
per share equal to $1,000 plus all dividends (whether or not declared
or due) accrued and unpaid on such share on the date fixed for the
distribution of assets of the Corporation to the holders of Series B
Preferred Stock.
If upon any Liquidation of the Corporation, the assets available
for distribution to the holders of Series B Preferred Stock and any
other stock of the Corporation ranking on a parity with the Series B
Preferred Stock upon Liquidation issued by the Corporation which shall
then be outstanding (hereinafter in this paragraph called the "Total
Amount Available") shall be insufficient to pay the holders of all
outstanding shares of Series B Preferred Stock and all other such
parity stock the full amounts (including all dividends accrued and
unpaid) to which they shall be entitled by reason of such Liquidation
of the Corporation, then there shall be paid to the holders of the
Series B Preferred Stock in connection with such Liquidation of the
Corporation, an amount equal to the product derived by multiplying
the Total Amount Available by a fraction, the numerator of which shall
be the full amount to which the holders of the Series B Preferred Stock
shall be entitled under the terms of the preceding paragraph by reason
of such Liquidation of the Corporation and the denominator of which
shall be the total amount which would have been distributed by reason
of such Liquidation of the Corporation with respect to the Series B
Preferred Stock and all other stock ranking on a parity with the Series
B Preferred Stock upon Liquidation then outstanding had the Corporation
possessed sufficient assets to pay the maximum amount which the holders
of all such stock would be entitled to receive in connection with such
Liquidation of the Corporation.
The voluntary sale, conveyance, lease, exchange or transfer of all
or substantially all the property or assets of the Corporation, or the
merger or consolidation of the Corporation into or with any other
corporation, or the merger of any other corporation into the
Corporation, or any purchase or redemption of some or all of the shares
of any class or series of stock of the Corporation, shall not be deemed
to be a Liquidation of the Corporation for the purpose of this Section
5 (unless in connection therewith the Liquidation of the Corporation is
specifically approved).
The holder of any shares of Series B Preferred Stock shall not be
entitled to receive any payment owed for such shares under this Section
5 until such holder shall cause to be delivered to the Corporation: (i)
the certificate(s) representing such shares of Series B Preferred Stock
and (ii) transfer instrument(s) satisfactory to the Corporation and
sufficient to transfer such shares of the Series B Preferred Stock
to the Corporation free of any adverse interest. As in the case of the
Redemption Price, no interest shall accrue on any payment upon
Liquidation after the due date thereof.
After payment of the full amount of the liquidating dividend to
which they are entitled, the holders of shares of the Series B
Preferred Stock will not be entitled to any further participation in
any distribution of assets by the Corporation.
6. PAYMENTS. Any payment which may be owed for the payment of
the Redemption Price for any shares of Series B Preferred Stock
pursuant to Section 4 or the payment of any amount distributable with
respect to any shares of Series B Preferred Stock under Section 5 shall
be deemed to have been "paid or properly provided for" upon the
earlier to occur of the date upon which a check payable to the person
entitled to receive such payment shall be (i) delivered to such person
or (ii) mailed to such person at either the address of such person then
appearing on the books of the Corporation or such other address as the
Corporation shall deem reasonable.
7. STATUS OF REACQUIRED SHARES OF Series B PREFERRED STOCK.
Shares of Series B Preferred Stock issued and reacquired by the
Corporation (including, without limitation, shares of Series B
Preferred Stock which have been redeemed pursuant to the terms of
Section 4 hereof) shall have the status of authorized and unissued
shares of Preferred Stock, undesignated as to series, subject to later
issuance.
8. FRACTIONAL SHARES. In the event the holder of Series B
Preferred Stock shall be entitled to receive a fractional interest in
a share of Series B Preferred Stock, except as otherwise provided
herein, the Corporation shall either, in the sole discretion of the
Board of Directors, (i) round such fractional interest up to the next
whole share of Series B Preferred Stock, (ii) issue a fractional share
of such stock, (iii) deliver cash in the amount of the fair market
value of such fractional interest, or (iv) issue scrip representing a
fractional share of such stock entitling the holder to receive a full
share of such stock upon the surrender of such scrip aggregating a full
share of such stock.
9. PREEMPTIVE RIGHTS. The Series B Preferred Stock is not
entitled to any preemptive or subscription rights in respect of any
securities of the Corporation;
<PAGE>
MAIL TO:
Colorado Secretary of State
Corporations Office
1575 Sherman Street, 2nd Floor
Denver, CO 80203
(303) 866-2361
STATEMENT OF CHANGE OF REGISTERED OFFICE
OR REGISTERED AGENT OR BOTH
Pursuant to the provisions of the Colorado Corporations Code, the
Colorado Nonprofit Corporation Act and the Colorado Uniform Limited
Partnership Act of 1981, the undersigned corporation or limited
partnership organized under the laws of COLORADO submits
the following statement for the purpose of changing its registered
office or its registered agent, or both, in the state of Colorado.
First: The name of the corporation or limited partnership is:
PAK MAIL CENTERS OF AMERICA, INC.
Second: The address of its REGISTERED OFFICE is:
1400 Glenarm Place, Denver, Colorado 80202
Third: The name of its REGISTERED AGENT is:
The Prentice-Hall Corporation System, Inc.
Fourth: The address of its registered office and the address of
the business office of its registered agent, as changed, will be
identical.
Fifth: The address of its place of business in Colorado is
3033 So. Parker Road, Ste 1200
Aurora, CO 80014 (Note 1)
By: \s\ P. Evan Lasky (Note 2)
IMPORTANT! PLEASE READ CAREFULLY! Its Exec. Vice president
If you are a not-to-profit corporation Its authorized agent
of a limited partnership, the form must Its registered agent(Note 3)
be notarized. If you are a business Its general partner
(profit) corporation, no notarization Its manager
is required.
<PAGE>
SECRETARY OF STATE
CORPORATIONS SECTION
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
Pursuant to the provisions of the Colorado Business Corporation Act,
the undersigned corporation adopts the following Articles of Amendment
to its Articles of Incorporation.
FIRST: The name of the corporation is PAK MAIL CENTERS OF AMERICA, INC.
SECOND: The following amendment of the Articles of Incorporation was
adopted on February 24, 1995 , as prescribed by the Colorado
Business Corporation Act, in the manner marked with an X below:
No shares have been issued or Directors Elected - Action by
Incorporators
No shares have been issued but Directors Elected - Action by
Directors
Such amendment was adopted by the board of directors where
shares have been issued.
X Such amendment was adopted by a vote of the shareholders.
The number of shares voted for the amendment was sufficient for
approval.
SEE ATTACHMENT A
THIRD: The manner, if not set forth in such amendment, in which any
exchange, reclassificiation, or cancellation of issued shares
provided for in the amendment shall be effected, is as follows:
SEE ATTACHMENT A
If these amendments are to have delayed effective date, please list
that date:
5:00pm EST on March 24, 1995
PAK MAIL CENTERS OF AMERICA, INC.
By: \s\ John E. Kelly
Its President/CEO
<PAGE>
Article IV of the Articles of Incorporation of Pak Mail Centers
of America, Inc. (the Company ) is hereby amended by adding the
following provisions:
4.9 Reverse Stock Split. At 5:00pm EST on March 24, 1995 (the
Effective Date ), each share of the Company s Common Stock, par value
$0.001 per share, issued and outstanding (the Old Common Stock ), shall
automatically and without any action on the part of the holder thereof
be reclassified and changed into one-fiftieth (1/50) of a share of the
Company s Common Stock, par value $0.001 per share (the New Common
Stock ), subject to the treatment of fractional share interests as
described below. Each holder of a certificate or certificates, which
immediately prior to the Effective Date represented outstanding shares
of Old Common Stock (the Old Certificates, whether one or more), shall
be entitled to receive, upon surrender of such Old Certificates the
Company s exchange agent (the Exchange Agent ) for cancellation, a
certificate or certificates (the New Certificates, whether one or
more) representing the number of whole shares of the New Common Stock
into which and for which the shares of the Old Common Stock formerly
represented by such Old Certificates so surrendered are reclassified
under the terms hereof. From and after the Effective Date, Old
Certificates shall represent only the right or receive New Certificates
(and, where applicable, cash in lieu of fractional shares, as provided
below) pursuant to the provisions hereof. No certificates or scrip
representing fractional share interests in New Common Stock will be
issued, and no such fractional share interest will entitle the holder
thereof to vote or to any other rights of a shareholder of the Company.
A holder of Old Certificates shall receive, in lieu of any fraction of
a share of New Common Stock to which the holder would other wise be
entitled, a cash payment equal to the number of shares of Old Common
Stock that would otherwise be converted to a fractional share of New
Common Stock multiplied by $.03. If more than one Old Certificate
shall be surrendered at one time for the account of the same
shareholder, the number of full shares of New Common Stock for which
New Certificates shall be issued shall be computed on the basis of the
aggregate number of shares represented by the Old Certificates
surrendered for exchange are issued, the Old Certificates so
surrendered shall be properly endorsed and otherwise in proper form for
transfer, and the person or persons requesting such exchange shall
affix any requisite stock transfer tax stamps to the Old Certificates
surrendered, or provide funds for their purchase, or establish to the
satisfaction of the Exchange Agent that such taxes are not payable.
PAK MAIL CENTERS OF AMERICA, INC.
MANAGEMENT INCENTIVE PLAN
Fiscal Year 1995
I. Purpose
The Pak Mail Centers of America, Inc. Management Incentive
Plan (MIP) has been established for fiscal year 1995 for those
covered employees defined under Section III below.
The purpose of this Management Incentive Plan is to provide
additional compensation to participants for their contribution
to the achievement of the objectives of the Company including:
- Assisting in attracting and retaining highly qualified
key employees.
- Encouraging and stimulating superior performance by such
personnel.
II. Definitions
A. Base Salary equals the salary earnings for the portion
of the Fiscal Year during which the participant was an
active employee in the particular level of management
for which the computation is being made. Salary
earnings do not include Plan awards, long-term incentive
awards, imputed income from such programs as executive
life insurance or non-recurring earnings such as moving
expenses and is based on salary earnings before
reductions for such items as contributions under Section
401-(K) of the Internal Revenue Code of 1986 as amended.
B. Company means Pak Mail Centers of America, Inc., its
successors and assigns.
C. Fiscal Year means the Company's Fiscal Year beginning
December 1 and ending the last day of November.
D. Plan means the Pak Mail Centers of America, Inc.
Management Incentive Plan as from time to time amended.
E. Executive Committee of the Board of Directors which
means the Executive Committee of the Board as appointed
by the full Board of Directors of Pak Mail Centers of
America, Inc.
F. Financial Targets are the financial goal(s) appropriate
to the company for the Fiscal Year. These goals are
identified in Exhibit B and are specifically identified
by participant in Exhibit C.
G. Discretionary Goals refer to the personal goals and
objectives set by each participant and his/her
supervisor at the beginning of each Fiscal Year against
which performance is measured.
III. EMPLOYEES COVERED BY THIS PLAN
The Plan is applicable to those management employees and
other key personnel in the management levels specified in
the attached Exhibit C.
IV. FINANCIAL AWARD
A participant in the Plan shall be entitled to a Financial
Award computed in accordance with the following formula:
Base Financial Bonus Financial
Salary x Performance x Percent = Performance
Incentive Allocated Award
Earned To Financial
Targets
Where:
- "Base Salary" is as defined in Section II A.
- "Financial Performance Incentive Earned" is determined by
the relationship of actual achievement to targeted goals
and can range from 33.3% (minimum) to 100% (maximum),
with full attainment of the financial goals equating to
66.67% (target), the minimum/target/maximum range for
each participant being a function of management level
slotting (see Exhibit C). The relationship of actual
achievement to the performance range will be determined
by using straight-line interpolation for achievement
between the target and the minimum or the maximum of
the payout range as applicable (see Exhibit B).
Actual performance below the minimum of the range will
result in no award being paid on that particular
financial measure.
- "Bonus Percent Allocated To Financial Targets" shall
range from 0% to 100%.
If a participant was in more than one management level during
a Fiscal Year, a separate computation shall be made for each
level applicable to the participant during such Fiscal Year;
the sum of the separate computations shall be the
participant's Financial Performance Award.
V. Personal Performance Award
Goals for each participant are to be developed jointly by the
participant and his/her supervisor at the beginning of a
Fiscal Year. It is anticipated that both quantifiable and
non-quantifiable goals will be developed in the process.
Each goal should be weighted from 0% to 100%, with the sum of
the weights equal to 100%.
A participant in the Plan shall be entitled to a Personal
Performance Award computed in accordance with the following
formula:
Base Personal Bonus Personal
Salary x Performance x Percent = Performance
Incentive Allocated Award
Earned To Personal
Objectives
Where:
- "Base Salary" is as defined in Section II A.
- "Percent of Personal Objectives Achieved" ranges from 0%
to 100% and is determined by the agreed upon performance
of the individual against pre-established individual goals.
- "Percent of Bonus Allocated to Personal Objectives" shall
range from 0% to 100%.
It is intended that the participant and his or her supervisor
will agree on meaningful individual goals. The following is
a partial list of the type of goals or objectives that may be
developed:
- Achievement of royalty income goals
- Development of subordinates
- Opening of new franchise outlets
- Successful development of new franchise outlets
- Development of existing franchise outlets
- Improvement in product merchandising programs
- Attainment of self-development objectives
- Control or reduction of operating expenses
At the end of a Fiscal Year, each participant will review
and evaluate his/her accomplishment of personal goals and
objectives. The participant and his/her supervisor will
then review the preliminary rating. Thereafter, the
supervisor will assign a Personal Performance %, from 0% to
100%, reflecting the participant's achievement of his/her
goals during such Fiscal Year. The Personal Performance %
recommendation of the supervisor shall be reviewed by the
Chief Executive Officer of the Company, who shall recommend
an appropriate Personal Performance % to the Executive
Committee of the Board who shall approve the final Personal
Performance % for each participant.
VI. Performance Measures, Targets and Payout Ranges
The financial performance measures, targets and payout
ranges used for incentive purposes shall be established by
the Company based on the annual business plan. Those
measures, targets and payout ranges, as appropriate, shall
be approved by the Executive Committee of the Board. The
performance measures, targets and payout ranges are defined
in Exhibit B.
VII. Participant Bonus Composition
The composition of each participant's bonus shall be
determined by the Chief Executive Officer of the Company or
his designee(s). The composition may have a Discretionary
portion and a Financial portion. The composition of the
bonuses are established in Exhibit C.
VIII. Computation and Disbursement of Funds
As soon as possible after the close of the Fiscal Year, the
Chief Executive Officer of the Company will recommend a
final personal goal achievement percentage and incentive
award payment to the Executive Committee of the Board. Once
approved, payment of the awards shall be made within sixty
(60) days after the end of the Fiscal Year.
If the participant dies before receiving his/her award, the
amount due will be paid to the designated beneficiaries on
file with the Company and, in the absence of such
designation, to the participant's estate. All payment
awards shall be reduced by amounts required to be withheld
for taxes at the time payments are made.
IX. Changes to Target
The Chief Executive Officer of the Company may recommend to
the Executive Committee of the Board, at any time prior to
the final determination of awards, changes to the performance
measures, targets, and payout ranges used for incentive
purposes. If, in the judgment of the Executive Committee of
the Board, such change(s) is/are desirable in the interests
of equitable treatment of the participants and the Company as
a result of extraordinary or non-recurring events, changes in
applicable accounting rules or principles, changes in the
Company's methods of accounting, changes in applicable law,
changes due to consolidation, acquisitions, or reorganiza-
tion, the Executive Committee of the Board shall authorize
and approve such change(s) for immediate incorporation into
the Plan. Further, should actual performance on any one or
all of the financial measure(s) be less than or greater than
target by twenty-five percent (25%) or more, the award
actually earned under that measure(s) will be at the sole
discretion of the Chief Executive Officer subject to approval
by the Executive Committee of the Board.
X. Partial Awards
A participant shall be entitled to payment of a partial
Financial Award and a partial Personal Objectives Award,
computed in accordance with Sections IV and V, and based on
Base Salary in a Fiscal Year, if prior to the end of such
Fiscal Year, a participant:
- Dies,
- Retires (is eligible to immediately receive retirement
benefits under a Company sponsored retirement plan),
- Becomes permanently disabled,
- Transfers to a position with a salary grade not eligible
for participation in the Plan,
- Enters military service,
- Takes an approved leave of absence,
- Is appointed or elected to public office,
- Is terminated due to position elimination,
provided that the participant was an active employee for a
minimum of 30 consecutive calendar days during such Fiscal
Year. Such partial awards shall be paid when payments of
non-deferred awards for such Fiscal Year are made.
Participants hired during the course of a Fiscal Year and who
are employed through the end of such Fiscal Year shall be
eligible for an award based on their Base Salary during such
Fiscal Year, provided that such employees begin active
service prior to December 1 of such Fiscal Year.
XI. Forfeiture of Bonus
Except as provided in Section X, no participant who ceases to
be an employee of the Company prior to the end of a Fiscal
Year shall be entitled to any amounts under this Plan for
such Fiscal Year unless the Executive Committee of the Board
decides otherwise.
Participants who cease to be an employee of the Company
between the end of a Fiscal Year and the payment date of
awards for such Fiscal Year shall be entitled to awards
earned during such Fiscal Year.
XII. Administration
This Plan shall be administered by the Chief Executive
Officer of the Company, subject to the control and
supervision of the Executive Committee of the Board. The
decision of the Executive Committee of the Board as to the
facts in any case arising hereunder, and the meaning and
intent of any provision hereof, or its application, shall be
final and conclusive.
XIII. No Employment Contract; Future Plans
Participation in this Plan shall not confer upon any
participant any right to continue in the employ of the
Company nor interfere in any way with the right of the
Company to terminate any participant's employment at any
time. The company is under no obligation to continue the
Plan in future Fiscal Years.
XIV. Amendment or Termination
The Company may at any time, or from time to time, (a) amend,
alter or modify the provisions of this Plan, (b) terminate
this Plan, or (c) terminate the participation of an employee
or group of employees in this Plan; provided, however, that
in the event of the termination of this Plan or a termination
of participation, the Company shall provide the partial
awards to the affected participant(s) for the portion of the
Fiscal Year during which such employee(s) were participants
in this Plan, in a manner in which the Company, in its sole
judgment, determines to be equitable to such participants and
the Company.
XV. General Provisions
(a) No right under the Plan shall be assignable, either
voluntarily or involuntarily by way of encumbrance, pledge,
attachment, level or charge of any nature (except as may be
required by state or federal law).
(b) Nothing in the Plan shall require the Company to
segregate or set aside any funds or other property for the
purpose of paying any portion of an award. No participant,
beneficiary or other person shall have any right, title or
interest in any amount awarded under the Plan prior to the
close of the Fiscal Year, or in any property of the Company
or its subsidiaries.
/s/ J. S. Corcoran
J.S. Corcoran,
Executive Committee
of the Board
/s/ F.Edward Gustafson
12/28/94 F.Edward Gustafson,
Final Approval Date Executive Committee
of the Board
/s/ John E. Kelly
John E. Kelly, President and
Chief Executive Officer
Exhibit (21)
SUBSIDIARIES OF THE ISSUER
Subsidiary Jurisdiction of Incorporation
Pak Mail Crating & Freight Delaware
Service, Inc.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> Nov-30-1995
<PERIOD-END> Aug-31-1995
<CASH> 13,802
<SECURITIES> 0
<RECEIVABLES> 422,123
<ALLOWANCES> 154,873
<INVENTORY> 38,460
<CURRENT-ASSETS> 362,857
<PP&E> 368,656
<DEPRECIATION> 307,621
<TOTAL-ASSETS> 1,243,889
<CURRENT-LIABILITIES> 401,958
<BONDS> 0
<COMMON> 2,989,482
0
2,216,668
<OTHER-SE> (1,861,678)
<TOTAL-LIABILITY-AND-EQUITY> 1,243,889
<SALES> 728,188
<TOTAL-REVENUES> 2,891,220
<CGS> 628,967
<TOTAL-COSTS> 1,228,489
<OTHER-EXPENSES> 1,587,085
<LOSS-PROVISION> 37,784
<INTEREST-EXPENSE> 6,200
<INCOME-PRETAX> (2,963)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,963)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,963)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
