<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
MAIL-WELL, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------
<PAGE>
[LOGO] MAIL-WELL, INC.
23 INVERNESS WAY EAST
ENGLEWOOD, COLORADO 80112
(303) 790-8023
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 29, 1998
TO THE STOCKHOLDERS OF MAIL-WELL, INC.:
Notice is hereby given that the Annual Meeting of Stockholders of Mail-Well,
Inc., a Colorado corporation (the "Company"), will be held on Wednesday, April
29, 1998, at 8:30 a.m. at the Denver Marriott Tech Center, 4900 South Syracuse
Street, Denver, Colorado, for the following purposes:
1. To elect six directors of the Company to hold office until the 1999
Annual Meeting of Stockholders or until their respective successors are duly
elected and qualified;
2. To approve the Company's 1998 Incentive Stock Option Plan;
3. To approve an increase in the Company's authorized common stock from
30,000,000 shares to 100,000,000 shares;
4. To ratify the selection of Deloitte & Touche L.L.P., independent
auditors, as auditors of the Company for the year ending December 31, 1998;
5. To transact such other business as may properly come before the meeting
or any adjournments thereof.
The names of the nominees for directors are set forth in the accompanying
Proxy Statement.
The Board of Directors has fixed the close of business on March 20, 1998, as
the record date for the determination of stockholders entitled to receive notice
of and to vote at the Annual Meeting or any adjournments thereof.
A copy of the Company's 1997 Annual Report to Stockholders, which includes
the Company's consolidated financial statements, was mailed with this Notice on
or about March 25, 1998, to all stockholders of record on the record date. The
Company's Annual Report on Form 10-K to the Securities and Exchange Commission
may be obtained without charge upon written request directed to the Secretary of
the Company at the address above. The officers and directors of the Company
cordially invite you to attend the Annual Meeting.
Whether or not you expect to attend the Annual Meeting, you should complete,
date and sign the enclosed proxy card and mail it promptly in the enclosed
postage prepaid envelope. The proxy card must be signed and returned in order to
be counted.
By Order of the Board of Directors,
Roger Wertheimer
Vice President-General Counsel and
Secretary
Englewood, Colorado
March 25, 1998
<PAGE>
MAIL-WELL, INC.
23 INVERNESS WAY EAST
ENGLEWOOD, COLORADO 80112
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 29, 1998
INTRODUCTION
This Proxy Statement is furnished to the stockholders of Mail-Well, Inc., a
Colorado corporation (the "Company"), in connection with the solicitation of
proxies to be used in voting at the Annual Meeting of Stockholders to be held on
Wednesday, April 29, 1998 (the "Annual Meeting"). The enclosed proxy is
solicited by the Board of Directors of the Company. The proxy materials were
mailed on or about March 25, 1998, to the stockholders of record at the close of
business on March 20, 1998 (the "Record Date").
The Company will bear the cost of the solicitation of proxies, including the
charges and expenses of brokerage firms and others who forward solicitation
material to beneficial owners of the Company's common stock (the "Common
Stock"). In addition to the use of the mail, proxies may be solicited by
personal interview, telephone or telegraph by certain employees of the Company.
The Company will bear any costs relating to such solicitations by Company
personnel. The Company has arranged for American Securities Transfer, Inc. to
serve as its agent to coordinate and oversee the return of proxy cards.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock at the close of business on the
Record Date will be entitled to vote at the Annual Meeting. On the Record Date,
there were 21,324,991 shares of Common Stock outstanding. Each share of Common
Stock is entitled to one vote on all matters on which stockholders may vote.
There is no cumulative voting in the election of directors.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the inspectors of election appointed for the meeting and will determine whether
or not a quorum is present. The holders of a majority of the outstanding Common
Stock are required for a quorum at the Annual Meeting. The inspectors of
election will treat abstentions as shares that are present and entitled to vote
for purposes of determining the presence of a quorum, but as unvoted for
purposes of determining the approval of any matter submitted to the stockholders
for a vote. If a broker indicates on the proxy that it does not have
discretionary authority as to certain shares to vote on a particular matter,
those shares will not be considered as present and entitled to vote with respect
to that matter.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is exercised. It may be revoked by (i) filing a
written notice of revocation with the Secretary of the Company at the Company's
principal executive offices, 23 Inverness Way East, Suite 160, Englewood,
Colorado 80112, (ii) duly executing and delivering a proxy bearing a later date,
or (iii) attending the Annual Meeting and voting in person. Attendance at the
Annual Meeting will not, by itself, revoke a proxy.
SUMMARY OF PROPOSALS
Stockholders will be asked to vote upon the following proposals at the
Annual Meeting:
1. Election of the following six persons to the Board of Directors: Gerald
F. Mahoney, Paul V. Reilly, Frank P. Diassi, J. Bruce Duty, Frank J. Hevrdejs
and Jerome W. Pickholz.
<PAGE>
2. Approval of the Company's 1998 Incentive Stock Option Plan (the "1998
Plan") which provides for the grant of stock options for Common Stock to
eligible key employees and directors of the Company and its affiliates. The 1998
Plan is described beginning on page 15 of this Proxy Statement and is attached
hereto as Exhibit A.
3. Approval of an increase in the Company's authorized Common Stock from
30,000,000 shares to 100,000,000 shares. This proposal is described on page 17
of this Proxy Statement.
4. Ratification of the selection of Deloitte & Touche L.L.P. as independent
auditors for the Company for 1998.
The proxies will be voted, unless authority to do so is withheld, to elect
the six nominees recommended by the Board, to approve the 1998 Incentive Stock
Option Plan, to approve an increase in the authorized Common Stock from
30,000,000 shares to 100,000,000 shares, and to ratify the selection of Deloitte
& Touche L.L.P. as the Company's auditors for 1998.
INFORMATION CONCERNING DIRECTORS AND NOMINEES
The names, ages (as of December 31, 1997), positions with the Company and
the business experience over the past five years of each of the Board nominees
is set forth below. Each director has served continuously with the Company since
the date indicated below.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITION(S) SINCE
- --------------------------------------- ----------- ------------------------------------- -----------
<S> <C> <C> <C>
Gerald F. Mahoney 54 Director, Chairman of the Board 1994
and Chief Executive Officer
Paul V. Reilly 45 Director, President and Chief 1998
Operating Officer
Frank P. Diassi(2) 64 Director 1994
J. Bruce Duty(1)(2) 46 Director 1994
Frank J. Hevrdejs(2) 52 Director 1993
Jerome W. Pickholz(1) 65 Director 1994
</TABLE>
- ----------------------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
GERALD F. MAHONEY has been a director, Chairman of the Board and Chief
Executive Officer of the Company since February 1994. Mr. Mahoney devotes
substantially all of his time to the Company in his capacity as Chairman and
CEO. He was Chairman of the Board, President and Chief Executive Officer of
Pavey Envelope & Tag Corp. from January 1991 until it became a subsidiary of the
Company in February 1994.
PAUL V. REILLY has been a director, President and Chief Operating Officer of
the Company since January 1998. Prior to that, he served as Senior Vice
President--Finance and served as Chief Financial Officer of the Company since
June 1995. Mr. Reilly spent 14 years with Polychrome Corporation, a prepress
supplier to the printing industry, where he held a number of positions including
Assistant Corporate Treasurer, Corporate Treasurer, Vice President and Chief
Financial Officer, and General Manager of United States Operations. During 1994
and 1995, Mr. Reilly worked with Saddle River Capital, an investment banking
firm which purchased and managed small businesses, and as Vice President with a
direct marketer of educational materials. Mr. Reilly is a Certified Public
Accountant.
FRANK P. DIASSI has been a director of the Company since February 1994.
Since August 1996, Mr. Diassi has been Chairman of Sterling Chemicals, Inc., a
manufacturer of commodity petrochemicals and chemicals primarily in the pulp and
paper industry. He was a founding director of Arcadian Corporation,
2
<PAGE>
the largest nitrogen fertilizer company in North America. Mr. Diassi was
director and Chairman of the Finance Committee of Arcadian Corporation from 1989
to 1994. Mr. Diassi serves as a member of the Compensation Committee of the
Board of Directors.
J. BRUCE DUTY has been a director of the Company since February 1994. Since
July 1993 he has been Senior Vice President of Capital Southwest Corporation, a
venture capital investment firm. From July 1982 to June 1993, he was Vice
President of Capital Southwest Corporation. Mr. Duty serves as Chairman of the
Audit Committee and a member of the Compensation Committee of the Board of
Directors.
FRANK J. HEVRDEJS has been a director of the Company since its inception in
November 1993. In 1982, Mr. Hevrdejs co-founded The Sterling Group, Inc., a
major management buyout company. Mr. Hevrdejs is a principal and president of
The Sterling Group, Inc. Additionally, he is Chairman of First Sterling Ventures
Corp., an investment company, Endoro Holdings, Inc., a structural and electrical
manufacturing company, and Fibreglass Holdings, Inc., a truck accessory
manufacturer. He is also a board member and a member of the executive committee
of Purina Mills, Inc., an animal feed producer, and a board member of Eagle
U.S.A., an air-freight company. Mr. Hevrdejs serves as Chairman of the
Compensation Committee of the Board of Directors.
JEROME W. PICKHOLZ has been a director of the Company since June 1994. From
1978 to 1994, he was Chief Executive Officer of Ogilvy & Mather Direct
Worldwide, a direct advertising agency. From 1994 to June 1995, he served as
Chairman of the Board of Ogilvy & Mather Direct Worldwide. Since January 1996,
Mr. Pickholz has served as founder and Chairman of Pickholz, Tweedy, Cowan,
L.L.C., a marketing communications company. Mr. Pickholz serves as a member of
the Audit Committee.
BOARD AND COMMITTEE MEETINGS
During 1997, the Board met on 6 occasions (3 regular meetings and 3 special
meetings). All other actions taken by the Board during 1997, were accomplished
by means of unanimous written consent. During 1997 all directors attended at
least 75% of the meetings of the Board and of the committees of the Board on
which they were members. The Board has an Audit Committee and a Compensation
Committee. The Nominating Committee is inactive and nominees for election to the
Board are determined by the entire Board.
The Audit Committee meets with the Company's independent auditors annually
to review the results of the annual audit and discuss the financial statements.
The committee also recommends to the Board the independent auditors to be
retained; receives and considers the auditor's comments as to controls and
adequacy of staff, and management performance and procedures in connection with
audit and financial controls; reviews the system of internal controls and
compliance with policies regarding business conduct; and other related matters.
The Audit Committee, which is currently comprised of Mr. Duty (Chairman) and Mr.
Pickholz, met 2 times during 1997.
The Compensation Committee is responsible for the compensation arrangements
of senior management and for the administration of the Company's stock option
plans. The committee makes recommendations concerning salaries, incentive
compensation and stock options to officers and directors, and otherwise
determines compensation levels and performs such other functions regarding
compensation as the Board may delegate. See "Compensation Committee Report on
Executive Compensation." The committee is currently comprised of Messrs.
Hevrdejs (Chairman), Diassi and Duty. The Compensation Committee met 2 times
during 1997.
DIRECTOR COMPENSATION
Each director of the Company who is not an employee of the Company or its
subsidiaries receives an annual retainer of $10,000. In addition, each
non-employee director of the Company receives $1,000 for each regular meeting of
the Board attended and $500 for each committee meeting of the Board attended.
3
<PAGE>
Directors who are also employees of the Company do not receive compensation for
their service on the Board.
Non-employee directors receive stock options for 3,000 shares of Common
Stock each year upon election or reelection to the Board pursuant to the 1996
Directors' Stock Option Plan. All directors may receive stock options pursuant
to the 1997 Non-Qualified Stock Option Plan in amounts determined by the
Compensation Committee. See "Stock Option Plans." The Company also provides
directors and officers liability insurance for its directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee determined the compensation for the Company's
executive officers for 1997 and granted stock options in 1997 under the
Company's three stock option plans. See "Stock Option Plans." The three members
of the Compensation Committee, Messrs. Diassi, Duty and Hevrdejs, have no
interlocking relationships as defined by rules and regulations of the Securities
and Exchange Commission.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of March 1, 1998, there were 21,324,991 shares of Common Stock
outstanding held of record by 328 stockholders. The following table sets forth
as of March 1, 1998, the number and percentage of outstanding shares of Common
Stock beneficially owned by (a) each person known by the Company to beneficially
own more than 5% of the outstanding Common Stock, (b) each current director of
the Company, (c) each executive officer named in the Executive Compensation
table on page 7, and (d) all directors and executive officers of the Company as
a group. Except as otherwise indicated, each person has sole voting and
investment power with respect to the Common Stock owned.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENTAGE OF
BENEFICIAL OWNERSHIP OUTSTANDING
BENEFICIAL OWNERS OF COMMON STOCK(1) COMMON STOCK
- -------------------------------------------------------------------- ---------------------- ---------------
<S> <C> <C>
Gerald F. Mahoney 815,342(2) 3.78%
Paul V. Reilly 55,012(3) *
Frank P. Diassi 775,127(4)(5) 3.59%
J. Bruce Duty 10,200(4)(6) *
Frank J. Hevrdejs 808,107(4)(7) 3.75%
Jerome W. Pickholz 27,145(4)(8) *
Robert J. Terry 221,495(9) 1.03%
Roger Wertheimer 18,172(10) *
All executive officers and directors of the 2,509,667 11.64%
Company as a group (9 persons)
Pilgrim Baxter & Associates, Ltd. 1,766,350 8.19%
825 Duportail Road
Wayne, Pennsylvania 19087
M-W Corp. Employee Stock Ownership Plan(11) 1,083,584 5.03%
23 Inverness Way East
Englewood, Colorado 80112
</TABLE>
- ----------------------------
* Less than 0.1%.
(1) Unless otherwise noted, each stockholder has direct ownership and sole
voting and investment power with respect to the indicated shares of Common
Stock.
4
<PAGE>
(2) Includes 423,888 shares held by Mr. Mahoney's wife, 25,308 shares held by
two trusts for his children of which Mr. Mahoney is trustee, stock options
for 112,458 shares exercisable within 60 days of the Record Date, and 1,992
shares allocated to Mr. Mahoney under the Company's Employee Stock Ownership
Plan (the "ESOP").
(3) Includes 3,708 shares held by Mr. Reilly's wife, 348 shares held by a trust
for his child of which Mr. Reilly is trustee, stock options for 22,196
shares exercisable within 60 days of the Record Date and 190 shares
allocated under the ESOP to Mr. Reilly.
(4) Includes stock options for 7,200 shares exercisable within 60 days of the
Record Date.
(5) Includes 36,198 shares held by two trusts of which members of Mr. Diassi's
immediate family are beneficiaries, 488,719 shares held by Winged Lion
Holdings II L.L.C., which is controlled by Mr. Diassi, and 243,010 shares
held jointly with Mr. Diassi's wife.
(6) Includes 3,000 shares held by Mr. Duty as custodian for minor children.
Excludes 1,041,094 shares held by Capital Southwest Corporation of which Mr.
Duty is Senior Vice President and a shareholder. Mr. Duty disclaims
beneficial ownership of shares of Common Stock owned by Capital Southwest.
(7) Includes 11,757 shares held by Mr. Hevrdejs' wife.
(8) Includes 2,847 shares held by the Jerome W. Pickholz Defined Benefit Pension
Trust of which Mr. Pickholz is a trustee and beneficiary.
(9) Includes stock options for 61,054 shares exercisable within 60 days of the
Record Date and 1,857 shares allocated under the ESOP to Mr. Terry.
(10) Includes stock options for 13,127 shares exercisable within 60 days of the
Record Date and 90 shares allocated under the ESOP to Mr. Wertheimer.
(11) The Trustee of the ESOP (the "ESOP Trustee") will vote all shares held by
the ESOP pursuant to the direction of the Board of Directors or a committee
designated by the Board of Directors, except that participants are entitled
to direct the ESOP Trustee to vote the shares allocated to their accounts
with respect to the approval or disapproval of any corporate merger,
consolidation, recapitalization, reclassification, liquidation, dissolution,
sale of substantially all assets of a trade or business or such similar
transaction as may be prescribed in the regulations under the Internal
Revenue Code of 1986, as amended. Approximately 4,189 shares are currently
allocated under the ESOP to executive officers.
EXECUTIVE OFFICERS AND EXECUTIVE COMPENSATION
EXECUTIVE OFFICERS
Following are descriptions of the Company's executive officers, including
age (as of December 31, 1997), positions with the Company and the business
experience of each during the past five years. The officers hold office until
their successors are appointed by the Board of Directors.
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
- ---------------------------------------------------- ----------- ------------------------------------------------------
<S> <C> <C>
Gerald F. Mahoney(1) 54 Chairman and Chief Executive Officer
Paul V. Reilly(1) 45 President and Chief Operating Officer
Kevin Howley 38 Vice President--Treasurer
Douglas A. Mahoney 49 Vice President--Controller
Roger Wertheimer 38 Vice President--General Counsel and Secretary
Robert J. Terry 57 Former President and Chief Executive Officer of
the Company's U.S. Envelope Operations
</TABLE>
- ----------------------------
(1) See "Information Concerning Directors and Nominees" above for a biographical
summary.
5
<PAGE>
KEVIN HOWLEY has been Vice President--Treasurer of the Company since May
1997. From 1994 until May 1997 Mr. Howley was Chief Operating Officer of
Universal Lending Corporation, a home mortgage originator, for which he
continues to serve as a director. From 1988 to 1994, Mr. Howley worked for
Service 2000, Inc., a computer services company, first as Chief Financial
Officer and subsequently as President and Chief Executive Officer.
DOUGLAS A. MAHONEY has been Vice President--Controller of the Company since
July 1997. From 1991 until July 1997 Mr. Mahoney was Senior Vice
President--Administration and Chief Financial Officer of Quality Park Products,
a manufacturer of envelopes and filing supplies which was acquired by the
Company in March 1996. Mr. Mahoney is a Certified Public Accountant.
ROGER WERTHEIMER has been Vice President--General Counsel and Secretary of
the Company since February 1995. Mr. Wertheimer has been engaged in the practice
of law since 1984. He previously served as Corporate Counsel for PACE Membership
Warehouse, Inc., from 1988 to 1994 and practiced as a private legal practitioner
from March 1994 until February 1995, when he joined the Company.
ROBERT J. TERRY was a director of the Company and President and Chief
Executive Officer of the Company's U.S. Envelope operations from February 1994
until he retired from the Company in January 1998. He originally joined GP
Envelope, the Company's predecessor, in May 1964. Mr. Terry served as Executive
Vice President of the Mail-Well Envelope Division of Georgia-Pacific from
December 1991 to February 1994, and served as Regional Vice President of Butler
Paper Company, a subsidiary of Georgia-Pacific, and as Vice President of
Georgia-Pacific's Mail-Well Envelope Division prior to that time. Mr. Terry
served on the Board of the Envelope Manufacturers Association from 1992 to 1996,
and currently serves on the Board of the Denver Better Business Bureau.
There are no arrangements or understandings between the Company's directors
or officers, or any other persons, pursuant to which any of the directors have
been selected as directors or officers have been selected as officers.
EXECUTIVE COMPENSATION
The following summary compensation table sets forth information concerning
all compensation received for services rendered for the three years ended
December 31, 1997, by the Company's Chief Executive Officer and by the three
most highly compensated executive officers who were serving as executive
officers at the end of 1997 and whose total annual salary and bonus exceeded
$100,000.
6
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION(1)
------------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES
------------------------------------------- STOCK UNDERLYING ALL OTHER
SALARY BONUS OTHER ANNUAL AWARD(S) OPTIONS / COMPENSATION
NAME AND PRINCIPAL POSITION YEAR $ $(2) COMPENSATION ($) ($) SARS (#) ($)
- ----------------------------- --------- --------- --------- --------------------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Gerald F. Mahoney 1997 350,000 490,000 (3) 0 285,000 0
Chairman of the Board 1996 250,000 137,500 (3) 56,493 30,000 0
and Chief Executive 1995 200,000 135,200 (3) 0 63,945 0
Officer
Paul V. Reilly(4) 1997 200,000 220,000 (3) 0 87,000 0
President and Chief 1996 150,000 80,000 (3) 11,054 15,000 6,500
Operating Officer 1995 135,000 35,000 (3) 0 19,184 120,533
Roger Wertheimer 1997 128,000 102,400 (3) 0 15,000 0
Vice President, 1996 118,000 29,500 (3) 5,649 3,750 0
General Counsel and 1995 110,000 25,100 (3) 0 14,920 0
Secretary
Robert J. Terry 1997 225,000 0 (3) 0 90,000 0
Former Divisional 1996 200,000 100,000 (3) 28,247 18,750 0
President and Chief 1995 175,000 100,200 (3) 0 51,156 0
Executive Officer
</TABLE>
- ----------------------------
(1) All stock amounts reflect the 3-for-2 stock split in June 1997.
(2) Bonus amounts are shown for the year earned and are paid in the following
year.
(3) None of the named executive officers has received perquisites, the value of
which exceeded the lesser of either $50,000 or 10% of the total salary and
bonus. Perquisites paid include contributions to such person's 401(k)
account, payments pursuant to the profit-sharing plan, tax reimbursements
and car allowance.
(4) All Other Compensation for Mr. Reilly in 1996 includes $6,500 for a
relocation allowance and in 1995 includes $120,533 to offset costs related
to his change in employment and relocation.
STOCK OPTION PLANS
1994 PLAN. On February 17, 1994, and February 22, 1994, the Board of
Directors of the Company adopted and the stockholders of the Company approved,
respectively, the Company's 1994 Stock Option Plan, as subsequently amended
("1994 Plan"). Currently, there are 1,006,812 shares authorized for grant
pursuant to the 1994 Plan. Of this amount, as of March 1, 1998, options for
1,004,192 shares of Common Stock had been granted.
Under the 1994 Plan, the Compensation Committee of the Board of Directors
(the "Committee") may grant incentive and non-incentive stock options to key
employees (including officers and directors who are key employees) of the
Company and its affiliates. Subject to the express provisions of the 1994 Plan,
the Committee determines the prices, expiration dates and other material
features of the options granted and has discretionary authority to prescribe,
amend and rescind rules and regulations relating to the 1994 Plan, to interpret
the 1994 Plan, to prescribe and amend the terms of any agreements executed
pursuant to the 1994 Plan (which need not be identical) and to make all other
determinations deemed necessary or advisable for the administration of the 1994
Plan.
7
<PAGE>
Unless earlier terminated, the 1994 Plan terminates on May 3, 2005. The
Board may terminate or amend the 1994 Plan at any time, except that the
stockholders must approve any amendment that would increase the number of shares
of Common Stock available under the 1994 Plan, change the provisions regarding
option price (except as otherwise permitted under the 1994 Plan) or materially
increase the cost of the 1994 Plan or increase the benefits to participants.
The Committee may award incentive stock options ("ISOs") within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or
options that do not constitute ISOs and are therefore non-qualified stock
options ("Non-Qualified Options"). With respect to ISOs, the aggregate fair
market value (determined at the time the ISO is granted) of the Common Stock
exercisable for the first time by an employee during any calendar year is
limited to $100,000. Each option granted will terminate with respect to any
shares not previously purchased by the optionee upon the expiration of ten years
from the date of the grant of the option or such earlier date as the Committee
may prescribe; provided, that ISOs granted to an individual who, at the time of
grant, owns stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company (a "10% Stockholder"), will terminate no
later than five years from the date of grant.
The 1994 Plan requires that the purchase price of each share subject to an
ISO must be not less than 100% of the fair market value of such share on the
date the option is granted. In the case of an ISO granted to a 10% Stockholder,
the purchase price of each share subject to the option must be at least 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 subject to a Non-Qualified Option is
determined by the Committee in its sole discretion prior to granting the option;
provided, that the purchase price of each share subject to a Non-Qualified
Option may not be less than 85% of the fair market value on the date the option
is granted, as determined by the Committee.
All the options were granted at fair market value, vest over a period of
four (4) years at a rate of 25% per each year and expire ten years after the
date of grant.
1996 DIRECTORS PLAN. On May 8, 1996, the Board adopted the Mail-Well, Inc.
1996 Directors Stock Option Plan (the "1996 Directors Plan") which was approved
by stockholders on May 7, 1997. Currently, there are 210,000 shares authorized
for grant pursuant to the 1996 Directors Plan. Of this amount, on March 1, 1998,
options for 39,000 shares of Common Stock had been granted. The 1996 Directors
Plan provides a means by which the Company, through the grant of stock options
to eligible directors, may attract and retain persons of ability as directors,
and motivate such directors to exert their best efforts on behalf of the Company
and its stockholders.
Pursuant to the 1996 Directors Plan, each non-employee director of the
Company receives Non-Qualified Options for 3,000 shares of Common Stock annually
upon the election or reelection of such person to the Board by the stockholders
at the annual meeting or at a special meeting in lieu of an annual meeting
called for such purpose. Such grants are automatic and shall continue until all
options have been granted for all the shares under the 1996 Directors Plan or
until the 1996 Directors Plan is discontinued.
Options granted under the 1996 Directors Plan may be exercised six (6)
months from the date of grant and prior to the tenth anniversary date of grant.
All unexercised options expire on the tenth anniversary of their grant date. The
purchase price for shares subject to options is the average closing price of the
Common Stock as reported in the Wall Street Journal for the five trading days
immediately preceding the grant date. The purchase price shall be paid to the
Company at the time of exercise.
8
<PAGE>
Awards under the 1996 Directors Plan are not transferable except by will or
by the laws of descent and distribution, or pursuant to a qualified domestic
relations order. Options granted under the 1996 Directors Plan are exercisable
during the lifetime of the optionee by the optionee. Awards under the 1996
Directors Plan are subject to adjustment in the event of a stock dividend, stock
split, recapitalization or combination of the Common Stock. In the event of
certain mergers, consolidations, plans of exchange or other reorganizations of
the Company, outstanding awards under the 1996 Directors Plan are subject to
adjustment to reflect the terms of such transaction.
The Board may amend, suspend or discontinue the 1996 Directors 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) increase the total number
of shares reserved for the purposes of the 1996 Directors Plan; (ii) amend
certain provisions of the 1996 Directors Plan which set forth the terms and
conditions of the options granted (including term, option price and
nontransferability) and compliance with federal and state laws; or (iii) modify
the requirement as to eligibility for participation in the 1996 Directors Plan.
The 1996 Directors Plan may be amended not more frequently than every six
months.
1997 NQ PLAN. On March 31, 1997, the Board adopted the Mail-Well, Inc. 1997
Non-Qualified Stock Option Plan (the "1997 NQ Plan"). Currently, there are
975,000 shares of Common Stock authorized for grant pursuant to the 1997 NQ
Plan. Of this amount, on March 1, 1998, options for 555,201 shares have been
granted. The 1997 NQ Plan provides the means by which the Company, through the
grant of options, encourages ownership of the Company by eligible key employees
(including directors) of the Company and its affiliates, and provides increased
incentives for such persons to render services and to assert maximum effort for
the business success of the Company.
Under the 1997 NQ Plan, the Committee may grant Non-Qualified Options to
such key employees (including directors) of the Company or its affiliates as the
Committee shall determine. Subject to the express provisions of the 1997 NQ
Plan, the Committee determines the prices, expiration dates, vesting schedules,
and other material features of the Non-Qualified Options granted and makes all
other determinations necessary or advisable for the administration of the 1997
NQ Plan. All unexercised options shall expire on the tenth anniversary of their
grant date.
Awards under the 1997 NQ Plan are not transferable except by rule or by the
laws of descent and distribution, or pursuant to a qualified domestic relations
order. Options granted under the 1997 NQ Plan shall be exercisable during the
lifetime of the optionee. Awards under the 1997 NQ Plan are subject to
adjustment in the event of a stock dividend, stock split, recapitalization or
combination of the Common Stock. In the event of certain mergers,
consolidations, plans of exchange or other reorganizations of the Company,
outstanding awards under the 1997 NQ Plan are subject to adjustment to effect
the terms of such transaction.
The Board of Directors may amend, alter or discontinue the 1997 NQ Plan, but
no amendment or alternation shall be made which would impair the rights of any
optionee, without his or her consent.
The following table sets forth information concerning individual grants of
stock options made pursuant to the 1994 Plan and the 1997 NQ Plan during 1997 to
each of the named executive officers and the potential realizable value for the
stock options based on future appreciation assumptions. There can be no
assurance that the values shown in this table will be achieved. No stock
appreciation rights ("SARs") were granted in 1997.
9
<PAGE>
OPTION GRANTS IN 1997
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT
ASSUMED ANNUAL RATES
OF
NUMBER OF STOCK PRICE
SECURITIES % OF TOTAL APPRECIATION
UNDERLYING OPTIONS GRANTED EXERCISE FOR OPTION TERM(1)
OPTIONS GRANTED TO EMPLOYEES PRICE EXPIRATION ----------------------
(#) IN 1997 ($) DATE 5%($) 10%($)
------------------- ----------------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Gerald F. Mahoney 285,000 31.95% 13.33 03-31-07 2,389,794 6,056,206
Paul V. Reilly 87,000 9.75% 13.33 03-31-07 729,516 1,848,737
Roger Wertheimer 15,000 1.68% 13.33 03-31-07 125,779 318,746
Robert J. Terry 90,000 10.09% 13.33 03-31-07 754,672 1,912,486
</TABLE>
- ----------------------------
(1) Assuming a ten-year option term, annual compounding results in total
appreciation of 63% (at 5% per year) and 159% (at 10% per year). Actual
gains on exercise, if any, are dependent on the future performance on Common
Stock and overall market conditions.
The following table sets forth with respect to the Company's named executive
officers (a) the number of shares exercised during 1997, (b) the dollar value
realized upon exercise, (c) the total number of unexercised stock options held
at December 31, 1997, and (d) the aggregate dollar value of in-the-money,
unexercised options held at December 31, 1997.
AGGREGATED OPTION EXERCISES IN 1997 AND YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES VALUE AT 12-31-97 (#) AT 12-31-97 ($)(1)
ACQUIRED ON REALIZED ----------------------- -----------------------
EXERCISE (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
------------- ----------- ----------------------- -----------------------
<S> <C> <C> <C> <C>
Gerald F. Mahoney 0 0 55,458/323,487 2,063,493/9,091,046
Paul V. Reilly 0 0 4,796/103,046 180,649/2,915,778
Roger Wertheimer 2,000 69,982 10,127/ 21,543 378,896/ 641,645
Robert J. Terry 0 0 43,054/116,852 1,607,444/3,393,757
</TABLE>
- ----------------------------
(1) Represents the market value based upon the closing price per share of the
Common Stock as quoted on the NYSE on December 31, 1997 ($40.50 per share),
less the option exercise price.
401(K) PLAN
As part of the Company's effort to attract and maintain high quality staff,
the Company adopted the 401(k) Savings Retirement Plan (the "401(k) Plan") in
February 1994, which was amended on April 1, 1997. The 401(k) Plan, as amended,
allows eligible employees to make salary reduction contributions up to 20% of
their salary as well as invest in the Company's Common Stock as an investment
option. In 1997 the Company matched 50% of each participating employee's
contribution up to a maximum of 6% of the employee's salary. The Company match
for collectively bargained groups varies by the terms of the respective
agreements. All monies withheld from employees and the Company's matching
contributions are paid to a trustee who invests for the benefit of members of
the 401(k) Plan in six Vanguard funds, one Norwest fund and in Company Common
Stock.
BONUS PLAN
In 1997 the Board of Directors adopted a Cash Bonus Incentive Plan (the
"Bonus Plan") pursuant to which the named executives and key employees may
receive bonus compensation. The Bonus Plan is
10
<PAGE>
further described at "Compensation Committee Report on Executive
Compensation--Components of Compensation."
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Decisions on compensation for the Company's executive officers for the year
ending December 31, 1997, were made by the three member Compensation Committee
of the Board. Each member of the Committee is an outside director. None of the
members of the Committee has ever been an officer or employee of the Company or
any of its subsidiaries. The Committee is responsible for establishing and
administering the policies that govern the annual compensation and stock
ownership programs for the executive officers and key employees.
COMPENSATION PHILOSOPHY
The Company's executive compensation policies are designed to align
compensation with the Company's annual and long-term performance goals, to
attract and retain a highly qualified and motivated management team, to reward
individual performance and to link the interests of the executive officers
directly with those of shareholders through the use of the Common Stock as a
compensation vehicle. These policies have been implemented by setting salaries
and bonuses for executives which are generally lower than the mid-point for
salaries and bonuses given to executives in similar positions, but offering a
total compensation package (including grants of stock options and restricted
Common Stock) which should compensate the executives at a level consistent with,
or above, the mid-point for total gain opportunities received by counterparts at
similar companies. This compensation design emphasizes long-term incentives that
will encourage executives to maintain their focus on long-term shareholder
interests.
COMPONENTS OF COMPENSATION
Total compensation for each executive officer is set by the Committee at
levels which it believes are competitive in relation to companies of similar
type and size based upon a study and recommendations provided by an independent
compensation consultant. The components of executive compensation include
salary, equity participation in the Company in the form of options to purchase
Common Stock, grants of restricted Common Stock and the Bonus Plan discussed
below. Compensation for executive officers of the Company is usually set by the
Committee in March or April of each year for that year. Due to the level of
compensation received by the executive officers of the Company, and the fact
that none of the executive officers have employment agreements, the Committee
has not yet deemed it necessary to adopt a policy regarding the one million
dollar limit on deductibility of certain executive compensation under Section
162 (m) of the Internal Revenue Code.
BASE SALARY. The Committee reviews the salaries of the executive officers
annually. The Committee's policy is to fix base salaries at levels below the
mid-point for amounts paid to senior executives with comparable qualifications,
experience and responsibilities at other companies of similar size and engaged
in a similar business to that of the Company. Salary recommendations are
submitted annually to the Committee by the Chairman and Chief Executive Officer.
In determining salary compensation, the Committee takes into account
management's success and ability to accomplish certain strategic goals in
operating and growing the Company, the Company's level of debt, the
accomplishment of the Company's continuing acquisition strategy, the desire to
maintain low fixed costs, the complexity of the challenges which face the
executive officers, as well as management's consistent commitment to the
long-term success of the Company. In addition, the base salaries take into
account the individual's experience within the industry, with the Company and
its predecessors, and/or within the profession. The Committee believes that
compensation for its executive officers has been competitive, appropriate and
comparable to similarly situated companies.
11
<PAGE>
Based upon its evaluation of these factors, the Committee believes that
senior management is dedicated to achieving long-term financial improvements,
and that the compensation policies, plans and programs administered by the
Committee contribute to management's commitments. The Committee attempts to
assimilate all of the foregoing factors when it renders its compensation
decisions; however, the Committee recognizes that its decisions are primarily
subjective in nature. The Committee does not assign any specified weight to the
criteria it considers.
The Committee's recommendations are offered to the full Board of the
Company. The Committee's recommendations are ultimately ratified, changed or
rejected by the Board.
LONG-TERM INCENTIVES. The Company believes that the interests of
stockholders and of the Company's key employees, including officers, are more
closely aligned when such key employees, including officers, are provided an
opportunity to acquire a proprietary interest through ownership of Common Stock.
Through the 1994 Plan and the 1997 NQ Plan, officers and other key employees are
granted options to purchase Common Stock. To date, the Company has only granted
incentive stock options, at a price equal to or greater than fair market value.
The number of options granted by the Committee are based upon the Committee's
evaluation of the anticipated performance requirements and contributions of each
employee, as well as each employee's current equity participation in the
Company. In addition, the Committee seeks the recommendation of senior
management with respect to options granted to key employees of the Company. In
March 1997, the Committee granted options representing 727,500 shares of Common
Stock under the 1994 Plan and the 1997 NQ Plan.
The grant of stock options to certain executive officers (Messrs. G.
Mahoney, Reilly, Terry and Wertheimer) in 1997 under the Company's stock option
plans was made with the intention of further aligning the interests of those
executive officers with that of shareholders by providing incentives to achieve
the long-range goals of the Company. These grants were also made with the
understanding that a substantial grant would obviate the need to provide further
long-term incentives in the near future. The Committee has no plans to grant
additional options to those officers at this time.
BONUS. Bonus compensation is also paid to officers by the Company under the
Company's Bonus Plan. Bonuses were paid as a percentage of 1997 base salary
based upon the level of attainment of pre-tax income goals established by the
Board for each officer and key employee. The components which are considered in
paying bonuses to the executive officers include profitability of the Company
and the employee's job performance.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Mahoney has served as Chief Executive Officer and Chairman of the Board
of the Company since 1994. As Chief Executive Officer, Mr. Mahoney receives a
base salary as well as stock options under the 1994 Plan and is also eligible
for a bonus pursuant to the Bonus Plan and grants of restricted Common Stock.
The Committee reviewed Mr. Mahoney's performance, particularly his continued
contribution to the significant growth of the Company, acquisitions of the
Company, and the integration of acquired businesses in determining his base
salary. The Committee assessed Mr. Mahoney's overall performance and the above
referenced performance factors on a subjective basis and did not assign relative
weights to these factors. As a result of these considerations, the Committee
granted Mr. Mahoney an increase in base salary of $100,000 from $250,000
annually to $350,000 annually, effective February 1997. In March 1997 the
Committee granted options for 285,000 shares of Common Stock to Mr. Mahoney
under the 1994 Plan and the 1997 NQ Plan. This grant was made pursuant to the
policies and understanding described above. Accordingly, the Committee did not
grant any options to Mr. Mahoney as part of his 1997 compensation and has no
plans to grant additional options to Mr. Mahoney at this time. Consistent with
the Committee's compensation philosophy discussed above, Mr. Mahoney's salary
and bonus has been lower than the mid-point for salaries of CEOs at similar
companies. However, it is the Committee's objective that the total
12
<PAGE>
compensation package awarded to Mr. Mahoney meet or exceed the mid-point for
total gain opportunities received by CEOs at similar companies.
CONCLUSION
In summary, the Committee believes that its policy of linking executive
compensation to Company performance was met. The Committee believes that the
Company's compensation levels adequately reflect its philosophy. In addition,
the Committee believes that the Company's executive compensation programs and
policies are supportive of its overall objective to enhance stockholder value
through the profitable management of its operations.
Frank J. Hevrdejs (Chairman)
Frank P. Diassi
J. Bruce Duty
13
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The following graph presents the cumulative total quarterly stockholder
return (assuming reinvestment of dividends, if any) from investing $100 on
September 22, 1995 (the date the Common Stock began trading on the NASDAQ Stock
Market) in each of (i) the Common Stock; (ii) Standard & Poor's 500 Index; and
(iii) a Company chosen peer group which includes Consolidated Graphics, Inc.,
Deluxe Corporation, R. R. Donnelley & Sons Company, Merrill Corporation and
Standard Register Company (the "Peer Group Index"). On December 19, 1996, the
Company delisted from the NASDAQ Stock Market and listed the Common Stock on the
New York Stock Exchange. The graph assumes that all dividends were reinvested.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
MAIL-WELL AVERAGE PEER GROUP NASDAQ INDEX
<S> <C> <C> <C>
22-Sep-95 $100.00 $100.00 $100.00
29-Sep-95 $96.43 $101.62 $100.45
29-Dec-95 $87.50 $99.64 $105.87
29-Mar-96 $58.04 $94.32 $110.95
28-Jun-96 $62.50 $111.38 $115.28
30-Sep-96 $76.79 $113.76 $118.14
27-Dec-96 $116.96 $146.62 $130.08
27-Mar-97 $133.26 $151.89 $133.02
27-Jun-97 $277.23 $185.67 $152.52
26-Sep-97 $289.29 $215.56 $162.47
26-Dec-97 $405.81 $211.47 $160.97
</TABLE>
14
<PAGE>
COMPLIANCE WITH SECTION 16(A)
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers and holders of more than 10% of the
Common Stock to file with the Securities and Exchange Commission initial reports
of ownership and reports of changes in ownership of the Common Stock. Based
solely upon a review of Forms 3, 4 and 5 and amendments thereto furnished to the
Company with respect to the year ended December 31, 1997, to the best of the
Company's knowledge the Company's directors, officers and holders of more than
10% of its Common Stock complied with all Section 16(a) filing requirements,
except that Mr. Reilly inadvertently made one late Form 5 filing and Mr.
Wertheimer inadvertently made one late Form 4 filing.
PROPOSAL 1--ELECTION OF DIRECTORS
GENERAL
At the Annual Meeting, six directors will be elected, each to hold office
until the Company's 1999 Annual Meeting of Stockholders or until his or her
respective successor has been elected and qualified. All of the nominees are
currently directors of the Company. The Board has no reason to anticipate that
any nominee will decline or be unable to serve as a director. In the event any
nominee does decline or is unable to serve, proxies may be voted for the
election of a substitute nominee or the Board may reduce the number of directors
to be elected.
The shares of Common Stock represented by the enclosed proxy will be voted
for the election to the Board of the six nominees named below, unless a vote is
withheld from one or more individual nominees. If any nominee becomes
unavailable for any reason, or if a vacancy should occur before election, shares
represented by the enclosed proxy may be voted for such other person as may be
determined by the holders of such proxy. The simple majority vote of shares
voting is required for election of directors.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF GERALD F. MAHONEY,
PAUL V. REILLY, FRANK P. DIASSI, J. BRUCE DUTY, FRANK J. HEVRDEJS AND JEROME W.
PICKHOLZ.
PROPOSAL 2--APPROVAL OF 1998 INCENTIVE STOCK OPTION PLAN
BACKGROUND
On February 4, 1998, the Board adopted, subject to shareholder approval, the
1998 Incentive Stock Option Plan (the "1998 Plan"). The 1998 Plan provides for
the issuance of incentive stock options ("ISOs") within the meaning of Section
422 of the Code and non-qualified stock options ("Non-Qualified Options") to
eligible key employees and directors of the Company and its affiliates. A copy
of the 1998 Plan is attached to the Proxy Statement as Exhibit A and should be
read in its entirety. Following is a brief summary of the significant provisions
of the 1998 Plan.
ADMINISTRATION
The 1998 Plan will be administered by the Compensation Committee of the
Board, comprised of two or more outside directors, all of whom are
"disinterested persons" within the meaning of Rule 16(b)-3 of the Securities
Exchange Act of 1934, as amended. All actions of the Compensation Committee
regarding the 1998 Plan shall be taken by a majority of its members.
SHARES AVAILABLE
There are 500,000 shares of authorized and unissued shares of Common Stock
reserved for issuance pursuant to awards under the 1998 Plan. If an option
granted under the 1998 Plan ceases to be exercisable
15
<PAGE>
in whole or in part, the shares representing such option shall be available
under this 1998 Plan for the grant of options in the future.
PARTICIPATION AND ELIGIBILITY
Key employees and directors of the Company and its affiliates, approximately
nine (9) persons, shall be eligible for participation in the 1998 Plan. Each
such person may receive options as determined by the Committee in its
discretion.
TERMS AND CONDITIONS
Subject to the express provisions of the 1998 Plan, the Committee shall
determine the prices, vesting schedules and other material features of the
options granted. Each option under the 1998 Plan shall be evidenced by an
agreement in a form determined by the Board. Options granted under the 1998 Plan
may be exercised as determined by the Committee and prior to the tenth
anniversary date of grant. All unexercised options shall expire on the tenth
anniversary of their grant date. With respect to ISOs, the purchase price for
shares subject to ISOs shall not be less than 100% of the fair market value on
the date of grant. In the case of an ISO granted to a 10% stockholder, the
purchase price shall not be less than 110% of the fair market value on the date
of grant as determined by the Committee. The purchase price for shares subject
to Non-Qualified Options shall be determined by the Committee in its sole
discretion, provided that it shall not be greater than the fair market value.
The purchase price shall be paid to the Company at the time of exercise.
Awards under the 1998 Plan are not transferable except by will or by the
laws of descent and distribution, or pursuant to a qualified domestic relations
order. Options granted under the 1998 Plan shall be exercisable during the
lifetime of the optionee by the optionee. Awards under the 1998 Plan are subject
to adjustment in the event of a stock dividend, stock split, recapitalization or
combination of the Common Stock. In the event of certain mergers,
consolidations, plans of exchange or other reorganizations of the Company,
outstanding awards under the 1998 Plan are subject to adjustment to reflect the
terms of such transaction.
Unless earlier terminated, the 1998 Plan terminates on February 4, 2008. The
Board may amend, alter or discontinue the 1998 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) increase the total number of shares
reserved for the purposes of the 1998 Plan; (ii) change the class of persons
eligible to participate in the 1998 Plan; (iii) extend the applicable maximum
option period; (iv) extend the expiration date; (v) decrease the option price of
any option granted under the 1998 Plan; or (vi) withdraw the administration of
the 1998 Plan from the Committee.
TAX CONSEQUENCES
To the extent that the exercise of an option or the disposition of shares of
Common Stock acquired by exercise of the option results in compensation income
to the optionee for federal or state income tax purposes, the optionee shall pay
to the Company at the time of such exercise or disposition such amount of money
as the Company may require to meet its obligation under applicable tax laws or
regulations. If an optionee fails to do so, the Company is authorized to
withhold from any cash remuneration then or thereafter payable to the optionee,
any tax required to be withheld by reason of such resulting compensation income
or the Company may otherwise refuse to issue or transfer any share otherwise
required to be issued or transferred.
16
<PAGE>
REQUIRED VOTE
The affirmative vote of the stockholders holding a majority of the
outstanding shares of Common Stock present, in person or by proxy, and entitled
to vote at the Annual Meeting, is required to approve the adoption of the 1998
Plan.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE ADOPTION OF THE 1998 INCENTIVE
STOCK OPTION PLAN.
PROPOSAL 3--AMENDMENT OF THE COMPANY'S
ARTICLES OF INCORPORATION
TO INCREASE AUTHORIZED COMMON STOCK
The Company's Articles of Incorporation, as currently in effect, provide
that the authorized capital stock shall consist of thirty million (30,000,000)
shares of Common Stock, $0.01 par value, and twenty-five thousand (25,000)
shares of Preferred Stock, $0.01 par value. On February 4, 1998, the Company's
Board approved an amendment to the Articles to increase the number of shares of
Common Stock authorized for issuance under the Articles by 70,000,000 to a total
of 100,000,000 shares. The text of the Amendment is set forth in Exhibit B
attached hereto. There will be no increase in authorized shares of Preferred
Stock.
The proposal to increase the number of authorized shares of Common Stock to
100,000,000 shares is being made to enable the Board of the Company to issue
additional shares from time to time as it determines desirable. Among the
possible purposes for which these additional shares would be available are the
declaration and issuance of stock dividends, issuance under the 1998 Plan and
stock option plans that may be adopted in the future, issuance in public or
private offerings to raise additional capital, or reservation for future
issuance in the event convertible stock is issued. Authorization for the
additional shares will also enable the Company to take timely and competitive
advantage of favorable acquisition opportunities of other companies through the
issuance of Common Stock without the delay and expense associated with a special
meeting of stockholders. The authorized but unissued shares of Common Stock
could be used by the incumbent Board of Directors to make a change in control of
the Company more difficult. Under certain circumstances, such shares could be
used to frustrate persons seeking to effect a takeover or otherwise gain control
of the Company. For example, it may be possible to privately place shares with
purchasers who might assist the Board in opposing a hostile takeover bid.
Company stockholders do not have preemptive rights to purchase Common Stock
in future issuances of Common Stock. Therefore, any future issuances of Common
Stock could dilute the ownership percentage and voting control of the current
stockholders and decrease the per share earnings ratio and other per share
ratios.
The Company currently has no firm plans, understandings or agreements to
issue the additional authorized shares of Common Stock other than pursuant to
its stock option plans. However, the Company is continually engaged in
negotiations for the acquisition of companies, and future acquisition
transactions will likely involve the issuance of Common Stock as all or part of
the purchase prices. UNLESS REQUIRED BY LAW OR THE NEW YORK STOCK EXCHANGE, NO
FURTHER AUTHORIZATION OR VOTE OF COMPANY STOCKHOLDERS WILL BE NEEDED FOR THE
ISSUANCE OF ANY AUTHORIZED SHARES, INCLUDING ISSUANCE OF COMMON STOCK IN FUTURE
ACQUISITIONS AND OFFERINGS.
REQUIRED VOTE
The affirmative vote of the stockholders of a majority of the outstanding
shares of Common Stock present, in person or by proxy, and entitled to vote at
the Annual Meeting, is required to approve the amendment to the Articles to
increase the authorized shares of Common Stock.
17
<PAGE>
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE AMENDMENT TO THE ARTICLES OF
INCORPORATION TO INCREASE THE AUTHORIZED SHARES OF COMMON STOCK.
PROPOSAL 4--RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The principal independent public accounting firm utilized by the Company
during the years ended December 31, 1997, 1996 and 1995 was Deloitte & Touche
L.L.P., independent auditors (the "Auditors"). Management recommends that the
Auditors be retained as the principal accounting firm to be utilized by the
Company throughout the year ending December 31, 1998. The Company anticipates
that a representative of the Auditors will attend the Annual Meeting for the
purpose of responding to appropriate questions. At the Annual Meeting, a
representative of the Auditors will be afforded an opportunity to make a
statement if the Auditors so desire.
REQUIRED VOTE
Ratification of the selection of the Auditors requires the affirmative vote
of a majority of the outstanding shares of Common Stock present, in person or by
proxy, and entitled to vote at the Annual Meeting.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF THE SELECTION OF
DELOITTE AND TOUCHE L.L.P. AS THE COMPANY'S AUDITORS FOR 1998.
STOCKHOLDER PROPOSALS
Proposals of stockholders that are intended to be presented at the Company's
1999 Annual Meeting of Stockholders must be received by the Company at its
principal executive offices not later than January 7, 1999, in order to be
included in the proxy statement and form of proxy relating to the annual
meeting.
OTHER ITEMS
The Board does not intend to present further items of business to the
meeting and knows of no such items which will or may be presented by others.
However, if any other matter properly comes before the meeting, the persons
named in the enclosed proxy form will vote thereon in such manner as they may in
their discretion determine.
By Order of the Board of Directors,
Roger Wertheimer
Vice President--General Counsel and
Secretary
Englewood, Colorado
March 25, 1998
18
<PAGE>
EXHIBIT A
MAIL-WELL, INC.
1998 INCENTIVE STOCK OPTION PLAN
SECTION 1. PURPOSE OF THE PLAN. The purpose of this Mail-Well, Inc. 1998
Incentive Stock Option Plan ("Plan"), is to encourage ownership of common stock,
$.01 par value ("Common Stock"), of Mail-Well, Inc., a Colorado 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.
(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 500,000. 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
<PAGE>
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 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
2
<PAGE>
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 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).
(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, provided that in no
event shall ISOs be exercised after the
3
<PAGE>
date three months from the effective date of the termination of employment
and provided further in no event may any option be exercised after its
expiration under the terms of the option agreement.
(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, provided that in no event shall ISOs be exercised after the date 12
months from the effective date of the termination of employment due to
disability or the date 18 months from the effective date of termination of
employment due to death (or 18 months after the death of the optionee within
12 months of the termination of such optionee's employment due to
disability).
(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 under Section 422 of the Code.
(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.
(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.
4
<PAGE>
(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.
(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
5
<PAGE>
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 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 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.
6
<PAGE>
(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 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
7
<PAGE>
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.
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 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.
8
<PAGE>
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.
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 February 4, 1998.
<TABLE>
<S> <C>
ATTEST: Mail-Well, Inc.
By: ---------------------------------------
- ------------------------------------------- Name: ------------------------------------
Secretary Title: -------------------------------------
[CORPORATE SEAL]
</TABLE>
9
<PAGE>
EXHIBIT B
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
MAIL-WELL, INC.
Mail-Well, Inc. (the "Company"), a corporation duly organized and existing
under and by virtue of the Colorado Business Corporation Act, does hereby
certify:
FIRST: The name of the corporation is Mail-Well, Inc.
SECOND: The following amendment to the Articles of Incorporation was adopted
by the Board of Directors of the Company, at a regular meeting of the Board on
February 4, 1998, and adopted by a vote of shareholders on April 29, 1998:
RESOLVED, that the Articles of Incorporation of the Company, as amended
(the "Articles of Incorporation"), be amended by deleting the first sentence
of Article IV in its entirety and substituting the following sentence:
The total number of shares of stock which the Corporation shall have the
authority to issue is one hundred million twenty-five thousand
(100,025,000) shares, of which twenty-five thousand (25,000) shares are
to be preferred stock, par value $0.01 per share (the "Preferred
Stock"), and one hundred million (100,000,000) shares are to be shares
of common stock, par value $0.01 per share (the "Common Stock").
IN WITNESS WHEREOF, Mail-Well, Inc. has caused these Articles of Amendment
to be signed by Roger Wertheimer as Vice President--General Counsel and
Secretary this day of , 1998.
MAIL-WELL, INC.
By:
--------------------------------------
Roger Wertheimer
VICE PRESIDENT-GENERAL COUNSEL AND
SECRETARY
<PAGE>
REVOCABLE PROXY
MAIL-WELL, INC.
SOLICITED BY THE BOARD OF DIRECTORS FOR ANNUAL MEETING OF SHAREHOLDERS
APRIL 29, 1998
The undersigned holder of common stock of Mail-Well, Inc., a Colorado
corporation (the "Company"), acknowledges receipt of a copy of the Notice of
Annual Meeting of Shareholders dated March 25, 1998, and, revoking any proxy
heretofore given, hereby appoints Roger Wertheimer and Paul V. Reilly, and each
of them, with full power to each of substitution as attorneys and proxies to
appear and vote all shares of common stock of the Company registered in the
name(s) of the undersigned and held by the undersigned of record as of March 20,
1998, at the Annual Meeting of Shareholders of the Company to be held at the
Denver Marriott Tech Center, 4900 South Syracuse Street, Denver, Colorado, on
April 29, 1998, at 8:30 a.m., and at any postponements and adjournments thereof,
upon the following items as set forth in the Notice of Annual Meeting and to
vote according to their discretion on all other matters which may be properly
presented for action at the meeting. All properly executed proxies will be voted
as indicated.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED "FOR" THE FOLLOWING
ITEMS:
(1) To elect as directors the nominees listed below.
/ / FOR ALL nominees listed below (except as marked to the contrary). / /
WITHHOLD AUTHORITY to vote for all nominees listed below.
Instruction: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THAT NOMINEE'S NAME IN THE LIST BELOW:
Frank P. Diassi, J. Bruce Duty, Frank J. Hevrdejs, Gerald F. Mahoney,
Jerome W. Pickholz, Paul V. Reilly
(2) To approve the Company's 1998 Incentive Stock Option Plan.
/ / FOR / / AGAINST / / ABSTAIN
(3) To approve an increase in the Company's authorized common stock from
30,000,000 shares to 100,000,000 shares.
/ / FOR / / AGAINST / / ABSTAIN
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
(4) To ratify the selection of Deloitte & Touche L.L.P., independent auditors,
as auditors of the Company for the year ending December 31, 1998.
/ / FOR / / AGAINST / / ABSTAIN
(5) In their discretion, the proxy holders are authorized to vote upon such
other business as may properly come before the meeting or matters incidental
to the conduct of the meeting.
THIS PROXY IS SOLICITED BY AND ON BEHALF OF THE BOARD OF DIRECTORS AND MAY
BE REVOKED PRIOR TO ITS EXERCISE. THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" PROPOSALS 1, 2, 3 AND 4. THIS PROXY WHEN PROPERLY EXECUTED WILL BE
VOTED AS DIRECTED. IF NO DIRECTION IS MADE IT WILL BE VOTED "FOR" PROPOSALS
1, 2, 3 AND 4.
WITNESS my hand this day of , 1998.
<TABLE>
<S> <C>
NAME AND ADDRESS OF (Please sign exactly as name appears hereon. When signing
COMPANY SHAREHOLDER(S) as attorney, executor, administrator, trustee or guardian,
give full title as such. If a corporation, please affix
corporate seal. If a partnership, please sign in
partnership name by authorized persons. If joint tenants,
each joint tenant should sign.)
-----------------------------------------------------------
-----------------------------------------------------------
Signature of Shareholder(s)
WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING, PLEASE
MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY BY
USING THE ENCLOSED POSTAGE-PAID ENVELOPE.
I/WE DO / / DO NOT / / EXPECT TO ATTEND THIS MEETING.
</TABLE>
