<PAGE>
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
Commission file number 0-26692
MAIL-WELL, INC.
(Exact name of Registrant as specified in its charter.)
Colorado 84-1250533
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
23 Inverness Way East, Englewood, CO 80112
(Address of principal executive offices) (Zip Code)
303-790-8023
(Registrant's telephone number, including area code)
Indicate by checkmark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [_]
As of July 31, 1997, the Registrant had 18,815,356 shares of Common Stock, $0.01
par value, outstanding.
- --------------------------------------------------------------------------------
<PAGE>
MAIL-WELL, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Page
Part I - Financial Information
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 17
Part II - Other Information
Item 1. Legal Proceedings 17
Item 2. Changes in Securities 17
Item 3. Defaults upon Senior Securities 17
Item 4. Submission of Matters to a Vote of Securities Holders 17
Item 5. Other Information 17
Item 6. Exhibits and Reports on Form 8-K 17
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MAIL-WELL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
(Unaudited)
June 30, December 31,
1997 1996
- --------------------------------------------------------------------------------
CURRENT ASSETS
Cash and cash equivalents $ 12,523 $ 9,656
Receivables, net 35,954 40,612
Accounts receivable - other 10,108 7,743
Income tax receivable, net 2,374 3,504
Inventories 73,001 68,275
Deferred tax asset 2,361 2,309
Other current assets 4,933 3,513
--------- ---------
Total current assets 141,254 135,612
PROPERTY, PLANT AND EQUIPMENT - NET 187,857 183,302
DEFERRED FINANCING COSTS - NET 13,207 14,497
GOODWILL - NET 128,451 128,812
OTHER ASSETS - NET 8,863 8,723
--------- ---------
TOTAL $ 479,632 $ 470,946
========= =========
CURRENT LIABILITIES
Accounts payable $ 38,931 $ 44,539
Accrued compensation and vacation 23,952 23,312
Accrued interest 5,429 4,455
Other current liabilities 28,222 26,206
Current portion of long-term debt
and capital leases 15,575 14,975
--------- ---------
Total current liabilities 112,109 113,487
ACCRUED PENSION 1,330 1,284
CAPITAL LEASES 2,817 2,958
BANK BORROWINGS 112,853 121,992
SUBORDINATED NOTES 85,000 85,000
DEFERRED INCOME TAXES 27,099 23,153
OTHER LONG TERM LIABILITIES 3,559 1,865
--------- ---------
Total liabilities 344,767 349,739
--------- ---------
COMMITMENTS AND CONTINGENCIES
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,
18,774,562 and 19,414,242 shares
issued and 18,774,562 and 18,731,130
(including 1,948,272 shares held by ESOP)
outstanding, respectively 188 194
Paid-in capital 97,689 98,216
Retained earnings 40,188 27,631
Unearned ESOP compensation (2,832) (2,896)
Cumulative foreign currency translation
adjustment (258) (115)
Pension liability adjustment (110) (110)
Treasury stock - at cost; 683,112 shares
outstanding at December 31, 1996 - (1,713)
--------- ---------
Total stockholders' equity 4,865 121,207
--------- ---------
TOTAL $ 479,632 $ 470,946
========= =========
See notes to unaudited consolidated financial statements.
3
<PAGE>
MAIL-WELL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
Quarter Ended June 30, Six Months Ended June 30,
1997 1996 1997 1996
---------- ----------- ----------- -----------
NET SALES $ 207,482 $ 185,110 $ 419,514 $ 378,835
COST OF SALES
Materials 85,456 84,474 175,414 175,404
Labor and other 60,657 48,838 119,674 102,132
Manufacturing 14,025 10,300 29,566 21,037
Depreciation 3,324 3,993 6,679 7,478
Waste recovery (2,261) (1,877) (4,734) (4,292)
----------- ----------- ----------- -----------
Total cost of sales 161,201 145,728 326,599 301,759
GROSS PROFIT 46,281 39,382 92,915 77,076
OTHER OPERATING COSTS
Selling 15,609 13,629 31,030 27,661
Administrative 12,120 10,112 25,165 20,132
Amortization 940 988 2,057 1,934
Loss on disposal of assets 351 598 1,222 598
---------- ----------- ----------- -----------
Total other
operating costs 29,020 25,327 59,474 50,325
OPERATING INCOME 17,261 14,055 33,441 26,751
OTHER EXPENSE
Interest expense - debt 4,551 7,064 9,105 14,145
Interest expense -
amortization of deferred
financing costs 724 748 1,448 1,480
Discount on sale of
accounts receivable 938 0 1,961 0
Other (income) expense (354) (77) (884) (23)
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES 11,402 6,320 21,811 11,149
PROVISION FOR INCOME TAXES
Current 3,103 2,217 5,654 3,426
Deferred 1,723 491 3,600 1,344
----------- ----------- ----------- -----------
NET INCOME $ 6,576 $ 3,612 $ 12,557 $ 6,379
=========== =========== =========== ===========
NET INCOME PER SHARE $ 0.35 $ 0.20 $ 0.68 $ 0.36
WEIGHTED AVERAGE SHARES
OUTSTANDING 18,565,921 17,824,593 18,362,111 17,802,282
See notes to unaudited consolidated financial statements.
4
<PAGE>
MAIL-WELL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
Six Months Ended June 30,
1997 1996
-------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 12,557 $ 6,379
Adjustments to reconcile net income to cash
provided by operations
Depreciation 6,679 7,478
Amortization 3,505 3,414
Deferred tax provision 3,600 1,344
Loss on disposal of assets 1,222 598
ESOP compensation expense 68 1,089
Other 100 (125)
Change in operating assets and liabilities
Receivables 3,593 12,608
Current income taxes 1,073 597
Inventories (3,038) 9,971
Accounts payable (4,285) (1,489)
Accrued interest 974 (1,052)
Other working capital 4,843 (4,544)
Accrued pension, current and long term (139) 115
Other assets and other long-term liabilities (895) (192)
--------- ---------
Net cash provided by operating activities 29,857 36,191
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition costs (6,235) (25,610)
Capital expenditures (12,658) (7,133)
Proceeds from sale of property, plant and equipment 152 2,101
Maturity of temporary cash investments - 250
--------- ---------
Net cash used in investing activities (18,741) (30,392)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from common stock issuance 123 15
Cash overdrafts 810 (2,734)
Proceeds from long-term debt 9,000 99,639
Repayments of long-term debt (17,472) (102,392)
Repayments of capital lease obligations (395) (326)
--------- ---------
Net cash used in financing activities (7,934) (5,798)
EFFECT OF EXCHANGE RATE CHANGES ON CASH (315) (1)
--------- ---------
INCREASE IN CASH AND CASH EQUIVALENTS 2,867 0
BALANCE AT BEGINNING OF PERIOD 9,656 0
--------- ---------
BALANCE AT END OF PERIOD $ 12,523 $ 0
========= =========
NON-CASH FINANCING ACTIVITIES
Cash paid for interest $ 8,131 $ 15,197
Cash paid for taxes 5,163 2,824
Issuance of common stock for compensation 0 51
See notes to unaudited consolidated financial statements.
5
<PAGE>
MAIL-WELL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
Nature of Operations - Mail-Well, Inc. (the "Company") is one of the
largest printers in North America, manufacturing both envelopes and high
impact color commercial work. Within envelope printing, the Company
competes in the consumer direct segment in which envelopes are designed and
manufactured to customer specifications. In addition, the Company
manufactures envelopes sold into the office products market. The Company
is also a leading high impact commercial printer specializing in printing
advertising literature, high-end catalogs, annual reports, calendars and
computer instruction books and is recognized as an innovative provider of
quality printed products to leading companies in the United States. The
Company commenced operations on February 24, 1994 with the acquisition of
the envelope businesses of Georgia-Pacific Corporation ("GP Envelope") and
Pavey Envelope and Tag Corp. ("Pavey").
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation - The consolidated financial statements
for all periods presented include the accounts of the Company and its
subsidiaries. All significant intercompany accounts and transactions have
been eliminated.
Interim Financial Information - The interim financial information
contained herein is unaudited and includes all normal and recurring
adjustments which, in the opinion of management, are necessary to present
fairly the information set forth. The consolidated financial statements
should be read in conjunction with the Notes to the Consolidated Financial
Statements which are included in the Company's Form 10-K. The results for
interim periods are not necessarily indicative of results to be expected
for the fiscal year of the Company ending December 31, 1997. The Company
believes that the report filed on Form 10-Q is representative of its
financial position, its results of operations and its cash flow for the
quarter and six months ended June 30, 1997 and 1996.
Employee Stock Ownership Plan - Unearned ESOP compensation balance is
presented in the accompanying financial statements as a reduction of
equity. As the ESOP shares are allocated to participants, the unearned
ESOP compensation balance will decrease and compensation expense will be
recorded.
Earnings Per Share - In June 1997, the Company's common stock split
3:2; all shares and per share information has been retroactively restated
to reflect the conversion.
Net income per share is computed by dividing net income by the weighted
average number of common shares. Common shares outstanding excludes
unallocated and uncommitted shares held by the ESOP.
<TABLE>
<CAPTION>
Quarter Ended June 30, Six Months Ended June 30,
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Common shares 17,840,479 17,484,683 17,808,467 17,480,645
Common stock equivalents 725,442 339,910 553,644 321,637
---------- ---------- ---------- ----------
Total shares outstanding 18,565,921 17,824,593 18,362,111 17,802,282
========== ========== ========== ==========
</TABLE>
Reclassification - Certain amounts in the 1996 financial statements have been
reclassified to conform to 1997 presentation.
6
<PAGE>
3. DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS (in thousands)
<TABLE>
<CAPTION>
Inventories:
June 30, 1997 December 31, 1996
<S> <C> <C>
Raw materials $ 25,922 $ 25,953
Work in process 7,982 7,549
Finished goods 41,728 37,385
Reserve for obsolescence and loss (2,631) (2,612)
-------- --------
Total $ 73,001 $ 68,275
======== ========
Property, plant and equipment:
June 30, 1997 December 31, 1996
Land and land improvements $ 11,698 $ 11,429
Buildings 50,645 45,385
Leasehold improvements 2,390 3,627
Machinery and equipment 125,977 124,028
Furniture and fixtures 3,332 3,066
Automobiles and trucks 587 556
Computers and software 9,897 7,457
Assets under capital lease 1,502 3,584
Construction in progress 10,608 6,576
-------- --------
216,636 205,708
Less accumulated depreciation (28,779) (22,406)
-------- --------
Total $187,857 $183,302
======== ========
4. LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
June 30, 1997 December 31, 1996
Bank borrowings:
Revolving credit loans $ 0 $ 768
Term loans 127,788 135,000
Subordinated notes 85,000 85,000
Other 229 651
-------- --------
213,017 221,419
Less current maturities (15,164) (14,427)
-------- --------
Long-term debt $197,853 $206,992
======== ========
</TABLE>
The bank credit agreements of the Company include a $30.0 million
revolving credit facility, a C$10.0 million revolving credit facility,
$135.0 million of term loans, a $30.0 million acquisitions loan facility, a
$12.0 million letter of credit facility and a C$8.0 million letter of
credit facility. The Company's obligations under the bank credit agreement
are secured by substantially all of the assets of the domestic subsidiaries
of the Company and by 66% of the common stock of a Canadian subsidiary.
An interest rate cap agreement is used to reduce the potential impact
of increases in the rates on floating-rate long-term debt. At June 30,
1997, the Company was party to an interest rate cap agreement for the
notional amount of $55.0 million which provides an effective LIBOR interest
rate cap of 9.0% and expires June 30, 1999. The agreement entitles the
Company to receive from counterparties the amounts, if any, by which the
Company's interest payments exceed the interest rate cap.
7
<PAGE>
5. PRO FORMA EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share"
("SFAS 128"). SFAS 128 establishes standards for computing and presenting
earnings per share and applies to all entities with publicly held common
stock or potential common stock. SFAS 128 replaces the presentation of
primary earnings per share and fully diluted earnings per share with a
presentation of basic earnings per share and diluted earnings per share,
respectively. Basic earnings per share excludes dilution and is computed
by dividing earnings available to common stockholders by the weighted
average number of common shares outstanding for the period. Similar to
fully diluted earnings per share, diluted earnings per share reflects the
potential dilution of securities that could share in the earnings. SFAS
128 is effective for periods ending after December 15, 1997, including
interim periods, and will require restatement of all prior period earnings
per share data presented; earlier application is not permitted. The
following pro forma disclosure illustrates earnings per share if calculated
in accordance with SFAS 128. The unallocated shares issued under the
Employee Stock Ownership Plan are excluded from both the basic and diluted
earnings per share calculations.
<TABLE>
<CAPTION>
Income Shares Per-Share
(dollars in thousands) (Numerator) (Denominator) Amount
- ---------------------------------------------------------------------------------
For the Quarter Ended June 30, 1997
-----------------------------------
<S> <C> <C> <C>
Basic Earnings Per Share
Income available to common
stockholders $ 6,576 17,840,479 $0.37
======
Effect of Dilutive Securities
Stock options, primarily 0 725,442
------- ----------
Diluted Earnings Per Share
Income available to common
stockholders
including assumed conversions $ 6,576 18,565,921 $0.35
======= ========== ======
For the Quarter Ended June 30, 1996
-----------------------------------
Basic Earnings Per Share
Income available to common
stockholders $ 3,612 17,484,683 $0.21
======
Effect of Dilutive Securities
Stock options, primarily 0 339,910
------- ----------
Diluted Earnings Per Share
Income available to common
stockholders including assumed
conversions $ 3,612 17,824,593 $0.20
======= ========== ======
For the Six Months Ended June 30, 1997
--------------------------------------
Basic Earnings Per Share
Income available to common
stockholders $12,557 17,808,467 $0.71
======
Effect of Dilutive Securities
Stock options, primarily 0 553,644
------- ----------
Diluted Earnings Per Share
Income available to common
stockholders including assumed
conversions $12,557 18,362,111 $0.68
======= ========== ======
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
For the Six Months Ended June 30, 1996
--------------------------------------
<S> <C> <C> <C>
Basic Earnings Per Share
Income available to common stockholders $6,379 17,480,645 $0.36
=====
Effect of Dilutive Securities
Stock options, primarily 0 321,637
------ ----------
Diluted Earnings Per Share
Income available to common stockholders
including assumed conversions $6,379 17,802,282 $0.36
====== ========== =====
</TABLE>
6. STOCK OPTIONS
On March 31, 1997, the Company's Board of Directors adopted a non-
qualified stock option plan for key employees and directors, authorizing
future grants of stock options to purchase up to 975,000 shares of the
Company's common stock. Also at that time, stock options were granted
under the non-qualified stock option plan for the purchase of up to
approximately 600,000 shares of common stock, in addition to the granting
of stock options under the Company's 1994 stock option plan for the
purchase of approximately 187,500 shares of common stock. The exercise
price of all options granted equals or exceeds the fair market value of the
Company's common stock on the date of grant.
7. ACQUISITIONS
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. The balance sheet of Griffin is included in the consolidated
balance sheet of the Company as of June 30, 1997; the statement of
operations excludes the operations of Griffin.
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. The Company issued 36,531 shares of common stock 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 south eastern 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.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following should be read in conjunction with the consolidated historical
financial statements and related notes of Mail-Well, Inc. and its subsidiaries
(the "Company") included elsewhere in this report. In addition to the
historical information contained herein, this report contains forward-looking
statements. The reader of this information should understand that all such
forward-looking statements are subject to various uncertainties and risks that
could affect their outcome. The Company's actual results could differ
materially from those suggested by such forward-looking statements. Factors
which could cause or contribute to such differences include, but are 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 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. This entire report should be read to put such forward-looking statements
in context and to gain a more complete understanding of the uncertainties and
risks involved in the Company's business.
Overview
Operating Results - Net income for the quarter ended June 30, 1997 increased by
$3.0 million ($0.15 per share), or 82%, compared with the prior year period.
For the six months ended June 30, 1997, net income increased by $6.2 million
($0.32 per share), or 97%, compared with the six months ended June 30, 1996.
Sales for the quarter ended June 30, 1997 rose $22.4 million, or 12%, from the
prior year's quarter, and for the first six months of 1997 increased by $40.7
million, or 10.7%, over the first six months of 1996. During the most recent
quarter and the first six months of 1997, the Company focused its efforts on
integrating the operations of recently acquired businesses into the Canadian
Envelope and High Impact Color Printing segments of the Company, respectively.
These efforts included reviewing the acquired operations to determine changes to
be made to cost structures, pricing and strategic markets. The High Impact
Color Printing segment continued to address market pressures by repositioning
its marketing efforts toward the channels within this segment for which the
gross margins were higher. In November 1996, the bank credit agreement was
amended, the Company refinanced certain equipment under a sale/leaseback
arrangement and a receivable securitization facility was arranged. The effects
of these transactions are reflected in the results for 1997.
Acquisitions - In April 1996, the Company acquired Quality Park Products, Inc.
("QPP"), a printer and manufacturer of envelopes. In November 1996, the Company
acquired Pac National Group Products, Inc. ("PNG"), a Canadian envelope printer
and manufacturer based in Ontario. In December 1996, the Company acquired
Shepard Poorman Communications Corporation ("SP"), a high impact color printer
located in Indianapolis, Indiana. In June 1997, the Company acquired Griffin
Envelope, Inc. ("Griffin"), a manufacturer and distributor of envelopes located
in Seattle, Washington. In July 1997, the Company acquired Murray Envelope
Corp. ("Murray"), a manufacturer of envelopes located in Hattiesburg,
Mississippi. Also, in July 1997, the Company acquired The Allied Printers
("Allied"), a high impact color printer located in Seattle, Washington.
10
<PAGE>
Results Of Operations
U.S. Envelope
- -------------
The following table presents 1997 historical financial data for the U.S.
Envelope operations of the Company, including the operations of QPP. The 1996
data includes the historical operations of the Company and the historical
operations of QPP for the three months ended March 31, 1996 which was included
to provide comparability to the 1997 information.
<TABLE>
<CAPTION>
Quarter Ended June 30, Six Months Ended June 30,
---------------------- --------------------------
1997 1996 1997 1996
-----------------------------------------------------------------------------------------------
(dollars in thousands) $ % $ % $ % $ %
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net sales $139,677 100.0 $140,679 100.0 $279,377 100.0 $292,622 100.0
Cost of sales 108,325 77.5 112,088 79.7 216,648 77.5 234,634 80.2
Operating expenses 16,738 12.0 14,399 10.2 33,471 12.0 30,948 10.6
-------- ----- -------- ------- --------- ----- -------- -----
Operating income $ 14,614 10.5 $ 14,192 10.1 $ 29,258 10.5 $ 27,040 9.2
======== ===== ======== ======= ========= ===== ======== =====
</TABLE>
Quarter Ended June 30, 1997 Compared to the Quarter Ended June 30, 1996
Net sales - Net sales decreased by $1.0 million (or 0.7%) for the quarter ended
June 30, 1997 compared to the quarter ended June 30, 1996. The average selling
price decreased 8.1% to $19.08 per thousand units for the quarter ended June 30,
1997 from $20.76 per thousand units for the quarter ended June 30, 1996, due
mainly to lower paper costs and competitive pricing pressures. Because of its
ability to pass on changes in paper costs to its customers, the Company uses
volumes of units sold and material gross margin (that is, net sales less cost of
materials net of waste recovery revenue, measured on a per thousand unit basis)
as indicators of revenue trends in its envelope operations. Unit volume
increased 7.3% to 7.3 billion units in the second quarter of 1997 from 6.8
billion units in the same quarter of 1996, indicating that customers have been
increasing their volumes at the lower prices. Material gross margin decreased
to $11.09 per thousand units in the second quarter of 1997 from $11.32 per
thousand units in the year-ago period, as lower selling prices were not entirely
offset by lower paper prices.
Cost of sales - Total cost of sales, as a percentage of sales, decreased from
79.7% in 1996 to 77.5% in 1997. Cost of sales includes materials, labor,
manufacturing, depreciation and other manufacturing costs, net of waste recovery
revenue. A decrease in average paper costs of approximately 16% in the second
quarter of 1997 from the second quarter of 1996 was the major factor in the
reduction in total cost of sales. The decline in paper costs, while material
gross margins remained relatively constant, resulted in the decrease in cost of
sales as a percentage of sales. In addition, factory labor and overhead costs
declined to $5.71 per thousand units in the second quarter of 1997 from $5.81
per thousand units in the year-ago quarter. Gross profit per thousand units
increased 1.4% from $4.22 in the second quarter of 1996 to $4.28 in 1997.
Operating expenses - For the second quarter ended June 30, 1997, selling and
administrative expenses increased by $2.4 million, to 12.0% of sales from 10.2%
of sales compared to the same period in 1996. The increase included increases in
salaries and bonuses, profit sharing and health insurance. In particular, the
Company accrued for profit sharing and bonuses in the second quarter of 1997,
whereas the Company did not accrue for these items in the first half of 1996 due
to business conditions at that time.
Six Months Ended June 30, 1997 Compared to the Six Months Ended June 30, 1996
Net sales - Net sales decreased 4.4% for the six months ended June 30, 1997
compared to the six months ended June 30, 1996. The average selling price
decreased 8.6% to $19.27 per thousand units for the six months ended June 30,
1997 from $21.08 per thousand units for the six months ended June 30, 1996, due
mainly to lower paper costs and competitive
11
<PAGE>
pricing pressures. Unit volume increased 4.3% to 14.5 billion units in the first
six months of 1997 from 13.9 billion units in the same period of 1996,
indicating that customers have been increasing their volumes at the lower
prices. Material gross margin increased to $11.18 per thousand units in the six
months ended June 30, 1997 from $11.09 per thousand in the year-ago period. The
increase in material gross margin in the first quarter of 1997 was offset by
lower material gross margins in the second quarter of 1997.
Cost of sales - Total cost of sales, as a percentage of sales, decreased from
80.2% in 1996 to 77.5% in 1997. A decrease in average paper costs of
approximately 19% as compared with the prior year period was the major factor in
the reduction in total cost of sales, and was partially offset by a .5% increase
in factory labor and overhead expenses from $5.70 per thousand units in the
first six months of 1996 to $5.73 per thousand units in the 1997 period. Gross
profit per thousand units increased 3.6% from $4.18 in the first half of 1996 to
$4.33 in 1997.
Operating expenses - For the six months ended June 30, 1997, selling and
administrative expenses, as a percent of sales, increased to 12.0% from 10.6%
compared to the same period in 1996. The $2.5 million increase includes
increases in salaries and bonuses, profit sharing and health insurance, $2.4
million of which occured in the second quarter chiefly as a result of accruals
for profit sharing and bonuses which were not made in the year-ago period.
Canadian Envelope
- -----------------
The following table presents financial information with respect to the Canadian
Envelope operations for the quarters and six months ended June 30, 1997 and
1996. The 1997 information includes the operations of both Supremex, Inc., the
Company's main Canadian operating subsidiary ("Supremex"), and PNG, while the
1996 information excludes the operations of PNG. All amounts are in U.S.
dollars.
<TABLE>
<CAPTION>
Quarter Ended June 30, Six Months Ended June 30,
----------------------------------------- -----------------------------------
1997 1996 1997 1996
---------------------- ----------------- --------------- ----------------
(dollars in thousands) $ % $ % $ % $ %
- --------------------------- ---------- ---------- --------- ----- ------- ----- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $27,466 100.0 $ 20,176 100.0 $59,082 100.0 $42,326 100.0
Cost of sales 19,017 69.2 14,146 70.1 41,794 70.7 30,309 71.6
Operating expenses 4,176 15.2 2,942 14.6 8,746 14.8 5,926 14.0
--------- ----------- -------- ----- ------- ----- ------- -----
Operating income $ 4,273 15.6 $ 3,088 15.3 $ 8,542 14.5 $ 6,091 14.4
========= =========== ======== ===== ======= ===== ======= =====
</TABLE>
Quarter Ended June 30, 1997 Compared to the Quarter Ended June 30, 1996
Net sales - Net sales of $27.5 million for the Canadian Envelope segment
included $8.0 million of net sales attributable to PNG. The 1997 net sales for
Supremex of $19.5 million represented a $0.7 million, or 3.5%, decline in net
sales dollars as compared to the quarter ended June 30, 1996. Paper prices
decreased approximately 10% in the quarter ended June 30, 1997 as compared to
paper prices for the quarter ended June 30, 1996, which translates to an
expected decline in selling prices of 4.3%. The average selling price decreased
only 3.1% to $19.58 per thousand units in the most recent quarter as compared to
$20.20 per thousand units for the year-ago quarter. As a result of the Company
exiting certain markets with relatively low selling prices and margins, the
average selling price did not decline as much as expected. Unit volume at
Supremex was stable at 1.0 billion units for both quarters, while unit volume
for Canadian Envelope (including PNG) increased to 1.4 billion units in 1997.
Material gross margin increased from $11.33 per thousand units in the quarter
ended June 30, 1996 to $11.57 per thousand units for the same quarter in 1997.
The higher material gross margin was attributable to the shift away from less
profitable markets.
Cost of sales - Total cost of sales, as a percentage of sales, decreased from
70.1% in 1996 to 69.2% in 1997. The gross profit per thousand units increased
1.0% to $6.11 per thousand units from $6.04 per thousand units in 1996. As
PNG's operations are integrated with those of Supremex, the cost of sales (as a
percentage of net sales), is expected to decrease further as Supremex's
operating strategies are applied to PNG's operations.
12
<PAGE>
Operating expenses - As a percentage of sales, operating expenses increased to
15.2% of net sales for the quarter ended June 30, 1997 from 14.6% of net sales
in the same quarter of 1996 due to the higher cost structure of PNG and
severance payments made in the most recent quarter. Operating expenses as a
percentage of net sales are expected to decrease as PNG's cost structure is
changed to reflect that of Supremex. Specifically, PNG's costs for
administrative expenses exceed the parameters of Supremex's cost structure.
Six Months Ended June 30, 1997 Compared to the Six Months Ended June 30, 1996
Net sales - Net sales of $59.1 million for the Canadian Envelope segment
included $17.6 million of net sales attributable to PNG. The net sales for
Supremex of $41.5 million for the six months ended June 30, 1997 represented a
$0.8 million, or 2.0%, decline in net sales dollars as compared to the same
period in 1996. Paper prices decreased 10% in the six months ended June 30,
1997 as compared to paper prices for the six months ended June 30, 1996, which
translates to an expected decline in selling prices of 4.3%. The average
selling price decreased 4.1% to $19.50 per thousand units as compared to $20.33
per thousand units for the six months ended June 30, 1996. As a result of the
Company exiting certain markets with relatively low selling prices and margins,
the average selling price did not decline as much as expected. Unit volume at
Supremex was stable at 2.1 billion units for both periods, while unit volume for
Canadian Envelope (including PNG) increased to 2.95 billion units in 1997.
Material gross margin increased from $11.21 per thousand units in the year-ago
period to $11.42 per thousand units for the same period in 1997. The higher
material gross margin was attributable to the shift away from less profitable
markets.
Cost of sales - Total cost of sales, as a percentage of sales, decreased from
71.6% for the six months ended June 30, 1996 to 70.72% in the same period in
1997. The gross profit per thousand units increased 1.6% to $5.86 per thousand
units from $5.77 per thousand units in 1996. As PNG's operations are integrated
with those of Supremex, the cost of sales (as a percentage of net sales), is
expected to decrease as Supremex's operating strategies are applied to PNG's
operations.
Operating expenses - As a percentage of sales, operating expenses increased to
14.8% of net sales for the six months ended June 30, 1997 from 14.0% of net
sales in the year-ago period, due to the higher cost structure of PNG.
Operating expenses as a percentage of net sales are expected to decrease as
PNG's cost structure is changed to reflect that of Supremex. Specifically,
PNG's costs for administrative expenses exceed the parameters of Supremex's cost
structure.
High Impact Color Printing
- --------------------------
The following table presents financial information with respect to the High
Impact Color Printing operations for the periods ended June 30, 1997 and 1996.
The operations of SP are excluded from the results for the quarter and six
months ended June 30, 1996.
<TABLE>
<CAPTION>
Quarter Ended June 30, Six Months Ended June 30,
---------------------------------------- ---------------------------------
1997 1996 1997 1996
--------------------- ----------------- --------------- ---------------
(dollars in thousands) $ % $ % $ % $ %
- --------------------------- ----------- -------- --------- ----- ------- ----- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $40,339 100.0 $ 24,255 100.0 $81,055 100.0 $67,153 100.0
Cost of sales 33,319 82.6 19,494 80.4 67,021 82.7 56,468 84.1
Operating expenses 5,255 13.0 3,934 16.2 10,420 12.9 8,976 13.4
----------- -------- --------- ----- ------- ----- ------- -----
Operating income $ 1,765 4.4 $ 827 3.4 $ 3,614 4.4 $ 1,709 2.5
=========== ======== ========= ===== ======= ===== ======= =====
</TABLE>
Quarter Ended June 30, 1997 Compared to the Quarter Ended June 30, 1996
Net sales - Net sales produced at the Company's Graphic Arts Center, Inc.
subsidiary ("GAC") for the quarter ended June 30, 1997 were $26.6 million of the
quarter's net sales for the High Impact Color Printing segment of the Company, a
9.7% increase from the prior year. Net sales produced at SP constituted $13.7
million of the quarter's net sales and represented a decrease of 6.1% compared
with those of the prior year (before SP was owned by the Company). A shift of
annual report work from the first quarter to the second quarter resulted in
increased net annual report sales of $0.8 million
13
<PAGE>
in the second quarter of 1997. Annual report sales to new customers (net of
customer losses) added another $0.1 million to net sales in the second quarter
of 1997. Catalog and car brochure sales increases of $1.0 and $0.4 million,
respectively, comprise the remainder of the $2.4 million increase in GAC net
sales. The increase in catalog sales includes $0.8 million from a new client;
the remaining increase was due to changes in existing customer orders. The sales
increase from car brochures was from an existing client; net sales in this time
period for car brochures was unusual. The decrease in sales at SP (as compared
to the same period in 1996) was due, primarily, to one client that was acquired
by another company which caused a temporary push back in its highly seasonal
production cycle; the sales volumes attributable to this customer are expected
to occur in the third quarter.
Cost of sales - For GAC, the total cost of sales as a percentage of net sales
increased from 80.4% in the second quarter of 1996 to 82.6% in the second
quarter of 1997. Cost of sales for GAC and SP totaled $22.3 million and $11.0
million, respectively. Due to changes in the mix of paper used in its
operations, the declining paper market had a negligible effect on cost of sales
at GAC. The $2.8 million increase in cost of sales related to GAC included
$1.9 million which correlates to the increase in the sales. The remaining $0.9
million increase included $0.5 million for outside tradework paid for
specialties which could not be done in-house. Increased wages required another
$0.3 million. SP cost of sales of $11.0 million is included in the 1997 amount
and represents 80.6% of SP's sales which is consistent with the second quarter
of 1996 (before SP was owned by the Company).
Operating expenses - Total operating expense was $1.3 million higher than the
amount for the quarter ended June 30, 1996. This increase included $1.6 million
of operating expenses related to SP offset by $0.3 million in operating expense
reductions implemented by the GAC operations of the High Impact Color Printing
segment. The GAC reductions were almost exclusively due to declines in selling
expenses, including sales commissions and sales salaries, as certain sales
representatives were moved to full-commission status from salaried status and
lower unit prices reduced commission expense. Additional reductions were made
to the travel and entertainment and information services costs.
Six Months Ended June 30, 1997 Compared to the Six Months Ended June 30, 1996
Net sales - Net sales produced at GAC for the six months ended June 30, 1997
were $55.3 million, a 17.6% decrease from the prior year. Net sales produced at
SP constituted $25.7 million of the net sales for the six months ended June 30,
1997 and represented a decrease of 4.1% compared with those of the prior year
(before SP was owned by the Company). This decline in net sales was due to the
Company targeting higher margin markets and allocating sales resources to those
markets; the remarketing effort has caused a decline in sales volumes.
Operating income margins for the High Impact Color Printing segment of the
Company have increased to 4.4% of net sales from 2.5% of net sales. Another
factor affecting the decline in sales dollars was the decrease in paper costs
between 1996 and 1997 which caused a corresponding decrease in net sales
dollars.
Cost of sales - Total cost of sales decreased to 82.7% of sales for the six
months ended June 30, 1997 as compared to 84.1% for the six months ended June
30, 1996. Cost of sales for GAC and SP totaled $45.4 million and $21.6 million,
respectively. The $11.1 million decline in GAC's cost of sales was comprised of
declines in paper prices and other manufacturing costs. Reduction in paper
prices, coupled with improved corporate purchasing power, resulted in lower
paper costs of approximately $5.9 million as compared with the six months ended
June 30, 1996. Outside tradework declined both as a percentage of revenue and
by $1.5 million in nominal dollars. A reduction in factory costs constituted
the remainder of the favorable variance and corresponds largely to the downward
movement in volumes. Improved control over overtime and factory chargeability
also yielded favorable variances. SP cost of sales of $21.6 million is included
in the 1997 figure and represents 84.1% of SP's sales. The comparable figure
for SP in 1996 was $23.2 million or 86.5% of SP's sales.
Operating expenses - Total operating expense was $1.4 million greater for the
six months ended June 30, 1997 than that recorded for the six months ended June
30, 1996. The increase included $2.8 million of operating expenses related to
SP offset by $1.4 million in operating expense reductions implemented by the GAC
operations of the High Impact Color Printing segment. The GAC reductions are
almost exclusively due to declines in selling expenses including sales
commissions and sales salaries. These reductions occurred as GAC has moved
certain sales representatives to full-commission status from salaried status and
lower unit prices have reduced commission expense. Additionally, reductions
have been made to the travel and entertainment and information services costs.
14
<PAGE>
Corporate Expenses
- ------------------
The following table presents historical financial information for the Company
and includes the operations of each acquired company from the date of its
acquisition. The percentage column presents the specific expense items as a
percentage of historical net sales for the year.
<TABLE>
<CAPTION>
Quarter Ended June 30, Six Months Ended June 30,
------------------------------------------- ------------------------------------
1997 1996 1997 1996
---------------------- ----------------- ----------------- ----------------
(dollars in thousands) $ % $ % $ % $ %
- --------------------------- ----------- --------- -------- ------- ------ ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cost of sales -
operating lease expenses $ 540 0.3 $ 0 - $1,136 0.2 $ 0 -
Operating expenses 1,560 0.8 2,466 1.3 3,558 0.8 3,639 1.0
Amortization expense 940 0.5 988 0.5 2,057 0.5 1,934 0.5
Loss on disposal of assets 351 0.2 598 0.3 1,222 0.3 598 0.2
Interest expense - debt 4,551 2.2 7,064 3.8 9,105 2.2 14,145 3.7
Interest expense -
amortization of deferred
financing costs 724 0.3 748 0.4 1,448 0.3 1,480 0.4
Discount on sale of
accounts receivable 938 0.5 0 - 1,961 0.5 0 -
Other (income) expense (354) (0.2) (77) - (884) (0.2) (23) -
Income tax expense 4,826 2.3 2,708 1.5 9,254 2.2 4,770 1.3
</TABLE>
Cost of sales - operating lease expenses - Certain property, plant and equipment
of the Company was sold as part of a sales/leaseback transaction in the fourth
quarter of 1996. The expense amounts represent the operating lease payments for
the quarter and six month periods ending June 30, 1997; there was no comparable
expense in the quarter or six months ended June 30, 1996.
Operating expenses - Total operating expenses decreased by $0.9 million (or 37%)
in the quarter ended June 30, 1997 compared to the quarter ended June 30, 1996,
and by less than $0.1 million for the six months ended June 30, 1997 compared to
the six months ended June 30, 1996. The decrease in operating expenses for the
quarter offset the increase in expenses recorded for the first quarter ended
March 31, 1997, primarily as a result of certain corporate expenses, including
the annual report and proxy statements, having been incurred in the earlier
quarter in 1997. Included in operating expenses in the quarter and six months
ended June 30, 1997 is $0.3 million and $0.5 million, respectively, of
administrative expenses related to the accounts receivable securitization
program.
Loss on disposal of assets - The majority of the loss on disposal of assets
relates to building and equipment costs written off related to the closing of
the Pittsburgh warehouse and reorganizations of the plants in Salt Lake City and
Chicago. In 1996, the loss on disposal of assets included costs to relocate the
Philadelphia plant and consolidate the Texas facilities.
Interest expense- debt - Interest expense decreased for the quarter ended June
30, 1997 as compared to the quarter ended June 30, 1996 primarily as a result of
the lower average bank debt balance of $160.6 million in 1997 as compared to
$216.0 million in 1996. The bank debt restructuring, the sale/leaseback
transaction and the accounts receivable securitization transaction resulted in
the reduction of outstanding debt balances toward the end of 1996. The average
15
<PAGE>
interest rate of 7.7% for the six months ended June 30, 1997 was less than the
average interest rate of 8.1% for the same period in 1996.
Discount on sale of accounts receivable - This amount represents expenses
related to the accounts receivable securitization program, including an
effective interest rate of approximately 5.6% and associated utilization fees.
Since the program was implemented in November 1996, there are no appropriate
comparisons for previous periods.
Other (income) expense - This line item includes a $0.3 million foreign exchange
gain and $0.6 million of interest income earned from the investment of funds in
cash equivalents for the six months ended June 30, 1997.
Income taxes - The effective tax rate for the quarter and six months ended June
30, 1997 was 42.3% and 42.4%, respectively, as compared to an effective tax rate
of 42.8% for the quarter and six months ended June 30, 1996. The effective tax
rate for all periods was higher than the federal statutory rate due to state
and provincial income taxes. Additionally, certain goodwill amortization and a
portion of the employee stock ownership contribution is not tax deductible.
Liquidity and Capital Resources
Historical cash flow - Net cash provided by operating activities was $29.9
million and $36.2 million for the six months ended June 30, 1997 and 1996,
respectively. Capital expenditures totaled $12.7 million for the first six
months of 1997 as compared to $7.1 million for the first six months of 1996.
Proceeds from the sale of property, plant and equipment totaled $2.1 million in
1996 as compared to $0.2 million for the same period in 1997.
In November 1996, the Company entered into a five year agreement whereby it can
sell, on a revolving basis, an undivided percentage interest in a designated
pool of accounts receivable up to a maximum of $100.0 million. At June 30,
1997, $71.0 million of accounts receivable were sold under this agreement.
Debt obligations - In November 1996, the Company amended its bank credit
agreements. These credit agreements, as amended, provide a $30.0 million
revolving credit facility, a C$10.0 million revolving credit facility, $135.0
million of term loans, a $30.0 million acquisition loans facility, a $12.0
million letter of credit facility and an C$8.0 million letter of credit
facility. As of June 30, 1997, the Company had borrowed $6.0 million (including
$6.0 million in letters of credit) under the revolving credit facility of the
bank credit agreement and $127.8 million under the term loans. Availability at
June 30, 1997 included $37.2 million under the revolving credit facilities and
$30.0 million under the acquisition loan facility. The interest rate on the
Company's bank debt was 7.8125% as of June 30, 1997. The weighted average
interest rate on bank debt was 7.7% for the six months ended June 30, 1997. The
senior subordinated debt balance remained stable at $85.0 million at an interest
rate of 10.5%.
Capital requirements - The Company estimates that, based on current utilization
of its existing equipment and expected demand, it will spend $20.0 to $30.0
million per year on capital expenditures exclusive of acquisitions. The Company
expects to use net cash from operations and/or bank and leasing company
borrowings to fund these expenditures.
Recent Developments
Labor relations - The Company has been negotiating new union contracts with
respect to two of its larger envelope printing and converting facilities, as
well as GAC's Portland plant, which have been operating under tentative
arrangements which are terminable on ten days notice, or less. No new agreement
has been reached with respect to any of these plants. In addition, contracts
with respect to two other plants will expire in the near future, and the Company
has or will soon begin negotiations with respect to 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.
16
<PAGE>
Postal rate increase - The U.S. Postal Service announced proposed rate increases
of approximately 4% for direct mail and 3% for first class mail. In addition, a
6% rate decrease was proposed for prepaid, courtesy reply envelopes. The
proposed postal rate increases are significantly less than the cumulative rate
of inflation since the last postal rate increases. Management does not
anticipate 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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK -
None
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS - None
ITEM 2. CHANGES IN SECURITIES - None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES - None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS.
The Company's regular annual meeting of shareholders was held on May 7, 1997.
At the meeting, each of the Company's nominees for director was elected by a
vote of 9,539,548 votes for, with 58,593 votes withheld. In addition, the
following matters were voted upon and approved:
(a) To ratify the selection of Deloitte & Touche LLP as auditors of
the Company for the year ending December 31, 1997:
For: 9,568,837 Against: 4,016 Abstain: 25,288
(b) To approve the Company's 1996 Director's Stock Option Plan:
For: 9,312,716 Against: 268,799 Abstain: 16,626
(c) To approve the change in the Company's state of incorporation from
Delaware to Colorado:
For: 8,767,278 Against: 21,376 Abstain: 14,806
Not Voted: 794,681
(d) To approve an increase in the Company's authorized common stock
from 15,000,000 shares to 30,000,000 shares:
For: 9,562,024 Against: 24,927 Abstain: 11,190
None of the preceding vote tallies were adjusted for the 3-for-2 stock split.
ITEM 5. OTHER INFORMATION - None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
Number Description of Exhibit
- ------ ----------------------
2 * Articles of Merger to effect reincorporation of the Company in
Colorado effective May 30, 1997
17
<PAGE>
3 (i) * Articles of Incorporation of the Company
3 (ii) * Bylaws of the Company
4.1 Form of Certificate representing the Common Stock, par value $0.01 per
share, of the Company - incorporated by reference from Exhibit 4.1 of
the Company's Registration Statement on Form S-1 dated March 25, 1994.
4.3 Indenture dated as of February 24, 1994 by and between M-W Corp. and
Shawmut Bank, National Association, as Trustee, with respect to the
10-1/2% Original Senior Subordinated Notes and the 10-1/2% Exchange
Senior Subordinated Notes due 2004, including the form of Note and the
guarantees of the Company, Wisco and Pavey - incorporated by reference
from Exhibit 4.3 of the Company's Registration Statement on Form S-1
dated March 25, 1994.
4.3.1 Supplemental Indenture dated July 31, 1995 to the Indenture identified
in Exhibit 4.3 - incorporated by reference from Exhibit 4.4.1 of the
Company's Registration Statement on Form S-1 dated September 21, 1995.
4.3.2 Form of Second Supplemental Indenture to the Indenture identified in
Exhibit 4.3 -incorporated by reference from Exhibit 4.4.2 of the
Company's Registration Statement on Form S-1 dated September 21, 1995.
4.7 Form of Registration Rights Agreement among the Company and certain
holders of the Common Stock effective as of February 24, 1994 -
incorporated by reference from Exhibit 4.6 of the Company's
Registration Statement on Form S-1 dated March 25, 1994.
10.11 Form of Indemnity Agreement between the Company and each of its
officers and directors - incorporated by reference from Exhibit 10.17
of the Company's Registration Statement on Form S-1 dated March 25,
1994.
10.12 Form of Indemnity Agreement between M-W Corp. and each of its officers
and directors - incorporated by reference from Exhibit 10.18 of the
Company's Registration Statement on Form S-1 dated March 25, 1994.
10.13 Form of M-W Corp. Employee Stock Ownership Plan effective as of
February 23, 1994 and related Employee Stock Ownership Plan Trust
Agreement - incorporated by reference from Exhibit 10.19 of the
Company's Registration Statement on Form S-1 dated March 25, 1994.
10.14 Form of M-W Corp. 401(k) Savings Retirement Plan - incorporated by
reference from Exhibit 10.20 of the Company's Registration Statement
on Form S-1 dated March 25, 1994.
10.15 Company 1994 Stock Option Plan, as amended - incorporated by reference
from Exhibit 10.15 of the Company's Registration Statement on Form S-1
dated September 21, 1995.
10.16 Form of the Company Incentive Stock Option Agreement - incorporated by
reference from Exhibit 10.22 of the Company's Registration Statement
on Form S-1 dated March 25, 1994.
10.17 Form of the Company Nonqualified Stock Option Agreement - incorporated
by from Exhibit 10.23 of the Company's Registration Statement on Form
S-1 dated March 25, 1994.
10.25 Share Purchase Agreement dated July 20, 1995, by and among the
shareholders of Supremex, 3159051 Canada Inc. and Schroder Investment
Canada Limited and Schroder Venture Managers (North America) Inc. -
incorporated by reference from Exhibit 10.25 of the Company's
Registration Statement on Form S-1 dated September 21, 1995.
10.26 Indemnification Escrow Agent dated July 31, 1995, by and among 3159051
Canada Inc., Royal Trust Company of Canada and Schroder Investment
Canada Limited and Schroder Venture Mangers (North America) Inc. -
incorporated by reference from Exhibit 10.26 of the Company's
Registration Statement on Form S-1 dated September 21, 1995.
10.27 Guaranty dated July 31, 1995, executed by M-W Corp. in favor of
Schroder Investment Canada Limited and Schroder Venture Mangers (North
America) Inc., as Agents - incorporated by reference from Exhibit
10.27 of the Company's Registration Statement on Form S-1 dated
September 21, 1995.
10.28 Securities Purchase Agreement dated as of August 2, 1995, as amended,
by and among GAC Acquisition Company, Inc., GAC and the
securityholders of GAC and McCown De Leeuw & Co., as Agents -
incorporated by reference from Exhibit 10.28 of the Company's
Registration Statement on Form S-1 dated September 21, 1995.
10.29 Escrow Agreement dated as of August 2, 1995, by and among GAC
Acquisition Company, Inc., GAC and securityholders of GAC and McCown
De Leeuw & Co., as Agents - incorporated by reference from Exhibit
10.29 of the Company's Registration Statement on Form S-1 dated
September 21, 1995.
18
<PAGE>
10.30 Guaranty dated as of August 2, 1995, by M-W Corp. in favor of McCown
De Leeuw & Co., as Agents - incorporated by reference from Exhibit
10.30 of the Company's Registration Statement on Form S-1 dated
September 21, 1995.
10.32 Asset Purchase Agreement dated April 26, 1996 by and between Quality
Park Products, Inc. and Mail-Well I Corporation - incorporated by
reference from Exhibit 1 of the Company's Form 8-K dated May 2, 1996.
10.33 Acquisition Agreement and Plan of Share Exchange by and among Graphic
Arts Center, Inc. and Shepard Poorman Communications Corporation dated
November 6, 1996 - incorporated by reference from exhibit 10.33 of the
Company's Form 10-K for the year ended December 31, 1996.
10.34 Amendment No. 1 to Acquisition Agreement and Plan of Share Exchange by
and among Graphic Arts Center, Inc. and Shepard Poorman Communications
Corporation dated November 6, 1996- incorporated by reference from
exhibit 10.34 of the Company's Form 10-K for the year ended December
31, 1996.
10.35 Asset Purchase Agreement dated as of October 15, 1996 by and between
Supremex, Inc. and PNG Products, Inc. Pac National Group and PNG
Envelope Internationale, Inc.- incorporated by reference from exhibit
10.35 of the Company's Form 10-K for the year ended December 31, 1996.
10.36 Master Lease Agreement dated as of August 1, 1996 between General
Electric Capital Corporation and Mail-Well, Inc., Mail-Well I
Corporation, Graphic Arts Center, Inc., Mail-Well West, Pavey Envelope
and Tag Corp., Wisco II, L.L.C and Wisco Envelope Corp.- incorporated
by reference from exhibit 10.36 of the Company's Form 10-K for the
year ended December 31, 1996.
10.37 Third Amended and Restated Credit Agreement dated as of November 15,
1996, executed by Mail-Well I Corporation, as Borrower, and Wisco
Envelope Corp., Pavey Envelope and Tag Corp., Mail-Well West, Inc.,
Wisco II, L.L.C., Mail-Well Canada Holdings, Inc., Graphic Arts
Center, Inc. and Wisco III, L.L.C., as Guarantors, in favor of Banque
Paribas, as Agent, and the Lenders named herein - incorporated by
reference from exhibit 10.37 of the Company's Form 10-K for the year
ended December 31, 1996.
10.38 Amended and Restated Credit Agreement dated as of November 15, 1996,
executed by Supremex, Inc., as borrower, and Mail-Well I Corporation
and Innova Envelope, Inc., as Guarantors, in favor of Banque Paribas,
as Agent, and the Lenders named herein - incorporated by reference
from exhibit 10.38 of the Company's Form 10-K for the year ended
December 31, 1996.
10.39 Purchase and Contribution Agreement dated as of November 15, 1996
between Mail-Well I Corporation, Wisco Envelope Corp., Pavey Envelope
and Tag Corp., Mail-Well West, Inc., Graphic Arts Center, Inc., Wisco
III, L.L.C., Supremex, Inc., Innova Envelope, Inc., as Sellers, and
Mail-Well Trade Receivables Corp., as Purchaser - incorporated by
reference from exhibit 10.39 of the Company's Form 10-K for the year
ended December 31, 1996.
10.40 Mail-Well Receivables Master Trust Pooling and Servicing Agreement
dated as of November 15, 199 by and between Mail-Well Trade
Receivables Corporation, Seller, Mail-Well I Corporation, Servicer,
and Norwest Bank Colorado, National Association, Trustee -
incorporated by reference from exhibit 10.40 of the Company's Form 10-
K for the year ended December 31, 1996.
10.41 Series 1996-1 Supplement dated as of November 15, 1996 to Pooling and
Servicing Agreement, dated as of November 15, 1996, by and between
Mail-Well Trade Receivables Corporation, Seller, Mail-Well I
Corporation, Servicer, and Norwest Bank Colorado, National
Association, as Trustee on behalf of the Series 1996-1
Certificateholders - incorporated by reference from exhibit 10.41 of
the Company's Form 10-K for the year ended December 31, 1996.
10.42 Series 1996-1 Certificate Purchase Agreement dated as of November 15,
1996 among Mail-Well Trade Receivables Corporation, as Seller,
Corporate Receivables Corporation, as Purchaser, Norwest Bank
Colorado, National Association, as Trustee, and Mail-Well I
Corporation, as Servicer- incorporated by reference from exhibit 10.42
of the Company's Form 10-K for the year ended December 31, 1996.
10.43 Intercreditor Agreement dated as of November 15, 1996 by and among
Citicorp North America, Inc., as Securitization Company Agent, Banque
Paribas, New York Branch, as Liquidity Agent, Banque Paribas, as
Credit Lenders' Agent, Norwest Bank Colorado, National Association, as
Trustee, Mail-Well Trade Receivables Corporation, as Servicer,
originator and Mail-Well Credit Borrower, Supremex, Inc., as the
Supremex Credit Borrower and the other parties hereto - incorporated
by reference from exhibit 10.43 of the Company's Form 10-K for the
year ended December 31, 1996.
19
<PAGE>
10.44 Series 1996-1 Asset Purchase Agreement among Corporate Receivables
Corporation, the Liquidity Providers Parties hereto, Citicorp North
America, Inc., as Securitization Company Agent, Banque Paribas, New
York Branch, as Liquidity Agent, and Norwest Bank Colorado, National
Association, as trustee, dated as of November 15, 1996 - incorporated
by reference from exhibit 10.44 of the Company's Form 10-K for the year
ended December 31, 1996.
10.45 Participation Agreement dated as of November 15, 1996 among Mail-Well I
Corporation, as Lessee and Guarantor, Certain Subsidiaries of Mail-Well
I Corporation, as Subsidiary Guarantors, Paribas Properties, Inc., as
Lessor, Various Financial Institutions Identified herein, as Equity
Lenders, Various Financial Institutions Identified herein, as Financing
Lenders and Banque Paribas, as Agent for the Financing Lenders and
Equity Lenders - incorporated by reference from exhibit 10.45 of the
Company's Form 10-K for the year ended December 31, 1996.
10.46 Loan Agreement dated as of November 15, 1996 among Paribas Properties,
Inc., as Lessor, Various Financial Institutions Identified herein, as
Financing Lenders, Various Financial Institutions Identified herein, as
Equity Lenders, and Banque Paribas, as Agent for the Lenders -
incorporated by reference from exhibit 10.46 of the Company's Form 10-K
for the year ended December 31, 1996.
10.47 Master Equipment Lease and Security Agreement dated November 15, 1996
between Mail-Well I Corporation, as the Lessee or Debtor and Paribas
Properties, Inc., as the Lessor or Secured Party - incorporated by
reference from exhibit 10.47 of the Company's Form 10-K for the year
ended December 31, 1996.
10.48 Security Agreement (Second and Subordinated Security Interest) made and
entered into by Paribas Properties, Inc. and Mail-Well I Corporation,
as Debtors, and Banque Paribas, as Agent for Secured Party date
November 15, 1996 - incorporated by reference from exhibit 10.48 of the
Company's Form 10-K for the year ended December 31, 1996.
10.49 Appendix A to Participation Agreement, Master Lease, and Loan Agreement
- incorporated by reference from exhibit 10.49 of the Company's Form
10-K for the year ended December 31, 1996.
10.50 Lease Facility Guaranty dated as of November 15, 1996 made by Mail-Well
I Corporation, Mail-Well, Inc. and certain of their Subsidiaries, as
Guarantors, in favor of Various Financial Institutions, as the Lenders,
and Banque Paribas, as Agent for the Lenders - incorporated by
reference from exhibit 10.50 of the Company's Form 10-K for the year
ended December 31, 1996.
10.51 Assignment of Lease and rent dated as of November 15, 1996 from Paribas
Properties, Inc., as Assignor to Banque Paribas, as Agent for the
Lenders, as Assignee - incorporated by reference from exhibit 10.51 of
the Company's Form 10-K for the year ended December 31, 1996.
10.52 Security Agreement (First and Prior Security Interest) made and entered
into by Paribas Properties, Inc. and Mail-Well I Corporation, as
Debtors, and Banque Paribas, as Agent for Secured Party dated November
15, 1996 - incorporated by reference from exhibit 10.52 of the
Company's Form 10-K for the year ended December 31, 1996.
10.53 Bill of Sale and Assignment of Equipment made and entered into on this
15th day of November, 1996 by Mail-Well I Corporation to and for the
benefit of Paribas Properties, Inc. - incorporated by reference from
exhibit 10.53 of the Company's Form 10-K for the year ended December
31, 1996.
10.54 1997 Non-Qualified Stock Option Plan - incorporated by reference from
exhibit 10.54 of the Company's Form 10-Q for the quarter ended March
31, 1997
10.55 1997 Non-Qualified Stock Option Agreement - incorporated by reference
from exhibit 10.54 of the Company's Form 10-Q for the quarter ended
March 31, 1997
10.56* Company's 1994 Stock Option Plan as Amended on May 7, 1997
27* Financial Data Schedule
_____________
* Filed herewith.
(b) Reports on Form 8-K
A report on Form 8-K was filed on May 21, 1997 to provide information
under Item 5 regarding the 3-for-2 stock split payable June 9, 1997,
to shareholders of record on June 2, 1997.
20
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MAIL-WELL, INC.
(Registrant)
By /s/ PAUL V. REILLY
--------------------------
Paul V. Reilly
Senior Vice President,
Chief Financial Officer
August 12, 1997
21
<PAGE>
EXHIBIT INDEX
-------------
Sequentially
Exhibit Numbered
Number Description of Exhibit Pages
- ------- ---------------------- ------------
2 Articles of Merger to effect reincorporation of the
Company in Colorado effective May 30, 1997.
3(i) Articles of Incorporation of the Company.
3(ii) Bylaws of the Company.
10.56 Company's 1994 Stock Option Plan as amended May 7, 1997.
27 Financial Data Schedule
<PAGE>
ARTICLES OF MERGER
------------------
The undersigned corporations, Mail-Well Colorado, Inc., a Colorado
corporation ("M-W Colorado"), and Mail-Well, Inc., a Delaware corporation ("M-W
Delaware"), pursuant to Section 7-7-104 of the Colorado Revised Statutes, adopt
the following Articles of Merger:
Article 1. On the effective date, M-W Delaware shall merge with and
into M-W Colorado and the separate existence of M-W Delaware shall cease
pursuant to the terms of the Merger Agreement and Plan of Reorganization
attached hereto as EXHIBIT A ("Merger Agreement"), and M-W Colorado shall
continue as the surviving corporation.
Article 2. The Merger Agreement was approved by the shareholders of M-W
Delaware at a duly called and properly held Meeting of Shareholders. At the time
of the adoption of the Merger Agreement there were 12,498,645 shares of the
common stock of M-W Delaware issued and outstanding. Of these shares, 8,767,278
shares (70 percent) were voted in favor of the adoption of the Merger Agreement.
The number of shares voted for the Merger Agreement was sufficient for approval.
Article 3. M-W Delaware owns 100% of the Common Stock of M-W Colorado
and as the sole shareholder approved the Merger Agreement for M-W Colorado.
Article 4. The effective time and date of the merger shall be 5:01 p.m.
Eastern Daylight Time, May 30, 1997.
Article 5. The Articles of Incorporation of M-W Colorado shall be
amended as of the effective time and date recited above as follows:
ARTICLE I
The name of the Corporation is Mail-Well, Inc.
IN WITNESS WHEREOF, these Articles of Merger have been signed and verified
by the duly authorized officers of M-W Colorado and M-W Delaware on this 28th
day of May, 1997.
MAIL-WELL COLORADO, INC.
By: /s/ Roger Wertheimer
-----------------------------------------
Roger Wertheimer, Secretary
MAIL-WELL, INC.
By: /s/ Roger Wertheimer
-----------------------------------------
Roger Wertheimer, Secretary
<PAGE>
EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of May 7, 1997, by and between MAIL-WELL, INC., a Delaware corporation
("Mail-Well Delaware") and MAIL-WELL COLORADO, INC., a Colorado corporation
("Mail-Well Colorado").
WHEREAS, Mail-Well Colorado is a wholly-owned subsidiary of Mail-Well
Delaware; and
WHEREAS, the respective Boards of Directors of Mail-Well Colorado and Mail-
Well Delaware have determined it to be in the best interests of each to merge
Mail-Well Delaware with and into Mail-Well Colorado, for the purpose of
effecting a reincorporation of Mail-Well Delaware in Colorado; and
WHEREAS, the shareholders of Mail-Well Delaware have approved the plan of
merger (the "Merger") at the regular annual meeting thereof in accordance with
its Certificate of Incorporation and Bylaws and the Delaware General Corporation
Law.
NOW, THEREFORE, in consideration of these premises and the mutual covenants
contained herein, the parties agree as follows:
1. Plan of Merger. Effective at 5:01 p.m. EDT on May 30, 1997 (the
--------------
"Effective Time") Mail-Well Delaware will merge with and into Mail-Well
Colorado, and the separate corporate existence of Mail-Well Delaware shall
cease. Effective at such time, Mail-Well Colorado shall change its name to
"Mail-Well, Inc."
2. Effect of Merger. At the Effective Time, all of the common shares of
----------------
Mail-Well Delaware (the "Mail-Well Common') shall be converted automatically and
by operation of law into common shares of Mail-Well Colorado (the "New Shares"),
and all outstanding options to acquire Mail-Well Common shall be converted into
the right to acquire a like number of New Shares, all without any action on the
part of shareholders or optionees. The shares of Mail-Well Colorado currently
held by Mail-Well Delaware shall be canceled. Mail-Well Colorado shall succeed
to all of the rights, property and subsidiaries, and all of the obligations and
liabilities, of Mail-Well Delaware. The Bylaws of Mail-Well Delaware shall
become substantially the Bylaws of Mail-Well Colorado, with only such changes as
are necessary to reflect the change of state of incorporation.
3. Officers and Directors. After the Effective Time, all of the officers
----------------------
of Mail-Well Delaware shall become officers of Mail-Well Colorado, and all of
the directors of Mail-Well Delaware shall become directors of Mail-Well
Colorado, until their successors have been elected and qualified. The officers
and directors of Mail-Well Colorado shall thenceforth
<PAGE>
hold no offices therewith, except insofar as such officers and directors hold
such offices with Mail-Well Delaware.
4. Articles of Merger. The respective officers of Mail-Well Delaware and
------------------
Mail-Well Colorado shall execute Articles of Merger and cause them to be filed
with the respective Secretaries of State of each of Colorado and Delaware in
order to effect the Merger, and shall execute and deliver such other documents,
instruments or certificates as may be required to accomplish same.
5. Successors. This Agreement shall inure to the benefit of the parties
----------
hereto and their respective successors, heirs and assigns.
6. Entire Understanding. This Agreement constitutes the entire
--------------------
understanding of the parties hereto, and there are no oral or written
statements, representations or agreements that modify or amend and of the terms
hereof.
IN WITNESS WHEREOF, the parties hereto have duly caused this Agreement to
be executed as of the date first above written.
MAIL-WELL, INC.
a Delaware corporation
By: Paul Reilly, Senior Vice-President
and Chief Financial Officer
MAIL-WELL COLORADO, INC.
a Colorado Corporation
By: Paul Reilly, Senior Vice-President
and Chief Financial Officer
<PAGE>
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
MAIL-WELL, INC.
INTO
MAIL-WELL COLORADO, INC.
* * * * * * * *
Mail-Well, Inc., a corporation organized and existing under the laws of
Delaware,
DOES HEREBY CERTIFY:
FIRST: That this corporation was incorporated on the 30th day of November,
1993, pursuant to the General Corporation laws of the State of Delaware.
SECOND: That this corporation owns 100 percent of the outstanding shares
of the stock of Mail-Well Colorado, Inc., a corporation incorporated on the 1st
day of May, 1997, pursuant to the Colorado Business Corporation Act.
THIRD: That the directors of Mail-Well, Inc., by the following resolutions
of its Board of Directors, duly adopted at a meeting held on the 4th day of
March, 1997, determined to merge itself into said Mail-Well Colorado, Inc.:
RESOLVED, that Mail-Well, Inc. merge, and it hereby does merge itself, into
said Mail-Well Colorado, Inc. which assumes all of the obligations of Mail-Well,
Inc.
FURTHER RESOLVED, that the merger shall become effective at 5:01 p.m.,
Eastern Daylight Time on May 30, 1997.
FURTHER RESOLVED, that for each share of Mail-Well, Inc. common stock
owned, upon the surrender of the certificate therefor, the holder shall be
entitled to one share of Mail-Well Colorado, Inc. common stock.
FURTHER RESOLVED, that the proposed merger shall be submitted to the
stockholders of Mail-Well, Inc. at a meeting of such stockholders duly called
and held after twenty days' notice of the purpose thereof mailed to the address
of each such stockholder as it appears int he records of the corporation; and
upon receiving the affirmative vote of the
<PAGE>
holders of at least a majority of the outstanding stock entitled to vote thereon
of Mail-Well, Inc., the merger was approved; and
FURTHER RESOLVED, that the proper officer of this corporation be and he or
she is hereby directed to make and execute a Certificate of Ownership and Merger
setting forth a copy of the Merger Agreement within 10 days after May 30, 1997,
the effective date specified in the Certificate of Ownership and Merger,
resolutions to merge itself into said Mail-Well Colorado, Inc., and the date of
adoption thereof, and to cause the same to be filed with the Secretary of State
and to do all acts and things whatsoever, whether within or without the State of
Delaware, which may be in anywise necessary proper to effect said merger; and
FOURTH: That the merger has been approved by the holders of at least a
majority of the outstanding stock entitled to vote thereon of Mail-Well, Inc. at
a meeting duly called and held.
FIFTH: That Mail-Well Colorado, Inc. survives the merger and may be served
with process in the State of Delaware in any proceeding for enforcement of any
obligation of Mail-Well, Inc. as well as for enforcement of any obligation of
the surviving corporation arising from the merger, including any suit or
proceeding to enforce the right of any stockholder as determined in appraisal
proceedings pursuant to the provisions of Section 262 of Title 8 of the Delaware
Code, and it does hereby irrevocably appoint the Secretary of State of Delaware
as its agent to accept service of process in any such suit or other proceeding.
The address to which a copy of such process shall be mailed by the Secretary of
State of Delaware is 23 Inverness Way East, Suite 165, Englewood, Colorado
80112, until the surviving corporation shall have hereafter designated in
writing to the said Secretary of State a different address for such purpose.
Service of such process may be made by personally delivering to and leaving with
the Secretary of State of Delaware duplicate copies of such process, one of
which copies the Secretary of State of Delaware shall forthwith send by
registered mail to Mail-Well Colorado, Inc. at the above address.
SEVENTH: Anything herein or elsewhere to the contrary notwithstanding,
this merger may be amended or terminated and abandoned by the Board of Directors
of Mail-Well, Inc. at any time prior to the date of filing the merger with the
Secretary of State.
IN WITNESS WHEREOF, said Mail-Well, Inc. has caused this Certificate to be
signed by Roger Wertheimer, its Secretary and General Counsel this 28th day of
May, 1997.
MAIL-WELL, INC.
By: /s/ Roger Wertheimer
---------------------------------------
Roger Wertheimer
Secretary and General Counsel
-2-
<PAGE>
EXHIBIT 3(i)
ARTICLES OF INCORPORATION
OF
MAIL-WELL COLORADO, INC.
ARTICLE I
The name of the Corporation is Mail-Well Colorado, Inc.
ARTICLE II
The principal business address and the Corporation's registered office in
the state of Colorado is 23 Inverness Way East, Suite 165, Englewood, CO 80112.
The name of its registered agent at such address is Roger Wertheimer.
ARTICLE III
The nature of the business or purposes to be conducted or promoted by the
Corporation is to engage in any lawful business, act or activity for which
corporations may be organized under the Colorado Business Corporation Act.
ARTICLE IV
The total number of shares of stock which the Corporation shall have
authority to issue is thirty million twenty-five thousand (30,025,000) shares,
of which twenty-five thousand (25,000) shares are to be preferred stock, par
value $.01 per share ("Preferred Stock"), and thirty million (30,000,000) shares
are to be common stock, par value $.01 per share ("Common Stock").
(a) Subject to the rights of the holders of any series of Preferred Stock as
set forth in any resolution adopted by the Board of Directors pursuant to
Section (b) of this Article IV, the holders of the Common Stock shall
exclusively hold all of the voting rights in the Corporation, with each holder
entitled to one vote on all matters to be voted on by the shareholders for each
share of Common Stock held, and the holders of the Common Stock shall be
entitled to receive the net assets of the Corporation upon dissolution.
(b) Shares of Preferred Stock may be issued from time to time in one or more
series as may from time to time be determined by the Board of Directors, each of
said series to be given a distinguishing designation. The Board of Directors may
determine, in whole or in part, the preferences, limitations and relative
rights, within the limits set forth in Section 7-106-101 of the Colorado
Business Corporation Act, of any series of Preferred Stock before the issuance
of any shares of that series, including:
(1) The distinguishing designation of, and the number of shares of Preferred
Stock that shall constitute, such series;
<PAGE>
(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 Corporation 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 Corporation, and this 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
Corporation or in the event of any merger or consolidation of or sale of assets
by the Corporation;
(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 Corporation 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 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.
All shares of a series shall have preferences, limitations, and relative
rights identical with those of other shares of the same series and, except to
the extent otherwise provided in the description of the series, with those of
other series of the same class. Before issuing any shares of a class or series,
the preferences, limitations and relative rights of which are determined by the
Board of Directors under this section, the Corporation shall deliver to the
secretary of state for filing articles of amendment to the Corporation's
articles of incorporation (meeting the requirements of Section 7-106-102 of the
Colorado Business Corporation Act), which articles shall be effective without
shareholder action.
<PAGE>
ARTICLE V
The Corporation shall indemnify, to the fullest extent permitted by
applicable law in effect from time to time, any person, and the estate and
personal representative of any such person, against all liability and expense
(including attorneys' fees) incurred by reason of the fact that he or she is or
was a director or officer of the Corporation or, while serving as a director or
officer of the Corporation, he or she is or was serving at the request of the
Corporation as a director, officer, partner, trustee, employee, fiduciary, or
agent of, or in any similar managerial or fiduciary position of, another
domestic or foreign Corporation or other individual or entity or of an employee
benefit plan. The Corporation shall also indemnify any person who is serving or
has served the Corporation as director, officer, employee, fiduciary, or agent,
and that person's estate and personal representative, to the extent and in the
manner provided in any bylaw, resolution of the shareholders or directors,
contract, or otherwise, so long as such provision is legally permissible.
ARTICLE VI
There shall be no personal liability of a director to the Corporation or to
its shareholders for monetary damages for breach of fiduciary duty as a
director, except that said personal liability shall not be eliminated to the
Corporation or to the shareholders for monetary damages arising due to any
breach of the director's duty of loyalty to the Corporation or to the
shareholders, acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, acts specified in section 7-108-403,
C.R.S., or any transaction from which a director derived an improper personal
benefit. Notwithstanding any other provisions herein, personal liability of a
director shall be eliminated to the greatest extent possible as is now, or in
the future, provided for by law. Any repeal or modification of the foregoing
sentence shall not adversely affect any right or protection of a director of the
Corporation existing hereunder with respect to any act or omission occurring
prior to such repeal or modification.
ARTICLE VII
The number of directors which shall constitute the whole board of directors
shall be fixed from time to time by the bylaws of the Corporation.
ARTICLE VIII
The name and mailing address of the person who is to serve as the initial
director of the Corporation until the first annual meeting of shareholders of
the Corporation, or until his successors are elected and qualified, are set
forth below:
Name Address
---- -------
Gerald F. Mahoney 23 Inverness Way East, Suite 165
Englewood, CO 80112
ARTICLE IX
<PAGE>
The name and mailing address of the incorporator are as follows:
Name Address
---- -------
Paul Reilly 23 Inverness Way East, Suite 165
Englewood, CO 80112
ARTICLE X
In furtherance and not in limitation of the powers conferred by statute,
the board of directors is expressly authorized to adopt, alter or repeal the
bylaws of the Corporation.
ARTICLE XI
Elections of directors need not be by written ballot unless the bylaws of
the Corporation shall so provide.
There shall be no cumulative voting by shareholders of any class or series
in the election of directors of the Corporation.
Meetings of shareholders may be held at such place, either within or
without the State of Colorado, as may be designated by or in the manner provided
in the bylaws. The books of the Corporation may be kept (subject to any
provision contained in the statutes of the State of Colorado) outside the State
of Colorado at such place or places as may be designated from time to time by
the board of directors or in the bylaws of the Corporation.
ARTICLE XII
(a) As used in this Article, the term:
(1) "Affiliate" means a person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
another person.
(2) "Associate," when used to indicate a relationship with any person, means:
(i) any corporation, partnership, unincorporated association or other entity of
which such person is a director, officer or partner or is, directly or
indirectly, the owner of 20% or more of any class of voting stock; (ii) any
trust or other estate in which such person has at least a 20% beneficial
interest or as to which such person serves as trustee or in a similar fiduciary
capacity; and (iii) any relative or spouse of such person, or any relative of
such spouse, who has the same residence as such person.
(3) "Business Combination," means:
(i) any merger, consolidation or plan of share exchange involving the
Corporation or any direct or indirect majority-owned subsidiary of the
Corporation with (A) an Interested Shareholder (as hereinafter defined), or
(B) with any other corporation, partnership, unincorporated association or
other entity if the merger, consolidation or plan of share exchange is
caused by the Interested Shareholder and as a result of such merger,
consolidation or plan of share exchange subsection (b) of this Article is
not applicable to the surviving entity;
<PAGE>
(ii) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions), except
proportionately with all other shareholders of the Corporation, to or with
the Interested Shareholder, whether as part of a dissolution or otherwise,
of assets of the Corporation or of any direct or indirect majority-owned
subsidiary of the Corporation which assets have an aggregate market value
equal to 10% or more of either the aggregate market value of all the assets
of the Corporation determined on a consolidated basis or the aggregate
market value of all the outstanding stock of the Corporation;
(iii) any transaction which results in the issuance or transfer by the
Corporation or by any direct or indirect majority-owned subsidiary of the
Corporation of any stock of the Corporation or of such subsidiary to an
Interested Shareholder, except: (A) pursuant to the exercise, exchange or
conversion of securities exercisable for, exchangeable for or convertible
into stock of the Corporation or any such subsidiary which securities were
outstanding prior to the time that the Interested Shareholder became such;
(B) pursuant to a dividend or distribution paid or made, or the exercise,
exchange or conversion of securities exercisable for, exchangeable for or
convertible into stock of the Corporation or any such subsidiary which
security is distributed, pro rata to all holders of a class or series of
stock of the Corporation subsequent to the time the Interested Shareholder
became such; (C) pursuant to an exchange offer by the Corporation to
purchase stock made on the same terms to all holders of said stock; or (D)
any issuance or transfer of stock by the Corporation; provided however,
that in no case under items (B)-(D) of this subparagraph shall there be an
increase in the Interested Shareholder's proportionate share of the stock
of any class or series of the Corporation or of the voting stock of the
Corporation;
(iv) any transaction involving the Corporation or any direct or
indirect majority-owned subsidiary of the Corporation which has the effect,
directly or indirectly, of increasing the proportionate share of the stock
of any class or series, or securities convertible into the stock of any
class or series, of the Corporation or of any such subsidiary which is
owned by the Interested Shareholder, except as a result of immaterial
changes due to fractional share adjustments or as a result of any purchase
or redemption of any shares of stock not caused, directly or indirectly, by
the Interested Shareholder; or
(v) any receipt by the Interested Shareholder of the benefit, directly
or indirectly (except proportionately as a shareholder of the Corporation),
of any loans, advances, guarantees, pledges or other financial benefits
(other than those expressly permitted in subparagraphs (i)-(iv) of this
paragraph) provided by or through the Corporation or any direct or indirect
majority-owned subsidiary.
(4) "control," including the terms "controlling," "controlled by" and
"under common control with," means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
person, whether through the ownership of voting stock, by contract or otherwise.
A person who is the owner of 20% or more of the outstanding voting stock of any
corporation, partnership, unincorporated association or other entity shall be
presumed to have control of such entity, in the absence of proof by a
preponderance of the evidence to the contrary; notwithstanding the foregoing, a
presumption of control shall not apply where such person holds voting stock, in
good faith and not for the purpose of circumventing this section, as an agent,
bank, broker, nominee, custodian or trustee for one or more owners who do not
individually or as a group have control of such entity.
(5) "Interested Shareholder" means any person (other than the Corporation
and any direct or indirect majority-owned subsidiary of the Corporation) that
(i) is the owner of 15% or more of the outstanding voting stock of the
Corporation, or (ii) is an Affiliate or Associate of the Corporation and was the
owner of 15% or more of the outstanding voting stock of the Corporation at any
time within the 3-year period immediately prior to the date on which it is
sought to be determined whether such person is an Interested Shareholder, and
the Affiliates and Associates of such person; provided, however, that the term
"Interested Shareholder" shall not include any person whose ownership of shares
in excess of the 15% limitation set forth herein is the result of action taken
solely by the Corporation; provided that such person shall be an Interested
Shareholder if thereafter such person acquires additional shares of voting stock
of the Corporation, except as a result of further corporate action not caused,
directly or indirectly, by such person. For the purpose of determining whether a
person is an Interested Shareholder, the voting stock of the Corporation deemed
to be outstanding shall include stock deemed to be owned by the person through
application of paragraph (8) of this subsection but shall not include any other
unissued stock of the Corporation which may be issuable pursuant to any
agreement, arrangement or understanding, or upon exercise of conversion rights,
warrants or options, or otherwise.
<PAGE>
(6) "person" means any individual, corporation, partnership, unincorporated
association or other entity.
(7) "stock" means, with respect to any corporation, capital stock and, with
respect to any other entity, any equity interest.
(8) "voting stock" means, with respect to any corporation, stock of any
class or series entitled to vote generally in the election of directors and,
with respect to any entity that is not a corporation, any equity interest
entitled to vote generally in the election of the governing body of such entity.
(a) "owner," including the terms "own" and "owned," when used with respect
to any stock, means a person that individually or with or through any of its
Affiliates or Associates:
(i) beneficially owns such stock, directly or indirectly; or
(ii) has (A) the right to acquire such stock (whether such right is
exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding, or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise; provided,
however, that a person shall not be deemed the owner of stock tendered
pursuant to a tender or exchange offer made by such person or any of such
person's Affiliates or Associates until such tendered stock is accepted for
purchase or exchange; or (B) the right to vote such stock pursuant to any
agreement, arrangement or understanding; provided, however, that a person
shall not be deemed the owner of any stock because of such person's right
to vote such stock if the agreement, arrangement or understanding to vote
such stock arises solely from a revocable proxy or consent given in
response to a proxy or consent solicitation made to 10 or more persons; or
(iii) has any agreement, arrangement or understanding for the purpose
of acquiring, holding, voting (except voting pursuant to a revocable proxy
or consent as described in item (B) of subparagraph (ii) of this
paragraph), or disposing of such stock with any other person that
beneficially owns, or whose Affiliates or Associates beneficially own,
directly or indirectly, such stock.
(b) Notwithstanding any other provisions contained in these Articles, the
Corporation shall not engage in any Business Combination with any Interested
Shareholder for a period of three (3) years following the time that such
shareholder became an Interested Shareholder, unless:
(1) Prior to such time the Board of Directors of the Corporation approved
either the Business Combination or the transaction which resulted in the
shareholder becoming an Interested Shareholder;
(2) Upon consummation of the transaction which resulted in the shareholder
becoming an Interested Shareholder, the Interested Shareholder owned at least
85% of the voting stock of the Corporation outstanding at the time the
transaction commenced, excluding for purposes of determining the number of
shares outstanding those shares owned (i) by persons who are directors and also
officers and (ii) employee stock plans in which employee participants do not
have the right to determine confidentially whether shares held subject to the
plan will be tendered in a tender or exchange offer; or
(3) At or subsequent to such time the Business Combination is approved by
the board of directors and authorized at an annual or special meeting of
shareholders, and not by written consent, by the affirmative vote of at least 66
2/3% of the outstanding voting stock which is not owned by the Interested
Shareholder.
(c) The restrictions contained in this Article shall not apply if:
(1) The Corporation, by action of the shareholders, adopts an amendment to
these Articles of Incorporation expressly repealing this Article; provided that,
in addition to any other vote required by law, such amendment to the Articles of
Incorporation or bylaws must be approved by the affirmative vote of a majority
of the shares entitled to vote. An amendment adopted pursuant to this paragraph
shall not be effective until 12 months after the adoption of such amendment and
shall not apply to any Business Combination between the Corporation and any
person who became an Interested Shareholder of the Corporation on or prior to
the date of such adoption;
<PAGE>
(2) A shareholder becomes an Interested Shareholder inadvertently and (i)
as soon as practicable divests itself of ownership of sufficient shares so that
the shareholder ceases to be an Interested Shareholder; and (ii) would not, at
any time within the 3-year period immediately prior to a Business Combination
between the Corporation and such shareholder, have been an Interested
Shareholder but for the inadvertent acquisition of ownership; or
(3) The Business Combination is proposed prior to the consummation or
abandonment of and subsequent to the earlier of the public announcement or the
notice required under the Colorado Business Corporation Act of a proposed
transaction which (i) constitutes one of the transactions described in the 2nd
sentence of this paragraph; (ii) is with or by a person who either was not an
Interested Shareholder during the previous 3 years or who became an Interested
Shareholder with the approval of the Corporation's Board of Directors; and (iii)
is approved or not opposed by a majority of the members of the Board of
Directors then in office (but not less than 1) who were directors prior to any
person becoming an Interested Shareholder during the previous 3 years or were
recommended for election or elected to succeed such directors by a majority of
such directors. The proposed transactions referred to in the preceding sentence
are limited to (x) a merger, consolidation or plan of share exchange involving
the Corporation (except for a merger in respect of which, pursuant to Section 7-
111-104 of the Colorado Business Corporation Act or any successor provision
thereto, no vote of the shareholders of the Corporation is required); (y) a
sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one
transaction or a series of transactions), whether as part of a dissolution or
otherwise, of assets of the Corporation or of any direct or indirect majority-
owned subsidiary of the Corporation (other than to any direct or indirect
wholly-owned subsidiary or to the Corporation) having an aggregate market value
equal to 50% or more of either that aggregate market value of all of the assets
of the Corporation determined on a consolidated basis or the aggregate market
value of all the outstanding stock of the Corporation; or (z) a proposed tender
or exchange offer for 50% or more of the outstanding voting stock of the
Corporation. The Corporation shall give not less than 20 days' notice to all
Interested Shareholders prior to the consummation of any of the transactions
described in clause (x) or (y) of the 2nd sentence of this paragraph.
(d) No provision of the Articles of Incorporation or bylaw shall require,
for any vote of shareholders required by this section, a greater vote of
shareholders than that specified in this section.
ARTICLE XIII
Except as specifically provided otherwise herein, the Corporation may
amend, alter, change or repeal any provision contained in these Articles of
Incorporation, in the manner now or hereafter prescribed by the laws of the
State of Colorado and may add additional provisions authorized by such laws as
are then in force. All rights conferred upon the directors or shareholders of
the Corporation herein or in any amendment hereof are granted subject to this
reservation.
IN WITNESS WHEREOF, I, the undersigned (who, if a natural person is over
the age of 18 years), being the incorporator designated in Article IX of the
foregoing Articles of Incorporation, have executed said Articles of
Incorporation as of the 1st day of May, 1997.
/s/ Paul Reilly
---------------------------------
Paul Reilly, Incorporator
The undersigned consents to the appointment as the initial registered agent
of Mail-Well Colorado, Inc.
/s/ Roger Wertheimer
---------------------------------
Roger Wertheimer
<PAGE>
The undersigned consents to the appointment as the initial registered agent
of Mail-Well Colorado, Inc.
Roger Wertheimer
<PAGE>
EXHIBIT 3(ii)
BYLAWS
OF
MAIL-WELL, INC.
(A COLORADO CORPORATION)
AS AMENDED EFFECTIVE MAY 30, 1997
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
OFFICES
<TABLE>
<CAPTION>
<C> <S> <C>
Section 1.1. Registered Office and Agent.................................... 1
Section 1.2. Offices........................................................ 1
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 2.1. Annual Meetings................................................ 1
Section 2.2. Special Meetings............................................... 1
Section 2.3. Notice of Meetings............................................. 2
Section 2.4. Quorum......................................................... 2
Section 2.5. Adjournments................................................... 2
Section 2.6. Voting; Proxies................................................ 2
Section 2.7. Action by Consent of Stockholders.............................. 2
Section 2.8. List of Stockholders Entitled to Vote.......................... 3
Section 2.9. Fixing Record Date............................................. 3
Section 2.10. Business to be Brought Before the Annual Meeting............... 3
ARTICLE III
BOARD OF DIRECTORS
Section 3.1. Number; Qualifications......................................... 4
Section 3.2. Vacancies...................................................... 4
Section 3.3. Powers......................................................... 4
Section 3.4. Resignations................................................... 4
Section 3.5. Regular Meetings............................................... 5
Section 3.6. Special Meetings............................................... 5
Section 3.7. Notice of Meetings............................................. 5
Section 3.8. Quorum; Vote Required for Action............................... 5
Section 3.9. Action by Consent of Directors................................. 5
Section 3.10. Telephonic Meetings Permitted.................................. 5
Section 3.11. Compensation................................................... 6
Section 3.12. Removal........................................................ 6
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C>
Section 3.13. Committees................................................. 6
Section 3.14. Nomination of Directors.................................... 6
ARTICLE IV
NOTICES
Section 4.1. Notices.................................................... 7
Section 4.2. Waiver of Notice........................................... 8
ARTICLE V
OFFICERS
Section 5.1. Election; Qualifications; Term of Office;
Resignation; Removal; Vacancies............................ 8
Section 5.2. Powers and Duties.......................................... 8
ARTICLE VI
STOCK
Section 6.1. Certificates............................................... 8
Section 6.2. Certificates Issued for Partly Paid Shares................. 9
Section 6.3. Facsimile Signatures....................................... 9
Section 6.4. Lost, Stolen or Destroyed Stock Certificates;
Issuance of New Certificates............................... 9
Section 6.5. Transfer of Stock.......................................... 9
ARTICLE VII
GENERAL PROVISIONS
Section 7.1. Dividends.................................................. 9
Section 7.2. Fiscal Year................................................ 9
Section 7.3. Seal.......................................................10
Section 7.4. Amendments.................................................10
</TABLE>
ARTICLE VIII
INDEMNIFICATION
<PAGE>
* * * * *
BYLAWS
OF
MAIL-WELL, INC.
* * * * *
ARTICLE I
OFFICES
Section 1.1. Registered Office and Agent. The initial registered
----------- ---------------------------
office shall be 23 Inverness Way East, Englewood, Colorado 80112, and the name
of the initial registered agent of the corporation at such address shall be
Roger Wertheimer, Vice-President, General Counsel and Secretary.
Section 1.2. Offices. The corporation may also have offices at such
----------- -------
other places both within and without the State of Colorado as the Board of
Directors may from time to time determine or the business of the corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 2.1. Annual Meetings. Annual meetings of stockholders shall
----------- ---------------
be held at such date, time and place, either within or without the State of
Colorado, as may be designated from time to time by the Board of Directors and
stated in the notice of the meeting, for the purpose of electing a Board of
Directors, and transacting such other business as may properly be brought before
the meeting.
Section 2.2. Special Meetings. Special meetings of the stockholders,
----------- ----------------
for any purpose or purposes, unless otherwise provided by statute or by the
Articles of Incorporation, may be called at any time by the President and shall
be called by the President or Secretary at the request in writing of a majority
of the Board of Directors, or at the request in writing of stockholders owning a
majority in amount of the entire capital stock of the corporation issued and
outstanding and entitled to vote. Such request shall state the purpose or
purposes of the proposed meeting. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice.
<PAGE>
Section 2.3. Notice of Meetings. Whenever stockholders are required or
----------- ------------------
permitted to take action at a meeting, a written notice of the meeting shall be
given which shall state the place, date and hour of the meeting, and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called. Unless otherwise provided by law, the written notice of any meeting
shall be given not less than ten nor more than sixty days before the date
of the meeting, to each stockholder entitled to vote at such meeting.
Section 2.4. Quorum. Except as otherwise provided by law or by the
----------- ------
Articles of Incorporation or these Bylaws, the presence in person or by proxy of
the holders of a majority of the outstanding shares of stock of the corporation
entitled to vote thereat shall constitute a quorum at each meeting of the
stockholders and all questions shall be decided by a majority of the shares so
represented in person or by proxy at the meeting and entitled to vote thereat.
The stockholders present at any duly organized meeting may continue to do
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
Section 2.5. Adjournments. Notwithstanding any other provisions of the
----------- ------------
Articles of Incorporation or these Bylaws, the holders of a majority of the
shares of stock of the corporation entitled to vote at any meeting, present in
person or represented by proxy, whether or not a quorum is present, shall have
the power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented. At
any such adjourned meeting at which a quorum shall be present or represented,
any business may be transacted which might have been transacted at the meeting
originally called; provided, however, that if the adjournment is for more than
thirty days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the adjourned meeting.
Section 2.6. Voting; Proxies. Unless otherwise provided in the Articles
----------- ---------------
of Incorporation, each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder, but no proxy shall be voted on
after three years from its date, unless the proxy provides for a longer period.
Each proxy shall be revocable unless expressly provided therein to be
irrevocable or unless otherwise made irrevocable by law. The notice of every
meeting of the stockholders may be accompanied by a form of proxy approved by
the Board of Directors in favor of such person or persons as the Board of
Directors may select.
Section 2.7. Action by Consent of Stockholders. Unless otherwise
----------- ---------------------------------
provided in the Articles of Incorporation, any action required to be taken at
any annual or special meeting of stockholders of the corporation, or any action
which may be taken at any annual or special meeting of such stockholders, may be
taken without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, shall be signed by all of the
holders of outstanding stock entitled to vote thereon.
<PAGE>
Section 2.8. List of Stockholders Entitled to Vote. The officer who has
----------- -------------------------------------
charge of the stock ledger of the corporation shall prepare and make, at least
ten days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten days prior to the meeting, either
at a place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at the
time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
Section 2.9. Fixing Record Date. In order that the corporation may
----------- ------------------
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than sixty nor less than ten
days before the date of such meeting, nor more than sixty days prior to any
other action. The Board of Directors shall not close the books of the
corporation against transfer of shares during the whole or any part of such
period. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
Section 2.10. Business to be Brought Before the Annual Meeting. To be
------------ ------------------------------------------------
properly brought before the annual meeting of stockholders, business must be
either (a) specified in the notice of meeting (or any supplement thereto) given
by or at the direction of the Board of Directors, (b) otherwise brought before
the meeting by or at the direction of the Board of Directors, or (c) otherwise
properly brought before the meeting by a stockholder of the corporation who is a
stockholder of record at the time of giving of notice provided for in this
Section 2.10 of Article II, who shall be entitled to vote at such meeting and
who complies with the notice procedures set forth in this Section 2.10 of
Article II. In addition to any other applicable requirements, for business to be
brought before an annual meeting by a stockholder of the corporation, the
stockholder must have given timely notice thereof in writing to the Secretary of
the corporation. To be timely, a stockholder's notice must be delivered to or
mailed and received at the principal executive offices of the corporation not
less than 90 days prior to the anniversary date of the immediately preceding
annual meeting of stockholders of the corporation in the case of each subsequent
annual meeting of stockholders. A stockholder's notice to the Secretary shall
set forth as to each matter the stockholder proposes to bring before the annual
meeting (i) a brief description of the business desired to be brought before the
annual meeting and the reasons for conducting such business at the annual
meeting, (ii) the name and address, as they appear on the corporation's books,
of the stockholder proposing such business, (iii) the acquisition date, the
class and the number of shares of voting stock of the corporation which are
owned beneficially by the stockholder, (iv) any material interest of the
stockholder in such business, and (v) a representation that
<PAGE>
the stockholder intends to appear in person or by proxy at the meeting to bring
the proposed business before the meeting.
Notwithstanding anything in these Bylaws to the contrary, no business
shall be conducted at the annual meeting except in accordance with the
procedures set forth in this Section 2.10.
The chairman of the annual meeting shall, if the facts warrant,
determine and declare to the meeting that business was not properly brought
before the meeting in accordance with the provisions of this Section 2.10 of
Article II, and if the chairman should so determine, the chairman shall so
declare to the meeting and any such business not properly brought before the
meeting shall not be transacted.
Notwithstanding the foregoing provisions of this Section 2.10 of Article
II, a stockholder shall also comply with all applicable requirements of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder with respect to the matters set forth in this Section 2.10.
ARTICLE III
BOARD OF DIRECTORS
Section 3.1. Number; Qualifications. The number of directors shall be as
----------- ----------------------
fixed in such a manner as may be determined by the vote of not less than a
majority of the directors then in office, but shall not be less than one. The
directors shall be elected at the annual meeting of the stockholders, except as
provided in Section 3.2, and each director elected shall hold office until his
successor is elected and qualified or until his earlier death, resignation or
removal. A director need not be a stockholder of the corporation. A majority of
the directors may elect from its members a chairman, who shall also serve as
chairman of any annual or special meeting of the stockholders. The chairman, if
any, shall hold this office until his successor shall have been elected and
qualified.
Section 3.2. Vacancies. Any vacancy in the Board of Directors, including
----------- ---------
vacancies resulting from any increase in the authorized number of directors may
be filled by a majority of the remaining directors then in office, though less
than a quorum, or by a sole remaining director, and the directors so chosen
shall hold office until the next annual meeting of stockholders and their
successors are duly elected and qualified, or until their earlier death,
resignation or removal.
Section 3.3. Powers. The business affairs and property of the
----------- ------
corporation shall be managed by or under the direction of the Board of Directors
which may exercise all such powers of the corporation and do all such lawful
acts and things as are not by statute or by the Articles of Incorporation or by
these Bylaws directed or required to be exercised or done by the stockholders.
Section 3.4. Resignations. Any director may resign at any time by
----------- ------------
written notice to the corporation. Any such resignation shall take effect at the
date of receipt of such notice or at any later time specified therein, and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
Section 3.5. Regular Meetings. Regular meetings of the Board of
----------- ----------------
Directors shall be held
<PAGE>
at such place or places within or without the State of Colorado, at such
hour and on such day as may be fixed by resolution of the Board of Directors,
without further notice of such meetings.
Section 3.6. Special Meetings. Special meetings of the Board of
----------- ----------------
Directors may be held whenever called by (i) the Chairman of the Board; (ii) the
President; (iii) the President or Secretary on the written request of a majority
of the Board of Directors; or (iv) resolution adopted by the Board of Directors.
Special meetings may be held within or without the State of Colorado as may be
stated in the notice of the meeting.
Section 3.7. Notice of Meetings. Written notice of the time, place and
----------- ------------------
general nature of the business to be transacted at all special meetings of the
Board of Directors must be given to each director at least one day prior to the
day of the meeting; provided, however, that notice of any meeting need not be
given to any director if waived by him in writing, or if he shall be present at
such meeting, except when the director attends the meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business on the grounds that the meeting is not lawfully called or convened.
Section 3.8. Quorum; Vote Required for Action. At all meetings of the
----------- --------------------------------
Board of Directors, a majority of directors then in office shall constitute a
quorum for the transaction of business and, except as otherwise provided by law
or these Bylaws, the act of a majority of the directors present at any meeting
at which there is a quorum shall be the act of the Board of Directors; but a
lesser number may adjourn the meeting from day to day, without notice other than
announcement at the meeting, until a quorum shall be present. Directors may
participate in any meeting of the directors, and members of any committee of
directors may participate in any meeting of such committee, by means of
conference telephone or similar communications equipment by means of which all
persons participating in such meeting can hear each other, and such
participation shall constitute presence in person at such meeting.
Section 3.9. Action by Consent of Directors. Any action required or
----------- ------------------------------
permitted to be taken at any meeting of the Board of Directors or of any
committee of the Board of Directors may be taken without a meeting, if all
members of the board or the committee of the board, as the case may be, consent
thereto in writing, which may be in counterparts, and the writing or writings
are filed with the minutes of proceedings of the Board of Directors or the
committee thereof. Such writing(s) shall be manually executed if practicable,
but if circumstances so require, effect shall be given to written consent
transmitted by telegraph, telex, telecopy or similar means of visual data
transmission.
Section 3.10. Telephonic Meetings Permitted. Members of the Board of
------------ ------------------------------
Directors, or any committee designated by the board, may participate in a
meeting of such board or committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
Bylaw shall constitute presence in person at such meeting.
<PAGE>
Section 3.11. Compensation. Directors shall be entitled to such
------------ ------------
compensation for their services as may be approved by the Board of Directors,
including, if so approved by resolution of the Board of Directors, a fixed sum
and expenses of attendance at each regular or special meeting or any committee
thereof. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
Section 3.12. Removal. Except as provided in the Articles of
------------ -------
Incorporation or by law, any director or the entire Board of Directors may be
removed, with or without cause, by the holders of a majority of shares entitled
to vote at an election of directors. The notice calling such meeting shall state
the intention to act upon such matter, and, if the notice so provides, the
vacancy or vacancies caused by such removal may be filled at such meeting by a
vote of the majority of the shares entitled to vote at an election of directors.
Section 3.13. Committees. The Board of Directors may, by resolution
------------ ----------
passed by a majority of the whole Board, designate one or more committees, each
committee to consist of two or more of the directors of the corporation. The
Board may designate one or more directors as alternate members of any committee.
The alternate members of any committee may replace any absent or disqualified
member at any meeting of the committee. Any such committee, to the extent
provided in a resolution of the Board of Directors, shall have and may exercise
all the powers and authority of the Board of Directors in the management of the
business and affairs of the corporation, and may authorize the seal of the
corporation to be affixed to all papers which may require it; but no such
committee shall have such power or authority in reference to amending the
Articles of Incorporation, adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the corporation's property and assets, recommending to the
stockholders a dissolution of the corporation or a revocation of a dissolution,
or amending the Bylaws of the corporation; and, unless the resolution or the
Articles of Incorporation expressly so provide, no committee shall have the
power or authority to declare a dividend or to authorize the issuance of stock.
Such committee or committees shall have such name or names as may be determined
from time to time by resolution adopted by the Board of Directors. Each
committee shall keep regular minutes of its meetings and report the same to the
Board of Directors when required. Members of special or standing committees
shall be entitled to receive such compensation for serving on such committees as
the Board of Directors shall determine.
Section 3.14. Nomination of Directors. Only persons who are nominated in
------------ -----------------------
accordance with the following procedures shall be eligible for election as
directors. Nominations of persons for election to the Board of Directors of the
corporation may be made at a meeting of stockholders (a) by or at the direction
of the Board of Directors or (b) by any stockholder of the corporation who is a
stockholder of record at the time of giving of notice provided for in this
Section 3.14 of Article III, who shall be entitled to vote for the election of
directors at the meeting and who complies with the notice procedures set forth
in this Section 3.14 of Article III. Such nominations, other than those made by
or at the direction of the Board of Directors, shall be made pursuant to timely
notice in writing to the Secretary of the corporation. To be timely, a
stockholder's notice shall be delivered to or mailed and received at the
principal executive offices of the corporation (i) with respect to an election
to be held at
<PAGE>
the annual meeting of the stockholders of the corporation, not
later than 90 days prior to the anniversary date of the immediately preceding
annual meeting of stockholders of the corporation, and (ii) with respect to an
election to be held at a special meeting of stockholders of the corporation for
the election of directors, not later than the closing of business on the 10th
day following the day on which such notice of the date of the meeting was mailed
or public disclosure of the date of the meeting was made, whichever first
occurs. Such stockholder's notice to the Secretary shall set forth (a) as to
each person whom the stockholder proposes to nominate for election or re-
election as a director, all information relating to the person that is required
to be disclosed in solicitations for proxies for election of directors, or is
otherwise required, pursuant to Regulation 14A under the Securities Exchange Act
of 1934, as amended (including the written consent of such person to be named in
the proxy statement as a nominee and to serve as a director if elected); and (b)
as to the stockholder giving the notice (i) the name and address, as they appear
on the corporation's books, of such stockholder, and (ii) the class and number
of shares of capital stock of the corporation which are beneficially owned by
the stockholder. At the request of the Board of Directors, any person nominated
by the Board of Directors for election as a director shall furnish to the
Secretary of the corporation that information required to be set forth in a
stockholder's notice of nomination which pertains to the nominee.
In the event that a person is validly designated as nominee to the Board
and shall thereafter become unable or unwilling to stand for election to the
Board of Directors, the Board of Directors or the stockholder who proposed such
nominee, as the case may be, may designate a substitute nominee.
No person shall be eligible to serve as a director of the corporation
unless nominated in accordance with the procedures set forth in this Section
3.14 of Article III. The chairman of the meeting of stockholders shall, if the
facts warrant, determine and declare to the meeting that a nomination was not
made in accordance with the procedures prescribed by the Bylaws, and if the
chairman should so determine, the chairman shall so declare to the meeting and
the defective nomination shall be disregarded.
Notwithstanding the foregoing provisions of this Section 3.14 of Article
III, a stockholder shall also comply with all applicable requirements of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder with respect to the matters set forth in this Section 3.14 of Article
III.
ARTICLE IV
NOTICES
Section 4.1. Notices. Whenever any notice is required to be given under
----------- -------
the provisions of these Bylaws or of the Articles of Incorporation to any
director or stockholder, such notice must be in writing and may be given in
person, in writing or by mail, telegram, telecopy or other similar means of
visual communication, addressed to such director or stockholder, at his address
as it appears on the records of the corporation, with postage or other
transmittal charges thereon prepaid. Such notice shall
<PAGE>
be deemed to be given (i) if by mail, at the time when the same shall be
deposited in the United States mail and (ii) otherwise, when such notice is
transmitted.
Section 4.2. Waiver of Notice. Whenever any notice is required to be
----------- ----------------
given under the provisions of the Bylaws or of the Articles of Incoporation to
any director or stockholder, a waiver thereof in writing, signed by the person
or persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent thereto.
ARTICLE V
OFFICERS
Section 5.1. Election; Qualifications; Term of Office; Resignation;
----------- ------------------------------------------------------
Removal; Vacancies. The officers of the corporation shall be elected or
- ------------------
appointed by the Board of Directors and may include, at the discretion of the
Board, a Chairman of the Board, a President, a Secretary, a Treasurer and such
Executive, Senior or other Vice Presidents and other officers as may be
determined by the Board of Directors. Any number of offices may be held by the
same person. The officers of the corporation shall hold office until their
successors are chosen and qualified, except that any officer may resign at any
time by written notice to the corporation and the Board of Directors may remove
any officer at any time at its discretion with or without cause. Any vacancies
occurring in any office of the corporation by death, resignation, removal or
otherwise may be filled for the unexpired portion of the term by the Board of
Directors at any regular or special meeting.
Section 5.2. Powers and Duties. The officers of the corporation shall
----------- -----------------
have such powers and duties as generally pertain to their offices, except as
modified herein or by the Board of Directors, as well as such powers and duties
as shall be determined from time to time by the Board of Directors. The Chairman
of the Board, if one is elected, and otherwise the President, shall preside at
all meetings of the Board. The President shall preside at all meetings of the
Stockholders.
<PAGE>
ARTICLE VI
STOCK
Section 6.1. Certificates. Every holder of stock in the corporation
----------- ------------
shall be entitled to have a certificate, signed by, or in the name of the
corporation by, (i) the Chairman or Vice-Chairman of the Board of Directors, or
the President or a Vice President and (ii) the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary of the corporation,
certifying the number of shares owned by him in the corporation. If the
corporation shall be authorized to issue more than one class of stock or more
than one series of any class, the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualification, limitations or restrictions of such
preferences and/or rights shall be set forth in full or summarized on the face
or back of the certificate which the corporation shall issue to represent such
class or series of stock, provided that, in lieu of the foregoing requirements,
there may be set forth on the face or back of the certificate which the
corporation shall issue to represent such class or series of stock, a statement
that the corporation will furnish without charge to each stockholder who so
requests the powers, designations, preferences and relative, participating,
optional or other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences and/or
rights.
Section 6.2. Certificates Issued for Partly Paid Shares. Certificates
----------- ------------------------------------------
may be issued for partly paid shares and in such case upon the face or back of
the certificates issued to represent any such partly paid shares the total
amount of the consideration to be paid therefor, and the amount paid thereon
shall be specified.
Section 6.3. Facsimile Signatures. Any of or all the signatures on the
----------- --------------------
certificate may be facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.
Section 6.4. Lost, Stolen or Destroyed Stock Certificates; Issuance of
----------- ---------------------------------------------------------
New Certificates. The Board of Directors may direct a new certificate or
- ----------------
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or to give the corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
Section 6.5. Transfer of Stock. Upon surrender to the corporation or the
----------- -----------------
transfer agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of
<PAGE>
succession, assignation or authority to transfer, and subject to applicable
federal and state securities laws and contractual obligations, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
ARTICLE VII
GENERAL PROVISIONS
Section 7.1. Dividends. Dividends upon the capital stock of the
----------- ---------
corporation, subject to the provisions of the Articles of Incorporation, if any,
may be declared by the Board of Directors at any regular or special meeting,
pursuant to law. Dividends may be paid in cash, in property, or in shares of the
capital stock, subject to the provisions of the Articles of Incorporation.
Before payment of any dividend, there may be set aside out of any funds of the
corporation available for dividends such sum or sums as the directors from time
to time, in their absolute discretion, think proper as a reserve or reserves to
meet contingencies, or for equalizing dividends, or for repairing or maintaining
any property of the corporation, or for such other purpose as the directors
shall think conducive to the interest of the corporation, and the directors may
modify or abolish any such reserve in the manner in which it was created.
Section 7.2. Fiscal Year. The fiscal year of the corporation shall be
----------- -----------
fixed by resolution of the Board of Directors.
Section 7.3. Seal. The seal of the corporation shall be in such form as
----------- ----
the Board of Directors shall prescribe.
Section 7.4. Amendments. These Bylaws may be altered, amended or
----------- ----------
repealed or new Bylaws may be adopted by the stockholders or, unless expressly
prohibited by a particular Bylaw, by the Board of Directors (i) at any regular
meeting of the stockholders or of the Board of Directors (ii) or at any special
meeting of the stockholders or of the Board of Directors if notice of such
alteration, amendment, repeal or adoption of new Bylaws shall be contained in
the notice of such special meeting. The power to adopt, amend or repeal Bylaws
conferred upon the Board of Directors shall not divest or limit the power of the
stockholders to adopt, amend or repeal Bylaws.
ARTICLE VIII
INDEMNIFICATION
The corporation shall be authorized to indemnify any person entitled to
indemnity under the Colorado Business Corporation Act, as the same exists or may
hereafter be amended (the "Act"), to the fullest extent permitted by the Act;
provided, however, that the corporation shall not be permitted to indemnify any
person in connection with any proceeding initiated by such person, unless such
proceeding is authorized by a majority of the directors of the corporation.
<PAGE>
EXHIBIT 10.56
MAIL-WELL, INC.
1994 STOCK OPTION PLAN
AS AMENDED ON MAY 7, 1997
SECTION 1. Purpose of the Plan. The purpose of this Mail-Well, Inc. 1994
--------------------
Stock Option Plan, as amended ("Plan") is to encourage ownership of common
stock, $.01 par value ("Common Stock"), of Mail-Well, Inc., a Delaware
corporation (the "Company"), by eligible key employees and directors of the
Company and its Affiliates (as defined below) and to provide increased incentive
for such employees and directors to render services and to exert maximum effort
for the business success of the Company. In addition, the Company expects that
the Plan will further strengthen the identification of employees and directors
with the stockholders. Certain options to be granted under this Plan are
intended to qualify as Incentive Stock Options ("ISOs") pursuant to Section 422
of the Internal Revenue Code of 1986, as amended ("Code"), while other options
granted under this Plan will be nonqualified options which are not intended to
qualify as ISOs ("Nonqualified Options"), either or both as provided in the
agreements evidencing the options as provided in the Section 6 hereof. As used
in this Plan, the term "Affiliates" means any "parent corporation" of the
Company and any "subsidiary corporation" of the Company within the meaning of
Code Sections 424(e) and (f), respectively.
SECTION 2. Administration of the Plan.
--------------------------
(a) Composition of Committee. The Plan shall be administered by the
------------------------
Compensation Committee (the "Committee") comprised of two or more Directors
designated by the Board of Directors of the Company (the "Board"), which
shall also designate the Chairman of the Committee. If the Company is
governed by Rule 16b-3 promulgated by the Securities and Exchange
Commission ("Commission") pursuant to the Securities Exchange Act of 1934,
as amended ("Exchange Act"), no director shall serve as a member of the
Committee unless he is a "Non-Employee Director" within the meaning of such
Rule 16b-3.
(b) Committee Action. The Committee shall hold its meetings at such
----------------
times and places as it may determine. A majority of its members shall
constitute a quorum, and all determinations of the Committee shall be made
by not less than a majority of its members. Any decision or determination
reduced to writing and signed by a majority of the members shall be fully
effective as if it had been made by a majority vote of its members at a
meeting duly called and held. The Committee may designate the Secretary of
the Company or other Company employees to assist the Committee in the
administration of the Plan, and may grant authority to such persons to
execute award agreements or other documents on behalf of the Committee and
the Company. Any duly constituted committee of the Board satisfying the
qualifications of this Section 2 may be appointed as the Committee.
<PAGE>
(c) Committee Expenses. All expenses and liabilities incurred by the
------------------
Committee in the administration of the Plan shall be borne by the Company.
The Committee may employ attorneys, consultants, accountants or other
persons.
SECTION 3. Stock Reserved for the Plan. Subject to adjustment as provided
---------------------------
in Section 6(k) hereof, the aggregate number of shares of Common Stock that may
be optioned under the Plan is 225,000. The shares subject to the Plan shall
consist of authorized but unissued shares of Common Stock and such number of
shares shall be and is hereby reserved for sale for such purpose. Any of such
shares which may remain unsold and which are not subject to outstanding options
at the termination of the Plan shall cease to be reserved for the purpose of the
Plan, but until termination of the Plan or the termination of the last of the
options granted under the Plan, whichever last occurs, the Company shall at all
times reserve a sufficient number of shares to meet the requirements of the
Plan. Should any option expire or be canceled prior to its exercise in full,
the shares theretofore subject to such option may again be made subject to an
option under the Plan.
SECTION 4. Eligibility. The persons eligible to participate in the Plan
-----------
as a recipient of options ("Optionee") shall include only key employees and
directors of the Company or its Affiliates at the time the option is granted.
An employee who has been granted an option hereunder may be granted an
additional option or options, if the Committee shall so determine.
SECTION 5. Grant of Options.
----------------
(a) Committee Discretion. The Committee shall have sole and absolute
--------------------
discretionary authority (i) to determine, authorize, and designate those
key employees and directors of the Company or its Affiliates who are to
receive options under the Plan, (ii) to determine the number of shares of
Common Stock to be covered by such options and the terms thereof, and (iii)
to determine the type of option granted: ISO, Nonqualified Option or a
combination of ISO and Nonqualified Options; provided that a director who
is not also an employee of the Company may not receive any ISOs. The
Committee shall thereupon grant options in accordance with such
determinations as evidenced by a written option agreement. Subject to the
express provisions of the Plan, the Committee shall have discretionary
authority to prescribe, amend and rescind rules and regulations relating to
the Plan, to interpret the Plan, to prescribe and amend the terms of the
option agreements (which need not be identical) and to make all other
determinations deemed necessary or advisable for the administration of the
Plan.
(b) Stockholder Approval. All options granted under this Plan are
--------------------
subject to, and may not be exercised before, the approval of this Plan by
the stockholders prior to the first anniversary date of the Board meeting
held to approve the Plan, by the affirmative vote of the holders of a
majority of the outstanding shares of the Company present, or represented
by proxy, and entitled to vote thereat or by written consent in accordance
with applicable corporate law; provided that if such approval
<PAGE>
by the stockholders of the Company is not forthcoming, all options
previously granted under this Plan shall be void.
(c) Limitation on Incentive Stock Options. The aggregate fair market
-------------------------------------
value (determined in accordance with Section 6(b) of this Plan at the time
the option is granted) of the Common Stock with respect to which ISOs may
be exercisable for the first time by any Optionee during any calendar year
under all such plans of the Company and its Affiliates shall not exceed
$100,000.
SECTION 6. Terms and Conditions. Each option granted under the Plan shall
--------------------
be evidenced by an agreement, in a form approved by the Committee, which shall
be subject to the following express terms and conditions and to such other terms
and conditions as the Committee may deem appropriate.
(a) Option Period. The Committee shall promptly notify the Optionee
-------------
of the option grant and a written agreement shall promptly be executed and
delivered by and on behalf of the Company and the Optionee, provided that
the option grant shall expire if a written agreement is not signed by said
Optionee (or his agent or attorney) and returned to the Company within 60
days from date of receipt by the Optionee of such agreement. The date of
grant shall be the date the option is actually granted by the Committee,
even though the written agreement may be executed and delivered by the
Company and the Optionee after that date. Each option agreement shall
specify the period for which the option thereunder is granted (which in no
event shall exceed ten years from the date of grant) and shall provide that
the option shall expire at the end of such period. If the original term of
an option is less than ten years from the date of grant, the option may be
amended prior to its expiration, with the approval of the Committee and the
Optionee, to extend the term so that the term as amended is not more than
ten years from the date of grant. However, in the case of an ISO granted
to an individual who, at the time of grant, owns stock possessing more than
10 percent of the total combined voting power of all classes of stock of
the Company or its Affiliate ("Ten Percent Stockholder"), such period shall
not exceed five years from the date of grant.
(b) Option Price. The purchase price of each share of Common Stock
------------
subject to each option granted pursuant to the Plan shall be determined by
the Committee at the time the option is granted and, in the case of ISOs,
shall not be less than 100% of the fair market value of a share of Common
Stock on the date the option is granted, as determined by the Committee.
In the case of an ISO granted to a Ten Percent Stockholder, the option
price shall not be less than 110% of the fair market value of a share of
Common Stock on the date the option is granted. The purchase price of each
share of Common Stock subject to a Nonqualified Option under this Plan
shall be determined by the Committee prior to granting the option. The
Committee shall set the purchase price for each share subject to a
Nonqualified Option at such price as the Committee in its sole discretion
shall determine, provided that the purchase price of each share of Common
Stock subject to a Nonqualified
<PAGE>
Option shall not be greater than the fair market value of a share of Common
Stock on the date the option is granted as determined by the Committee.
For all purposes under the Plan, the fair market value of a share of
Common Stock on a particular date shall be equal to the mean of the
reported high and low sales prices of the Common Stock on the New York
Stock Exchange Composite Tape on that date, or if no prices are reported on
that date, on the last preceding date on which such prices of the Common
Stock are so reported. If the Common Stock is not traded on the New York
Stock Exchange at the time a determination of its fair market value is
required to be made hereunder, its fair market value shall be deemed to be
equal to the average between the closing bid and ask prices of the Common
Stock on the most recent date the Common Stock was publicly traded.
In the event the Common Stock is not publicly traded at the time a
determination of its value is required to be made hereunder, the
determination of its fair market value shall be made by the Committee in
such manner as it deems appropriate.
(c) Exercise Period. The Committee may provide in the option
---------------
agreement that an option may be exercised in whole, immediately, or is to
be exercisable in increments. However, no portion of any option may be
exercisable by an Optionee prior to the approval of the Plan by the
Stockholders of the Company.
(d) Procedure for Exercise. Options shall be exercised by the
----------------------
delivery of written notice to the Secretary of the Company setting forth
the number of shares with respect to which the option is being exercised.
Such notice shall be accompanied by cash or cashier's check, bank draft,
postal or express money order payable to the order of the Company, or at
the option of the Committee, in Common Stock theretofore owned by such
Optionee (or any combination of cash and Common Stock). Notice may also be
delivered by fax or telecopy provided that the purchase price of such
shares is delivered to the Company via wire transfer on the same day the
fax is received by the Company. The notice shall specify the address to
which the certificates for such shares are to be mailed. An Optionee shall
be deemed to be a stockholder with respect to shares covered by an option
on the date the Company receives such written notice and such option
payment.
As promptly as practicable after receipt of such written notification
and payment, the Company shall deliver to the Optionee certificates for the
number of shares with respect to which such option has been so exercised,
issued in the Optionee's name or such other name as Optionee directs;
provided, however, that such delivery shall be deemed effected for all
purposes when a stock transfer agent of the Company shall have deposited
such certificates in the United States mail, addressed to the Optionee at
the address specified pursuant to this Section 6(d).
<PAGE>
(e) Termination of Employment. If an employee to whom an option is
-------------------------
granted ceases to be employed by the Company for any reason other than
death or disability or if a director to whom an option is granted ceases to
serve on the Board for any reason other than death or disability, any
option which is exercisable on the date of such termination of employment
or cessation from the Board shall expire upon such date of such termination
of employment or cessation from the Board; provided, however, the
Committee, in its sole discretion, may allow an Optionee to exercise all or
a portion of the Options granted but unexercised for a period of time after
the Optionee's termination of employment or cessation from the Board.
(f) Disability or Death of Optionee. In the event of the
-------------------------------
determination of disability or death of an Optionee under the Plan while he
is employed by the Company or while he serves on the Board, the options
previously granted to him may be exercised (to the extent he would have
been entitled to do so at the date of the determination of disability or
death) at any time and from time to time, within a three-month period after
such determination of disability or death, by the former employee or
director, the guardian of his estate, the executor or administrator of his
estate or by the person or persons to whom his rights under the option
shall pass by will or the laws of descent and distribution, but in no event
may the option be exercised after its expiration under the terms of the
option agreement. An Optionee shall be deemed to be disabled if, in the
opinion of a physician selected by the Committee, he is incapable of
performing services for the Company of the kind he was performing at the
time the disability occurred by reason of any medically determinable
physical or mental impairment which can be expected to result in death or
to be of long, continued and indefinite duration. The date of
determination of disability for purposes hereof shall be the date of such
determination by such physician. The Committee, in its sole discretion,
may allow an Optionee to exercise all or a portion of the Options granted
but unexercised for a longer period than three months after disability or
death.
(g) Assignability. An option shall not be assignable or otherwise
-------------
transferable except by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined in the Code or
Title I of the Employee Retirement Income Security Act, as amended, or the
rules thereunder. During the lifetime of an Optionee, an option shall be
exercisable only by him.
(h) Incentive Stock Options. Each option agreement may contain such
-----------------------
terms and provisions as the Committee may determine to be necessary or
desirable in order to qualify an option designated as an incentive stock
option.
(i) No Rights as Stockholder. No Optionee shall have any rights as a
------------------------
stockholder with respect to shares covered by an option until the option is
exercised by the written notice and accompanied by payment as provided in
clause (d) above.
<PAGE>
(j) Extraordinary Corporate Transactions. The existence of
------------------------------------
outstanding options shall not affect in any way the right or power of the
Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations, exchanges, or other changes in the
Company's capital structure or its business, or any merger or consolidation
of the Company, or any issuance of Common Stock or other securities or
subscription rights thereto, or any issuance of bonds, debentures,
preferred or prior preference stock ahead of or affecting the Common Stock
or the rights thereof, or the dissolution or liquidation of the Company, or
any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or
otherwise. If the Company recapitalizes or otherwise changes its capital
structure, or merges, consolidates, sells all of its assets or dissolves
(each of the foregoing a "Fundamental Change"), then thereafter upon any
exercise of an option theretofore granted the Optionee shall be entitled to
purchase under such option, in lieu of the number of shares of Common Stock
as to which option shall then be exercisable, the number and class of
shares of stock and securities to which the Optionee would have been
entitled pursuant to the terms of the Fundamental Change if, immediately
prior to such Fundamental Change, the Optionee had been the holder of
record of the number of shares of Common Stock as to which such option is
then exercisable.
(k) Changes in Company's Capital Structure. If the outstanding
--------------------------------------
shares of Common Stock or other securities of the Company, or both, for
which the option is then exercisable shall at any time be changed or
exchanged by declaration of a stock dividend, stock split, or combination
of shares, the number and kind of shares of Common Stock or other
securities which are subject to the Plan or subject to any options
theretofore granted, and the option prices, shall be appropriately and
equitably adjusted so as to maintain the proportionate number of shares or
other securities without changing the aggregate option price.
(l) Acceleration of Options. Except as hereinbefore expressly
-----------------------
provided, (i) the issuance by the Company of shares of stock of any class
of securities convertible into shares of stock of any class, for cash,
property, labor or services, upon direct sale, upon the exercise of rights
or warrants to subscribe therefor, or upon conversion of shares or
obligations of the Company convertible into such shares or other
securities, (ii) the payment of a dividend in property other than Common
Stock or (iii) the occurrence of any similar transaction, and in any case
whether or not for fair value, shall not affect, and no adjustment by
reason thereof shall be made with respect to, the number of shares of
Common Stock subject to options theretofore granted or the purchase price
per share, unless the Committee shall determine in its sole discretion that
an adjustment is necessary to provide equitable treatment to Optionee.
Notwithstanding anything to the contrary contained in this Plan, the
Committee may in its sole discretion accelerate the time at which any
option may be exercised, including, but not limited to, upon the occurrence
of the events specified in this Section 6, and is authorized at any time
(with the consent of the Optionee) to purchase options pursuant to Section
7.
<PAGE>
(m) Stockholders Agreement. The Committee shall provide in the
----------------------
option agreement that prior to receiving any shares of Common Stock or
other securities on the exercise of the option, the Optionee (or the
Optionee's representative upon the Optionee's death) shall be required to
execute the American Mail-Well Employee Stockholders Agreement, or the
Company's Stockholders Agreement, whichever the Committee deems
appropriate.
(n) Change of Control. In the event that (i) there is a proposed
-----------------
action whereby the Company would not be the surviving entity in any merger
or consolidation (or survives only as a subsidiary of another entity) other
than a merger for the sole purpose of changing the Company's state of
incorporation, (ii) there is a proposed action whereby the Company would
sell all or substantially all of its assets to any person or entity (other
than a wholly-owned subsidiary), (iii) any person or entity (including a
"group" as contemplated by Section 13(d)(3) of the Exchange Act), acquires
or gains ownership or control of (including, without limitation, power to
vote) more than 50% of the outstanding shares of Common Stock, (iv) there
is a proposed action whereby the Company would be dissolved and liquidated,
or (v) as a result of or in connection with a contested election of
directors, the persons who were directors of the Company before such
election shall cease to constitute a majority of the Board (each such event
in clauses (i) through (v) above is referred to herein as a "Corporate
Change"), all Optionees hereunder shall be given notice of such Corporate
Change and shall have a period of thirty (30) days thereafter to exercise
their options after receipt of such notice whether such options had vested
in accordance with their terms or not.
SECTION 7. Relinquishment of Options.
--------------------------
(a) The Committee, in granting options hereunder, shall have
discretion to determine whether or not options shall include a right of
relinquishment as hereinafter provided by this Section 7. The Committee
shall also have discretion to determine whether an option agreement
evidencing an option initially granted by the Committee without a right of
relinquishment shall be amended or supplemented to include such a right of
relinquishment. Neither the Committee nor the Company shall be under any
obligation or incur any liability to any person by reason of the
Committee's refusal to grant or include a right of relinquishment in any
option granted hereunder or in any option agreement evidencing the same.
Subject to the Committee's determination in any case that the grant by it
of a right of relinquishment is consistent with Paragraph 1 hereof, any
option granted under this Plan, and the option agreement evidencing such
option, may provide:
i) That the Optionee, or his heirs or other legal
representatives to the extent entitled to exercise the option under
the terms thereof, in lieu of purchasing the entire number of shares
subject to purchase thereunder, shall have the right to relinquish all
or any part of the then unexercised portion of
<PAGE>
the option (to the extent then exercisable) for a number of shares of
Common Stock, for an amount of cash or for a combination of Common
Stock and cash to be determined in accordance with the following
provisions of this clause (i):
a) The written notice of exercise of such right of
relinquishment shall state the percentage, if any, of the
Appreciated Value (as defined below) that the Optionee elects to
receive in cash ("Cash Percentage"), such Cash Percentage to be
in increments of 10% of such Appreciated Value up to 100%
thereof;
b) The number of shares of Common Stock, if any, issuable
pursuant to such relinquishment shall be the number of such
shares, rounded to the next greater number of full shares, as
shall be equal to the quotient obtained by dividing (A) the
difference between (I) the Appreciated Value and (II) the result
obtained by multiplying the Appreciated Value and the Cash
Percentage by (B) the then current market value per share of
Common Stock;
c) The amount of cash payable pursuant to such
relinquishment shall be an amount equal to the Appreciated Value
less the aggregate current market value of the Common Stock
issued pursuant to such relinquishment, if any, which cash shall
be paid by the Company subject to such conditions as are deemed
advisable by the Committee to permit compliance by the Company
with the withholding provisions applicable to employers under the
Code and any applicable state income tax laws;
d) For the purpose of this clause (i), "Appreciated Value"
means the excess of (x) the aggregate current market value of the
shares of Common Stock covered by the option or the portion
thereof to be relinquished over (y) the aggregate purchase price
for such shares specified in such option;
ii) That such right of relinquishment may be exercised only upon
receipt by the Company of a written notice of such relinquishment
which shall be dated the date of election to make such relinquishment;
and that, for the purposes of this Plan, such date of election shall
be deemed to be the date when such notice is sent by registered or
certified mail, or when receipt is acknowledged by the Company, if
mailed by other than registered or certified mail or if delivered by
hand or by any telegraphic communications equipment of the sender or
otherwise delivered; provided, that, in the event the method just
described for determining such date of election shall not be or remain
consistent with the provisions of Section 16(b) of the Exchange Act or
the rules and regulations adopted by the Commission thereunder, as
<PAGE>
presently existing or as may be hereafter amended, which regulations
exempt from the operation of Section 16(b) of the Exchange Act in
whole or in part any such relinquishment transaction, then such date
of election shall be determined by such other method consistent with
Section 16 (b) of the Exchange Act or the rules and regulations
thereunder as the Committee shall in its discretion select and apply;
iii) That the "current market value" of a share of Common Stock
on a particular date shall be deemed to be its fair market value on
that date as determined in accordance with Paragraph 6 (b); and
iv) That the option, or any portion thereof, may be relinquished
only to the extent that (A) it is exercisable on the date written
notice of relinquishment is received by the Company, (B) the
Committee, subject to the provisions of Paragraph 7(b), shall consent
to the election of the holder to relinquish such option in whole or in
part for cash as set forth in such written notice of relinquishment
and (C) the holder of such option pays, or makes provision
satisfactory to the Company for the payment of, any taxes which the
Company is obligated to collect with respect to such relinquishment.
(b) The Committee shall have sole discretion to consent to or
disapprove, and neither the Committee nor the Company shall be under any
liability by reason of the Committee's disapproval of, any election by a
holder of an option to relinquish such option in whole or in part for cash
as provided in Paragraph 7(a), except that no such consent to or approval
of a relinquishment for cash shall be required under the following
circumstances. Each Optionee who is subject to the short-swing profits
recapture provisions of Section 16(b) of the Exchange Act ("Covered
Optionee") shall be entitled to receive payment only in cash when options
are relinquished during any window period commencing on the third business
day following the Company's release of a quarterly or annual summary
statement of sales and earnings and ending on the twelfth business day
following such release ("Window Period"); provided, however, that payment
shall be so made in cash only in respect of 50% of the options covered by
any stock option agreement. A Covered Optionee shall be entitled to
receive payment only in shares of Common Stock upon (a) the relinquishment
of options outside a Window Period and (b) the relinquishment of options
during a Window Period once such Optionee has received payment in cash for
the relinquishment of 50% of the options covered by any stock option
agreement.
(c) The Committee, in granting options hereunder, shall have
discretion to determine the terms upon which such options shall be
relinquishable, subject to the applicable provisions of this Plan, and
including such provisions as are deemed advisable to permit the exemption
from the operation from Section 16(b) of the Exchange Act of any such
relinquishment transaction, and options outstanding, and option agreements
evidencing such options, may be amended, if necessary, to permit
<PAGE>
such exemption. If an option is relinquished, such option shall be deemed
to have been exercised to the extent of the number of shares of Common
Stock covered by the option or part thereof which is relinquished, and no
further options may be granted covering such shares of Common Stock.
(d) Neither any option nor any right to relinquish the same to the
Company as contemplated by this Paragraph 7 shall be assignable or
otherwise transferable except by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined
in the Code or Title I of the Employee Retirement Income Security Act, as
amended, or the rules thereunder.
(e) Except as provided in Section 7(f) below, no right of
relinquishment may be exercised within the first six months after the
initial award of any Option containing, or the amendment or supplementation
of any existing option agreement adding, the right of relinquishment.
(f) No right of relinquishment may be exercised after the initial
award of any option containing, or the amendment or supplementation of any
existing option agreement adding the right of relinquishment, unless such
right of relinquishment is effective upon the Optionee's death, disability
or termination of his relationship with the Company and the payment upon
the exercise of such right is only in cash.
SECTION 8. Amendments or Termination. The Board may amend, alter or
-------------------------
discontinue the Plan, but no amendment or alteration shall be made which would
impair the rights of any Optionee, without his consent, under any option
theretofore granted, or which, without the approval of the stockholders, would:
(i) except as is provided in Section 6(k) of the Plan, increase the total number
of shares reserved for the purposes of the Plan, (ii) change the class of
persons eligible to participate in the Plan as provided in Section 4 of the
Plan, (iii) extend the applicable maximum option period provided for in Section
6(a) of the Plan, (iv) extend the expiration date of this Plan set forth in
Section 14 of the Plan, (v) except as provided in Section 6(k) of the Plan,
decrease to any extent the option price of any option granted under the Plan or
(vi) withdraw the administration of the Plan from the Committee.
SECTION 9. Compliance With Other Laws and Regulations. The Plan, the
------------------------------------------
grant and exercise of options thereunder, and the obligation of the Company to
sell and deliver shares under such options, shall be subject to all applicable
federal and state laws, rules and regulations and to such approvals by any
governmental or regulatory agency as may be required. The Company shall not be
required to issue or deliver any certificates for shares of Common Stock prior
to the completion of any registration or qualification of such shares under any
federal or state law or issuance of any ruling or regulation of any government
body which the Company shall, in its sole discretion, determine to be necessary
or advisable. Any adjustments provided for in subparagraphs 6(j), (k) and (l)
shall be subject to any shareholder action required by applicable corporate law.
<PAGE>
SECTION 10. Purchase for Investment. Unless the options and shares of
-----------------------
Common Stock covered by this Plan have been registered under the Securities Act
of 1933, as amended, or the Company has determined that such registration is
unnecessary, each person exercising an option under this Plan may be required by
the Company to give a representation in writing that he is acquiring such shares
for his own account for investment and not with a view to, or for sale in
connection with, the distribution of any part thereof.
SECTION 11. Taxes.
------
(a) The Company may make such provisions as it may deem appropriate
for the withholding of any taxes which it determines is required in
connection with any options granted under this Plan.
(b) Notwithstanding the terms of Paragraph 11(a), any Optionee may pay
all or any portion of the taxes required to be withheld by the Company or
paid by him in connection with the exercise of a nonqualified option by
electing to have the Company withhold shares of Common Stock, or by
delivering previously owned shares of Common Stock, having a fair market
value, determined in accordance with Paragraph 6(b), equal to the amount
required to be withheld or paid. An Optionee must make the foregoing
election on or before the date that the amount of tax to be withheld is
determined ("Tax Date"). All such elections are irrevocable and subject to
disapproval by the Committee.
SECTION 12. Replacement of Options. The Committee from time to time may
----------------------
permit an Optionee under the Plan to surrender for cancellation any unexercised
outstanding option and receive from the Company in exchange an option for such
number of shares of Common Stock as may be designated by the Committee. The
Committee may, with the consent of the person entitled to exercise any
outstanding option, amend such option, including reducing the exercise price of
any option to not less than the fair market value of the Common Stock at the
time of the amendment and extending the term thereof.
SECTION 13. No Right to Company Employment. Nothing in this Plan or as
------------------------------
a result of any option granted pursuant to this Plan shall confer on any
individual any right to continue in the employ of the Company or interfere in
any way with the right of the Company to terminate an individual's employment at
any time. The option agreements may contain such provisions as the Committee
may approve with reference to the effect of approved leaves of absence.
SECTION 14. Liability of Company. The Company and any Affiliate which
--------------------
is in existence or hereafter comes into existence shall not be liable to an
Optionee or other persons as to:
(a) The Non-Issuance of Shares. The non-issuance or sale of
--------------------------
shares as to which the Company has been unable to obtain from any
regulatory body having jurisdiction with the authority deemed by the
<PAGE>
Company's counsel to be necessary to the lawful issuance and sale of
any shares hereunder; and
(b) Tax Consequences. Any tax consequence expected, but not
----------------
realized, by any Optionee or other person due to the exercise of any
option granted hereunder.
SECTION 15. Effectiveness and Expiration of Plan. The Plan shall be
------------------------------------
effective on the date the Board adopts the Plan. If the stockholders of the
Company fail to approve the Plan within twelve months of the date the Board
approved the Plan, the Plan shall terminate and all options previously granted
under the Plan shall become void and of no effect. The Plan shall expire ten
years after the date the Board approves the Plan and thereafter no option shall
be granted pursuant to the Plan.
SECTION 16. Non-Exclusivity of the Plan. Neither the adoption by the
---------------------------
Board nor the submission of the Plan to the stockholders of the Company for
approval shall be construed as creating any limitations on the power of the
Board to adopt such other incentive arrangements as it may deem desirable,
including without limitation, the granting of restricted stock or stock options
otherwise than under the Plan, and such arrangements may be either generally
applicable or applicable only in specific cases.
SECTION 17. Governing Law. This Plan and any agreements hereunder shall
-------------
be interpreted and construed in accordance with the laws of the state in which
the Company is incorporated and applicable federal law.
SECTION 18. Cashless Exercise. The Committee also may allow cashless
-----------------
exercises as permitted under Federal Reserve Board's Regulation T, subject to
applicable securities law restrictions, or by any other means which the
Committee determines to be consistent with the Plan's purpose and applicable
law. The proceeds from such a payment shall be added to the general funds of
the Company and shall be used for general corporate purposes.
IN WITNESS WHEREOF, and as conclusive evidence of the adoption of the
foregoing by directors of the Company, Mail-Well, Inc. has caused these presents
to be duly executed in its name and behalf by its proper officers thereunto duly
authorized on May 7, 1997.
Mail-Well, Inc.
By: __________________________
Name: ________________________
Title: _________________________
ATTEST:
____________________________
Secretary
[CORPORATE SEAL]
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<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 12,523
<SECURITIES> 0
<RECEIVABLES> 46,062
<ALLOWANCES> 0
<INVENTORY> 73,001
<CURRENT-ASSETS> 141,254
<PP&E> 216,636
<DEPRECIATION> (28,779)
<TOTAL-ASSETS> 479,632
<CURRENT-LIABILITIES> 112,109
<BONDS> 0
0
0
<COMMON> 188
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<TOTAL-LIABILITY-AND-EQUITY> 479,632
<SALES> 419,514
<TOTAL-REVENUES> 419,514
<CGS> 326,599
<TOTAL-COSTS> 326,599
<OTHER-EXPENSES> 59,474
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<INTEREST-EXPENSE> 10,553
<INCOME-PRETAX> 21,881
<INCOME-TAX> 9,254
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