<PAGE>
Filed Pursuant to rule 424B(4)
PROSPECTUS SUPPLEMENT
(To Prospectus Dated November 13, 1997)
- -------------------------------------------------------------------------------
$150,000,000
[LOGO OF MAIL-WELL, INC. APPEARS HERE]
MAIL-WELL, INC.
5% Convertible Subordinated Notes Due 2002
- -------------------------------------------------------------------------------
The 5% Convertible Subordinated Notes due 2002 (the "Notes") of Mail-Well,
Inc. (the "Company") are convertible at the option of the holder at any time
after 60 days following the date of original issuance thereof and prior to
maturity, unless previously redeemed or repurchased, into shares of the
Company's common stock, par value $.01 per share (the "Common Stock"), at a
conversion price of $38.00 per share (equivalent to a conversion rate of
26.3158 shares per $1,000 principal amount of Notes), subject to certain
adjustments. The Company's Common Stock is listed on the New York Stock
Exchange (the "NYSE") under the symbol "MWL." On November 13, 1997 the last
reported sales price of the Company's Common Stock on the NYSE was $30.375 per
share. The Notes have been approved for listing on the NYSE under the symbol
"MWL 02", subject to official notice of issuance.
The Notes will bear interest at the rate of 5% per annum from November 19,
1997, payable in arrears on May 1 and November 1 of each year, commencing May
1, 1998. The Notes are redeemable at the option of the Company, in whole or in
part, at any time on or after November 1, 2000 at the redemption prices set
forth herein together with accrued and unpaid interest. The Notes do not
provide for any sinking fund. Upon the occurrence of a Designated Event (as
defined herein), each holder of the Notes may require the Company to
repurchase all or a portion of such holder's Notes at 101% of the principal
amount thereof, together with accrued and unpaid interest, if any, to the date
of repurchase. See "Description of Notes."
The Notes will constitute unsecured subordinated obligations of the Company
and will rank pari passu in right of payment to the Company's other
subordinated indebtedness, if any. The Notes and the Company's obligations
with respect thereto (including the Company's obligation to repurchase Notes
upon the occurrence of a Designated Event) will be subordinated in right of
payment to all Senior Debt (as defined herein) of the Company and effectively
subordinated to all future and outstanding indebtedness of the Company's
subsidiaries. See "Description of Notes--Subordination of Notes." At September
30, 1997, on a pro forma basis giving effect to the offering of Notes being
made hereby (the "Offering") and the repayment of the Credit Facilities (as
defined herein), the Company had no outstanding Senior Debt and the Company's
subsidiaries had approximately $105 million of outstanding Indebtedness (as
defined herein) and other liabilities. See "Capitilization." The Indenture (as
defined herein) does not prohibit or limit the incurrance of additional Senior
Debt or additional Indebtedness of the Company or its subsidiaries. See "Risk
Factors" herein and in the accompanying Prospectus.
SEE "RISK FACTORS" ON PAGES S-7 TO S-8 HEREIN AND "RISK FACTORS" ON PAGES 4 TO
8 IN THE ACCOMPANYING PROSPECTUS FOR A DISCUSSION OF CERTAIN MATERIAL FACTORS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE NOTES
OFFERED HEREBY.
- -------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR
ACCOMPANYING PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public(1) Commissions(2) Company(3)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note.............................. 100% 3% 97%
- --------------------------------------------------------------------------------
Total(4).............................. $150,000,000 $4,500,000 $145,500,000
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Plus accrued interest, if any, from November 19, 1997.
(2) The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of
1933, as amended. See "Underwriting."
(3) Before deducting offering expenses payable by the Company estimated to be
$300,000.
(4) The Company has granted the several Underwriters a 30-day over-allotment
option to purchase up to an additional $22,500,000 aggregate principal
amount of Notes on the same terms and conditions as set forth above. If
all such additional Notes are purchased by the Underwriters, the total
Price to Public will be $172,500,000, the total Underwriting Discounts and
Commissions will be $5,175,000, and the total Proceeds to Company will be
$167,325,000. See "Underwriting."
- -------------------------------------------------------------------------------
The Notes are offered by the several Underwriters subject to delivery by the
Company and acceptance by the Underwriters, to prior sale and to withdrawal,
cancellation or modification of the offer without notice. Delivery of the
Notes to the Underwriters is expected to be made at the office of Prudential
Securities Incorporated or in book entry form through the facilities of the
Depository Trust Company, on or about November 19, 1997 against payment
therefor in immediately available funds.
PRUDENTIAL SECURITIES INCORPORATED
BEAR, STEARNS & CO. INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
HANIFEN, IMHOFF INC.
November 13, 1997
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES OR THE
COMMON STOCK, INCLUDING PURCHASES OF THE NOTES OR THE COMMON STOCK TO
STABILIZE THE MARKET PRICES THEREOF, PURCHASES OF THE NOTES OR THE COMMON
STOCK TO COVER SOME OR ALL OF A SHORT POSITION IN THE NOTES MAINTAINED BY THE
UNDERWRITERS, AND THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING."
S-2
<PAGE>
PROSPECTUS SUPPLEMENT SUMMARY
The following summary is qualified by, and should be read in conjunction
with, the more detailed information and consolidated financial statements,
including the notes thereto, appearing elsewhere in this Prospectus Supplement,
in the accompanying Prospectus and in the documents incorporated by reference
herein. Except as otherwise indicated, the information contained in this
Prospectus Supplement assumes that the underwriters over-allotment option will
not be exercised. As used in this Prospectus Supplement, the "Company" refers
to Mail-Well, Inc., a Colorado corporation, and its subsidiaries as well as to
the business operations of their predecessors. Investors should consider
carefully the information set forth under "Risk Factors" included herein and
under "Risk Factors" in the accompanying Prospectus.
THE COMPANY
Mail-Well, Inc. (the "Company") is a leading consolidator in the highly
fragmented envelope and high-impact color printing industries. From December 1,
1994 through September 30, 1997, the Company completed ten acquisitions in the
envelope and commercial printing industries, ranging in size from $6.1 million
to $97.4 million. As a result of its consolidation strategy, the Company has
become the largest printer and manufacturer of envelopes in the United States
and Canada, competing primarily in the higher-margin consumer direct market
segment of the envelope industry in which envelopes are designed and
manufactured to customer specifications, as well as the leading high-impact
color printer in the United States.
Since its formation in 1994, the Company has achieved significant growth in
both revenues and net income through its acquisition strategy, internal growth
and the use of operating leverage. As a result of these strategies, revenue and
net income increased to $778.5 million and $16.9 million, respectively, for the
Company in 1996 from $262.3 million and $1.4 million, respectively, for the
Company and its predecessors in 1994. For the six months ended June 30, 1997,
the Company's revenue and net income grew to $419.5 million and $12.6 million,
respectively, from $378.8 million and $6.4 million, respectively, during the
same period in 1996.
The Company believes that there continue to be significant consolidation
opportunities in the envelope and high-impact color printing industries. There
are approximately 215 independent envelope companies in the United States and
Canada, generating in excess of $3.0 billion in annual revenues. The Company
estimates that there are approximately 500 commercial printing companies in the
United States competing in the high-impact color segment of the printing
industry, generating approximately $3.5 billion in annual revenues in that
segment.
As of September 30, 1997, the Company and its subsidiaries operated 53
envelope plants and printing facilities throughout the United States and Canada
serving over 40,000 customers. The Company's envelope products include standard
size envelopes as well as envelopes with features customized for mass mailing
markets. The Company also produces medical folders, overnight mailers,
photofinishing envelopes, airline and car rental jackets, tags and interoffice
envelopes. The Company's high-impact printed products are designed to elicit
the maximum response from the reader and include advertising literature, high-
end catalogs and brochures, calendars and annual reports. The Company is
recognized as an innovative provider of quality printed products to leading
companies throughout the United States.
S-3
<PAGE>
BUSINESS STRATEGY
The Company's objective is to continue to increase its profits through
acquisitions and an operating strategy that enhances internal growth and
achieves cost efficiencies. The key elements of the Company's strategy include:
Strategic Acquisitions. The Company believes that the envelope and high-
impact color printing industries are highly fragmented and present significant
opportunities for consolidation. The Company's growth strategy includes the
acquisition of established and profitable envelope and high-impact color
printing businesses in markets with attractive growth opportunities. The
Company seeks acquisition targets with strong management infrastructures and
opportunities to increase operating efficiencies as well as to expand the
Company's customer base, presence in geographic areas, and product lines. The
Company's management team has extensive experience in identifying attractive
acquisition targets and integrating acquired businesses into its operations.
Internal Sales Growth. A key component of the Company's strategy is to
accelerate internal sales growth for both its envelope and high-impact color
printing segments. The key elements of this internal growth strategy include
the expansion of the products and services sold to existing customers and the
addition of new customers. The Company believes that it has the ability to
combine the responsiveness of a local facility with the full service advantages
of a large national company, and intends to increase growth in each of its
regions by adding complementary products and services to its operations. For
example, most of the Company's envelope manufacturing facilities produce only a
portion of the envelope products available from the Company as a whole. By
targeting markets in which the Company believes there is demand for additional
product lines, the Company believes it may be able to achieve significant
internal growth.
National Sales and Marketing Program. The Company has begun to establish a
sales and marketing program targeting national accounts as a means to expand
its envelope and high-impact printing business. The Company believes that this
program will allow it to both utilize its current network of strategically
located plants and sales offices to attract new customers that require
production from multiple locations, as well as to offer existing customers
greater flexibility in meeting their needs due to more available capacity and
equipment capabilities.
Operating Margins. The Company has realized and believes that it will
continue to realize cost savings as a result of volume related purchases of
paper, ink and other raw materials. The Company has also begun to achieve cost
savings through the consolidation of insurance administration, employee health
benefits, financial management and other administrative functions. The Company
also believes that its purchasing power will reduce the risk of constraints on
paper allocation from suppliers during periods of tight supply. The Company
believes that by continuing to centralize certain administrative and support
functions, the management of its operating subsidiaries and businesses acquired
in the future will be able to focus on pursuing new customers and business
opportunities and increasing capacity utilization.
Operating Efficiencies. The Company believes that there may be opportunities
to eliminate redundant facilities and equipment by consolidation or through
coordination among its current operations as well as operations to be acquired
in the future. The Company periodically reviews its operations at the local and
regional operating levels (as well as examining other industry practices) in
order to identify certain "best practices" that can be standardized and
implemented throughout its operations.
S-4
<PAGE>
ACQUISITIONS
The Company was formed in 1994 through the acquisition of the Mail-Well
Envelope division of the Georgia-Pacific Corporation ("GP Envelope"), and the
acquisition of the Pavey Envelope and Tag Corporation ("Pavey"). Since then,
the Company has built its business through a series of strategic acquisitions.
The following table sets forth certain information with respect to such
acquisitions:
<TABLE>
<CAPTION>
DATE OF GEOGRAPHIC ANNUAL REVENUES(1)
COMPANY ACQUISITION LOCATION PRODUCTS (IN MILLIONS)
------- -------------- ------------------- ----------------- ------------------
<S> <C> <C> <C> <C>
American Envelope....... December 1994 National Envelopes $180
Supremex................ July 1995 Canada Envelopes 90
Graphic Arts Center..... August 1995 Portland High-Impact Color 140
Printing
Quality Park Products... April 1996 Atlanta, St. George Envelopes 90
(UT), Beresford (SD)
Pac National Group
Products............... November 1996 Ontario, Canada Envelopes 44
Shepard Poorman High-Impact Color
Communications......... December 1996 Indianapolis Printing 50
Griffin Envelope........ June 1997 Seattle Envelopes 12
The Allied Printers..... July 1997 Seattle High-Impact Color 17
Printing
Murray Envelope......... July 1997 Hattiesburg (MS) Envelopes 48
National Color September 1997 Atlanta High-Impact Color 23
Graphics............... Printing
</TABLE>
- --------
(1) Represents the approximate revenues for the twelve months preceding the
date of acquisition.
RECENT FINANCIAL RESULTS
The Company has recently announced its results of operations for the quarter
and the nine months ended September 30, 1997. For the quarter ended September
30, 1997, sales increased 16.5% to $233.5 million from $200.5 million in the
same period in 1996. Third quarter 1997 net income was $7.5 million, an
increase of 49.4% over the $5.0 million in 1996. Third quarter earnings per
share increased to $0.40 per share in 1997 compared to $0.28 per share in 1996.
For the nine months ended September 30, 1997, sales increased 12.7% to $653.0
million from $579.3 in the same period in 1996. For the nine months ended
September 30, 1997, the Company reported net income of $20.1 million, a 76.3%
increase over the $11.4 million in net income for the same period a year ago.
Earnings per share for the nine months ended September 30, 1997 increased 68.8%
to $1.08 per share from $0.64 per share for the same period in 1996.
RISK FACTORS
Investors should consider the material risk factors involved in connection
with an investment in the Notes and the impact to investors from various events
that could adversely affect the Company's business. See "Risk Factors" included
herein as well as "Risk Factors" in the accompanying Prospectus.
S-5
<PAGE>
THE OFFERING
Securities Offered
Hereby................... $150,000,000 aggregate principal amount 5%
Convertible Subordinated Notes due 2002 (the
"Notes") ($172,500,000 aggregate principal amount
if the Underwriters' over-allotment option is
exercised in full) See "Description of Notes."
Interest Rate............. 5% per annum on the principal amount, payable
semiannually in arrears in cash on May 1 and
November 1 of each year, commencing May 1, 1998.
Conversion Rights......... Each Note will be convertible, at the option of the
holder, at any time after 60 days following the
date of original issuance thereof through maturity,
unless previously redeemed or otherwise purchased
by the Company, into Common Stock at the conversion
rate of 26.3158 shares per $1,000 principal amount
of the Notes (the "Conversion Rate"). The
Conversion Rate will be subject to adjustment upon
the occurrence of certain events affecting the
Common Stock. See "Description of Notes--Conversion
of Notes."
Subordination............. The Notes will be subordinated to all future Senior
Debt (as defined herein) and pari passu with
Indebtedness (as defined herein) of the Company
that is not Senior Debt. The Notes will also be
effectively subordinated to all existing and future
Indebtedness and liabilities of subsidiaries of the
Company. At September 30, 1997, on a pro forma
basis giving effect to the Offering and the
repayment of the Credit Facilities (as defined
herein), the Company had no outstanding Senior Debt
and the Company's subsidiaries had approximately
$105 million of outstanding Indebtedness and other
liabilities. The Indenture (as defined herein) does
not prohibit or limit the incurrence of additional
Senior Debt or additional Indebtedness of the
subsidiaries. See "Risk Factors" herein and in the
accompanying Prospectus.
Redemption at the Option
of the Company........... The Notes are not redeemable by the Company prior
to November 1, 2000. Subject to the foregoing, the
Notes will be redeemable on at least 30 days'
notice at the option of the Company, in whole or in
part, at any time, at a Redemption Price as set
forth herein, together with accrued and unpaid
interest to the date of the redemption. See
"Description of Notes--Optional Redemption."
Repurchase at the Option
of the Holders........... Upon the occurrence of any Change of Control (as
defined herein) or a Termination of Trading (as
defined herein) in the Company occurring prior to
the maturity of the Notes, each holder shall have
the right, at such holder's option, to require the
Company to purchase all or any part (provided that
the principal amount is $1,000 or an integral
multiple thereof) of such holder's Notes at a
Redemption Price equal to 101% of the principal
amount thereof, together with accrued and unpaid
interest up to the payment date (as defined
herein). See "Description of Notes--Repurchase at
the Option of Holders."
Use of Proceeds........... The net proceeds from the issuance of the Notes
will be used to repay a portion of the outstanding
Indebtedness of the Company's subsidiaries. See
"Use of Proceeds."
Listing................... The Notes have been approved for listing on the
NYSE under the symbol "MWL 02", subject to official
notice of issuance.
S-6
<PAGE>
RISK FACTORS
An investment in the Notes offered hereby involves a high degree of risk. In
addition to the information set forth under "Risk Factors" in the accompanying
Prospectus, prospective investors should carefully consider the following
additional factors in connection with an investment in the Notes offered
hereby.
HOLDING COMPANY STRUCTURE; INDEBTEDNESS OF SUBSIDIARIES. The only asset of
the Company is the capital stock of Mail-Well I Corporation ("M-W
Corporation"). Because all of the operations of the Company are conducted
through its subsidiaries, the Company's cash flow and consequently its ability
to service debt, including the payment of principal and interest on the Notes,
is dependent upon the cash flow of its subsidiaries and the transfer of funds
by its subsidiaries to the Company in the form of loans, dividends or
otherwise. The subsidiaries are distinct legal entities and have no obligation
to pay any amounts due pursuant to the various obligations or Indebtedness of
the Company or to make any funds available therefor, whether in the form of
loans, dividends or otherwise.
In addition, the Company's subsidiaries are parties to certain credit
facilities with aggregate availability of $225 million (the "Credit
Facilities") which mature in 2003 and one of the Company's subsidiaries has
issued $85 million in subordinated notes (the "Subsidiary Notes") which are
guaranteed by the Company and mature in 2004. The Credit Facilities contain
provisions significantly restricting the ability of the Company to make
restricted payments (including the payment of dividends and other
distributions to the Company) and currently permit such restricted payments
only for purposes of (i) making principal and interest payments on the
Subsidiary Notes, (ii) covering the Company's administrative and tax expenses
and (iii) making payments relating to the Company's employee stock ownership
plan. In addition, the Credit Facilities permit the payment of up to 50% of
Excess Cash Flow (as defined therein) by the subsidiaries to the Company up to
a maximum amount of $12 million annually, with the balance going to mandatory
prepayment provisions. It is a condition to the closing of this Offering that
the Company repay in full amounts outstanding under and retire the Credit
Facilities. The Company intends to utilize a temporary bridge facility, in
addition to the net proceeds of the Offering, in order to repay in full the
Credit Facilities. In addition, the Company expects to have in place a
commitment for a permanent replacement credit facility of approximately $250
million prior to expiration of the bridge facility. The permanent facility is
not expected to have an aggregate restricted payment limitation similar to
that contained in the existing Credit Facilities. While the Company expects
the permanent facility to contain more favorable terms than its current
indebtedness, such facility is expected to contain certain restrictive
covenants which could negatively impact its ability to meet its obligations
under the Notes in the event of defaults under such facility.
In addition to the restricted payment provisions contained in the Credit
Facilities, pursuant to the indenture governing the Subsidiary Notes,
restricted payments (including the payment of dividends and other
distributions to the Company) are prohibited unless, after giving effect to
such payment (i) no default has occurred, (ii) the subsidiary would be
permitted to incur $1.00 of additional indebtedness under the applicable
indenture, (iii) the aggregate principal amount of all restricted payments
since the date of issuance of such notes on February 24, 1994 does not exceed
either 50% of Consolidated Net Income (as defined therein), the proceeds of
issuances of equity of the subsidiary or the aggregate amount of capital
contributions from the Company. The provisions governing restricted payments
contained in each of the Credit Facilities and the indenture governing the
Subsidiary Notes could significantly adversely effect the Company's ability to
make principal and interest payments with respect to the Notes.
In addition to limitations on restricted payments, the Credit Facilities and
the indenture governing the Subsidiary Notes contain, and any bridge or
permanent replacement credit facility is expected to contain, restrictive
covenants that, among other things, limit the ability of the subsidiaries to
incur additional indebtedness, prepay subordinated debt, transfer assets, pay
dividends or repurchase equity. In addition, these facilities require the
subsidiaries to satisfy certain financial covenants and tests and limit
capital expenditures to specified limits. The violation of any of these
restrictive provisions would cause an event of default under the respective
facilities, effectively prohibiting the ability of the subsidiaries to make
dividends or advances to the Company.
S-7
<PAGE>
SUBORDINATION. The Notes will be unsecured and subordinated in right of
payment in full to all future Senior Debt (as defined herein) of the Company.
As a result of such subordination, in the event of bankruptcy, liquidation or
reorganization of the Company or upon acceleration of the Notes due to an
Event of Default (as defined in the Indenture), the assets of the Company
would be available to pay obligations on the Notes only after all Senior Debt
has been paid in full, and there might not be sufficient assets remaining to
pay amounts due on any or all of the Notes then outstanding. In addition, the
Notes will be effectively subordinated to claims of creditors (including the
lenders under the Credit Facilities and the holders of the Subsidiary Notes)
of the Company's subsidiaries, including trade creditors, secured creditors,
taxing authorities, creditors holding guarantees, and tort claimants. In the
event of a liquidation, reorganization, or similar proceeding relating to a
subsidiary, these persons generally would have priority as to the assets of
such subsidiary over the claims and equity interest of the Company and,
thereby indirectly, holders of the Company's indebtedness, including the
Notes. The Indenture does not prohibit or limit the incurrence of Senior Debt
or the incurrence of other Indebtedness and other liabilities by the Company
or its subsidiaries, and the incurrence of additional Indebtedness and other
liabilities by the Company or its subsidiaries could adversely affect the
Company's ability to pay its obligations on the Notes. At September 30, 1997,
on a pro forma basis giving effect to the Offering and the repayment of the
Credit Facilities, the Company had no outstanding Senior Debt and the
Company's subsidiaries had outstanding indebtedness and other liabilities of
approximately $105 million.
LIMITATIONS ON REDEMPTION OF NOTES. Upon the occurrence of a Designated
Event (as defined herein), each holder of the Notes will have certain rights,
at the holder's option, to require the Company to redeem all or a portion of
such holder's Notes. If a Designated Event were to occur, there can be no
assurance that the Company would have sufficient funds to pay the Redemption
Price of all Notes tendered. The restricted payment provisions contained in
the Credit Facilities significantly restrict the Company's ability to redeem
the Notes and any future credit agreements of the Company or its subsidiaries
may contain similar provisions. In the event of the occurrence of a Designated
Event at a time when the Company is prohibited from purchasing or redeeming
the Notes, the Company could seek the consent of its lenders to the purchase
of the Notes or could attempt to refinance the borrowings that contain such
prohibition. If the Company does not obtain such a consent or repay such
borrowings, the Company would remain prohibited from purchasing or redeeming
Notes. In such case, the Company's failure to redeem tendered Notes would
constitute an Event of Default under the Indenture, which might, in turn,
constitute a default under the terms of agreements relating to other
Indebtedness that the Company may enter into from time to time. In such
circumstances, the subordination provisions in the Indenture would likely
restrict payments to the holders of the Notes.
ABSENCE OF PRIOR PUBLIC MARKET FOR THE NOTES. Prior to the Offering made
hereby, there has been no trading market for the Notes. Although the
Underwriters have advised the Company that they currently intend to make a
market in the Notes, they are not obligated to do so and may discontinue such
market making at any time without notice. Such market making activity will
also be subject to the limits imposed by the Securities Act of 1933, as
amended (the "Securities Act"), and the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). In addition, the Notes have been approved for
listing on the NYSE under the symbol "MWL 02", subject to official notice of
issuance. There can be no assurance, however, that any market for the Notes
will develop, either as a result of such market making or on the NYSE, or if
one does develop that it will be sustained. If an active market for the Notes
fails to develop or be sustained, the trading price of such Notes could be
materially adversely affected.
S-8
<PAGE>
USE OF PROCEEDS
The Company intends to use the net proceeds estimated to be $145,200,000
($167,025,000 if the Underwriters' over-allotment option is exercised in full)
after deducting underwriting discounts and commissions and estimated offering
expenses from the sale of the Notes offered hereby to repay amounts
outstanding under the Credit Facilities. The Credit Facilities mature in 2003
and carry an interest rate of LIBOR plus 175 basis points (7.41% at September
30, 1997). Pending any of the foregoing applications, the net proceeds may be
invested temporarily in short-term, investment-grade, interest bearing
securities or guaranteed obligations of the United States government. See
"Capitalization."
PRICE RANGE OF COMMON STOCK
The Common Stock has been listed on the NYSE since December 1996 under the
symbol "MWL". Prior to that time, the Common Stock was included in the Nasdaq
Stock Market's National Market (that "Nasdaq National Market") under the
symbol "MLWL". The following table sets forth, for the periods indicated, the
range of high and low sales prices per share of the Common Stock as reported
by the NYSE or the Nasdaq National Market, respectively.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
1995
----
<S> <C> <C>
Fourth Quarter.................................................. $ 9.05 $ 7.12
<CAPTION>
1996
----
<S> <C> <C>
First Quarter................................................... $ 8.50 $ 5.44
Second Quarter.................................................. 6.53 5.19
Third Quarter................................................... 6.95 5.53
Fourth Quarter.................................................. 11.17 7.00
<CAPTION>
1997
----
<S> <C> <C>
First Quarter................................................... $14.50 $10.50
Second Quarter.................................................. 29.00 13.17
Third Quarter................................................... 34.50 25.38
Fourth Quarter (to November 13, 1997)........................... 38.75 27.38
</TABLE>
In June 1997, the Common Stock was split 3-for-2, and all prices reflect
such split. As of September 30, 1997, there were approximately 377
stockholders of record. On November 13, 1997, the last reported sales price of
the Common Stock on the NYSE was $30.375 per share.
DIVIDEND POLICY
The Company has not paid or declared a dividend on Common Stock since its
incorporation. The Company does not anticipate declaring or paying any
dividends on Common Stock in the foreseeable future because it intends to
retain earnings to finance the expansion of its business, to repay
indebtedness and for general corporate purposes. Any declaration and payment
of future dividends will be at the discretion of the Board of Directors and
will depend upon, among other things, the Company's earnings, financial
condition, capital requirements, level of indebtedness, contractual
restrictions with respect to payments of dividends and other relevant factors.
Certain of the Company's indebtedness limits the amount of dividends the
Company could pay before causing a default thereunder.
S-9
<PAGE>
CAPITALIZATION
The following table sets forth the historical capitalization of the Company
as of September 30, 1997 and as adjusted to reflect the application of the
estimated net proceeds from the Offering. This presentation should be read in
conjunction with the financial statements of the Company and related notes
incorporated by reference herein.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
----------------------
HISTORICAL AS ADJUSTED
---------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Current liabilities:
Current portion of long-term debt and capital
leases.......................................... $ 16,938 $ 334(1)
Short-term bank financing........................ -- 11,789(1)
Long-term liabilities:
Capital Leases................................... 2,762 2,762
Bank borrowings.................................. 145,185 -- (1)
Senior Subordinated Notes........................ 85,000 85,000
Convertible Notes................................ -- 150,000
Other long-term debt............................. 5,472 5,472
-------- --------
Total long-term liabilities.................... 238,419 243,234
Minority interest.................................. 3,500 3,500
Stockholders' equity:
Preferred stock, $0.01 par value, 25,000 shares
authorized, none issued and outstanding......... -- --
Common stock, $0.01 par value, 30,000,000 shares
authorized; 18,834,732 issued and outstanding... 188 188
Paid-in capital.................................. 99,226 99,226
Retained earnings................................ 47,728 42,323(2)
Unearned ESOP compensation....................... (3,307) (3,307)
Cumulative foreign currency translation
adjustment...................................... (313) (313)
Pension liability adjustment..................... (110) (110)
-------- --------
Total stockholders' equity..................... 143,412 138,007
-------- --------
Total capitalization............................... $402,269 $396,864
======== ========
</TABLE>
- --------
(1) Reflects the application of the estimated net proceeds of the Offering
made hereby and amounts drawn under a bridge facility. It is a condition
to the closing of this Offering that the Credit Facilities be repaid in
full. In addition, the Company is in the process of obtaining a permanent
replacement credit facility which it expects to have in place following
consummation of the Offering. See "Risk Factors."
(2) Reflects effect of an extraordinary charge for the write-off of
$5,405,000, net of income taxes, in deferred financing costs upon
repayment of outstanding debt.
S-10
<PAGE>
SELECTED FINANCIAL DATA
The summary of historical financial data presented below is derived from the
historical audited financial statements of the Company and its predecessors,
GP Envelope and Pavey, except for the data presented below for the interim
periods as of June 30, 1997 and 1996, and for the periods then ended, and as
of December 31, 1992 and for the year then ended, for GP Envelope which is
derived from the unaudited financial statements which, in the opinion of
management, reflect all adjustments, consisting of only normal, recurring
adjustments, necessary for a fair presentation of such information. The
historical balance sheet data as of December 31, 1994 include GP Envelope and
Pavey which were acquired on February 24, 1994 and American Envelope which was
acquired on December 19, 1994. The operations of GP Envelope, Pavey, American
Envelope, Supremex, Graphic Arts Center, Quality Park Products, Pac National
Group Products and Shepard Poorman Communications have been included in the
historical income statement data of the Company from their respective dates of
acquisition. The data presented below should be read in conjunction with the
Management's Discussion and Analysis of Financial Condition and Results of
Operations, the historical financial statements and the related notes thereto
included in the Forms 10-K and 10-Q (and Amendments on Form 10-K/A and 10-Q/A,
respectively) incorporated herein by reference.
<TABLE>
<CAPTION>
PREDECESSOR COMPANIES(1)
--------------------------
SIX MONTHS PERIOD FROM PERIOD FROM
ENDED YEAR ENDED FEBRUARY 24, JANUARY 1, YEAR ENDED
JUNE 30, DECEMBER 31, 1994 THROUGH 1994 THROUGH DECEMBER 31,
------------- ------------- DECEMBER 31, FEBRUARY 23, -------------
1997 1996 1996 1995 1994 1994 1993 1992
------ ------ ------ ------ ------------ ------------ ------ ------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales............... $419.5 $378.8 $778.5 $596.8 $225.7 $36.6 $252.0 $262.7
Cost of sales........... 326.6 301.8 611.6 470.8 176.7 32.7 206.0 212.3
Other operating costs... 59.5 50.3 106.0 78.4 30.4 5.9 39.4 38.6
------ ------ ------ ------ ------ ----- ------ ------
Operating income
(loss)................. 33.4 26.7 60.9 47.6 18.6 (2.0) 6.6 11.8
Interest expense -
debt................... 9.1 14.1 26.9 27.0 12.9 0.0 0.3 0.4
Interest expense -
amortization of
deferred financing
costs.................. 1.4 1.4 3.6 2.3 1.0 -- -- --
Other (income) expense.. 1.0 0.0 1.2 0.7 (0.2) -- -- --
Provision (benefit) for
income taxes........... 9.3 4.8 12.3 7.2 2.2 (0.7) 2.5 4.3
------ ------ ------ ------ ------ ----- ------ ------
Income (loss) before
extraordinary item..... 12.6 6.4 16.9 10.4 2.7 (1.3) 3.8 7.1
Extraordinary item...... -- -- -- 2.4(2) -- -- -- --
------ ------ ------ ------ ------ ----- ------ ------
Net income (loss)....... $ 12.6 $ 6.4 $ 16.9 $ 8.0 $ 2.7 $(1.3) $ 3.8 $ 7.1
====== ====== ====== ====== ====== ===== ====== ======
PER SHARE DATA(3):
Income before
extraordinary item..... $ 0.68 $ 0.36 $ 0.95 $ 0.91 $ 0.31
Extraordinary item...... -- -- -- 0.21(2) --
------ ------ ------ ------ ------
Net income.............. $ 0.68 $ 0.36 $ 0.95 $ 0.70 $ 0.31
====== ====== ====== ====== ======
Weighted average shares
outstanding............ 18.4 17.8 17.9 11.4 8.8
====== ====== ====== ====== ======
BALANCE SHEET DATA:
Working capital......... $ 29.1 $ 85.2 $ 22.1 $ 89.8 $ 67.3
Total assets............ 479.6 510.7 470.9 500.4 307.7
Total long term debt,
excluding current
portion................ 200.7 292.2 209.9 295.9 229.4
Total liabilities....... 344.8 401.0 349.7 398.1 283.3
Total stockholders'
equity................. 134.8 109.7 121.2 102.3 23.7
</TABLE>
- --------
(1) Per share and balance sheet data are not presented for these periods as
operations were those of predecessor companies.
(2) Extraordinary item arising from the early extinguishment of debt.
(3) In June 1997, the Common Stock was split 3-for-2 and all share and per
share information has been restated to reflect the split.
S-11
<PAGE>
MANAGEMENT
The names, ages (as of December 31, 1996), positions with the Company and
the business experience over the past five years of the executive officers and
directors of the Company are set forth below. Each director is elected for a
one year term or until his successor is elected.
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
---- --- -----------
<S> <C> <C>
Gerald F. Mahoney....................... 54 Chairman of the Board and Chief
Executive Officer, Director
Paul V. Reilly.......................... 45 Senior Vice President, Finance and
Chief Financial Officer
Roger Wertheimer........................ 38 Vice President, General Counsel and
Secretary
Robert J. Terry......................... 56 President and Chief Operating
Officer--U.S. Envelope Operations,
Director
Frank P. Diassi (1)..................... 64 Director
J. Bruce Duty (1)(2).................... 45 Director
Frank J. Hevrdejs(1).................... 51 Director
Jerome W. Pickholz (2)(3)............... 64 Director
W. Thomas Stephens (3).................. 54 Director
</TABLE>
- --------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
(3) Member of the Nominating Committee.
Gerald F. Mahoney has been a director, Chairman of the Board and Chief
Executive Officer of the Company since February 1994. He was Chairman of the
Board, President and Chief Executive Officer of Pavey Envelope & Tag Corp.,
from January 1991 until it became a subsidiary of the Company in February
1994. From January 1990 to the present, he has also served as President of
Saddle River Capital, an investment banking firm. Mr. Mahoney devotes
substantially all of his time to the Company in his capacity as Chairman and
CEO. From June 1987 to September 1989, Mr. Mahoney served as President of
Transkrit Corp., a business forms manufacturing company.
Paul V. Reilly has been Senior Vice President, Finance and Chief Financial
Officer of the Company since April 1997 and has been with the Company since
June 1995. Mr. Reilly spent 14 years with Polychrome Corporation, a prepress
supplier to the printing industry, where he held a number of positions
including Assistant Corporate Treasurer, Corporate Treasurer, Vice President
and Chief Financial Officer, and General Manager of United States Operations.
During 1994 and 1995, Mr. Reilly worked with Saddle River Capital, an
investment banking firm which purchased and managed small businesses, and more
recently as Vice President with a direct marketer of educational materials.
Mr. Reilly is a Certified Public Accountant.
Roger Wertheimer has been Vice President, General Counsel and Secretary of
the Company since February 1995. Mr. Wertheimer has been engaged in the
practice of law since 1984. He previously served as Corporate Counsel for PACE
Membership Warehouse, Inc., from 1988 to 1994 and practiced as a private legal
practitioner from March 1994 until February 1995, when he joined the Company.
Robert J. Terry has been a director of the Company since February 1994. Mr.
Terry is currently President and Chief Operating Officer of the Company's U.S.
Envelope Operations. He originally joined GP Envelope, the Company's
predecessor, in May 1964. Mr. Terry served as Executive Vice President of the
Mail-Well Envelope Division of Georgia-Pacific from December 1991 to February
1994, and served as Regional Vice President of Butler Paper Company, a
subsidiary of Georgia-Pacific, and as Vice President of Georgia-Pacific's
Mail-Well Envelope Division prior to that time. Mr. Terry served on the Board
of the Envelope Manufacturers Association from 1992 to 1996, and currently
serves on the Board of the Denver Better Business Bureau.
S-12
<PAGE>
Frank P. Diassi has been a director of the Company since February 1994. He
is currently managing general partner of the Unicorn Group, an investment
company. He organized the Unicorn Group in 1982 and has originated investments
in over 39 entrepreneurial companies. His primary area of interest is in
chemical and related industries. Since August 1996, Mr. Diassi has been
Chairman of Sterling Chemicals, Inc., a manufacturer of commodity
petrochemicals and chemicals primarily in the pulp and paper industry. He was
a founding director of Arcadian Corporation, the largest nitrogen fertilizer
company in North America. Mr. Diassi was director and Chairman of the Finance
Committee of Arcadian Corporation from 1989 to 1994. Mr. Diassi serves as a
member of the Compensation Committee of the Board of Directors.
J. Bruce Duty has been a director of the Company since February 1994. Since
July 1993 he has been Senior Vice President of Capital Southwest Corporation,
a venture capital investment firm. From July 1982 to June 1993, he was Vice
President of Capital Southwest Corporation. Mr. Duty serves as a member of
both the Audit and Compensation Committees of the Board of Directors.
Frank J. Hevrdejs has been a director of the Company since its inception in
November 1993. In 1982, Mr. Hevrdejs co-founded The Sterling Group, Inc., a
major management buyout company. Mr. Hevrdejs is a principal and president of
The Sterling Group, Inc. Additionally, he is Chairman of First Sterling
Ventures Corp., an investment company, Endoro Holdings, Inc., a structural and
electrical manufacturing company, and Fibreglass Holdings, Inc., a truck
accessory manufacturer. He is also a board member and a member of the
executive committee of Purina Mills, Inc., an animal feed producer, and a
board member of Eagle U.S.A., an air-freight company. Mr. Hevrdejs serves as
Chairman of the Compensation Committee of the Board of Directors.
Jerome W. Pickholz has been a director of the Company since June 1994. From
1978 to 1994, he was Chief Executive Officer of Ogilvy & Mather Direct
Worldwide, a direct advertising agency. From 1994 to June 1995, he served as
Chairman of the Board of Ogilvy & Mather Direct Worldwide. Since January 1996,
Mr. Pickholz has served as founder and Chairman of Pickholz, Tweedy, Cowan,
L.L.C., a marketing communications company. Mr. Pickholz serves as a member of
the Audit Committee and the Nominating Committee of the Board of Directors.
W. Thomas Stephens has been a director of the Company since March 1996.
Since September 1996, Mr. Stephens has been retired from Johns Manville
Corporation (formerly Schuller Corporation). From 1986 to September 1996, he
served as Chief Executive Officer and President of Johns Manville Corporation,
a building materials and forest products company. Mr. Stephens also served as
Chairman of Johns Manville Corporation from June 1990 to September 1996, and
as Executive Vice President and CFO from 1984 to 1986. Mr. Stephens serves as
director on the boards of Public Service of Colorado, a utility company, and
Stillwater Mining Company, a mining company. Mr. Stephens is a trustee of the
Eagle-Picher Trust. Mr. Stephens serves as Chairman of the Nominating
Committee of the Board of Directors.
S-13
<PAGE>
DESCRIPTION OF NOTES
GENERAL
The Notes will be issued under an indenture, to be dated as of November 19,
1997, between the Company and The Bank of New York, as trustee (the
"Trustee"), as supplemented by an indenture supplement (the "Indenture
Supplement") executed simultaneously therewith. The Indenture, together with
the Indenture Supplement, will be collectively referred to herein as the
"Indenture." A form of the Indenture is incorporated by reference in the
Registration Statement of which this Prospectus Supplement is a part. The
following summaries of certain provisions of the Indenture and Indenture
Supplement do not purport to be complete and are subject to and are qualified
in their entirety by reference to, all of the provisions of the Indenture,
including the definitions therein of certain terms. Capitalized terms used but
not defined herein have the meanings given to them in the Indenture.
The Notes are convertible at the option of the holder into Common Stock of
the Company. See "--Conversion." The Notes are unsecured, will constitute
subordinated obligations of the Company and will rank pari passu in right of
payment to the Company's other subordinated indebtedness, if any. The Notes
and the Company's obligations with respect thereto (including the Company's
obligations to repurchase Notes upon the occurrence of a Designated Event (as
defined below)) will be subordinated in right of payment to all Senior Debt
(as defined in the Indenture) of the Company as well as effectively
subordinated to all existing and future indebtedness of the Company's
subsidiaries. As of September 30, 1997, on a pro forma basis giving effect to
the Offering and the repayment of the Credit Facilities, the Company had no
Senior Debt and the Company's subsidiaries had approximately $105 million of
outstanding indebtedness and other liabilities. The Indenture does not
restrict, however, the amount of Senior Debt or other indebtedness of the
Company or any subsidiary of the Company that may be incurred in the future,
and the Company and its subsidiaries anticipate incurring Senior Debt or other
indebtedness in the future.
PRINCIPAL, MATURITY AND INTEREST
The Notes offered by this Prospectus Supplement will be limited to $150
million aggregate principal amount, plus such additional amount not in excess
of $22,500,000 as may be purchased by the Underwriters upon exercise of the
over-allotment option. See "Underwriting." The Notes will mature on November
1, 2002. The Notes will bear interest at the rate per annum set forth on the
cover page of this Prospectus from November 1, 1997 or from the most recent
interest payment date to which interest has been paid or provided for, payable
semiannually on May 1 and November 1 of each year, commencing May 1, 1998, to
the person in whose name such Note is registered at the close of business on
the April 15 or October 15 preceding such interest payment date. Interest will
be computed on the basis of a 360 day year comprised of twelve 30-day months.
The Notes will be issuable and transferable in fully registered form and
will be issued in denominations of $1,000 and integral multiples thereof.
Principal, premium, if any, and interest on the Notes may, at the option of
the Company, be paid either (i) by check mailed to the address of the person
entitled thereto as it appears in the security register or (ii) by transfer to
an account maintained by the payee entitled thereto as specified in the
security register; provided, however, that payments to The Depository Trust
Company ("DTC") will be made by wire transfer of immediately available funds
to the account of DTC or its nominee.
OPTIONAL REDEMPTION
The Notes may be redeemed at the option of the Company, in whole or in part,
at any time on or after November 1, 2000, on not less than 15, nor more than
60, days' prior notice at the redemption prices (expressed as percentages of
principal amount) set forth below, together with accrued and unpaid interest,
if any, to the date of redemption, if redeemed during the 12-month period
beginning on November 1 of the years indicated below (subject to the right of
holders of record on relevant record dates to receive interest due on an
interest payment date):
S-14
<PAGE>
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
2000........................................................... 102%
2001........................................................... 101%
2002........................................................... 100%
</TABLE>
If less than all of the Notes are to be redeemed, the Trustee shall select
the Notes or portions thereof to be redeemed either in compliance with the
requirements of the principal national securities exchange, if any, on which
the Notes are listed or, if the Notes are not so listed, pro rata or by lot or
by any other method the Trustee deems fair and appropriate.
MANDATORY REDEMPTION
The Company is not required to make mandatory redemption or sinking fund
payments with respect to the Notes.
REPURCHASE AT THE OPTION OF HOLDERS
Upon the occurrence of a Designated Event (as defined below), each holder of
Notes shall have the right to require the Company to repurchase all or any
part (equal to $1,000 or an integral multiple thereof) of such holder's Notes
(the "Designated Event Repurchase") at a purchase price equal to 101% of the
principal amount thereof, together with accrued and unpaid interest thereon to
the Designated Event Payment Date (the "Designated Event Payment"). Within 30
days following any Designated Event, the Company shall mail a notice to each
holder stating: (1) that the Designated Event Repurchase is being made
pursuant to the covenant entitled "Designated Event" and that all Notes
tendered will be accepted for payment; (2) the purchase price and the purchase
date, which shall be no earlier than 45 days nor later than 60 days from the
date such notice is mailed (the "Designated Event Payment Date"); (3) that any
Notes not tendered will continue to accrue interest; (4) that, upon the
payment of the Designated Event Payment, all Notes accepted for payment
pursuant to the Designated Event Repurchase shall cease to accrue interest
after the Designated Event Payment Date; (5) that holders electing to have any
Notes purchased pursuant to a Designated Event Repurchase will be required to
surrender the Notes, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Notes completed, to the Trustee at the address
specified in the notice prior to the close of business on the third Business
Day preceding the Designated Event Payment Date; (6) that holders will be
entitled to withdraw their election if the Trustee receives, not later than
the close of business on the second Business Day preceding the Designated
Event Payment Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the holder, the principal amount of Notes delivered
for purchase, and a statement that such holder is withdrawing his election to
have such Notes purchased; (7) that holders whose Notes are being purchased
only in part will be issued new Notes equal in principal amount to the
unpurchased portion of the Notes surrendered, which unpurchased portion must
be equal to $1,000 in principal amount or an integral multiple thereof; (8)
the last date on which holders' rights to have Notes repurchased may be
exercised; and (9) any other procedures holders must follow in order to have
their Notes repurchased.
At least one Business Day prior to the Designated Event Payment Date, the
Company shall irrevocably deposit with the Trustee or Paying Agent an amount
equal to the principal amount of Notes to be purchased. On the Designated
Event Payment Date, the Company will, to the extent lawful, (1) accept for
purchase Notes or portions thereof tendered pursuant to the Designated Event
Repurchase, (2) deposit with the Trustee the Notes so accepted and (3) deliver
or cause to be delivered to the Trustee an Officers' Certificate stating the
Notes or portions thereof tendered to the Trustee. The Trustee shall promptly
mail to each holder of Notes so accepted payment in an amount equal to the
purchase price for such Notes, and the Trustee shall promptly authenticate and
mail to each holder a new Note equal in principal amount to any unpurchased
portion of the Notes surrendered, if any; provided, that each such new Note
shall be in a principal amount of $1,000 or an integral multiple thereof. The
Company will publicly announce the results of the Designated Event Repurchase
on or as soon as practicable after the Designated Event Payment Date. There
can be no assurance that the Company will have the financial resources
necessary to repurchase the Notes in such circumstances.
S-15
<PAGE>
The foregoing provisions would not necessarily afford holders of the Notes
protection in the event of a takeover, recapitalization, restructuring or
other transaction involving the Company that may adversely affect holders.
The right to require the Company to repurchase Notes as a result of a
Designated Event could have the effect of delaying, deferring or preventing a
Designated Event or other attempts to acquire control of the Company unless
arrangements have been made to enable the Company to repurchase all the Notes
at the Designated Event Payment Date. Consequently, this right may render more
difficult or discourage a merger, consolidation or tender offer (even if such
transaction is supported by the Company's Board of Directors or is favorable
to the stockholders), the assumption of control by a holder of a large block
of the Company's shares and the removal of incumbent management.
The terms of certain of the existing indebtedness of the Company's
subsidiaries prohibit the Company from purchasing any Notes prior to their
stated maturity, and also provide that certain change of control events with
respect to the Company would constitute a default thereunder. In addition,
such indebtedness contains restrictions on the ability of the subsidiaries to
make restricted payments (including dividends and other distributions to the
Company) which could significantly adversely affect the Company's ability to
repurchase the Notes upon the occurrence of a Designated Event. See "Risk
Factors." Any future credit agreements or other agreements relating to
indebtedness (including the permanent replacement facility currently being
negotiated by the Company or any bridge facility) to which the Company or its
subsidiaries becomes a party may contain similar restrictions on the
repurchase of Notes. Moreover, the exercise by the holders of the Notes of
their rights to require the Company to repurchase the Notes could cause a
default under such other indebtedness, even if the Designated Event itself
does not, due to the financial effect of the repurchase on the Company. In the
event a Designated Event occurs at a time when the Company is prohibited from
repurchasing Notes, the Company could seek the consent of its lenders to the
repurchase of Notes or could attempt to refinance the borrowings that contain
such prohibition. If the Company does not obtain such a consent or repay such
borrowings, the Company would remain prohibited from repurchasing Notes. In
such case, the Company's failure to repurchase tendered Notes would constitute
an Event of Default under the Indenture, which may, in turn, constitute a
further default under certain of the Company's existing debt instruments and
may constitute a default under the terms of other indebtedness that the
Company may enter into from time to time. As the payment of the Designated
Event Payment is subordinated to the prior payment of Senior Debt and
effectively subordinated to the prior payment of the indebtedness of the
Company's subsidiaries as described under "--Subordination of Notes" below, in
such circumstances, such subordination would likely prohibit payments to the
holders of Notes.
A "Designated Event" will be deemed to have occurred upon a Change of
Control (as defined below) or a Termination of Trading (as defined below).
A "Change of Control" will be deemed to have occurred when: (i) any "person"
or "group" (as such terms are used in Section 13(d) and 14(d) of the Exchange
Act) is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5
under the Exchange Act) of shares representing more than 50% of the combined
voting power of the then outstanding securities entitled to vote generally in
elections of directors of the Company ("Voting Stock"), (ii) the Company
consolidates with or merges into any other corporation, or any other
corporation merges into the Company, and, in the case of any such transaction,
the outstanding Common Stock of the Company is reclassified into or exchanged
for any other property or security, unless the stockholders of the Company
immediately before such transaction own, directly or indirectly immediately
following such transaction, at least a majority of the combined voting power
of the outstanding voting securities of the corporation resulting from such
transaction in substantially the same proportion as their ownership of the
Voting Stock immediately before such transaction, (iii) the sale, lease,
transfer, conveyance or other disposition (other than by way of merger or
consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Restricted Subsidiaries
taken as a whole to any "person" (as such term is used in Section 13(d)(3) of
the Exchange Act) or (iv) any time the Continuing Directors do not constitute
a majority of the Board of Directors of the Company (or, if applicable, a
successor corporation to the Company); provided, that a Change of Control
shall not be deemed to have occurred if either (i) the last sales price of the
S-16
<PAGE>
Common Stock for any five trading days during the ten trading days immediately
preceding the Change of Control is at least equal to 110% of the Conversion
Price in effect on the date of such Change of Control or (ii) at least 90% of
the consideration (excluding cash payments for fractional shares) in the
transaction or transactions constituting the Change of Control consists of
shares of common stock that are, or upon issuance will be, traded on a United
States national securities exchange or approved for trading on an established
automated over-the-counter trading market in the United States.
"Continuing Directors" means, as of any date of determination, any member of
the Board of Directors of the Company who (i) was a member of such Board of
Directors on the date of the Indenture or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
A "Termination of Trading" will be deemed to have occurred if the Common
Stock (or other common stock into which the Notes are then convertible) is not
listed for trading on a United States national securities exchange or an
established automated over-the-counter trading market in the United States.
The Company will comply with the provisions of Rule 13e-4 and any other
tender offer rules under the Exchange Act which may then be applicable and
will file a Schedule 13E-4 or any other schedule required thereunder in
connection with any offer by the Company to repurchase Notes at the option of
holders upon a Designated Event.
The Company could, in the future, enter into certain transactions, including
certain recapitalization of the Company, that would not constitute a Change of
Control for purposes of the Designated Event repurchase feature of the Notes,
but that would increase the amount of Senior Debt (or other indebtedness)
outstanding at such time. There are no restrictions in the Indenture on the
creation of additional Senior Debt (or any other indebtedness), and under
certain circumstances the incurrence of significant amounts of additional
indebtedness could have an adverse effect on the Company's ability to service
its indebtedness, including the Notes. If a Designated Event were to occur,
there can be no assurance that the Company would have sufficient funds to pay
the Designated Event Payment for all Notes tendered by the holders thereof. A
default by the Company on its obligations to pay the Designated Event Payment
could result in acceleration of the payment of other indebtedness of the
Company at the time outstanding pursuant to cross-default provisions.
CONVERSION
The Notes, or any portion thereof which is an integral multiple of $1,000,
are convertible at any time after 60 days following the date of original
issuance thereof and prior to the close of business on November 1, 2002,
subject to prior redemption at the option of the Company or repurchase at the
option of the holder, into shares of the Company's Common Stock, at the
conversion price set forth on the cover of this Prospectus Supplement, subject
to adjustment as set forth below (the "Conversion Price"). The Company will
not be required to issue fractional shares of Common Stock but will pay a cash
adjustment in lieu thereof. In the case of any Note or portion thereof called
for redemption, conversion rights expire at the close of business on the
business day immediately preceding redemption. In the event any holder
exercises its repurchase right upon a Designated Event, such holder's
conversion right will terminate. See"--Repurchase at the Option of Holders."
Except as described below, no adjustment will be made on conversion of any
Notes for interest accrued thereon or for dividends on any Common Stock
issued.
Accrued interest will not be paid on Notes that are converted. If any Note
is converted between a record date for the payment of interest and the next
succeeding interest payment date, the interest payable on such interest
payment date shall be paid to the holder of such Note on such record date;
however, such Note upon surrender must be accompanied by funds equal to the
interest payable on such interest payment date on the principal amount so
converted (unless such Note shall have been called for redemption, in which
case no such payment shall be required).
S-17
<PAGE>
The Conversion Price is subject to adjustment in certain events, including
(i) the subdivision, combination or reclassification of the outstanding Common
Stock of the Company; (ii) the issuance by the Company of Common Stock as a
dividend or distribution on the Common Stock; (iii) the issuance of rights and
warrants (expiring within 45 days after the record date for the determination
of stockholders entitled to receive such rights and warrants) to all holders
of Common Stock entitling them to purchase shares of Common Stock or
securities convertible into or exchangeable for Common Stock at a price per
share (or having a conversion or exercise price per share) less than the then
current market price (as defined in the Indenture) of the Common Stock (iv)
the distribution of shares of capital stock of the Company (other than Common
Stock), evidences of indebtedness or other assets (excluding dividends in
cash, except as described in clause (v) below) to all holders of Common Stock;
(v) the distribution, by dividend or otherwise, of cash to all holders of
Common Stock in an aggregate amount that, together with the aggregate of any
other distributions of cash that did not trigger a Conversion Price adjustment
to all holders of its Common Stock within the 12 months preceding the date
fixed for determining the stockholders entitled to such distribution and all
Excess Payments in respect of each tender offer or other negotiated
transaction by the Company or any of its Subsidiaries for Common Stock
concluded within the preceding 12 months not triggering a Conversion Price
adjustment, exceeds 5% of the product of the current market price per share
(determined as set forth below) on the date fixed for the determination of
stockholders entitled to receive such distribution times the number of shares
of Common Stock outstanding on such date; (vi) payment of an Excess Payment in
respect of a tender offer or other negotiated transaction by the Company or
any of its Subsidiaries for Common Stock, if the aggregate amount of such
Excess Payment, together with the aggregate amount of cash distributions made
within the preceding 12 months not triggering a Conversion Price adjustment
and all Excess Payments in respect of each tender offer or other negotiated
transaction by the Company or any of its Subsidiaries for Common Stock
concluded within the preceding 12 months not triggering a Conversion Price
adjustment, exceeds 5% of the product of the current market price per share
(determined as set forth below) on the expiration of such tender offer times
the number of shares of Common Stock outstanding on such date; (vii) the
distribution to all holders of Common Stock of rights or warrants to subscribe
for securities (other than those securities referred to in clause (iii)
above); and (viii) the issuance of Common Stock or securities convertible
into, or exchangeable for, Common Stock at a price per share (or having a
conversion or exchange price per share) that is less than the current market
price of the Common Stock (but excluding, among other things, issuances: (a)
pursuant to any bona fide plan for the benefit of employees, directors or
consultants of the Company now or hereafter in effect; (b) to acquire all or
any portion of a business in an arm's-length transaction between the Company
and an unaffiliated third party including, if applicable, issuances upon
exercise of options or warrants assumed in connection with such an
acquisition; (c) in a bona fide public offering pursuant to a firm commitment
underwriting or sales at the market pursuant to a continuous offering stock
program; (d) pursuant to the exercise of warrants, rights (including, without
limitation, earnout rights) or options, or upon the conversion of convertible
securities, which are issued and outstanding on the date hereof, or which may
be issued in the future for fair value and with an exercise price or
conversion price at least equal to the current market price of the Common
Stock at the time of such issuance). In the event of a distribution to
substantially all holders of Common Stock of rights or warrants to subscribe
for securities (other than those securities referred to in clause (iii)
above), the Company may, instead of making any adjustment in the Conversion
Price, make proper provision so that each holder of a Convertible Note who
converts such Convertible Note after the record date for such distribution and
prior to the expiration or redemption of such rights shall be entitled to
receive upon such conversion, in addition to shares of Common Stock, an
appropriate number of such rights. The Company is not required to make any
adjustment in the Conversion Price of less than 1%, but instead such
adjustment will be carried forward and taken into account in the computation
of any subsequent adjustment.
In the Indenture, the "current market price" per share of Common Stock on
any date shall be deemed to be the average of the Daily Market Prices for the
shorter of (i) 30 consecutive business days ending on the last full trading
day on the exchange or market referred to in determining such Daily Market
Prices prior to the time of determination (as defined in the Indenture) or
(ii) the period commencing on the date next succeeding the first public
announcement of the issuance of such rights or warrants or such distribution
through such last full trading day prior to the time of determination.
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"Excess Payment" means the excess of (A) the aggregate of the cash and fair
market value of other consideration paid by the Company or any of its
Subsidiaries with respect to the shares acquired in the tender offer or other
negotiated transaction over (B) the market value of such acquired shares after
giving effect to the completion of the tender offer or other negotiated
transaction.
In case of any merger or consolidation of the Company or the sale or
conveyance by the Company of all or substantially all the assets of the
Company, the holder of each outstanding Note shall have the right to convert
such Note into the kind and amount of shares of stock and other securities and
property (including cash) received in such transaction by a holder of the
number of shares of Common Stock into which such Note was convertible
immediately prior to the effective date of such transaction. The meaning of
the phrase "sale or conveyance by the Company of all or substantially all of
the assets of the Company" will be determined under New York law, which
governs the Indenture. Application of the phrase to a particular sale of
assets will depend on the interpretation given to the phrase by courts
construing New York law at the time, and by the specific facts and
circumstances of such sale. Although there is a developing body of case law
interpreting the phrase "substantially all," there is no precise established
definition of the phrase under applicable law. Accordingly, the applicability
of the foregoing provision as a result of a lease, transfer or conveyance of
less than all of the assets of the Company to another person or group may be
uncertain.
The Company may from time to time reduce the Conversion Price by any amount
for any period of at least 20 days, in which case the Company shall give at
least 15 days' notice of such reduction, if the Board of Directors of the
Company has made a determination that such reduction would be in the best
interests of the Company, which determination shall be conclusive. In
addition, and without limiting the foregoing, the Board of Directors may also
make such reductions in the Conversion Price as it deems advisable to avoid or
diminish any income tax to holders of Common Stock resulting from any dividend
or distribution of stock (or rights to acquire stock) or from any event
treated as such for income tax purposes. See "Certain United States Tax
Considerations."
Certain adjustments (or the failure to make certain adjustments in certain
cases) in the Conversion Price in accordance with the foregoing provisions
(other than to take account of a dividend of the Company's own stock or a
stock split) could be taxable pursuant to Section 305 of the Internal Revenue
Code of 1986, as amended, as a constructive distribution to holders of the
Notes at the time of such adjustments in the Conversion Price.
SUBORDINATION OF NOTES
The payment of the principal of, interest on or any other amounts due on the
Notes will be subordinate in right of payment to all existing and future
Senior Debt. The Indenture does not restrict the amount of Senior Debt or
other indebtedness that may be incurred in the future by the Company or any
subsidiary of the Company. In addition, the Notes will be effectively
subordinated to claims of holders of any preferred stock and claims of
creditors (other than the Company) of the Company's subsidiaries, including
trade creditors, secured creditors, taxing authorities, creditors holding
guarantees, and tort claimants. In the event of a liquidation, reorganization,
or similar proceeding relating to a subsidiary, these persons generally would
have priority as to the assets of such subsidiary over the claims and equity
interest of the Company and, thereby indirectly, holders of the Company's
indebtedness, including the Notes. As of September 30, 1997 and on a pro forma
basis giving effect to the Offering and the repayment of the Credit
Facilities, the Company had no outstanding Senior Indebtedness and the
Company's subsidiaries had outstanding indebtedness and other liabilities of
approximately $105 million.
The only asset of the Company is the capital stock of M-W Corporation.
Because all of the operations of the Company are conducted through its
subsidiaries, the Company's cash flow and consequently its ability to service
debt, including the payment of principal and interest on the Notes, is
dependent upon the cash flow of its subsidiaries and the transfer of funds by
its subsidiaries to the Company in the form of loans, dividends or otherwise.
The subsidiaries are distinct legal entities and have no obligation to pay any
amounts due pursuant to the various obligations or Indebtedness of the Company
or to make any funds available therefor, whether in the form of loans,
dividends or otherwise. In addition, both the terms of the current Credit
Facilities as well as the indenture governing the Subordinated Notes contain
provisions which significantly limit and in certain
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circumstances prohibit the payment of dividends or advances to the Company.
Any bridge facility or permanent replacement credit facility may contain
similar limitations. Finally, violation by the subsidiaries of any of the
restrictive covenants contained in the Credit Facilities or in the indenture
governing the Subsidiary Notes could cause an event of default under the
respective facilities, effectively prohibiting dividends or advances to the
Company. See "Risk Factors".
No payment on account of principal of, redemption of, interest on or any
other amounts due on the Notes, including, without limitation, any payments
with respect to a Designated Event, and no redemption, purchase or other
acquisition of the Notes may be made unless (i) full payment of amounts then
due on all Senior Debt have been made or duly provided for pursuant to the
terms of the instrument governing such Senior Debt, and (ii) at the time for,
or immediately after giving effect to, any such payment, redemption, purchase
or other acquisition, there shall not exist under any Senior Debt or any
agreement pursuant to which any Senior Debt has been issued, any default which
shall not have been cured or waived and which shall have resulted in the full
amount of such Senior Debt being declared due and payable.
Upon any distribution of its assets in connection with any dissolution,
winding-up, liquidation or reorganization of the Company or acceleration of
the principal amount due on the Notes because of an Event of Default, all
Senior Debt must be paid in full before the holders of the Notes are entitled
to any payments whatsoever.
If payment of the Notes is accelerated because of an Event of Default, the
Company shall promptly notify the holders of Senior Debt or the trustee(s) for
such Senior Debt of the acceleration. The Company may not pay the Notes until
five days after such holders or trustee(s) of Senior Debt receive notice of
such acceleration and, thereafter, may pay the Notes only if the subordination
provisions of the Indenture otherwise permit payment at that time.
As a result of these subordination provisions, in the event of the Company's
insolvency, holders of the Notes may recover ratably less than general
creditors of the Company.
MODIFICATION AND WAIVER
Each Indenture provides that, with the consent of the holders of not less
than a majority in aggregate principal amount of the outstanding Notes, the
Company and the Trustee may also execute a supplemental indenture to add
provisions to, or change in any manner or eliminate any provisions of, the
Indenture with respect to such Notes or modify in any manner the rights of the
holders of the Notes and any related coupons under such Indenture; provided
that no such supplemental indenture will, without the consent of the holder of
each such outstanding Note (i) change the stated maturity of the principal of,
or any installment of principal or interest on, the Notes or any premium
payable upon redemption thereof, (ii) reduce the principal amount of, or the
rate of interest on, the Notes; (iii) change the place or currency of payment
of principal or interest, if any, on the Notes; (iv) impair the right to
institute suit for the enforcement of any payment on or with respect to the
Notes; (v) reduce the above-stated percentage of holders of the Notes to
modify or amend such Indenture; (vi) modify the foregoing requirements or
reduce the percentage in principal amount of outstanding Notes necessary to
waive any covenant or past default; (vii) amend or modify any of the
provisions of such Indenture relating to subordination of the Notes in any
manner adverse to the holders of such Notes; (viii) adversely affect the right
of any holder to convert any Note as provided in the Indenture and (ix) modify
the provisions in the Indenture relating to the Company's requirement to
repurchase Notes upon a Designated Event in a manner adverse to the holders.
Holders of not less than a majority in principal amount of the outstanding
Notes of any series may waive certain past Defaults and may waive compliance
by the Company with certain of the restrictive covenants described above with
respect to the Notes.
BOOK-ENTRY; DELIVERY AND FORM
The certificates representing the Notes will be issued in fully registered
form, without coupons. The Notes will be deposited with, or on behalf of, The
Depository Trust Company, New York, New York ("DTC"), and registered in the
name of Cede & Co., as DTC's nominee in the form of a global Note certificate
(the "Global Certificate" ) or will remain in the custody of the Trustee
pursuant to a FAST Balance Certificate Agreement between DTC and the Trustee.
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GLOBAL CERTIFICATES
Upon the issuance of the Global Certificate, DTC or its custodian will
credit, on its internal system, the respective principal amount of Notes of
the individual beneficial interests represented by such Global Certificate to
the respective accounts of persons who have accounts with such depositary.
Such accounts initially will be designated by or on behalf of the
Underwriters. Ownership of beneficial interests in the Global Certificate will
be limited to persons who have accounts with DTC ("participants") or persons
who hold interests through participants. Ownership of beneficial interests in
a Global Certificate will be shown on, and the transfer of that ownership will
be effected only through, records maintained by DTC or its nominee (with
respect to interests of participants) and the records of participants (with
respect to interests of persons other than participants).
Conveyance of notices and other communications by DTC to Direct Participants
(as defined herein), by Direct Participants to Indirect Participants (as
defined herein), and by Direct Participants and Indirect Participants to
beneficial owners, will be governed by arrangements among them, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Purchases of Notes under the DTC system must be made by or through Direct
Participants, which will receive a credit for the Notes on DTC's records. The
ownership interest of each actual purchaser of each Note ("Beneficial Owner")
will in turn be recorded on the Direct and Indirect Participants' records.
Beneficial Owners will not receive written confirmation from DTC of their
purchase, but Beneficial Owners are expected to receive written confirmations
providing details of the transaction, as well as periodic statements of their
holdings, from the Direct and Indirect Participant through which the
Beneficial Owners entered the transaction. Transfers of ownership interests in
the Notes are to be accomplished by entries made on the books of participants
acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in the Notes, except in
the event that use of the book entry system for the Notes is discontinued.
So long as DTC, or its nominee, is the registered owner or holder of the
Global Certificate, DTC or such nominee, as the case may be, will be
considered the sole owner or holder of the Notes represented by such Global
Certificate for all purposes under the Indenture and the Notes. No beneficial
owner of an interest in the Global Certificate will be able to transfer the
interest except in accordance with DTC's applicable procedures, in addition to
those provided for under the Indenture.
Payments of the principal of, and interest on, the Global Certificate will
be made to DTC or its nominee, as the case may be, as the registered owners
thereof. Neither the Company, the Trustee nor any Paying Agent will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global
Certificate of for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests, subject to any statutory or regulatory
requirements as may be in effect from time to time.
The Company expects that DTC or its nominee, upon receipt of any payment of
principal or interest in respect of the Global Certificate, will credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such Global
Certificate as shown on the records of DTC or its nominee. The Company also
expects that payments by participants to owners of beneficial interests in
such Global Certificate held through such participants will be governed by
standing instructions and customary practices, as is now the case with
securities held for the accounts of customers registered in the names of
nominees for such customers. Such payments will be the responsibility of such
participants.
Transfers between participants in DTC will be effected in the ordinary way
in accordance with DTC rules. If a holder requires physical delivery of a
certificated note for any reason, including to sell Notes to persons in
jurisdictions which require such delivery of such Notes or to pledge such
Notes, such holder must transfer its interest in the Global Certificate in
accordance with the normal procedures of DTC and the procedures set forth in
the Indenture. Once an interest in the Global Certificate is delivered as a
certificated Note, such certificated Note may be exchanged for an interest in
the Global Certificate.
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The Company expects that DTC will take any action permitted to be taken by a
holder of Notes (including the presentation of Notes for exchange as described
below) only at the direction of one or more participants to whose account the
DTC interests in a Global Certificate is credited and only in respect of such
portion of the aggregate principal amount of the Notes as to which such
participant or participants has or have given direction. However, if there is
an Event of Default (as defined) under the Notes, DTC may exchange the Global
Certificate for certificated Notes, which it will distribute to its
participants.
DTC has advised the Company as follows: DTC is a limited-purpose trust
company organized under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the New York
Uniform Commercial Code, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of 1934, as amended.
DTC holds securities that its participants deposit with DTC. DTC also
facilitates the settlement among participants of securities transactions, such
as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in accounts of its participants, thereby
eliminating the need for physical movement of securities certificates. Direct
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations, and certain other organizations. DTC is owned by a
number of its Direct Participants and by the New York Stock Exchange, Inc.,
the American Stock Exchange and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others such as
banks, securities brokers and dealers and trust companies that clear through
or maintain a custodial relationship with a Direct Participant, either
directly or indirectly ("Indirect Participants").
Although the Company expects that DTC will agree to the foregoing procedures
in order to facilitate transfers of interests in the Global Certificate among
participants of DTC, DTC is under no obligation to perform or continue to
perform such procedures, and such procedures may be discontinued at any time.
Neither the Company nor the Trustee will have any responsibility for the
performance by DTC or its Direct or Indirect Participants of their respective
obligations under the rules and procedures governing their operations.
If DTC is at any time unwilling or unable to continue as a depositary for a
Global Certificate and a successor depositary is not appointed by the Company
within 90 days, the Company will issue certificated Notes in exchange for the
Global Certificate. The Company also may decide to discontinue use of the
system of book-entry transfers through DTC (or a successor securities
depository). In that event, the Company will issue certificated Notes in
exchange for the Global Certificate.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company believes to be reliable, but
the Company takes no responsibility for the accuracy thereof.
TRANSFER AND EXCHANGE
A holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar and the Trustee may require a holder, among other things, to
furnish appropriate endorsements and transfer documents and the Company may
require a holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company is not required to exchange or register the transfer of
any Note selected for redemption. Also, the Company is not required to
exchange or register the transfer of any Note for a period of 15 days before a
selection of Notes to be redeemed. The registered holder of a Note will be
treated as the owner of it for all purposes.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Indenture provides that the Company will not consolidate with or merge
into any other Person or sell, convey, transfer or lease all or substantially
all of its properties and assets to any Person, or permit any Person to
consolidate with or merge into the Company or sell, convey, transfer or lease
all or substantially all of its properties and assets to the Company, unless
(a) the Company shall be the continuing Person or the Person
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formed by such consolidation or into which the Company is merged or the Person
or corporation that acquires all or substantially all of its properties and
assets is a corporation, partnership or trust organized and validly existing
under the laws of the United States or any stated thereof or the District of
Columbia and expressly assumes payment of the principal of and premium, if
any, and interest on the Notes and performance and observance of each
obligation of the Company under the Indenture and the Notes, (b) immediately
after giving effect to such transaction and treating any indebtedness which
becomes an obligation of the Company as a result of such transaction as having
been incurred by the Company at the time of such transaction, no Default or
Event of Default exists, (c) such sale, assignment, transfer, lease,
conveyance or other disposition of all or substantially all of the Company's
properties or assets shall be as an entirety or virtually as an entirety to
one Person and such Person shall have assumed all the Obligations of the
Company under the Notes and the Indenture, pursuant to a supplemental
indenture in a form reasonably satisfactory to the Trustee, and (d) the
Company has delivered to the Trustee an Officer's Certificate and an Opinion
of Counsel, each stating that such consolidation, merger, conveyance, transfer
or lease complies with the provisions of the Indenture.
EVENTS OF DEFAULT
The following are Events of Default under the Indenture with respect to the
Notes (even if the event is the failure to do an act which is prohibited by
the subordination provisions of the Indenture): (a) failure to pay interest
upon any Note when it becomes due and payable, and continuance of such default
for a period of 30 days; (b) failure to pay the principal of (or premium, if
any, on) any Note at its maturity; (c) failure to pay the Redemption Price or
the Designated Event Payment when and as due; (d) failure to perform, or
breach of, any covenant or agreement of the Company in the Indenture continued
for 60 days after written notice as provided in the Indenture; (e) default
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any Indebtedness for money borrowed
by the Company or any of its Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Subsidiaries), whether such
Indebtedness or guarantee now exists or is created after the date on which the
Notes are first authenticated and issued, which default (i) is caused by a
failure to pay principal or interest due on such Indebtedness within the grace
period for payment provided in such Indebtedness (which failure continues
beyond any applicable grace period) (a "Payment Default") or (ii) results in
the acceleration of such Indebtedness prior to its express maturity and, in
each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$10 million or more; (f) one or more judgments or decrees shall be entered
against the Company or any Subsidiary involving a liability of more than $10
million in the aggregate and such judgments or decrees shall not have been
vacated, discharged, satisfied or stayed pending appeal within 60 days from
the date of entry thereof; and (g) certain events of bankruptcy, insolvency or
reorganization of the Company or any Material Subsidiary.
If an Event of Default with respect to the Notes shall occur and be
continuing, the Trustee or the holders of not less than 25% in aggregate
principal amount of the Notes then outstanding may declare the principal of
all Notes to be due and payable. The Company is required to furnish to the
Trustee quarterly statements as to any default in the performance by the
Company of its obligations under the Indenture. Under certain circumstances,
any declaration of acceleration with respect to the Notes may be rescinded and
past defaults may be waived by the holders of a majority of the aggregate
principal amount of the outstanding Notes. The Indenture provides that the
Trustee shall give notice to the holders of the Notes of any default known to
it as provided in the Trust Indenture Act of 1939.
No holder of any Note will have any right individually to pursue any remedy
under the Indenture unless (i) the holder previously has given to the Trustee
written notice of a continuing Event of Default, (ii) holders of not less than
25% of the aggregate principal amount of the outstanding Notes have made
written request to the Trustee to institute a proceeding, (iii) such holder
has offered reasonable indemnity to the Trustee, (iv) the Trustee has not
received from the holders of a majority in aggregate principal amount of the
outstanding Notes a
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direction inconsistent with the request and (v) the Trustee has failed to
institute such proceeding within 60 days. However, these limitations do not
apply to a suit instituted by a holder of a Note for the enforcement of
payment of the principal of an premium, it any, or interest on such Note on or
after the respective due dates expressed in such Note or of the right to
convert the Note in accordance with the Indenture.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as
any other capitalized terms used herein for which no definition is provided.
"Capital Stock" means any and all shares, interests, participations, rights
or other equivalents (however designated) of equity interests in any entity,
including, without limitation, corporate stock and partnership interests.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, which are in effect as of the date of
preparation of a financial statement or the date that a particular action is
taken or event occurs, as applicable.
"Indebtedness" means, with respect to any person, all obligations, whether
or not contingent, of such person (i) (a) for borrowed money (including, but
not limited to, any indebtedness secured by a security interest, mortgage or
other lien on the assets of such person which is (1) given to secure all or
part of the purchase price of property subject thereto, whether given to the
vendor of such property or to another, or (2) existing on property at the time
of acquisition thereof), (b) evidenced by a note, debenture, bond or other
written instrument, (c) under a lease required to be capitalized on the
balance sheet of the lessee under GAAP or under any lease or related document
(including a purchase agreement) which provides that such person is
contractually obligated to purchase or to cause a third party to purchase such
leased property, (d) in respect of letters of credit, bank guarantees or
bankers' acceptances, (e) with respect to Indebtedness secured by a mortgage,
pledge, lien, encumbrance, charge or adverse claim affecting title or
resulting in an encumbrance to which the property or assets of such person are
subject, whether or not the obligation secured thereby shall have been assumed
or guaranteed by or shall otherwise be such person's legal liability, (f) in
respect of the balance of deferred and unpaid purchase price of any property
or assets, (g) under interest rate or currency swap agreements, cap, floor and
collar agreements, spot and forward contracts and similar agreements and
arrangements; (ii) with respect to any obligation of others of the type
described in the preceding clause (i) or under clause (iii) below assumed by
or guaranteed in any manner by such person or in effect guaranteed by such
person through an agreement to purchase, contingent or otherwise (and the
obligations of such person under any such assumptions, guarantees or other
such arrangements); and (iii) any and all deferrals, renewals, extensions,
refinancings and refundings of, or amendments, modifications or supplements
to, any of the foregoing.
"Material Subsidiary" means any Subsidiary of the Company which is a
"significant subsidiary" as defined in Rule 1-02(w) of Regulation S-X under
the Securities Act and the Exchange Act (as such Regulation is in effect on
the date hereof).
"Senior Debt" means the principal of, interest on and other amounts due on
Indebtedness of the Company, whether outstanding on the date of the Indenture
or thereafter created, incurred, assumed or guaranteed by the Company, unless,
in the instrument creating or evidencing or pursuant to which Indebtedness is
outstanding, it is expressly provided that such Indebtedness is not senior in
right of payment to the Notes. Senior Debt includes, with respect to the
obligations described above, interest accruing, pursuant to the terms of such
Senior Debt, on or after the filing of any petition in bankruptcy or for
reorganization relating to the Company, whether or not post-filing interest is
allowed in such proceeding, at the rate specified in the instrument governing
the relevant
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obligation. Notwithstanding anything to the contrary in the foregoing, Senior
Debt shall not include: (a) Indebtedness of or amounts owed by the Company for
compensation to employees, or for goods, services or materials purchased in
the ordinary course of business; (b) Indebtedness of the Company to a
Subsidiary of the Company; or (c) any liability for Federal, state, local or
other taxes owed or owing by the Company.
"Subsidiary" means any corporation, association or other business entity of
which more than 50% of the total voting power of shares of Capital Stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by any person or one or more of the other
Subsidiaries of that person or a combination thereof.
GOVERNING LAW
The Indenture and Notes will be governed and construed in accordance with
the laws of the State of New York without giving effect to such state's
conflicts of laws principles.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of certain material United States
federal income tax consequences of the purchase, ownership and disposition of
the Notes (and of Common Stock acquired upon a conversion of the Notes) to the
initial holders thereof. This discussion is based on provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), Treasury regulations
promulgated thereunder, and administrative and judicial interpretations
thereof now in effect, all of which are subject to change, possibly with
retroactive effect. This discussion addresses the tax consequences to the
initial holders of Notes and does not address the tax consequences to
subsequent holders of Notes. Furthermore, this discussion is limited to
holders who hold the Notes as capital assets. This discussion is for general
information only, and does not address all of the tax consequences that may be
relevant to particular holders in light of their personal circumstances, or to
certain types of holders (such as certain financial institutions, insurance
companies, tax exempt entities, dealers in securities, Non-U.S. Holders or
persons who have hedged the interest rate).
As used herein, the term "United States Holder" or "U.S. Holder" means a
holder of a Note, or of Common Stock acquired upon conversion of a Notes, that
is for United States federal income tax purposes (i) a citizen or resident of
the United States, (ii) a corporation or partnership created or organized in
or under the laws of the United States or of any State, (iii) an estate the
income of which is subject to United States federal income taxation regardless
of source, or (iv) a trust which is subject to the supervision of a court
within the United States and the control of a U.S. Person. As used herein
"Non-U.S. Holder" means any beneficial owner who is not a U.S. Holder.
Prospective Purchasers are urged to consult their own tax advisors as to the
particular tax consequences to them of the acquisition, ownership and
disposition of the Notes or Common Stock, including the applicability of any
federal estate or gift tax laws or any state, local or foreign tax laws,
changes in applicable tax laws and any pending or proposed legislation.
TAX TREATMENT OF INTEREST PAYMENTS
Interest payments on the Notes will be includable in a United States
Holder's taxable income as received or accrued in accordance with the holder's
method of tax accounting.
SALE, EXCHANGE OR RETIREMENT OF THE NOTES
Upon the sale, exchange, redemption, retirement at maturity or other
disposition of a Note, a United States Holder generally will recognize capital
gain or loss equal to the difference between the amount of cash plus the fair
market value of all property received on such disposition (except to the
extent such cash or property is attributable to accrued interest, which is
taxable as ordinary income) and such holder's adjusted tax basis in the Note.
For United States Holders other than individuals, such gain or loss will be
long-term capital gain or loss if, at the time of such disposition, the United
States Holder's holding period in the Note is more than one year. Certain
changes to the Code, enacted recently as part of the Taxpayer Relief Act of
1997, will apply to United States Holders who are individuals. In general, the
maximum tax rate for such holders on long-term capital gains will be 20% for
most capital assets (including the Notes) held for more than 18 months. For
individual holders holding Notes for more than one year but not more than 18
months, the maximum tax rate on capital gains will be 28%. Capital gain or
loss will be short-term if the Note is held for one year or less.
ADJUSTMENTS TO CONVERSION RATE
The Conversion Price of the Notes is subject to adjustment under certain
circumstances. See "Description of Notes--Conversion of Notes." Section 305 of
the Code may treat a United States Holder of Notes as receiving a constructive
distribution, taxable as dividend to the extent of the Company's current or
accumulated earnings and profits, in the case of certain adjustments in the
Conversion Price of the Notes that may occur in limited circumstances
(particularly an adjustment to reflect a taxable dividend to holders of the
Common Stock).
S-26
<PAGE>
CONVERSION OF NOTES INTO COMMON STOCK
Generally, no gain or loss will be recognized for federal income tax
purposes at the time of the conversion of the Notes into shares of Common
Stock. However, cash paid in lieu of a fractional share of Common Stock will
result in capital gain (or loss) to the extent of the difference between the
amount of such cash and the portion of the adjusted basis of the Note
allocable to such fractional share. The adjusted basis of shares of Common
Stock received on conversion will equal the adjusted basis of the Note
converted, reduced by the portion of such adjusted basis allocated to any
fractional share of Common Stock deemed exchanged for cash. The holding period
of the Common Stock received on conversion will include the period during
which the converted Notes were held.
SALE OR EXCHANGE OF COMMON STOCK
A United States Holder of Common Stock into which the Notes have been
converted generally will recognize capital gain or loss upon the sale,
exchange, redemption, or other disposition of the Common Stock measured by the
difference between the amount realized on such disposition and the United
States Holder's adjusted tax basis in the Common Stock. Such gain or loss will
be long-term capital gain or loss if the holding period of the Common Stock
(determined as described above under "Conversion of Notes into Common Stock")
is more than one year at the time of the sale or exchange. Special rules may
apply to certain redemptions of Common Stock which may result in different
treatment.
BACK-UP WITHHOLDING
A United States Holder of Notes or Common Stock may be subject to "back-up
withholding" at a rate of 31% with respect to certain "reportable payments,"
including interest payments, dividend payments and, under certain
circumstances, principal payments on the Notes and payments of the proceeds of
the sale of Notes or Common Stock. These back-up withholding rules apply if
the United States Holder, among other things, (i) fails to furnish a social
security number or other taxpayer identification number ("TIN") certified
under penalties of perjury within a reasonable time after the request
therefor, (ii) furnishes an incorrect TIN, (iii) fails to report properly
interest or dividends, or (iv) under certain circumstances, fails to provide a
certified statement, signed under penalties of perjury, that the TIN furnished
is the correct number and that such holder is not subject to back-up
withholding. A United States Holder who does not provide the Company with its
correct TIN also may be subject to penalties imposed by the IRS. Any amount
withheld from a payment to a United States Holder under the back-up
withholding rules is creditable against the United States Holder's federal
income tax liability, provided the required information is furnished to the
IRS. Back-up withholding does not apply, however, with respect to payments
made to certain holders, including corporations, tax-exempt organizations and
certain foreign persons, provided their exemption from back-up withholding is
properly established. The Company will report to the holders of Notes and
Common Stock and to the IRS the amount of any "reportable payments" for each
calendar year and the amount of tax withheld, if any, with respect to such
payments.
S-27
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Sales of substantial amounts of Common Stock in the public market may have
an adverse effect on the market price of the Common Stock. Of the 18,834,732
shares outstanding at September 30, 1997, 12,651,335 shares are freely
tradeable. All of the shares of Common Stock issued upon conversion of the
Notes offered hereby will also be freely transferable. In addition, and as of
September 30, 1997, 6,183,397 shares are otherwise available for resale into
the public market pursuant to Rule 144 under the Securities Act.
The Company, its directors and executive officers, and the Company's
principal shareholders who hold an aggregate of 4,324,648 shares of Common
Stock have entered into lock-up agreements with the representatives of the
Underwriters pursuant to which they have agreed that they will not, directly
or indirectly, offer, sell, offer to sell, contract to sell, pledge, grant any
option to purchase or otherwise sell or dispose) or announce any offer, sale,
offer of sale, contract of sale, pledge, grant of any option to purchase or
other sale or disposition) of any shares of Common Stock or any securities
convertible into, or exchangeable or exercisable for, shares of Common Stock,
without the prior written consent of Prudential Securities Incorporated on
behalf of the Underwriters, for a period of 90 days after the date of this
Prospectus Supplement, except for issuances by the Company pursuant to the
exercise of options granted under employee benefit plans existing as of the
date of this Prospectus Supplement or pursuant to the terms of convertible
securities or warrants of the Company outstanding as of the date of this
Prospectus Supplement. Prudential Securities Incorporated may, in its sole
discretion at any time and without notice, release all or any portion of the
shares subject to such lock-up agreements. All 4,324,648 shares will become
available for sale 90 days after the date of this Prospectus Supplement upon
expiration of these lock-up agreements, subject to compliance with Rule 144 or
Rule 701 promulgated under the Securities Act.
S-28
<PAGE>
UNDERWRITING
The Underwriters named below (the "Underwriters"), for whom Prudential
Securities Incorporated, Bear Stearns & Co. Inc., Donaldson, Lufkin & Jenrette
Securities Corporation and Hanifen, Imhoff Inc. are acting as representatives
(collectively, the "Representatives"), have severally agreed, subject to the
terms and conditions contained in the underwriting agreement (the
"Underwriting Agreement"), to purchase from the Company the aggregate
principal amount of Notes set forth below opposite their respective names:
<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITER AMOUNT
----------- ------------
<S> <C>
Prudential Securities Incorporated............................. $ 52,500,000
Bear, Stearns & Co. Inc. ...................................... 52,500,000
Donaldson, Lufkin & Jenrette Securities Corporation............ 22,500,000
Hanifen, Imhoff Inc. .......................................... 22,500,000
------------
Total...................................................... $150,000,000
============
</TABLE>
The Company is obligated to sell, and the Underwriters are obligated to
purchase, all of the Notes offered hereby, if any are purchased.
The Underwriters, through their Representatives, have advised the Company
that they propose to offer the Notes initially at the public offering price
set forth on the cover page of this Prospectus Supplement; that the
Underwriters may allow to selected dealers a concession of 1.6% of the
principal amount of the Notes; and that such dealers may re-allow a concession
of 0.25% of the principal amount of the Notes to certain other dealers. After
the public offering, the offering price and the concessions may be changed by
the Representatives.
The Company has granted the Underwriters an option, exercisable for 30 days
from the date of this Prospectus Supplement, to purchase up to an additional
$22,500,000 in aggregate principal amount of Notes at the public offering
price, less underwriting discounts and commissions, as set forth on the cover
page of this Prospectus Supplement. The Underwriters may exercise such option
solely for the purpose of covering over-allotments incurred in the sale of the
Notes offered hereby. To the extent such option to purchase is exercised, each
Underwriter will become obligated, subject to certain conditions, to purchase
approximately the same percentage of such additional Notes as the number set
forth next to such Underwriter's name in the preceding table bears to
$150,000,000.
The Company has agreed to indemnify the several Underwriters and contribute
to any losses arising out of certain liabilities, including liabilities under
the Securities Act.
The Company, its executive officers and directors, holding an aggregate of
approximately 4,324,648 shares of Common Stock have agreed that they will not,
directly or indirectly, offer, sell, offer to sell, contract to sell, pledge,
grant any option to purchase or otherwise sell or dispose) or announce any
offer, sale, offer of sale, contract of sale, pledge, grant of any option to
purchase or other sale or disposition) of any shares of Common Stock or any
securities convertible into, or exchangeable or exercisable for, shares of
Common Stock, without the prior written consent of Prudential Securities
Incorporated on behalf of the Underwriters, for a period of 90 days after the
date of this Prospectus Supplement, except for issuances by the Company
pursuant to the exercise of options granted under employee benefit plans
existing as of the date of this Prospectus Supplement or pursuant to the terms
of convertible securities or warrants of the Company outstanding as of the
date of this Prospectus Supplement. Prudential Securities Incorporated may, in
its sole discretion, at any time and without notice, release all or any
portion of the shares subject to such lockup agreements.
In connection with the Offering, certain Underwriters (and selling group
members if any) and their respective affiliates may engage in transactions
that stabilize, maintain or otherwise affect the market price of the Notes and
the Common Stock. Such transactions may include stabilization transactions
effected in accordance
S-29
<PAGE>
with Rule 104 of Regulation M, pursuant to which such persons may bid for or
purchase Notes or Common Stock for the purpose of stabilizing its market
price. The Underwriters also may create a short position for the account of
the Underwriters by selling more Notes in connection with the Offering than
they are committed to purchase from the Company, and in such case may purchase
Notes and Common Stock in the open market following completion of the Offering
to cover all or a portion of such short position. The Underwriters may also
cover all or a portion of such short position, with up to $22,500,000
additional aggregate principal amount of Notes, by exercising the
Underwriters' overallotment option referred to above. In addition, Prudential
Securities Incorporated, on behalf of the Underwriters, may impose "penalty
bids" under contractual arrangements with the Underwriters whereby it may
reclaim from an Underwriter (or any selling group member participating in the
Offering) for the account of the other Underwriters, the selling concession
with respect to Notes that is distributed in the Offering but subsequently
purchased for the account of the Underwriters in the open market. Any of the
transactions described in this paragraph may result in the maintenance of the
price of the Notes and Common Stock at levels above that which might otherwise
prevail in the open market. None of the transactions described in this
paragraph are required and, if they are undertaken, then they may be
discontinued at any time.
LEGAL MATTERS
The legality of the Notes being offered hereby and the Common Stock of the
Company to be issued upon the conversion of the Notes has been passed upon for
the Company by Rothgerber, Appel, Powers & Johnson LLP, Denver, Colorado.
Certain legal matters will be passed upon for the Underwriters by Andrews &
Kurth L.L.P., Houston, Texas.
S-30
<PAGE>
PROSPECTUS
- -------------------------------------------------------------------------------
$300,000,000
MAIL-WELL, INC.
DEBT SECURITIES
PREFERRED STOCK
[LOGO OF MAIL-WELL, INC. APPEARS HERE]
DEPOSITORY SHARES
COMMON STOCK
WARRANTS
- -------------------------------------------------------------------------------
Mail-Well, Inc., a Colorado corporation (the "Company" or "Mail-Well"), may
offer from time to time, in one or more series (i) debt securities (the "Debt
Securities"), which may be senior subordinated debt securities ("Senior
Subordinated Debt Securities") or subordinated debt securities ("Subordinated
Debt Securities"), in each case consisting of debentures, notes and/or other
unsecured evidences of indebtedness, (ii) shares of Preferred Stock, par value
$0.01 per share (the "Preferred Stock"), (iii) Preferred Stock represented by
depository shares ("Depository Shares"), (iv) shares of its common stock, par
value $0.01 per share (the "Common Stock") and (v) warrants to purchase Debt
Securities, Preferred Stock or shares of Common Stock (the "Warrants"), as
shall be designated by the Company at the time or times of the offering. The
Debt Securities, the Preferred Stock, the Common Stock, the Warrants and any
shares of Common Stock issuable upon conversion or exchange of the Debt
Securities or Preferred Stock or exercise of the Warrants are collectively
referred to as the "Securities" and will have an aggregate public offering
price of up to $300,000,000 or the equivalent thereof in U.S. dollars if any
Securities are denominated in a currency other than U.S. dollars or in
currency units. The Securities may be offered separately or together (in any
combination) and as a separate series, in any case in amounts, at prices and
on terms to be determined at the time of sale.
The form in which the Securities are to be issued will be set forth in a
Prospectus Supplement (including any related term sheet) relating to such
Securities (the "Prospectus Supplement"), together with the offering terms of
such Securities, and will include where applicable, their specific
designation, aggregate principal amount or aggregate public offering price,
maturity, if any, rate and times of payment of interest or dividends, if any,
redemption, conversion, exchange and sinking fund terms, if any, exercise
price and detachability, if any, and other specific terms. If so specified in
the applicable Prospectus Supplement, Debt Securities of a series may be
issued in whole or in part in the form of one or more temporary or permanent
global securities. The Prospectus Supplement will also contain information, as
applicable, about certain material United States federal income tax
considerations relating to the particular securities offered thereby. The
Prospectus Supplement will also contain information, where applicable, as to
any listing on a national securities exchange of the securities covered by
such Prospectus Supplement.
The Securities may be offered directly through agents designated from time to
time by the Company or to or through underwriters or dealers. The names of
such agents, dealers or underwriters and any applicable purchase price, fee,
underwriting discounts and commissions and the net proceeds from such sale
will be set forth, or will be calculable from the information set forth, in
the applicable Prospectus Supplement. See "Plan of Distribution." No
Securities may be sold without delivery of the applicable Prospectus
Supplement describing the method and terms of offering of such Securities.
SEE "RISK FACTORS" ON PAGES 4 TO 8 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS IN CONNECTION WITH AN INVESTMENT
IN THE SECURITIES.
- -------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
This Prospectus is dated November 13, 1997
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450
Fifth Street, N.W. Washington, D.C. 20549; 7 World Trade Center, 13th Floor,
New York, New York 10048; and Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of such material can be obtained at
prescribed rates from the Public Reference Section of the Commission at 450
Fifth Street, N.W. Washington, D.C. 20549. Such reports and other information
concerning the Company may also be inspected at the offices of the New York
Stock Exchange, 20 Broad Street, New York, New York 10005. The Commission also
maintains a site on the World Wide Web at http://www.sec.gov that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission.
The Company has filed with the Commission a registration statement on Form
S-3 (including all amendments thereto, the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Securities offered hereby. As permitted by the rules and regulations of the
Commission, this Prospectus does not contain all of the information set forth
in the Registration Statement and the exhibits and schedules thereto. Such
additional information is available for inspection and copying at the offices
of the Commission. Statements contained in this Prospectus, in any Prospectus
Supplement or in any document incorporated by reference herein or therein as
to the contents of any contract or other document referred to herein or
therein are not necessarily complete, and in each instance reference is made
to the copy of such contract or other document filed as an exhibit to, or
incorporated by reference in, the Registration Statement, each such statement
being qualified in all respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, all of which were previously filed by the Company
(File No. 0-26692) with the Commission pursuant to the Exchange Act, are
hereby incorporated by reference in this Prospectus:
(1) the Company's Annual Report on Form 10-K, and the Amendment on Form
10-K/A filed on October 28, 1997, for the year ended December 31, 1996;
(2) the Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997 and June 30, 1997, and the Amendments on Form 10-Q/A filed
on September 12, 1997 and October 28, 1997 for the quarter ended June 30,
1997;
(3) the Company's Current Report on Form 8-K, dated May 20, 1997.
All reports and documents filed by the Company subsequent to the date of
this Prospectus pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act and prior to the termination of the offering of the Securities covered by
this Prospectus shall be deemed to be incorporated by reference and to be a
part hereof from the date of filing of such documents.
Any statement contained herein or in a document incorporated by reference or
deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that such
statement is modified or replaced by a statement contained in this Prospectus
or in any other subsequently filed document that also is or is deemed to be
incorporated by reference into this Prospectus. Any such statement so modified
or superseded shall not be deemed, except as so modified or replaced, to
constitute a part of this Prospectus.
The Company undertakes to provide without charge to each person to whom a
copy of this Prospectus has been delivered, upon the written or oral request
of any such person to the Company, a copy of any or all of the documents
referred to above that have been or may be incorporated into this Prospectus
by reference, including exhibits to such documents (unless such exhibits are
specifically incorporated by reference to such documents). Requests for such
copies should be directed to Investor Relations, Mail-Well, Inc., 23 Inverness
Way East, Englewood, Colorado 80112, telephone number (303) 790-8023.
2
<PAGE>
THE COMPANY
Mail-Well, Inc. (the "Company") is the largest printer and manufacturer of
envelopes in the United States and Canada, competing primarily in the higher-
margin consumer direct market segment of the envelope industry in which
envelopes are designed and manufactured to customer specifications. In
addition, the Company is the leading high-impact color printer in the United
States. As of September 30, 1997, the Company and its subsidiaries operated 53
envelope plants and printing facilities throughout the United States and
Canada serving over 40,000 customers.
Since its formation in 1994, the Company has achieved significant growth in
both revenues and net income through a business strategy that focuses on
acquisitions, internal growth and operating leverage. As a result of this
strategy, revenue and net income increased to $778.5 million and $16.9
million, respectively, for the Company in 1996 from $262.3 million and $1.4
million, respectively, for the Company and its predecessors in 1994. For the
six months ended June 30, 1997, the Company's revenue and net income grew to
$419.5 million and $12.6 million, respectively, from $378.8 million and $6.4
million, respectively, during the same period in 1996.
The envelope and high-impact color printing industries are highly
fragmented. There are approximately 215 independent envelope companies in the
United States and Canada, generating in excess of $3.0 billion in annual
revenues. The Company estimates that there are approximately 500 commercial
printing companies in the United States competing in the high-impact color
segment of the printing industry, generating approximately $3.5 billion in
annual revenues in that segment. The Company's objective is to grow both
internally and externally. Internally, the Company plans to expand the
products and services sold to existing customers and to add new customers.
Externally, the Company plans to continue to grow by pursuing acquisition
opportunities to capitalize on the consolidation occurring within these
industries. From December 1, 1994 through September 30, 1997, the Company
completed ten acquisitions in the envelope and commercial printing industries,
ranging in size from $6.1 million to $97.4 million.
Management believes that it enjoys, and will continue to enjoy, certain
competitive advantages, including (i) the ability to utilize the Company's
network of strategically located plants and sales offices to attract customers
that require production from multiple locations, (ii) the ability to realize
cost savings as a result of volume related purchases of paper, ink and other
raw materials, (iii) the reduction of overhead expense through the
consolidation of certain administrative functions for insurance, employee
health benefits and financial management, (iv) the ability to increase
profitability through the optimization of equipment utilization among
facilities, (v) the ability to offer customers greater flexibility in meeting
their needs due to more available capacity and equipment capabilities and (vi)
the ability to combine the responsiveness of a local or regional facility with
the resources of a large national company.
The Company's envelope products include standard size envelopes as well as
envelopes with features customized for mass mailing markets. The Company also
produces medical folders, overnight mailers, photofinishing envelopes, airline
and car rental jackets, tags and interoffice envelopes. The Company's high-
impact printed products are designed to elicit the maximum response from the
reader and include advertising literature, high-end catalogs and brochures,
calendars and annual reports. The Company is recognized as an innovative
provider of quality printed products to leading companies throughout the
United States.
The Company's principal executive offices are located at 23 Inverness Way
East, Englewood, Colorado 80112; its telephone number is (303) 790-8023.
RECENT DEVELOPMENTS
On June 27, 1997, the Company acquired all of the outstanding shares of
common stock of Griffin Envelope, Inc. ("Griffin"). Griffin, which is located
in Seattle, Washington, manufactures and distributes envelopes in the
northwestern United States. Annual sales for Griffin approximate $12 million.
3
<PAGE>
On July 11, 1997, the Company acquired all of the outstanding shares of
common stock of The Allied Printers ("Allied"). Allied, which is located in
Seattle, Washington, is a high impact color printer servicing customers with
sheet fed printing needs. Annual sales for Allied approximate $17 million. In
addition to other consideration, the Company issued 36,531 shares of common
stock to Edward R. Whitehead, the sole shareholder of Allied, in connection
with this acquisition.
On July 14, 1997, the Company acquired all of the outstanding shares of
common stock of Murray Envelope Corporation ("Murray"). Murray, which is
located in Hattiesburg, Mississippi, manufactures envelopes primarily for
sales through distributors in the southeastern and south central markets.
Additionally, the Barkley division of Murray distributes filing products for
the national market. Annual sales for Murray approximate $48 million. In
connection with the acquisition, a wholly-owned subsidiary of the Company
issued 110,236 shares of common stock which are convertible into an equal
number of shares of Company common stock.
On September 10, 1997, the Company acquired substantially all of the Assets
of National Color Graphics, Inc. ("Color Graphics"). Color Graphics, which is
located in Atlanta, Georgia, is a high impact color printer servicing
customers with sheet fed needs. Annual sales for Color Graphics approximate
$23 million.
The Company paid approximately $58.5 million in aggregate consideration, for
Griffin, Allied, Murray and Color Graphics. The consideration consisted of
cash, Common Stock, notes and convertible securities. No single acquisition,
nor the acquisitions in the aggregate, were "significant" as defined by the
rules of the Commission.
RISK FACTORS
An investment in the Securities offered hereby involves a high degree of
risk. Prospective investors should consider carefully the following factors,
in addition to other information contained in this Prospectus and any
Prospectus Supplement, in connection with an investment in the Securities
offered hereby.
This Prospectus contains statements which constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933,
as amended (the "Securities Act"), and Section 21E of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). The words "expect," "believe,"
"goal," "plan," "intend," "estimate" and similar expressions and variations
thereof used in this Prospectus are intended to specifically identify forward-
looking statements. Those statements appear in a number of places in this
Prospectus and include statements regarding, but not limited to, product
demand and sales, growth rate, ability to obtain assumed productivity savings,
quality controls, availability of acquisition opportunities and their related
costs, cost savings due to integration and synergies associated with
acquisitions, ability to obtain additional financings and bank debt
restructuring, interest rates, foreign currency exchange rates, paper and raw
material costs, waste paper prices, ability to pass through paper costs to
customers, postage rates, changes in the direct mail industry, competition,
ability to develop new products, labor costs, labor relations and advertising
costs. Prospective investors are cautioned that any such forward-looking
statements are not guarantees of future performance and involve risks and
uncertainties, and that actual results may differ materially from those
projected in the forward-looking statements as a result of various factors.
The Company undertakes no obligation to publicly update or revise forward-
looking statements made in this Prospectus to reflect events or circumstances
after the date of this Prospectus or to reflect the occurrence of
unanticipated events.
LEVERAGE. The Company has incurred substantial indebtedness in connection
with financing certain of its acquisitions. The degree to which the Company is
leveraged could have important consequences to the holders of the Company's
Securities, including the following: (i) the Company's ability to obtain
additional financing for working capital, acquisitions or other purposes in
the future may be limited, (ii) a substantial portion of the Company's cash
flow from operations will be dedicated to the payment of principal and
interest on indebtedness, (iii) the Company may be more vulnerable to economic
downturns or other adverse developments than less leveraged competitors, and
(iv) borrowings under the Company's bank credit agreements (as amended through
4
<PAGE>
the date hereof, the "Credit Agreements") bear interest at fluctuating rates
which could result in higher interest expense in the event of an increase in
interest rates. The Company's ability to make scheduled payments of principal
or interest on, or to refinance, indebtedness will depend on future operating
performance and cash flow, which are subject to prevailing economic conditions
and financial, competitive and other factors beyond the Company's control. See
"Ratio of Earnings to Fixed Charges."
AVAILABILITY, FINANCING AND INTEGRATION OF ACQUISITIONS. The Company has
grown rapidly through acquisitions. Although the Company believes it has an
adequate infrastructure, there can be no assurance that the Company's current
management, personnel and other corporate infrastructure will be adequate to
manage the Company's growth. In addition, to the extent the success of the
Company's strategy is contingent on making further acquisitions, there can be
no assurance that the Company will be able to identify and acquire acceptable
acquisition candidates on terms favorable to the Company or that the Company
will be able to integrate such acquisitions successfully. Increased
competition for acquisition candidates may develop, in which event there may
be fewer acquisition opportunities available to the Company as well as higher
acquisition prices. There can be no assurance that the Company will be able to
continue to identify, acquire or profitably manage additional businesses or
successfully integrate acquired businesses, if any, into the Company without
substantial costs, delays or other operational or financial problems. Further,
acquisitions involve a number of special risks, including possible adverse
effects on the Company's operating results, diversion of management's
attention, failure to retain key acquired personnel, risks associated with
unanticipated events or liabilities and amortization of acquired intangible
assets, some or all of which could have a material adverse effect on the
Company's business, financial condition and results of operations.
The Company may finance future acquisitions through the issuance of the
Securities, the incurrence of additional bank indebtedness, the utilization of
cash from operations, or a combination thereof. In the event that the Common
Stock does not maintain a sufficient market value, or potential acquisition
candidates are otherwise unwilling to accept Common Stock or other Securities
as part of the consideration for the sale of their businesses, the Company may
be required to utilize more of its cash resources or available funds under its
Credit Agreements in order to finance future acquisitions. If the Company does
not have sufficient cash resources, its ability to make acquisitions could be
limited unless it is able to obtain additional capital through debt or equity
financings. There can be no assurance that the Company will be able to obtain
all the financing it will need in the future on terms the Company deems
acceptable.
UNITED STATES AND CANADIAN POSTAL SERVICES. Because the great majority of
envelopes used in the United States and Canada are sent through the mail,
postal rates are a significant factor affecting the growth of envelope usage.
Historically, increases in postal rates, relative to changes in the cost of
alternative delivery means and/or advertising media, have resulted in
temporary reductions in the growth rate of mail sent. For example, third class
postal rates increased approximately 50% and 14% in 1991 and 1995,
respectively, contributing to a substantial leveling off in the growth rate of
third class mail sent during the periods following such increases. In 1997,
the U.S. Postal Service announced proposed rate increases of approximately 4%
for direct mail and 3% for first class mail, and a proposed 6% rate decrease
for prepaid, courtesy reply envelopes. The recent proposed postal rate
increases are significantly less than the cumulative rate of inflation since
the last postal rate increases. Management does not expect that these postal
rate increases will go into effect until mid-1998 and, if implemented, does
not anticipate the rate increases to negatively impact mail volume, although
there can be no assurance in that regard.
The Canadian Post Corporation (the "CPC") increased the basic postal rate by
approximately 4.7% in 1995, and approximately 6.7% in 1996, contributing to a
leveling off of the growth rate of mail sent during the periods immediately
following such increases. Although the CPC has announced its intention to
raise rates further in 1998, management believes such an increase will be
minimal and does not anticipate that it will have a negative impact on mail
volume. There can be no assurance, however, that future increases in United
States and/or Canadian postal rates will not have a material adverse effect on
the Company's financial condition and results of operations.
5
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The CPC has been operating under an expired labor contract since May 1996.
Although no agreement has been reached, the parties continue to negotiate. In
the event of a work stoppage, the Canadian government has the right to call
the postal workers back to work, a power which it has exercised in previous
work stoppages. Although management believes that a short-term work stoppage
would not have a material, long-term impact on the Company's business, there
can be no assurance that any work stoppage would not be prolonged, or would
not have a material adverse effect on the Company.
LABOR RELATIONS. As of June 30, 1997, the Company had approximately 6,600
full-time employees, of which approximately 2,100 employees were members of 14
local labor unions. If unionized employees were to engage in a concerted
strike or other work stoppage, or if other employees were to become unionized,
the Company could experience a disruption of operations and higher labor
costs. The Company is currently negotiating new union contracts with respect
to four of its larger envelope printing and converting facilities, all of
which have been operating under tentative arrangements which are terminable on
short notice, while the Company's commercial printing facility in Portland is
operating under an extension of its existing agreement, which is not
terminable unless and until a legal impasse has been reached. No new agreement
has been reached with respect to any of these plants. In order to mitigate the
effect of a potential work stoppage, the Company has prepared a contingency
plan for each of these locations. There can be no assurance, however, that the
Company's preparations will prevent a material adverse effect on the Company's
operations in the event of a protracted work stoppage.
COST AND AVAILABILITY OF PAPER. The cost of paper represents a significant
portion of the Company's cost of materials. Increases in paper costs could
have a material adverse effect on the Company's results of operations and
financial condition. Historically, the Company has been successful in
maintaining gross profit margins when paper prices increase by passing paper
price increases on to its customers and by receiving increased proceeds from
waste paper sales. There can be no assurance, however, that the Company will
be able to continue to pass on future increases in the cost of paper.
Moreover, rising paper costs and their consequent impact on the Company's
pricing could have a material adverse effect on the Company's volume of units
sold. For example, successive paper price increases during the latter part of
1995 and early 1996 resulted in a decline in demand for the Company's
products, particularly from the direct-mail advertising industry.
Proceeds from the sale of waste paper were equal to 1.1% of the Company's
net sales and 5.1% of the Company's gross profits for the six months ended
June 30, 1997. Prices for waste paper generally fluctuate in a pattern similar
to changes in raw paper prices. Accordingly, in a falling paper price
environment, the Company's proceeds from waste paper sales could decrease
significantly. Although management believes that the Company will be able to
generate waste paper proceeds in the future, there can be no assurance that
such proceeds will not decline from current levels.
Due to the significance of paper in the manufacture of most of the Company's
products, the Company is dependent upon the availability of paper. During
periods of tight paper supply, many paper producers allocate shipments of
paper based on the historical purchase levels of customers. As a result of the
Company's large volume paper purchases from several paper producers, the
Company generally has not experienced difficulty in obtaining adequate
quantities of paper, although occasionally the Company has experienced minor
delays in delivery. Although management believes that the Company's large
volume paper purchases will continue to enable the Company to receive adequate
supplies of paper in the future, there can be no assurance in this regard.
COMPETITION. The envelope and commercial printing industries in which the
Company competes are extremely fragmented and highly competitive. In the
envelope market, the Company competes primarily with a few multi-plant and
many single-plant companies servicing regional and local markets. The Company
also faces competition from alternative sources of communication and
information transfer such as facsimile machines, electronic mail, interactive
video disks, interactive television and electronic retailing. In the
commercial printing market, the Company competes against a number of large,
diversified and financially stronger printing companies, as well as regional
and local commercial printers, many of which are capable of competing with the
Company in both volume and production quality.
6
<PAGE>
AVAILABILITY OF ALTERNATIVE DELIVERY MEDIA. The Company's envelope printing
and manufacturing business is highly dependent upon the demand for envelopes
sent through the mail. Such demand comes from utility companies, banks and
other financial institutions, among others. As the current trend towards usage
of the Internet and other electronic media by consumers for such purposes as
paying utility and credit card bills grows, the Company expects the demand for
envelopes for such purposes to decline. Although management believes that
overall demand for envelopes will continue to grow at rates comparable to
recent historical levels, there can be no assurance that competition from
alternative media will not have an adverse effect on such demand.
NATURE OF PRINTING BUSINESS. The envelope and high-impact color printing
businesses in which the Company competes are generally characterized by
individual orders from customers or short-term (less than one year) supply
contracts. In the high-impact color printing market in particular, customer
orders are typically for specific printing jobs, and continued or repeat
engagements for successive jobs depending upon the customer's satisfaction
with the services provided. Although the Company is not dependent upon any one
customer or group of customers, and management believes that the Company has
and will continue to have excellent relations with its customers, there can be
no assurance that any particular customer will continue to do business with
the Company over an extended period of time. In addition, the timing of
particular jobs or types of jobs at particular times of year may cause
fluctuations in the financial results of the Company's high-impact color
printing operations in any given quarter.
ASSET ENCUMBRANCES; RESTRICTIVE COVENANTS. The obligations of the Company
under the Credit Agreements are secured by a pledge of all of the capital
stock of Mail-Well I Corporation ("M-W Corporation"), a wholly-owned
subsidiary of the Company, and all of M-W Corporation's subsidiaries, and by a
first priority security interest in substantially all of the assets of M-W
Corporation and its subsidiaries. If the Company becomes insolvent or is
liquidated, or if payment under the Credit Agreements is accelerated, the
lenders under the Credit Agreements would be entitled to exercise the remedies
available to secured lenders under applicable law and pursuant to the Credit
Agreements. Accordingly, such lenders will have a claim on the assets of the
Company and its subsidiaries prior to that of any Security holder.
The Credit Agreements and the indenture pursuant to which the 10 1/2% Senior
Subordinated Notes due 2004 were issued by M-W Corporation (the "Indenture")
contain numerous financial and operating covenants and require the Company and
its subsidiaries to meet certain financial ratios and tests. A failure to
comply with the obligations contained in the Credit Agreements or the
Indenture could result in an event of default under either the Credit
Agreements or the Indenture which could permit acceleration of the related
debt and acceleration of debt under other instruments that may contain cross-
acceleration or cross-default provisions.
CONTROL BY MANAGEMENT AND DIRECTORS. As of September 30, 1997, officers and
directors of the Company and entities affiliated with them beneficially owned
approximately 23% of the then outstanding shares of Common Stock. In addition,
the Company's employee stock ownership plan ("ESOP") owned approximately 10.4%
of the outstanding shares, of which approximately 5.0% were unallocated and
thus voted by management on all matters. As a result, management and directors
exercise substantial influence over the Company's affairs.
VOLATILITY OF STOCK PRICE. Since the completion of the Company's initial
public offering in September 1995, the market price of the Common Stock has
fluctuated significantly. The Company believes that factors such as
announcements of developments related to the Company's business, sales by
competitors, including sales to the Company's customers, sales of the Common
Stock into the public market, including by members of management, developments
in the Company's relationship with its customers, partners, distributors and
suppliers, shortfalls or changes in analysts expectations for revenue, gross
margins, earnings or losses or other financial results, regulatory
developments, fluctuations in results of operations, seasonality and general
conditions in the Company's market or the markets served by the Company's
customers or the economy could cause the price of the Common Stock to
fluctuate substantially. In addition, the stock market has experienced extreme
price fluctuations which have often been unrelated to the operating
performance of affected companies. There can be no assurance that the market
price of the Common Stock will not decline substantially, or otherwise
continue to
7
<PAGE>
experience significant fluctuations in the future, including fluctuations that
are unrelated to the Company's operating performance. In addition, to the
extent a public market develops for any of the Company's other Securities,
investors may experience similar levels of volatility, including but not
limited to changes in interest rates generally.
HOLDING COMPANY STRUCTURE. The only asset of the Company is the capital
stock of M-W Corporation. Because all of the operations of the Company are
conducted through its subsidiaries, the Company's cash flow and consequently
its ability to service debt and pay dividends is dependent upon the cash flow
of its subsidiaries and the transfer of funds by its subsidiaries to the
Company in the form of loans, dividends or otherwise. The subsidiaries are
distinct legal entities and have no obligation, contingent or otherwise, to
pay any amounts due pursuant to the various obligations of indebtedness of the
Company or to make any funds available therefor, whether in the form of loans,
dividends or otherwise. Moreover, the Credit Agreements and the Indenture
restrict the Company's ability to pay dividends.
ENVIRONMENTAL COMPLIANCE. The Company's operations are subject to federal,
state and local environmental laws and regulations relating to air emissions,
waste generation, handling, management and disposal, and at certain
facilities, wastewater treatment and discharge. In addition, certain of the
Company's predecessors have been designated as potentially responsible parties
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980 with respect to off-site disposal of hazardous waste. While management
believes that the Company has minimal exposure as a result of such
designations and that the Company's current operations are in substantial
compliance with applicable environmental laws and regulations, there can be no
assurance that currently unknown matters, new laws and regulations, or
stricter interpretations of existing laws and regulations will not materially
affect the Company's business or operations in the future.
DEPENDENCE ON KEY MANAGEMENT. The Company's success will continue to depend
to a significant extent on its executive officers and other key management
personnel. The Company has not currently entered into employment agreements
with its executive officers. There can be no assurance that the Company will
be able to retain its executive officers and key personnel or attract
additional qualified management in the future. In addition, the success of
certain of the Company's acquisitions may depend, in part, on the Company's
ability to retain management personnel of the acquired companies. The Company
does not carry key-person insurance on any of its managerial personnel.
USE OF PROCEEDS
Except as otherwise indicated in this Prospectus and in an accompanying
Prospectus Supplement, the Company intends to use the net proceeds from the
sale of the Securities offered hereby for general corporate purposes, which
may include, without limitation, capital expenditures, possible future
acquisitions, repayment of outstanding indebtedness, working capital
requirements and other corporate purposes. Pending any of the foregoing
applications, the net proceeds may be invested temporarily in short-term,
investment-grade, interest bearing securities.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges is computed by dividing the sum of
historical earnings from continuing operations before taxes on income and
fixed charges, as adjusted, by fixed charges. Fixed charges represent interest
expense (including capitalized interest) and amortization of debt discount and
expense and that portion of rental expense which is deemed to be
representative of interest.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED FISCAL YEAR ENDED
JUNE 30 DECEMBER 31
----------- -----------------
1997 1996 1996 1995 1994
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges............. 2.74 1.71 1.94 1.60 1.35
</TABLE>
8
<PAGE>
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and provisions of
the Debt Securities to which any Prospectus Supplement may relate. The
particular terms of the Debt Securities offered by any Prospectus Supplement
and the extent, if any, to which such general provisions may apply to the Debt
Securities so offered will be described in the applicable Prospectus
Supplement relating to such Debt Securities.
The Debt Securities may be issued, from time to time, in one or more series,
and will constitute either Senior Subordinated Debt Securities or Subordinated
Debt Securities. Senior Subordinated Debt Securities may be issued from time
to time under an Indenture (the "Senior Subordinated Debt Securities
Indenture") to be entered into between the Company and a trustee to be named
in the applicable Prospectus Supplement (the "Senior Subordinated Debt
Securities Trustee"). Subordinated Debt Securities may be issued from time to
time under an Indenture (the "Subordinated Debt Securities Indenture") to be
entered into between the Company and a trustee to be named in the applicable
Prospectus Supplement (the "Subordinated Debt Securities Trustee").
The Senior Subordinated Debt Securities Indenture and the Subordinated Debt
Securities Indenture are referred to herein individually as an "Indenture" and
collectively as the "Indentures," and the Senior Subordinated Debt Securities
Trustee and the Subordinated Debt Securities Trustee are referred to herein
individually as the "Trustee" and collectively as the "Trustees." Forms of the
Indentures are filed as exhibits to the Registration Statement. The Indentures
will be subject to and governed by the Trust Indenture Act of 1939, as amended
(the "TIA"). Capitalized terms used in this section which are not otherwise
defined in this Prospectus shall have the meanings set forth in the Indentures
to which they relate. The following summaries of certain provisions of the
Debt Securities and the Indentures do not purport to be complete and are
subject to, and are qualified in their entirety by express reference to, all
the provisions of the Indentures, including the definitions therein of certain
terms. As used in this section of the Prospectus, the "Company" refers to
Mail-Well, Inc. and does not include its subsidiaries.
GENERAL
The Debt Securities will be direct, unsecured obligations of the Company.
The Indentures do not limit the aggregate principal amount of Debt Securities
that may be issued thereunder and provide that Debt Securities may be issued
thereunder from time to time in one or more series. Under the Indentures, the
Company will have the ability to issue Debt Securities with terms different
from those of Debt Securities previously issued, without the consent of the
holders of previously issued series of Debt Securities, in an aggregate
principal amount determined from time to time by the Company.
The applicable Prospectus Supplement or Prospectus Supplements relating to
any Senior Subordinated Debt Securities or Subordinated Debt Securities will
set forth the aggregate amount of other outstanding indebtedness, if any, that
would be senior to such Debt Securities and any limitation on the issuance of
additional senior indebtedness.
Securities may be issued as discount securities which may be sold at a
discount below their principal amount. Even if Securities are not issued at a
discount below their principal amount, such Securities may, for United States
Federal income tax purposes, be deemed to have been issued with "original
issue discount" ("OID") because of certain interest payment characteristics.
Special United States Federal income tax considerations applicable to
Securities issued with original issue discount, including discount securities,
will be described in more detail in any applicable Prospectus Supplement. In
addition, special United States Federal tax considerations or other
restrictions or terms applicable to any Debt Securities which are issuable in
bearer form, offered exclusively to United States Aliens or denominated in a
currency other than United States dollars will be set forth in the Prospectus
Supplement relating thereto.
The applicable Prospectus Supplement or Prospectus Supplements will
describe, among other things, the following terms of the Debt Securities
offered thereby (the "Offered Debt Securities"): (i) the title of the Offered
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<PAGE>
Debt Securities; (ii) any limit on the aggregate principal amount of the
Offered Debt Securities; (iii) whether the Offered Debt Securities are to be
issuable as registered securities or bearer securities or both and whether the
Offered Debt Securities may be represented initially by a Debt Security in
temporary or permanent global form, and if so, the initial Depositary with
respect to such temporary or permanent global Debt Security and whether, and
the circumstances under which, beneficial owners of interests in any such
temporary or permanent global Debt Security may exchange such interests for
Debt Securities of such series and of like tenor of any authorized form and
denomination; (iv) the price or prices at which the Offered Debt Securities
will be issued; (v) the date or dates on which the principal of the Offered
Debt Securities is payable or the method of determination thereof; (vi) the
place or places where and the manner in which the principal of and premium, if
any, and interest, if any, on such Offered Debt Securities will be payable and
the place or places where such Offered Debt Securities may be presented for
transfer and, if applicable, conversion or exchange; (vii) the rate or rates
at which the Offered Debt Securities will bear interest, or the method of
calculating such rate or rates, if any, and the date or dates from which such
interest, if any, will accrue; (viii) the Stated Maturities (as defined below)
of installments of interest (the "Interest Payment Dates"), if any, on which
any interest on the Offered Debt Securities will be payable, and the Regular
Record Date for any interest payable on any Offered Debt Securities which are
registered securities; (ix) the right or obligation, if any, of the Company to
redeem or purchase Debt Securities of the series pursuant to any sinking fund
or analogous provisions or at the option of a holder thereof, the conditions,
if any, giving rise to such right or obligation, and the period or periods
within which, and the price or prices at which and the terms and conditions
upon which Debt Securities of the series shall be redeemed or purchased, in
whole or part, and any provisions for the remarketing of such Debt Securities;
(x) whether such Offered Debt Securities are convertible or exchangeable into
other debt or equity securities, and, if so, the terms and conditions upon
which such conversion or exchange will be effected, including the initial
conversion or exchange price or rate and any adjustments thereto, the
conversion or exchange period and other conversion or exchange provisions;
(xi) the currency or currencies, including composite currencies or currency
units, of payment of principal of and interest, if any, on the Offered Debt
Securities, if other than U.S. dollars, and, if other than U.S. dollars,
whether the Offered Debt Securities may be satisfied and discharged other than
as provided in the Indenture and whether the Company or the holders of any
such Offered Debt Securities may elect to receive payments in respect of such
Offered Debt Securities in a currency or currency units other than that in
which such Offered Debt Securities are stated to be payable; (xii) any terms
applicable to such Offered Debt Securities issued at an issue price below
their stated principal amount, including the issue price thereof and the rate
or rates at which such original issue discount will accrue; (xiii) if the
amount of payments of principal of and interest, if any, on the Offered Debt
Securities is to be determined by reference to an index or formula, or based
on a coin or currency or currency unit other than that in which the Offered
Debt Securities are stated to be payable, the manner in which such amounts are
to be determined and the calculation agent, if any, with respect thereto;
(xiv) if other than the principal amount thereof, the portion of the principal
amount of the Offered Debt Securities which will be payable upon declaration
or acceleration of the maturity thereof pursuant to an Event of Default; (xv)
any deletions from, modifications of or additions to the Events of Default or
covenants of the Company with respect to such Offered Debt Securities, whether
or not such Events of Default or covenants are consistent with the Events of
Default or covenants set forth herein; (xvi) any special United States Federal
income tax considerations applicable to the Offered Debt Securities; and
(xvii) any other terms of the Offered Debt Securities not inconsistent with
the provisions of the applicable Indenture. The applicable Prospectus
Supplement will also describe the following terms of any series of Senior
Subordinated Debt Securities or Subordinated Debt Securities offered hereby in
respect of which this Prospectus is being delivered: (a) the rights, if any,
to defer payments of interest on the Senior Subordinated Debt Securities or
Subordinated Debt Securities of such series by extending the interest payment
period, and the duration of such extensions, and (b) the subordination terms
of the Senior Subordinated Debt Securities or Subordinated Debt Securities of
such series. The foregoing is not intended to be an exclusive list of the
terms that may be applicable to any Offered Debt Securities and shall not
limit in any respect the ability of the Company to issue Debt Securities with
terms different from or in addition to those described above or elsewhere in
this Prospectus provided that such terms are not inconsistent with the
applicable Indenture. Any such Prospectus Supplement will also describe any
special provisions for the payment of additional amounts with respect to the
Offered Debt Securities.
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The operations of the Company are currently conducted almost entirely
through subsidiaries. Accordingly, the Company's cash flow and its consequent
ability to service debt, including the Debt Securities, are dependent, in
large part, upon the earnings of its subsidiaries and the distribution of
those earnings to the Company, whether by dividends, loans or otherwise. The
payment of dividends and the making of loans and advances to the Company by
its subsidiaries may be subject to statutory or contractual restrictions, are
contingent upon the earnings of those subsidiaries and are subject to various
business considerations. Any right of the Company to receive assets of any of
its subsidiaries upon their liquidation or reorganization (and the consequent
right of the holders of the Debt Securities to participate in those assets)
will be effectively subordinated to the claims of that subsidiary's creditors
(including trade creditors and tort claimants), except to the extent that the
Company is itself recognized as a creditor of such subsidiary, in which case
the claims of the Company would still be subordinate to any security interests
in the assets of such subsidiary and any indebtedness of such subsidiary
senior to that held by the Company.
Unless otherwise indicated in an applicable Prospectus Supplement, the
Indentures do not include covenants limiting the amount of indebtedness that
may be incurred or otherwise restricting the Company's ability to enter into a
highly leveraged transaction, including a reorganization, restructuring,
merger or similar transaction involving the Company, that may adversely affect
the holders of the Debt Securities, if such transaction is a permissible
consolidation, merger or similar transaction. In addition, unless otherwise
specified in an applicable Prospectus Supplement, the Indentures do not afford
the holders of the Debt Securities the right to require the Company to
repurchase or redeem the Debt Securities in the event of a highly leveraged
transaction. See "Mergers and Sale of Assets."
FORM, EXCHANGE, REGISTRATION AND TRANSFER
The Debt Securities of a series may be issued solely as registered
securities, solely as bearer securities (with or without coupons attached) or
as both registered securities and bearer securities. Debt Securities of a
series may be issuable in whole or in part in the form of one or more global
Debt Securities, as described below under "Global Debt Securities." Unless
otherwise indicated in an applicable Prospectus Supplement, registered
securities will be issuable in denominations of $1,000 and integral multiples
thereof, and bearer securities will be issuable in denominations of $5,000 and
$100,000.
Registered securities of any series will be exchangeable for other
registered securities of the same series of any authorized denominations and
of a like aggregate principal amount and tenor. In addition, if Debt
Securities of any series are issuable as both registered securities and as
bearer securities, at the option of the holder, subject to the terms of the
applicable Indenture, bearer securities (accompanied by all unmatured coupons,
except as provided below, and all matured coupons in default) of such series
will be exchangeable for registered securities of the same series of any
authorized denominations and of a like aggregate principal amount and tenor.
Unless otherwise indicated in an applicable Prospectus Supplement, any bearer
security surrendered in exchange for a registered security between a Regular
Record Date or a Special Record Date and the relevant date for payment of
interest will be surrendered without the coupon relating to such date for
payment of interest and interest will not be payable in respect of the
registered security issued in exchange for such bearer security, but will be
payable only to the holder of such coupon when due in accordance with the
terms of the applicable Indenture. Bearer securities may not be issued in
exchange for registered securities.
Debt Securities may be presented for exchange as provided above, and unless
otherwise indicated in an applicable Prospectus Supplement, registered
securities may be presented for registration of transfer, at the office or
agency of the Company designated as registrar or co-registrar with respect to
any series of Debt Securities, without service charge and upon payment of any
taxes, assessments or other governmental charges as described in the
applicable Indenture. Such transfer or exchange will be effected on the books
of the registrar or any other transfer agent appointed by the Company upon
such registrar or transfer agent, as the case may be, being satisfied with the
documents of title and identity of the person making the request. The Company
intends to initially appoint the Trustee as registrar and the name of any
different or additional registrar designated by the Company with respect to
the Offered Debt Securities will be included in the Prospectus Supplement
relating thereto. If a
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<PAGE>
Prospectus Supplement refers to any transfer agents (in addition to the
registrar) designated by the Company with respect to any series of Debt
Securities, the Company may at any time rescind the designation of any such
transfer agent or approve a change in the location through which any such
transfer agent acts, except that, if Debt Securities of a series are issuable
only as registered securities, the Company will be required to maintain a
transfer agent in each Place of Payment for such series and, if Debt
Securities of a series are issuable as bearer securities, the Company will be
required to maintain (in addition to the registrar) a transfer agent in a
Place of Payment for such series located outside the United States. The
Company may at any time designate additional transfer agents with respect to
any series of Debt Securities.
In the event of any partial redemption of Debt Securities of any series, the
Company will not be required to (i) issue, register the transfer of or
exchange Debt Securities of that series during a period beginning at the
opening of business 15 days before any selection of Debt Securities of that
series to be redeemed and ending at the close of business on (a) if Debt
Securities of the series are issuable only as registered securities, the day
of mailing of the relevant notice of redemption, and (b) if Debt Securities of
the series are issuable as bearer securities, the day of the first publication
of the relevant notice of redemption or, if Debt Securities of the series are
also issuable as registered securities and there is no publication, the
mailing of the relevant notice of redemption; (ii) register the transfer of or
exchange any registered security, or portion thereof, called for redemption,
except the unredeemed portion of any registered security being redeemed in
part; or (iii) exchange any bearer security called for redemption, except to
exchange such bearer security for a registered security of that series and of
like tenor and principal amount that is immediately surrendered for
redemption.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of and interest on any registered securities will be made at the
office of such paying agent or paying agents as the Company may designate from
time to time, except that at the option of the Company payment of principal or
interest may be made by check or by wire transfer to an account maintained by
the payee. Unless otherwise indicated in an applicable Prospectus Supplement,
payment of any installment of interest on registered securities will be made
to the person in whose name such registered security is registered at the
close of business on the Regular Record Date for such payment of interest.
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of and interest, if any, on bearer securities will be payable,
subject to any applicable laws and regulations, at the offices of such paying
agents outside the United States as the Company may designate from time to
time, or by check or transfer to an account maintained by the payee outside
the United States. Unless otherwise indicated in an applicable Prospectus
Supplement, any payment of interest on any bearer securities will be made only
against surrender of the coupon relating to such interest installment.
Unless otherwise indicated in an applicable Prospectus Supplement, the
Trustee will be designated as the Company's sole paying agent for payments
with respect to Debt Securities which are issuable solely as registered
securities and as the Company's paying agent for payments with respect to Debt
Securities (subject to any limitations described in any applicable Prospectus
Supplement) which are issuable as bearer securities. Any paying agents outside
the United States and any other paying agents in the United States initially
designated by the Company for the Offered Debt Securities will be named in an
applicable Prospectus Supplement. The Company may at any time designate
additional paying agents or rescind the designation of any paying agent or
approve a change in the office through which any paying agent acts, except
that, if Debt Securities of a series are issuable only as registered
securities, the Company will be required to maintain a paying agent in each
Place of Payment for such series and, if Debt Securities of a series are
issuable as bearer securities, the Company will be required to maintain (i) a
paying agent for payments with respect to any registered securities of the
series (and for payments with respect to bearer securities of the series in
the circumstances described in the Indenture, but not otherwise), and (ii) a
paying agent in a Place of Payment located outside the United States where
Debt Securities of such series and any related coupons may be presented and
surrendered for payment.
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All moneys paid by the Company to a paying agent for the payment of
principal of or interest, if any, on any Debt Security which remains unclaimed
at the end of two years after such principal or interest shall have become due
and payable will be repaid to the Company, and the holder of such Debt
Security or any coupon will thereafter look only to the Company for payment
thereof.
GLOBAL DEBT SECURITIES
The Debt Securities of a series may be issued in whole or in part in global
form. A Debt Security in global form will be deposited with, or on behalf of,
a Depositary, which will be identified in an applicable Prospectus Supplement.
A global Debt Security may be issued in either registered or bearer form and
in either temporary or permanent form. A Debt Security in global form may not
be transferred except as a whole to the Depositary for such Debt Security or
to a nominee or successor of such Depositary. If any Debt Securities of a
series are issuable in global form, the applicable Prospectus Supplement will
describe the circumstances, if any, under which beneficial owners of interests
in any such global Debt Security may exchange such interests for definitive
Debt Securities of such series and of like tenor and principal amount in any
authorized form and denomination, the manner of payment of principal of and
interest, if any, on any such global Debt Security and the specific terms of
the depositary arrangement with respect to any such global Debt Security.
MERGERS AND SALES OF ASSETS
The Company, in a single transaction or series of related transactions, may
not consolidate with or merge into any other person or convey, transfer or
lease all or substantially all of its properties and assets to another person
or group of affiliated persons, unless, among other things, (i) the resulting,
surviving or transferee person (if other than the Company) is organized and
existing under the laws of the United States, any state thereof or the
District of Columbia and such person expressly assumes all obligations of the
Company under the Debt Securities and the Indenture, and (ii) immediately
after giving effect to such transaction, no event which is, or after notice or
passage of time or both would be, an Event of Default (any such event, a
"Default") or Event of Default shall have occurred or be continuing under the
Indenture. Upon the assumption of the Company's obligations by a person to
whom such properties or assets are conveyed, transferred or leased, subject to
certain exceptions, the Company shall be discharged from all obligations under
the Debt Securities and the Indenture.
EVENTS OF DEFAULT
Each Indenture provides that, if an Event of Default specified therein shall
have occurred and be continuing, with respect to each series of the Debt
Securities outstanding thereunder individually, the Trustee or the holders of
not less than 25% in aggregate principal amount of the outstanding Debt
Securities of such series may declare the principal amount (or, if any of the
Debt Securities of such series are Discount Securities, such portion of the
principal amount of such Debt Securities as may be specified by the terms
thereof) of the Debt Securities of such series to be immediately due and
payable. Under certain circumstances, the holders of a majority in aggregate
principal amount of the outstanding Debt Securities of such series may rescind
any such declaration.
Under each Indenture, an Event of Default is defined as, with respect to
each series of Securities outstanding thereunder individually, any of the
following: (i) default in payment of the principal of any Debt Security of
such series; (ii) default in payment of any interest on any Debt Security of
such series when due, continuing for 30 days (or such other period as shall be
set forth in the applicable Prospectus Supplement); (iii) failure by the
Company to comply with its other agreements in the Debt Securities of such
series or such Indenture for the benefit of the holders of Debt Securities of
such series upon the receipt by the Company of notice of such Default by the
Trustee or the holders of at least 25% in aggregate principal amount of the
outstanding Debt Securities of such series and the Company's failure to cure
such Default within 60 days (or such other period as shall be set forth in the
applicable Prospectus Supplement) after receipt by the Company of such notice;
(iv) certain events of bankruptcy or insolvency; and (v) any other Event of
Default set forth in the applicable Prospectus Supplement.
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The Trustee shall give notice to holders of the Debt Securities of any
continuing Default known to the Trustee within 90 days after the occurrence
thereof; provided, that the Trustee may withhold such notice, as to any
Default other than a payment Default, if it determines in good faith that
withholding the notice is in the interests of the holders.
The holders of a majority in principal amount of the outstanding Debt
Securities of any series may direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or exercising any trust
or power conferred on the Trustee with respect to the Debt Securities of such
series; provided that such direction shall not be in conflict with any law or
the Indenture and subject to certain other limitations. Before proceeding to
exercise any right or power under the Indenture at the direction of such
holders, the Trustee shall be entitled to receive from such holders reasonable
security or indemnity satisfactory to it against the costs, expenses and
liabilities which might be incurred by it in complying with any such
direction. With respect to each series of Debt Securities, no holder will have
any right to pursue any remedy with respect to the Indenture or the Debt
Securities, unless (i) such holder shall have previously given the Trustee
written notice of a continuing Event of Default with respect to the Debt
Securities of such series; (ii) the holders of at least 25% in aggregate
principal amount of the outstanding Debt Securities of such series shall have
made a written request to the Trustee to pursue such remedy; (iii) such holder
or holders have offered to the Trustee reasonable indemnity satisfactory to
the Trustee; (iv) the holders of a majority in aggregate principal amount of
the outstanding Debt Securities of such series have not given the Trustee a
direction inconsistent with such request within 60 days after receipt of such
request; and (v) the Trustee shall have failed to comply with the request
within such 60-day period.
Notwithstanding the foregoing, the right of any holder of any Debt Security
or coupon to receive payment of the principal of and interest in respect of
such Debt Security or payment of such coupon on the date specified in such
Debt Security or coupon representing such installment of interest as the fixed
date on which an amount equal to the principal of such Debt Security or an
installment of principal thereof or interest thereon is due and payable (the
"Stated Maturity" or "Stated Maturities") or to institute suit for the
enforcement of any such payments shall not be impaired or adversely affected
without such holder's consent. The holders of at least a majority in aggregate
principal amount of the outstanding Debt Securities of any series may waive an
existing Default with respect to such series and its consequences, other than
(i) any Default in any payment of the principal of, or interest on, any Debt
Security of such series or (ii) any Default in respect of certain covenants or
provisions in the Indenture which may not be modified without the consent of
the holder of each outstanding Debt Security of such series affected as
described in "Modification and Waiver," below.
Each Indenture provides that the Company shall deliver to the Trustee within
120 days after the end of each fiscal year of the Company (beginning with the
first fiscal year ending after the execution of the relevant Indenture) an
officers' certificate stating whether or not the signers know of any Default
that occurred during such period.
MODIFICATION AND WAIVER
The Company and the Trustee may execute a supplemental indenture without the
consent of the holders of the Debt Securities or any related coupons (i) to
add to the covenants, agreements and obligations of the Company for the
benefit of the holders of all the Debt Securities of any series or to
surrender any right or power conferred in the Indenture upon the Company; (ii)
to evidence the succession of another corporation to the Company and the
assumption by it of the obligations of the Company under the Indenture and the
Debt Securities; (iii) to provide that bearer securities may be registrable as
to principal, to change or eliminate any restrictions (including restrictions
relating to payment in the United States) on the payment of principal of or
interest, if any, on bearer securities, to permit bearer securities to be
issued in exchange for registered securities, to permit bearer securities to
be issued in exchange for bearer securities of other authorized denominations
or to permit the issuance of Debt Securities in uncertificated form; (iv) to
establish the form or terms of Debt Securities of any series and any related
coupons as permitted by the Indenture; (v) to provide for the acceptance of
appointment under the Indenture of a successor Trustee with respect to the
Debt Securities of one or more series
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and to add to or change any provisions of the Indenture as shall be necessary
to provide for or facilitate the administration of the trusts by more than one
Trustee; (vi) to cure any ambiguity, defect or inconsistency; (vii) to add to,
change or eliminate any provisions (which addition, change or elimination may
apply to one or more series of Debt Securities), provided that any such
addition, change or elimination neither (a) applies to any Debt Security of
any series created prior to the execution of such supplemental indenture and
is entitled to the benefit of such provision nor (b) modifies the rights of
the holder of any such Debt Security with respect to such provision; (viii) to
secure the Debt Securities; or (ix) to make any other change that does not
adversely affect the rights of any Security holder.
Each Indenture provides that, with the consent of the holders of not less
than a majority in aggregate principal amount of the outstanding Debt
Securities of the series affected by such supplemental indenture, the Company
and the Trustee may also execute a supplemental indenture to add provisions
to, or change in any manner or eliminate any provisions of, the Indenture with
respect to such series of Debt Securities or modify in any manner the rights
of the holders of the Debt Securities of such series and any related coupons
under such Indenture; provided that no such supplemental indenture will,
without the consent of the holder of each such outstanding Debt Security
affected thereby (i) change the stated maturity of the principal of, or any
installment of principal or interest on, any such Debt Security or any premium
payable upon redemption thereof, or reduce the amount of principal of any Debt
Security that is a discount security and that would be due and payable upon
declaration of acceleration of maturity thereof, (ii) reduce the principal
amount of, or the rate of interest on, any such Debt Security; (iii) change
the place or currency of payment of principal or interest, if any, on any such
Debt Security; (iv) impair the right to institute suit for the enforcement of
any payment on or with respect to any such Debt Security; (v) reduce the
above-stated percentage of holders of Debt Securities of any series necessary
to modify or amend such Indenture; (vi) modify the foregoing requirements or
reduce the percentage in principal amount of outstanding Debt Securities of
any series necessary to waive any covenant or past default; or (vii) amend or
modify any of the provisions of such Indenture relating to subordination of
the Debt Securities in any manner adverse to the holders of such Debt
Securities. Holders of not less than a majority in principal amount of the
outstanding Debt Securities of any series may waive certain past Defaults and
may waive compliance by the Company with certain of the restrictive covenants
described above with respect to the Debt Securities of such series.
DISCHARGE AND DEFEASANCE
Unless otherwise indicated in an applicable Prospectus Supplement, each
Indenture provides that the Company may satisfy and discharge obligations
thereunder with respect to the Debt Securities of any series by delivering to
the Trustee for cancellation all outstanding Debt Securities of such series or
depositing with the Trustee, after such outstanding Debt Securities have
become due and payable, cash sufficient to pay at Stated Maturity all of the
outstanding Debt Securities of such series and paying all other sums payable
under the Indenture with respect to such series.
In addition, unless otherwise indicated in an applicable Prospectus
Supplement, each Indenture provides that the Company (a) shall be discharged
from its obligations in respect of the Debt Securities of such series
("defeasance and discharge"), or (b) may cease to comply with certain
restrictive covenants ("covenant defeasance") including those described under
"Mergers and Sales of Assets" and any such omission shall not be an Event of
Default with respect to the Debt Securities of such series, in each case at
any time prior to the Stated Maturity or redemption thereof, when the Company
has irrevocably deposited with the Trustee, in trust, (i) sufficient funds in
the currency or currency unit in which the Debt Securities are denominated to
pay the principal of (and premium, if any) and interest to Stated Maturity (or
redemption) on, the Debt Securities of such series, or (ii) such amount of
direct obligations of, or obligations the principal of (and premium, if any)
and interest on which are fully guaranteed by, the government which issued the
currency in which the Debt Securities are denominated, and which are not
subject to prepayment, redemption or call, as will, together with the
predetermined and certain income to accrue thereon without consideration of
any reinvestment thereof, be sufficient to pay when due the principal of (and
premium, if any) and interest to Stated Maturity (or redemption) on, the Debt
Securities of such series. Such defeasance and discharge and covenant
defeasance are conditioned
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upon, among other things, the Company's delivery of an opinion of counsel that
the holders of the Debt Securities of such series will not recognize income,
gain or loss for United States Federal income tax purposes as a result of such
defeasance, and will be subject to tax in the same manner as if no defeasance
and discharge or covenant defeasance, as the case may be, had occurred. Upon
such defeasance and discharge, the holders of the Debt Securities of such
series shall no longer be entitled to the benefits of the Indenture, except
for the purposes of registration of transfer and exchange of the Debt
Securities of such series and replacement of lost, stolen or mutilated Debt
Securities and shall look only to such deposited funds or obligations for
payment.
THE TRUSTEES
Each Trustee will be permitted to engage in other transactions with the
Company and its subsidiaries; however, if any Trustee acquires any conflicting
interest, it must eliminate such conflict or resign.
DESCRIPTION OF PREFERRED STOCK
The Company may issue, from time to time, shares of one or more series or
classes of Preferred Stock. The following description sets forth certain
general terms and provisions of the Preferred Stock to which any Prospectus
Supplement may relate. The particular terms of any series of Preferred Stock
and the extent, if any, to which such general provisions may apply to the
series of Preferred Stock so offered will be described in the Prospectus
Supplement relating to such Preferred Stock. The following summary of certain
provisions of the Preferred Stock does not purport to be complete and is
subject to, and is qualified in its entirety by express reference to, the
provisions of the Company's Articles of Incorporation (the "Articles of
Incorporation") and the Certificate of Designation relating to a specific
series of the Preferred Stock (the "Certificate of Designation"), which will
be in the form filed as an exhibit to, or incorporated by reference in, the
Registration Statement of which this Prospectus is a part at or prior to the
time of issuance of such series of Preferred Stock.
Under the Articles of Incorporation, the Company has the authority to issue
up to twenty-five thousand (25,000) shares of Preferred Stock. The Board of
Directors of the Company is authorized to issue shares of Preferred Stock, in
one or more series or classes, and to fix for each such series voting powers
and such preferences and relative, participating, optional or other special
rights and such qualifications, limitations or restrictions as are permitted
by the Colorado Business Corporation Act.
The Board of Directors of the Company shall be authorized to determine for
each series of Preferred Stock, and the Prospectus Supplement shall set forth
with respect to such series: (1) the distinguishing designation of, and the
number of shares of Preferred Stock that shall constitute, such series; (2)
the rights in respect of dividends, if any, of such series of Preferred Stock,
the extent of the preference or relation, if any, of such dividends to the
dividends payable on any other class or classes or any other series of the
same or other class or classes of capital stock of the Company and whether
such dividends shall be cumulative or noncumulative; (3) the right, if any, of
the holders of such series of Preferred Stock to convert the same into, or
exchange the same for, shares of any other class or classes or of any other
series of the same or any other class or classes of capital stock of the
Company, and the terms and conditions of such conversion or exchange; (4)
whether or not shares of such series of Preferred Stock shall be subject to
redemption, and the redemption price or prices and the time or times at which,
and the terms and conditions on which, shares of such series of Preferred
Stock may be redeemed; (5) the rights, if any, of the holders of such series
of Preferred Stock upon the voluntary or involuntary liquidation, dissolution
or winding-up of the Company or in the event of any merger or consolidation of
or sale of assets by the Company; (6) the terms of any sinking fund or
redemption or repurchase or purchase account, if any, to be provided for
shares of such series of Preferred Stock; (7) the voting powers, if any, of
the holders of any series of Preferred Stock generally or with respect to any
particular matter, which may be less than, equal to or greater than one vote
per share, and which may, without limiting the generality of the foregoing,
include the right, voting as a series of Preferred Stock as a class, to elect
one or more directors of the Company generally or under such specific
circumstances and on such conditions, as shall be provided in the resolution
or resolutions of the Board of Directors adopted pursuant hereto, including,
without limitation, in the event there shall have been
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a default in the payment of dividends on or redemption of any one or more
series of Preferred Stock; and (8) such other powers, preferences and
relative, participating, optional and other special rights, and the
qualifications, limitations and restrictions thereof, as the Board of
Directors shall determine.
DIVIDENDS
Holders of shares of Preferred Stock shall be entitled to receive, when and
as declared by the Board of Directors of the Company out of funds of the
Company legally available therefor, a cash dividend payable in such amounts,
at such dates and at such rates, if any, per share as set forth in the
applicable Prospectus Supplement.
Unless otherwise set forth in the applicable Prospectus Supplement, no
dividends (other than in common stock or other capital stock ranking junior to
the Preferred Stock as to dividends and upon liquidation) shall be declared or
paid or set aside for payment, nor shall any other distribution be declared or
made upon the common stock, or any other capital stock of the Company ranking
junior to or on a parity with the Preferred Stock as to dividends, nor shall
any common stock or any other capital stock of the Company ranking junior to
or on a parity with the Preferred Stock as to dividends be redeemed, purchased
or otherwise acquired for any consideration (or any moneys be paid to or made
available for a sinking fund for the redemption of any shares of any such
stock) by the Company (except by conversion into or exchange for other capital
stock of the Company ranking junior to the Preferred Stock as to dividends)
unless (i) if such series of Preferred Stock has a cumulative dividend, full
cumulative dividends on the Preferred Stock have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof set
apart for all past dividend periods and the then current dividend period and
(ii) if such series of Preferred Stock does not have a cumulative dividend,
full dividends on the Preferred Stock have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof set
apart for payment for the then current dividend period; provided, however,
that any monies theretofore deposited in any sinking fund with respect to any
preferred stock in compliance with the provisions of such sinking fund may
thereafter be applied to the purchase or redemption of such preferred stock in
accordance with the terms of such sinking fund, regardless of whether at the
time of such application full cumulative dividends upon shares of the
Preferred Stock outstanding on the last dividend payment date shall have been
paid or declared and set apart for payment and provided, further; that any
such junior or parity preferred stock or common stock may be converted into or
exchanged for stock of the Company ranking junior to the Preferred Stock as to
dividends.
The amount of dividends payable for the initial dividend period or any
period shorter than a full dividend period shall be computed on the basis of a
360-day year of twelve 30-day months. Accrued but unpaid dividends will not
bear interest.
CONVERTIBILITY
No series of Preferred Stock will be convertible into, or exchangeable for,
other securities or property except as set forth in the applicable Prospectus
Supplement, which will set forth the terms and conditions upon which such
conversion or exchange may be effected, including the initial conversion or
exchange rate and any adjustments thereto, the conversion or exchange period
and any other conversion or exchange provisions.
REDEMPTION AND SINKING FUND
No series of Preferred Stock will be redeemable or receive the benefit of a
sinking fund except as set forth in the applicable Prospectus Supplement,
which will set forth the terms and conditions thereof, including the dates and
redemption prices of any such redemption, any conditions thereto, and any
other redemption or sinking fund provisions.
LIQUIDATION RIGHTS
Unless otherwise set forth in the applicable Prospectus Supplement, in the
event of any liquidation, dissolution or winding up of the Company, the
holders of shares of each series of Preferred Stock are entitled to
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receive out of assets of the Company available for distribution to
stockholders, before any distribution of assets is made to holders of (i) any
other shares of preferred stock ranking junior to such series of Preferred
Stock as to rights upon liquidation, dissolution or winding up and (ii) shares
of common stock, liquidating distributions per share in the amount of the
liquidation preference specified in the applicable Prospectus Supplement for
such series of Preferred Stock plus any dividends accrued and accumulated but
unpaid to the date of final distribution; but the holders of each series of
Preferred Stock will not be entitled to receive the liquidating distribution
of, plus such dividends on, such shares until the liquidation preference of
any shares of the Company's capital stock ranking senior to such series of the
Preferred Stock as to the rights upon liquidation, dissolution or winding up
shall have been paid (or a sum set aside therefor sufficient to provide for
payment) in full. If upon any liquidation, dissolution or winding up of the
Company, the amounts payable with respect to the Preferred Stock, and any
other Preferred Stock ranking as to any such distribution on a parity with the
Preferred Stock are not paid in full, the holders of the Preferred Stock and
such other parity preferred stock will share ratably in any such distribution
of assets in proportion to the full respective preferential amount to which
they are entitled. Unless otherwise specified in a Prospectus Supplement for a
series of Preferred Stock, after payment of the full amount of the liquidating
distribution to which they are entitled, the holders of shares of Preferred
Stock will not be entitled to any further participation in any distribution of
assets by the Company. Neither a consolidation or merger of the Company with,
or into, another corporation nor a sale of securities, lease, transfer or
conveyance shall be considered a liquidation, dissolution or winding up of the
Company.
VOTING RIGHTS
The Board of Directors may determine the voting powers, if any, of the
holders of any series of Preferred Stock generally or with respect to any
particular matter. Any such voting rights may be less than, equal to or
greater than one vote per share, and which may, without limiting the
generality of the foregoing, include the right, voting as a series of
Preferred Stock as a class, to elect one or more directors of the Company
generally or under such specific circumstances and on such conditions, as
shall be provided in the resolution or resolutions of the Board of Directors
adopted pursuant to the Articles of Incorporation, including, without
limitation, in the event there shall have been a default in the payment of
dividends on or redemption of any one or more series of Preferred Stock.
Holders of shares of Preferred Stock will have no voting rights except as
provided in the Prospectus Supplement and as otherwise required from time to
time by applicable law.
MISCELLANEOUS
The holders of Preferred Stock will have no preemptive rights. The Preferred
Stock, upon issuance against full payment of the purchase price therefor, will
be fully paid and nonassessable. Shares of Preferred Stock redeemed or
otherwise reacquired by the Company shall resume the status of authorized and
unissued shares of Preferred Stock undesignated as to series, and shall be
available for subsequent issuance. There are no restrictions on repurchase or
redemption of the Preferred Stock while there is any arrearage on sinking fund
installments except as may be set forth in an applicable Prospectus
Supplement. Payment of dividends on any series of Preferred Stock may be
restricted by loan agreements, indentures and other transactions entered into
by the Company. The accompanying Prospectus Supplement will describe any
material contractual restrictions on dividend payments.
NO OTHER RIGHTS
The shares of a series of Preferred Stock will not have any preferences,
voting powers or relative, participating, optional or other special rights
except as set forth above or in the applicable Prospectus Supplement, the
Articles of Incorporation or the applicable Certificate of Designation or as
otherwise required by law.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for each series of Preferred Stock will be
designated in the applicable Prospectus Supplement.
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DESCRIPTION OF DEPOSITORY SHARES
GENERAL
The Company may offer receipts ("Depository Receipts") for Depository
Shares, each of which will represent a fractional interest in a share of a
particular series of a class of Preferred Stock, as specified in the
applicable Prospectus Supplement. Preferred Stock of each series of each class
represented by Depository Shares will be deposited under a separate Deposit
Agreement (each, a "Deposit Agreement") among the Company, the depository
named therein (such depository or its successor, the "Preferred Stock
Depository") and the holders from time to time of the Depository Receipts.
Subject to the terms of the Deposit Agreement, each owner of a Depository
Receipt will be entitled, in proportion to the fractional interest of a share
of the particular series of a Depository Receipt, to all the rights and
preferences of the Preferred Stock represented by such Depository Shares
(including dividend, voting, conversion, redemption and liquidation rights).
The Depository Shares will be evidenced by Depository Receipts issued
pursuant to the applicable Deposit Agreement. Immediately following the
issuance and delivery of the Preferred Stock by the Company to the Preferred
Stock Depository, the Company will cause the Preferred Stock Depository to
issue, on behalf of the Company, the Depository Receipts. Copies of the
applicable form of Deposit Agreement and Depository Receipt may be obtained
from the Company upon request.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Preferred Stock Depository will distribute all cash dividends or other
cash distributions received in respect of the Preferred Stock to the record
holders of the Depository Receipts evidencing the related Depository Shares in
proportion to the number of such Depository Receipts owned by such holder,
subject to certain obligations of holders to file proofs, certificates and
other information and to pay certain charges and expenses to the Preferred
Stock Depository.
In the event of a distribution other than in cash, the Preferred Stock
Depository will distribute property received by it to the record holders of
Depository Receipts entitled thereto, subject to certain obligations of
holders to file proofs, certificates and other information and to pay certain
charges and expenses to the Preferred Stock Depository, unless the Preferred
Stock Depository determines that it is not feasible to make such distribution,
in which case the Preferred Stock Depository may, with the approval of the
Company, sell such property and distribute the net proceeds from such sale to
such holders.
WITHDRAWAL OF SHARES
Upon surrender of the Depository Receipts at the corporate trust office of
the Preferred Stock Depository (unless the related Depository Shares have
previously been called for redemption), the holders thereof will be entitled
to delivery at such office, to or upon such holder's order, or the number of
whole shares of Preferred Stock and any money or other property represented by
the Depository Shares evidenced by such Depository Receipts. Holders of
Depository Receipts will be entitled to receive whole shares of the related
Preferred Stock on the basis of the proportion of Preferred Stock represented
by each Depository Share as specified in the applicable Prospectus Supplement,
but holders of such Preferred Stock will not thereafter be entitled to receive
Depository Shares therefor. If the Depository Receipts delivered by the holder
evidence a number of Depository Shares in excess of the number of Depository
Shares representing the number of shares of Preferred Stock to be withdrawn,
the Preferred Stock Depository will deliver to such holder at the same time a
new Depository Receipt evidencing such excess number of Depository Shares.
REDEMPTION OF DEPOSITORY SHARES
Whenever the Company redeems Preferred Stock held by the Preferred Stock
Depository, the Preferred Stock Depository will redeem as of the same
redemption date the number of Depository Shares representing the Preferred
Stock so redeemed, provided the Company shall have paid in full to the
Preferred Stock Depository
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the redemption price of the Preferred Stock to be redeemed plus an amount
equal to any accrued and unpaid dividends (except, with respect to
noncumulative shares of Preferred Stock, dividends for the current dividend
period only) thereon to the date fixed for redemption. The redemption price
per Depository Share will be equal to the redemption price and any other
amounts per share payable with respect to the Preferred Stock. If less than
all the Depository Shares are to be redeemed, the Depository Shares to be
redeemed will be selected by the Preferred Stock Depository by lot.
After the date fixed for redemption, the Depository Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depository Receipts evidencing the Depository Shares so called
for redemption will cease, except the right to receive any moneys payable upon
such redemption and any money or other property to which the holders of such
Depository Receipts were entitled upon such redemption upon surrender thereof
to the Preferred Stock Depository.
VOTING OF THE UNDERLYING PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the Preferred
Stock are entitled to vote, the Preferred Stock Depository will mail the
information contained in such notice of meeting to the record holders of the
Depository Receipts evidencing the Depository Shares which represent such
Preferred Stock. Each record holder of Depository Receipts evidencing
Depository Shares on the record date (which will be the same date as the
record date for the Preferred Stock) will be entitled to instruct the
Preferred Stock Depository as to the exercise of the voting rights pertaining
to the amount of Preferred Stock represented by such holder's Depository
Shares. The Preferred Stock Depository will vote the amount of Preferred Stock
represented by such Depository Shares in accordance with such instructions,
and the Company will agree to take all reasonable action which may be deemed
necessary by the Preferred Stock Depository in order to enable the Preferred
Stock Depository to do so. The Preferred Stock Depository will abstain from
voting the amount of Preferred Stock represented by such Depository Shares to
the extent it does not receive specific instructions from the holders of
Depository Receipts evidencing such Depository Shares.
LIQUIDATION PREFERENCE
In the event of liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, each holder of a Depository Receipt will be
entitled to the fraction of the liquidation preference accorded each share of
Preferred Stock represented by the Depository Share evidenced by such
Depository Receipt, as set forth in the applicable Prospectus Supplement.
CONVERSION OF THE UNDERLYING PREFERRED STOCK
The Depository Shares, as such, are not convertible into Common Stock or any
securities or property of the Company. Nevertheless, if so specified in the
applicable Prospectus Supplement relating to an offering of Depository Shares,
the Depository Receipts may be surrendered by holders thereof to the Preferred
Stock Depository with written instructions to the Preferred Stock Depository
to instruct the Company to cause conversion of the Preferred Stock represented
by the Depository Shares evidenced by such Depository Receipts into whole
shares of Common Stock, other Preferred Stock of the Company or other shares
of capital Stock, and the Company has agreed that upon receipt of such
instructions and any amounts payable in respect thereof, it will cause the
conversion thereof utilizing the same procedures as those provided for
delivery of Preferred Stock to effect such conversion. If the Depository
Shares evidenced by a Depository Receipt are to be converted in part only, one
or more new Depository Receipts will be issued for any Depository Shares not
to be converted. No fractional shares of Common Stock will be issued upon
conversion, and if such conversion will result in a fractional share being
issued, an amount will be paid in cash by the Company equal to the value of
the fractional interest based upon the closing price of the Common Stock on
the last business day prior to the conversion.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depository Receipt evidencing the Depository Shares which
represent the Preferred Stock and any provision of the Deposit Agreement may
at any time be amended by agreement between the Company and
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the Preferred Stock Depository. However, any amendment that materially and
adversely alters the rights of the holders of Depository Receipts will not be
effective unless such amendment has been approved by the existing holders of
at least a majority of the Depository Shares evidenced by the Depository
Receipts then outstanding.
The Deposit Agreement may be terminated by the Company upon not less than 30
days' prior written notice to the Preferred Stock Depository if a majority of
each class of Depository Shares affected by such termination consents to such
termination, whereupon the Preferred Stock Depository shall deliver or make
available to each holder of Depository Receipts, upon surrender of the shares
of Preferred Stock as are represented by the Depository Shares evidenced by
such Depository Receipts. In addition, the Deposit Agreement will
automatically terminate if (i) all outstanding Depository Shares shall have
been redeemed, (ii) there shall have been a final distribution in respect of
the related Preferred Stock in connection with any liquidation, dissolution or
winding up of the Company and such distribution shall have been distributed to
the holders of Depository Receipts evidencing the Depository Shares
representing such Preferred Stock or (iii) each related share of Preferred
Stock shall have been converted into capital stock of the Company not so
represented by Depository Shares.
CHARGES OF PREFERRED STOCK DEPOSITORY
The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the Deposit Agreement. In addition, the
Company will pay the fees and expenses of the Preferred Stock Depository in
connection with the performance of its duties under the Deposit Agreement.
However, holders of the Depository Receipts will pay the fees and expenses of
the Preferred Stock Depository for any duties requested by such holders to be
performed which are outside of those expressly provided for in the Deposit
Agreement.
RESIGNATION AND REMOVAL OF PREFERRED STOCK DEPOSITORY
The Preferred Stock Depository may resign at any time by delivering to the
Company notice of its election to do so, and the Company may at any time
remove the Preferred Stock Depository, any such resignation or removal to take
effect upon the appointment of a successor Preferred Stock Depository. A
successor Preferred Stock Depository must be appointed within 60 days after
delivery of the notice of resignation or removal and must be a bank or trust
company having its principal office in the United States and having a combined
capital and surplus of at least $50,000,000.
MISCELLANEOUS
The Preferred Stock Depository will forward to holders of Depository
Receipts any reports and communications from the Company that are received by
the Preferred Stock Depository with respect to the related Preferred Stock.
Neither the Preferred Stock Depository nor the Company will be liable if it
is prevented from or delayed in, by law or any circumstances beyond its
control, performing its obligations under the Deposit Agreement. The
obligations of the Company and the Preferred Stock Depository under the
Deposit Agreement will be limited to performing their duties thereunder in
good faith and without gross negligence or willful misconduct, and the Company
and the Preferred Stock Depository will not be obligated to prosecute or
defend any legal proceeding in respect of any Depository Receipts, Depository
Shares or the Preferred Stock represented thereby unless satisfactory
indemnity is furnished. The Company and the Preferred Stock Depository may
rely on written advice of counsel or accountants, or information provided by
persons presenting Preferred Stock represented thereby for deposit, holders of
Depository Receipts or other persons believed to be competent to give such
information, and on documents believed to be genuine and signed by a proper
party.
If the Preferred Stock Depository shall receive conflicting claims, requests
or instructions from any holders of Depository Receipts, on the one hand, and
the Company, on the other hand, the Preferred Stock Depository shall be
entitled to act on such claims, requests or instructions received from the
Company.
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<PAGE>
DESCRIPTION OF COMMON STOCK
The Company's Articles of Incorporation authorize an aggregate of 30,000,000
shares of Common Stock. Except as described below with respect to certain
significant shareholders, holders of Common Stock are entitled to one vote for
each share on all matters on which shareholders are entitled to vote,
including election of directors. The Articles do not provide for cumulative
voting or preemptive, subscription, redemption or conversion rights.
Dividends may be paid to shareholders when, as and if declared by the Board
of Directors out of funds legally available for such purpose. The declaration
and payment of dividends is restricted under the terms of the Company's
guarantees of certain indebtedness of its subsidiaries.
In the event of the dissolution or winding up of the Company, after payment
or provision for payment of debts and other liabilities of the Company, the
holders of Common Stock will be entitled to receive pro rata all remaining
assets of the Company.
Under the provisions of Article XII of the Articles of Incorporation, a
holder of 15% or more of the Common Stock may not vote such shares in favor of
certain transactions, e.g. merger, consolidation, plan of exchange or sale of
substantially all of the Company's assets, with such shareholder or any party
related to such shareholder for a period of three years following acquisition
of the Common Stock without the approval of the Board of Directors and two-
thirds of the other shareholders. This provision does not apply if such
shareholder acquires at least 85% of the Common Stock in the same transaction
resulting in such shareholder acquiring 15%, or if such transaction is
approved by the Board of Directors prior to such shareholder's acquisition of
15% of the Common Stock.
DESCRIPTION OF WARRANTS
GENERAL
The Company may issue, together with other Securities or separately,
warrants for the purchase of (i) Debt Securities ("Debt Warrants"), (ii)
Preferred Stock (the "Preferred Stock Warrants") or (iii) Common Stock
("Common Stock Warrants"). The Preferred Stock Warrants and the Common Stock
Warrants are collectively referred to as the "Stock Warrants" and the Stock
Warrants and the Debt Warrants are collectively referred to as the
"Warrants").
The Warrants will be issued under Warrant Agreements (as defined below) to
be entered into between the Company and a bank or trust company, as warrant
agent (the "Warrant Agent"), all to be set forth in the applicable Prospectus
Supplement relating to any or all Warrants in respect of which this Prospectus
is being delivered. Copies of the form of agreement for each Warrant (each a
"Debt Securities Warrant Agreement" or "Stock Warrant Agreement," as the case
may be, or collectively the "Warrant Agreements"), including the forms of
certificates representing the Warrants ("Debt Warrant Certificates" or "Stock
Warrant Certificates," as the case may be, or collectively, the "Warrant
Certificates") reflecting the provisions to be included in such agreements
that will be entered into with respect to the particular offerings of each
type of warrant are, or will be, filed as exhibits to the Registration
Statement of which this Prospectus forms a part.
The following description sets forth certain general terms and provisions of
the Warrants to which any Prospectus Supplement may relate. The particular
terms of the Warrants to which any Prospectus Supplement may relate and the
extent, if any, to which such general provisions may apply to the Warrants so
offered will be described in the applicable Prospectus Supplement. The
following summary of certain provisions of the Warrants, Warrant Agreements
and Warrant Certificates does not purport to be complete and is subject to,
and is qualified in its entirety by express reference to, all the provisions
of the Warrant Agreements and Warrant Certificates, including the definitions
therein of certain terms.
22
<PAGE>
DEBT WARRANTS
General. Reference is made to the applicable Prospectus Supplement for the
terms of Debt Warrants in respect of which this Prospectus is being delivered,
the Debt Securities Warrant Agreement relating to such Debt Warrants and the
Debt Warrant Certificates representing such Debt Warrants, including the
following: (i) the designation, aggregate principal amount and terms of the
Debt Securities purchasable upon exercise of such Debt Warrants and the
procedures and conditions relating to the exercise of such Debt Warrants; (ii)
the designation and terms of any related Debt Securities with which such Debt
Warrants are issued and the number of such Debt Warrants issued with each such
Debt Security; (iii) the date, if any, on and after which such Debt Warrants
and the related Debt Securities will be separately transferable; (iv) the
principal amount of Debt Securities purchasable upon exercise of each Debt
Warrant and the price at which such principal amount of Debt Securities may be
purchased upon such exercise; (v) the date on which the right to exercise such
Debt Warrants shall commence and the date on which such right shall expire;
(vi) a discussion of the material United States Federal income tax
considerations applicable to the ownership or exercise of Debt Warrants; (vii)
whether the Debt Warrants represented by the Debt Warrant Certificates will be
issued in registered or bearer form, and, if registered, where they may be
transferred and registered; (viii) call provisions of such Debt Warrants, if
any; and (ix) any other terms of the Debt Warrants.
Debt Warrant Certificates will be exchangeable for new Debt Warrant
Certificates of different denominations and Debt Warrants may be exercised at
the corporate trust office of the Warrant Agent or any other office indicated
in the applicable Prospectus Supplement. Prior to the exercise of their Debt
Warrants, holders of Debt Warrants will not have any of the rights of holders
of the Debt Securities purchasable upon such exercise and will not be entitled
to payments of principal of (and premium, if any) or interest, if any, on the
Debt Securities purchasable upon such exercise.
Exercise of Debt Warrants. Each Debt Warrant will entitle the holder to
purchase for cash such principal amount of Debt Securities at such exercise
price as shall in each case be set forth in, or be determinable as set forth
in, the applicable Prospectus Supplement relating to the Debt Warrants offered
thereby. Debt Warrants may be exercised at any time up to 5:00 p.m., New York
City time, on the expiration date set forth in the applicable Prospectus
Supplement. After 5:00 p.m., New York City time, on the expiration date,
unexercised Debt Warrants will become void.
Debt Warrants may be exercised as set forth in the applicable Prospectus
Supplement relating to the Debt Warrants. Upon receipt of payment and the Debt
Warrant Certificate properly completed and duly executed at the corporate
trust office of the Warrant Agent or any other office indicated in the
applicable Prospectus Supplement, the Company will, as soon as practicable,
forward the Debt Securities purchasable upon such exercise. If less than all
of the Debt Warrants represented by such Debt Warrant Certificate are
exercised, a new Debt Warrant Certificate will be issued for the remaining
amount of Debt Warrants.
STOCK WARRANTS
General. Reference is made to the applicable Prospectus Supplement for the
terms of Stock Warrants in respect of which this Prospectus is being
delivered, the Stock Warrant Agreement relating to such Stock Warrants and the
Stock Warrant Certificates representing such Stock Warrants, including the
following: (i) the type and number of shares of Preferred Stock or Common
Stock purchasable upon exercise of such Stock Warrants and the procedures and
conditions relating to the exercise of such Stock Warrants; (ii) the date, if
any, on and after which such Stock Warrants and the related shares of
Preferred Stock or Common Stock will be separately tradeable; (iii) the
offering price of such Stock Warrants, if any; (iv) the initial price at which
such shares may be purchased upon exercise of Stock Warrants and any provision
with respect to the adjustment thereof; (v) the date on which the right to
exercise such Stock Warrants shall commence and the date on which such right
shall expire; (vi) a discussion of the material United States Federal income
tax considerations applicable to the ownership or exercise of Stock Warrants;
(vii) call provisions of such Stock Warrants, if any; (viii) any other terms
of the Stock Warrants and; (ix) in the case of Preferred Stock Warrants,
information relating to the Preferred Stock purchasable upon exercise of such
Preferred Stock Warrants.
23
<PAGE>
Stock Warrant Certificates will be exchangeable for new Stock Warrant
Certificates of different denominations and Stock Warrants may be exercised at
the corporate trust office of the Warrant Agent or any other office indicated
in the applicable Prospectus Supplement. Prior to the exercise of their Stock
Warrants, holders of Stock Warrants will not have any of the rights of holders
of shares of capital stock purchasable upon such exercise, and will not be
entitled to any dividend payments on such capital stock purchasable upon such
exercise.
Exercise of Stock Warrants. Each Stock Warrant will entitle the holder to
purchase for cash such number of shares of Preferred Stock or Common Stock, as
the case may be, at such exercise price as shall in each case be set forth in,
or be determinable as set forth in, the applicable Prospectus Supplement
relating to the Stock Warrants offered thereby. Unless otherwise specified in
the applicable Prospectus Supplement, Stock Warrants may be exercised at any
time up to 5:00 p.m., New York City time, on the expiration date set forth in
the applicable Prospectus Supplement. After 5:00 p.m., New York City time, on
the expiration date, unexercised Stock Warrants will become void.
Stock Warrants may be exercised as set forth in the applicable Prospectus
Supplement relating thereto. Upon receipt of payment and the Stock Warrant
Certificates properly completed and duly executed at the corporate trust
office of the Warrant Agent or any other office indicated in the applicable
Prospectus Supplement, the Company will, as soon as practicable, forward a
certificate representing the number of shares of capital stock purchasable
upon such exercise. If less than all of the Stock Warrants represented by such
Stock Warrant Certificate are exercised, a new Stock Warrant Certificate will
be issued for the remaining amount of Stock Warrants.
PLAN OF DISTRIBUTION
The Company may sell the Securities to one or more underwriters for public
offering and sale by them or may sell the Securities to investors directly or
through agents or dealers. Any such underwriter, agent or dealer involved in
the offer and sale of the Securities will be named in an applicable Prospectus
Supplement. Securities offered pursuant to a particular Prospectus Supplement
are referred to herein as "Offered Securities."
Underwriters may offer and sell the Offered Securities at a fixed price or
prices, which may be changed, or from time to time at market prices prevailing
at the time of sale, at prices related to such prevailing market prices or at
negotiated prices. The Company also may, from time to time, authorize
underwriters acting as its agents to offer and sell the Offered Securities
upon the terms and conditions set forth in the applicable Prospectus
Supplement. In connection with the sale of Offered Securities, underwriters
may be deemed to have received compensation from the Company in the form of
underwriting discounts or commissions and may also receive commissions from
purchasers of Offered Securities for whom they may act as agent. Underwriters
may sell Offered Securities to or through dealers, and such dealers may
receive compensation in the form of discounts and commissions or concessions
from the underwriters and/or commissions (which may be changed from time to
time) from the purchasers for whom they may act as agent.
Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of Offered Securities, and any discounts and
commissions or concessions allowed by underwriters to participating dealers,
will be set forth in an applicable Prospectus Supplement. Underwriters,
dealers and agents participating in the distribution of the Offered Securities
may be deemed to be underwriters under the Securities Act, and any discounts
and commissions received by them and any profit realized by them on resale of
the Offered Securities may be deemed to be underwriting discounts and
commissions under the Securities Act. Underwriters, dealers and agents may be
entitled, under agreements with the Company, to indemnification against and
contribution toward certain civil liabilities, including liabilities under the
Securities Act, and to reimbursement by the Company for certain expenses.
If a dealer is utilized in the sale of the Securities in respect of which
this Prospectus is delivered, the Company will sell such Securities to such
dealer, as principal. The dealer may then resell such Securities to the public
at varying prices to be determined by such dealer at the time of resale.
24
<PAGE>
If so indicated in an applicable Prospectus Supplement, the Company will
authorize dealers acting as its agents to solicit offers by certain
institutions to purchase Offered Securities from the Company at the public
offering price set forth in such Prospectus Supplement pursuant to Delayed
Delivery Contracts ("Contracts") providing for payment and delivery on the
date or dates stated in such Prospectus Supplement. Each Contract will be for
an amount not less than, and the aggregate principal amount of Offered
Securities sold pursuant to Contracts shall not be less nor more than, the
respective amounts stated in such Prospectus Supplement. Institutions with
whom Contracts, when authorized, may be made include commercial and savings
banks, insurance companies, pension funds, investment companies, educational
and charitable institutions and other institutions, but will in all cases be
subject to the approval of the Company. The terms and conditions of any
Contracts will be set forth in the applicable Prospectus Supplement relating
thereto. Agents and underwriters will have no responsibility in respect of the
delivery or performance of Contracts.
LEGAL MATTERS
The validity of the issuance of the Securities offered hereby will be passed
upon for the Company by Rothgerber, Appel, Powers & Johnson LLP, Denver,
Colorado.
EXPERTS
The consolidated financial statements and related financial statement
schedules incorporated in this Prospectus by reference from the Company's
Annual Report on Form 10-K have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports, which are incorporated
herein by reference, and have been so incorporated in reliance upon the
reports of such firm given upon their authority as experts in accounting and
auditing.
25
<PAGE>
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NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AU-
THORIZED BY THE COMPANY OR ANY UNDERWRITER OR AGENT. THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SO-
LICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY OR THEREBY
BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHO-
RIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER IS NOT QUALIFIED TO DO SO, OR
TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEI-
THER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS
NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CRE-
ATE ANY IMPLICATION THAT THE INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT THERETO.
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$150,000,000
LOGO
MAIL-WELL, INC.
5% Convertible Subordinated Notes due 2002
------------------------------
PROSPECTUS SUPPLEMENT
------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
PROSPECTUS SUPPLEMENT
<S> <C>
Prospectus Supplement Summary.............................................. S-3
Risk Factors............................................................... S-7
Use of Proceeds............................................................ S-9
Price Range of Common Stock................................................ S-9
Dividend Policy............................................................ S-9
Capitalization............................................................. S-10
Selected Financial Data.................................................... S-11
Management................................................................. S-12
Description of Notes....................................................... S-14
Certain United States Federal Income Tax Considerations.................... S-26
Shares Eligible for Future Sales........................................... S-28
Underwriting............................................................... S-29
Legal Matters.............................................................. S-30
PROSPECTUS
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
The Company................................................................ 3
Recent Developments........................................................ 3
Risk Factors............................................................... 4
Use of Proceeds............................................................ 8
Ratio of Earnings to Fixed Charges......................................... 8
Description of Debt Securities............................................. 9
Description of Preferred Stock............................................. 16
Description of Depository Shares........................................... 19
Description of Common Stock................................................ 22
Description of Warrants.................................................... 22
Plan of Distribution....................................................... 24
Legal Matters.............................................................. 25
Experts.................................................................... 25
</TABLE>
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PRUDENTIAL SECURITIES INCORPORATED
BEAR, STEARNS & CO. INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
HANIFEN, IMHOFF INC.
November 13, 1997
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